CSP Inc (CSPI) reported a decline in revenue for the fourth quarter of 2024, with figures dropping to $13 million compared to $15.3 million in the same quarter last year. The company also posted a net loss of $1.7 million, or $0.18 per share. Following these results, CSP's stock price fell by 7.88%, reflecting investor concerns over the company’s financial health.
Key Takeaways
- CSP Inc reported a decrease in both quarterly and annual revenue.
- The company experienced a significant drop in its stock price following the earnings release.
- Recurring revenue increased, showing a positive trend amid financial challenges.
Company Performance
CSP Inc's performance in Q4 2024 saw a notable decline in revenue, dropping from $15.3 million in the previous year to $13 million. This decrease continues a downward trend, as the company also reported a full-year revenue of $15.2 million, significantly lower than the $64.6 million recorded in the prior year. The net loss for the quarter was $1.7 million, or $0.18 per share, highlighting ongoing financial challenges.
Financial Highlights
- Revenue: $13 million in Q4, down from $15.3 million year-over-year.
- Full Year Revenue: $15.2 million, down from $64.6 million the previous year.
- Net Loss: $1.7 million in Q4, $300,000 for the year.
- Gross Profit Margin: 28.4% in Q4, down from 33.8%.
- Cash and Cash Equivalents: Increased to $30.6 million from $25.2 million.
Earnings vs. Forecast
Due to the absence of specific forecast data, a detailed analysis of earnings versus expectations is not possible. However, the reported figures indicate a miss compared to the previous year's performance.
Market Reaction
CSP Inc's stock price fell by 7.88% following the earnings announcement, closing at approximately $15.2. This decline suggests investor disappointment, likely due to the reported financial losses and reduced revenue. The stock's performance is within its 52-week range, yet significantly lower than its high of $29.93.
Company Outlook
Looking ahead, CSP Inc aims to grow its recurring revenue by 10-15% annually, with a goal to double it within 24 months. The company is also focusing on expanding its AZT Protect distribution and expects potential profitability of around $0.56 per share without further investment in AZT.
Executive Commentary
CEO Victor Dellovo highlighted the company's strategic initiatives, stating, "If we could double again in the next 24 months, that would be something that would be we'd be proud of." He also emphasized the importance of building a distribution network for AZT Protect, noting, "AZT is truly a startup we're building we have to build a whole food chain for distribution."
Q&A
During the earnings call, analysts inquired about CSP Inc's partnerships, including potential collaborations with NVIDIA (NASDAQ:NVDA) in robotics. The company also discussed ongoing Proof of Concepts and hinted at possible government contract expansions.
Risks and Challenges
- Continued revenue declines could affect investor confidence and stock performance.
- Competition from larger cybersecurity firms poses a threat to market share.
- Economic uncertainties and market saturation may hinder growth prospects.
- The company’s reliance on expanding its AZT Protect product may face challenges if distribution efforts do not succeed.
Full transcript - CSP Inc (CSPI) Q4 2024:
Alan, Conference Operator: Greetings, and welcome to CSP Inc. Fiscal 4th Quarter and Full Year 2024 Conference Call. At this time, all participants are in a listen only mode and a question and answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr.
Michael Poliviou. Sir, you may begin.
Michael Poliviou, Investor Relations, CSPI: Thank you, Alan. Hello, everyone, and thank you for joining the SIRUI CSPI's fiscal 4th quarter and full year 2024 financial results, which ended September 30, 2024. With me on the call today is Victor Dellovo, CSPI's Chief Executive Officer and Gary Levine, CSPI's Chief Financial Officer. After Victor and Gary conclude their opening remarks, we'll then open the call for questions. During the Q and A session, we ask participants to limit themselves to one question and one follow-up question and then re queue if they have additional questions.
