TSS, Inc. (TSSI) grows AI integration revenue and keeps 2026 EBITDA at top range

Rhea-AI Filing Summary

TSS, Inc. reported second quarter 2026 results that highlight a continued shift toward higher margin AI-focused services. Total revenue was $35.1 million, with systems integration revenue of $13.9 million, up 46% year-over-year, and facilities management revenue of $2.7 million, up 84%. Systems integration accounted for 39% of total revenue versus 22% a year earlier, while procurement revenue declined to $18.2 million from $33.0 million as lower-margin activity was reduced.

Gross profit rose 11% to $8.0 million, pre-tax income increased 19% to $1.8 million, and Adjusted EBITDA grew 12% to $4.5 million. Net income was $1.4 million, with diluted EPS of $0.05. For the first six months of 2026, systems integration revenue increased 65% to $28.0 million and Adjusted EBITDA rose 5% to $9.8 million, despite sharply lower procurement revenues. The company began deploying a planned ~$17 million investment to support next generation AI data center technology and reiterated its 2026 Adjusted EBITDA outlook at the upper end of the $20 million–$22 million range.

Positive

• Higher-margin segments are expanding, with systems integration revenue up 46% and facilities management up 84% year-over-year in Q2 2026.
• Q2 profitability improved: gross profit rose 11% to $8.0 million, and pre-tax income increased 19% to $1.8 million versus Q2 2025.
• Q2 2026 Adjusted EBITDA grew 12% to $4.5 million, and year-to-date Adjusted EBITDA increased 5% to $9.8 million.
• Management reaffirmed 2026 guidance, expecting Adjusted EBITDA at the upper end of the $20–$22 million range.
• TSS is deploying a planned ~$17 million investment to support next generation AI data center technology, expected to drive higher systems integration revenue starting Q3 2026.

Negative

• Lower-margin procurement revenues declined sharply, from $33.0 million to $18.2 million in Q2 and from $123.2 million to $58.2 million year-to-date versus 2025.
• Despite margin gains, net income softened, from $1.5 million to $1.4 million in Q2 and from $4.5 million to $3.7 million for the first six months year-over-year.
• Cash and cash equivalents decreased from $85.5 million to $67.7 million between December 31, 2025 and June 30, 2026, while the company is committing to a sizable capital investment.

Filing Explained

As of June 30, cash was $67,679 thousand versus $85,510 thousand at year-end while the planned $17 million investment had begun deploying.

This Form 8-K reports second-quarter results and says deployment has begun on a planned $17 million investment; the disclosed state is an ongoing program, not a completed investment.

The investment is described as capital intended to prepare for next-generation AI data-center technology, with higher systems-integration revenue expected to begin in the third quarter of 2026.

At June 30, 2026, cash and cash equivalents were $67,679 thousand, compared with $85,510 thousand at December 31, 2025; total liabilities were $95,025 thousand and stockholders’ equity was $80,296 thousand.

The specified checkpoint is whether the investment converts into higher systems-integration revenue beginning in the third quarter; the filing presents that conversion as expected, not reported as achieved.

Key Figures

Total revenue Q2 2026: $35,141 thousand Systems integration revenue Q2 2026: $13,880 thousand Facilities management revenue Q2 2026: $2,723 thousand +5 more

8 metrics

Total revenue Q2 2026 $35,141 thousand Three months ended June 30, 2026

Systems integration revenue Q2 2026 $13,880 thousand Up 46% year-over-year; 39% of total revenue

Facilities management revenue Q2 2026 $2,723 thousand Up 84% versus Q2 2025

Adjusted EBITDA Q2 2026 $4,487 thousand Up 12% from $4,010 thousand in Q2 2025

Net income Q2 2026 $1,432 thousand Versus $1,483 thousand in Q2 2025

Cash and cash equivalents $67,679 thousand Balance at June 30, 2026

Planned AI investment ~$17 million Capital deployment for next generation AI data center technology

2026 Adjusted EBITDA guidance range $20 million–$22 million Management expects to be at the upper end of this range

Key Terms

Systems Integration, Facilities Management, Adjusted EBITDA, Deferred tax asset, +2 more

6 terms

Systems Integration financial

"Systems Integration revenues of $13.9 million, up 46%"

Systems integration is the process of connecting different software, hardware and data sources so they operate together as a single, working system. For investors, it matters because successful integration can cut costs, speed operations and enable new products, while poor integration can cause delays, extra spending and operational risk; think of it like wiring a house so all appliances run reliably from the same circuit.

