Q1 2024 CSP Inc Earnings Call
Participants
Victor Dellovo; CEO; CSP Inc.
Gary Levine; CFO; CSP Inc.
Michael Polyviou; IR; EVC Group Inc.
Brett Davidson
Joseph Nerges; Analyst; Segren Investments
Will Lauber; Analyst; visionary wealth advisers
Mike Price
Sergio Huber; Analyst; Huber Research
Paul Escalante,
John Coffey
Presentation
Operator
Welcome to the CSP's first quarter fiscal year 2024 conference call. At this time, all participants are in a listen only mode a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded.
I will now turn the conference over to your host, Michael Polyviou. You may begin.
Michael Polyviou
Thank you, Holly. Hello, everyone, and thank you for joining us to review CSPI.'s fiscal 2024 first quarter results conference call, which ended December 31, 2023. With me on call today is Victor Dellovo, CSPi's Chief Executive Officer; and Gary Levine, CSPi's Chief Financial Officer. After Victor and Gary conclude your opening remarks, we will then open the call for questions.
Statements made by CSTI.'s management on today's call regarding the Company's business that are not historical facts may be forward-looking statements as the term is identified in federal securities laws. The words may will expect, believe, anticipate, project, plan, intend, estimate and continue as well as similar expressions are intended to identify forward-looking statements.
Forward-looking statements should not be read 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 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 by risk factor section of the annual report on Form 10 K and the quarterly report on Form 10 Q filed with the Securities and Exchange Commission. Forward-looking statements are based on information available at the time of the information and management's good faith belief as of the time 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 it over to Victor global, Chief Executive Officer. Victor, please go ahead.
Victor Dellovo
Thanks, Michael. And good morning, everyone. Early this morning, we announced our fiscal 2024 first quarter results. However, before I ask Gary to review the quarter, I want to spend a few minutes highlighting two developments that were recently announced. As I believe these truly demonstrate our growing business prospects and continued optimism with high performance products and the technology solution businesses to begin the launch of the AZT. protect offering is and continues to be a game changing development within the high-performance products or HPP. business because the advancements allow us to offer our customers a giant leap forward in the evolution of cyber security solutions.
Few days ago, we announced our largest and most significant contract to date for AZT. a multimillion dollar agreement with a global pharmaceutical company deploying a ZT. across its global manufacturing operational technology, or OT, protecting over 40 facilities in response to the growing cyber security threat to OT. from hostile nation states, terrorism and organized cyber crime.
This customer appreciate the enormous risk of cyber security attacks on the facilities. It could lead to best of intellectual property, compromise, safety and quality regulatory fines and major disruptions to its manufacturing process. However, many other remain extremely vulnerable and are they'll prepare to protect their critical assets from new wave of cyber security threats that can bypass network bypass protections and modern cloud-based next-generation antivirus solutions.
Second development that was also recently announced was a five-year multimillion dollar contract to provide managed services for a prominent Florida Public college, one of the largest and most diverse institutions of higher education in the nation. We will deliver proactive monitoring management and support for college critical infrastructure, including networking, security and private cloud services. I believe these two developments are a strong indicator of the future success and precisely why the Board of Directors had the confidence to raise its quarterly dividend to $0.05 per share.
I will spend a few moments highlighting the technology solutions for the TS business, and I will focus the majority of my comments on the ECT offering as it is the potential potential to dramatically change our growth curve. The TS business performed as planned, and we continue to be excited about the current business as well as the lead leads being generated on a daily basis from new and existing customers.
The TS business accounted for $14.7 million of the overall revenue and its success continues to be driven by our customers' increasing use of our implementation, installation and training capabilities. As I stated on the last call, the UCaaS is becoming profitable business and we ended the fiscal first quarter with an increase in clients based on our currently current information and leads flow well continue to see an upward swing in the client activity as we move throughout fiscal 2024.
As many of you know, has been challenging business environment for several years that team's ability to remain engaged with customers is amazing. I believe the yes, can-do attitude has enhanced our clients' loyalty because they recognize that our products and solutions are the most effective cost efficient answer to their critical needs. For example, while our cruise related business has been relatively quiet during the following of the pandemic. The team has remained on the ready and we are beginning to see some positive developments.
For example, we received orders for several shifts from one of the cruise line operators and the consistent growth of our non cruise related shipping business is continuing as we currently working with one of the largest freight operators specializing in containerized ocean exports, serving numerous ports worldwide with an extensive global agent network and has become one of our larger MSP customers.
Turning now to our high-performance product or HPP business. My comments will focus focus solely on the emerging ICT offering as it continues to generate a significant amount of interest in the market that we believe will grow to over $50 billion based on the number of devices that need to be protected across the relevant verticals. We are excited about the industry's positive reaction to AZT., and we remain bullish as sales funnel is getting larger and is that attracting prospects across the Fortune 500.