Statements made by CHPI's management on today's call regarding the company's business that are not historical facts may be forward looking statements as the terms identified in federal securities laws. The words may, will, expect, believe, state, project, plan, intend, estimate and continue as well as simple expressions are intended to identify forward looking statements. Forward looking statements should not be meant as a guarantee of future performance or results. The company cautions you that these statements reflect current expectations about the company's future performance or events and are subject to several uncertainties, risks and other influences, many of which are beyond the company's control, and that may influence the accuracy of the statements and the projections upon which the segment and statements are based. Factors that may affect the company's results include, but are not limited to, the risks and uncertainties discussed in the Risk Factors section of the Annual Report on Form 10 ks and the quarterly reports on Form 10 Q filed with the Securities and Exchange Commission.
Forward looking statements are based on the information available at the time those statements are made and management's good faith belief as of the timing with respect to future events. All forward looking statements are qualified in their entirety by this cautionary statement and CSPI undertakes no obligation to publicly revise or update any forward looking statements, whether as a result of new information, future events or otherwise after the date thereof. With that, I'll turn the call over to Victor Dellovo, Chief Executive Officer. Victor, please go ahead.
Victor Dellovo, Chief Executive Officer, CSPI: Thanks, Michael, and good morning, everyone. Our 4th quarter and full year financial results came in pretty much as expected when we last talked with you in August. Recurring revenue, which has been an area we have committed to growing, increased 17% of the total sales compared to less than 5% of sales just a couple of years ago. Overall, we finished the year with more than $30,000,000 in cash and cash equivalents as of September 30, 2024. Our Technology Solutions business generated approximately $12,700,000 in sales in the Q4 of fiscal 2024.
We finished the quarter with plenty of momentum. For example, very little of our fiscal Q4 revenue came from our cruise ship customers. However, towards the end of the quarter and during the current fiscal Q1, we've seen a pickup in the business, including the signing of a large order that should be executed during the next fiscal year. It was the 1st cruise ship order for professional services for our company in many quarters and piggybacks on the continued consistent momentum we built in the ocean freightliner market. Our freightliner operation customer continues to add new ships and choose to utilize our managed service offering following the retrofits, which have led to increase in recurring revenue.
We continue to see increased demand for our cloud clients who want to migrate the consumption of these services to our cloud group. We also have a dozen active cloud based projects to accommodate the growth. We continue to invest in people and process to provide managed service to assist in our clients with the day to day operations of these environments. The pipeline remains very encouraging, so we are optimistic about our opportunities to grow the overall TS sales, especially the recurring revenue piece during the coming fiscal year. On the HPP side of the business, for the Q4 of fiscal 2024, we reported revenue of $400,000 mostly from ARIA based customers.
Also, as we discussed in the prior conference call, we were in the process of transitioning our AZT Protect sales effort being led by Greg Fischer, an experienced 20 year OT industry sales veteran who joined us in July of 2024 has redirected the organization to maximize our relationships with Rockwell Automation (NYSE:ROK) and other distribution partners. In the short amount of time, we've made significant progress in building the market for this unique product and we entered the new fiscal year with great potential from Rockwell and the other distribution partners that primarily serve the middle market OT customers, which tend to have shorter sales cycles than the larger OT organizations. Our internal team will continue to address the large individual corporate OT buyers with the sales cycles extending up to 18 months, while they work closely with the distributors to build the short term revenue from the middle market customers. An example was a deal we announced with a Fortune 500 electric energy producer that selected ARIA Cybersecurity AZT Protect to protect its critical OT infrastructure from malicious cyber attacks. This was the first order of many to come as we will be as it will be a few 1,000 endpoints over the next 3 years.
We will assist with the rollout as fast as the customer will allow. We believe this approach will result in a noted upturn in AZT Protect sales in fiscal 2025 unfolds. Working with Rockwell Automation and other distribution partners, our sales team has quickly expanded the leads for AZT Protect to over 100. Many of these leads were generated from the Rockwell Automation Fair back in late November of 2024. But Gary Southwell, our Vice President and General Manager of High Performance Products presented an in-depth view of the latest attack techniques and their financial impact.
