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CSP Inc (CSPI)
NASDAQ:CSPI
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CSP
(NASDAQ:CSPI)
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Rating:47Neutral
Price Target:
$8.50
▼(-25.76% Downside)
Action:ReiteratedDate:02/14/26
The score is primarily held back by weak financial performance (TTM revenue decline, operating losses, and negative operating/free cash flow) and bearish technicals (price below key moving averages with negative MACD). The earnings call provides partial offset through improved margins, growing services momentum, and constructive FY2026 commentary, but execution and revenue volatility risks remain. Valuation is also constrained by the negative P/E despite a modest dividend yield.
Positive Factors
Recurring Service Revenue Growth
Growth in managed services and newly signed MSP customers that add recurring monthly revenue shifts CSP toward predictable MRR. A larger services base reduces reliance on one‑time product sales, supports steadier cash flows, and enables operating leverage as recurring contracts scale over the next several quarters.
Margin Expansion
A ~10 percentage‑point gross margin improvement driven by higher‑margin services indicates a structurally better mix. As services and AZT deployments increase, this elevated margin profile can persist, supporting sustainable gross profit generation and creating room for operating‑leverage driven profitability improvements.
Strong Balance Sheet & Liquidity
Material cash reserves and low leverage provide financial flexibility to fund R&D, absorb timing gaps in deployments, and continue shareholder returns. This liquidity cushion reduces short‑term refinancing risk and allows management to invest in AZT commercialization and managed services scaling without immediate capital stress.
Negative Factors
TTM Revenue & Profit Volatility
Trailing performance shows multi‑period volatility with recent revenue declines and operating losses despite prior profitable years. This inconsistency makes earnings durability uncertain, complicates multi‑quarter planning, and raises execution risk for turning margin expansion into stable, recurring net income.
Negative Operating & Free Cash Flow
A shift to negative operating and free cash flow from prior-year positive generation signals cash burn and working‑capital stress. Persistent negative cash flow reduces flexibility for organic investment, increases reliance on cash reserves, and heightens the risk that growth initiatives must be slowed or externally financed.
Concentration & Lumpy Orders
Dependence on large, non‑recurring product transactions drives quarter‑to‑quarter revenue swings. Combined with variable procurement timing for multisite AZT rollouts, this concentration creates persistent timing and conversion risk that can mute the benefits of pipeline traction and delay predictable revenue realization.
CSP (CSPI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$86.34M
Dividend Yield0.95%
Average Volume (3M)19.49K
Price to Earnings (P/E)―
Beta (1Y)1.56
Revenue Growth6.36%
EPS Growth73.88%
CountryUS
Employees111
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)<0.01
Shares Outstanding9,913,027
10 Day Avg. Volume33,055
30 Day Avg. Volume19,494
Financial Highlights & Ratios
PEG Ratio16.20
Price to Book (P/B)2.41
Price to Sales (P/S)1.83
P/FCF Ratio56.70
Enterprise Value/Market Cap0.74
Enterprise Value/Revenue1.15
Enterprise Value/Gross Profit3.40
Enterprise Value/Ebitda-111.65
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
CSP Business Overview & Revenue Model
Company DescriptionCSP (CSPI) is a technology-driven company specializing in high-performance computing and advanced engineering solutions. The company operates primarily in two sectors: High-Performance Computing (HPC) and IT Services. CSP designs and manufactures a range of products, including servers, storage solutions, and networking equipment, while also providing tailored IT services that enhance computational efficiency and reliability for various industries, including government, healthcare, and education.
How the Company Makes MoneyCSP generates revenue through multiple streams, primarily by selling its proprietary high-performance computing hardware and software solutions. The company also earns money from service contracts and consulting fees related to the deployment and maintenance of its computing systems. Key revenue streams include direct product sales, ongoing service agreements, and custom engineering projects for clients. CSP has established significant partnerships with technology providers and industry leaders, which enhance its market reach and contribute to revenue growth. Additionally, the company's focus on innovative solutions in HPC positions it to capitalize on the increasing demand for advanced computing capabilities across various sectors.
CSP Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:May 13, 2026
Earnings Call Sentiment Neutral
The call showed meaningful operational progress in higher-margin services, notable traction for the AZT Protect product (46 customers, multisite pipeline, OEM partnership with Acronis) and improved gross margins and net income. However, these positives were offset by a material top-line decline (total revenue -23.6%, product revenue -39.1%) largely due to a non‑recurring prior-year product order, a very high effective tax rate (75.5%) that depressed after-tax results, increased R&D spend, and timing uncertainties converting the AZT pipeline into consistent revenue. The company appears to be transitioning toward a more recurring, services-driven model with encouraging early signs, but near-term revenue volatility and execution/timing risks remain.Q1-2026 Updates
Positive Updates
Service Revenue Growth and Managed Services Momentum
Service revenue increased 14.6% year-over-year to $5.3M (from $4.7M). Management reported that the majority of service revenue is driven by managed services and signed new MSP customers that will generate nearly six figures of additional monthly revenue (clarified as net ~ $100,000 per month of new recurring revenue beginning this quarter).
