TSS Reports Third Quarter 2026 Financial Results
Higher-margin Systems Integration growth accompanied improved earnings despite lower revenue for the first nine months of 2026.
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Rhea-AI Summary
TSS (TSSI) reported third-quarter revenue of $50.1 million, with Systems Integration growth helping the company return to quarterly profitability. Revenue rose 20% year over year, while Systems Integration revenue increased 75% to $16.1 million. Net income was $1.1 million, or $0.04 per diluted share, versus a $1.5 million loss, or $0.06 per diluted share. Gross profit rose 86% to $8.6 million.
TSS raised its 2026 adjusted EBITDA outlook to $21 million–$23 million; this is a non-GAAP earnings measure. Nine-month revenue fell 24% to $140.5 million as Procurement revenue declined, although net income increased to $4.9 million from $3.0 million. Cash declined to $53.965 million from $85.510 million at year-end 2025. TSS secured a seven-year lease for approximately 380,000 square feet of additional warehouse space and completed its next-generation AI integration build-out shortly after quarter-end.
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Hollow bars mark forward-looking points. How the balance works
Positive
- Major point. Forward-looking: it has not happened yet and may not happen.TSS raised its 2026 adjusted EBITDA outlook to $21 million–$23 million.
- Moderate pointThird-quarter revenue of $50.1 million increased 20% year over year.
- Moderate pointQuarterly gross profit of $8.6 million increased 86% year over year.
- Moderate pointQuarterly net income of $1.1 million reversed a $1.5 million year-earlier loss.
- Moderate pointQuarterly adjusted EBITDA of $4.7 million increased 225% year over year.
- Moderate pointAdditional warehouse space of approximately 380,000 square feet expands capacity to support growing customer volumes.
18 minor points
- Minor pointQuarterly Systems Integration revenue of $16.1 million grew 75% year over year.
- Minor pointQuarterly Procurement revenue of $32.4 million increased 4% year over year.
- Minor pointQuarterly diluted EPS of $0.04 improved from a $0.06 year-earlier loss per share.
- Minor pointQuarterly operating income of $1.159 million reversed a $1.764 million year-earlier operating loss.
- Minor pointQuarterly pre-tax income of $1.5 million improved from a $1.4 million year-earlier loss.
- Minor pointNine-month Systems Integration revenue of $44.1 million increased 68% year over year.
- Minor pointNine-month Facilities Management revenue of $5.1 million increased 17% year over year.
- Minor pointNine-month gross profit of $25.4 million increased 21% year over year.
- Minor pointNine-month net income of $4.9 million increased from $3.0 million a year earlier.
- Minor pointNine-month diluted EPS of $0.16 increased from $0.11 a year earlier.
- Minor pointNine-month operating income of $5.035 million increased from $2.258 million a year earlier.
- Minor pointNine-month pre-tax income of $6.0 million increased 91% year over year.
- Minor pointNine-month adjusted EBITDA of $14.5 million increased 35% year over year.
- Minor pointBank factoring fees fell year over year: quarterly to $718,000 from $833,000; nine-month to $1.932 million from $3.160 million.
- Minor pointInterest income rose year over year: quarterly to $633,000 from $434,000; nine-month to $1.923 million from $992,000.
- Minor pointNext-generation AI integration build-out was completed shortly after quarter-end.
- Minor point. Forward-looking: it has not happened yet and may not happen.TSS anticipates further Systems Integration growth in the fourth quarter based on current pipeline visibility.
- Minor pointNon-current debt declined to $10.859 million from $14.004 million at December 31, 2025.
Negative
- Moderate pointNine-month revenue of $140.5 million declined 24% year over year.
- Moderate pointCash and equivalents fell to $53.965 million from $85.510 million at December 31, 2025.
- Moderate pointSeven-year warehouse lease adds a long-term commitment for the additional Georgetown space.
- Minor pointNine-month Procurement revenue of $90.6 million declined 41% from the record year-earlier level.
- Minor pointQuarterly Facilities Management revenue of $1.1 million declined 30% year over year.
7 minor points
- Minor pointSelling, general and administrative expenses rose year over year: quarterly to $6.114 million; nine-month to $17.196 million.
- Minor pointDepreciation and amortization rose year over year: quarterly to $1.476 million from $1.355 million; nine-month to $4.027 million from $2.409 million.
- Minor pointInterest expense rose year over year: quarterly to $310,000 from $121,000; nine-month to $965,000 from $121,000.
- Minor pointIncome tax expense rose year over year: quarterly to $338,000 from $50,000; nine-month to $1.142 million from $168,000.
