Tss, Inc.: Q1 FY2026 earnings call

What management said about Q1 FY2026, from the documents filed with the SEC on 7 May 2026: press release. Guidance figures: 1 kept. The quarter’s numbers.

Key takeaways

Revenue fell 44% on Procurement comparison: Total revenue was $55.3 million, down 44% from $99.0 million. Management said the comparison reflects record high Procurement volumes a year earlier, in a business it described as lower-margin. Source
Quarter in line with expectations: Management said first quarter results were in line with its expectations and support confidence in the full-year plan. Source
Adjusted EBITDA rose 1%: Adjusted EBITDA was $5.3 million, up 1%, which the company linked to a shift in total revenue toward higher-margin systems integration. Source
Systems Integration revenue up 88%: Systems integration revenue was $14.1 million against $7.5 million, up 88%. Management said growth was particularly high in its AI activities. Source
Procurement revenue down 56%: Procurement revenue was $40.0 million against $90.2 million, down 56%, the largest decline of the three revenue lines. Source
Georgetown rack facility scaling: The Georgetown, Texas AI rack integration facility is the site management cited as running at increasing scale over six months. Source
Integration demand exceeds forecast volume: Management said total integration demand is continuing to exceed the volume the company included in its forecast. Source

“Importantly, our first quarter results were in line with our expectations, underscore the strength of our core business and reinforce our confidence in achieving our outlook for the full year.”
Darryll Dewan, CEO of TSS, Inc.

Guidance

Area	Period	Figure	Against last quarter
Adjusted EBITDA Source	full year 2026	$20 million to $22 million	Kept

What changed from last quarter

Guidance raised: Adjusted EBITDA is now expected toward the high end of the unchanged range; the release headline calls this a refinement. Source
New: A chief strategy officer and a chief technology officer were added to the leadership team. Source

Results and growth drivers

Revenue fell 44% on Procurement comparison: Total revenue was $55.3 million, down 44% from $99.0 million. Management said the comparison reflects record high Procurement volumes a year earlier, in a business it described as lower-margin. Source
Quarter in line with expectations: Management said first quarter results were in line with its expectations and support confidence in the full-year plan. Source
Net income and EPS declined: Net income was $2.3 million, down 24%. Diluted EPS was $0.08 against $0.12. The release ties higher tax expense to the full effect of a valuation allowance removed in Q4 2025. Source
Adjusted EBITDA rose 1%: Adjusted EBITDA was $5.3 million, up 1%, which the company linked to a shift in total revenue toward higher-margin systems integration. Source

Segment revenue

Systems Integration revenue up 88%: Systems integration revenue was $14.1 million against $7.5 million, up 88%. Management said growth was particularly high in its AI activities. Source
Procurement revenue down 56%: Procurement revenue was $40.0 million against $90.2 million, down 56%, the largest decline of the three revenue lines. Source
Facilities Management revenue down 1%: Facilities management revenue was $1.29 million against $1.30 million a year earlier. Source

“Our forecast reflects a prudent view on component availability, with total integration demand continuing to exceed the volume incorporated into our outlook.”
Darryll Dewan, CEO of TSS, Inc.

Facility and leadership

Georgetown rack facility scaling: The Georgetown, Texas AI rack integration facility is the site management cited as running at increasing scale over six months. Source
New chief strategy and technology officers: The company added a chief strategy officer and a chief technology officer to its leadership team, as stated by Dewan. Source
Leaders to speed expansion: Management said the new leaders' expertise and networks position the company to accelerate organic expansion and strategic growth initiatives. Source

Demand, supply and expansion

Integration demand exceeds forecast volume: Management said total integration demand is continuing to exceed the volume the company included in its forecast. Source
Forecast reflects cautious component view: The forecast reflects management's prudent view on component availability. Source
Expansion into more customers and services: Management said it is working to expand the markets served, both in customers and in service offerings. Source

“We have strengthened our leadership team with the addition of a chief strategy officer and a chief technology officer”
Darryll Dewan, CEO of TSS, Inc.

Costs and margins

Gross profit down 4%: Gross profit was $8.8 million against $9.2 million, down 4%. The figure includes $0.9 million of depreciation allocated to cost of revenues. Source
Selling and admin costs rose: Selling, general and administrative expense was $5.5 million against $4.9 million a year earlier. Depreciation and amortization in operating expenses was $0.3 million. Source
Bank factoring fees fell: Bank factoring fees were $0.7 million against $1.5 million a year earlier, as shown in operating expenses. Source

Capital, cash and balance sheet

Cash declined to $66.0 million: Cash and cash equivalents were $66.0 million at March 31, against $85.5 million at December 31, with $1.8 million shown separately as restricted cash. Source
Payables and inventory fell: Accounts payable were $23.3 million against $46.4 million, and inventories were $8.1 million against $16.0 million. Source
Current deferred revenue declined: Current deferred revenues were $2.3 million against $13.9 million. Total long-term debt was about $17.0 million against $18.0 million. Source
Equity rose as deficit narrowed: Total stockholders' equity was $78.7 million against $76.6 million, with the accumulated deficit at $42.9 million against $45.2 million. Source

