TSS Reports First Quarter 2026 Financial Results
Rhea-AI Summary
TSS (Nasdaq:TSSI) reported first quarter 2026 results: total revenue $55.3M (down 44% YoY), systems integration revenue $14.1M (up 88% YoY) and procurement revenue $40.0M (down 56% YoY). Gross profit was $8.8M, net income $2.3M (down 24%), diluted EPS $0.08, and adjusted EBITDA $5.3M (up 1%). The company reiterated 2026 adjusted EBITDA guidance of $20M–$22M, saying performance is expected toward the high end.
The company cited growing AI rack integration volumes at its Georgetown, TX facility and recent senior hires as drivers of future growth.
Positive
- Systems integration revenue +88% YoY to $14.1M
- Adjusted EBITDA $5.3M, up 1% vs prior year
- 2026 adjusted EBITDA guidance maintained at $20M–$22M, expected toward high end
- AI rack integration facility scaling in Georgetown driving higher-margin volume
Negative
- Total revenue down 44% YoY to $55.3M
- Procurement revenue down 56% YoY to $40.0M
- Net income down 24% to $2.3M
- Diluted EPS decreased from $0.12 to $0.08
Key Figures
Market Reality Check
Peers on Argus
TSSI was up 7.48% while peers were mixed: LZMH gained 7.91%, IBEX and TTGT declined modestly, and CNDT/XRX were flat, indicating stock-specific dynamics around this earnings release.
Previous Earnings Reports
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Mar 11 | FY25 earnings | Positive | +8.1% | Strong 2025 revenue and EPS growth with solid Q4 integration trends. |
| Nov 13 | Q3 2025 earnings | Negative | -43.3% | Q3 2025 revenue and EBITDA declines despite raised full-year outlook. |
| Aug 06 | Q2 2025 earnings | Positive | -23.1% | Exceptional Q2 2025 growth and higher 2025 EBITDA outlook met with selloff. |
| May 15 | Q1 2025 earnings | Positive | +74.1% | Q1 2025 revenue surge from AI rack integration and stronger EPS. |
| Aug 14 | Q2 2024 earnings | Positive | +18.2% | Strong Q2 2024 profit growth and higher Adjusted EBITDA on AI demand. |
Earnings releases often trigger sizable moves; most have aligned with the tone of results, though there has been at least one sharp negative divergence after strong numbers.
Over the last several earnings cycles, TSS has highlighted rapid growth in AI-focused systems integration and improving profitability. Prior results included strong Q2 2024 and Q1–Q2 2025 growth, raised Adjusted EBITDA outlooks, and expanding AI rack integration at the Georgetown facility. However, volatility appeared, with Q3 2025 showing weaker quarterly metrics despite strong year-to-date trends. The current Q1 2026 report continues the theme of AI-driven systems integration strength while maintaining a $20–$22M Adjusted EBITDA outlook.
Historical Comparison
In the past, TSSI earnings headlines moved shares by an average of 6.77%. The current pre-news change of 7.48% sits slightly above that typical earnings reaction band.
Earnings updates trace a progression from strong Q2 2024 profitability to outsized 2025 AI-driven growth and into 2026, where guidance of $20–$22M Adjusted EBITDA is being reaffirmed.
Regulatory & Risk Context
TSS has an effective S-3/A shelf registration dated 2025-06-18 with at least 2 recorded 424B5 usages, indicating pre-established capacity to raise capital if needed. Specific remaining capacity details were not provided.
Market Pulse Summary
This announcement details a Q1 2026 profile of lower total revenue but sharply higher systems integration activity and stable profitability, supported by $5.3M Adjusted EBITDA and reaffirmed $20–$22M 2026 guidance. Recent earnings history shows both strong AI-driven growth and volatility around quarterly cadence. Investors may watch execution at the Georgetown AI facility, procurement demand swings, insider selling patterns, and any future use of the effective S-3/A shelf.
Key Terms
adjusted EBITDA financial
AI technical
AI-generated analysis. Not financial advice.
Total Revenue of
Systems Integration Revenue Increased
Refines Full-Year 2026 Outlook; Now Expects Adjusted EBITDA Toward High End of
GEORGETOWN, TX / ACCESS Newswire / 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
"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 , down44% Procurement revenues of
$40.0 million , down56% Systems Integration revenues of
$14.1 million , up88% Facilities Management revenues of
$1.3 million , down1%
Gross profit of
$8.8 million , down4% Reflects current year
$0.9 million allocation of depreciation to COGS
Net income of
$2.3 million , down24% 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 , up1% , 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
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
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.
Contacts: | |
Hayden IR | TSS, Inc. |
James Carbonara (646) 755-7412 | Danny Chism, CFO |
Brett Maas (646) 536-7331 | (512) 310-4908 |
-- 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 | ||||
SOURCE: TSS, Inc.
View the original press release on ACCESS Newswire