We expanded relationships with present clients whereas gaining new clients due largely by the distinctive buyer retention monitor file we have now earned in all kinds of industries, together with finance, manufacturing, oil and gasoline, well being care, aerospace, training, utilities, telecommunication and maritime. Know-how Options elevated will increase the effectivity and effectiveness of our clients’ IT funding in networking, wi-fi, mobility unified communication and collaboration, information heart and superior know-how safety and continues to be a serious driver of our service enterprise progress. In the course of the fourth quarter, our service income grew 63% over the identical prior 12 months quarter and represented roughly 44% of our whole income. In the course of the 12 months in the past fourth quarter, service income represented roughly 30% of whole income.
For the complete 12 months 2025, service income represented 36% of whole income as in comparison with 33% a 12 months in the past. Managed cloud and MSP providers are more and more vital a part of our providing. And throughout the fiscal 2025, this enterprise grew a wholesome double-digit price. One in every of our key targets in fiscal 2026 is to construct on that progress price. To attain this, we’re allocating extra assets to those alternatives, together with including extra gross sales reps. Our MSP/cloud service technique has been particularly positively efficient within the maritime trade. We’re increasing installations throughout the fiscal 2025 after which acquire contracts who service these installations the results of which is able to start in realized in fiscal 2026.
As well as, we entered our fiscal 2026 with backlog for cruise ships, installs and upgrades, which we hope to transform income over the following 12 months. Rising our service enterprise advantages our shareholders in 2 vital methods. First, the income tends to be very sticky given our sturdy service monitor file with clients and our distinctive place within the market. Second, our service income earns increased gross margins than our product income. We’re fairly excited concerning the outcomes generated from our service phase throughout the fiscal 2025 and are much more enthusiastic about our potential getting into the fiscal 2026. Turning to the HP phase.
We proceed to achieve traction with our strategic companions and distributors and their clients for AZT PROTECT cybersecurity providing. Over the course of the previous fiscal 12 months, our go-to-market technique led to dozens of recent AZT buyer installations in addition to it constantly expands pipeline for our new clients. Working by our gold star resellers, together with the Rockwell Automation largest North American distributors. Our technique is to efficiently implement our resolution at a person website with the shoppers’ operations then pursue different set up alternatives inside the group. We now have not too long ago executed this gross sales strategy with a number of clients as we converse and are actively engaged on buy orders with our companions to deploy AZT PROTECT at further websites.
So far, we have now clients within the metal, power, manufacturing, water utilities, pharmaceutical, meals, telecommunication in different industries, all with a number of set up potential. Many of those potentials to change into a 6- or 7-figure greenback relationship for our firm. We now have deployed case research of the outcomes achieved by AZT PROTECT inside most of those industries and Rockwell distribution channels are aggressively taking these outcomes to market. We consider this strategy is working as we exit the 12 months with a major enhance within the variety of AZT PROTECT deployment offers within the works. As well as, within the fall of 2024, we participated within the Rockwell Automation Truthful in Anaheim, which was a primary step into the Rockwell Automation channel.
We participated once more this 12 months on the Rockwell Truthful in Chicago that was held a number of weeks in the past and is not an exaggeration to say the sales space was busy all through the whole honest. Operational know-how clients proceed to lack the efficient cybersecurity safety on the degree AZT PROTECT supplies. We proceed to consider we have now a robust aggressive benefit on this area and in addition consider that the market now sees us as a considerable useful resource. Our goal is to transform this constructing momentum into sizable AZT PROTECT gross sales in fiscal 2026. We’re fairly excited concerning the course within the fiscal 12 months 2026 prospects for our enterprise as we develop our focus to defending industrial IoT units.
The units on this area have historically been tough to guard as a result of varieties of processes used and restricted assets out there that usually do not assist standard IT-based endpoint safety options. AZT PROTECT has had an preliminary success in being chosen and deployed in such environments. We’re optimistic that this opens a brand new marketplace for the product. Many AZT PROTECT installations require an strategy to easily simplify mass deployments. Which means our staff has needed to improve our software program to permit for straightforward integration into the economic IoT merchandise provided by different distributors. So far, we have now overcome these integration challenges with out exception. There’s nonetheless extra work to be carried out to streamline the strategy.
