Financial Data and Key Metrics Changes - The company reported consolidated revenue of $15.1 million for Q4 2024, reflecting a 15.1% year-over-year increase driven by double-digit growth across both OSS and Bressner segments [29] - Consolidated gross margin for Q4 was 15.7%, down from 33.7% in the prior year, with gross margin excluding one-time charges at 23.8% [30] - The company expects consolidated gross margin to return to the low 30% range in Q1 2025 [30] Business Line Data and Key Metrics Changes - OSS segment gross margin for Q4 was 9.4%, compared to 45.9% in the same period last year, with expectations for improvement to the mid to upper 30% range in Q1 2025 [31] - Customer-funded development revenue increased by 118% in 2024 to $3.7 million, indicating strong growth potential for larger revenues in the future [10] Market Data and Key Metrics Changes - The company experienced growth in both defense and commercial end markets, with significant demand from the U.S. Army and other defense contractors [9][10] - The company anticipates a projected consolidated revenue of $59 million to $61 million for the full year of 2025, including OSS segment revenue of approximately $30 million, representing over 20% year-over-year growth [22][23] Company Strategy and Development Direction - The company is focused on transforming its business model to capitalize on growth opportunities in artificial intelligence, machine learning, and rugged enterprise-class compute solutions [5][6] - The company has identified a $200 million multiyear pipeline opportunity in composable infrastructure for data centers, which is expected to drive future growth [17] Management's Comments on Operating Environment and Future Outlook - Management noted that while there may be near-term volatility due to budget delays and economic uncertainties, the company feels confident about its financial position and growth potential for 2025 [24] - The company expects to be EBITDA breakeven for the full year of 2025, with revenue and profitability anticipated to improve in the second half of the year [23] Other Important Information - The company incurred a $1.2 million charge related to contract losses and $7.1 million in inventory charges in 2024, which negatively impacted financial results [27][28] - As of December 31, 2024, the company had total cash and short-term investments of $10 million, with no borrowings on its revolving line of credit [35] Q&A Session Summary Question: What was the reason for the lower OSS segment gross margin? - Management indicated variability in gross margin based on the mix of products, with lower margin products shipping in Q4 2024 [40][43] Question: How has the order pipeline changed for 2025? - Management stated that the pipeline remains stable, with no significant shifts, and they are seeing increased opportunities for customer-funded development programs [52][54] Question: Where is the growth expected to come from in the commercial and defense markets? - Management noted that growth is balanced across both commercial and defense markets, with significant opportunities in data centers, medical imaging, and long-term contracts with defense contractors [64][66] Question: Are there any unexpected areas of strength in the commercial segment? - Management highlighted that medical imaging is showing faster adoption of AI than initially anticipated, contributing to growth [70] Question: How many product programs are currently in development under the OSS segment? - Management indicated that multiple customer-funded development programs are in place, which are expected to lead to larger production orders over time [73]

