Friday, May 10, 2024
One Stop Systems, Inc. (OSS) designs and manufactures innovative AI Transportable edge computing modules and systems, including ruggedized servers, compute accelerators, expansion systems, flash storage arrays, and Ion Accelerator™ SAN, NAS, and data recording software for AI workflows. These products are used for AI data set capture, training, and large-scale inference in the defense, oil and gas, mining, autonomous vehicles, and rugged entertainment applications. OSS utilizes the power of PCI Express, the latest GPU accelerators and NVMe storage to build award-winning systems, including many industry firsts, for industrial OEMs and government customers. The company enables AI on the Fly® by bringing AI datacenter performance to ‘the edge,’ especially on mobile platforms, and by addressing the entire AI workflow, from high-speed data acquisition to deep learning, training, and inference. OSS products are available directly or through global distributors. For more information, go to www.onestopsystems.com.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Ongoing Transition. The transition of OSS towards opportunities in growing defense and commercial markets and away from the legacy media company is ongoing, although the uncertain economic environment and delayed federal government budget approvals are slowing the process down. Nonetheless, we expect OSS to return to y-o-y revenue growth in the second half. Notably, book-to-bill in the OSS segment was 1.1x for the quarter.
1Q24 Results. Revenue of $12.7 million declined 24.6%, partly due to the absence of Disguise revenue but also delays in orders from a key customer. Gross margin of 29.4% declined 80bp y-o-y. OSS reported a GAAP net loss of $1.34 million, or a loss of $0.06/sh and an adjusted loss of $0.04/sh, compared to a net loss of $400,500, or a loss of $0.02/sh and an adjusted breakeven, in 1Q23. We had estimated revenue of $12.5 million, a GAAP loss of $0.07/sh, and adjusted loss of $0.04/sh.
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