OSS

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 10:00 a.m. ET President and Chief Executive Officer - Michael Knowles Daniel Gabel Operator: Good day and welcome to the One Stop Systems Second Quarter 2026 Conference Call and Webcast. [Operator Instructions] As a reminder, this call is being recorded. As part of the discussion today, the representatives from OSS will be making certain forward-looking statements regarding the company's future financial and operating results, including those relating to revenue growth, as well as business plans, bookings, the company's multiyear strategy, business objectives, and expectations. These statements are based on the company's current beliefs and expectations and should not be regarded as a representation by OSS that any of its plans and expectations will be achieved. Please be advised that these forward-looking statements are covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and that OSS desires to avail itself of the protections of the safe harbor for these statements. Please also be advised that actual results could differ materially from those stated or implied by the forward-looking statements due to certain risks and uncertainties, including those described in the company's most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and recent press releases. Please read these reports and other future filings that OSS will make with the SEC. OSS disclaims any duty to update or revise its forward-looking statements except as required by applicable law. It is now my pleasure to turn the conference over to OSS President and CEO, Mr. Mike Knowles. Please go ahead, sir. Michael Knowles: Thank you, Sylvie. Good morning, everyone, and thank you for joining today's call. We believe our second quarter performance builds upon the strong start we established in the first quarter and demonstrates the continued success of our multi-year strategic growth plan and growing demand for rugged enterprise-class compute at the edge. In fact, our year-over-year rate in revenue for the second quarter accelerated from what we delivered in the first quarter, and we achieved the strongest quarterly bookings result in our history. Before discussing our second quarter performance in greater detail, I want to remind everyone that our second quarter results reflect the opportunistic sale of our wholly owned subsidiary, Bressner, in December of 2025 for proceeds of $22.4 million. As a result, Bressner's historical financial results are now reported as discontinued operations, and the results are not yet available. The results we are discussing today reflect the performance of the remaining core OSS business. Today, OSS is a pure-play provider of ruggedized AI and high-performance compute platforms for edge applications. We entered 2026 as a more focused and scalable company, fully aligned around delivering market-leading, enterprise-class compute solutions to defense and commercial customers. We believe our performance during the first half of 2026 is already demonstrating the benefits of this transition and reinforcing the earnings potential of our go-forward strategy. Looking at our operational performance in the second quarter, we delivered strong results, with revenue increasing 62.3% year-over-year to $9.3 million, reflecting growth across both our defense and commercial businesses. Second quarter revenue growth was primarily driven by increased sales of liquid-cooled server products to a medical imaging OEM supporting a breast cancer screening application, sales of short-depth server products engineered for military applications aboard naval vessels and aircraft, and sales of compute products supporting autonomous construction and mining equipment. Importantly, each of these programs began with development, engineering, and qualification work performed over the past several years and has now advanced into larger-scale, multi-year production and deployment orders. We are also seeing meaningful progress in expanding our customer base with multiple new customers contributing to revenue in Q2 '26. We believe the combination of an expanding customer base and a growing number of large multi-year programs provides evidence that our strategic plan is working. These positive trends have also built longer-duration relationships that we believe are providing greater visibility into our business with more predictable recurring revenue. For the second quarter of 2026, customer-funded development was also an important contributor to our revenue growth, increasing 145% year-over-year to approximately $944,000. These engagements allow us to work closely with customers early in the development of next-generation platforms, designing and qualifying purpose-built compute solutions for their specific applications. While the timing and ultimate production opportunity associated with each engagement can vary, we believe this work strengthens our customer relationships, expands our tech position within their platforms, and creates a pathway to potential future production revenue. During the quarter, our revenue mix included a higher level of customer-funded development, early prototype, and low-rate initial production activity. These earlier-stage programs generally carry lower initial gross margins due to smaller production volumes and higher levels of engineering and manufacturing activity. As these programs mature and transition into higher-volume production, we believe they have the potential to generate both greater revenue contributions and improve gross margins over time. Progression from development to production that is contributing to our revenue growth is also evident in our strong bookings performance. During the quarter, we generated over $15 million in new bookings that we expect to deliver in 2026 and 2027. Year-to-date, we have secured more than $30 million in new bookings, resulting in a book-to-bill ratio of approximately 1.7. Bookings for both second quarter and year-to-date periods are record amounts for the company, and to put this performance into perspective, our bookings through the first 6 months of 2026 nearly equaled our total product revenue for the full year of 2025. Second quarter bookings were driven by several important program wins across both defense and commercial markets. First, we announced an $8.4 million initial contract from a leading defense and technology solutions company. We expect the first shipments to commence in 2026 and to contribute to revenue throughout the year. We believe this platform has the potential to contribute approximately $44 million in total revenue over the next 4 years. Second, we received an initial order valued at over $500,000 from a renewable energy technology company that focuses on generating clean energy for data center applications. Follow-on orders are expected to exceed $1 million year-over-year and anticipated to scale to a $10 million opportunity over the next 5 years. Since announcing the initial order in April, we received an additional order of nearly $1 million as the customer prepares for the commercial launch of its renewable energy-powered data center solution. Third, we received a $1.4 million order for short-depth servers from a government systems integrator. This order from the second quarter was on top of a nearly $600,000 order in the first quarter. Our relationship with this customer is expanding, and we expect continued demand into the future. Subsequent to quarter end in July, we announced a $2.2 million initial production order from a commercial robotics customer. This order followed an initial purchase order received in February and marked the successful transition of the program from prototype development into production deployment. Based on the customer's anticipated deployment plans, we believe this program could generate cumulative orders of approximately $10 million to $15 million over the next 5 years. Taken together, these program wins reflect a combination of expansion within existing customer platforms and the addition of new customers across defense and commercial markets. They also demonstrate a clear shift in the size, duration, and composition of our bookings. As I discussed in our first quarter call, our orders are becoming larger, more programmatic, and increasingly connected to multi-year deployments across a broader customer base. Since 2023, our average order size has nearly tripled, and during the past 12 months, we have added a growing number of programs with meaningful multi-year revenue potential. In fact, to date, OSS is supporting 14 programs with estimated multi-year revenue potential exceeding $42 million compared to just 1 program 3 years ago. Supporting the momentum we are seeing in revenue and bookings is the continued expansion and maturation of our pipeline of opportunities. We continue to take steps to build a more disciplined pipeline aligned with our defense and commercial go-to-market strategies, technology roadmap, and applications that we believe can scale into meaningful multi-year production programs. Within the defense market, we are pursuing a growing number of opportunities within the U.S. Department of Defense research laboratories and defense organizations that are evaluating future compute architectures for advanced AI, sensor processing, autonomy, and situational awareness applications. These engagements position OSS early in the development life-cycle and provide opportunities to work alongside customers as they define requirements, test new technologies, and prepare next-generation platforms for deployment. We are also advancing a new classified program opportunity and pursuing additional programs across the U.S. Army, including applications that require high-performance compute and data processing in rugged and space-constrained environments. We believe this activity reflects growing awareness of OSS and the increasing relevance of our enterprise-class compute capabilities across next-generation war-fighting platforms. In parallel, we are seeing encouraging customer interest in commercial and defense applications designed to harness our PCIe Gen 6 architecture. PCIe Gen 6 represents an important advancement in data transfer performance and is expected to support increasingly demanding AI, machine learning, and sensor-intensive workloads. We are actively engaged with prospective customers on initial Gen 6 opportunities and expect the first customer programs to emerge in the near future. Underlying this pipeline growth are strong and durable market dynamics. AI, machine learning, and sensor fusion workloads are increasingly moving beyond traditional data centers and into vehicles, aircraft, ships, and other edge environments. The combination of higher revenue, strong bookings, and stable gross margin provide OSS with greater capacity to invest in people, technology, and sales capabilities needed to support our continued growth. An important personnel addition during the quarter was Paul "PK" Averna, who joined OSS as Vice President of Business Development and Growth. PK brings more than 30 years of experience across defense, commercial technology, and mission-critical applications. He will focus on expanding our market reach, deepening engagement with defense and commercial customers and helping convert our growing pipeline into new development and production opportunities. PK will also assume the responsibility previously held by Robert Kalebaugh, our Vice President of Sales, who intends to retire following several years of dedicated service to OSS. We sincerely thank Robert for his leadership and significant contributions to the company. Robert will remain engaged with OSS on a part-time consulting basis, helping facilitate a seamless transition and supporting our continued growth initiatives. Given PK's extensive industry experience, familiarity with our team, and understanding of our markets, we believe he is a natural successor who will help us maintain our momentum and continue advancing our growth strategy. We are also continuing to invest in advancing our technology platform to support the next generation of AI-enabled systems operating at the edge. Research and development remains a critical component of our strategy, and we are increasingly working alongside customers through customer-funded development programs to design purpose-built compute architectures for emerging applications. These development programs position OSS early in the life-cycle of next-generation platforms, deepen our customer relationships, and create a potential pathway to future production programs. As we discussed earlier, a majority of our second quarter revenue and recent bookings can be traced back to internal research and development and customer-funded development efforts initiated 2, 3, or 4 years ago that have now progressed into deployment and production. That history reinforces why we intend to continue growing customer-funded development activity and investing in our technology roadmap during the second half of the year. The development work we undertake today is intended to create the next generation of test and pilot programs, production deployments, sustainment revenue, and future technology refresh opportunities. Following quarter end, we reached an agreement to resolve a commercial dispute involving a former customer relationship related to events dating back several years ago. While OSS disputed the claims, after evaluating the relevant business, financial, and other considerations, the company determined that resolving the matter for approximately $6.25 million was in the best interest of the company and its shareholders. The financial impact of this settlement is reflected in our second quarter fiscal 2026 results. The settlement does not constitute an admission of liability, is unrelated to our current operations and growth programs and fully resolves the dispute. Importantly, we believe this resolution allows the management team to remain focused on executing our strategy and supporting the significant opportunities we see across our defense and commercial markets. I also want to briefly address a housekeeping matter, an upcoming renewal of our shelf registration statement, which is scheduled to expire later this month. Maintaining an effective shelf registration statement is a routine element of prudent corporate and financial planning and provides OSS with appropriate flexibility as we execute our strategic plan. The renewal itself should not be viewed as an indication that the company has decided to undertake a financing transaction. Overall, we continue to believe OSS is well positioned for long-term sustained growth, and the first half of 2026 has exceeded our initial expectations. As a result, based on our current performance and business outlook, we are increasing our full-year 2026 revenue growth guidance. We now expect revenue growth in the range of 25% to 30%, up from our prior full-year guidance of 20% to 25%. Our higher revenue expectation is supported by our strong bookings, growing pipeline of platform opportunities, increasing customer engagement, higher customer-funded development activities, and the continued transition of customer-funded development programs into production deployment. We continue to expect full-year gross margins of approximately 40%, reflecting product mix and an increasing contribution from customer-funded development programs. At the same time, we expect to generate positive EBITDA and adjusted EBITDA, inclusive of planned strategic investments in personnel and research and development to support continued growth and technology leadership. We are encouraged that 2026 has started stronger than we initially expected, with accelerating revenue growth, record quarterly and year-to-date bookings, and continued progress converting multiple development programs into larger multi-year production opportunities. With a strong balance sheet, expanding customer relationships, and a growing pipeline driven by the adoption of AI-enabled systems at the edge, we believe OSS is well positioned to build on this momentum through the second half of the year and beyond. Our strengthened financial position also provides the flexibility to continue investing in our people, technology, and go-to-market capabilities, while selectively evaluating strategic acquisitions that could complement our technology platform, expand our customer base, and enhance our long-term growth opportunity. Finally, I want to thank our entire team for their dedication, innovation, and relentless focus on delivering results for our customers and shareholders. So, with this overview, I'd like to turn the call over to Dan. Daniel Gabel: Thank you, Mike, and good morning to everyone on today's call. The performance of the business exceeded our expectations in Q2, reflecting both strong customer demand and disciplined operational execution. Q2 results reflect a number of key accomplishments: First, we achieved accelerated top-line growth of 62%; second, we achieved record bookings of $15.1 million for the second quarter and $30 million