CSPI - Earnings call transcript Q3 2020

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Operator

Good day, everyone, and welcome to the CSPi Fiscal 2020 Third Quarter Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions. Please note that this call is being recorded. And now, it is my pleasure to turn the conference over to Mr. Group. EVC with Sherk Doug Please go sir. ahead,

Doug Sherk

the the today was statements. Thank us their regarding remarks, to operator. business, Inc.'s forward-looking June and The XXXX. management the Gary expressions open Hello, Federal Executive believe, on Chief we'll CSPi's not estimate intended plan, third expect, Statements facts Victor that everyone, joining for Securities identify anticipate, XX, and call on will, me Officer. you questions. Levine, thank by With historical Victor review intent, similar Officer; call are opening are for call to and made CSP's ended Dellovo, statements Chief today's as identified Laws. and company's quarter you, is may Financial CSP as be After continue as project, CSPi's fiscal Inc.'s conclude Gary forward-looking may, the words term in then well

the uncertainties the Commission. may with XX-Q and the Form XXK results risks be guarantee include, on control company's future the number on performance the may not quarterly Securities these of in risks are and read expectations influences influence based. to uncertainties, and company's the statements statements report Form the Forward-looking that which other upon Factors protection statements section subject of beyond of to the which affect report about are and are as accuracy many Factors reflect you but and performance should the statements the of and or or company's The Exchange cautions segment a of not current filed company that annual results. the a future the events and limited that Risk are discussed

available as the time faith Forward-looking with at statements statements the in made good of based to future the those events. belief management's are the time information on are respect

after result CSP and cautionary statements, publicly of information the obligation Victor their otherwise thereof. after Inc. qualified a any whether Chief new to as turn call over of entirety are Executive a future otherwise statement statements date by or me, With revise in forward-looking Officer. new date, that, events events the or information, as undertakes Dellovo, or Although excuse I'll or forward-looking the these update no result which

Victor Dellovo

Thank you and good morning, everyone.

execution a want express plan. CSPI growth you begin, continue increased to remain with our have and of the this pandemic those improve of COVID-XX we and that achievement our to how more products Since both Before have in demonstrates affected. we of maintain Businesses, operate the business the and in high pandemic was a several and profitable We potential secure of and is both us I -- in threat understands continue customers, critical months clients, working have pipeline helping announced providing the our limiting attacks. I lines our ability if of XX% visit to partner remotely. ransomware growing the Further suddenness complex small exposed despite we the significantly all working for to our large a as of is during transition, normal new of our unprecedented team for $XX.X critical into transition well-publicized businesses. manner the UCAS the be this executing team for for customers. to is primarily customers and been our working our prospects is in partner is build a than been service COVID-XX for We've revenue to environment our coronavirus vulnerabilities. there our the positioning we solutions nothing period team fiscal to remain ARIA highlight We're our several May, remote heartfelt a to soundness else, decline has The businesses year-over-year issues. our of and the concern today's been adjust acknowledge opportunities remote compared this higher-margin a I employees the to safe concern and most It was our last addition business Total work XXXX. same to clients enabled who our quarter we challenges. our our that our margin. or network related newer to impact to talked million to decision to in that gross quite to services million ready-made the as maximize unified of believe communication our business. third that reported in and believe our workforce network able also many revenue and $XX.X fiscal to pandemic, fear

quarter, our solution revenue the million. $XX.X technology was or For TS

While large from our division we TS COVID-XX, by most impacted revenue the customers. to able generate of was were our

of cruise we quarter, I these our industries. Accordingly service service spoke UCAS. managed we not cloud we single as customers which This our summer in were operators to as the revenue most value three continues the they that Our of influence a practice lines and created, perform or recurring continues new during even May, Separately, COVID-XX to cruise the business to month. resume MSP providing. impacted are industry to demonstrates remains customer stability the stickiness during to business ship many believe unprecedented customers the we the CSPI. When lost have include looking we signed one well bring times. during

the cruise Line XXXX. mid-September of the the CLIA operations in the International association that from However Association oceangoing announced will until members Cruise cruise port line suspension or extend US June the voluntary