Improved Gross Profit and Margin Expansion
Gross profit increased to $4.7M (up $171k versus prior-year quarter) and gross margin expanded to 39.3% from 29.1% in the year-ago quarter (an improvement of ~10.2 percentage points), driven by a higher-margin service mix.
AZT Protect Product Traction and Pipeline Growth
AZT Protect is serving over 46 unique customers with multisite expansion opportunities; management reported year-over-year AZT revenue growth, multiple new site wins, several second/third-site approvals, and a growing pipeline of higher-value multisite opportunities (each with the potential to become seven-figure relationships). Strategic OEM partnership with Acronis is underway (embedding AZT), and a joint webinar drew ~200 attendees and generated more than a dozen demo requests.
Improved Net Income and Cost Control in SG&A
Net income rose to $91,000 from $42,000 in the prior-year quarter (increase of ~$49,000, ~116.7%). Sales, general & administrative expense declined $143,000 to $4.0M, indicating some cost discipline alongside revenue mix improvements.
Strong Liquidity and Capital Returns
Cash and cash equivalents of $24.9M as of 12/31/2025. Company declared a $0.03 per share dividend (payable March 12) and indicated share repurchase activity will resume this quarter, signaling commitment to shareholder returns.
Strategic Positioning for Cloud and Security Services
MSP practice is a Microsoft Azure platinum partner and management emphasized structural demand from cloud migrations and post-migration managed services, positioning CSP to capture recurring revenue and operating leverage as these practices scale.
Negative Updates
Material Top-Line Decline
Total revenue decreased to $12.0M from $15.7M in the prior-year quarter (a decline of ~$3.7M, or -23.6%). Product revenue fell to $6.7M from $11.0M (-$4.3M, or -39.1%), in part due to a $4.5M one-time product deal in the year-ago quarter that did not recur.
Diluted EPS Decline Despite Net Income Increase
Diluted EPS decreased to $0.01 from $0.05 in the prior-year quarter (-80%), even though net income increased to $91,000 from $42,000, suggesting share count dilution or other capital structure impacts that compressed reported EPS.
High Effective Tax Rate
The company recorded a tax expense of $280,000 representing a year-to-date effective tax rate of 75.5% vs the U.S. statutory rate of 21%; management attributes the differential to state income taxes, valuation allowance changes against state credits, and nondeductible executive compensation—this materially reduces after-tax profitability.
Increased R&D Spend and Near-Term Margin Pressure
Research & development expense increased 9.2% (an increase of $858,000 year-over-year) to support AZT Protect customization and OEM embedding work, which raises near-term operating cost levels while integrations mature.
Timing Delays and Sales-Cycle Risk for AZT Deployments
Management highlighted varying customer procurement processes and timing delays for multisite AZT deployments. While pipeline and approvals exist, conversion timing is inconsistent across customers and verticals, creating revenue timing risk and uncertainty for near-term AZT contributions.
Reliance on Large, Non-Recurring Product Orders Creates Volatility
The significant year-over-year product revenue decline underscores exposure to lumpy, one-time product transactions (e.g., the $4.5M prior-year deal). This concentration risk contributes to quarter-to-quarter revenue volatility.
Company Guidance
Management said fiscal 2026 is “shaping up to be a growth year,” driven by service-led momentum, MRR expansion and expected “steady profitable improvements” with substantial operating leverage as revenue scales; Q1 metrics cited include total revenue $12.0M (versus $15.7M prior year, which included a ~$4.5M one‑time product deal), product revenue $6.7M, service revenue up 14.6% to $5.3M, gross profit $4.7M (+$171K y/y) and gross margin 39.3% (vs. 29.1% prior), R&D up 9.2% ($858K) to support AZT customization/OEM work, SG&A $4.0M (down $143K), net income $91K (vs. $42K) and diluted EPS $0.01 (vs. $0.05), cash $24.9M (12/31/25) with roughly $3.3M of financing payments expected over the next two quarters, a $0.03/share dividend payable Mar 12, new MSP wins adding nearly six‑figures of monthly revenue (~$100K/month net new), AZT Protect serving 46 unique customers with multisite opportunities that could become seven‑figure relationships, an Acronis webinar that drew ~200 attendees and generated >12 demo requests, and share repurchases slated to resume within ~48 hours.CSP Financial Statement Overview
Summary
Overall fundamentals are mixed: a solid balance sheet with low leverage is outweighed by weak recent operating performance and cash generation. Income statement trends show TTM revenue decline and operating losses, while cash flow is a key concern with negative operating and free cash flow versus prior years.Income Statement