year-to-date; third, revenue and bookings have diversified across a growing number of programs, customers and end markets, reflecting growing adoption for our rugged enterprise-class compute solutions; and fourth, profitability, excluding the legal settlement charge Mike previously mentioned, is in line with our 2026 expectations, reflecting operational improvement and prudent expense management. Currently, variation in gross margin reflects a higher mix of customer-funded development and early prototype and first-time production awards. We believe this company has never been in a stronger position, and with a strong cash position, a solid backlog, and a robust pipeline, we believe we are on track to achieve our expanded 2026 revenue guidance and to execute on our growth and profitability objectives. Now for a quick overview of Q2 2026 financial performance. For the second quarter, we reported total revenue from continuing operations of $9.3 million compared to $5.8 million last year. The 62.3% year-over-year increase in total revenue was primarily due to higher sales to a medical imaging OEM of liquid-cooled server products to support a breast cancer screening application as the customer moved from initial prototypes in 2025 to production in 2026. Sales, with a new customer for short-depth server products engineered for military applications onboard naval vessels and aircraft, and sales with another new customer for compute products to support autonomous construction and mining equipment. Gross margin from continuing operations in the second quarter was 39.1%, compared to 41.3% in the prior-year quarter. The 2.2 percentage point decrease from the prior year was primarily driven by product mix, including a higher level of customer-funded development, early prototype, and low-rate initial production activities, partially offset by more favorable manufacturing absorption due to higher production volume and higher usage of reserved inventory to fulfill customer orders. We continue to expect some level of variability in gross margins quarter-to-quarter based on absorption, product mix, and program life-cycle. On a sustaining basis, we continue to target margins in the mid-30s to mid-40s. We expect full-year 2026 gross margins of approximately 40%. Total Q2 operating expenses from continuing operations increased 129.8% to $11.3 million and included the $6.25 million legal settlement charge. Excluding this charge, total operating expenses from continuing operations increased 2.9% to $5.1 million, driven primarily by higher general and administrative and marketing and selling expenses, partially offset by lower R&D expenses. Not including the legal settlement charge, operating expenses were 54.3% of total revenue compared to 85.5% in Q2 of last year. The 31.2 percentage point year-over-year improvement reflects significant operating leverage on higher revenue levels. For the second quarter, the company reported a GAAP net loss from continuing operations of $7.3 million, or $0.29 per share, compared to a net loss from continuing operations of $2.5 million, or $0.11 per share in the prior year. The company reported a non-GAAP net loss from continuing operations of $0.2 million, or $0.01 per share, compared to a non-GAAP net loss from continuing operations of $2 million, or $0.09 per share, in the prior-year quarter. Adjusted EBITDA loss from continuing operations, a non-GAAP metric, was $0.3 million compared to an adjusted EBITDA loss from continuing operations of $1.8 million in the prior year's second quarter. Turning to the balance sheet and statement of cash flow. Our balance sheet remains strong with $31.4 million of total cash, cash equivalents, and short-term investments, and no debt outstanding at June 30, 2026. Working capital was $38.1 million at June 30, 2026, compared to $45.3 million at December 31, 2025. For the 6 months ended June 30, 2026, we used $629,000 in cash from continuing operations compared to net cash used in continuing operations of $2.8 million in the prior-year period. The use of cash during the 2026 6-month period was primarily driven by a $7.1 million investment in inventory in the second quarter to support expected sales growth as well as our efforts to prudently navigate supply chain constraints affecting certain components, including memory. As Mike mentioned, based on higher-than-expected sales and bookings, we're increasing our revenue guidance for the year from a prior range of 20% to 25% to a new range of 25% to 30%. We continue to expect full-year gross margin of approximately 40% and positive EBITDA for the full year, inclusive of planned strategic investments in personnel and research and development to support continued growth in technology leadership. As we enter the third quarter, we remain focused on disciplined execution, including managing our supply chain to convert customer demand into revenue, profit, and cash. We also remain focused on continuing to drive growth by investing in our technology, pursuing M&A opportunities and securing new platforms that may provide sustained multi-year revenue streams. This completes our prepared remarks. Operator, please open the call for questions. Operator: Thank you, sir. [Operator Instructions] First, we will hear from Brian Kinstlinger at AGP. Brian Kinstlinger: Can you provide an update on 2 opportunities for the 360-degree vision solution at Army vehicles? Where in the procurement lifecycle are these programs and when is a reasonable timeline for these? Michael Knowles: Yes. Thanks for the question. So as we indicated before, both those programs that are now essentially into test and evaluation by the Army on representative vehicles. So they will continue through that testing phase. It's more or less an undefined testing phase. As they do that, they can identify new requirements. They can identify applications. They can extend the technology to other elements if they chose, while at the same time, all of the acquisition vehicle classes can make a determination on their needs and requirements, timing, and funding. So both are progressing well. We're a company that has a solution that's tested, rugged, and is production-ready, so we would be ready to move as soon as the army was to make a definitive solution to move forward. I can't give an exact estimate onto the timeline of how soon or how late we would see something progress, but we do continue with our capture efforts in working with the army in looking to fulfill their requirements and potential to accelerate these technologies into field of programs. Brian Kinstlinger: My follow-up question is, you've had 2 consecutive quarters of $15 million of bookings, which is great to see. As you look at the next 6, 12, 18 months, how should we think about your goals for bookings, and what's reasonable to assume? Should we think about, given the size of your pipeline, equal or even stronger bookings going forward? Will it be lumpy? Just maybe speak to how you're viewing that? Michael Knowles: Yes, as we mentioned, I mean, we're encouraged by the strong bookings in the first half of this year, not to mention just the total volume, but the expanded customer set, the increased value of each, and the fact that we're expanding onto these platforms with not only initial positions and design, but converting those to production orders, and that'll lead to long-term sustainment. So that part of the engine and the strategy, we're happy with coming into view and into fruition. So going forward, we've been comfortable indicating that our pipeline indicates that we believe we can be on that 30% a year growth. Bookings can be very lumpy. You can see very strong periods of bookings, and then they can fade off based on timing. So you know, we generally monitor that year-to-date slash trailing 12-month book-to-bill ratio, and that's been fairly consistent here over the last year or so in showing that kind of 30% a year growth. The pipeline continues to be very manageable. We're starting to convert, as I said, more elements out of that. So we kind of retain on that view of what we think it can do, but as we've noted, we've had more customers coming into view. The orders have been increasing. So we're starting to fill in our growth with spread out about a very wide customer set, which in some respects gives us more optimism because of our reach rather than necessarily finding, you know, 1 or 2 really big large orders, though we still pursue those and they are still present in the pipeline. So I think we look forward to, you know, kind of continued performance. Expect that, you know, we will see some lumpiness quarter-to-quarter in the bookings. Operator: Our next question will be from Eric Martinuzzi at Lake Street Capital. Eric Martinuzzi: I wanted to focus on the customer-funded development that was around 10% of revenue this quarter. Is the expectation here that will be at that kind of similar run rate? I know it's hard to predict these things, but it's become a meaningful amount of the top line. Daniel Gabel: Yes, Eric, we're definitely happy with the demand that we're seeing for customer-funded development. All of that is a good forward-looking indicator of future growth. As we go through the year, we have a number of opportunities that we're working. I do expect that it will continue to be strong throughout the year. I think that the level that you're seeing in the first half should continue in the second half, and depending on some opportunities, we could see some variability around that, but I think it'll be strong in the second half. Eric Martinuzzi: Okay, and then one of the things that you mentioned was also just the diversity of your customer base, which is a good thing. Nobody likes to be too concentrated in any particular vertical. What's really behind this? Was this a proactive effort on your part, a sales effort to proactively diversify the customer base, or is this to say, you know, people move around the industry, they know where to come back to get a reliable ruggedization partner? Michael Knowles: Yes, I think it's a culmination of all the hard work the company's been putting in, in the strategy and that early step we took when we joined the company to build out a pipeline of a 5-year look at where opportunities would exist and where we could go and aligning the strategy with our sales force and team. And as we started to prosecute that pipeline and getting into different markets, then you start to gain some recognition, and then that increases your reach to people who understand what you're doing, and we're able to then prosecute each of that to an expanding element. And then now we're getting to a point where multiple customer sets have had systems delivered in production and seeing that performance, others take note of that. And so then we start getting that flywheel momentum moving off of notoriety and what we're delivering, and it starts to spread widely across the market. The other thing I'll note is that we really run that benefit of our product line is quite agnostic to market application. So we can, as customers hear about us as we reach into markets where we see this demand, AI, sensor fusion, and autonomy, we're very quickly able to adapt a product to the performance and compute and ruggedization that's needed, which allows us to diversify quickly across markets and customer sets. So this is really all built into the strategy and the plan, and I think we're seeing that. We're actually, you know, have built more optimism because we're seeing that diversification across, you know, decent-sized programs and not having to necessarily weigh down 1 or 2 really large ones. Eric Martinuzzi: Last question for me is on the supply chain side. Given the upward revision to your revenue as well as the reiteration of the gross margins, it would seem like you're in pretty good shape for FY 2026. Just curious to know if you've taken steps that have you confident that the memory motherboards, the kinds of nuts and bolts things that have gone up in price for a lot of tech hardware manufacturers, if those are things that you feel in good shape for FY '27. Michael Knowles: Yes, I think as we're closing out this year into 2027, the strategies that have worked for us this year should continue to help us work into next year. The early bookings clearly helps with that also, with customers and setting the expectation. So the methodologies and strategies that we've used this year have been helping. The memory market hasn't necessarily gotten any better in lead times, it's just how we've been able to, as I mentioned, use the strategies that we've had to help us be able to generate the revenue and the growth that we have. It's always still a little bit metering as we continue to see such strong bookings as to how fast and what we convert. But as you mentioned, we're already building in and focusing on the first half of 2027 and beyond and laying those elements in so that we can be prepared to support our customers and our growth. Daniel Gabel: Yes, I'd just add, Eric, so as Mike mentioned, we are still seeing the long lead times quoted, but we are seeing some opportunities to bring in particularly memory ahead of those lead times. And that is part of what you saw in the Q2 inventory increase, where we were able to bring in some memory products ahead of quoted lead times and really de-risk some of the deliveries for the year. So we are kind of keeping our eye out for those opportunities to de-risk delivery profiles by bringing in memory ahead of lead time. Operator: Next question is from Brian Dobson at Clear Street. Brian Dobson: As you're thinking about defense spending over this year and over the next few years, what do you think has changed recently about how defense customers are thinking about rugged AI compute? And do you think that there's more opportunity in terms of level of compute per vehicle or aircraft, so on and so forth? Michael Knowles: Yes, Brian, thanks for calling. Appreciate you joining coverage on OSS. Yes, so I think the intriguing thing, and which is part of why we feel the company is so well set in this market, is this inevitable transition as AI, ML, sensor processing, sensor fusion, and autonomy are becoming so exponentially adopted. We're seeing that across existing platforms to increase and enhance capability that can emerge in new platforms, air, land, sea, and space. And those elements really need the kind of architectures and compute that we deliver. So we're seeing that generated in a number of ways, though oftentimes the Department of Defense is slow in their movement. But you can see from our customer-funded development stuff that we have operating in labs and under test is you're seeing the communities across the services assessing and addressing architectures and solutions and what will work. And then those will slowly continue then to transition into ultimately production into existing and new and future platforms. So we're helping that technology and that timing move forward. We're also seeing in some of the kind of existing standard operating open system architectures that have been around for close to a decade, that we're starting to see the services now opening up to reevaluate the elements of those open systems architectures to move in some of the elements from commercial data center and high-performance enterprise-class compute open architectures, the things that we excel in, starting to move those in, realizing that the only way they're going to be able to keep up with sensors, technologies, and capabilities is with those standards and technologies. So it's all opening and paving the way for them to start to align their spend, their future developments, and weapon system and platform roadmaps to include this technology. And a lot of that becomes further strengthened by, I think you can see in a lot of the reports of what's going on in the Gulf and the Straits and with Iran now, just the application of autonomous systems, the weapon system application and all. So I think you'll see this continue to feed back and strengthen, again, this movement towards the compute that's going to be needed to support not only the compute, those extremely low latency for that. But there's going to be a need as our company has demonstrated, we can move these technologies significantly faster than industry has been able to do with current systems. We have been able to do in months what has taken other people years to deliver these capabilities. And in a fast-moving operational tempo environment like the U.S. and its allies are seeing, the ability to deliver these high-end computing systems to move more capabilities out to the field is going to be important. I think we'll see that continue to be backed and growing strength as the years come. Brian Dobson: Yes, great. And then just one follow-up question on the pipeline. Those numbers look good, but how do you see the composition of the pipeline evolving over the next year or 2, and could that be a contributor to margin expansion? Michael Knowles: Yes, I believe so, Brian. So you know, the pipeline we established