Gary's presentation was one of the show's hits and was a major reason why we generate so many leads from our participation. We also had a booth at the American Petroleum Institute Show for oil and natural gas in Houston, where we began a relationship with several large companies. We further expanded HD Protect's awareness in the market by attending the Industrial Control Systems Security Week Show in Atlanta. While we work to convert the leads generated from these activities into AZ Tech sales during the fiscal 2025, we will be supporting additional regional trade shows events with our distributors throughout the year. I strongly believe the interest we are generating at the trade shows is fostering by 9 major industry awards from AZT Protect has received since its launch, including the winner of the application security category
Joe Nerges, Investor, Seagrin Investments: at the 2024
Victor Dellovo, Chief Executive Officer, CSPI: 4RS Cybersecurity Award presented by Business Intelligence Group. Our efforts to sign new distributors and gain new customers has also benefited from the July CrowdStrike (NASDAQ:CRWD) update failure that exposed the risk continues cloud updates can have on critical OT applications, including industrial automation industry control systems. There is a recognition from the industrial automation vendors and the distribution channels that the traditional IT focused endpoint protection methodologies were not meeting their requirements. We believe companies using AZT protection capabilities can prevent 0 day malicious code from taking critical systems down out of the box without having seen it before and then relying on cloud updates to block such attacks. We've proven this capability in the field under real life operational circumstances.
This alternative approach to protect industrial control service is being received as a welcome news by Rockwell Distributor Partners. The Rockwell Show was the mechanism needed to bring this news into the ecosystem. From there, we believe we can expand into other markets. We have one agreement already completed and 3 others in process with top tier U. S.-based Rockwell distributors, allowing our U.
S. Team to work directly with the distributor sales teams to map out Targa's accounts to approach together. In summary, when we consider AZT Protect market momentum and the emergence of the Rockwell partnership, the growth of the managed service business and the pickup in the cruise lines, we have a potential to return growth during the fiscal 2025. With that, I will now ask Gary to provide a brief overview of the fiscal Q4 financial performance.
Gary Levine, Chief Financial Officer, CSPI: Thanks, Victor. For the Q4 ended September 30, 2024, we reported revenue of $13,000,000 compared to revenue of $15,300,000 for the fiscal Q4 ended September 30, 2023. Revenue was relatively flat compared to 20 24 fiscal 3rd and second quarters. Service revenue represented $4,400,000 of overall sales compared to the year ago service revenues of $4,300,000 Gross profit for the 3 months ended September 30, 2024 was $3,700,000 or 28.4 percent of sales compared to $5,200,000 or 33.8 percent of sales, reflecting a higher percentage of product sales. Gross margins on our service revenue increased 160 basis points from last year's comparable figures.
The company reported a net loss of $1,700,000 or $0.18 loss per common share for the Q4 ended September 30, 2024, compared to net income of $1,400,000 or $0.15 per share per diluted share for fiscal Q4 ended September 30, 2023. We had cash and cash equivalents of $30,600,000 as compared to $25,200,000 at the end of our 2023 fiscal year. The robust sales the robust balance sheet ensures that the company has the resources to implement the AZT Protect product offering and other growth strategies. During the Q4 of 2024, the company repurchased 2,800 shares of stock at a total cost of $34,000 and the Board of Directors has approved the payment of a $0.03 per share quarterly dividend to shareholders of record at the close of business on December 27, 2024 payable on January 15, 2025. For the fiscal quarter, our engineering and development expenses were $793,000 compared to $705,000 The increase was for outside consulting and stock compensation.