- Minor pointAsset disposal losses were $285,000 quarterly and $302,000 for nine months, versus none in either year-earlier period.
- Minor pointStock-based compensation rose year over year: quarterly to $1.102 million from $1.030 million; nine-month to $3.201 million from $2.881 million.
- Minor pointCurrent debt increased to $4.239 million from $4.010 million at December 31, 2025.
Details
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Key Figures
- Third-quarter revenue
- $50.1 million, up 20%
- Third quarter 2026 versus third quarter 2025
- Systems Integration revenue
- $16.1 million, up 75%
- Third quarter 2026 year over year
- Gross profit
- $8.6 million, up 86%
- Third quarter 2026 year over year
- Net income
- $1.1 million vs. net loss of $1.5 million
- Third quarter 2026 versus third quarter 2025
- Diluted EPS
- $0.04 vs. ($0.06)
- Third quarter 2026 versus third quarter 2025
- Adjusted EBITDA
- $4.7 million, up 225%
- Third quarter 2026 year over year
- Year-to-date revenue
- $140.5 million, down 24%
- First nine months of 2026 versus first nine months of 2025
- 2026 Adjusted EBITDA outlook
- $21 million to $23 million
- Company raised its 2026 outlook
Previous Earnings Reports
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Revenue declined year over year, while systems integration and Adjusted EBITDA increased and 2026 outlook was reaffirmed.
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Revenue fell year over year, while systems integration grew and the company reiterated its 2026 Adjusted EBITDA outlook.
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Quarterly revenue and Adjusted EBITDA declined year over year, and the company reported a net loss.
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Key Terms
adjusted ebitda financial
non-gaap financial measure financial
gaap financial
deferred tax asset financial
diluted eps financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
GEORGETOWN, TX / ACCESS Newswire / November 5, 2026 / TSS, Inc. (Nasdaq:TSSI), a data center services company that provides integration and related services for AI and other high-performance computing infrastructure and software, today reported results for its third quarter ended September 30, 2026.
Recent Business Highlights
- Achieved record quarterly Systems Integration revenue, reflecting continued growth in AI and high-performance computing infrastructure demand
- Secured a seven-year lease for approximately 380,000 square feet of additional warehouse space in Georgetown, Texas, expanding supply chain capacity and flexibility to support growing customer volumes
- Progressed build-out for readiness to integrate and deploy next generation of AI technology, with the build-out completed shortly after quarter-end
"Our record Systems Integration revenue for the quarter reflects the investment and strategic focus on positioning TSS for continued growth as an integrator of AI and high-performance computing infrastructure," said Darryll Dewan, CEO of TSS. "With revenue in this segment growing
Third Quarter 2026 Financial Highlights:
(All comparisons are to Third Quarter 2025)
- Revenues of
$50.1 million , up20% , with growth in higher-margin Systems Integration- Procurement revenues of
$32.4 million , up4% - Systems Integration revenues of
$16.1 million , up75% - Facilities Management revenues of
$1.1 million , down30% - Operating lease income of
$0.4 million
- Procurement revenues of
- Gross profit of
$8.6 million , up86% - Pre-tax income of
$1.5 million , an improvement of$2.9 million compared to ($1.4) million in the prior year quarter - Net income of
$1.1 million and Diluted EPS of$0.04 after full tax provision, following the fourth quarter 2025 removal of the valuation allowance on the deferred tax asset, compared to a net loss of$1.5 million and Diluted EPS of ($0.06) - Adjusted EBITDA of
$4.7 million , up225%
Year-to-Date 2026 Financial Highlights:
(All comparisons are to the first nine months of 2025)
- Revenues of
$140.5 million , down24% , reflecting lower Procurement revenue compared with the prior-year period, partially offset by growth in higher-margin Systems Integration and Facilities Management- Procurement revenues of
$90.6 million , down41% in comparison to record Procurement revenues in 2025 - Systems Integration revenues of
$44.1 million , up68% - Facilities Management revenues of
$5.1 million , up17%
- Procurement revenues of
- Gross profit of
$25.4 million , up21% - Reflects allocation of depreciation to COGS of
$3.0 million in the current period compared to$1.6 million in the prior year period
- Reflects allocation of depreciation to COGS of
- Pre-tax income of
$6.0 million , up91% - Net income of
$4.9 million and Diluted EPS of$0.16 after full tax provision, compared to net income of$3.0 million and Diluted EPS of$0.11 - Adjusted EBITDA of
$14.5 million , up35% , reflecting a shift in total revenues to higher-margin Systems Integration
2026 Outlook
Dewan concluded, "Building on the growth we delivered in Systems Integration in the third quarter and current visibility into our pipeline, we anticipate further growth in the fourth quarter. We are raising our 2026 outlook for Adjusted EBITDA to a range of
Adjusted EBITDA is a non-GAAP financial measure. The Company has not provided a reconciliation of its Adjusted EBITDA outlook to net income, the most directly comparable GAAP measure, for the reasons described under "About Non-GAAP Financial Measures" below.