ports the operators a EU restart in plan to coming the However, in weeks. some have cruise

ships, every the we we restrictions on to gain access move communicate the While continue and the to notice. hamper to the ability prepared continued are a week travel operators moment's to with other

when to resumes. to On so the operators the business prioritized side, equipment, these would occur purchased be upgrades have these expect positive the and already need we ships

perform latest quarter few this As Microsoft continues reported was we have the to exception. and no over past consistently practice well quarters, our

in business full-year the XXX% growth compared We belief am XXXX. achieve QX, rate in our a of are month a will a so rate we through to we for reaffirming I that achieved greater growth

size of is expected device Regarding soft our billion phones billion all-in-one XXXX to to centers both $XX.X and support Florida to being growing Texas, for in security by a reminder data by your the technical and and offering grow bring in XXxX market as towards from including driven $XX.X mobility an own XXXX, and workplace. UCAS redundant hard with service BYOD trends UCAS

to is of we virtual all new as the and the business new on are and During a to product communication. the added we customers weekly prospects our pipeline while sites expanded maintaining increase performing with we number demonstrations the continue quarter, engagement success at is have and promising constant current team continue basis, is customers,

to our the attacks we Now interest in are lead will be Revenue ARIA for and in organization million cybersecurity expected from with industry I to Performance will our revenue business sales award-winning tradeshows opportunities generation division. in installation next as heartful was and with move the from human is our customer for for to without line quarter continue or legacy the from customer. garner I completed we other drive Myricom company our the business. themselves Further international the HPP tremendous by acknowledgement cable in a protect and flow we generating testimony ARIA. $X.X reflects health offset OEMs High robust continuing leading believe well HPP decline division. virtual recently intervention positioned platform, estimate future Products being within along success in the

with Additionally, others we the and official robust several have speaking general program. to our are is ensure a now To the partners team summarize, performing and well unprecedented six we CSPI focused during times. for remain program

to and business execution. operations to adjustments make necessary made have our to will continue We ensure

pipeline. our Specifically, UCAS and customers we ARIA and up generating interest broadening offerings are the sign new new expected as our

small quest a to diverse uncertainty. will have customer us and and base the this allow near-term large both navigate successfully We

ask brief fiscal to We provide quarter about I long-term on are that, prospects. overview growth excited now Gary performance. will a financial the third our With

Gary Levine

Thanks Victor.

to margin were his the million quarter reflects We $XX.X in million of gross mentioned compared business. third Victor third our ago quarter and opening pursuit our in remarks, of higher compared the revenues $XX.X reported gross $XX.X an year profit year's As improvement to XX.X% profit of profit million X%. of resulting gross $X.X compared million, ago in to of last a of third year quarter profits $X.X

for for expenses development the a prior from consulting and $XXX,XXX $XXX,XXX compared that completed. in project the received third a engineering quarter of $XXX,XXX to wasn't cost quarter. ago the we a refund Our was year In year quarter,

taxes of $XXX,XXX compensation compared quarter. SG&A Our in in last million in slightly loss prior-year million before to the fiscal decrease of quarter to $X.X income were decreased costs. due from the QX We reported income a a before year's income $X.X in variable QX third expenses $XXX,XXX in

a $XX,XXX. stock income when took actions April, a had million. quarterly tax the These the COVID-XX approximately The our quarter, suspension cash We of prior year position June, of impact, stopped our of applied of early $X in of and have it program at that by $XX to economic severe million. evident short-term the tax which and buyback strengthened of million investments the PPP for In million, flow, $X.X have liability the During third a and our became cash and we improve had we of including several quarter cash a with ended would we loan. $XXX,XXX. cash UK expense $XX quarter received benefit dividend, includes our actions end the pension

products. we over to your and it designed our higher-margin boost continue will to line With sales the operator are bottom our that that, I to of actions take performance turn ensure questions. to Our drive

Operator

Segren instructions] question from And from ahead. first take go we'll Nerges Please [Operator Joseph our Investments.