Nonetheless, this capability to combine the deployment of AZT PROTECT into the economic IoT corporations present methods is a serious driver behind our rising pipeline into this massive unserved industrial edge compute market. In abstract, our service enterprise exited the 12 months on a particularly sturdy be aware. And our product enterprise is gaining momentum. We consider we’re on a trajectory to generate constant profitability enhancements for the fiscal full 12 months 2026 as we constructed the infrastructure and made the funding required to assist important enlargement of our enterprise. Consequently, we consider that we’re able to considerably leverage income progress going ahead.
With that, I’ll flip the decision over to Gary to give you some extra particulars about our current monetary efficiency. Gary?
Gary Levine: Thanks, Victor. For the fourth — fiscal fourth quarter ended September 30, 2025, we generated $14.5 million in income as in comparison with $13 million for the 12 months in the past fourth quarter. Our merchandise income decreased $1.1 million. Service revenues elevated $2.5 million or 63% in comparison with the 12 months in the past interval. Gross revenue for the fourth quarter was $5.3 million in comparison with $3.7 million for the fourth quarter of fiscal 2024. The distinctive service income progress throughout the quarter drove the gross revenue margin enhance. Gross margin for the fourth quarter was 37%, which was greater than 800 factors increased than the identical prior 12 months quarter. The sturdy enhance in service income drove the elevated margin.
On the expense aspect of the revenue assertion, evaluating the fourth quarter of fiscal 2025 to the identical prior 12 months quarter. Analysis and growth prices elevated 13% as we dropped at market new options for AZT PROTECT and develop software program options to interact and combine of our options into clients’ operations. Our SG&A bills for the quarter have been basically flat as in comparison with final 12 months. Our working loss for the quarter was $0.5 million in comparison with $2 million working loss for a similar interval of the prior 12 months quarter.
We reported a web lack of $191,000 or $0.02 per diluted share of frequent for the fourth quarter in comparison with a web revenue of $1.7 million of — or $0.18 per diluted share for the 12 months in the past interval. As of September 30, 2025, our stability sheet stays sturdy with money and money equivalents of $27.4 million. Our money place is down about 10% from our money place a 12 months in the past. Nonetheless, we proceed to supply income financing to certified clients and you will be aware that our financing receivables degree doubled over the course of the previous 12 months. As well as, we invested within the progress technique of AZT PROTECT.
We additionally used money to pay the $0.03 share dividend and repurchased 19,500 shares of our frequent inventory throughout the fourth quarter for a complete price of $234,000. As we famous within the press launch this morning, we will likely be paying a $0.03 a share dividend on July 15, 2026, to shareholders of file on December 26, 2025. Turning to the complete 12 months ended September 30, we grew the income by 6% and grew gross revenue by was $18.5 million or 32% of gross sales in comparison with $18.9 million or 34% of gross sales.
We reported a web lack of $91,000 or $0.01 per share of frequent in contrast with a web lack of $326,000 or $0.04 per diluted share of frequent for the prior 12 months. I’ll flip the decision over to the operator to your questions.
Operator: [Operator Instructions] Your first query is coming from Joseph Nerges from Segren Investments.
Joseph Nerges: My fast math right here. You talked about that the service income within the fourth quarter was like $0.44 of whole gross sales. In order that — if my math is right, you are near $6.4 million in service income within the quarter alone. Am I right? Am I mistaken on that math?
Gary Levine: Sure. I imply, total, as an organization, sure, that is roughly…
Joseph Nerges: Sure, you stated, I do not know, 44% of $14.5 million. That is the place I am arising with the quantity. In order that’s a terrific quantity. I imply, being on the annual assembly a number of years in the past, and Victor talked about that he will get referred to as on a regular basis, making an attempt to buy our managed providers operation. So if we proceed with that, we’re speaking a couple of plus $20 million a 12 months service income simply in managed providers alone within the TS division. In order that’s actually terrific. However let me get on to a query.
I actually suppose this — the final press launch you guys issued on the IIoT enlargement of AZT PROTECT is de facto — you used the time period — Victor used the time period sport changer whenever you first launched AZT PROTECT. And I actually consider that this enlargement is a sport changer. Now for example, I suppose this all began principally with our — am I right, the cell tower buyer in South Africa, the place we deployed that after which we started deploying it by different suppliers in that atmosphere. After which we maintain speaking concerning the black field.