Facilities Management financial

"Facilities Management revenues of $2.7 million, up 84%"

Facilities management involves overseeing the maintenance, operation, and safety of buildings and physical spaces to ensure they function smoothly. It includes tasks like cleaning, security, repairs, and ensuring compliance with regulations. For investors, effective facilities management helps protect asset value, reduce costs, and ensure the safe, efficient use of property assets.

Adjusted EBITDA financial

"Adjusted EBITDA of $4.5 million, up 12%"

Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.

Deferred tax asset financial

"following Q4 2025 removal of valuation allowance on deferred tax asset"

A deferred tax asset is an accounting recognition that a company expects to pay less tax in the future because of past losses or timing differences between accounting and tax rules; think of it as an IOU from the tax system that can reduce future tax bills. It matters to investors because it can boost future cash flow and reported profits if the company generates enough taxable income to use it, but its value depends on realistic prospects for future earnings.

Bank factoring fees financial

"Bank factoring fees 510 859 1,214 2,327"

Forward-looking statements regulatory

"This press release may contain “forward-looking statements”"

Forward-looking statements are predictions or plans that companies share about what they expect to happen in the future, like estimating sales or profits. They matter because they help investors understand a company's outlook, but since they are based on guesses and assumptions, they can sometimes be wrong.

Earnings Snapshot

Total revenue Q2 2026: $35,141 thousand vs $43,970 thousand · Guidance included

Quarter and six months ended June 30, 2026

Total revenue Q2 2026 $35,141 thousand vs $43,970 thousand revenue reflects shift away from lower-margin procurement

Net income Q2 2026 $1,432 thousand vs $1,483 thousand slight decrease after full tax provision

Adjusted EBITDA Q2 2026 $4,487 thousand vs $4,010 thousand up 12% year-over-year

Systems integration revenue Q2 2026 $13,880 thousand vs $9,486 thousand up 46% year-over-year

Systems integration revenue YTD 2026 $27,956 thousand vs $16,970 thousand up 65% for first six months

Procurement revenue YTD 2026 $58,229 thousand vs $123,179 thousand down 53% for first six months

Adjusted EBITDA YTD 2026 $9,758 thousand vs $9,254 thousand up 5% year-over-year

Guidance

Company expects second half of 2026 to be stronger than the first half and maintains 2026 Adjusted EBITDA outlook at the upper end of the $20 million to $22 million range.

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Available on EDGAR 08/13/2026 - 04:09 PM Accepted by SEC EDGAR 08/13/2026 - 04:07 PM Learn about SEC filing dates

FAQ

How did TSS (TSSI) perform financially in Q2 2026?

TSS generated $35.1 million in Q2 2026 revenue and $1.4 million in net income. Gross profit was $8.0 million, pre-tax income $1.8 million, and Adjusted EBITDA $4.5 million, reflecting growth in higher-margin AI-focused services.

What were TSS (TSSI) segment revenues for Q2 2026?

In Q2 2026, TSS reported $18.2 million in procurement revenue, $13.9 million in systems integration revenue, $2.7 million in facilities management revenue, and $0.3 million in operating lease income, underscoring a mix shift toward higher-margin services.

How is TSS (TSSI) shifting its business mix toward higher-margin services?

TSS is reducing lower-margin procurement activity while growing systems integration and facilities management. Systems integration revenue rose 46% year-over-year to $13.9 million and accounted for 39% of Q2 2026 revenue, compared with 22% in the prior-year quarter.

What is TSS (TSSI) 2026 Adjusted EBITDA outlook?

TSS expects 2026 Adjusted EBITDA to be at the upper end of its $20 million to $22 million range. Management anticipates a stronger second half of 2026 driven by accelerated growth in systems integration revenue.

What investment is TSS (TSSI) making in AI data center technology?

TSS has begun deploying a planned ~$17 million capital investment to prepare for next generation AI data center technology. The company expects this investment to translate into higher systems integration revenues beginning in the third quarter of 2026.