continues to grow with opportunities. Realistically, it still kind of moves in that 50-50 commercial defense space. You know, we don't purposely drive it to that, but it's generally continued over the 3 years since we started that -- 3 and a half years, to be in that range. You will see now, too, especially in the out years, we're starting to identify not only initial new opportunities, but the platform positions that we're winning now, we're able to start weaving in the longer-term production and expected very long-term sustainment on the back end of that. So part of that growth in the pipeline is just those elements. So we're seeing that start to weave all together, which is also now giving us a little bit of ability to be able to see more certainty in the future about platforms that we're on and what that will generate versus just, you know, winning new opportunities. So we're encouraged by that. Operator: Next question will be from Austin Moeller at Canaccord Genuity. Austin Moeller: If we look at the fiscal year '27 budget that's coming together after the CR, does the 50% projected increase in the shipbuilding budget, is that more beneficial to you just given the needs for network computing and C5ISR at the edge, or is there more opportunity on the Golden Dome and short-range air defense side? Michael Knowles: Yes, Austin, thanks for the question and being on the call. Ironically, we're engaged in all those areas. So the opportunities exist for both for similar reasons we've continued to identify. They're both moving forward heavy with sensors and compute and applications and AI and ML, and they all need high-end compute, low latency, generally fit into a rugged environment. And so we're able to deliver those. On the Navy shipboard elements, we're actually engaged in a number of areas with customers as they're evaluating what the architectures of the future can be on both surface and subsurface vessels for the Navy. As they're looking, as you know, they make investment on the ships and subs as they go out. Those tend to be there for a number of years. So they really want to look to take advantage of putting in, you know, the best system they can that will sustain ability to increase capability without huge updates every few years in technology, and that has really been the promise of what we're doing. So we're engaged in a lot of early discussions, activities, and assessments for customers on those fronts. Same thing as we are engaging with companies participating in Golden Dome. There's many, many layers into the Golden Dome concept, many people participating across each of those layers. And so we've been managing our way through that, identifying the key systems, where compute is the most important and the most critical to that solution, who the prime integrators are in those solutions and the weapon systems and sensor systems that'll go into there. So similarly, we're engaged there with how our compute and low latency can really help facilitate the performance needed to make that system wildly successful. Austin Moeller: Okay, and there's a lot of new contract awards that are starting to come out of the fiscal year '26 budget in Q2 and Q3 here. So if we just think about your pipeline going forward, when might we start seeing some of the programs that you're involved in on the R&D evaluation stage flip to LRIP or serial production with higher margins? And do you anticipate doing advanced procurement of component inventory if that starts to inflect into serial production? Michael Knowles: Yes, we don't have exact view into the timeline of when these early-stage systems that we have with the army under test would flow into a program of record, you know, low-rate initial production followed by production. We continue to work with them and advise that. Those elements could come out any number of ways from small buys to a huge program of record. So that'll continue to be kind of evaluated over time. So I don't have the ability really to give a timeframe or a period of timeframe on when that might come to fruition. I can say, though, that when and if it does, that generally the programs will be set up such that we would be able to be covered under the contract for our inventory and long lead purchase orders to support that. The government is generally very supportive, especially once they've identified a program, oftentimes placing orders for long lead parts in advance of final contract line items for final end items. That's part of what working early with a customer is about. So we wouldn't necessarily anticipate having to stock up inventory in advance of contract and funding from the government on something like that. Operator: Thank you. And at this time, we have no further questions registered, so that will conclude our question-and-answer session as well as our conference call for today. We would like to thank you all for attending and ask that you, please, disconnect your lines. Enjoy the rest of your day. Before you buy stock in One Stop Systems, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and One Stop Systems wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $396,758!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,300,820!* Now, it’s worth noting Stock Advisor’s total average return is 939% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 6, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. One Stop Systems (OSS) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Revenue surged 62.3% year-over-year to $9.3 million, with growth accelerating from Q1. Record bookings of $15.1 million in Q2 and $30 million year-to-date, with a book-to-bill ratio of 1.7. Expanding customer base and diversification across defense and commercial markets, reducing reliance on single programs. Customer-funded development revenue grew 145% year-over-year, providing early engagement and future production pathways. Raised full-year 2026 revenue growth guidance to 25%-30% from 20%-25%, reflecting strong demand and bookings. Gross margin declined to 39.1% from 41.3% year-over-year due to product mix and early-stage program activity. GAAP net loss widened to $7.3 million in Q2, impacted by a $6.25 million legal settlement charge. Operating expenses increased 129.8% year-over-year, largely due to the legal settlement, though ex-charge they rose only 2.9%. Cash used in operations was $629,000 in the first half, driven by a $7.1 million inventory investment to manage supply chain constraints. Supply chain challenges persist, particularly for memory components, with long lead times and potential delivery risks. Warning! GuruFocus has detected 4 Warning Signs with OSS. Is OSS fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide an update on the two opportunities for the 360 vision solution in Army vehicles? Where in the procurement life cycle are these programs and when is a reasonable timeline for these competitions? A: Mike Knowles (President and CEO): Both programs are now essentially into test and evaluation by the Army on representative vehicles. As they continue through the testing phase, they can identify new requirements and extend the technology. All acquisition vehicle classes can make determinations on their needs, timing, and funding. We have a solution that is tested, rugged, and production-ready, so we can move as soon as the Army makes a definitive decision. We cannot give an exact timeline, but we continue our capture efforts to potentially accelerate these technologies into fielded programs. Q: You've had two consecutive quarters of $15 million in bookings. As you look at the next 6, 12, 18 months, how should we think about your goals for bookings and what's reasonable to assume? A: Mike Knowles (President and CEO): We are encouraged by the strong bookings in the first half, not just the volume but the expanded customer set and increased value of each order. We are converting initial positions and designs into production orders that will lead to long-term sustainment. Our pipeline indicates we believe we can maintain that 30% a year growth. Bookings can be lumpy, so we monitor the year-to-date and trailing 12-month book-to-bill ratio, which has been fairly consistent. We have more customers coming into view, and orders are increasing, which gives us more optimism because of our reach, though we still expect some lumpiness quarter to quarter. Q: Customer-funded development was around 10% of revenue this quarter. Is the expectation that this will be at a similar run rate? A: Dan (CFO): We are definitely happy with the demand for customer-funded development, as it is a good forward-looking indicator of future growth. We have a number of opportunities we are working on, and I expect it to continue to be strong throughout the year. The levels seen in the first half should continue in the second half, though we could see some variability depending on opportunities. Q: What's really behind the diversity of your customer base? Was this a proactive sales effort, or is it people moving around the industry and coming back to a reliable ruggedization partner? A: Mike Knowles (President and CEO): It's a culmination of the hard work in our strategy, starting with building a five-year pipeline of opportunities. As we prosecuted that pipeline and entered different markets, we gained recognition, which increased our reach. Now that multiple customers have had systems delivered in production and seen the performance, others take note, creating a flywheel momentum. Our product line is agnostic to market application, so we can quickly adapt products to the performance, compute, and ruggedization needed, allowing us to diversify quickly across markets and customer sets. Q: Given the upward revision to revenue and reiteration of gross margins, have you taken steps to ensure you're in good shape for FY 2026 and FY 2027 regarding supply chain constraints like memory and motherboards? A: Mike Knowles (President and CEO): The strategies that have worked this year should continue to help us into next year. Early bookings help with setting expectations. The memory market hasn't necessarily gotten better, but we've used our strategies to generate the revenue and growth we have. We are already building in and focusing on the second half of 2027 and beyond, laying elements in to support our customers and growth. Dan (CFO) added that while long lead times are still quoted, we are seeing opportunities to bring in memory ahead of those lead times, which is part of the Q2 inventory increase, de-risking deliveries for the year. Q: As you think about defense spending over the next few years, what has changed recently about how defense customers are thinking about rugged AI compute, and is there more opportunity in terms of compute per vehicle or aircraft? A: Mike Knowles (President and CEO): There is an inevitable transition as AI/ML, sensor processing, and autonomy are exponentially adopted across existing and new platforms. These elements need the architectures and compute we deliver. The Department of Defense is assessing architectures and solutions, which will slowly transition into production. We are also seeing services reevaluate open system architectures to move in commercial data center and high-performance enterprise-class compute elements. The application of autonomous systems in recent conflicts strengthens this movement. We have demonstrated we can move these technologies significantly faster than industry, delivering in months what has taken others years, which is critical in a fast-moving operational tempo. Q: How do you see the composition of the pipeline evolving over the next year or two, and could that be a contributor to margin expansion? A: Mike Knowles (President and CEO): The pipeline continues to grow and generally moves in that 50/50 commercial-defense space. In the out years, we are identifying not only new opportunities but also weaving in longer-term production and sustainment on the back end of platform positions we are winning now. This gives us more certainty about future platforms and what they will generate versus just winning new opportunities, which we are encouraged by. Q: With the fiscal year '27 budget, is the 50% projected increase in the shipbuilding budget more beneficial to you given the needs for network computing and C5ISR at the edge, or is there more opportunity on the Golden Dome and short-range air defense side? A: Mike Knowles (President and CEO): Ironically, we are engaged in all those areas. Both are moving forward heavy with sensors, compute, and AI/ML applications, and they all need high-end compute, low latency, and rugged environments. On Navy shipboard elements, we are engaged with customers evaluating future architectures for surface and subsurface vessels. For Golden Dome, we are engaging with companies across its many layers, identifying key systems where compute is most critical and who the prime integrators are, to facilitate the performance needed for that system to be successful. Q: When might we start seeing some of the programs you're involved in at the R&D evaluation stage flip to LRIP or serial production with higher margins, and do you anticipate doing advanced procurement of component inventory if that starts to inflect? A: Mike Knowles (President and CEO): We don't have an exact view into the timeline of when these early-stage systems under test would flow into a program of record. Those elements could come out any number of ways, from small buys to a huge program of record. When and if it does, the programs will generally be set For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Transitioned to a pure-play provider of ruggedized AI and high-performance compute following the opportunistic $22.4 million sale of the Bressner subsidiary. Achieved record quarterly bookings of $15.1 million, driven by a shift toward larger, programmatic, multi-year contracts in defense and commercial sectors. Revenue growth of 62.3% was primarily fueled by the transition of long-term development programs into large-scale production for medical imaging and naval applications. Average order size has nearly tripled since 2023, reflecting a strategic move from one-off sales to supporting 14 major programs with multi-year revenue potential. Customer-funded development revenue grew 145%, serving as a critical lead indicator for future high-volume production and deeper technical integration. Management attributes the expanding customer base to a 'flywheel effect' where proven performance in rugged environments is attracting new interest in AI and sensor fusion applications. Strategic personnel additions, including a new VP of Business Development, are aimed at converting the growing pipeline into sustained production deployments. Increased full-year 2026 revenue growth guidance to 25%-30%, up from the previous 20%-25% range, supported by a year-to-date book-to-bill ratio of 1.7. Maintained full-year gross margin guidance of approximately 40%, anticipating that maturing programs will offset the lower initial margins of early-stage prototypes. Expects first customer programs for the new PCIe Gen 6 architecture to emerge in the near future, targeting high-demand AI and machine learning workloads. Guidance assumes continued positive EBITDA and adjusted EBITDA while maintaining planned strategic investments in R&D and personnel. Management is actively evaluating selective M&A opportunities to complement the technology platform and expand the customer base using its strengthened cash position. Recorded a $6.25 million legal settlement charge to resolve a multi-year commercial dispute with a former customer, intended to remove management distraction. Invested $7.1 million in inventory during the quarter to de-risk the supply chain against long lead times for critical components like memory. Renewed a shelf registration statement as a routine financial planning measure, clarifying it is not an immediate indication of a planned financing transaction. The company has invested $7.1 million in inventory to support expected sales growth and navigate supply chain constraints, including memory, while maintaining strategies intended to support performance into 2027. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Programs are currently in an undefined test and evaluation phase on representative vehicles, allowing the Army to refine requirements. OSS is production-ready and can move immediately once the Army makes a definitive acquisition decision, though exact timelines remain uncertain. Management expects bookings to remain 'lumpy' quarter-to-quarter but maintains a trailing 12-month target consistent with 30% annual growth. Optimism is driven by a wider customer set rather than reliance on one or two large orders, providing more diversified growth stability. The company is engaged in both shipbuilding and air defense (Golden Dome) sectors, as both require the low-latency, rugged compute OSS provides. Navy engagements focus on future architectures for surface and subsurface vessels that can sustain long-term capability increases without frequent hardware overhauls.