As a reminder, AGT's advancement allows us to offer our customers a giant leap forward in the evolution of cybersecurity solutions, ADT's performance surpasses what's available on the market today and its new generation of endpoints. Cybersecurity protection designed for critical operation technology and Brian, for example. And based on the internal testing, we believe ACT would have stopped SolarWinds SUNBURST malware using use during the attack after the initial breach.
The unique pain solution protect align organization endpoints for a full spectrum of cyber attacks and attack techniques, including the most advanced zero-day attacks, malware, ransomware supply chain vulnerabilities, even those threats that are completely unknown to security by deploying artificial intelligence capabilities. AZT. automatically halts attacks before damage occurs and sir, sorry, seamless operations without disruption or downtime, it lowers the risk of applications code base vulnerabilities for MaxPoint while running on endpoint devices to near zero. This removes the need for costly security, patching updates and associated costs of production downtime.
On the last call, I mentioned a number of industry events and conferences.
The team attended at each one.Our name and reputation is growing and we are garnering more and more attention. For example, Gary Southwell CSPI.'s General Manager, various cyber security recently hosted a webinar with retired Pfizer Global Head of automation engineering, Jim O'Brien.
They discuss a wide range of challenges.
Manufacturers face in today's new threat landscape, they delved into issues. Manufacturers need to address ranging from how to select the right technology to best practice to ensure critical manufacturing operations are protected. They focus on how current passive and active cloud-based security solutions are failing to guide against the new era of AI embedded attacks, creating substantial financial regulatory and reputational risk and manufacturing sectors such as pharmaceuticals.
The webinar demonstrated how ARIA cyber Security's breakthrough solutions for OT environments would have stopped the SolarWinds attack in other recent high profile attacks on critical infrastructure where existing defenses have failed. We are planning additional webinars every quarter going forward. Additionally, we have we will be attending several conferences in the coming months, including the CS. four CA. manufacturing Conference in Houston and the DistribuTECH International Conference in Orlando.
Our current customers are very chemical national security pharmaceuticals, demonstrating the breadth of offering. In fact, there is no limit no industry. We can't access to our ICT offering given the wide range of needs of companies dealing with constant attacks on their enterprises. Our goal is to ensure the team remains focused and is able to deliver consistent results, which basically means it's just as important to pursue smaller transactions while still hunting elephants, which can help which could take up to several months to close additional, we have continued to add resellers to leverage knowledge expertise and customer depth to drive greater adoption of ARIA Zero Trust Protect, including the addition this week, a leading cyber security advisor firm and reseller, which serves around 6,000 companies worldwide, including a focus on large enterprises in the world.
To summarize, we remain cautiously optimistic and continue to position the Company for greater success throughout fiscal 2024.
We have two stellar businesses, the TS business, which has been the growth driver over the past few years and a reemergence of the HPP. two AZT. offering is generating significant buzz throughout the organization within the industry.
With that, I will now ask Gary to provide a brief overview of the fiscal first quarter financial performance. Gary?
Gary Levine
Thank you, Victor. For the first quarter ended December 31st, 2023, we reported revenue of $15.4 million compared to $18.3 million in the year ago. Fiscal first quarter revenue could have been higher. That is if certain contracts were signed as expected towards the end of Q1, however, there were push-outs to the end of the year in the holiday season and signed contracts were signed up signed earlier this quarter and will benefit fiscal Q2 revenue. Our Q1 gross revenue was $4.1 million or 26.6% of revenue compared to $5.8 million or 31.7% of revenue in the same period prior year period. The decrease in gross margin compared to the year ago period was anticipated was due to the mix of business and the lower margin products. We continue to believe our gross margin will expand as the business transitions, especially the AZT. offering, the higher margin products and services.
For the first fiscal quarter, our engineering and development expenses were $700,000 $173,000 lower from the year ago fiscal quarter as we reduced outside contractors and elected to not fill some open positions.
Our SG&A cost for the fiscal first quarter was $3.7 million compared to 3.6 million in the year ago. Fiscal first quarter slight year over year over year increase is attributable to the addition of several salespeople and increased conference participation to help us raise awareness of the AZT. offering. We reported a slight net loss of $73,000 or $0.02 per diluted share for the fiscal first quarter ended December 31st, 2023, compared to the net income of $1 million or $0.21 per diluted share.
For fiscal first quarter ended December 31st, 2022, the company had cash and cash equivalents of $25.6 million as of December 31st, 2023, compared to cash and cash equivalents of $25.2 million as of September 30th, 2023. We believe our robust financial position allows us to be flexible and successfully implement our operating initiatives, and it's necessary leverage this to financial to finance large customer agreements, which have been highly successful in the past for CSPI., as Victor mentioned earlier, the Board of Directors approved an increase in the quarterly dividend to $0.05 per share payable on March 8, 2024 to shareholders of record on the close of business on February 26th, 2024.
With that, I will turn it over to the operator to take your questions.
Question and Answer Session
Operator
Certainly at this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue, you may press star two. If you would like to remove your question from the queue For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please while we poll for questions.