So for example, when you’ve got a cell tower buyer with, for instance, 1,000 towers, what is the what’s our potential for the endpoint — what number of endpoints can we presumably enroll if it is totally deployed and accepted by clients on the road? What are — for instance, dimension of 1,000 towers?
Victor Dellovo: Effectively, for those who take a look at the two press releases that we have carried out earlier than, proper, we began off with the black field that is contained in the cell towers after which we opened it as much as the cameras which are on the cell towers additionally. So these are the two press releases that I had launched in all probability 6 months in the past or so. And it is not 1,000 towers, it is tens of 1000’s of towers that we’re speaking about. I feel the primary spherical was like 15,000 after which it’ll proceed to develop as they transfer out.
And I had talked about on the final name that it took a while to get the product to have the ability to combine into these methods and with important testing. And that has already gone by the testing, in approval course of with the shopper. And as we stated on the opposite name and in press releases, we’re making an attempt to do a seed unit sort of atmosphere. After which we did that and we already get the second order for the cameras for added cell towers. And as they proceed to develop and develop, there must be additional buy orders all year long subsequent 12 months. Of what magnitude and what precisely that appears like too early to inform.
Joseph Nerges: However clearly, we’re simply speaking about 1 cell tower buyer right here. What number of different clients may we presumably combine? Have we signed — have we at the moment signed any OEM agreements within the IIoT atmosphere? I imply the — the man that is — the provider of the black field, he could be, I assume, a possible OEM provider for the IIoT market. Have we signed contracts with these individuals as of but? For OEM deployment…
Victor Dellovo: Not but.
Joseph Nerges: Not but? So that will be the following stage. And I am assuming that is a precedence for our gross sales staff going ahead. Is signing up as many of those OEM suppliers as potential.
Victor Dellovo: After all.
Joseph Nerges: Am I right? Am I mistaken in that? You’ll be specializing in…
Victor Dellovo: No, you are right.
Joseph Nerges: Effectively, I feel the numbers are nice. I notice I do know what the issue is, is just we want the time to get rollouts — full rollouts in a few of our clients. I am assuming our solely full rollout of AZT PROTECT is in our pharmaceutical firm. A lot of the different…
Victor Dellovo: That is right.
Joseph Nerges: Clients we have now, have deployed it in particular person crops or tools, however not totally roll them out. So whenever you’re saying you are anticipating the complete rollout over the following 12 months to 2 years, I assume that is what you are speaking about.
Victor Dellovo: Sure. In some circumstances, we’re speaking to completely different corporations about doing like an enterprise settlement the place centralized buying would buy it after which roll it out to all of the places. And in some circumstances, I feel I discussed on the final name, we have now to speak plant by plant. So since we had one preliminary plant that we bought to quarter, we bought it to a second one or a 3rd one. So it simply takes time based mostly on simply having to speak to 50 or 80 or 120 crops individually. In order that takes time attending to — it is simpler than getting the primary one in, nevertheless it’s nonetheless a gross sales course of.
After which in some circumstances, we’re speaking to corporations on the buying degree the place they need to minimize one potential buy order for all places, which, in fact, makes our life so much simpler and hastens the timeframe on after we can get the acquisition order over the road.
Joseph Nerges: Another follow-up on that. And I am assuming that each one of those potential clients have already got contracts signed of their OT atmosphere cybersecurity contracts. So am I right in a few of these clients may be ready for that contract to run out earlier than they enter a brand new contract with a brand new provider like us?
Victor Dellovo: In some circumstances, sure. In some circumstances, sure. So generally that the competitors will not be supporting older variations of software program. So one of many power corporations we bought to, that is what occurred. They stopped supplying the product that they are at the moment utilizing, which I do not need to point out, they cease supporting older variations of Microsoft. So we took over these couple of thousand units as a result of there — they don’t seem to be prepared at this stage to throw them out fully, however a minimum of we’re in there and we’re selecting at it slowly.
Joseph Nerges: All proper. I respect the solutions. Good luck going ahead. It feels like ’26 could possibly be a extremely good 12 months for us.
Victor Dellovo: Did you benefit from the present, Joe?
Joseph Nerges: Sure, aside from one factor. I got here again with a chilly and I nonetheless have it. I am nonetheless making an attempt to eliminate the chilly. However the present was actually good. Plenty of clients got here by they usually appear fairly effectively engaged. Now closing these guys is one other story, however the numbers are there to from what I noticed to hopefully get some fairly critical contracts within the not-too-distant future. So Sure, I respect inviting me to the present anyway.
