One Stop Systems Reports Fourth Quarter 2024 Revenue Growth, Anticipates Double-Digit Growth in 2025

One Stop Systems reported Q4 2024 revenue growth, driven by OSS and Bressner segments, forecasting continued growth in 2025.

Quiver AI Summary

One Stop Systems, Inc. (OSS) reported a consolidated revenue increase of 15.1% year-over-year for Q4 2024, reaching $15.1 million, with growth noted in both its OSS and Bressner segments. This rise reflects the company's strategic shift towards higher-margin markets, with a notable 10% increase in OSS segment revenue largely driven by defense and commercial customers. Despite the positive revenue trends, the company incurred a net loss of $3.1 million for the fourth quarter, affected by one-time charges related to contract losses. For the full year, total revenue was $54.7 million, down from $60.9 million in 2023, primarily due to the exit from a major media customer. Looking ahead, management anticipates double-digit revenue growth in 2025, driven by expected OSS segment growth exceeding 20%, and aims to achieve consolidated EBITDA break-even for the year.

Potential Positives

• Consolidated revenue increased by 15.1% year-over-year in Q4 2024, indicating strong overall growth across both OSS and Bressner segments.
• Management anticipates double-digit consolidated revenue growth in 2025, and specifically over 20% growth for the OSS segment, reflecting positive market expectations.
• The expectation of achieving EBITDA break-even for 2025 signifies a potential turnaround towards profitability after a challenging fiscal year.
• Continued investment in higher-growth markets aligns with the company’s transformation strategy, enhancing its competitive positioning in the rugged edge computing space.

Potential Negatives

• Significant reduction in gross margin percentage, from 33.7% in Q4 2023 to 15.7% in Q4 2024, indicating deteriorating profitability.
• Reported net loss increased substantially to $3.1 million in Q4 2024 from a loss of $278,000 in Q4 2023, highlighting an accelerating trend of financial losses.
• Full-year revenue decline of 10.2%, from $60.9 million in 2023 to $54.7 million in 2024, suggesting challenges in maintaining sales momentum and customer base.

FAQ

What drove One Stop Systems' revenue growth in Q4 2024?

Revenue growth was driven by double-digit increases in both OSS and Bressner segments, reflecting the company's transformation strategy.

What are OSS's revenue expectations for 2025?

OSS anticipates double-digit consolidated revenue growth in 2025, with OSS segment revenue expected to exceed 20% growth.

How did the company's performance compare year-over-year?

OSS reported a 15.1% year-over-year revenue increase in Q4 2024 compared to the same quarter in 2023.

What are OSS's plans for improving profitability?

The company aims to achieve EBITDA break-even in 2025, indicating a focus on higher sales and improved efficiencies.

How has OSS adjusted its operational costs?

OSS aligned its legacy inventory and program costs to enhance efficiencies and profitability during its business transformation.

Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.

$OSS Hedge Fund Activity

We have seen 22 institutional investors add shares of $OSS stock to their portfolio, and 15 decrease their positions in their most recent quarter.

Here are some of the largest recent moves:

• HERALD INVESTMENT MANAGEMENT LTD removed 379,059 shares (-100.0%) from their portfolio in Q3 2024, for an estimated $905,951
• MERCER GLOBAL ADVISORS INC /ADV removed 71,984 shares (-100.0%) from their portfolio in Q4 2024, for an estimated $241,146
• MILLENNIUM MANAGEMENT LLC added 42,277 shares (+inf%) to their portfolio in Q4 2024, for an estimated $141,627
• LYNROCK LAKE LP added 34,031 shares (+1.7%) to their portfolio in Q4 2024, for an estimated $114,003
• CITADEL ADVISORS LLC added 33,643 shares (+53.0%) to their portfolio in Q4 2024, for an estimated $112,704
• VONTOBEL HOLDING LTD. removed 33,000 shares (-100.0%) from their portfolio in Q4 2024, for an estimated $110,550
• TWO SIGMA SECURITIES, LLC added 32,560 shares (+inf%) to their portfolio in Q4 2024, for an estimated $109,076

To track hedge funds' stock portfolios, check out Quiver Quantitative's institutional holdings dashboard.

$OSS Analyst Ratings

Wall Street analysts have issued reports on $OSS in the last several months. We have seen 1 firms issue buy ratings on the stock, and 0 firms issue sell ratings.