Your first question for today is coming from Brett Davidson with investor letter
Brett Davidson
Good morning. Monitoring must be pretty satisfying that finally land the bigger deal.
Victor Dellovo
Oh, my God
Brett Davidson
and I'm thinking to on you so far is on salespeople. I know you added some in the past on. Has that changed your thinking any is there plans to add more along the sales lines or are you guys pretty set right now?
Victor Dellovo
Now we're interviewing our people right now. So where are we plan on adding to that this quarter and future
Brett Davidson
It has it hasn't changed like the company's compensation philosophy on as far as share grants are kind of like tying these people to them, prospects for the Company overall
Victor Dellovo
on all that is on the table. And when we talk to these individuals,
Brett Davidson
yes, I mean, I'd love to see the people that are working there and sell in this thing highly invested in the so, you know, the performance of the Company, I think that would be just a great idea. And then a little bit on the revenue recognition of that contract the other day, how is that going to run through that The income statement is that is that going to be all at once, or is that going to be spread out over time?
Victor Dellovo
It's all at once.
Brett Davidson
Okay. So that'll drop this coming quarter. Nice. And last time we talked I know that the cruise business was still kind of on slow yet. And Roland here again is has that changed at all? Is there any more progress on the cruise ship business?
Victor Dellovo
Yes, we are. We made some progress on NAM, a little different work that we've done in the past. I can't mention what kind of work we're doing with them, but it's a kind of Arm moved into a new technology with a cruise line and we're rolling it out to a bunch of ships. We won't have to travel as much as we used to in the past is we can do it a lot remote via, yes, gave us a new home form of income from from these cruise lines that will be coming over the next couple of quarters.
Brett Davidson
and what does the size of that business look like?
Victor Dellovo
And it's in the hundreds of thousands here,
Brett Davidson
and it is this applicable to pretty much all the cruise lines or is this just like certain customers, but still take advantage of it,
Victor Dellovo
but now every cruise line could do it. We're just not talking to every cruise line about it yet in our getting in front of them, as you know, have to battle.
Brett Davidson
Now interesting, Tom and the off that deal with the pharmaceutical company I know you guys did not release the name of that on. Are you guys able to use the name of that company when you are discussing US sales with other potential customers and
Victor Dellovo
with permission? Yes. So that is a possibility of you.
Brett Davidson
We are asked from. Referenceable accounts.
Victor Dellovo
Yes.
Brett Davidson
What was a very there are a referenceable account but we're not going to get their approval on the accounts.
Victor Dellovo
All right. Well, um, you know, some pretty exciting seeing those press releases and hope to see more of them in rapid succession here
Brett Davidson
as soon as I said, to numerous people numerous times in outright. Don't hold anything back in oh eight until I had said earlier, you know that I think was close to being dry on some of them by working with these large kind of working with these large organizations, everything takes way longer than expected. You know, from some of these things need a 10 signatures and getting 10 signatures, I guess in a larger organization it takes months now.
Victor Dellovo
Yes. Well, it's nice to have no matter how confident you are in the product. There's always lingering doubt in the back, it's nice to see that first big contract come through kind of confirming that you're headed down the right path.
Brett Davidson
It was Yeah, exactly, exactly. Yes.
Victor Dellovo
And yes. So yes, very, very glad to see that. Glad that finally put behind you that big deal there and looking forward to plenty more. So a great job and we have bring everybody along with.
Brett Davidson
Yes. Yes, we're trying we're trying. Thanks, Brad. I appreciate your support.
Victor Dellovo
Yes.
Operator
Your next question is coming from Joseph Nerges - Segren Investments.
Joseph Nerges
Morning guys, guys. How are you today?
Victor Dellovo
Good morning, Joe.
Joseph Nerges
I just wanted to tell everybody that the annual meeting was very nice last week and we had a foreign investors investor standpoint, we had 100% increase in the attendance and net impaired loans. The bad news, we went from one to two people. So I've been I've been to annual meetings where we had a game changing product and it was standing-room-only. We're not there yet. So maybe to possibly down the road, we'll have standing room only in the at the meeting.
A couple of quick things. I research just briefly one on your release of the pharma contract, the Merck breach, which was breached and a number of years ago, and I just part of the market know, here's the damage. It's on the Merck breach that the insurance companies paid $1.4 billion. That's how much damage was done by the brief Woodmark. So just give you an indication of how much some of these OT environments are at risk when that type of a damage award it can be out there.
I don't know, how do you guys know how the insurance is involved with these, what these companies? I mean, is there a separate policy for, let's say, the OT environment as opposed to the IT environment for breaches? Or is this kind of all rolled into one or these are not known?
Victor Dellovo
I have no idea, Joe, I have no idea how the EDR
Joseph Nerges
I'm just saying when you see that kind of I mean, when we hit the OT environment, if you could take down factories, I mean for extended periods of time. And so you could see was up where the cost could be quite dramatic. So I don't know how these insurance companies work, but I imagine they are pressuring these companies to either provide better security or storage or the premiums on Apollo, either do we know policy or the premiums would be sky high on that type of awards?