Our SG and A was $5,500,000 compared to $4,800,000 in the year ago fiscal Q4. The increase was based on increased legal, audit and tax and recruiting expenses. For the full year ended September 30, 2024, revenue was $15,200,000 compared with revenue of $64,600,000 in the prior year. Gross profit for the fiscal year was 18.9 $1,000,000 or 34.1 percent of sales compared to $21,900,000 33.9 percent of sales with the decline largely attributed to product mix. We reported a net loss of $300,000 or $0.04 per diluted share in the fiscal year ended September 30, 2024 compared to the net income of $5,200,000 or $0.55 of income per diluted share for the fiscal year ended September 30, 2023.
With that, I will turn it over to the operator to take your questions.
Alan, Conference Operator: Thank you. At this time, we will be conducting our question and answer Our first question is coming from Joseph Nerges with Seagrin Investments. Sir, your line is
Joe Nerges, Investor, Seagrin Investments: Good morning, guys. How are you today?
Victor Dellovo, Chief Executive Officer, CSPI: Good morning, Jim. Good morning, Jim.
Joe Nerges, Investor, Seagrin Investments: Just one quick accounting point here. Gary, last year, I think you mentioned in our 4th quarter that we had a credit of $2,100,000 for employment retention credit in our reporting of Q4 of last fiscal year. So that obviously that number and when we're comparing Q4 this year versus Q4 last year, that credit didn't fall into this year. So that's a considerable number.
Gary Levine, Chief Financial Officer, CSPI: Absolutely, yes.
Joe Nerges, Investor, Seagrin Investments: I'll go on to the not really question, but we talked about last year, Victor, quite a bit, we call proof of concept. And I realized the trade shows that you referred to were very recent. In fact, we were in one last week, I believe, in Oman. Correct. But the Rockwell was last month and then the Atlanta show, I think, was the month previous, whatever.
So I'm assuming there's an enormous amount of leads come out of all those shows. But do we have any proof of concepts? Have we started testing any of these companies or even prior to where are we at today with testing? How many people are out there? How can I say testing AZT Protect today?
Victor Dellovo, Chief Executive Officer, CSPI: Yes. From the shows, the one for Rockwell, it was right before Thanksgiving and then you had Thanksgiving and then it's literally only been like 10 business days that we've been able to contact those. But yes, there's been a lot of conversation, but the one that was overseas, we actually are starting a POC, believe it or not, on Sunday that happened already just in a week. So yes, there's been a lot of activity, a lot of conversations, and a lot of people like the POCs will start after the New Year. They're kind of already on vacation mode, but there's been a lot of good conversations and a lot of things that we have to follow-up on the New Year.
Joe Nerges, Investor, Seagrin Investments: Yes. But even prior to that, Victor, we've had proof of concepts ongoing even from earlier this year. Yes.
Victor Dellovo, Chief Executive Officer, CSPI: And those will continue. I think maybe I misunderstood your question, but like I thought you meant new just from those recent shows. But yes, we have probably more than a dozen of POCs going on in various stages. The one that we closed with the energy company recently that was over a year POC and we finally got awarded and there's some other that we're waiting. The POCs are done and now we're just waiting either for budgets or we're waiting to see if we were the last one standing on in the POCs.
And a lot of them had said to us that decisions will be made in January. I don't know if that's true or not, if it moves, but we are waiting for a couple very promising things in January. So hopefully they come through.
Joe Nerges, Investor, Seagrin Investments: And just to clarify, you've made PRs on this before, but we have 3 Fortune 500 companies now that are utilizing ACT Protect. A chemical company, the power company that we just referred to and the pharmaceutical company that we announced earlier this year. Correct. As well as the government, the Western Intelligence Agency that are utilizing ACT Protect. So we're not talking about small customers here that have looked at it and approved it.
I just want to clarify that.
Victor Dellovo, Chief Executive Officer, CSPI: Yes. And hot off the presses, just keep your eyes out there's there'll be something coming out early next week on another nice win. So I'll just
Joe Nerges, Investor, Seagrin Investments: give you that. All right. I appreciate that. And one other point on the stock buyback, I realized 2,800 shares. All I'm saying is, I think you guys and the Board ought to get maybe slightly more aggressive.
