CSP Inc. (NASDAQ:CSPI) Q1 2023 Earnings Call Transcript

Joseph Nerges: And one other point I want to make just basically a statement. There’s a great deal of current hype around artificial intelligence between Microsoft buying into it, Google buying into it. And I just want to make the point, that have we not incorporated artificial intelligence in our area platform two to three years ago?

Victor Dellovo: Yes, we did absolutely, yes.

Joseph Nerges: So somewhere I lag. I’m just trying to say, we’re not behind the game in that particular aspect, let’s say, but again thanks so much guys.

Gary Levine: Thank you, Joe.

Victor Dellovo: No, yes. Thank you, Joe talk to you soon.

Joseph Nerges: Yes.

Operator: Your next question is coming from Brett Davidson with Investletter. Please pose your question, your line is live.

Brett Davidson: Good morning.

Victor Dellovo: Good morning, Brett.

Brett Davidson: I’m not much of a morning person, but let’s just say that helps. I just got one quick question. Well, Joe already touched on the cruise business, which I was going to get an update on that. The High-Performance Product, I know you indicated that the supply chain is still an issue. If you could have gotten your hands on everything you needed, what – if you could give me an estimate of what the additional sales volume would look like over there?

Victor Dellovo: On the HPP or the total company?

Brett Davidson: No, the HPP I mean, with the product sales, what the Myricom stuff, what would it have looked like if you guys could have gotten your hands on all the parts that you needed to ship, what you have orders for?

Gary Levine: The backlog is about $4.4 million. Now some of that is related to the ARIA contracts because they’ve deferred over time. So you keep them in backlog. So that’s a portion of it as well as some – we’ve got product, but the customer doesn’t want it. They’ve got a spread over time. So it isn’t that we would get the entire amount at one lump sum, because they are…

Brett Davidson: I mean the supply issue – the supply chain, did that impact your ability to deliver product or not really?

Gary Levine: Yes.

Victor Dellovo: I would say I would say about $2 million – around $2 million, maybe just shy of $2 million would have been able to go in if we had the components to build the systems. Yes, I would say about half and that’s at a very high profit margin – I would, bought for it considerably.

Brett Davidson: And I would imagine that the – since the end of the quarter, I got to imagine that pressure is continuing to ease, getting your hands on the parts?

Gary Levine: No, Not.

Victor Dellovo: Not really. No, not at all, to be honest with you, in some cases, it’s getting worse, yes.

Gary Levine: No.

Brett Davidson: Oh my God. Well, I hope that swings the other way because, yes, $2 million today sounds better than $2 million next quarter.

Brett Davidson: That’s all I got, thanks guys.

Victor Dellovo: Yes. As soon as we can get it shipped out, we do, because we’re at the mercy of some of these larger organizations. Thanks Brett.

Operator: Your next question is coming from Mike Price. Please pose your question, your line is live.

Unidentified Analyst: Good morning, congratulations on a good quarter. Can you tell us what the ARIA revenues were for the quarter? And how much of the backlog is ARIA related?

Gary Levine: The ARIA revenue was about, I think, about $140,000 and then the backlog is probably $0.5 million.

Unidentified Analyst: Is this not a big growth area? I mean it seems like there’s huge upside with ARIA. Is that not the case?

Victor Dellovo: It is. Yes, it is. It’s what we’re focusing on and moving forward with it. But as I mentioned on previous calls, the technology once we get in we have a really good chance of winning it. But we’ve had some name recognition problems. It’s just – we’re not under Gartner, you don’t get there until you have revenue. And it’s sometimes they go with the larger company, even if they’re not – if our product outperforms them. They still kind of go with a company that’s a multibillion dollar organization. We’ve seen that quite a bit actually. So we have over a dozen accounts now. So it’s getting a little easier, but we’re still not on that Magic Quadrant and when you get into our SIM product. They do a lot of – some of the organizations are looking for their Magic Quadrant, and we’re not on yet.

And we’re talking to Gartner, but there’s a lot to go through, and there’s a revenue requirement. So it’s a chicken and the egg effect how do you get on there unless you have revenue and how do you get the revenue if you’re not on it. So – but it’s our focus area it’s just taking time.

Unidentified Analyst: Is the industry aware of the technology and as good as you think it is?

Victor Dellovo: We’re providing as much information as we can to as many people that will listen.

Unidentified Analyst: Okay. The question is, can somebody larger do more with ARIA than what if you can’t get in the door is the question.

Victor Dellovo: Yes, absolutely.