Victor Dellovo
I can tell you, Joe, that just in our case as a small company, what we had to go just to get our cyber security and it's in talking to the insurance companies, they're taking a very hard line on it and you need tools such as we have to amplify that to help because if you don't have any protection, you don't get any insurance, they'll give you nothing
Joseph Nerges
Well, that's I guess the point I'm trying to make. And of course, we're too early with AZT ProTec rollout to stab numbers. You become almost a best in breed for the OT environment, then then there would be demands from either the insurance and or it took to protect yourself to the best we can. So and I'm just hoping that we can get ourselves known well enough that then that the companies, even the insurance companies begin to recognize the people that would be put the benefits of the AZT. Protect product we'll see how that goes down the road.
A couple of things at the annual meeting, you mentioned one was the Internet and your intellectual property. I think you said, Victor, that there was we have two patents awarded.
And what do we have six to eight more pending is I can't recall what you said on such
Victor Dellovo
six total, the two to two that are already approved, two that are in the last waiting stage. So I think there, if my memory serves me right, I think it was supposed to be February, March, somewhere in our it's the weighting stage of just making sure and, you know, no one has any issues and then two that are in more the norm one, Omnicom, the review, the review process.
Joseph Nerges
Okay. And I assume most of it is tied to the area platform, right, where they are?
Victor Dellovo
It's always easy offerings on. Yes.
Joseph Nerges
Okay. A couple of things. I did ask you too on R&D, what are we doing? And I think you said we're at we're in beta test now. We're expanding the software to Android devices out there is that what you're saying, and we're testing it on our China roadmap.
Victor Dellovo
Yes, Androids on the roadmap.
Joseph Nerges
And I think you're adding to that screen, even the screen capability where you multiple screens can be reviewed by somebody's managed service providers at one-time?
Victor Dellovo
Yes. Okay. It's on the roadmap.
Joseph Nerges
Yes. So on the Rome, our auto-renewal development of PC., I don't think a lot of people also realize that when you when you introduce is it to protect in July, we were on version one. We were on multiple very we had gone through multiple versions before we came out with that. So it wasn't like it was the first version that came out there. And since then a question for you on the Linux side, I know what version, you know, a version we are now on on the ACT Protectron, HMA Lumistar six or seven yet.
Victor Dellovo
I think we're going to like 13 really achieved here.
Joseph Nerges
But yes, I mean, again want something that most people come out with it 1.0, but we're not there. So we've advanced this over a number of years pretty extensively.
Victor Dellovo
So yes, I think I had mentioned before that our original goal was to get a version now and then add a lot of the functionality and the bells and whistles as we moved along on. But through one of our large customers that we've talked about on, they needed all the functionality immediately before they were willing to sign off on it. And that's kind of why it took a lot longer for the development in. That's truly the first release that was available to sell was in this past July.
Joseph Nerges
Well. So the end result was a more robust product as yes, we finally came out with it, and I'm assuming that what we built it can be utilized almost across the board on any industry feeling like you said.
Victor Dellovo
Okay.
Joseph Nerges
One on one thing on this major reseller agreement you just signed the contract. Is that one was that you talked the last time about two major system integrators was just the contract that was just signed one of the two or is this a separate group altogether?
Victor Dellovo
No, it's a separate group.
Joseph Nerges
Exactly. So we're so we are talking about others, major integrators that we haven't done. Yes, I think you've got to the last time, is this about three years?
Victor Dellovo
Yes, that is where I think about half a dozen of E&O, I would say decent size integrase. There's a couple that are real well, this is our annual sales in the billions.
Joseph Nerges
So and just a quick point on this. When you signed the contract, what's different with the contract versus what you're talking to the others? I mean, is there any performance requirements in the contract for the resale or is it just a contract that any one of them will sign the contract of the number you're talking about?
Victor Dellovo
Well, let's face it. Anybody can sign it, but some of these larger ones because they're coded by every you know, every product out there on daily and I'll bring on new products where they believe a there's a gap. And then, of course, two, that is a big you know, there's a certain amount of revenue. They can you know, they can get from it's a product line, right? It's a one-time sales is something that they're not looking for. So it took Al, I would say, at least six months to go through the process with them, some of them, you know, looking at the product and then also bringing our product into some of their customers and talking about it and getting feedback and looking at a real need that's out in their customers' environments.
And that's kind of what brought it over the over the finish line to get the contract signed, was that they believe there's enough for their customers that can look at this product. They're not guaranteeing anything of course, and by if it's truly a need in a gap and we are talking in our arm, I would say, at least a half a dozen of their customers already are in different stages. So we're hoping, you know, they have a lot of customers this. I think that the target that we looked at is somewhere over 500 potential customers that we can at least talk to that may have a need of some sort for Z.
Joseph Nerges
I mean, it's a huge market expand.
Victor Dellovo
Yes.