Interested in One Stop Systems, Inc.? Here are five stocks we like better. Strong growth and raised outlook: Second-quarter revenue from continuing operations rose 62.3% to $9.3 million, driven by production programs in medical imaging, defense and autonomous equipment. OSS raised its 2026 revenue-growth forecast to 25%–30% from 20%–25%. Record bookings support future demand: Bookings reached $15.1 million in the quarter and topped $30 million for the first half, producing a 1.7 year-to-date book-to-bill ratio. The company is supporting 14 multiyear programs with estimated revenue potential above $42 million. Profitability affected by settlement and mix: OSS reported a $7.3 million GAAP loss, including a $6.25 million legal-settlement charge, while its non-GAAP loss narrowed to $0.2 million. The company ended the quarter with $31.4 million in cash and short-term investments, no debt, and maintained its expectation for positive full-year EBITDA. 3 Edge AI Stocks to Watch as the Next Wave of AI Demand Builds One Stop Systems (NASDAQ:OSS) reported second-quarter 2026 revenue growth of 62.3% from continuing operations and raised its full-year revenue growth outlook, citing record bookings, expanding customer relationships and increased demand for ruggedized artificial intelligence and high-performance computing platforms at the edge. The company said its results now reflect its core OSS business following the December 2025 sale of wholly owned subsidiary Bressner for $22.4 million. Bressner’s historical financial results are reported as discontinued operations. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control “Today, OSS is a pure-play provider of ruggedized AI and high-performance compute platforms for edge applications,” President and CEO Mike Knowles said during the company’s earnings call. He said the company entered 2026 as a more focused business serving defense and commercial customers. Revenue from continuing operations totaled $9.3 million in the second quarter, compared with $5.8 million in the year-earlier period. The increase was driven primarily by liquid-cooled server sales to a medical imaging original equipment manufacturer supporting breast cancer screening, short-depth servers for military applications aboard naval vessels and aircraft, and computing products for autonomous construction and mining equipment. → 3 Drone Stocks That Should Soar After the Summer Slump Knowles said these programs originated in development, engineering and qualification efforts conducted over the past several years and have moved into larger-scale production and deployment orders. Customer-funded development revenue rose 145% year over year to approximately $944,000. The company said such engagements allow it to participate early in the development of customer platforms, though production timing and the ultimate size of subsequent orders can vary. → The Bitcoin Comeback May Already Be Underway—2 ETFs for Exposure Chief Financial Officer Dan Gabel said the higher mix of customer-funded development, prototypes and low-rate initial production activity contributed to quarterly gross-margin variability. Gross margin from continuing operations was 39.1%, down from 41.3% a year earlier, primarily due to product mix. OSS continues to target sustainable gross margins in the mid-30% to mid-40% range and expects approximately 40% for full-year 2026. OSS generated $15.1 million in bookings during the quarter and more than $30 million during the first half of 2026, resulting in a year-to-date book-to-bill ratio of approximately 1.7. Knowles said both quarterly and year-to-date bookings were records for the company, and that first-half bookings nearly equaled total 2025 product revenue. An $8.4 million initial contract from a defense and technology solutions company, with first shipments expected in 2026. OSS said the platform could contribute approximately $44 million in revenue over four years. An initial order of more than $500,000 from a renewable-energy technology company developing clean-energy solutions for data centers. OSS subsequently received an additional order of nearly $1 million and said the opportunity could scale to $10 million over five years. A $1.4 million order for short-depth servers from a government systems integrator, following an order of nearly $600,000 in the first quarter. A $2.2 million initial production order, announced after quarter-end, from a commercial robotics customer. OSS said the program could produce cumulative orders of roughly $10 million to $15 million over five years. Knowles said the company is supporting 14 programs with estimated multiyear revenue potential exceeding $42 million, compared with one such program three years earlier. He also said OSS’s average order size has nearly tripled since 2023. Management cautioned that bookings may remain uneven on a quarterly basis. “Bookings can be very lumpy,” Knowles said, adding that the company primarily monitors year-to-date and trailing-12-month book-to-bill trends. Operating expenses from continuing operations rose 129.8% to $11.3 million, including a $6.25 million legal settlement charge related to a commercial dispute involving a former customer relationship. Excluding the settlement, operating expenses increased 2.9% to $5.1 million. OSS reported a GAAP net loss from continuing operations of $7.3 million, or $0.29 per share, compared with a loss of $2.5 million, or $0.11 per share, in the prior-year quarter. Its non-GAAP net loss from continuing operations narrowed to $0.2 million, or $0.01 per share, from $2 million, or $0.09 per share. Adjusted EBITDA loss improved to $0.3 million from a loss of $1.8 million. Knowles said the settlement fully resolves the dispute, does not represent an admission of liability and is unrelated to current operations or growth programs. At June 30, OSS had $31.4 million in cash equivalents and short-term investments, no debt and working capital of $38.1 million. Cash used in continuing operations during the first six months was $629,000, compared with $2.8 million a year earlier. Gabel said the company invested $7.1 million in inventory during the second quarter to support expected growth and address supply constraints affecting components including memory. OSS raised its full-year revenue growth forecast to 25% to 30%, from its previous outlook of 20% to 25%. The company maintained expectations for approximately 40% gross margin and positive EBITDA and adjusted EBITDA for the year, including planned investments in personnel and research and development. Management said it continues to pursue defense opportunities involving AI, sensor processing, autonomy and situational awareness, including work with Department of Defense research laboratories and Army-related programs. Knowles said two Army vehicle opportunities involving the company’s 360-degree vision solution are in testing and evaluation, but he did not provide a timeline for procurement decisions. The company also said it is seeing interest in its PCIe Gen 6 architecture for AI, machine-learning and sensor-intensive workloads, with initial customer programs expected to emerge in the near future. OSS added Paul “PK” Averna as vice president of business development and growth during the quarter. He will assume responsibilities previously held by Vice President of Sales Robert Kalebaugh, who plans to retire and remain with the company on a part-time consulting basis during the transition. One Stop Systems, Inc (NASDAQ: OSS) develops and manufactures high-performance computing and storage systems tailored for mission-critical and harsh-environment applications. The company's solutions are designed to deliver accelerated processing, high-throughput data handling and reliability in confined or ruggedized form factors. OSS leverages advanced cooling, power management and custom enclosures to support demanding workloads in settings where off-the-shelf hardware may fall short. The company's product portfolio includes GPU-accelerated servers, embedded single-board computers, high-speed RAID storage arrays and integrated system solutions. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "One Stop Systems Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Second quarter of 2026 revenue increased 62.3% year-over-year to $9.3 million Second-quarter bookings reached $15.1 million, representing the highest quarterly bookings in the Company’s history Company raises full year 2026 revenue growth guidance to 25% to 30% ESCONDIDO, Calif., Aug. 05, 2026 (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 second quarter ended June 30, 2026. Second-quarter and six-month comparisons are to the same year-ago periods unless otherwise noted. On December 30, 2025, the Company closed a definitive agreement to sell all assets and operations of Bressner Technology GmbH. All operations, assets, and liabilities associated with the sale of Bressner have been classified as discontinued operations. “OSS delivered another quarter of strong year-over-year revenue growth, which accelerated to 62.3% in the second quarter from 55.0% in the first quarter, reflecting continued execution against our multi-year strategic plan and growing demand for rugged, enterprise-class compute at the edge,” stated OSS President and CEO, Mike Knowles. “I am pleased to report that we also achieved the strongest quarterly bookings results in our history, with second quarter bookings reaching $15.1 million. This produced a book-to-bill ratio of 1.6x for the quarter and 1.7x year-to-date, which we believe provides strong support for continued growth. Our year-to-date results have benefited from important program-of-record activity, including a new intelligence platform for the U.S. Department of Defense that is expected to generate approximately $44 million over the next four years.” “Our momentum also reflects a growing portion of revenue and bookings generated across an increasingly diverse range of defense and commercial customers. This includes mission-critical defense applications across C5ISR, sensor fusion, and autonomy programs serving both defense and commercial markets, and niche data center, robotics and medical applications.   Many of these opportunities originated as development initiatives over the past several years and are now increasingly transitioning into larger scale, multi-year production orders.   We believe this broadening activity demonstrates that OSS is gaining market share and becoming an increasingly important technology partner for organizations that require enterprise-class compute in demanding and rugged environments,” continued, Mr. Knowles. “Given our strong start to the year, continued bookings momentum and expanding program activity, we are increasing our full-year revenue guidance. Overall, we believe OSS is well positioned to deliver sustained growth and create meaningful long-term shareholder value for years to come,” concluded Mr. Knowles. 2026 Second-Quarter Financial Summary Total revenue from continuing operations increased 62.3% to $9.3 million, from $5.8 million in the second quarter of 2025. The increase was primarily due to higher sales to a medical imaging OEM of liquid-cooled server products to support a breast cancer screening application, as the customer moved from initial prototypes in 2025 to production in 2026; sales with a new customer for short-depth server products engineered for military applications onboard naval vessels and aircraft; and sales with a new customer for compute products to support autonomous construction and mining equipment. Gross margin from continuing operations was 39.1% for the three months ended June 30, 2026, compared to 41.3% in the prior year quarter. The decrease in gross margin was primarily driven by product mix, including a higher level of customer-funded development, early prototype and low-rate initial production activities, partially offset by more favorable manufacturing absorption due to higher production volume and higher usage of reserved inventory to fulfill customer orders. During the second quarter of 2026, OSS recorded a $6.25 million charge related to the settlement of a legacy commercial dispute involving a former customer relationship and events dating back several years ago. The one-time settlement does not constitute an admission of liability, is unrelated to the Company’s current operations or growth programs and fully resolves the dispute. Total operating expenses from continuing operations increased 129.8% to $11.3 million, and included a $6.25 million legal settlement charge described above. Excluding the legal settlement, total operating expenses from continuing operations increased 2.9% to $5.1 million. This increase was predominantly attributable to higher general and administrative and marketing and selling expenses and partially offset by lower R&D expenses. The Company reported a loss from continuing operations of $7.3 million, or $0.29 per diluted share for the three months ended June 30, 2026, as compared to a loss from continuing operations of $2.5 million, or $0.11 per share, in the prior year period. The Company reported a non-GAAP net loss from continuing operations of $0.2 million, or $0.01 per diluted share, compared to a non-GAAP net loss of $2.0 million, or $0.09 per share, in the prior year period. Adjusted EBITDA loss, from continuing operations, a non-GAAP metric, was $0.3 million for the three months ended June 30, 2026, compared to an adjusted EBITDA loss, from continuing operations, of $1.8 million in the prior year period. Net cash used in continuing operations for the six months ended June 30, 2026, was $0.6 million, compared to net cash used in continuing operations of $2.8 million in the prior year period. As of June 30, 2026, the Company reported cash, cash equivalents, and short-term investments of $31.4 million, and total working capital of $38.1 million, compared to cash, cash equivalents, and short-term investments of $31.2 million, restricted cash of $2.2 million and total working capital of $45.3 million at December 31, 2025. 