Operator: Your subsequent query is coming from Will Lauber from Visionary Wealth Advisors.
William Lauber: Simply had a few questions. I suppose I used to be at that Rockwell present as effectively for, I suppose, a day and a morning. I did not get to see the entire thing, however positively noticed fairly a little bit of site visitors and the time was there. If I sort of bear in mind proper, a lot of the clients that you simply guys have gotten over the past 12 months the connections have been made at that Rockwell present a 12 months in the past. Is that true?
Victor Dellovo: That’s right. Sure. A lot of the orders that we acquired all got here from the Rockwell. In order that’s been our largest method of getting leads.
William Lauber: Okay. After which are you able to sort of quantify the variety of leads you bought final 12 months versus this 12 months after which I suppose, together with that, perhaps the standard of leads, I assume it is in all probability higher this time as a result of I observed numerous your distributors bringing their clients to the sales space. In order that’s so much higher than simply some random particular person strolling by your sales space and speaking to you.
Victor Dellovo: Proper. Sure. I am glad you observed that the distributors, the CDs, the Sonepar, the Rexel. They — this 12 months being comfy with the product, having closed some alternatives that have been far more comfy. It was an introduction final 12 months on the present, the place this 12 months, we have now a relationship. So that they introduced a variety of their clients. There’s been a variety of follow-up already. There’s been a variety of appointments already arrange our preliminary calls. Sadly, the timing of the present is such as you acquired Thanksgiving proper off of the next week. So everyone sort of takes that week off.
So it has been the final 2 weeks the place we’re in a position to get in contact with a variety of the people and arrange preliminary conferences and their follow-up conferences proper after Christmas. Simply because we’re again to again on these holidays as you see match. However sure, we in all probability acquired a 50% enhance in leads this 12 months than over final 12 months. I’ve — we’ve not gone by all of them but at this stage, however they appear to — we positively have much more preliminary conferences than we did it rapidly based mostly on the relationships we do have with the Rexels of the world in CDs and Sonepar, however to arrange conferences instantly for us.
So sure, we’re very optimistic that we closed a variety of offers final 12 months due to this present. My aim is to shut double if we may, proper? We now have about 50% extra of the leads, and I feel we have now a greater relationship with them. We now have a greater fame. They sort of know us now. We now have a variety of installs. So sure, I am trying ahead to 2026.
William Lauber: Sure, that was extra leads than I believed. In order that’s good.
Victor Dellovo: Sure. You have been there. Our sales space was all the time full, proper? You by no means noticed nobody that — we had 2 demos going virtually all day for the entire 8 hours that the present was there.
William Lauber: It was good. After which I do know — I imply, you guys have in all probability one of many smaller boosts and I am positive that prices you fairly a bit. However I feel it is in all probability cash effectively spent producing all these leads.
Victor Dellovo: Sure. Undoubtedly, positively.
Operator: Your subsequent query is coming from Mike Worth.
Unknown Analyst: You did not point out Acronis, and I used to be questioning if AZT is being built-in into Acronis’ software program, is there not predictability so far as income is anxious? And if that is the case, are you able to give us an thought of what that may be?
Victor Dellovo: Effectively, it’s being built-in about what the projections are on that, I feel it is too early to inform. We’re working diligently to get that carried out over the following few months. However as quickly as I’ve some info I can share, I positively will.
Unknown Analyst: So how quickly do you suppose we begin seeing some income? Is that this one thing a few months late 2026, some sort of time-frame? It looks like it must be a reasonably important quantity. Is it not?
Victor Dellovo: I feel it is too early. Our hopes for each events is that it should be important for each of us. We fill a spot that they’ve. In order that’s sort of how we put this collectively, however what income seems to be like, I feel it is simply method too early for me to even guess at this level what that’s, however our hopes that it should be important for each events. I do not suppose Acronis as being as huge as they’re, would staff up with us in the event that they — and waste their time in the event that they did not suppose it was value their effort and time.
Unknown Analyst: Okay. And final convention name, I requested you concerning the relationship with a few of the resellers. Particularly UFT the place with the unique press launch, they’ve 16,000 clients within the water and wastewater space. And also you stated that there are issues within the works that will be mentioned later. Do you’ve gotten any extra mild on that?