Joseph Nerges

I of a questions. guess couple quick just

demos line. able talking sites? that? get customers some attempting to customer last area Have on we the of were these of this to with access about What's at the we that been proof call the all conference product concept On you to status do were of

Victor Dellovo

Not yet Joe.

Joseph Nerges

yet. Not

have So been… backlog we a backlog -- could have we've of that demos assume proof out we concept a I of there of

Victor Dellovo

actually been like want purchase we're been ones facilities. like. That's to work work, to unless where order trying be to to been what get on the allowed there, able not try stuff those and see of still us haven't have and you're you we exactly yeah Most we've We've They a virtual a buy offering. and do doing they give our customers on-site.

Joseph Nerges

you Okay. last call, again But conference were last, demos. on doing saying you the were the

demo you of concept? able some sort proof So I assume the do of to were a absent

Victor Dellovo

but We're of level doing a five stage. three getting of proof demos kind demos. consistently, the next things this what's is slowing to to at down concept it doing the week We're of

Joseph Nerges

Okay.

customers have we three call a to it if want been And customers ago? the quite on to standard that a into are some few most we offering of -- we have sites do conference in signed were so the of getting you all, price see the and you getting taken we're matter to months, so call and customers was a demos you at have Okay like last that here, customer indicated specifications UCAS couple I that with you the modifications we on that I saying? not assume it's think have this the I -- or most able UPS, the get had modifying virtual the we've Are what fiscal?

Victor Dellovo

say would Joe. I XX-XX

Joseph Nerges

market? same world the guess competitive line, pretty And doing that we're versus competitive of product is with much the a the the there very right, are I platform they're utilizing my we out in because that ring let's question Okay. is fiscal central say thing

Victor Dellovo

probably I middle or would customers very goes month where that and a competitive, you a say problem. there $X bag, tiers per this ring higher if in. and the tone, get they like something not very a look not line that and it's we with just WebEx buckets If a two like trying you go they into they're inexpensive really very, to were is If it's that Joe sell user, try along that's interested that not were do like middle, after. the our we're where go on everything not a three

Joseph Nerges

with contact because again of assuming you COVID been do we in much situation. did the we indicate And I'm able to still cable company. whole Okay. the that are haven't

Victor Dellovo

every A how uncertainty lot out just want other what weekly have things due got not of been, forward. pushed down. to of have Yeah few things week months we slowing a communications they to conversations just their move do if

Joseph Nerges

able that you wondering obviously on the just vital other solutions and manage with finally advantage finally this is a one to to with offering security thing, And in area been technology is two group? we interest platform some for a providers. Okay. we the to garner any are technology service perfect MDR incorporating Have platform I'm solutions

Victor Dellovo

is the the solution service a of now. Well offering technology here part managed

discussing for also to is been other and working sim. platform in the that they the as that we're they MSPs provide area opportunities they force sales then that on diligently our to use to are side direct integrated So has talking that want

Joseph Nerges

But exists with Solutions don't that the I'm through can't that assuming the either, sites -- customer if same platform. have get in Technology they they're problem interested group access this is with to following

Victor Dellovo

have to say we're kind hey, trying just stronger we them could of We some Exactly. us. to relationships long-term believe push in that

You trust XX to going us know is the for We years. last this work.

push ARIA. brand are a conversations we that new customer little on on CSPi than the not those would side to the bit So TS we're a that trying know or may normally faster

Joseph Nerges

quarter? royalties about any particular this equity next How quarter Okay. expected the or in in

Victor Dellovo

few the to we’re and just out and to have because trickles the quarter, out have Joe the fiscal year. see last we last first how we a in what's over year years don't next had quarter, few is current they the quarter get they this it In happened product of fall the royalties into going going into

So when how the to see they board. build they

Gary Levine

bit a more bit we’re the quarter we the in fourth a little current Basically, quarter. did and this little we and quarter expecting had

Joseph Nerges

Correct.

Gary Levine

it’s And know we going fall then how just year. next don’t to

Joseph Nerges

Correct.