Economic and Market Conditions - Economic uncertainty and capital markets disruption significantly impacted by geopolitical instability could harm the company's financial condition and results of operations [150]. - The company may be adversely affected by inflation, which has increased overall cost structure and could lead to higher interest rates and capital costs [164]. - The market for high-performance computing products is developing and may not grow as expected, affecting demand and sales [165]. - Business disruptions from natural disasters or geopolitical conflicts could lead to significant losses and increased costs [153]. - Changes in U.S. government priorities and defense spending could negatively impact the company's financial position and results [151]. - The company has not been materially impacted by ongoing geopolitical conflicts to date, but future effects remain unpredictable [160]. Customer and Supplier Risks - The company relies on a limited number of parts suppliers, and any disruption could impact manufacturing and design processes [151]. - A limited number of customers represent a significant portion of sales, and losing key customers could lead to a substantial decrease in revenue [151]. - In the year ended December 31, 2024, 20.2% of total consolidated revenues were attributable to the top three customers, including Raytheon, Alcon Gps, and Torc Robotics [193]. - In the year ended December 31, 2024, 39.7% of OSS segment revenues were attributable to the top three customers, indicating a significant reliance on a limited customer base [193]. - Approximately 37% of materials purchased in 2024 came from suppliers that accounted for more than 10% of total parts purchases, highlighting supply chain concentration risks [195]. - The company relies on a limited number of parts suppliers, and disruptions could adversely affect product marketing and sales [195]. Competition and Market Position - The company faces competition from new entrants and existing customers, which could harm its competitive position [150]. - The competitive landscape is evolving, with new entrants and distribution models potentially harming the company's market position [171]. - The company’s products face competition from mass-produced hardware solutions, which could create pricing pressure and reduce profit margins [170]. - The ongoing commoditization of HPC hardware and software is leading to increased pricing pressure, potentially reducing gross margins and adversely affecting operating results [213]. Government and Regulatory Risks - Changes in U.S. government priorities and potential reductions in defense spending could negatively impact the company's financial position and growth prospects [185]. - The U.S. government may terminate contracts at its convenience, which could adversely affect the company's business and financial performance [188]. - The company is subject to procurement laws and regulations that could impose risks and costs on its business [187]. - Compliance with evolving data protection regulations, such as GDPR and CCPA, could result in penalties of up to 4% of worldwide revenue and increased compliance costs [224][226]. - The company is subject to governmental export and import controls that could impair its ability to compete internationally and result in significant penalties for non-compliance [229][230]. - Changes in regulations or standards related to suppliers' products may lead to unanticipated costs or liabilities, adversely affecting business operations and future sales [231]. Cybersecurity and Intellectual Property Risks - The company faces risks associated with cybersecurity incidents that could disrupt operations and expose it to liabilities [176]. - The company has implemented systems to address cybersecurity risks, but these measures may not be sufficient for all possible situations [178]. - Cybersecurity breaches pose a risk of theft of proprietary designs, which could negatively impact competitive edge and financial results [216]. - The company faces significant risks related to intellectual property protection, including potential costs and resource diversion from enforcing proprietary rights against competitors [214][215]. - The company is obligated to indemnify channel partners and end-customers for certain intellectual property infringement claims, which could lead to substantial costs [222]. Financial and Operational Challenges - The company’s operating results may fluctuate significantly due to various factors, including longer sales cycles in military and defense markets [167]. - The sales cycles for some products can take several months or longer, increasing the risk of inventory becoming obsolete [202]. - The company offers extended product warranties, which could lead to significant costs if failure rates unexpectedly increase [205]. - Achieving design wins is critical for success, and failure to do so could harm the company's business [207]. - Acquisitions may require significant management attention and could disrupt operations, leading to potential financial dilution [211]. - The company anticipates that future growth will require significant expansion of operations and innovation, which may strain management and financial resources [192]. Stock and Ownership Structure - Directors, executive officers, and significant stockholders own approximately 40% of the outstanding common stock, allowing them to exert significant control over corporate matters [237]. - As of March 5, 2025, there are 21,323,261 shares of common stock outstanding, with potential future equity issuances causing dilution to current shareholders [241]. - The company has the right to issue up to 10,000,000 shares of blank-check preferred stock, which could adversely affect common stock rights and preferences [242]. - The company has never paid cash dividends and does not expect to do so in the foreseeable future, relying on share price appreciation for returns [250]. - The company qualifies as a "smaller reporting company," which may make its common stock less attractive to investors due to reduced reporting requirements [252]. - The market price of common stock could decline if equity research analysts downgrade the stock or cease coverage [240]. - Anti-takeover provisions in the company's charter could delay or prevent changes in control, potentially affecting stock price [244]. - The concentration of ownership among major stockholders may adversely affect the market price of common stock [237]. - The company may face challenges in raising additional capital on acceptable terms, impacting its ability to develop new technologies and expand operations [248].

Group 1 - One Stop Systems, Inc. reported a quarterly loss of $0.12 per share, significantly worse than the Zacks Consensus Estimate of $0.01, marking an earnings surprise of -1,300% [1] - The company posted revenues of $15.14 million for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 0.93% and showing an increase from $13.16 million year-over-year [2] - Over the last four quarters, One Stop Systems has surpassed consensus revenue estimates four times, but has only exceeded EPS estimates once [2] Group 2 - The stock has underperformed the market, losing about 8.7% since the beginning of the year compared to the S&P 500's decline of -4.5% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.01 on revenues of $14 million, while for the current fiscal year, it is $0.01 on revenues of $61.3 million [7] - The Zacks Industry Rank for Electronics - Miscellaneous Products is in the bottom 40% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Core Insights - The company reported consolidated revenue growth for Q4 2024, with a year-over-year increase of 15.1%, reaching $15.1 million compared to $13.2 million in Q4 2023, driven by growth in both OSS and Bressner segments [4][10][18] - Management anticipates double-digit consolidated revenue growth in 2025, with OSS segment revenue expected to exceed 20% growth and aims for EBITDA break-even for the year [1][18] Financial Performance - OSS segment revenue increased by 10% year-over-year, primarily due to higher sales from defense and commercial customers, contributing $7.04 million in Q4 2024 [4][5] - Bressner segment revenue grew by 19.9% year-over-year, totaling $8.1 million in Q4 2024 [4][5] - For the full year 2024, consolidated revenue was $54.7 million, a decrease of 10.2% from $60.9 million in 2023, largely due to the loss of a former media customer [10][11] Profitability Metrics - The consolidated gross margin for Q4 2024 was 15.7%, down from 33.7% in the prior year, with a gross margin of 23.8% when excluding one-time charges [6][12] - The company reported a net loss of $3.1 million, or $(0.15) per share, compared to a net loss of $278,000, or $(0.01) per share, in the prior year [8][34] - Adjusted EBITDA for Q4 2024 was a loss of $2.3 million, including $1.2 million in one-time charges, compared to adjusted EBITDA of $322,000 in the prior year [8][17] Operational Adjustments - The company took a $1.2 million charge related to contract losses for a customer-funded development contract, which impacted gross margin and net income [4][10] - Total operating expenses increased by 15.1% to $5.5 million, primarily due to higher general and administrative costs [7][34] Cash and Working Capital - As of December 31, 2024, the company reported cash and short-term investments of $10.0 million, down from $11.8 million a year earlier, with total working capital of $24.0 million [9][33] - The reduction in cash was mainly due to the repayment of $1 million in notes payable [9] Future Outlook - The company expects consolidated revenue for 2025 to be between $59 million and $61 million, with OSS segment revenue projected at approximately $30 million [18] - Management anticipates improved revenue and profitability in the second half of 2025 based on current trends and an expanding sales pipeline [18]

