CSP Inc. (NASDAQ:CSPI) Q4 2023 Earnings Call Transcript

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Victor Dellovo: Fair enough. Thanks for your feedback. Appreciate it.

Operator: Our next question is coming from John Crotty [ph], who is an investor. Your line is live.

Unidentified Analyst: I got to tell you, I really enjoyed that last back and forth with you and Paul because those were some of my questions. I’d like to just kind of turn and talk on a more technical side now. As Paul mentioned, there’s a lot of headline news out there with all the cyber attacks, especially with China, Taiwan, Ukraine, Russia, what interested me the most was the fact the way they’re breaking through the firewall, they have been a harder time coming through. I’m speaking more technical now. But I think you guys are sitting in a potential sweet spot. If I understand this properly, AZT is deployed on the other side of the firewall, where it’s listening all the time is employees are now being the lead target for producing the cyber threats, whether it’s through a UBS or through a personal computer plugged into the network.

And I’m saying that because I noticed you were saying the word air gapped quite a lot. And to me, that means it’s almost like it’s a self-contained network without a direct link or constant link to the Internet. I’m just hoping you can maybe explain more to the rest of the world because that’s a real serious way of breaking in now. And I believe that’s how we’ve seen some certain nuclear reactions go down, if you could clarify that and give me a little more understanding.

Victor Dellovo: Okay. I’ll do my best on the technical side. So where we reside is on the — in the servers, right, on the core of the servers where it’s a driver that gets installed, and it’s about 40 meg, very, very small, uses 1% or 2% CPU utilization. And what happens is once that gets installed, it expands and it looks at every single application. Now we’re talking to some customers right now that are testing it on literally over 1,000 systems that are running 1,100 applications at one time. And it goes out, it looks at all 1,100 applications. And then that’s it’s — the person has looked at it and say, is it a viable application? Yes, it is. This is where we’re at. At that point, it’s not going to allow anything else besides what’s installed to be executed on that.

So if someone tries to get in and because the biggest thing is when end users open up with the executables, right? And then all of a sudden, then they’re inside the system and then everything goes, haywire at that point. So, we’re at the very beginning on the core and that’s where we start protecting and that’s where we’re looking at all the applications and how we protect all those applications. And then after that, that’s where it’s the perfect picture at that point. And we stopped everything immediately at that stage.

Unidentified Analyst: Okay. And that makes sense. Is that sitting in the NVIDIA chip? Or is it just a software install with the driver?

Victor Dellovo: It’s just a software install in the driver. So, it’s about 40 meg.

Unidentified Analyst: Oh, small.

Victor Dellovo: Very, very small.

Unidentified Analyst: And one last question. I’m sorry. With the AI attached to it, is it self-learning? Does it retain? Or does it learn? Or how does that happen?

Victor Dellovo: Well, yes, it looks at it and then it looks at what the customer’s environment and what’s correct for that customer, and that’s what the perfect model is. And then everything else that is not there, that’s when it stops it. And then, we can run code against it that will allow certain things to come through after the fact if we see, you know, what, this is the correct new environment, what it should look like?

Unidentified Analyst: So you’re starting at a static perfect world and what’s different from the tomorrow or the next hour. That makes total sense.

Operator: Our final question today is coming from Brett Davidson [ph], who is an investor. Sir, your line is live.

Unidentified Analyst: Back again. I just wanted to hop on a soapbox here for a minute. I understand the sentiment of some of the other callers and everybody would love to see the share price to skyrocket and this to become an overnight success. But I think patience is probably a pretty good idea at this point. I would love to see just rapidly adopted. And I think you guys are — got your nose to the grindstone trying to push this forward. But at the same time, I have realistic expectations that going to — it’s not going to happen overnight. So, I’ll step back down and thanks again, and we’ll talk to you next quarter.

Operator: Thank you. As we have reached the end of our question and answer session, I will now turn the call back over to Mr. Dellovo for any closing remarks.

Victor Dellovo: Thank you. As always, I want to thank our shareholders for their continued interest and support. Our success throughout the fiscal ’23 has given us momentum heading into fiscal 2024 as we’re already off to a good start with recent AZT client engagements. CSPI has always had a good reputation within the industry. The launch of AZT strengthens this view, and I believe will allow us to engage and sit at the table with Fortune 500 companies. Gary and I look forward to sharing our progress in fiscal 20,241st quarter in February. Until then, be well, stay safe and enjoy the holiday season. Thank you.

Gary Levine: Thank you.

Operator: Thank you, ladies and gentlemen. This does conclude today’s conference, and you may disconnect your lines at this time. And we thank you for your participation.

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