2026 First-Half Financial Summary Total revenue from continuing operations increased 58.8% to $17.4 million, compared to $11.0 million for the same period last year. This increase was primarily driven by revenue generated from new customers in 2026 and from higher production volume with certain existing customers. Gross margin from continuing operations was 44.9%, as compared to 43.3% in the prior year. The increase in gross margin percentage was primarily driven by engineering efficiencies realized on certain of our customer-funded development programs and more favorable manufacturing absorption due to higher production volume. Total operating expenses increased 67.5% to $16.2 million, and included a $6.25 million charge related to the legal settlement charge described above. Excluding the legal settlement, total operating expenses increased 2.7% to $9.9 million. This increase was predominantly attributable to higher personnel and professional services costs, offset by lower research and development expenses. OSS reported a loss from continuing operations of $7.7 million, or $0.31 per share, as compared to a loss from continuing operations of $4.8 million, or $0.22 per share, in the prior year. The Company reported non-GAAP net income from continuing operations of $0.1 million, or $0.00 per share, compared to a non-GAAP net loss from continuing operations of $3.7 million, or $0.17 per share in the prior year. Adjusted EBITDA loss, from continuing operations, a non-GAAP metric, was a loss of $0.2 million, compared to an adjusted EBITDA loss, from continuing operations, of $3.4 million in the prior year period. Income from Discontinued Operations, net of Income Taxes Income from discontinued operations consists of income from the Company’s Bressner Technologies subsidiary, which was sold on December 30, 2025. Income from discontinued operations also includes the gain recognized on the sale. The Company recorded no income or loss from discontinued operations, net of income taxes, for the three months ended June 30, 2026, compared to income of $0.5 million in the prior year. For the six months ended June 30, 2026, loss from discontinued operations, net of income taxes, was $0.2 million, compared to income from discontinued operations, net of income taxes, of $0.7 million in the prior year. The loss in the current year period was due to post-transaction adjustments to the gain on sale of the Bressner business for final net working capital balances. 2026 Full Year Outlook The Company 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. Based on its current performance and business outlook, OSS is increasing its full-year 2026 revenue growth guidance. The Company’s expectations for 2026 reflect expected continued growth across its core defense and commercial markets and expected higher customer-funded development revenue compared with 2025. The Company also continues to monitor potential supply chain constraints affecting certain components, including memory, and the current outlook for the federal government budget. Changes in these assumptions could positively or negatively affect OSS’s 2026 results. For the full year of 2026, OSS expects: Revenue growth of 25% to 30%, compared to prior guidance of 20% to 25% Gross margin of approximately 40% Positive EBITDA and adjusted EBITDA, inclusive of planned strategic investments in personnel and research and development to support continued growth and technology leadership Conference Call OSS will hold a conference call to discuss its results for the second quarter of 2026, followed by a question-and-answer period. Date: Wednesday, August 5, 2026Time: 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: 22300 (required for entry)Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1764322&tp_key=470bf5a9b7 A replay of the call will be available after 1:00 p.m. ET on August 5, 2026, through August 19, 2026. Toll-free replay: 1-844-512-2921International replay: 1-412-317-6671Passcode: 1122300 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 one of the fastest growing segments 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 also excludes the impact of the legal settlement agreement. 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. (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. Non-GAAP income (loss) also excludes the impact of the legal settlement agreement. 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: (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. 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 statements in this press release relating to the Company’s expected financial performance and outlook for 2026, including anticipated revenue growth, market share, gross margin and EBITDA expectations and shareholder value; anticipated demand trends across defense and commercial markets and technology leadership; expected customer-funded development activity; and the Company’s ability to execute its strategic plan and secure positions on large, multi-year programs. The inclusion of forward-looking statements should not be regarded as a representation by One Stop Systems or its partners that any of its plans or expectations will be achieved, including but not limited to expected increases in sales, revenues and profitability, non-GAAP financial measures, our multi-year strategy, expected market growth, continued or new demand for our products, increase in margins, and operating expenses. These statements are based on the Company's current beliefs and expectations. 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, as well as those relating to current geopolitical conditions, defense spending changes, the Company’s ability to successfully scale production, manage program execution, and meet customer delivery schedules, semiconductor supply constraints, and customer concentration. 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

Conference Call to be Held Wednesday, August 5, 2026, at 10:00 a.m. ET ESCONDIDO, Calif., July 22, 2026 (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) and sensor processing at the edge, announced today that it will release its second quarter 2026 financial results before the market opens on Wednesday, August 5, 2026. A webcast and conference call will be held that same day at 10:00 a.m. ET to review the Company’s results. Conference Call and WebcastDomestic: 1-800-717-1738International: 1-646-307-1865Conference ID: 22300Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1764322&tp_key=470bf5a9b7 Conference Call Replay Domestic: 1-844-512-2921International: 1-412-317-6671Passcode: 1122300 A replay of the call will be available after 1:00 p.m. ET on August 6, 2026, through August 19, 2026. About One Stop SystemsOne 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.Forward-Looking StatementsOne Stop Systems 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 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. Actual results may differ from those set forth in this press release due to the risk and uncertainties inherent in our business, performance of our products, growth of the edge computing market, as well as 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 OSS delivered first-quarter 2026 adjusted earnings of 1 cent per share, surpassing the Zacks Consensus Estimate of a loss of 5 cents by 120%. Revenues rose 55% year over year to $8.07 million, exceeding the consensus mark of $7 million by 15.29%. The quarter reflected higher defense and commercial shipments, an improved product mix and stronger execution across customer-funded development programs. OSS reported one of the strongest booking quarters in its history, with a first-quarter book-to-bill ratio of 1.8x, supported by growing demand for ruggedized AI compute platforms at the edge. Defense revenues benefited from higher shipments of data storage products supporting the P-8A Poseidon aircraft program, along with prototype compute systems tied to next-generation enhanced vision systems for U.S. Army combat vehicles. Management highlighted continued traction across defense platforms as deployments become larger and more programmatic. Commercial revenues were supported by increased demand from a medical imaging OEM, including shipments of liquid-cooled server platforms. OSS noted that its ruggedized enterprise-class compute systems are gaining momentum in data-intensive edge applications requiring high performance and reliability. One Stop Systems, Inc. price-consensus-eps-surprise-chart | One Stop Systems, Inc. Quote Bookings reached nearly $15 million during the quarter, resulting in a 1.8x book-to-bill ratio. Management stated that average order sizes have increased meaningfully as customers shift toward multi-year deployments and production-oriented programs. OSS also pointed to expanding customer-funded development activity as a pathway to future production opportunities. Gross margin from continuing operations expanded 610 basis points year over year to 51.6%, driven by a more profitable product mix, engineering efficiencies in customer-funded development work and improved manufacturing absorption from higher production volume. Operating expenses from continuing operations increased modestly 2.5% year over year to $4.8 million, reflecting higher general and administrative expenses that were partly offset by lower marketing, selling and R&D costs. Profitability improved significantly during the quarter. Adjusted EBITDA from continuing operations turned positive at $0.2 million compared with a loss in the year-ago period, reflecting stronger operating leverage and margin execution. As of March 31, 2026, cash, cash equivalents and short-term investments were $34.4 million, along with restricted cash of $2.2 million. This compares with cash, cash equivalents and short-term investments of $31.2 million, along with restricted cash of $2.2 million, as of Dec. 31, 2025. The company remained debt-free at quarter's end. Net cash provided by continuing operating activities was $4.0 million in the first quarter, supported by strong collections and disciplined working capital management. OSS highlighted that it generated record free cash flow from continuing operations during the quarter. Working capital stood at $44.7 million as of March 31, 2026, providing financial flexibility to support growth initiatives and production ramps. Management reaffirmed its full-year 2026 outlook, indicating revenue growth of 20-25%, gross margin of approximately 40%, and positive EBITDA and adjusted EBITDA. The company stated that first-quarter execution supports its expected second-half ramp, though management continues to monitor supply chain challenges, including extended lead times and pricing volatility in certain memory components. While OSS has generally been able to pass through pricing increases, management noted that timing remains the larger uncertainty. OSS currently carries a Zacks Rank #2 (Buy). Keysight Technologies KEYS, Cisco Systems CSCO, and Dell Technologies DELL are some other top-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. Keysight Technologies sports a Zacks Rank #1 (Strong Buy), whereas Cisco Systems and Dell Technologies presently carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here. Shares of Keysight Technologies have surged 78% in the year-to-date period. KEYS is set to report its second-quarter fiscal 2026 results on May 19. Cisco Systems shares have increased 19.6% in the year-to-date period. CSCO is scheduled to release third-quarter fiscal 2026 results on May 13. DELL Technologies shares have surged 82.9% in the year to date period. DELL is set to report its first-quarter fiscal 2027 results on May 28. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report Dell Technologies Inc. (DELL) : Free Stock Analysis Report Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report One Stop Systems, Inc. (OSS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Performance in Q1 was driven by a 55% revenue increase following the strategic sale of Bressner, which management believes unlocks shareholder value and sharpens focus on high-margin edge AI opportunities. Growth was attributed to increased shipments for the P-8 aircraft and prototype deliveries for U.S. Army enhanced vision systems, alongside rising demand from medical imaging OEMs for liquid-cooled server platforms. Management reported a record book-to-bill ratio of 1.8, with $15 million in new bookings nearly equaling the total bookings generated for the entirety of 2023. The average order size has increased nearly 3x since 2023, reflecting a shift toward larger, more programmatic, and multiyear deployments across both defense and commercial sectors. The opportunity pipeline has expanded significantly from a previous estimate of $1 billion, driven by a deliberate effort to align with applications that scale across both markets. Customer-funded development increased 145% year-over-year, which management views as a critical strategy to embed OSS early in the life cycle of next-generation defense and commercial platforms. Management reaffirmed 2026 revenue growth guidance of 20% to 25%, assuming a planned ramp in the second half of the year as development programs transition into production. Gross margins are expected to normalize to approximately 40% for the full year, reflecting a mix of product shipments and an increasing contribution from customer-funded development. Guidance assumes potential timing impacts from supply chain constraints, specifically longer lead times for memory components and CPUs which remain the critical path for deliveries. The company expects to generate positive EBITDA and adjusted EBITDA while continuing to invest in sales expansion and customer support resources. Management indicated that the strengthened balance sheet, with $34.4 million in cash and no debt, provides flexibility for selective strategic acquisitions to enhance technology capabilities. The sale of the Bressner subsidiary in December 2025 for $22.4 million resulted in its historical results being reclassified as discontinued operations. Supply chain volatility has moderated but plateaued at higher pricing levels; management intends to pass these increased costs to customers rather than absorbing them. While defense budgets for 2026 are passed, management noted a potential risk of slight delays in award timing due to the redirection of logistics and material for Middle East operations. The company introduced a next-generation PCIe Gen 6 product portfolio to address increasing bandwidth requirements for AI and machine learning workloads at the edge. Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Memory is the primary constraint with extended lead times and higher pricing, though volatility has moderated compared to three months ago. Management is implementing risk mitigation actions to manage delivery timing and has been successful in passing price increases to customers. No significant impact on 2026 bookings has been observed yet as budgets were already passed, though some award timing delays are anticipated. Management believes these conflicts may eventually create new opportunities for high-performance compute solutions to support specific sensor and software applications. The commercial robotics program for construction and mining is expected to transition to production in 2026. The commercial aerospace passenger cabin system has already transitioned into production with deliveries starting in 2026. Autonomous maritime systems are currently under test and evaluation, with production orders expected later in 2026. The medical imaging program is seeing a production ramp, and management is exploring tech refresh opportunities to enhance compute performance. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here.

