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01/11 03:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals a mixed performance with declining service revenue and gross profit, and a net loss compared to last year's profit. Despite strong cash reserves and shareholder returns via dividends and buybacks, the lack of clear guidance on AZT's backlog and competitive pressures in cybersecurity raise concerns. The market's response is likely negative due to the revenue miss, reduced profit margins, and management's vague responses in the Q&A, overshadowing the positive aspects like cash position and shareholder returns.
Revenue $13.1 million, down from $13.7 million year-over-year, reflecting a slight increase in product sales but a decline in service revenue due to a single multi-million-dollar deal that wasn't repeated this quarter.
Service Revenue $4.6 million, down from $5.2 million year-over-year, primarily due to the absence of a high-margin multimillion-dollar sales contract recognized in the prior year.
Gross Profit $4.2 million or 32% of sales, down from $6.2 million or 45.3% of sales year-over-year, reflecting higher component costs in the product side of the business and the impact of the previous year's high-margin contract.
Net Loss $108,000 or $0.01 per diluted share, compared to a profit in the prior year, influenced by the decline in revenue and gross profit.
Cash and Cash Equivalents Over $29 million, which is stable and supports the company's ability to pay dividends and invest in growth.
Net Profit for Six Months $341,000 or $0.04 per diluted share, down from $29.1 million in the first six months of fiscal 2024, indicating a decrease in overall revenue.
Share Repurchase $384,000 spent on repurchasing 23,800 shares during the quarter, reflecting the company's strategy to return value to shareholders.
AZT PROTECT traction: AZT PROTECT continues to gain traction in the OT marketplace, signing six new customers during the quarter.
New reseller partnership: Entered a new reseller partnership with Rexel USA, a premier Rockwell Automation distributor.
New customer contract: Signed a contract with Oryx Industries in South Africa for AZT PROTECT, potentially generating seven-figure sales.
Market expansion: Expanded pipeline for AZT PROTECT, increasing total opportunities fivefold over the past couple of quarters.
New customer acquisition: Acquired new customers through a Rockwell webinar, generating new business leads.
Revenue performance: Fiscal Q2 revenue was $13.1 million, meeting internal expectations despite a decline in service revenue.
Cash position: Finished the quarter with over $29 million in cash and cash equivalents.
Share repurchase: Repurchased $384,000 worth of common shares during the quarter.
Focus on AZT PROTECT: Continuing to enhance sales team and marketing efforts for AZT PROTECT.
Investment in technology solutions: Awarded a project for Microsoft Azure migration for a Florida-based healthcare provider.
Revenue Decline: Service revenue declined from $5.2 million to $4.6 million compared to the previous year due to a single multi-million-dollar deal that wasn't repeated this quarter.
Operating Conditions: Challenging operating conditions may arise from price increases on products purchased for resale and potential reductions in customer spending due to reduced headcount and project postponements.
Component Costs: Higher component costs in the product side of the business affected gross profit, which decreased from 45.3% to 32% of sales.
Market Competition: Increased competition in the cybersecurity market, particularly for AZT PROTECT, as the company seeks to expand its customer base and market presence.
Economic Factors: Economic uncertainties may influence customer spending patterns, impacting revenue generation and project timelines.
AZT PROTECT Growth: AZT PROTECT continues to gain traction in the OT marketplace, signing six new customers during the quarter, with potential for follow-on sales and installations of seven-figure values.
Reseller Partnerships: Entered a new reseller partnership with Rexel USA, enhancing distribution capabilities for AZT PROTECT.
International Expansion: New contract with Oryx Industries in South Africa to protect equipment for a major cell tower provider, with potential seven-figure sales over 18 months.
Marketing Investments: Continued investments in marketing AZT PROTECT, including participation in conferences and regional events.
Technology Solutions Growth: Technology Solutions business generated $12 million in revenue, executing contracts with cruise lines and healthcare providers.
Revenue Expectations: Fiscal second quarter revenue was $13.1 million, meeting internal budget expectations, with a promising start to the second half of the fiscal year.
Profitability Outlook: Gross profit for the quarter was $4.2 million or 32% of sales, reflecting higher component costs and a prior high-margin contract.
Cash Position: Finished the quarter with over $29 million in cash and cash equivalents, supporting growth initiatives and a quarterly cash dividend.
Dividend Declaration: Board of Directors approved a $0.03 cash dividend for shareholders, payable on June 11, 2025.
Market Challenges: Potential challenges include price increases on products and reduced customer spending due to economic conditions.
Quarterly Cash Dividend: $0.03 per share cash dividend authorized by the Board of Directors, payable on June 11, 2025, for shareholders of record on May 28, 2025.
Share Repurchase Program: Repurchased $384,000 worth of common shares during the quarter.
Total Shares Repurchased: 23,800 shares of common stock were repurchased for $380,000.
The earnings call shows mixed signals: strong service revenue growth and improved operating loss are positive, but net loss and cash decline are concerning. The Q&A reveals uncertainty in revenue predictability and lack of OEM agreements. While the Acronis partnership and potential endpoint sign-ups are promising, the lack of concrete guidance tempers optimism. Overall, the sentiment is neutral due to balanced positives and negatives.
The earnings call presents a mixed picture: positive revenue growth and cash position, but declining gross margins and higher expenses. The Q&A reveals potential in the AZT PROTECT product and new markets, but management's reluctance to share future projections adds uncertainty. Given these factors and the lack of clear guidance, the stock price is likely to remain stable in the short term.
The earnings call revealed declining service revenue, reduced gross profit margins, and a net loss for the quarter, despite a solid cash position. The Q&A session highlighted management's reluctance to provide specific details on the backlog and potential contracts, raising concerns about transparency and future growth. While there are positive elements like industry recognition and partnerships, the overall financial performance and lack of clarity in guidance suggest a negative outlook, potentially leading to a stock price decline of -2% to -8% over the next two weeks.
The earnings call reveals a mixed performance with declining service revenue and gross profit, and a net loss compared to last year's profit. Despite strong cash reserves and shareholder returns via dividends and buybacks, the lack of clear guidance on AZT's backlog and competitive pressures in cybersecurity raise concerns. The market's response is likely negative due to the revenue miss, reduced profit margins, and management's vague responses in the Q&A, overshadowing the positive aspects like cash position and shareholder returns.
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