How did TSS (TSSI) perform year-to-date 2026 versus 2025?

For the first six months of 2026, TSS posted $90.5 million in revenue and $3.7 million in net income. Systems integration revenue rose 65% to $28.0 million, while Adjusted EBITDA increased 5% to $9.8 million despite lower procurement revenues.

What is TSS (TSSI) Adjusted EBITDA and how is it defined?

TSS defines Adjusted EBITDA as net income before net interest expense and bank factoring costs, income taxes, depreciation and amortization, impairment, stock-based compensation, and certain extraordinary items. Management uses it to compare operating performance across periods and for incentive compensation.

EXHIBIT 99.1

TSS Reports Second Quarter 2026 Financial Results

Systems Integration Revenue Increased 46% Year-Over-Year, Representing 39% of Total Revenue

~$17 Million Investment Expected to Drive Increased Systems Integration Revenue from Next Generation AI Data Center Technology

GEORGETOWN, TEXAS – Aug. 13, 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 second quarter ended June 30, 2026, showing a continued strategic shift of its revenue base toward higher margin AI and infrastructure services.

	·	Systems integration revenue grew 46% year-over-year
	·	Facilities management revenue grew 84%
	·	Reduction in total revenues reflects shift from lower margin procurement business to higher margin systems integration and facilities management business lines
	·	The company began deploying capital for its planned $17 million investment in readiness for the next generation of AI data center technology, which is expected to convert into higher systems integration revenues beginning in the third quarter of 2026

“Systems integration revenue represented 39% of total revenues in the quarter, compared with just 22% in the prior year quarter. Over time, we expect growth in Systems Integration will continue to outpace the other segments of our business given the strong demand signals we are seeing and our proven ability to address complex technology needs," said Darryll Dewan, CEO of TSS, Inc.

Second Quarter 2026 Financial Highlights:

(All comparisons are to Second Quarter 2025)

· Revenues of $35.1 million, down 20%, with growth in higher margin business lines

	o	Procurement revenues of $18.2 million, down 45%
	o	Systems Integration revenues of $13.9 million, up 46%
	o	Facilities Management revenues of $2.7 million, up 84%
	o	Operating lease income of $0.3 million as we began warehouse operations May 1, 2026 using our previously idle former Round Rock integration facility

	·	Gross profit of $8.0 million, up 11%
	·	Pre-tax income up 19% on favorable leveraging of expense structure
	·	Net income of $1.4 million and Diluted EPS of $0.05, compared to net income of $1.5 million and Diluted EPS of $0.06 after full tax provision, following Q4 2025 removal of valuation allowance on deferred tax asset
	·	Adjusted EBITDA of $4.5 million, up 12%, reflecting a shift in total revenues to higher margin systems integration

1

Year-to-Date 2026 Financial Highlights:

(All comparisons are to the First Six Months of 2025)

· Revenues of $90.5 million, down 37%, with growth skewed towards higher margin business lines

	o	Procurement revenues of $58.2 million, down 53%
	o	Systems Integration revenues of $28.0 million, up 65%
	o	Facilities Management revenues of $4.0 million, up 44%

 

· Gross profit of $16.8 million, up 2%

o Reflects current period $1.9 million allocation of depreciation to COGS vs $0.6 million in the prior year period

	·	Pre-tax income of $4.5 million, down only 1% despite comparison to record procurement revenues in the prior year period
	·	Net income of $3.7 million and Diluted EPS of $0.13 compared to net income of $4.5 million and Diluted EPS of $0.17 after full tax provision, following Q4 2025 removal of valuation allowance on deferred tax asset
	·	Adjusted EBITDA of $9.8 million, up 5%, reflecting a shift in total revenues to higher margin systems integration

2026 Outlook

Dewan concluded, “Looking ahead, we expect the second half of this year to be stronger than the first half with accelerated growth in Systems Integration as we continue to see strong demand across our business. We maintain our 2026 outlook for Adjusted EBITDA to be at the upper end of our $20 million to $22 million range.

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 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 473873.  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/2294/54255.

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.

2

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
tssi@haydenir.com	dchism@tssiusa.com

-- Tables Follow –

3

TSS, Inc. 

