TSS, Inc. Reports 40% Revenue Decline and $1.5 Million Net Loss in Q3 2025

TSS, Inc. reported a significant decline in its financial performance for the third quarter of 2025, with total revenues falling 40% to $41.9 million compared to $70.1 million in the same period last year. The decrease was primarily driven by a 49% drop in procurement revenues, which fell to $31.1 million from $60.5 million, attributed to a reduction in federal government purchases. However, the company did see a 20% increase in systems integration revenues, which rose to $9.2 million, reflecting ongoing growth in the integration of AI-enabled computer racks.

In terms of profitability, TSS, Inc. reported a net loss of $1.5 million, or $0.06 per diluted share, compared to a net income of $2.6 million, or $0.10 per diluted share, in the prior year quarter. The loss was largely due to increased operational costs associated with the new Georgetown facility, which included higher depreciation and fixed electrical power costs. Operating expenses also rose, with selling, general, and administrative expenses increasing by $1.4 million, primarily due to higher headcount and non-cash equity-based compensation.

The company has made strategic investments to enhance its operational capabilities, including approximately $35.1 million in improvements to its new facility, which is expected to support increased production volumes of AI-enabled racks. TSS has also entered into a multi-year agreement with its largest customer, ensuring a minimum volume of integration services, which is anticipated to stabilize revenues moving forward. The company’s deferred revenues increased by $8.7 million, indicating ongoing projects that are expected to contribute to future revenue.

Operationally, TSS, Inc. has seen a notable increase in its employee headcount, reflecting its growth strategy and the need for additional resources to support its expanding operations. The company reported cash and cash equivalents of $70.7 million as of September 30, 2025, a significant increase from $23.2 million at the end of 2024, bolstered by a successful stock offering that raised $55.3 million in August 2025. This liquidity position is expected to support ongoing operational needs and strategic initiatives.

Looking ahead, TSS, Inc. anticipates a return to profitability in the fourth quarter of 2025 as it begins to realize the benefits of its recent investments and the stabilization of its revenue streams. The company remains focused on optimizing its operations and expanding its market presence, particularly in the growing sectors of AI and advanced computing technologies. However, it also acknowledges potential risks, including the impact of a prolonged federal government shutdown on its procurement business, which could affect future revenues.