Core Viewpoint - One Stop Systems, Inc. (OSS) will release its fourth quarter and full year 2024 financial results on March 19, 2025, followed by a conference call to discuss the results [1] Group 1: Company Overview - OSS is a leader in rugged Enterprise Class compute solutions for artificial intelligence (AI), machine learning (ML), and sensor processing at the edge [1][3] - The company designs and manufactures products that enable rugged AI, sensor fusion, and autonomous capabilities in challenging environments [3][5] - OSS products include ruggedized servers, compute accelerators, flash storage arrays, and storage acceleration software, utilized across various industries such as autonomous trucking, farming, and defense [4][5] Group 2: Product and Market Position - OSS solutions address the entire AI workflow, from data acquisition to deep learning and large-scale inference, and have achieved many industry firsts for industrial OEM and government customers [5] - The company operates in the rapidly growing multi-billion-dollar edge computing market, focusing on delivering high performance in demanding environments [5] Group 3: Communication and Accessibility - The conference call will be accessible via domestic and international phone lines, with a replay available after the call [2] - Additional information about OSS and its products can be found on the company's website and social media platforms [6]

Company Overview - One Stop Systems, Inc. (OSS) is a leader in rugged Enterprise Class compute for artificial intelligence (AI), machine learning (ML), and sensor processing at the edge [1][3] - OSS designs and manufactures products that enable rugged AI, sensor fusion, and autonomous capabilities across various challenging environments [3][5] Product Offerings - OSS products include ruggedized servers, compute accelerators, flash storage arrays, and storage acceleration software [4] - These products are utilized in multiple industries, including autonomous trucking, farming, defense, and aerospace applications [4][5] Market Position - OSS operates in the rapidly growing segment of the multi-billion-dollar edge computing market, focusing on AI-enabled solutions that deliver high performance in demanding conditions [5] - The company addresses the entire AI workflow, from data acquisition to deep learning and large-scale inference, achieving many industry firsts for its customers [5] Upcoming Events - OSS will participate in the 37th Annual ROTH Conference on March 17-18, 2025, where the CEO and CFO will be available for one-on-one investor meetings [1][2]

Core Insights - One Stop Systems, Inc. (OSS) announced two contract renewals with the U.S. Department of Defense, totaling approximately $6 million, which includes a $4 million contract for the P-8A Poseidon Aircraft and a $2 million contract for the Virginia Class Submarine [1][2][5] Group 1: Contract Details - The $4 million contract for the P-8A Poseidon includes a follow-on production order, a tech refresh contract, and a 5-year support extension, expanding the scope of OSS software under a current $36 million agreement [3][4] - The $2 million contract for the Virginia Class Submarine involves upgrading PCIe infrastructure for sonar sensor processing, with prototypes expected in early 2025 and production systems later in 2025 [5] Group 2: Company Positioning and Strategy - OSS emphasizes its leadership in providing high-performance edge computing solutions for military applications, highlighting the importance of these contract renewals in its long-term strategic plan [2][6] - The company focuses on ruggedized AI-enabled solutions that cater to demanding environments, showcasing its capabilities in various sectors including defense, autonomous trucking, and agriculture [6][7][8]

Core Insights - One Stop Systems, Inc. (OSS) has received a new purchase order valued at $200,000 from a leading defense contractor in Asia, with deliveries expected in Q4 2024 and additional orders anticipated in 2025 and 2026 [1][2]. Group 1: Company Overview - OSS specializes in rugged Enterprise Class compute solutions for AI, machine learning, and sensor processing at the edge, catering to demanding environments [4][6]. - The company designs and manufactures products that enable AI, sensor fusion, and autonomous capabilities, ensuring high performance in challenging applications across various sectors, including defense [4][5]. Group 2: Product and Application Details - The new order supports the contractor's modular system aimed at converting manned vessels into unmanned surface vessels (USV) for autonomous missions, integrating mission controls and payloads for diverse applications [2][3]. - OSS will provide 8U of hardware for each USV, including two rugged 3U Short Depth Servers and two redundant ethernet switches, designed to operate reliably in temperatures exceeding 40°C [2][3]. Group 3: Market Position and Future Outlook - OSS's rugged computing solutions are positioned to meet the needs of USVs operating in harsh environments, requiring high levels of compute power for autonomous operations [3][6]. - The company is part of the rapidly growing edge computing market, particularly in AI-enabled solutions, which demand high performance in challenging conditions [6].

