CSP Inc. Q3 2026 Earnings Call Summary

Moby Intelligence

Fri, August 14, 2026 at 8:02 PM GMT+3 3 min read

CSP Inc. Q3 2026 Earnings Call Summary - Moby

Strategic Performance Drivers and Operational Context

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Technology Solutions revenue was constrained by hardware vendor delivery times extending from historical 30-60 day windows to over 200 days, resulting in a 65% year-over-year increase in backlog.
The AZT Protect business is transitioning toward larger enterprise accounts, which involve longer 18-24 month sales cycles due to complex procurement processes and internal stakeholder alignment.
Management is pivoting its sales strategy to engage higher-level IT decision-makers earlier, as these stakeholders often control the budgets even when OT teams advocate for the technology.
Strategic focus has shifted toward OEM partnerships, such as the Acronis integration, to embed AZT Protect directly into third-party products for long-term recurring revenue.
The managed cloud and service practice continues to see healthy growth driven by the increasing complexity of enterprise cloud migrations and demand for post-migration operational support.
Operational efficiency in the service segment improved, with service gross margins increasing by 1.3% compared to the prior-year period.
Management highlighted that AZT Protect has maintained a 100% renewal rate and zero customer breaches to date, validating the product's efficacy in OT environments.

Outlook and Strategic Initiatives

Management expects hardware supply chain constraints to persist for at least another year as large-scale AI infrastructure build-outs continue to consume global component capacity.
The Acronis partnership is targeted for a full commercial launch by October 1, 2026, following the completion of software integration and SKU availability.
Several large six-figure enterprise opportunities are nearing the end of their 18-24 month sales cycles, with management optimistic about conversions in the coming months.
The company is expanding its OEM pipeline with three additional US-based partners and ongoing deployments in the South African telecommunications market.
Future growth will prioritize high-margin recurring revenue streams from MSP, cloud services, and AZT Protect to offset volatility in the hardware-dependent Technology Solutions segment.

Structural Changes and Risk Factors

The company completed the buyout and sale of its UK pension plan to an insurance company, incurring one-time actuarial and legal costs of approximately a couple hundred thousand dollars.
Operating loss increased to 1.5 million from 1.2 million, partly due to variable compensation in the Technology Solutions division and the UK pension transaction costs.
Management identified 'friendly fire' incidents—disruptions caused by internal IT updates in OT environments—as a key market opportunity for AZT Protect's patch-free security model.
The company utilized its balance sheet to finance over 20 customer transactions, with long-term receivables reaching 8.3 million as of June 30, 2026.

Q&A Session Highlights

Status and revenue expectations for the Acronis OEM integration

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Management stated they do not yet have a specific revenue estimate for the Acronis rollout as the integration process was entirely controlled by the partner's timeline.
The partnership was previously on hold because the partner's sales team lacked the necessary SKUs and integrated systems to sell the product globally.

Salesforce turnover and new direct sales strategy

CSPi replaced three out of four salespeople to bring in talent accustomed to the longer sales cycles required for enterprise cybersecurity deals.
The new strategy emphasizes building trust with resellers to gain direct access to their 'white glove' enterprise accounts.

Impact of US government router bans on product delivery

Management confirmed the ban on foreign-made routers is not impacting their business, as they primarily deal with US-based name brands.
Current delays are attributed to broad shortages in memory, hard drives, and processors rather than regulatory restrictions.

Progress with water and wastewater utility partners

A partnership with UFT has progressed through a nine-month validation phase, including lab testing and successful pilot deployments with three customers.
Management teased new joint initiatives with UFT to be announced within the next two to three weeks.