One Stop Systems Reports Q1 2025 Results

First quarter of 2025 consolidated gross margin increased 320 basis points year-over-year to 32.6%, on consolidated revenue of $12.3 million OSS segment gross margin of 45.5%, on OSS segment revenue of $5.2 million OSS segment experienced strong first-quarter bookings of $10.4 million Management continues to expect double-digit consolidated revenue growth in 2025 and consolidated EBITDA break even for the year ESCONDIDO, Calif., May 07, 2025 (GLOBE NEWSWIRE) -- One Stop Systems, Inc. ("OSS" or the "Company") (Nasdaq: OSS), a leader in rugged Enterprise Class compute for artificial intelligence (AI), machine learning (ML), autonomy and sensor processing at the edge, reported results for the three-month period ended March 31, 2025. Comparisons for the three-month periods are to the same year-ago periods unless otherwise noted. “Our OSS segment achieved strong bookings during the first quarter of 2025, driven by growing demand from both new and existing commercial and defense customers. This positive trend highlights increased interest in our Enterprise Class compute solutions and validates our strategic focus on building multi-year, predictable revenue streams. Higher OSS segment orders are particularly encouraging amid ongoing uncertainty in business and government spending. Momentum remains strong, as the programs we are pursuing closely align with our customers’ evolving priorities on AI, ML, autonomy and sensor processing at the Edge," stated OSS President and CEO, Mike Knowles. “As expected, our consolidated gross margin improved year-over-year and from the fourth quarter of 2024, supported by a 45.5% gross margin at our OSS segment, associated with a more profitable mix of products. While near-term market conditions affected the timing of certain OSS segment orders anticipated for the first and second quarters of 2025, we remain on track to achieve our 2025 annual guidance. In addition, we expect bookings to remain strong throughout the year within our OSS segment and support profitable revenue growth in the second half of 2025 and into 2026,” concluded Mr. Knowles. 2025 First-Quarter Financial Summary Consolidated revenue was $12.3 million, compared to $12.7 million in the first quarter of 2024. OSS segment revenue decreased 5.9%, as compared to the same period in 2024, primarily due to lower volume of shipments to a commercial aerospace customer, partially offset by higher volume of shipments to a defense customer. Bressner segment revenue decreased $65,637, or 0.9%, as compared to the same period in 2024. The following table sets forth net revenue by segment for the three months ended March 31, 2025, and March 31, 2024 (Dollars may not calculate due to rounding): Three Months EndedEntity:March 31,2025 % of NetRevenue March 31,2024 % of NetRevenue %ChangeOSS$5,206,810 42.5% $5,533,872 43.7% (5.9)%Bressner 7,052,277 57.5% 7,117,914 56.3% (0.9)%Total net revenue$12,259,088 100.0% $12,651,786 100.0% (3.1)% Consolidated gross margin percentage was 32.6% for the three months ended March 31, 2025, compared to 29.4% in the prior year quarter. On a segment basis, the OSS segment had a gross margin of 45.5%, an increase of 11.3 percentage points as compared to the prior year of 34.2%. The increase in OSS segment gross margin was primarily due to higher volume of certain higher margin data storage units and componentry shipped in the quarter. The Company’s Bressner segment had a gross margin percentage of 23.1%, compared to 25.7% in the same period last year, due to product mix. Total operating expenses increased 19.2% to $5.9 million. This increase was predominantly attributable to higher marketing and selling costs due to an increase in personnel costs from the additions in headcount made during 2024 as well as an increase in research and development costs driven by higher engineering labor to support new product development. The Company reported a net loss of $2.0 million, or $(0.09) per share, as compared to a net loss of $1.3 million, or $(0.06) per share, in the prior year period. Adjusted EBITDA, a non-GAAP metric, was a loss of $1.1 million, compared to adjusted EBITDA loss of $500,452 in the prior year period. As of March 31, 2025, the Company reported cash and short-term investments of $9.1 million and total working capital of $23.1 million, compared to cash and short-term investments of $10.0 million and total working capital of $24.0 million at December 31, 2024. 