Coming up, as management said on 7 May 2026

Quarterly EBITDA to grow with racks: Management said quarterly EBITDA levels will continue to grow along with AI rack volumes. Source

Risks management discussed

Operational: Management said its forecast takes a prudent view of component availability, which is a constraint on the rack volumes assumed. Source
Demand: Management described the Procurement business as lower-margin and variable, with volumes that can change from quarter to quarter. Source

Earlier plans management reported on

Met: Management said first quarter results were in line with its expectations. Source
Not stated: Management said it has confidence in achieving the full-year plan. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

TSS Reports First Quarter 2026 Financial Results

Total Revenue of $55.3 Million

Systems Integration Revenue Increased 88% Year-Over-Year

Refines Full-Year 2026 Outlook; Now Expects Adjusted EBITDA Toward High End of $20 to $22 Million Range

GEORGETOWN, TEXAS - May 7, 2026 - TSS, Inc. (Nasdaq: TSSI), a data center services company that integrates AI and other high-performance computing infrastructure and software and provides related data center services, today reported results for its first quarter ended March 31, 2026.

“We delivered strong growth in our higher margin Systems Integration business in the first quarter, with revenue increasing 88% year over year, driven by strong customer demand and solid operational execution with growth particularly high in our AI activities,” said Darryll Dewan, CEO of TSS, Inc. “Total revenue comparisons were affected by record high volumes in the first quarter of last year in our lower-margin Procurement business, which can vary from quarter to quarter. Importantly, our first quarter results were in line with our expectations, underscore the strength of our core business and reinforce our confidence in achieving our outlook for the full year.

“Our Georgetown, Texas AI rack integration facility has been running at increasing scale for six months. As a result, our quarterly EBITDA levels have grown and will continue to grow along with AI rack volumes. We are working to expand the markets we serve in terms of both customers and service offering. We have strengthened our leadership team with the addition of a chief strategy officer and a chief technology officer, whose deep industry expertise, proven leadership and extensive global networks position us to accelerate both organic expansion and strategic growth initiatives within our current customer base as well as opportunities to expand beyond our current customers.”

First Quarter 2026 Financial Highlights:

(All comparisons are to First Quarter 2025)

Revenues of $55.3 million, down 44%
Procurement revenues of $40.0 million, down 56%
Systems Integration revenues of $14.1 million, up 88%
Facilities Management revenues of $1.3 million, down 1%
Gross profit of $8.8 million, down 4%
Reflects current year $0.9 million allocation of depreciation to COGS
Net income of $2.3 million, down 24%
Reflects full impact of income taxes following removal of valuation allowance on deferred tax asset in Q4 2025
Diluted EPS of $0.08 compared to $0.12
Adjusted EBITDA of $5.3 million, up 1%, reflecting a shift in total revenues to higher margin systems integration

2026 Outlook

Dewan concluded, “We maintain our outlook for Adjusted EBITDA in the range of $20 million to $22 million for 2026 with performance expected toward the higher end of the range. Our forecast reflects a prudent view on component availability, with total integration demand continuing to exceed the volume incorporated into our outlook.”

Conference Call Details

The Company will conduct a conference call at 5:00 p.m. Eastern time today. To participate on the conference call, please dial 888-506-0062 toll free from the U.S. or Canada. Other international callers may access the call at 1-973-528-0011. The event ID number is 804808. Investors may also access a live audio webcast of this conference call and replay the call for one year following the webcast, at https://www.webcaster5.com/Webcast/Page/2294/53895.

About Non-GAAP Financial Measures

Adjusted EBITDA is a supplemental financial measure not defined under Generally Accepted Accounting Principles (GAAP). We define Adjusted EBITDA as net income (loss) before net interest expense and bank factoring costs, income taxes, depreciation and amortization, impairment loss on goodwill and other intangibles, stock-based compensation, and certain extraordinary items. We present Adjusted EBITDA because we believe this supplemental measure of operating performance is helpful in comparing our operating results across reporting periods on a consistent basis by excluding items that may or could have a disproportionately positive or negative impact on our results of operations in any particular period. We also use Adjusted EBITDA as a factor in evaluating the performance of certain management personnel when determining incentive compensation.

Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA, while providing useful information, should not be considered in isolation or as an alternative to net income or cash flows as determined under GAAP. Consistent with Regulation G under the U.S. federal securities laws, Adjusted EBITDA has been reconciled to the nearest GAAP measure; this reconciliation is located under the heading “Adjusted EBITDA Reconciliation” following the Consolidated Statements of Operations included in this press release. The Company is unable to provide a reconciliation of forward-looking Adjusted EBITDA to GAAP net income because certain reconciling items are outside the Company’s control or cannot be reasonably predicted without unreasonable efforts. These items may include stock-based compensation expense, fluctuations in prevailing interest rates and the resulting impacts on bank factoring fees, interest expense and interest income, and other adjustments that may be material.

About TSS, Inc.

