CSPi, an IT solutions provider, continues to step deeper into the managed services market -- with a particular emphasis on cybersecurity services.
It won't be an overnight journey. Last December, on a Q4 2017 earnings call, CSPi CEO Victor Dellovo called the venerable company a “start-up that just happened to have been in business for nearly 50 years. We are remaking our company with a focus on managed IT services and cyber security market.”
He wasn’t kidding. The Lowell, Massachusetts-based supplier, which was founded in 1968 as a provider of IT integrated solutions to commercial and defense customers, is pivoting to a managed security service profile in what amounts to nothing short of a major overhaul of its business. Facing declining sales and a tightening in its legacy business, the vendor is trying to seize the opportunity in the ballooning market for cybersecurity products and services.
The Results So Far
Based on CSPi’s revenue performance over the last two quarters, it’s been an encouraging but not entirely smooth transition. In the vendor’s Q2 2018 ended March 31, it posted a 13 percent revenue dip to $22 million compared to the same time last year, along with deepening net losses to $594,000. And, its Q1 2018 performance wasn’t much better, with sales tumbling by 10.5 percent. Overall for the six months ending March 31, CSPi’s sales declined three percent to $44 million from the same period last year, mostly due to a sharp downturn in its high performance products, slightly offset by a $0.6 million uptick in its technology solutions business.
Still, there are signs of progress. Amid the Q1 and Q2 sales dips, CSPi inked multiple managed security service contracts in the U.S. and in Europe. At the end of Q1, Dellovo announced that the company is “successfully executing our strategy to move from a company focused on defense-related multi-computer to the growing managed service business that can capitalize on the demand for cybersecurity products and proliferation of wireless.”
It wasn’t just hyperbole, he has evidence. In the U.S. in Q1, CSPi closed two new customer contracts for its managed service business and hired nine new sales and engineering staffers to keep pace with business in its pipeline. In Europe, it also signed a number of managed service contracts. CSPi showed similar initiatives in its just completed Q2. In particular, it has pressed on with development in its new ARIA Software Defined Security platform, which the company plans to position as a cornerstone for cybersecurity sales.
ARIA Platform for Managed Security Services
“During the second quarter, we made good progress toward our strategy of transforming CSPi into a provider of innovative technology solutions and cybersecurity products,” Dellovo reiterated. “Our pipeline of managed services has grown, as we continue to focus on the development of new security products which expand market opportunities.”
The new capabilities afford CSP the opportunity to grow ARIA revenues within the MSSP market, Dellovo said. "We expect to launch a beta version of the product in the current third fiscal quarter and begin to realize revenues from this new market by the end of the year,” he said. “We are at a significant juncture as we prepare to launch exciting new products late in the fiscal year.”