First quarter of 2025 consolidated gross margin increased 320 basis points year-over-year to 32.6%, on consolidated revenue of $12.3 million 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 t ...

Financial Data and Key Metrics Changes - OSS 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 2024 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 2024 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 future revenues [10] Market Data and Key Metrics Changes - The company experienced greater adoption in both defense and commercial end markets, contributing to a broader customer base [9] - The annual book-to-bill ratio for the OSS segment was lifted to 1.14, with expectations for a ratio of approximately 1.2 in 2025 [11][12] Company Strategy and Development Direction - OSS is focused on transforming the company and pursuing growth opportunities driven by artificial intelligence, machine learning, and sensor processing [5] - The company anticipates significant opportunities in composable infrastructure for data centers, with a projected $200 million multiyear pipeline [17] - OSS aims to leverage its technology to meet the increasing demand for rugged enterprise-class compute solutions in both defense and commercial markets [13] Management's Comments on Operating Environment and Future Outlook - Management noted that while uncertainty related to business and government spending is expected to continue in the first half of 2025, the embedded position with customers remains strong [11] - The company projects consolidated revenue of $59 million to $61 million for 2025, with OSS segment revenue expected to grow over 20% year-over-year [22][23] - Management expressed confidence in the financial position and potential for 2025, despite anticipated near-term volatility [24] Other Important Information - OSS incurred a $1.2 million charge related to contract losses and $7.1 million in inventory charges in 2024, impacting gross margin and net income [27][28] - The company had total cash and short-term investments of $10 million as of December 31, 2024, 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 [52] Question: Where is the growth expected to come from in the commercial and defense markets? - Growth is expected to be balanced across both markets, with notable opportunities in data centers and medical imaging [64][66] Question: Are there any unexpected areas of strength in the commercial segment? - The medical imaging sector is seeing faster adoption of AI than initially anticipated [70] Question: How many product programs are currently in development under the OSS segment? - Management noted that customer-funded development programs are crucial for long-term opportunities, but specific numbers were not provided [73]