Joseph Nerges
Just one other point and you brought this at the annual meeting, you talked about that that you get you often get calls down there in your interest in the TS group for four people that are that are after are looking to buy. It's either the TSP you are buying into our managed services offering for those who want to buy or our managed service offerings as any of those stocks ever reached a dollar or have we just not advanced those talks at all?
Victor Dellovo
We're not interested from now. We just concentrate on building the business.
Joseph Nerges
Okay. But you have fielded calls or people want to know if we're even in the market to sell it, do what you're saying?
Victor Dellovo
Yes. So it's a lot of emails, you know, on there's a few people that actually can be picking up the phone that have conversations with them. But right now, it's just about building that monthly recurring revenue.
Brett Davidson
Yes, the concept never or is it now other than just the pure pure of interest that people are their flooring is some questions out there if they were interested at. All right. Well, thanks a lot appreciate. It seems like we're just a matter of time to get some of these big numbers across the board on from Fraser's statements. Thanks, guys.
Victor Dellovo
Thanks, Jim.
Operator
Thanks, Joe. Your next question for today is coming from Will Lauber with visionary wealth advisers.
Will Lauber
Hi. Can you there has been some confusion on our end how the ADTI. product has been priced. It's a monthly recurring subscription or?
Victor Dellovo
Yes, moving forward with our customers, it is a monthly recurring fee. Gary had mentioned that this one is upfront and we made an agreement with the pharmaceutical organization just because they help us test for 18 months that they could purchase it, you know, upfront as a one-time fee with yearly maintenance after that by moving forward, you know, it will be more like a CrowdStrike model where it's a monthly recurring.
Will Lauber
Okay. And is it priced by side or per user per user?
Victor Dellovo
Yes. Per endpoint I should say, which it's, you know, we're in the we are truly end user as laptops were in the server as the endpoint because we're protecting the application. So if there's a server with 10 VMs, it would be basically 11 licenses for that. And if you add 1,000 servers, you do the math and on that.
Will Lauber
Okay. And I guess one of the things that I noticed in this latest release compared to some of the early ones that I guess in particular that Fortune 500 chemical company, I think that was just for one site. Did this from two companies that include like all their manufacturing sites? Or is there still some that could be come on later?
Victor Dellovo
Yes, it's this is I'm hoping it's just the first phase no guarantee. But once we roll these out, then we'll see. What's what what's next.
Will Lauber
And then with that for manufacturing company, how are things going with that? Or is that does that have to be that each plant manager that has to make the decision to add that or how that on which companies that of the chemical companies?
Victor Dellovo
Yes, we are fortunate. We have to deal with each and every location separately where on the pharmaceutical, this is being pushed out from a corporate level. It's a little easier for us to deal with this this rollout and then the other one. So it's been a it's it's been challenging, but it's a process.
Will Lauber
So it's in one facility now what's the potential with that customer? How many facilities?
Victor Dellovo
Tom, I want to say this 80 sites.
Will Lauber
I'm sorry, have you guys been seeing any increased interest from SEC rule about cyber security or how that kind of playing out.
Victor Dellovo
We're using as a sales E&O. It's out there and we're talking about every time we talk about. It's one of our selling points not only the protection, but what could happen if you if you don't.
Will Lauber
Okay. Well, thank you very much and welcome, everyone.
Victor Dellovo
Yes.
Operator
Your next question is coming from Mike Price, a shareholder.
Mike Price
Good morning. Thanks for taking my questions. I appreciate the press releases, but there pretty vague, all of them have said multimillion dollar and there's no way for us to evaluate what the impact is going to be to revenues. And you said that you could use the I'm the buyer of the AZT. as a reference in trying to secure new buyers. But what about publicly disseminating who a buyer is? It seems like it's in everybody's best interest with their permission. It gives credibility to CSPI. and for the customer, it seems like putting up a sign in front of your house saying I'm protected by the security, and that's almost a deterrent works opposite.
Victor Dellovo
If you if they know what it is and they could potentially, you know what like what to do, how to hack to. We don't have permission on writing the contract. We cannot use the name on wheat. That was part of the terms and conditions to we can use it on, as I said, a permission basis, basically calling customer up saying I have this customer, they would like to talk to you, they would like to have a reference.
Mike Price
Will you are you willing to speak with them?
Victor Dellovo
And if they say yes, then we can set up the call and then we can move forward. So anytime I can use someone's name legally, I would do it if I did it for a reason.
Mike Price
Okay. On the last conference call, you said you're in discussions with 50 potential buyers of AZT. Can you give us an update on that on?
Victor Dellovo
Yes, some have progressed on this. Some that are moving again, I don't want to say it again because then after I get you guys driving me crazy on exactly on we're talking contracts. But when that is, I have no idea on. But yes, they're all progressing some sell off. Some of them said we love it. We don't have budget for six months on a normal sales gain, but a gain or some strong fall off, some come in and we're setting the shows did well for us on and we have multiple POCs that came from the shows where they have the product and testing it. And you know, after the testing, then we'll see how long it takes to close the deal, but there are some progressing on that. So we have a couple of more shows coming up in March, which come as they come up. And there, we believe that it's the right audience will be attending them.