Victor Dellovo

Well, don't to the come for just to we're know timetable we royalties. year. going the next royalties in We know have

Joseph Nerges

said R&D Very quarter. That's right. All the all Okay. $XXX,XXX expenses, good. I for about have you around

guys. essentially. have obviously you So All R&D, again, it, much. been been the very we Appreciate have we would thank right, absent profitable, would

Victor Dellovo

Joe. Thanks,

Joseph Nerges

this lot, can over a move get pandemic we through new some the forward offerings. guys. of certainly and Thanks with Hopefully,

Victor Dellovo

Joe. Thanks

Operator

And we'll question Compound with Please take Partners. Jonathan our next ahead. from go

Jonathan

Gentlemen, good morning.

Victor Dellovo

morning. Good

Jonathan

of doing. bullish you're group, what believe The shareholder a thank you I and what And an is extremely which about largest so we innovation a company help discount value How can the people trading to growth isn't opportunity. here, we're the for we the especially is group. doing you're understand that size know sleepy let a names potential the people the the cybersecurity this I company, a the there. and market for to market, represent the to in CSPi is management kind individual valuation the doing. believe in really massive is when out, at is that to story story This many be there, And and speak opinion. compelling in put in best the is especially your the be technology what could you of how can space a my is there, is, compared given and

Gary Levine

proactive scenes, there's firm that the things doing got at few think with IR get but have on people I going is there people in different more. very know being the well noticed more standpoint, getting and as the we're trying I in a hired So that we're front we're so get that we've you're to new in more behind working them, that channel competing correct mean, a product to the we've IR get trying out. issues the least of things still customer by trying more from Victor message that I get out our also shareholders and we're there itself, to our notified, to to as We're the put get potential message to media, out look and at we front. about the We continuing and we on more that to in word trying really think get so to certain

Victor Dellovo

currently cover that have. that we of completely you piece that XX% the we're been look do XX% competitors, feel where can Yes, competing in products covering at we the But it with the that maybe a with with really both and technology, than I have. overall the longer we doing the ARIA we're they've of they points agree security, we you little segment some if to

more that the get I there. and commercials this the put foresters the product any product but think try that out they've against -- against So wise, to bigger need it build at that National like the that bit us TVs customers that lot you bit up of garden, go a a covered it, and of definitely cover on definitely day. of I put we're we some I the a to few are more reputation to little you that, value, compared been to product a could them players definitely and products But see out stage. stuff a any that other are longer there But on doing little

Jonathan

largest don’t ask think call you, that briefly the little Thank bit small you but for to want thank relationships large companies with that their couple has Victor to and briefly I building and of can you're know I I'll you Can among that are to cap well CSPi speak because speak you you're with relationships work that the the in working spaces? very two, is known dominate hope the a known, caps. undervalued with I the a most of that that some well you to

Victor Dellovo

in financial largest, we're not without financial talk tell can the currently and the the permission, rather are the healthcare verticals, large really I institutions, their are specifically banking started on. verticals the focusing mentioned names the customers you, in two but lower, to, institutions, we I we we're

spend on that on of do financial the information pandemic I have in security, it’s in this to healthcare. even they the protect think or to and have HIPAA both type money whether clients environment, they in

right that said two verticals that we've to we're we're concentrated are also there, out So the talking now. And largest to that those on. cable companies like are I talking

once and it works, the business. there's a we have were earning chance So, of able there how I product of good the we'll think to always course, show get competition, but in

Jonathan

CSPi ETF, and Cybersecurity we That's what extent, that's it the again. company's to we mean, before traded this think believe closely recovered awesome. undervalued the and to doing really has very you and why CSPi lesser continue bullish dramatically. hold. Thank you're quite a with I obviously, interestingly so pandemic,

Victor Dellovo

Well, support. thanks for your

Operator

[Operator Instructions] a to investor, Brett ahead. And Davidson, we’ll private go next go please

Brett Davidson

guys. Hi,

Victor Dellovo

Brett. Hi,

Brett Davidson

to I some ones. got Joe some slow up Following fast questions. had here, Joe

Victor Dellovo

Okay.