Condensed Consolidated Balance Sheets 

(In thousands) 

		June 30, 2026 (Unaudited)				December 31, 2025
Current Assets:
Cash and cash equivalents		$	67,679			$	85,510
Contract and other receivables, net			14,320				12,501
Costs and estimated earnings in excess of billings on uncompleted contracts			205				3,011
Inventories, net			16,962				15,966
Restricted cash			1,811				-
Prepaid expenses and other current assets			1,944				1,642
Total current assets			102,921				118,630
Property and equipment, net			45,901				38,076
Lease right-of-use asset			14,569				15,294
Goodwill			780				780
Deferred tax asset, net of valuation allowance			7,242				7,917
Other assets			3,908				4,238
Total assets		$	175,321			$	184,935
Current Liabilities:
Accounts payable		$	38,295			$	46,362
Accrued expenses and other current liabilities			14,814				6,273
Deferred revenues, current			2,793				13,928
Long-term debt, current			4,161				4,010
Lease liabilities, current			2,117				1,994
Total current liabilities			62,180				72,567
Non-current Liabilities:
Long-term debt, non-current			11,919				14,004
Lease liabilities, non-current			20,568				21,629
Deferred revenues, non-current			255				-
Other non-current liabilities			103				100
Total non-current liabilities			32,845				35,733
Total liabilities			95,025				108,300
Commitments and Contingencies
Stockholders’ Equity:
Preferred stock			-				-
Common stock			3				3
Additional paid-in capital			121,795				121,842
Accumulated deficit			(41,502	)			(45,210	)
Total stockholders’ equity			80,296				76,635
Total liabilities and stockholders’ equity		$	175,321			$	184,935

4

TSS, Inc. 

Consolidated Statements of Operations 

(Unaudited, In thousands except per-share values)

		Three Months Ended June 30,								Six Months Ended June 30,
		2026				2025				2026				2025
Revenues
Procurement		$	18,249			$	33,002			$	58,229			$	123,179
Facilities management			2,723				1,482				4,013				2,780
System integration			13,880				9,486				27,956				16,970
Operating lease income			289				-				289				-
Total revenues			35,141				43,970				90,487				142,929
Cost of revenues
Cost of revenues			25,908				36,155				71,512				125,904
Cost of revenues - depreciation			989				618				1,925				618
Cost of lease operations			235				-				235				-
Total cost of revenues			27,132				36,773				73,672				126,522
Gross Profit			8,009				7,197				16,815				16,407
Operating Expenses:
Selling, general and administrative			5,560				4,735				11,082				9,622
Depreciation and amortization			320				226				626				436
Bank factoring fees			510				859				1,214				2,327
Loss on sale or disposal of assets			17				-				17				-
Total operating expenses			6,407				5,820				12,939				12,385
Income from operations			1,602				1,377				3,876				4,022
Interest expense			322				-				655				-
Interest income			(565	)			(175	)			(1,290	)			(558	)
Other expense (income)			-				-				(1	)			-
Pre-tax income			1,845				1,552				4,512				4,580
Income tax expense			413				69				804				118
Net income		$	1,432			$	1,483			$	3,708			$	4,462
Earnings per common share - Basic		$	0.05			$	0.06			$	0.13			$	0.19
Earnings per common share - Diluted		$	0.05			$	0.06			$	0.13			$	0.17

5

 TSS, Inc. 

Adjusted EBITDA Reconciliation (GAAP to non-GAAP)

(Unaudited, In thousands)

		Three Months Ended June 30,								Six Month Ended June 30,
		2026				2025				2026				2025
Net income		$	1,432			$	1,483			$	3,708			$	4,462
Interest expense			322				-				655				-
Bank factoring fees			510				859				1,214				2,327
Interest income			(565	)			(175	)			(1,290	)			(558	)
Depreciation and amortization			1,309				844				2,551				1,054
Income tax expense			413				69				804				118
EBITDA		$	3,421			$	3,080			$	7,642			$	7,403
Stock based compensation			1,049				930				2,099				1,851
Loss on sale or disposal of assets			17				--				17				-
Adjusted EBITDA		$	4,487			$	4,010			$	9,758			$	9,254

6

Filing Exhibits & Attachments

6 documents

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