Mike Price
Okay. And if a reseller actually places sells a ZT. It's just something that you'll disseminate to the same as you have when you sell it yourself?
Victor Dellovo
Correct?Correct. Yes, exactly.
Mike Price
Okay. And I asked this question each of the last two conference calls about buying stock. Did you buy back any stock last quarter?
Victor Dellovo
No, but no, the Company did not. I personally bought, you know, some stock again last quarter.
Mike Price
Yes.So you bought it was down five bucks, couldn't have been better timing. And again, we have the same issue today with the stock down almost three bucks and down more earlier. And with the roadway that you pay for us, it still seems like a good use of shareholders' cash. Appreciate the increased dividend, but it seems like a good use of cash going forward. It seems like there's quite a runway here.
One final question. Any thoughts about change in the name of the company? I mean, the company is definitely going towards cybersecurity, ARIA, cybersecurity.
Victor Dellovo
And that's why we have asked the ARIA cybersecurity on the umbrella of SESPI. because they're still have the other business. The TS business.
Mike Price
Okay.Okay.I appreciate it. Thank you very much.
Victor Dellovo
Yes, yes.
Operator
Your next question for today is coming from Sergio Huber with Huber Research.
Sergio Huber
Good morning, guys, and congratulations on the progress that you're making. I'm wondering about I understand that you can't disclose the customer without the customers permission, but why can't you disclose the amount of the contract on
Victor Dellovo
because we normally we don't give we've never have given exact amounts of contracts and what they are, you will disclose in next quarter when we actually recognize it.
Sergio Huber
What is difficult for investors to put a price on the stock without knowing how much the contracts are this way asking them and you're not giving any guidance?Or are there plans to provide guidance future
Victor Dellovo
potentially on but not right now
Sergio Huber
is the reason that you're not giving up the amount of the contracts because of competitive competition, not to give away to the competition, what the product sells for?
Victor Dellovo
That's part of it, yes.
Sergio Huber
Okay. And then I have one question from a reader from a Seeking Alpha article, and I figured I'll pose it to you but I don't know how to answer this question that I don't know if it's a fair question. But the companies and enterprises that you're selling, the AZACT. product are large entities that have their own IT department. Why would they be customers our view instead of developing new product for their IP,
Victor Dellovo
they want to develop a security product to their own IT.
Sergio Huber
Okay. We'll get a loss of all, I guess. So enough money time and expertise. Anybody could potentially do it. But you know, if he's asking if they have their own IT department or someone who doesn't have their own security department. Could we help manage that for them?
Victor Dellovo
The answer is yes. But you know whether you have your own IT department or or not, you still need some type of products enough to do the inspection and the protection and the detection and everything else that goes along with that but yes, I'm I'm a little confused on what he's asking.
Sergio Huber
Look, I couldn't answer the question either that came from or more than one person you have basically I don't think that the average person, including me understands the complexity of security and there's so many products out there and we're trying to figure out how do we know that there is nothing else like this product in and that how disruptive it is? How can we judge that without you know, I've asked experts in the field and they can answer the question and I think investors are trying to figure that out.
Victor Dellovo
So I think I've mentioned on calls, it's a crowded space, right? You everybody knows the big boys, right? The power of those cars, you name it right. Then there's the second tier, which I don't know exactly the number, but a couple of years. It was over 2000 other security companies of all sizes So of course, it's a crowded space. How do you separate yourselves? That's a challenge that that, you know, we have to deal with every day. So on winning this contract, right that's going to be our biggest selling tool because when you looked at the Company, we sold to they tested everything, they have the resources, God knows it took us over 18 months to close this deal on. So they have the option and everybody out there. Security wise, ARM was knocking on their door, so they had the option to look at many many products for them to choose our product after the, you know, literally over year testing.
That's kind of how we are we believe on our product does fit a need you know, it's not just from, you know, of course, you know, some of the people on the phone have heard this. We think RBB's beautiful, but it may not be, but having these customers test the product look at it and it fills a need, especially with the the later XP windows, the older versions, these all these other companies are really not supporting the old versus the Linux and Windows. So not only we can do the current ones, but we can go all the way back. And as I suggest everybody on the call go back to the webinars that we did. It really breaks down the value of the product. Why we're different in how we complement other existing products.
Right. You know, I think Jim, what Bonnie mentioned on the on the webinar, if you look, I have clarity or CrowdStrike, they have it if they're necessary, but there's a void and we can fill that void. Now you can use us exclusively if you want, that's beautiful, we'll take it or we can complement the existing products that are out there to fill a gap.
Right. Just some comprised that Delta Tech, but they won't prevent. And that's kind of where we step in and we do zero-day attack on zero-day, not.
Oh, my God, I got Patrick give me a week or two days or five days or six months to go patch. So, you know, our biggest issue is we need to get the message out and we're doing everything we possibly can to talk to as many customers and to evangelize that message, give us a chance to show our product, do a POC, beat it up and you know, what let us show you the performance of the products.