Core Insights - One Stop Systems, Inc. (OSS) has received a $2 million initial order from an established AI infrastructure company, with shipments expected to begin in Q1 2025 [1][2] - The order includes 100 units, comprising 50 OSS Ponto Reef compute accelerators and 50 OSS Gen5 4UPro Accelerator Systems, with expectations for follow-on orders in the coming years [2][3] - OSS's PCIe 5.0 expansion system, Ponto Reef, supports up to 32 PCIe Accelerator Devices in a single chassis, catering to the growing demands of the Composable Disaggregated Infrastructure (CDI) and datacenter market [3] Company Overview - OSS specializes in rugged Enterprise Class compute solutions for AI, machine learning, and sensor processing at the edge, providing high-performance products for various industries [4][5] - The company’s offerings include ruggedized servers, compute accelerators, flash storage arrays, and storage acceleration software, utilized in sectors such as autonomous trucking, defense, and aerospace [5][6] - OSS addresses the entire AI workflow, from data acquisition to deep learning and inference, positioning itself as a leader in the rapidly growing edge computing market [6]

Financial Data and Key Metrics Changes - For Q3 2024, the company reported consolidated revenue of $13.7 million, exceeding guidance of $13.3 million, with a slight year-over-year decrease due to a $1 million reduction in Bressner revenue, offset by a $1 million increase in OSS segment revenue [33] - The gross margin percentage was negative 12.5%, compared to 26.6% in the prior year quarter, while gross margin excluding a $6.1 million inventory charge was 32%, up from 26.6% [34] - The company reported a GAAP net loss of $6.8 million or $0.32 per share, compared to a net loss of $3.6 million or $0.18 per share in the prior year [37] Business Line Data and Key Metrics Changes - OSS segment revenue grew year-over-year by 17.5%, with gross margin of 43.2% excluding the inventory charge, a 10.8 percentage point increase from the same period last year [8][35] - Bressner segment had a gross margin percentage of 22%, a 0.6 percentage point decrease from the same period last year, driven by a less profitable mix of revenue [36] Market Data and Key Metrics Changes - The company’s five-year unfactored pipeline at the end of Q3 remained over $1 billion, with approximately 70% comprised of platform and multiyear opportunities [17] - Orders outpaced revenue by 25% for the third quarter in a row, driven by existing customers in the air and maritime C5ISR defense markets [20] Company Strategy and Development Direction - The company is focused on converting its $1 billion pipeline to sales and pursuing customer-funded development projects to establish itself as an incumbent on platforms driving future multiyear production contracts [7][12] - The strategic focus is on higher-margin revenue opportunities in commercial and defense markets, particularly in response to emerging requirements for AI, machine learning, and autonomy [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sustainable revenue growth, with expectations for consolidated revenue of approximately $15 million in Q4 2024 and OSS segment revenue of $7 million, representing over 9% year-over-year growth [41][42] - The company anticipates a rebound in the Bressner segment in 2025, likely to see growth around Q2, contingent on improvements in the European economy [61][64] Other Important Information - The company announced the retirement of CFO John Morrison and welcomed Daniel Gabel as the new CFO, emphasizing the importance of leadership in executing growth strategies [28][29] - The company has expanded its product development efforts, currently working on five product initiatives focused on edge computing for both defense and commercial applications [27] Q&A Session Summary Question: What is driving the strengthening trends in bookings? - Management noted that the growth in bookings is driven by both defense and commercial markets, with a broader outreach and application of products since the new VP of Sales joined [44] Question: What is the percentage of government versus commercial bookings? - Management estimated that approximately 55% to 60% of bookings are from defense [46] Question: What are the expectations for the Bressner segment in 2025? - Management anticipates a potential rebound in the Bressner segment around Q2 2025, depending on the European economic recovery [64] Question: What is the expected gross margin for the OSS segment in the next 18 months? - Management expects to drive gross margins up to 35% or better as the mix of products and customer-funded development grows in volume [50] Question: How does the customer-funded development translate into future revenue? - Management indicated that customer-funded development typically represents 10% to 20% of a whole program, with potential for significant revenue during production phases [58]