Conference Call Details
The Company will conduct a conference call at 5 p.m. Eastern time today. To participate on the conference call, please dial 1-888-506-0062 toll free from the U.S. or Canada. Other international callers may access the call at 1-973-528-0011. The event ID is 384673. 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/2294/54666.
About Non-GAAP Financial Measures
Adjusted EBITDA is a supplemental financial measure not defined under U.S. generally accepted accounting principles ("GAAP"). We define Adjusted EBITDA as net income (loss) before interest expense, net of interest income, bank factoring fees, income taxes, depreciation and amortization, impairment loss on goodwill and other intangibles, stock-based compensation, and loss on sale or disposal of assets. 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 net income, the most directly comparable 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 without unreasonable efforts because certain reconciling items are outside the Company's control or cannot be reasonably predicted. 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, income tax expense, losses on sale or disposal of assets, and other adjustments. The unavailable information could have a significant impact on the Company's future GAAP net income.
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's 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 contains "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, including our 2026 Adjusted EBITDA outlook, and often contain words such as "guidance," "forecast," "outlook," "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; risks 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 related to our ability to effectively utilize our expanded warehouse and integration facilities and our related lease obligations; 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 and subsequent Quarterly Reports on Form 10-Q. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. Forward-looking statements speak only as of the date of this press release, and we do not undertake to update our forward-looking statements, except as required by law.
Contacts:
| Hayden IR | TSS, Inc. | |
| James Carbonara (646) 755-7412 | Danny Chism, CFO | |
| Brett Maas (646) 536-7331 | (512) 310-4908 | |
| tssi@haydenir.com | dchism@tssiusa.com |
-- Tables Follow -
TSS, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
| September 30, 2026 (Unaudited) | December 31, 2025 | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 53,965 | $ | 85,510 | ||||
Contract and other receivables, net | 13,852 | 12,501 | ||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 254 | 3,011 | ||||||
Inventories, net | 12,405 | 15,966 | ||||||
Restricted cash | 1,811 | - | ||||||
Prepaid expenses and other current assets | 1,876 | 1,642 | ||||||
Total current assets | 84,163 | 118,630 | ||||||
Property and equipment, net | 50,964 | 38,076 | ||||||
Lease right-of-use asset | 14,184 | 15,294 | ||||||
Goodwill | 780 | 780 | ||||||
Deferred tax asset, net of valuation allowance | 6,922 | 7,917 | ||||||
Other assets | 3,744 | 4,238 | ||||||
Total assets | $ | 160,757 | $ | 184,935 | ||||
Current Liabilities: | ||||||||
Accounts payable | $ | 34,426 | $ | 46,362 | ||||
Accrued expenses and other current liabilities | 4,001 | 6,273 | ||||||
Deferred revenues, current | 2,138 | 13,928 | ||||||
Long-term debt, current | 4,239 | 4,010 | ||||||
Lease liabilities, current | 2,184 | 1,994 | ||||||
Total current liabilities | 46,988 | 72,567 | ||||||
Non-current Liabilities: | ||||||||
Long-term debt, non-current | 10,859 | 14,004 | ||||||
Lease liabilities, non-current | 19,989 | 21,629 | ||||||
Deferred revenues, non-current | 348 | - | ||||||
Other non-current liabilities | 97 | 100 | ||||||
Total non-current liabilities | 31,293 | 35,733 | ||||||
Total liabilities | 78,281 | 108,300 | ||||||
Commitments and Contingencies | ||||||||
Stockholders' Equity: | ||||||||
Preferred stock | - | - | ||||||
Common stock | 3 | 3 | ||||||