Sergio Huber
As I said yesterday, I think you guys are making great progress considering the product hasn't been a year yet. So when will we start seeing revenue from ACC
Victor Dellovo
next quarter?
Sergio Huber
And is that the pharmaceutical contract?
Victor Dellovo
Yes, yes, we are and we're hoping that there'll be other product in our other customers. Yes, that will fall into place. But is like to me, like I told you you're going to hit a big bang from from the pharmaceutical because the way we sold a term that is a one-time deal. And then all the other customers are what we want to sell them as a monthly recurring revenue to build up that, that model
Sergio Huber
actually the end will there be upfront fees on the recurring revenue, while it just depends a depth if they want us to do the installed and we're going to charge professional services for that and then you'll do a monthly fee and you know, on per per end point,
Victor Dellovo
and that will include the maintenance in that monthly fee to. So they'll get all the latest and greatest updates that we we have.
Sergio Huber
All right, guys. Thank you, Gary and Victor. And I think the good news is you have a great day. Thanks.
Operator
Yes, we have time for two more questions. Here's your next question is coming from Paul Escalante, a private investor.
Paul Escalante,
Yes, how are you doing gentlemen? Awesome job on the quarter, handsome job with the press releases. I want to start off by saying that.
Victor Dellovo
Thank you.
Paul Escalante,
Rarely yes, I can hear you. Yes, I kind of feel bad that you have to deal with these Rocky questions. From shareholders because it's common knowledge that smaller companies cannot release either the name of larger companies deals or the amounts for strategic reasons. Although I as a shareholder and most shareholders appreciate that you are still are getting a great fall. Our press releases once you get these deals to keep the Street informed. So I say great job with the press releases and also in the prior call or want to listen to that awesome webinar with the ex Pfizer executives, he said the differentiation of the AZT.
product out in the marketplace that whatever hours or some information. So I think versus some of the shareholders, you need to do a little more research before you waste the executive time with these questions now post your questions, and I'll be brief because you guys did an awesome job foreseeing on a macro level on in recent weeks, headlines coming out about China, Iran, Russia that they're going to attack infrastructure.
We saw in recent months that water infrastructure in the United States was actually attacked. This seems to be brewing as emerging scary theme on that one doesn't this place even more massive importance on Eminence on the AZT. product? And are those type of headlines on? Do you see them as being a as obviously a selling point as you think they're going to raise awareness for these companies to start seeking to protect their OT environment.
Victor Dellovo
And I would think so on a Joe actually, as was our Joe nervous every morning, I get the latest and greatest releases of every of every breach that happens on a like for AM. He sends them out to me arms and we use that right. I forwarded, you know, to the sales force. We don't how people say we don't have budget for the security when they know they have a gap. I have no idea. I literally on every sales call if that comes up, I'm Mike, I just don't believe it because getting hacked is only out a matter of time right now is that if you're ever going to it's some some way somehow somebody will get some type of pack inside the organization of three years from now two years, but is going to happen of all size companies. So how people are not making security, then the number one priority and in the thing is like good enough is not the right answer right. Because it only takes one, we are one access point inside the network or the infrastructure and then they're in. So, you know, saying I'm 90% protected is, you know, is not the right answer for these organizations.
So how this doesn't just fly off the shelf? I'm not sure because I believe we're doing a really good job separating ourselves from the rest of the group out there, but it's still CSPI. who are we and we're trying to like I said, we're trying to do the shows we're trying to do the webinars. We're trying to get in front of that many customers. We're trying to bring on resellers and then let the product speak for itself that that's what we've tried to position. You know, you can listen to us all day long. Let us do a POC. What's what's run the product in your environment and what the product talk speak for itself in that. We've never got that feedback from any customer that's taken the time to look at it
Paul Escalante,
right now, 100% in many ways like according to the damage of the hack the product fees were told, if you think about how much it's going to cost you to get hacked. And I think really what we need is the gate you on CNBC or some our FOX News business news when they have all these scary headlines, I say AZT. as the solution. And hopefully maybe we'll see that soon. That's like we talked about mandate and we know there's SEC reporting mandate. I think Australia has a mandate. Does the U.S. and other countries have been growing mandates to have this OT. protection on? And is that kind of if you see something that's going to drive more awareness to AZT., the mandates themselves?
Are you seeing that are people saying, hey, we got to get this in place, whether it be the US or other countries
Victor Dellovo
and some people are talking about a week if they are still not, we're bringing it up right now. Like I had mentioned earlier, we're using that as one of our key selling points. Like it's not going to be a choice any longer. Are you going to have to do that. And when it all becomes about just getting getting time in front of the customers, once they once you have some time with them, you can peel back the cover and you can see where the need is and then it's our job just to sell it to them and and us showing the value. But yes, I believe the mandates they can hurt right there. It can only help that,
Paul Escalante,
yes. Okay. And then also, we talked about last call about cyber security company partners potentially and talking to them and we know that soon there is a press release showing the video is a card partner. No, I know companies like in video are very secretive and you might not be able to tell me anything about it, but it is public info that they are a partner of. Are they partnering on the TV side and are you still in talks with other big cyber security players to potentially our sell this for you since it doesn't compete and it could just be an add-on product to like a Palo Alto's offering.