2025 Full Year Outlook OSS is executing a strategic plan targeting both commercial and defense markets, aiming to provide integrated solutions and establish OSS as a platform incumbent on large, multi-year programs. This approach is expected to drive long-term value by increasing predictable, recurring revenue and building a strong, multi-year backlog. As a result of OSS’ multi-year strategy, the Company continues to anticipate consolidated revenue of $59 to $61 million for the full year of 2025. This includes expected OSS segment revenue of approximately $30 million, representing over 20% year-over-year growth. In addition, the Company expects to be EBITDA break-even for the full year of 2025. Management expects revenue and profitability to improve at a higher rate in the second half of 2025 based on current trends and the Company’s expanding sales pipeline. Conference Call OSS will hold a conference call to discuss its results for the first quarter of 2025, followed by a question-and-answer period. Date: Wednesday, May 7, 2025Time: 10:00 a.m. ET (7:00 a.m. PT)Toll-free dial-in: 1-800-717-1738International dial-in: 1-646-307-1865Conference ID: 57745 (required for entry)Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1710966&tp_key=28a1f0fc7f A replay of the call will be available after 1:00 p.m. ET on May 7, 2025, through May 21, 2025. Toll-free replay: 1-844-512-2921International replay: 1-412-317-6671Passcode: 1157745 About One Stop Systems One Stop Systems, Inc. (Nasdaq: OSS) is a leader in AI enabled solutions for the demanding ‘edge’. OSS designs and manufactures Enterprise Class compute and storage products that enable rugged AI, sensor fusion and autonomous capabilities without compromise. These hardware and software platforms bring the latest data center performance to harsh and challenging applications, whether they are on land, sea or in the air. OSS products include ruggedized servers, compute accelerators, flash storage arrays, and storage acceleration software. These specialized compact products are used across multiple industries and applications, including autonomous trucking and farming, as well as aircraft, drones, ships and vehicles within the defense industry. OSS solutions address the entire AI workflow, from high-speed data acquisition to deep learning, training and large-scale inference, and have delivered many industry firsts for industrial OEM and government customers. As the fastest growing segment of the multi-billion-dollar edge computing market, AI enabled solutions require—and OSS delivers—the highest level of performance in the most challenging environments without compromise. OSS products are available directly or through global distributors. For more information, go to www.onestopsystems.com. You can also follow OSS on X, YouTube, and LinkedIn.Non-GAAP Financial Measures We believe that the use of adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, is helpful for an investor to assess the performance of the Company. The Company defines adjusted EBITDA as income (loss) before interest, taxes, depreciation, amortization, acquisition expense, impairment of long-lived assets, financing costs, government funded programs, fair value adjustments from purchase accounting, stock-based compensation expense, and expenses related to discontinued operations. Adjusted EBITDA is not a measurement of financial performance under generally accepted accounting principles in the United States, or GAAP. Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash operating expenses, we believe that providing a non-GAAP financial measure that excludes non-cash and non-recurring expenses allows for meaningful comparisons between our core business operating results and those of other companies, as well as providing us with an important tool for financial and operational decision making and for evaluating our own core business operating results over different periods of time. Our adjusted EBITDA measure may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring and unusual items. Our adjusted EBITDA is not a measurement of financial performance under GAAP, and should not be considered as an alternative to operating income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. We do not consider adjusted EBITDA to be a substitute for, or superior to, the information