TSS, Inc. Reports 523% Revenue Growth to $98.96 Million in Quarterly Earnings

TSS, Inc. reported significant financial growth in its quarterly earnings for the period ending March 31, 2025, with total revenues reaching $98.96 million, a 523% increase from $15.89 million in the same period last year. The surge in revenue was primarily driven by a substantial rise in procurement services, which saw an increase of 676% to $90.18 million, and a 253% growth in systems integration revenues, which totaled $7.48 million. The facilities management segment, however, experienced a decline, with revenues falling 40% to $1.30 million.

The company's gross profit also improved significantly, rising to $9.21 million from $2.71 million year-over-year. This increase in profitability was attributed to the higher volume of procurement and systems integration activities, despite a decrease in gross margin from 17% to 9%. The procurement segment maintained a gross margin of 8%, while systems integration margins improved to 22%. TSS's operating income surged to $4.11 million compared to just $0.25 million in the prior year, reflecting effective cost management as operating expenses grew at a slower rate than gross profit.

In terms of strategic developments, TSS has been enhancing its systems integration services to include AI-enabled data center server racks, which began in June 2024. The company signed a multi-year agreement with a major customer to provide these integration services, which is expected to stabilize revenue streams and cover operational costs associated with a new facility in Georgetown, Texas. The facility is being developed to support increased production capacity, with anticipated capital expenditures of $25 million to $30 million.

Operationally, TSS reported a cash and cash equivalents balance of $27.34 million as of March 31, 2025, up from $23.22 million at the end of 2024. The company also noted an increase in accounts payable, which rose by $12.87 million, indicating a growing operational scale. The total employee headcount has increased to support the expanded business activities, although specific figures were not disclosed. TSS continues to rely heavily on a single U.S.-based IT OEM customer, which accounted for 100% of its revenues in the current quarter, highlighting a concentration risk in its customer base.

Looking ahead, TSS remains optimistic about its growth trajectory, particularly in the procurement and systems integration segments. The company anticipates that the ongoing demand for AI-enabled solutions will sustain revenue growth, although it acknowledges potential risks related to supply chain disruptions and reliance on a single customer. TSS is committed to enhancing its operational capabilities and mitigating risks associated with its customer concentration as it moves forward.