I know we have a little more volume in the shares now than we did a year ago. But so we can't we can buy more shares under the market conditions. But I would think that you guys should be seriously considering maybe upping the amount of shares that can be repurchased under the program. And I'll move on to somebody else's questions. Thanks again guys.
Victor Dellovo, Chief Executive Officer, CSPI: Thanks Joe.
Alan, Conference Operator: Thank you. Our next question is coming from Will Lowber with Visionary Wealth Advisors. Your line is live.
Will Lowber, Analyst, Visionary Wealth Advisors: Yes. Guys, just so people can realize and help us get a handle on how much money you guys are putting into this ADT effort for hopefully a huge payoff down the line. What would the earnings have been that division for this year?
Gary Levine, Chief Financial Officer, CSPI: But it was a loss. So I
Michael Poliviou, Investor Relations, CSPI: mean No,
Victor Dellovo, Chief Executive Officer, CSPI: you said if you're taking out if you took out AZT, if it was just TS, it would
Gary Levine, Chief Financial Officer, CSPI: Yes. Yes, definitely. It would be profitable.
Victor Dellovo, Chief Executive Officer, CSPI: It will be very profitable, yes. Yes, that's one thing that I have to understand. The TS is doing really, really well. They have the cash cow that's paying for all this R and D for AZT. And to grow the cash position and to have a true start up and only have a small loss for the whole year.
Like I said, people want earnings, they want dividend, they want cash growth, they want AZT is truly a startup we're building we have to build a whole food chain for distribution. There's a lot going on right now. But now that in building the sales team, getting partners, there's a lot going on that side of it. And then we had Myricom sales last year. And unfortunately, because that product was over 20 years old, The big distributor or manufacturer actually that was building the boards no longer will build the board.
So all that Myricom business from last year went away. There are some pieces and parts that we still sell, but they're minimal now. If you really look at it, where we were and where we are in to Joe's point, our big customers that we have closed are all Fortune 500 customers. And that's where a lot of the testing, it took a lot of time through the POCs, but now we have 4 customers that are using it, that are happy. And now we're just, like I said, building out the food chain to try to get in front of more people, building on name recognition, which is like I said on a prior call is one of the things that I think is just because of our size and our name, it takes a lot more effort to get that sale over the fence just because we're competing with some other multi $1,000,000,000 companies in this space.
Will Lowber, Analyst, Visionary Wealth Advisors: Okay. Could you guys put an approximation on it? I mean, could we have earned $1 a share?
Victor Dellovo, Chief Executive Officer, CSPI: Yes, more than that, yes.
Will Lowber, Analyst, Visionary Wealth Advisors: More than $1 a share? Yes. Okay. Okay. And my next question was, the increase in your recurring revenue as a percentage is pretty impressive.
When you look out, say 3, maybe 5 years down the line, what percentage do you think that could be and what's kind of your internal goals?
Victor Dellovo, Chief Executive Officer, CSPI: If we could double again in the next 24 months, that would be something that would be we'd be proud of. And that's where we're very, very focused on that recurring revenue piece of it, especially in the cloud, the Microsoft (NASDAQ:MSFT) business that we're bringing we're continuing to grow, the engineers, the support staff and the sales staff along with it. And then the MSP, once if we could get into the cloud play, the MSP usually comes after that. So they're definitely they're adjacent to each other. If we can get one, we usually get the other.
So yes, our goal is to grow that as fast as possible. There's no limits on what we want to do, but at least a 10% to 15% growth minimum year over year, if not more.
Michael Poliviou, Investor Relations, CSPI: Okay. To
Gary Levine, Chief Financial Officer, CSPI: answer your question, it would be about $0.56 per share.
Will Lowber, Analyst, Visionary Wealth Advisors: Okay. All right. Thank you.
John Crotty, Private Investor: Yes.