Additional paid-in capital | 122,826 | 121,842 | ||||||
Accumulated deficit | (40,353 | ) | (45,210 | ) | ||||
Total stockholders' equity | 82,476 | 76,635 | ||||||
Total liabilities and stockholders' equity | $ | 160,757 | $ | 184,935 | ||||
TSS, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, In thousands except per-share values)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
Revenues | ||||||||||||||||
Procurement | $ | 32,396 | $ | 31,101 | $ | 90,625 | $ | 154,280 | ||||||||
Facilities management | 1,119 | 1,591 | 5,132 | 4,371 | ||||||||||||
Systems integration | 16,112 | 9,191 | 44,068 | 26,161 | ||||||||||||
Operating lease income | 433 | - | 722 | - | ||||||||||||
Total revenues | 50,060 | 41,883 | 140,547 | 184,812 | ||||||||||||
Cost of revenues | ||||||||||||||||
Cost of revenues | 39,955 | 36,221 | 111,467 | 162,125 | ||||||||||||
Cost of revenues - depreciation | 1,120 | 1,027 | 3,045 | 1,645 | ||||||||||||
Cost of lease operations | 353 | - | 588 | - | ||||||||||||
Total cost of revenues | 41,428 | 37,248 | 115,100 | 163,770 | ||||||||||||
Gross profit | 8,632 | 4,635 | 25,447 | 21,042 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 6,114 | 5,238 | 17,196 | 14,860 | ||||||||||||
Depreciation and amortization | 356 | 328 | 982 | 764 | ||||||||||||
Bank factoring fees | 718 | 833 | 1,932 | 3,160 | ||||||||||||
Loss on sale or disposal of assets | 285 | - | 302 | - | ||||||||||||
Total operating expenses | 7,473 | 6,399 | 20,412 | 18,784 | ||||||||||||
Income (loss) from operations | 1,159 | (1,764 | ) | 5,035 | 2,258 | |||||||||||
Interest expense | 310 | 121 | 965 | 121 | ||||||||||||
Interest income | (633 | ) | (434 | ) | (1,923 | ) | (992 | ) | ||||||||
Other expense (income) | (5 | ) | (4 | ) | (6 | ) | (4 | ) | ||||||||
Pre-tax income (loss) | 1,487 | (1,447 | ) | 5,999 | 3,133 | |||||||||||
Income tax expense | 338 | 50 | 1,142 | 168 | ||||||||||||
Net income (loss) | $ | 1,149 | $ | (1,497 | ) | $ | 4,857 | $ | 2,965 | |||||||
Earnings (loss) per common share - basic | $ | 0.04 | $ | (0.06 | ) | $ | 0.17 | $ | 0.12 | |||||||
Earnings (loss) per common share - diluted | $ | 0.04 | $ | (0.06 | ) | $ | 0.16 | $ | 0.11 | |||||||
TSS, Inc.
Adjusted EBITDA Reconciliation (GAAP to non-GAAP)
(Unaudited, In thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
Net income (loss) | $ | 1,149 | $ | (1,497 | ) | $ | 4,857 | $ | 2,965 | |||||||
Interest expense | 310 | 121 | 965 | 121 | ||||||||||||
Bank factoring fees | 718 | 833 | 1,932 | 3,160 | ||||||||||||
Interest income | (633 | ) | (434 | ) | (1,923 | ) | (992 | |||||||||
Depreciation and amortization | 1,476 | 1,355 | 4,027 | 2,409 | ||||||||||||
Income tax expense | 338 | 50 | 1,142 | 168 | ||||||||||||
EBITDA | $ | 3,358 | $ | 428 | $ | 11,000 | $ | 7,831 | ||||||||
Stock-based compensation | 1,102 | 1,030 | 3,201 | 2,881 | ||||||||||||
Loss on sale or disposal of assets | 285 | - | 302 | - | ||||||||||||
Adjusted EBITDA | $ | 4,745 | $ | 1,458 | $ | 14,503 | $ | 10,712 | ||||||||
SOURCE: TSS, Inc.
View the original press release on ACCESS Newswire
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were TSS's third-quarter 2026 revenue and earnings?
TSS reported $50.1 million in revenue and $1.1 million in net income, or $0.04 per diluted share. Revenue increased 20% from the third quarter of 2025, when TSS recorded a $1.5 million net loss, or $0.06 per diluted share.
What is TSS's updated 2026 adjusted EBITDA outlook?
TSS raised its 2026 adjusted EBITDA outlook to $21 million–$23 million. Adjusted EBITDA is a non-GAAP measure that excludes items including interest, taxes, depreciation and amortization, bank factoring fees and stock-based compensation.
Why do TSS's 2026 earnings include a full tax provision?
TSS's 2026 earnings include a full tax provision following the removal of the valuation allowance on its deferred tax asset in the fourth quarter of 2025. Income tax expense was $338,000 for the third quarter and $1.142 million for the first nine months of 2026.