provided by GAAP financial results. For the Three Months Ended March 31, 2025 2024 Net loss$(2,017,634) $(1,339,622)Depreciation 223,847 289,547 Amortization of right-of-use assets net of change in lease liability (2,032) 55,997 Stock-based compensation expense 612,561 408,740 Interest expense 14,186 35,342 Interest income (72,511) (141,725)Provision for income taxes 109,466 191,269 Adjusted EBITDA$(1,132,116) $(500,452) (Dollars may not calculate due to rounding) Adjusted EPS excludes the impact of certain items and, therefore, has not been calculated in accordance with GAAP. We believe that exclusion of certain selected items assists in providing a more complete understanding of our underlying results and trends and allows for comparability with our peer company index and industry. We use this measure along with the corresponding GAAP financial measures to manage our business and to evaluate our performance compared to prior periods and the marketplace. The Company defines non-GAAP income (loss) as income or (loss) before amortization, government funded programs, impairment of long lived assets, stock-based compensation, expenses related to discontinued operations, and acquisition costs. Adjusted EPS expresses adjusted income (loss) on a per share basis using weighted average diluted shares outstanding. Adjusted EPS is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. These non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies. We expect to continue to incur expenses similar to the adjusted income from continuing operations and adjusted EPS financial adjustments described above, and investors should not infer from our presentation of these non-GAAP financial measures that these costs are unusual, infrequent or non-recurring. The following table reconciles non-GAAP net income and basic and diluted earnings per share: For the Three Months Ended March 31, 2025 2024 Net loss$(2,017,634) $(1,339,622)Stock-based compensation expense 612,561 408,740 Non-GAAP net loss$(1,405,073) $(930,882)Non-GAAP net loss per share: Basic$(0.07) $(0.04)Diluted$(0.07) $(0.04)Weighted average common shares outstanding: Basic 21,384,599 20,709,234 Diluted 21,384,599 20,709,234 (Dollars may not calculate due to rounding) Forward-Looking Statements OSS cautions you that statements in this press release that are not a description of historical facts are forward-looking statements. . Words such as, but not limited to, “anticipate,” “aim,” “believe,” “contemplate,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “suggest,” “strategy,” “target,” “will,” “would,” and similar expressions or phrases, or the negative of those expressions or phrases, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements include but are not limited to those relating to increased sales and revenues, non-GAAP financial measures, our multi-year strategy, increase in margins, and operating expenses. These statements are based on the company's current beliefs and expectations. The inclusion of forward-looking statements should not be regarded as a representation by OSS or its partners that any of our plans or expectations will be achieved. Factors that could interfere with our ability to achieve our plans or expectations , include but are not limited to, our ability to expand our product offerings and further penetrate our target markets, future demand for AI/ML integrations, global socio-economic challenges, stock market uncertainty or volatility, reductions in business and/or government spending, and changes in our business strategies, management and/or senior leadership. Actual results may differ from those set forth in this press release due to the risk and uncertainties inherent in our business, including risks described in our prior press releases and in our filings with the Securities and Exchange Commission (SEC), including under the heading "Risk Factors" in our latest Annual Report on Form 10-K and any subsequent filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the company undertakes no obligation to revise or update this press release to reflect events or circumstances after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.Media Contacts: Robert KalebaughOne Stop Systems, Inc. Tel (858) 518-6154Email contact Investor Relations:Andrew BergerManaging Director SM Berger & Company, Inc. Tel (216) 464-6400Email contact ONE STOP SYSTEMS, INC. (OSS)CONSOLIDATED BALANCE