One Stop Systems posted Q1 revenue of $8.1 million, up 55% year-over-year, and booked nearly $15 million (book-to-bill 1.8x) driven by large program wins including $10.5M in P‑8 awards and new commercial aerospace, robotics and energy-node opportunities. Gross margin reached a first-quarter record of 51.6%, the company turned to positive non‑GAAP earnings and adjusted EBITDA, and delivered a record $4.0 million of free cash flow while finishing the quarter with $34.4 million in cash and no debt. Management reaffirmed 2026 guidance for 20–25% revenue growth, ~40% gross margin and positive EBITDA, but cautioned that extended component lead times—especially for memory and CPUs—could affect shipment timing and the timing of revenue conversion. Interested in One Stop Systems, Inc.? Here are five stocks we like better. 3 Edge AI Stocks to Watch as the Next Wave of AI Demand Builds One Stop Systems (NASDAQ:OSS) reported a strong start to 2026, posting significant year-over-year gains in both revenue and profitability as demand increased for its ruggedized, enterprise-class compute platforms across defense and commercial markets. Management also reaffirmed full-year guidance, citing solid bookings momentum but noting that extended component lead times—particularly for memory—could affect shipment timing through the year. President and CEO Mike Knowles said the company’s first-quarter results reflect the sale of its wholly owned subsidiary Bressner in December 2025 for proceeds of $22.4 million, subject to final closing working capital balances. Because Bressner is now reported as discontinued operations, the quarter’s discussion focused on the remaining “core OSS business,” which Knowles described as a “pure-play provider of ruggedized AI compute platforms for edge applications.” → 3 Emerging Markets ETFs to Maximize Exposure to High-Potential Countries Knowles said the transaction “unlocked value for shareholders, simplified our operating structure, strengthened our balance sheet, and sharpened our focus on higher margin, higher growth opportunities within our core business,” adding that the first quarter “is already demonstrating the benefits of this transition.” For the first quarter of 2026, OSS reported revenue of $8.1 million, up 55% from $5.2 million in the prior-year quarter. Knowles said the increase reflected growth in both defense and commercial. → The Real SpaceX Play: 5 Chip Stocks Powering the IPO Before It Launches In defense, Knowles highlighted increased shipments supporting the P-8 Poseidon aircraft and increased activity tied to “the design, development, and delivery of prototype compute systems for next-generation enhanced vision systems for U.S. Army combat vehicles.” On the commercial side, he said OSS saw increased demand from a medical imaging OEM, including shipments of liquid-cooled server platforms. → Tyson Foods' Total Returns: Tasty Treats for Income Investors? Chief financial officer Dan (last name not provided in the transcript) said the revenue growth was “primarily due to higher sales to a defense prime customer of data storage products to support the P-8 aircraft,” higher sales to the medical imaging OEM, and sales tied to the enhanced vision prototype compute systems. Knowles said OSS generated “nearly $15 million in new bookings” in the quarter, which he said was one of the strongest quarters in company history and produced a book-to-bill ratio of 1.8x. He added that first-quarter bookings nearly equaled the company’s total bookings for all of 2023, and that average order size has increased nearly three times since 2023. Management detailed several program wins and expansions, including: P-8 Poseidon awards: Knowles said OSS announced aggregate new awards of $10.5 million from the U.S. Navy and a U.S.-based prime defense contractor supporting the P-8 platform, with $0.5 million booked in the first quarter and the remainder in fourth-quarter 2025. He said the company has secured more than $65 million in total contracted revenue tied to the aircraft to date, including over $23 million awarded since the start of 2025. Commercial aerospace: A $1.1 million initial order from a “top-tier commercial aerospace prime contractor” supporting next-generation in-flight entertainment systems, expected to be delivered by the fourth quarter of 2026. Knowles said OSS believes the platform could generate more than $6.5 million over five years. Commercial robotics: A new engagement with a customer manufacturing autonomous construction and mining equipment, expected to generate about $2 million in orders in 2026, with a five-year opportunity of $10 million to $15 million. Knowles said OSS “displaced an incumbent solution” to win the business. Autonomous energy nodes for data centers: In April 2026, OSS announced a relationship with a company building a network of autonomous energy nodes for alternative energy-powered data centers. Knowles said the initial order was valued at over $500,000 and could scale to an aggregate $10 million opportunity over five years. During Q&A, Knowles said the robotics program has completed prototype and early prototype build, delivery, and validation and is expected to transition to production in 2026. He also said the commercial aerospace program “has actually transitioned into production,” with deliveries starting in 2026 and continuing through the year and into 2027. Gross margin in the first quarter was 51.6%, up from 45.5% a year earlier. The CFO called it a first-quarter record and said the improvement reflected “a more profitable mix of products shipped,” engineering efficiencies in customer-funded development programs, and improved manufacturing absorption due to higher volume. He cautioned gross margin can vary by quarter based on mix, absorption, and program life cycle, adding the company continues to target “mid-30s to mid-40s” margins on a sustaining basis and expects second-quarter gross margins to normalize into that range. Operating expenses rose 2.5% to $4.8 million, which management attributed mainly to higher general and administrative expense, partially offset by lower marketing and selling and R&D expenses. On the bottom line, OSS reported a GAAP net loss from continuing operations of $0.4 million, or $0.01 per diluted share, compared with a loss of $2.3 million, or $0.11 per share, in the prior-year quarter. On a non-GAAP basis, the company reported net income from continuing operations of $0.3 million, or $0.01 per diluted share, compared with a non-GAAP net loss of $1.7 million, or $0.08 per share, a year earlier. Adjusted EBITDA from continuing operations was $0.2 million, versus an adjusted EBITDA loss of $1.6 million in the prior-year first quarter. The CFO also pointed to a “record amount of free cash flow from continuing operations.” Net cash provided by continuing operations was $4.0 million for the three months ended March 31, 2026, compared with net cash used of $1.5 million in the prior-year period. OSS ended the quarter with $34.4 million in cash equivalents and short-term investments, $2.2 million of restricted cash, and no debt outstanding. Management reaffirmed 2026 guidance, calling for revenue growth of 20% to 25%, gross margin of approximately 40%, and positive EBITDA. Knowles said the outlook is supported by a growing pipeline of opportunities, increasing customer engagement, higher customer-funded development activity, and the transition of development programs into production deployments. Customer-funded development increased 145% year-over-year in the first quarter, and Knowles said the company expects additional growth through 2026. He also discussed the company’s technology roadmap, noting OSS introduced a next-generation PCIe Gen 6 product portfolio in the fourth quarter of 2025 to address rising bandwidth requirements for AI, machine learning, and sensor-driven workloads. However, management emphasized supply chain risk around component availability and lead times. Knowles said OSS is seeing longer lead times for certain components, including memory, which “may impact the timing of certain shipments throughout the year.” The CFO said memory remains a key constraint and noted extended lead times for other components, including CPU. He also said pricing has risen but OSS generally aims to pass increases through to customers. In response to a question about guidance philosophy, management said demand strength could have supported a higher outlook, but they are maintaining guidance due to the “dynamic supply chain environment” and because “the timing of revenue conversion remains our biggest risk for the year.” Knowles also addressed questions about defense activity in the Middle East and around Iran, saying OSS has not seen a major impact on bookings or planned orders for 2026, while acknowledging there could be slight delays in award timing due to increased logistics and contracting activity. One Stop Systems, Inc (NASDAQ: OSS) develops and manufactures high-performance computing and storage systems tailored for mission-critical and harsh-environment applications. The company's solutions are designed to deliver accelerated processing, high-throughput data handling and reliability in confined or ruggedized form factors. OSS leverages advanced cooling, power management and custom enclosures to support demanding workloads in settings where off-the-shelf hardware may fall short. The company's product portfolio includes GPU-accelerated servers, embedded single-board computers, high-speed RAID storage arrays and integrated system solutions. The article "One Stop Systems Q1 Earnings Call Highlights" was originally published by MarketBeat.