Here are some recent analyst ratings:

• Alliance Global Partners issued a "Buy" rating on 11/06/2024

To track analyst ratings and price targets for $OSS, check out Quiver Quantitative's $OSS forecast page.

Full Release

Strength in both segments contributed to


consolidated year-over-year revenue growth for Q4 2024

Consolidated revenue increased sequentially every quarter throughout 2024, reflecting the success of the Company’s transformation strategy to higher-growth markets

Management expects double-digit consolidated revenue growth in 2025, driven by anticipated OSS segment revenue of over 20% and consolidated EBITDA break even for the year

ESCONDIDO, Calif., March 19, 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- and twelve-month periods ended December 31, 2024. Comparisons for the three- and twelve-month periods are to the same year-ago periods unless otherwise noted.

“I am pleased to report a return to consolidated year-over-year revenue growth for the fourth quarter, as sales from both our OSS and Bressner segments grew at double digit rates. Throughout 2024 we executed on our multi-year transformation, making significant progress in shifting our business toward higher-margin, higher-growth markets. We invested in our platform, strengthened our pipeline, and deepened collaboration with customers developing high-performance, Enterprise Class, edge computing solutions for both commercial and defense applications," stated OSS President and CEO, Mike Knowles.

“As efforts to reposition the Company for revenue growth gained momentum during 2024 and our business model evolved, we adjusted our legacy inventory and program costs to better align with our focus on improving efficiencies and increasing profitability. We believe the progress we made in 2024 strengthened our business, positioning the Company for higher sales and profitability in 2025 and beyond,” concluded Mr. Knowles.

2024 Fourth-Quarter Financial Summary

Consolidated revenue was $15.1 million, compared to $13.2 million in the fourth quarter of 2023. The 15.1% year-over-year increase was a result of a $1.3 million increase in Bressner segment revenue and a $642,000 year-over-year increase in OSS segment revenue. The 10% year-over-year increase in OSS segment revenue was primarily due to higher revenue from defense and commercial customers, as well as new customer-funded development orders, aligned directly with the Company’s strategic focus and plan.

The following table sets forth net revenue by segment for the three months ended December 31, 2024, and December 31, 2023 (Dollars may not calculate due to rounding):

During the fourth quarter ended December 31, 2024, the Company took a charge related to contract losses of $1.2 million for incurred and anticipated costs to satisfy performance obligations on a customer-funded development contract that was entered into in 2022.   This charge reduced reported gross margin, net income, and adjusted EBITDA for the three- and twelve-month periods ended December 31, 2024. Management does not currently foresee any further charges related to this customer-funded development contract.

Consolidated gross margin percentage was 15.7%, compared to 33.7% in the prior year quarter. Gross margin, excluding the one-time charges, was 23.8%, compared to 33.7% in the same period last year. The decrease in gross margin was primarily due to product mix.

On a segment basis, the OSS segment had a gross margin of 9.4%, compared to 45.9% for the same period a year ago. OSS segment gross margin, excluding the one-time charges, was 26.8%, compared to 45.9%. The decrease from the same period last year was primarily driven by product mix. The Company’s Bressner segment had a gross margin percentage of 21.2%, compared to 22.2% in the same period last year.

Total operating expenses increased 15.1% to $5.5 million. This increase was predominantly attributable to higher general and administrative costs related to planned sales and program management investments made during the quarter.

The Company reported a net loss of $3.1 million, or $(0.15) per share, as compared to a net loss of $278,000, or $(0.01) per share, in the prior year period.

Adjusted EBITDA, a non-GAAP metric, was a loss of $2.3 million, inclusive of $1.2 million in one-time charges, compared to adjusted EBITDA of $322,000 in the prior year period.

As of December 31, 2024, the Company reported cash and short-term investments of $10.0 million and total working capital of $24.0 million, compared to cash and short-term investments of $11.8 million and total working capital of $35.6 million at December 31, 2023. The reduction in cash and short-term investments was primarily driven by the paydown of $1 million of notes payable.

2024 Twelve Months Financial Summary

Consolidated revenue was $54.7 million, compared to $60.9 million for the same period last year. The 10.2% year-over-year reduction in consolidated revenue was primarily a result of approximately $4.8 million related to a former media customer, for whom shipments ceased in the second quarter of 2023. This decrease was partially offset by higher sales to customers in the military and defense end markets. In addition, Bressner segment revenue declined by $2.0 million on a year-over-year basis, associated with slower economic activity in the German economy.