SHEETS Unaudited Audited March 31, December 31, 2025 2024 ASSETS Current assets Cash and cash equivalents$6,498,468 $6,794,093 Short-term investments 2,620,169 3,217,065 Accounts receivable, net 7,245,983 8,177,371 Inventories, net 15,099,479 13,176,156 Prepaid expenses and other current assets 1,178,620 836,364 Total current assets 32,642,719 32,201,048 Property and equipment, net 1,472,160 1,669,026 Operating lease right-of use assets 1,463,099 1,536,094 Deposits and other 38,093 38,093 Goodwill 1,489,722 1,489,722 Total Assets$37,105,793 $36,933,982 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable$4,475,684 $2,068,017 Accrued expenses and other liabilities 3,730,499 4,806,675 Current portion of operating lease obligation 272,865 285,937 Current portion of notes payable 1,079,484 1,035,050 Total current liabilities 9,558,532 8,195,679 Deferred tax liability, net 45,572 52,574 Operating lease obligation, net of current portion 1,451,728 1,513,684 Total liabilities 11,055,832 9,761,937 Commitments and contingencies Stockholders’ equity Common stock, $0.0001 par value; 50,000,000 shares authorized; 21,582,196 and 21,148,810 shares issued and outstanding 2,158 2,115 Additional paid-in capital 49,824,911 49,082,737 Accumulated other comprehensive income 293,587 140,254 Accumulated deficit (24,070,695) (22,053,061)Total stockholders’ equity 26,049,961 27,172,045 Total Liabilities and Stockholders' Equity$37,105,793 $36,933,982 ONE STOP SYSTEMS, INC. (OSS)UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars may not calculate due to rounding) For the Three Months Ended March 31, 2025 2024 Revenue: Product$11,848,713 $12,287,046 Customer funded development 410,375 364,740 12,259,088 12,651,786 Cost of revenue: Product 7,912,314 8,818,756 Customer funded development 349,782 109,737 8,262,096 8,928,493 Gross profit 3,996,992 3,723,293 Operating expenses: General and administrative 2,366,369 2,094,317 Marketing and selling 2,218,190 1,920,113 Research and development 1,357,293 970,877 Total operating expenses 5,941,852 4,985,307 Loss from operations (1,944,860) (1,262,014)Other (expense) income, net: Interest income 72,511 141,725 Interest expense (14,186) (35,342)Other (expense) income, net (21,633) 7,278 Total other income, net 36,692 113,661 Loss before income taxes (1,908,168) (1,148,353)Provision for income taxes 109,466 191,269 Net loss$(2,017,634) $(1,339,622) Net loss per share: Basic$(0.09) $(0.06)Diluted$(0.09) $(0.06) Weighted average common shares outstanding: Basic 21,384,599 20,709,234 Diluted 21,384,599 20,709,234 ONE STOP SYSTEMS, INC. (OSS)UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2025 2024 Cash flows from operating activities: Net loss$(2,017,634) $(1,339,622)Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Deferred income taxes 1,737 (188,674)Loss on disposal of property and equipment - 354 Provision for bad debt (100) - Warranty reserves - (15,000)Depreciation 223,847 289,547 Amortization of right-of-use assets 76,825 100,138 Inventory reserves (146,200) 94,063 Stock-based compensation expense 612,561 408,740 Changes in operating assets and liabilities: Accounts receivable 1,068,100 842,057 Inventories (1,418,185) (66,013)Prepaid expenses and other current assets (332,400) (224,116)Accounts payable 2,336,310 1,486,003 Accrued expenses and other liabilities (1,461,601) 700,041 Operating lease liabilities (78,857) (44,141)Net cash (used in) provided by operating activities (1,135,596) 2,043,378 Cash flows from investing activities: Redemption of short-term investment grade securities 597,288 1,811,364 Purchases of property and equipment, including capitalization of labor costs for test equipment and ERP (12,793) (167,168)Net cash provided by investing activities 584,495 1,644,196 Cash flows from financing activities: Proceeds from exercise of stock options and warrants 373,310 127,350 Payment of payroll taxes on net issuance of employee stock options (243,654) (246,376)Repayments on notes payable - (680,948)Net cash provided by (used in) financing activities 129,656 (799,974) Net change in cash and cash equivalents (421,445) 2,887,600 Effect of exchange rates on cash 125,820 (32,446)Cash and cash equivalents, beginning of period 6,794,093 4,048,948 Cash and cash equivalents, end of period$6,498,468 $6,904,102

One Stop Systems Reports Q1 2025 Results

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