Victor Dellovo
And yes, and yes, we are still talking to him video heavily weekly on and we are still talking to other major players out there to partner with them on to make our offering it has a selling as a bundled product.
Paul Escalante,
Awesome. That's that's great. Thank you for that. And lastly, and my last quick point is you guys are doing an amazing job on executing both you and Gary and the whole company. We want that as shareholders, but it would be nice when CNBC and everybody's talking about the cyber threats for operational technology, if we could get you on CNBC. So have you thought about hiring, I guess, investor relations, public relations firm since one of our biggest this is like the group, but I feel like the Super Bowl has happened and on STSDI.s at the Super Bowl, but nobody knows they're playing in it yet. So have you thought about hiring an IR PR firm. So while you guys are busy executing, somebody can help get the story out for from a marketing shareholder perspective, which is also not the most important thing, execution is more important, but it's part of the equation.
Victor Dellovo
Yes, we are we are we are talking about it and where this is a game plan.
Paul Escalante,
So that was all right now that said, as long as you guys are on your plate and you're thinking about it on, I just want to say because I was more intense last quarter, you guys have done an awesome job, appreciate the press releases, keep them flying. And to me, this is like a generational opportunity. And with the headlines, the scary macro headlines we're seeing this is like a much needed product for so many companies and governments. So thank you, guys, and great job.
Victor Dellovo
Thank you, Paul. Have a good day.
Paul Escalante,
Okay.
Operator
Your final question for today is coming from John Coffey - - Private Investor.
John Coffey
I'll say good morning, guys. How are you doing
Victor Dellovo
more on goodwill?
John Coffey
Just wanted to say I want to say congratulations on a great quarter you guys actually accomplished everything you said you were going to do the last quarter. Some of it not have been as timely was being trained, but you did it. So that's actually a big kudos to see management actually do what they say they're going to do. And the other thing is there's a great information on the CC. and MU. of every retail investors should listen to this most importantly win, you mentioned a $1.4 billion cost to Merck. I mean those are amazing numbers. You think everyone would realize that when the insurance company will cover it, they should be calling you guys, I mean, but anyway, here are my questions.
So we know and I anticipate your phone to be ringing off the hook, but I know you have a lot of resellers like we saw you guys with you a deal down in Florida, any pre-existing MSP customer, any feedback from any of your resellers, especially the large one in Australia. They do have a mandate as well. And just about the other 50 smaller partners you have regarding these large ones and any feedback are you assisting them?Are they needing any assistance and
Victor Dellovo
for this to separations? Right. So you know, the reseller, the TS division is the one that sold the MSP contract, right? So that's all part of the ESPI. umbrella. And when you have all the other resellers that we sign under the ARIA arm division, the HPP. division. So those resellers are the ones that we're targeting with AZTM. And those are the new contracts that we signed with the large reseller. And it's about training them doing marketing events with them. So those are the things that we're doing with those types of resellers.
But there's no it it's really no one's really put two and two together our ask us any questions about the MSP contract or anything else we won. That's why we separated the two. So all all the information that we're dealing with the IRS, they separate, you know. So those resellers feel comfortable and you know that all their information is private.
John Coffey
Okay. Okay.So that you're doing that on behalf of the pre-existing partnership side of the deal. What about looking at Logitech that's been strictly an AZT. reseller over in Australia, and again, they have a mandate. Just wondering what they're seeing and as I say, maybe equivalent to you,
Victor Dellovo
yes, the asset, you know his company, he deals with a lot of government entities out there in Australia. So as you know, things work slow, but it's about getting in front of them with the POCs and then he does the rest of the work we educated. We treat them with the he has a lab, everything that he needs to be successful he he has. And now it's about him just working the relationships and the opportunities that that he finds out in Australia.
John Coffey
Okay. And my last question has to do with the type of product, a company mix you're seeing with your leads, are they more government?
Are they more infrastructure like electrical oil and gas for the more like manufacturing like you just recently won are higher ready on
Victor Dellovo
oil and gas is definitely on a segment that we're talking to quite a few people on the pharmaceutical area, medical, those are probably the top3 ones that we're talking to right now.
John Coffey
Okay. Fair enough.
Okay. No, that was it just kind of get a good mix.Hi, guys.Thank you so much and look forward to next quarter and attending the meeting as well.
Victor Dellovo
So thank you, Victor.
Operator
Thanks. We have reached the end of the question-and-answer session and I will now turn the call over to Victor for closing remarks.
Victor Dellovo
Thank you. As always, I want to thank our shareholders for your continued interest and support. We are entering a period of increased activity. And we look forward to sharing our progress on the next fiscal 2024, second quarter in May until then be well and stay safe. Thank you.
This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.