Brett Davidson

So just made catch touch on you comments, reference of was guys made could reference, that your you wondering I I it. you Victor, didn't all again. to growth in and if

Victor Dellovo

In relation to…

Brett Davidson

The to prior-year, sure we wasn’t going year. I where this was if end up were it

Victor Dellovo

just saying good Office That's Microsoft had was on XXX to. it. rate growth the business. iCloud growth piece the what I of was referring was we a I on the The

Brett Davidson

had it dropped a that forward? the of Got believe mentioned it. you quarter I that the All is right. which in there installation revenue, did UCAS that going new any is or and was There customer last all and is was

Victor Dellovo

Well we've over had quarter. new customers UCAS the MSP in both

We also that large the we but had was it installed installation international of did it an last ARIA wasn't and was book product, it quarter. an customer

Brett Davidson

And the the mean I quarter, UCAS, throughout was quarter or? last it

Victor Dellovo

model. is doing I UCAS right it, it's this the do, we're Well, recurring, lines to caught know everything recurring don't and business revenue you three a if now that trying we're

it's whether revenue or can can revenue. UCAS UCAS are and ARIA usually model then monthly bought And which then month revenue so potentially the as practice, MSP, the even recurring so model the basis, you be between basis, be on contracts, So service three-year recurring have models. recurring ARIA just revenue a on have a the a recurring all managed you

of revenue over So three we the would recognize as period years.

Brett Davidson

of revenue, not time to impact book quarter look or this an such was what mean like? idea quarter, a to course can was get was No, some and the on of you going mean of So, guys forward? on inside I'm or the week is? exactly going the how late all revenues comment what's that's hard I whether it during business. in the that at prior-quarter just will figuring representative quarter, just mean, last trying I'm out I that the it’s quarter the I obviously having you disruption, going or the if

Victor Dellovo

were Well, customers I that think had mean months were were as purchasing. other did. I didn't stronger quarter, downs but and other, we the the throughout some the We many and than trends ups certain

sort product, was things of spread revenue stuff the that times buying throughout with quarter we're the came on was reoccurring getting more, ones a product and getting you're So that board. the different at the some that the whole but new

Gary Levine

because answer can spread have to difficult your $XXX,XXX out you is it's So years. that's contract question a over happens what three

million You contract. got dollar a

towards month of huge the a of see increasing So lot financial our some going you are time. has you quarter but Every a swings. millions large just throughout at it, there spend some hoping institutions you're then whole purchases, dollars been to keep that

the and the what So have it's of bill week, then selling combination just any you’ve the revenue the if sign you're you're and likely going of whole it orders it not we until towards purchase it's quarter, to is the which of it last not Gary and a saying following it to quarter just got the product, throughout at the of more end happens recurring we're than get if month. done delivering you into

Brett Davidson

that's is, or was what to evenly have you quarter. distributed this if just I'm a this in trying So half a get total how was about on patient Yeah, quarter, distributed? handle the monthly over the

little So in this of be to a than final the of quarter. month majority it's different spread was going it out was activity the evenly if the all

Victor Dellovo

As soon gain Bret, the business can we book we it. as

Brett Davidson

be get is that's recognized worth Yeah, now or to this am trying euro coming? for just coming going when instead on going but us X.X month whatever. or months of a three impact to it's I How handle quarter the to one

the did So in revenue book as from you the guys quarter? UK

Victor Dellovo

Yes.

Brett Davidson

at to Press issuing dislocated point? press extent. that thing and Do of this you a releases next releases about you forward the two? or a the nothing releases see How in I or put do flurry call, some press your finger by prior been coming COVID can there's talked you you that know in on quarter like really anticipate going looks

Victor Dellovo

second. Nothing right this

how whole industry. still the roll is know uncertainty There out. We a see of lot you just as have to things in

are focus business just heads with just we what to trying prospect new to out So where right customers and the products just figure down our looks trying on their to trying customers in like. now time a

you acts the balancing to push without upsetting of those customers. as as potential one it's can hard So

get back soon we we'll some that have them worthy, as press are So out. releases as