Alan, Conference Operator: Thank you. Our next question is coming from John Crotty, who is a private
Victor Dellovo, Chief Executive Officer, CSPI: investor. Your line
John Crotty, Private Investor: is live. Hi. Thanks for taking my question. Investor. I want to just say congratulations on the S-five hundred energy company.
18 months is a long POC. I understand I've been involved with a few and good job, especially having the patience. And for us investors, we need to have the patience of a dead person. So we're with you right along with it. Anyway, you've talked a lot about the Rockwell and I read a lot and that really seems like a great partnership with lots of leads.
But I want to talk about the other partnerships you have. You have the large one in Australia. You mentioned there was a smaller one in the Middle East and then we had a larger one that was out in the U. S, I believe in the East Coast with a lot of clients. Could you give us any feedback on that in terms of are they running proof of concepts?
Do they have a large pipeline or any type of any info like that?
Victor Dellovo, Chief Executive Officer, CSPI: The partner in Australia, they're not the largest partner, but we do have some POCs going on with them. They are good sized opportunities. And they're not in the commercial sector, so things do take time there, but they are progressing. And yes, the partners that we're focused on right now with the Rockwell is because we're really focused on that OT space and because we have the approval from Rockwell as a certified partner, that's kind of where our focus has been because getting into some of the other manufacturers takes time. Rockwell took us almost 2 years to get approved inside as a certified partner.
So we're working with some of the other big manufacturers. We're in different stages of getting approval, as a certified partner that can work inside their stack. So yes, everything is moving just at different paces, just depending on how fast in some of these large organizations, unfortunately, people leave, move or get fired. And sometimes you take 2 steps forward and then someone leaves and you got to reeducate the new person and we've seen that happen in some of these large manufacturing companies.
John Crotty, Private Investor: Yes, I agree. Go for the low hanging fruit because they're pushing you through. I agree. I also want to talk about what you mentioned a couple of calls ago that some of the government win that you had, they had many other divisions or departments or areas that were waiting for budgets to add it in. Is anything moving along with increasing any of the opportunities with existing customers, especially like you had mentioned with the Western Intelligence?
Victor Dellovo, Chief Executive Officer, CSPI: Yes, there's another opportunity I think that has moved forward. Timing on that is not I'm not exactly sure, but there is a deal that I feel like in the next 90 days, we're hoping that will come in. And that's all I can say about that.
John Crotty, Private Investor: Okay. No, that's fair enough. And I know you have a lot of non disclosures you got to be cautious with.
Joe Nerges, Investor, Seagrin Investments: No, that was it.
John Crotty, Private Investor: That's what I wanted just to follow-up. Everything else read through and I like the response. And I like $0.56 a share on just the TS side. So that's good. All right.
Thank you so much. Keep up the good work guys.
Victor Dellovo, Chief Executive Officer, CSPI: Thank you.
Alan, Conference Operator: Thank you. Our next question is coming from Douglas Johnson, who is a private Your line is live.
John Crotty, Private Investor: Yes. How large are these AZT contracts you have with these 3 Fortune 500 companies?
Victor Dellovo, Chief Executive Officer, CSPI: Well, I can't disclose exactly, but one of them is in the millions and the other ones, as I mentioned in the script, we're looking to get adopted inside their infrastructure. And some of these were what was left in the current budget. And then we'll roll out, I mentioned the Big Energy, they have thousands of systems that they told us it could take up to 3 years to roll them out. We're hoping to speed that up by us doing or assisting with the installation. But there are thousands of endpoints and it's how they roll out and how fast is kind of up to the customer.
Will Lowber, Analyst, Visionary Wealth Advisors: Okay. Thank you.
Alan, Conference Operator: Thank you. Our next question is coming from Jeffrey Stevens with Longpond Capital. Your line is live.
Jeffrey Stevens, Analyst, Longpond Capital: Yes. What's going on guys?