TTM (Trailing-Twelve-Months) results show revenue down (~6%) with continued operating losses (negative EBIT/EBITDA) and a small net loss, signaling weaker profitability versus prior years. Gross margin remains fairly steady in the low-to-mid 30% range, but the company has not been able to convert that into bottom-line profits recently. The multi-year picture is volatile: strong profitability in 2023 contrasts with losses in 2024, annual 2025, and TTM, which raises concern about earnings durability.38
Negative
Balance Sheet
Leverage appears low with modest total debt (about $2.7M TTM) against a sizable equity base, suggesting balance-sheet risk is contained. Equity has also grown materially versus recent annual periods (TTM equity higher than annual 2024/2025 levels provided), supporting financial flexibility. The key weakness is returns: return on equity is negative in TTM and recent annual periods, reflecting that the balance sheet is strong but currently not producing attractive shareholder returns.72
Positive
Cash Flow
TTM (Trailing-Twelve-Months) cash generation deteriorated meaningfully, with negative operating cash flow and negative free cash flow, and a sharp drop in free-cash-flow growth versus the prior annual periods shown. This is a notable shift from 2024 and 2023, when the company produced solid positive operating and free cash flow. While the recent net loss is small, cash burn in TTM suggests working-capital or operating pressures that elevate near-term execution risk.34
Negative
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 55.10M | 58.73M | 55.22M | 64.65M | 54.36M | 49.21M |
| Gross Profit | 18.68M | 18.51M | 18.86M | 21.92M | 18.83M | 16.15M |
| EBITDA | -569.00K | -602.00K | 610.00K | 5.93M | 3.23M | 2.06M |
| Net Income | -472.00K | -91.00K | -326.00K | 5.20M | 1.89M | 699.00K |
Balance Sheet | ||||||
| Total Assets | 69.15M | 71.16M | 69.44M | 65.90M | 75.06M | 62.97M |
| Cash, Cash Equivalents and Short-Term Investments | 24.93M | 27.42M | 30.59M | 25.22M | 23.98M | 20.01M |
| Total Debt | 2.71M | 2.58M | 4.67M | 2.95M | 5.18M | 4.01M |
| Total Liabilities | 24.34M | 26.61M | 22.17M | 19.76M | 36.10M | 28.93M |
| Stockholders Equity | 44.81M | 44.55M | 47.27M | 46.15M | 38.96M | 34.05M |
Cash Flow | ||||||
| Free Cash Flow | -2.82M | 1.89M | 4.02M | 3.63M | 2.44M | 1.80M |
| Operating Cash Flow | -2.39M | 2.27M | 4.21M | 3.91M | 2.67M | 1.90M |
| Investing Cash Flow | -486.00K | -428.00K | -256.00K | -341.00K | 20.00K | -166.00K |
| Financing Cash Flow | -2.92M | -5.04M | 1.38M | -2.40M | 1.33M | -954.00K |
CSP Technical Analysis
Negative
11.45
Price Trends
11.16
Negative
11.61
Negative
11.88
Negative
Market Momentum
-0.67
Positive
37.64
Neutral
27.89
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CSPI, the sentiment is Negative. The current price of 11.45 is above the 20-day moving average (MA) of 9.89, above the 50-day MA of 11.16, and below the 200-day MA of 11.88, indicating a bearish trend. The MACD of -0.67 indicates Positive momentum. The RSI at 37.64 is Neutral, neither overbought nor oversold. The STOCH value of 27.89 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CSPI.
CSP Risk Analysis
CSP disclosed 26 risk factors in its most recent earnings report. CSP reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
CSP Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $231.76M | 24.82 | 10.22% | 3.03% | -5.74% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
53 Neutral | $297.23M | -9.92 | -23.73% | ― | 17.44% | 41.97% | |
47 Neutral | $86.34M | -169.79 | -0.27% | 0.95% | 6.36% | 73.88% | |
46 Neutral | $110.24M | -0.57 | -111.47% | ― | -5.70% | 94.70% | |
45 Neutral | $167.58M | -0.49 | ― | ― | -4.93% | 18.65% | |
44 Neutral | $227.42M | -1.30 | -18.81% | ― | -12.45% | -142.77% |
* Technology Sector Average
CSPI
CSP
8.71
-6.95
-44.38%
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CSP Corporate Events
Executive/Board ChangesShareholder Meetings
CSP Shareholders Back Board, Executive Pay and Auditors
Positive
Feb 13, 2026
At CSP’s 2026 Annual Meeting held on February 10, 2026, shareholders representing 7,765,027 shares formed a quorum and elected four directors, Victor Dellovo, Ismail “Izzy” Azeri, Anthony Folger, and Stephen Webber, to serve until the 2027 Annual Meeting. Investors also approved on an advisory basis the compensation of the company’s named executive officers and ratified CBIZ US, LLP as CSP’s independent auditors for fiscal 2026, reinforcing continuity in both leadership and external financial oversight.
These voting outcomes indicate strong shareholder support for the existing board slate, executive pay practices, and audit arrangements, suggesting stability in CSP’s governance framework. Such continuity may provide stakeholders with confidence in the company’s strategic direction and financial reporting integrity as it moves through the 2026 fiscal year.
The most recent analyst rating on (CSPI) stock is a Hold with a $10.00 price target. To see the full list of analyst forecasts on CSP stock, see the CSPI Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.