Brett Davidson

you to give like So an don't revenues backlog, do do guys, might any look you internal use possibly you that at? you any you? don’t guys you metrics backlog, what of do believe have anything guys track you idea have I

Gary Levine

Yes. We do.

the You have pipeline. to monitor

that, You we internal lot need is a and that report but and the doing. a to how have don't but of do data pulse all do business we're metrics, we obviously doing whether we monitor keep of

through So we of all have meetings the many within going those operations company. the

Brett Davidson

an Can idea some that of those what you just things give you guys are monitoring? actively

Gary Levine

pipeline, things well Will monitor backlog quality what related of of schedules the always we're to group going obviously items on. engineering the as and metrics, well our that sales those very watch and and maintaining we and watching as the products are as kind as closely

Brett Davidson

I Are you do the you contract mean size? do of pipeline? guys What monitoring? customers quantify you at how contacted, how you the exactly -- potential looking that number And you're is

Victor Dellovo

pipeline figure this were put right. with it how customers, hold. XX% hold based just cancelled and communication you vendors and review it on look manage move our moving up individuals against down always that then or you what's as Things you you and XX%, out ahead XX%, you're or -- on on sales and behind, move ratio, how your the close XX% it you with with and will you you XX%, then off not through and you you what the rate lost that's kind of when closer start at at see prospecting, your of then move No, or

when and new and XX% then we down other that and or it bring pipeline project however over managers head the XX% that close you and already to have are manage and we been the them. current salespeople meetings out to net and or and and how went we to all to where they opportunities go we that's where then customers and either we reviews go that's SOWs expect door or sales project with back the with meetings new the SOWs that we have business in phone So the lead have do the every are and rollouts through we in on our their week we want signed of engineering

those can that's business actually are revenue everyday we So we things recognize do. and that

Brett Davidson

might March not but the thing, during looking imagine I'd recovered generally of it been in this has the of summer And real here? course a favorable

Victor Dellovo

down. and up it's No,

hit Some customers match that of others constant us the just than are one better was it's one it's communication. the the and honestly mix toughest. a May month

March we April think everybody that are us for I shocked the enough there. but was business had already backlog there enough I just month for think May and was was backlog at people picked went least brakes the on it where up not where but to June at then back normality talking was some kind to and of back but least are now.

Brett Davidson

So like you are May in pushing now? and other touched the of things kind bottom direction in guys back

Victor Dellovo

May. significantly were in they're Yeah than better they

Brett Davidson

and the just So on is dividend? slow what I color on current thing thinking is last might here questions the maybe you could give a little

Gary Levine

with but the us for really the because that quarter it cash and board. money discussing our first just and at things can't we're it we're every close important if is the get of a as at that we one losing company profitability good take think looking I look it, certainly and such Well, requirements do

Victor Dellovo

I but and we have of we're that conference are we're some now meeting are, it about levels, I then options out, can the I we're board normality to cautiously now. rolls having, have and that to it something we get economies too guess But uncertain think what if when type on. the read you that think until just, still talk every we review something do right -- what count the right that optimistic a actually everybody morning this even make does mean our just they is that And vaccine that this they then

Brett Davidson

cross think than the be can vide dividend we on going table. back how back the once that's profitability So about the it is to to we

Victor Dellovo

look Yeah, to that's metric yeah. certainly a at,

Brett Davidson

taking right. next time quarter. guys Well very answer All to the you to talk for you much thank and

Victor Dellovo

you Brett, too. Okay.

Operator

And there further the this no management for any the appears at questions turn remarks. to be time. I'll closing back team over call

Victor Dellovo

operator. you, Thank

interest As for shareholders thank our to always, and I continued support. want

we and as offering. a interest higher is pursuing do of the to results have are future. by strategy day. in great growing and business and a continue Have ARIA business, generating we strong We margin Our UCAS desired transition encouraged the the bright

Operator

for Thank conclude your does program. you. And your you participation. Thank this

You at disconnect may any time.

CSP (CSPI) 11 Aug 202020 Q3 Earnings call transcript