Victor Dellovo: I do. So the powers to be at UFT needed to get 3 websites carried out after which do case research on these 3. So that is what’s occurred over the past couple of months. Their clients transfer slower than they want, however we’re on weekly calls with updates. After which within the new 12 months, it is a full steam forward to a variety of their clients are doing main advertising and marketing occasions collectively with their 16,000 clients doing attain out. However they wanted case research, they wanted to alter authorized agreements. There was so much that they needed to do on their aspect to get this prepared and I am a bit of bit at their mercy, however the relationship is robust.
We closed 3 alternatives over the past quarter. That was a part of the case research that they are writing up now.
Unknown Analyst: Okay. And one final fast query. Final quarter, to procure some shares, however are you not topic to the identical — the corporate is topic to the identical guidelines as insiders so far as shopping for shares. So now that you simply’re reporting earnings so late inside 2 weeks of the top of the primary quarter, you possibly can’t purchase shares till subsequent earnings. Is that the case?
Gary Levine: Sure, just about. Sure.
Unknown Analyst: So principally the blackout for share repurchase was from mid-September till mid-February whenever you subsequent report. Is that right?
Victor Dellovo: Effectively to the fifteenth of the month of December. And we’re right here now simply due to when the year-end reporting. [indiscernible].
Unknown Analyst: You final had a window inside 2 weeks on the finish of the fiscal 12 months, mid-September. Due to the late reporting is inside 2 weeks on the finish of the primary quarter, you can not purchase shares once more till you report earnings in all probability mid-February. Is that right?
Victor Dellovo: Appropriate. That is right.
Operator: [Operator Instructions] Your subsequent query is coming from Brett Davidson.
Unknown Analyst: I need to flip again to the fog surrounding the Acronis or [ Acranis ] or nonetheless the names pronounced. So I perceive that a variety of that is endpoint protected, the income era. How does that work with the Acronis system. Who’re you going to be recognizing the income from? Is that coming from Acronis or is that coming from their finish person?
Victor Dellovo: Will probably be coming from a Acronis. And it is a bit of completely different with what we’re doing with them. We’re concentrating on scanning the backups earlier than Acronis does the backups to verify there is no all of the content material is secured, and there is nothing inside that. After which they might set off the backup. And that is the place the benefits are scanning of all the data that is earlier than the backup happens, we might scan it and certify that there is nothing mistaken with it, after which they might the backup go. So in the event that they ever needed to do a restoration, it might be a secured restoration.
Unknown Analyst: So is that this going to go on…
Victor Dellovo: So Acronis will likely be our buyer on the finish.
Unknown Analyst: Is that this going to go on each a type of units that they are producing? Or is it going to be based mostly on what their buyer desires? Or that is robotically going to be thrown on their units?
Victor Dellovo: No, they might nonetheless must promote it to their buyer. That is the way in which it’s proper now. If it will get to the extent that you simply simply stated that will be — we’re not there but, let’s put it that method. They acquired to go some to their industrial clients, which I can not point out they usually have to point out it as an added worth.
Unknown Analyst: And it should work related. That is going to be like a subscription sort factor that can renew sooner or later?
Victor Dellovo: Sure.
Unknown Analyst: Excellent. And the one different factor that I had questions on was relating to the income subsequent 12 months. Is that this one thing the place we may fairly count on incremental will increase in income all year long? Or it is simply so in every single place that you simply simply do not have that sort of perception into what — how that is going to play out.
Victor Dellovo: The latter. The latter…
Operator: That concludes our Q&A session. I will now hand the convention again to Victor Dellovo for closing remarks. Please go forward.
Victor Dellovo: Thanks, everybody, for becoming a member of us right this moment. We hope you’ve got come away right this moment’s name with a way of pleasure from our fourth quarter outcomes and our alternative for fiscal 2026. We’re working extraordinarily laborious to capitalize on the alternatives we have now had within the service aspect of our enterprise in addition to the AZT PROTECT, and we sit up for reporting on our progress with you in February of subsequent 12 months. Within the meantime, thanks to our shareholders for his or her assist, to our staff for his or her dedication and energy, and we want everybody a contented holidays. Goodbye for now.
Operator: Thanks. Everybody, this concludes right this moment’s occasion. You might disconnect presently, and have an exquisite day. Thanks to your participation.
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CSPi (CSPI) This autumn 2025 Earnings Name Transcript was initially printed by The Motley Idiot