One Stop Systems, Inc. (OSS) came out with quarterly earnings of $0.01 per share, beating the Zacks Consensus Estimate of a loss of $0.05 per share. This compares to a loss of $0.07 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +120.00%. A quarter ago, it was expected that this company would post a loss of $999 per share when it actually produced earnings of $0.09, delivering a surprise of +100%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. One Stop Systems, which belongs to the Zacks Computer - Micro Computers industry, posted revenues of $8.07 million for the quarter ended March 2026, surpassing the Zacks Consensus Estimate by 15.28%. This compares to year-ago revenues of $12.26 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. One Stop Systems shares have added about 36.1% since the beginning of the year versus the S&P 500's gain of 6%. While One Stop Systems has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for One Stop Systems was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.02 on $8.4 million in revenues for the coming quarter and breakeven on $38.7 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Computer - Micro Computers is currently in the top 17% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Dell Technologies (DELL), is yet to report results for the quarter ended April 2026. The results are expected to be released on May 28. This computer and technology services provider is expected to post quarterly earnings of $3.18 per share in its upcoming report, which represents a year-over-year change of +105.2%. The consensus EPS estimate for the quarter has been revised 0.6% higher over the last 30 days to the current level. Dell Technologies' revenues are expected to be $35.46 billion, up 51.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report One Stop Systems, Inc. (OSS) : Free Stock Analysis Report Dell Technologies Inc. (DELL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, May 6, 2026 at 10 a.m. ET President and Chief Executive Officer — Michael Knowles Chief Financial Officer — Daniel Gabel Michael Knowles: Thank you, Julie. Good morning, everyone, and thank you for joining today's call. I am pleased to report that 2025's positive momentum has carried into 2026, and we are off to a strong start with significant year-over-year growth in both revenue and profitability. These results reflect disciplined execution by our team and suggest accelerating demand for our enterprise-class ruggedized compute platforms across both the defense and commercial markets. Importantly, we believe these trends further validate One Stop Systems, Inc.'s position as a critical enabler of next-generation AI autonomy and sensor-driven applications at the edge—markets that we expect to drive sustained long-term growth for years to come. Before we review the specifics of the first quarter, I want to remind everyone on today's call that our first quarter results reflect the opportunistic sale of our wholly owned subsidiary, Bressner, in December 2025 for proceeds of $22.4 million, subject to final closing working capital balances. As a result, Bressner's historical financial results are now reported as discontinued operations, and the results we are discussing today reflect the performance of the remaining core One Stop Systems, Inc. business. The sale of Bressner was a strategic transaction that we believe unlocked value for shareholders, simplified our operating structure, strengthened our balance sheet, and sharpened our focus on higher-margin, higher-growth opportunities within our core business. We believe our first quarter performance is already demonstrating the benefits of this transition and reinforcing the earning power of our go-forward strategy. Today, One Stop Systems, Inc. is a pure-play provider of ruggedized AI compute platforms for edge applications. As a result, we entered 2026 as a more focused and scalable company, fully aligned around delivering market-leading enterprise-class compute solutions to both defense and commercial markets, and I am very pleased with our strong start to the year. Looking at our operational performance in the first quarter, we delivered strong results with revenue increasing 55% year-over-year to $8.1 million, reflecting growth across both our defense and commercial businesses. Highlights in the defense market include increased shipments to support the P-8 Poseidon aircraft, a long-range multi-mission maritime patrol aircraft used for anti-submarine warfare, surveillance, and reconnaissance operations. In addition, we benefited from increased activity related to the design, development, and delivery of prototype compute systems for next-generation enhanced vision systems for U.S. Army combat vehicles. These programs highlight our role supporting mission-critical applications and our ability to scale alongside large multiyear defense platforms. On the commercial side, we experienced increased demand from a medical imaging OEM, including shipments of our liquid-cooled server platforms, reflecting the growing adoption of our solutions in high-performance, data-intensive environments. Taken together, these drivers demonstrate both production-level demand and early-stage program engagement, which we believe will position us well for continued growth. As our sales grow, we are seeing increased market awareness and stronger customer engagement, with a growing number of organizations turning to One Stop Systems, Inc. for enterprise-class deployable compute solutions. During the quarter, we generated nearly $15 million in new bookings that we expect to deliver in 2026 and 2027. I am pleased to report that this was one of the strongest quarters in our history and resulted in a book-to-bill ratio of 1.8, supporting our goal to maintain a trailing twelve-month book-to-bill ratio above 1.2. Bookings during the quarter were driven by several key program wins across both defense and commercial markets. First, we announced aggregate new awards of $10.5 million from the U.S. Navy and a leading U.S.-based prime defense contractor in support of the Poseidon reconnaissance aircraft—$7.5 million of which was booked during the first quarter, with the remainder falling in last year's fourth quarter. With these latest wins, One Stop Systems, Inc. has secured more than $65 million in total contracted revenue associated with this mission-critical aircraft to date, including over $23 million awarded since the beginning of 2025. Second, we received a new $1.1 million initial order from a top-tier commercial aerospace prime contractor to support next-generation in-flight entertainment systems, which is expected to be delivered by 2026. We believe this platform has the potential to generate more than $6.5 million in total revenue over the next five years. Third, we secured a new engagement with a commercial robotics customer manufacturing autonomous construction and mining equipment. We expect this program to generate approximately $2 million in orders in 2026, with a five-year opportunity in the range of an aggregate $10 million to $15 million. Importantly, we displaced an incumbent solution to win this business, which we believe highlights the strength of our technology. More recently, in April 2026, we announced a new relationship with a company building a network of autonomous energy nodes for emerging alternative-energy-powered data centers. While the initial order was valued at over $0.5 million, we expect this customer to scale to an aggregate $10 million opportunity over the next five years. We believe this opportunity reflects how our solutions are increasingly being deployed in next-generation data center architectures where power efficiency, scalability, and enterprise-class compute are critical to supporting AI and data-intensive workloads. Recent program wins reflect both expansion within existing platforms and new customer additions, underscoring the breadth and durability of demand we are seeing across our markets. We are also seeing a clear shift in the size and composition of our bookings. Orders are becoming larger, more programmatic, and increasingly tied to multiyear deployments across a broader set of customers. In fact, our first quarter bookings of $15 million nearly equal the total bookings we generated for the full year of 2023. In addition, our average order size has increased nearly three times since 2023, and over the past twelve months, we have added a growing number of new programs and projects, further strengthening our long-term growth profile. Supporting the momentum we are seeing in both sales and bookings is the continued expansion of our pipeline of opportunities. Three years ago, we believed our pipeline lacked structure, consistency, and alignment with our long-term strategy. Since then, we have made a deliberate effort to build a more strategic and disciplined pipeline—one that is closely aligned with our commercial and defense go-to-market strategy, our technology roadmap, and applications that we believe can scale across both markets. I am pleased with the progress we have made, and more companies across our core defense and commercial end markets are pursuing the company's rugged enterprise-class compute solutions. As a result, we believe our pipeline has expanded significantly from roughly $1 billion previously. These opportunities are primarily concentrated in North America; however, we are starting to see more international opportunities emerge. This has the potential to further increase the size and diversity of our pipeline materially over time. We believe that underlying this growth are strong and durable market dynamics. Demand for enterprise-class compute is accelerating as AI, machine learning, and sensor fusion applications increasingly move from the data center to the edge. This shift is driving a new generation of mission-critical applications across both defense and commercial markets—areas where One Stop Systems, Inc. is well positioned given our expertise in ruggedized compute platforms. Alongside the growth in our pipeline, we are continuing to invest in advancing our technology platform to support the next generation of AI-enabled systems operating at the edge. R&D remains a critical component of our strategy, and we are increasingly working alongside customers on customer-funded development programs that allow us to design and deploy purpose-built compute architectures for emerging applications. These engagements are a key driver of our long-term growth. We believe they position One Stop Systems, Inc. early in the lifecycle of next-generation platforms, deepen our relationship with key customers, and create a clear pathway to future production programs as these technologies move from development to deployment. We are seeing growing traction within U.S. Army labs, defense research organizations, and large defense primes as they reassess current requirements and plan for future compute architectures, and One Stop Systems, Inc. is becoming increasingly embedded as a trusted provider of enterprise-class compute solutions supporting next-generation warfighting capabilities. These efforts span a range of applications, including advanced vision systems, sensor and data processing, autonomy, and AI-enabled situational awareness. While these development programs typically take multiple years to mature, we are encouraged by our expanding role within the Department of Defense ecosystem, and we believe these engagements position One Stop Systems, Inc. to participate in a growing number of future production programs. Many of the programs we discussed earlier today began as development efforts where we worked alongside customers to design highly specialized compute solutions for demanding applications. As those systems mature and transition into production platforms, we believe they can create multiyear revenue opportunities for One Stop Systems, Inc. Customer-funded development increased 145% year-over-year in the first quarter, and we expect additional growth through 2026, supported by new defense and commercial development efforts. At the same time, we continue to advance our core technology roadmap. During 2025, we led the way in our market with the introduction of our next-generation PCIe Gen 6 product portfolio that is designed to address the rapidly increasing bandwidth and data processing requirements associated with artificial intelligence, machine learning, and sensor-driven workloads. PCIe Gen 6 significantly expands data throughput capabilities and will play an important role in enabling the next generation of AI accelerators and GPUs, high-speed storage systems, and advanced compute architectures required for AI applications at the edge. We continue to believe these technology investments position One Stop Systems, Inc. well to support the growing demand for high-performance compute infrastructure as AI-enabled systems continue to expand across both defense and commercial platforms. We believe that One Stop Systems, Inc. is well positioned for long-term growth, and we are encouraged by the strong start to 2026. As we move through the year, we are focused on helping provide the compute and storage needs of our customers, supporting our customers' development efforts, and converting our pipeline to sales. We also continue to closely manage several operational factors, including supply chain dynamics. In particular, we are seeing longer lead times for certain components, including memory, which may impact the timing of certain shipments throughout the year. As a result, we are maintaining our guidance for 2026, and we expect revenue growth in the range of 20% to 25%, supported by our growing pipeline of platform opportunities, increasing customer engagement, higher customer-funded development activities, and the continued transition of development programs into production deployments. We expect gross margins of approximately 40%, reflecting product mix and an increasing contribution from customer-funded development programs, which is an important component of our strategy to advance new technologies alongside our customers. At the same time, we expect to generate positive EBITDA and adjusted EBITDA while continuing to invest in key areas of the business, including sales expansion and customer support resources that support our growing pipeline and deepen relationships with strategic customers. With a strong balance sheet, expanding customer relationships, and a growing pipeline of opportunities driven by the adoption of AI-enabled systems, we believe One Stop Systems, Inc. is well positioned to continue building momentum and delivering long-term value for our shareholders. We also believe our strengthened balance sheet provides the flexibility to make strategic investments in our business and pursue selective strategic acquisitions that could complement our technology platform, expand our customer base, and enhance our capabilities over time. Finally, I want to thank our entire team for their dedication, innovation, and relentless focus on delivering results for our customers and shareholders. So with this overview, I would like to now turn the call over to Dan. Daniel Gabel: Thank you, Mike, and good morning to everyone on today's call. Financial performance in Q1 exceeded our expectations, reflecting both strong customer demand and disciplined operational execution. Q1 results reflect a number of key accomplishments. First, we achieved strong top-line growth of 55%. Second, we achieved robust bookings of nearly $15 million for the first quarter. Third, gross margin of 51.6% remained above our expectations, reflecting favorable mix and pricing, operational improvement, and showcasing the strong value that we provide to our customers. Fourth, higher sales, strong gross margin, and disciplined expense management produced positive adjusted EBITDA in the first quarter. And finally, strong collections and working capital management drove a record amount of free cash flow from continuing operations. We believe that the company has never been in a stronger position, and with a strong cash position, a solid backlog, and a robust pipeline, we believe we are on track to achieve our 2026 guidance and to execute on our growth and profitability objectives. Now for a quick overview of Q1 2026 financial performance. For the first quarter, we reported total revenue of $8.1 million, compared to $5.2 million last year. The 55% year-over-year increase in total revenue was primarily due to higher sales to a defense prime customer of data storage products to support the P-8 aircraft, higher sales to a medical imaging OEM of liquid-cooled server products, and sales to a defense prime customer related to the design, development, and delivery of prototype compute