Victor Dellovo, Chief Executive Officer, CSPI: How are you doing?
Jeffrey Stevens, Analyst, Longpond Capital: Yes. Good. I want to look I look back a couple of years ago, and you guys had a relationship with NVIDIA, which are You guys were you guys did a little announcement with them that their hardware and their software. Is it possible that have you had conversations with them for AZT?
Victor Dellovo, Chief Executive Officer, CSPI: Yes. We definitely have had conversations with them. That was one of the examples where some of the powers to be that we were talking with kind of moved on. So we kind of had to start from scratch a little bit on some of the contacts there. But there's definitely conversations.
They're not moving as fast as we would like, but we do have some relationships there and we're talking more in their robotic area. That's kind of where we want to focus on AZT in that area. What comes from it, I can't say, but that's kind of our goal and our focus with those guys.
Jeffrey Stevens, Analyst, Longpond Capital: All right. Well, thank you so much.
Victor Dellovo, Chief Executive Officer, CSPI: Thank you.
Alan, Conference Operator: Thank you. Our next question is coming from Brett Davidson, who is a Private Investor. Your line is live.
Brett Davidson, Private Investor: Gary, Victor, happy holidays.
Victor Dellovo, Chief Executive Officer, CSPI: How are you Brett? Same to you Brett.
Brett Davidson, Private Investor: I'm doing good. Just got a couple of I'm going to limit it to one question. It's just going to be a multipart. I'll link it with and. Is there any legacy stuff at all going out in the E-2D program?
And can you give a little color on those UCaaS contracts that were announced in the last quarterly earnings release?
Victor Dellovo, Chief Executive Officer, CSPI: There is going to be a little E-2D next year. It was supposed to be in this quarter. They moved it. So we're thinking it's going to be Q1. It could move out, but that's coming, as you note, towards the end.
It is at the end of its career. But we believe there'll be one more next year in 2025. And then there'll be some pieces and parts, we're guessing over we're not sure exactly. And then on the UCaaS, we continue just to grow that business, bring in new clients. There's been a few that we sold a deal last quarter, but it took some time to implement and we turned on the billing in this quarter.
So it will continue to grow over time. And these are usually 3 year contracts.
Brett Davidson, Private Investor: Got it. And so that's this quarter and any headway since then?
Victor Dellovo, Chief Executive Officer, CSPI: Yes. The pipeline looks pretty good on UCaaS and we're constantly we're bringing on 1 or 2 customers consistently every quarter of all sizes. And it's a monthly recurring, so it's not like you get a big pop, you get whether it's 5,000 or 20,000 or whatever the number may be, it's on a monthly basis. Like I said, we're focused on our recurring revenue at this stage of the game. We'll still sell the product and services as we do.
And I mentioned one of the cruise lines finally gave us a nice close to $1,000,000 professional service contract that will roll out over 2025. Yes, we're focused on either professional services because it's high margin or any of the recurring revenue and we try to do like multi year deals on pretty much everything we do. Microsoft is a little different. You either get 1 year or monthly, but that's because it's a program that they offer.
Brett Davidson, Private Investor: Got it. Well, thank you very much.
Victor Dellovo, Chief Executive Officer, CSPI: Yes. Have a good one. Happy holidays. Thank
Alan, Conference Operator: you. Thank you. Okay. As we have no further questions in queue at this time, I'd like to hand the call back over to Mr. Delovo for any closing comments.
Victor Dellovo, Chief Executive Officer, CSPI: Thank you. As always, I want to thank our shareholders for their continued interest and support. Good things are happening at CSPI and AZT Protect in generating more interest and gaining more and more momentum in the market. The increased activity we are experiencing is exciting and we look forward to updating you on our progress in February. Until then, best wishes for a healthy happy holiday season.
Thank you.
Alan, Conference Operator: Thank you, ladies and gentlemen. This concludes today's call and you may disconnect your lines at this time. And we thank you for your participation.
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