TSS specializes in simplifying the complex. The TSS mission is to streamline the integration and deployment of high-performance computing infrastructure and software, ensuring that end users quickly receive and efficiently utilize the necessary technology. Known for flexibility, the company builds, integrates, and deploys custom, high-volume solutions that empower data centers and catalyze the digital transformation of generative AI and other leading-edge technologies essential for modern computing, data, and business needs. TSS' reputation is built on passion and experience, quality, and fast time to value. As trusted partners of the world's leading data center technology providers, the company manages and deploys billions of dollars in technology each year. For more information, visit www.tssiusa.com.

Forward Looking Statements

Forward-looking statements notice

This press release may contain “forward-looking statements” -- that is, statements related to future -- not past -- events, plans, and prospects. In this context, forward-looking statements may address matters such as our expected future business and financial performance, and often contain words such as “guidance,” “forecast,” “prospects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “should,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties that could adversely or positively affect our future results include: we may not have sufficient resources to fund our business and may need to issue debt or equity to obtain additional funding; our reliance on a significant portion of our revenues from a limited number of customers and our ability to diversify our customer base; risks relating to operating in a highly competitive industry; risks relating to supply chain challenges; risk related to changes in labor market conditions; risks related to the implementation of a new enterprise resource IT system; risks related to the development of our procurement services business; risks relating to rapid technological, structural, and competitive changes affecting the industries we serve; risks involved in properly managing complex projects; risks relating to the possible cancellation of customer contracts on short notice; risks relating to our ability to continue to implement our strategy, including having sufficient financial resources to carry out that strategy; and other risks and uncertainties disclosed in our filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2025. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.

-- Tables Follow -

TSS, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

	March 31, 2026 (Unaudited)	December 31, 2025
Current Assets:
Cash and cash equivalents	$65,973	$85,510
Contract and other receivables, net	10,582	12,501
Costs and estimated earnings in excess of billings on uncompleted contracts	363	3,011
Inventories, net	8,091	15,966
Restricted cash	1,811	-
Prepaid expenses and other current assets	1,886	1,642
Total current assets	88,706	118,630
Property and equipment, net	37,498	38,076
Lease right-of-use asset	14,919	15,294
Goodwill	780	780
Deferred tax asset, net of valuation allowance	7,601	7,917
Other assets	4,073	4,238
Total assets	$153,577	$184,935
Current Liabilities:
Accounts payable	$23,287	$46,362
Accrued expenses and other current liabilities	8,879	6,273
Deferred revenues, current	2,307	13,928
Long-term debt, current	4,084	4,010
Lease liabilities, current	2,049	1,994
Total current liabilities	40,606	72,567
Non-current Liabilities:
Long-term debt, non-current	12,959	14,004
Lease liabilities, non-current	21,100	21,629
Deferred revenues, non-current	134	-
Other non-current liabilities	102	100
Total non-current liabilities	34,295	35,733
Total liabilities	74,901	108,300
Commitments and Contingencies
Stockholders’ Equity:
Preferred stock	-	-
Common stock	3	3
Additional paid-in capital	121,607	121,842
Treasury stock, at cost	-	-
Accumulated deficit	(42,934)	(45,210)
Total stockholders’ equity	78,676	76,635
Total liabilities and stockholders’ equity	$153,577	$184,935

TSS, Inc.

Consolidated Statements of Operations

(Unaudited, In thousands except per-share values)

	Three Months Ended March 31,
	2026	2025
Revenues:
Procurement	$39,980	$90,177
Facilities management	1,290	1,298
Systems integration	14,076	7,484
Total revenues	55,346	98,959
Cost of revenues	45,604	89,749
Cost of revenues - depreciation	936	-
Total cost of revenues	46,540	89,749
Gross profit	8,806	9,210
Operating expenses:
Selling, general and administrative	5,522	4,887
Depreciation and amortization	306	210
Bank factoring fees	704	1,468
Total operating expenses	6,532	6,565
Income from operations	2,274	2,645
Interest expense	333	-
Interest income	(725)	(383)
Other expense (income)	(1)	-
Pre-tax income	2,667	3,028
Income tax expense	391	49
Net income	$2,276	$2,979
Earnings per common share - Basic	$0.08	$0.13
Earnings per common share - Diluted	$0.08	$0.12

TSS, Inc.

Adjusted EBITDA Reconciliation (GAAP to non-GAAP)

(Unaudited, In thousands)

	Three Months Ended March 31,
	2026	2025
Net income	$2,276	$2,979
Interest expense	333	-
Bank factoring fees	704	1,468
Interest income	(725)	(383)
Depreciation and amortization	1,242	210
Income tax expense	391	49
EBITDA	$4,221	$4,323
Stock based compensation	1,050	921
Adjusted EBITDA	$5,271	$5,244

Contacts
Hayden IR · James Carbonara (646) 755-7412 · Brett Maas (646) 536-7331 · tssi@haydenir.com
TSS, Inc. · Danny Chism, CFO · (512) 310-4908 · dchism@tssiusa.com