systems for an enhanced vision system for combat vehicles. Gross margin in the first quarter was a first-quarter record of 51.6% compared to 45.5% in the prior-year quarter. The 6.1 percentage point increase from the prior year was primarily due to a more profitable mix of products shipped this year, engineering efficiencies in customer-funded development programs, and improved manufacturing absorption due to higher production volume. We continue to expect some level of variability in gross margins quarter to quarter based on absorption, product mix, and program life cycle. On a sustaining basis, we continue to target margins in the mid-30s to mid-40s. We expect that second-quarter gross margins will normalize into this range. Total first-quarter operating expenses increased 2.5% to $4.8 million. This increase was predominantly attributable to higher general and administrative expenses, partially offset by lower marketing and selling and R&D expenses. For the first quarter, the company reported a GAAP net loss from continuing operations of $0.4 million, or $0.01 per diluted share, compared to a net loss from continuing operations of $2.3 million, or $0.11 per share, in the prior-year quarter. The company reported non-GAAP net income from continuing operations of $300,000, or $0.01 per diluted share, compared to a non-GAAP net loss from continuing operations of $1.7 million, or $0.08 per share, in the prior-year quarter. Adjusted EBITDA from continuing operations, a non-GAAP metric, was $0.2 million compared to an adjusted EBITDA loss from continuing operations of $1.6 million in the prior-year first quarter. Turning to the balance sheet, cash flow from continuing operating activities was a record for a three-month period as we saw a robust quarter of collections and prudently managed inventory levels. Net cash provided by continuing operations for the three months ended 03/31/2026 was $4 million, compared to net cash used in continuing operations of $1.5 million in the prior-year period. As of 03/31/2026, One Stop Systems, Inc. had total cash, cash equivalents, and short-term investments of $34.4 million, restricted cash of $2.2 million, and no debt outstanding. Working capital was $44.7 million as of 03/31/2026, compared to $45.3 million at 12/31/2025. As Mike mentioned, we are reaffirming our guidance for the full year, including revenue growth in the range of 20% to 25%, gross margin of approximately 40%, and positive EBITDA. We believe our strong performance in Q1 supports our planned ramp in the second half of the year. We are seeing strong demand, and our first-quarter performance establishes strong operational momentum. At this time, we are maintaining our guidance as we continue to navigate a dynamic supply chain environment. As we enter the second quarter, we remain focused on disciplined execution, including managing our supply chain to convert customer demand into revenue, profit, and cash. We also remain focused on continuing to drive growth by investing in our technology, pursuing M&A opportunities, and securing new platforms that may provide sustained multiyear revenue streams. As always, we look forward to updating you on our success. This completes our prepared remarks. Julie, please open the call for questions. Operator: Thank you. Your first question comes from Scott Searle from ROTH Capital. Please go ahead. Scott Searle: Hey, good morning. Thanks for taking the questions. Congrats on the quarter and the outlook. Maybe just for starters, could you give us a little bit of an idea of the mix of business in the quarter between defense and commercial? And then on the supply chain front, it sounds like there are some headwinds. I am wondering if you could dig in a little bit more in detail—where does memory fit in the stack? Is it a cost issue from a BOM standpoint impacting gross margins, or just general availability as you look out into the second half of this year? And is that the primary constraint? And Mike, on ongoing military activities, I think there have been some concerns that potentially it is a distraction in terms of the ability to progress existing opportunities. Based on your comments, it does not sound like that has been the case—you have started to move forward on a couple of different fronts and expand that pipeline. I wonder if you could just expand on that a little bit, and then I had a follow-up. Michael Knowles: Great. I will let Dan start with the mix, and then I will jump in with the supply chain and the ongoing defense activities. Daniel Gabel: Thanks, Mike. So starting on the mix, in Q1 we saw growth across multiple areas. Customer-funded development was up. Production was also up. Within production, we did see a higher mix of some of our more mature production programs, and those tend to carry higher margins—that is part of what you are seeing. But on the bookings front, we also announced some new wins, including on the commercial side, that are expected to scale over time as we go through the year and into future years. On the supply chain, what we are seeing primarily is memory, as well as extended lead times for other components, including CPUs, but certainly the critical path for many of our deliveries runs through that memory supply chain. Lead times are longer than what we saw last year. Pricing has certainly moved up. I think there is still some volatility, but relative to three months ago, that volatility has moderated—so, plateaued at a higher level. From a pricing perspective, in general we do not aim to absorb those price increases; we pass them along to our customers. This is a market-wide dynamic, not unique to One Stop Systems, Inc., and generally we have been successful in doing that. But every bid has its own customer and competitive dynamics, and so we evaluate those bids individually. Michael Knowles: I would just add that the biggest long-term impact has really been on memory, and it is a moderate portion of the BOM. We have been able to manage the rest of the bill of materials in our products, whether standard or purpose-built, with supply chain quite well. So it is really just those components, and we have a number of risk mitigation actions we have been working to help mitigate the risk of those delivery timeframes. We will assess and continue to work that as it goes through. And as Dan mentioned, we have been able to pass the price on, so financially we have been able to manage that impact. Now we will just be continuing to work the timing impact across our systems, and it really is just one component—unfortunately, a fairly standard component in server memory. On the change in the defense environment with the ongoing operations in the Middle East and around Iran, given that the budget for 2026 on the defense side was already passed and people are executing against obligations, we really have not seen an impact on bookings or planned orders for the year. We built into the plan and anticipated there may be some slight delays in award timing, and that is just based on the fact that there is an increased overall movement to move standard logistics and material needed in support of the forces in the Middle East. That has to get contracted and put out, so there is a time factor. But to date so far we have not seen a big impact on timing or on elements of programs or plans that were already budgeted or planned for 2026. In these kinds of experiences, we have also seen that as these protract, there generally start to be indications from the conflict on what technology applications could be used to better facilitate execution of the battle plans in the area, to become more efficient in the very specific battle or environment. We are positioned in the labs, and we are looking for that to hopefully turn to opportunity for us into this year and next year as we have the opportunity to leverage high-performance computing, commercial-based solutions to readily support any of those applications. Those generally will come in and around software or sensor capabilities, and to go with that you will need the right level of compute and low latency, which is where we sit. So we will monitor those in the labs and keep an eye out for them. Oftentimes it starts to create opportunity for specific solutions that would enable the current conflict’s operational execution. Scott Searle: Very helpful. And if I could just follow up on the opportunity—the unfactored opportunity pipeline—I think you indicated that it is up significantly from the prior number; you had talked about it being $1 billion, and it sounds like there are growing-size opportunities within that. I am wondering if you could expand on that a little bit. And as it relates to some of the near-term opportunities, particularly the advanced vision systems for military vehicles, what is the timeline for that to convert to production? And then as we look to 2027, I think the long-term targets you have talked about for growth are 20% to 30%. Given all the activity that is going on in the pipeline and how you are starting to convert some of that into orders, do we see an inflection in 2027 towards the higher end of that long-term target range? Thanks. Michael Knowles: Thanks, Scott. On the pipeline, yes, we continue to monitor that. That is our source of identification of opportunities. As we have spoken before, we rate those on the probability that they will be funded, awarded, and happen, and the probability that we win. That helps identify our orders of priority in terms of where we will be addressing opportunities. We continue to see elements moving into the pipeline. I am most encouraged that we are seeing diversity across that pipeline that includes a multitude of new customers and new opportunities, all at moderate values compared to when we looked at the pipeline three years ago. As I noted in my comments, there is a growing number of booking sizes and multiyear programs. The other thing I would say that is starting to appear in that pipeline is an increased number of potential transitional or transformational opportunities that we have factored down appropriately, but they are creating more opportunities for us to find potential transformational organic growth out of things that we are doing. That is leading us, as we move through the factored elements of that, to continue to feel positive about the ability to grow at that 20% to 30% range. Some of those transformational opportunities and some long programs of record—where if we see those come to fruition—would represent substantially greater growth than what we are seeing in the probability-weighting factors today. Some of those, as we have mentioned in the past, are in and around Army programs. The current elements we talked about in the past with the 360-degree situational awareness system—that architected solution still remains under testing and evaluation by the U.S. Army. They will make decisions as appropriate in timing and priority for them. This is the joy of working in the Department of Defense—sometimes these things can happen fast, sometimes they can be protracted, sometimes they can come in multiple phases. The benefit we have is that we have a solution that is present, under test, available, and is the only solution that can provide the capabilities that were written to the requirements we delivered. That architecture has now expanded into multiple additional sensor-based processing applications where the demand for high-performance compute and sensor processing, and the demand for low latency to move that data, has become a requirement across a couple of other capabilities. We mentioned one in our press release about the enhanced vision system, and we continue to work additional opportunities where that compute infrastructure is starting to form the basis for sensor distribution at extremely low latency. We are seeing those opportunities across the other services as well, where we could find these potential larger transformational programs of record, but there is no distinct timing on any of those quite yet. Scott Searle: Great. Thanks so much. Congrats on the quarter and outlook again. I will get back in the queue. Operator: Your next question comes from Eric Martinuzzi from Lake Street. Please go ahead. Eric Martinuzzi: I wanted to ask a guidance philosophy question. It sounds like if there were not the supply chain issues, there is a chance you could have actually bumped up your outlook for 2026. Am I reading that the right way? And is there any pull-forward impact in the Q1 booking success—was any of that kind of Q2 or Q3 pull-forward, or was it just normal course? Daniel Gabel: I think that is right, Eric. We are definitely seeing strength on the demand side—you can see that in our bookings. As we look towards guidance, we are remaining cautious as we navigate this dynamic supply chain environment. The other thing I would add is our guidance was back-half weighted for the year. I think the strong performance in Q1 helps to moderate that ramp. It certainly increases our confidence in the guidance. We have seen, and are continuing to see, extended and variable lead times for components, including memory, so the timing of revenue conversion remains our biggest risk for the year. It is a risk that our guidance takes into account. On bookings, I think it was a combination. There was probably some pull-forward that we saw, and there were also some new wins that we had factored. Maybe the initial awards were not huge, but those will grow over time. Overall, I think Q1 bookings were a very positive story for us. Michael Knowles: I agree with exactly what Dan said. Across the board, it was a good bookings quarter for us. Operator: Your next question comes from Brian Kinstlinger from Alliance Global Partners. Please go ahead. Brian Kinstlinger: This is Kevin for Brian. First, can you provide updates on both the autonomous robotics for construction and mining, as well as the aerospace programs for passenger cabin systems? When do you expect each might move into production from LRIP? Michael Knowles: Thanks, Brian. On the robotics front, we have successfully completed prototype and early prototype build and delivery, test, and validation in the environment, and we will be transitioning that program to production here in 2026. We will start to see news on that in the coming months and quarters as that program transitions into production. The commercial aerospace program has actually transitioned into production. Deliveries have started in 2026 and will continue through this year, and then we will look to 2027. Brian Kinstlinger: Thanks. And then, can you provide any updates on the liquid cooling system for medical imaging where a tech refresh is pending? How will a tech refresh impact this production program? Michael Knowles: We are well set on the production forecast for the year with the medical imaging company and the liquid-cooled server. We have that laid in. We saw a ramp in production demand from last year, so we are positive about the momentum of that program and where it is going. We do continue to explore the opportunity for tech refresh. In our systems and configurations—while they are based on a lot of commercial open system architectures—the ability for tech refresh and upgrades, being able to put in even more compute or lower latency, can help with the overall performance of systems. So we always continue, with this customer and with all our customers, to engage in opportunities to provide quick updates in compute and latency to further enhance system performance where needed. Brian Kinstlinger: Great. Thanks. And then lastly, could you provide an update on the autonomous maritime application? Has testing been completed, and do you still expect production orders this year? Michael Knowles: Yes. On the autonomous maritime systems, we have delivered, and they are under test and evaluation. We are in discussions with the customer and would expect to see production orders this year. Given that the production orders are received early enough, we should be able to generate revenue on that this year. Brian Kinstlinger: Great. Thanks. That is all from us. Operator: And there are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you. Before you buy stock in One Stop Systems, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and One Stop Systems wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $473,985!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,204,650!* Now, it’s worth noting Stock Advisor’s total average return is 950% — a market-crushing outperformance compared to 203% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of May 6, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. OSS Q1 2026 Earnings Call Transcript was originally published by The Motley Fool