The following table sets forth net revenue by segment for the twelve months ended December 31, 2024, and December 31, 2023 (Dollars may not calculate due to rounding):

For the year ended December 31, 2024, the Company incurred a total of $8.3 million of one-time charges that reduced reported gross margin, net income, and adjusted EBITDA. During the fourth quarter of 2024, the Company took a charge related to contract losses of $1.2 million for incurred and anticipated costs to satisfy performance obligations on a customer-funded development contract that was entered into in 2022.   Additionally, during the year, OSS incurred $7.1 million of inventory charges related to obsolete and slow-moving inventory associated with the transition of the Company's business model and operating strategies, as well as slower adoption and movement in certain commercial and defense edge compute markets. Management does not currently foresee any further significant adjustments to costs related to this customer-funded development contract or inventory charges, outside of historical trends.

Consolidated gross margin percentage was 14.1%, compared to 29.5% in the prior year. On a full year basis, consolidated gross margin, excluding one-time charges, was 29.3%, compared to 29.5% in 2023.

On a segment basis, the Company’s OSS segment had a gross margin of 2.5%, compared to 35.6% for the same period a year ago. OSS segment gross margin, excluding one-time charges, was 36.4%, up from 35.6% for 2023. The Company’s Bressner segment had a gross margin of 23.5%, compared to 24.0% in the same period last year.

Total operating expenses decreased 18.6% to $21.1 million. This decrease was predominantly attributable to a charge of $5.6 million for an impairment of goodwill that occurred during the 2023 twelve-month period, the elimination of costs associated with organizational restructuring, timing of certain new product introduction activities and the deployment of engineering resources onto customer funded development efforts, partially offset by increased costs for personnel and for tradeshow participation.

The Company reported a net loss of $13.6 million, or $(0.65) per share, as compared to a net loss of $6.7 million, or $(0.32) per share, in the prior year. Non-GAAP net loss and loss per share was $11.6 million, or $(0.56) per share, as compared to non-GAAP net loss and loss per share of $415,000, or $(0.02) per share, in the prior year period. Net loss and non-GAAP net loss for the period ended December 31, 2024, are inclusive of $8.3 million of one-time charges.

Adjusted EBITDA, a non-GAAP metric, was a loss of $10.3 million, inclusive of $7.1 million of inventory-related charges and a $1.2 million contract loss related to a customer-funded development contract that was entered into in 2022, compared to adjusted EBITDA of $1.1 million in the prior year.

2025 Full Year Outlook

The Company anticipates 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 the OSS segment. 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 fourth quarter of 2024, followed by a question-and-answer period.

Date: Wednesday, March 19, 2025


Time: 10:00 a.m. ET (7:00 a.m. PT)


Toll-free dial-in: 1-800-717-1738


International dial-in: 1-646-307-1865


Conference ID: 35863 (required for entry)


Webcast:

https://viavid.webcasts.com/starthere.jsp?ei=1706031&tp_key=7e52a82afd

A replay of the call will be available after 1:00 p.m. ET on March 19, 2025, through April 2, 2025.

Toll-free replay: 1-844-512-2921


International replay: 1-412-317-6671


Passcode: 1135863

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.

FOOTNOTE: Adjusted EBITDA for the fourth quarter and full year ended December 31, 2024, included a charge related to contract losses of $1.2 million for incurred and anticipated costs to satisfy performance obligations on a customer-funded development contract that was entered into in 2023. Adjusted EBITDA for the full year ended December 31, 2024, also included inventory-related charges of $7.1 million.

(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:

FOOTNOTE: Non-GAAP net loss for the fourth quarter and full year ended December 31, 2024, included a charge related to contract losses of $1.2 million for incurred and anticipated costs to satisfy performance obligations on a customer-funded development contract that was entered into in 2023. Non-GAAP net loss for the full year ended December 31, 2024, also included an inventory charge of $6.1 million.

(Dollars may not calculate due to rounding)

Forward-Looking Statements

One Stop Systems cautions you that statements in this press release that are not a description of historical facts are forward-looking statements. 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 One Stop Systems or its partners that any of our plans or expectations will be achieved, including but not limited to, our ability to expand our product offerings and further penetrate our target markets, future demand for AI/ML integrations, expected or anticipated increase in revenues, and our business strategies. 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 Kalebaugh


One Stop Systems, Inc.


Tel (858) 518-6154



Email contact

Investor Relations:



Andrew Berger


Managing Director


SM Berger & Company, Inc.


Tel (216) 464-6400




Email contact

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.