One Stop Systems (OSS) 21 Mar 242023 Q4 Earnings call transcript

Good afternoon, and thank you for joining us today to discuss One Stop Systems' financial results for the fourth quarter and full year ended December 31, 2023. With us today are the company's President and Chief Executive Officer, Michael Knowles, and its Chief Financial Officer, John Morrison.

Following their remarks, we will open the call to your questions.

Before we conclude this call, I will provide some important information regarding the forward-looking statements made by management during the call. I would like to remind everyone that the call will be recorded and made available for replay in the Investors section of the company's website.

to Mike call Knowles. like President to would CEO, and I turn over the OSS Now Sir, go please ahead.

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opportunities our defense segments. that edge update believe shareholders. to us and artificial all are customers fusion dramatically an implementations. uniquely and processing environment. to future pipeline These new sensor take want Strategically, We is we introduction, rugged our number on to evolving by require autonomous growth portfolio platforms backlog value our sensor dynamics increasing growth modern of where position Department that rival and wins edge driven edge of securing portfolio this by and with moving and sensor road autonomy. our efforts by business and to sensor being So and our are technology across defense the and adoption, learning, and are I strong product taking Systems can in commercial machine markets, of AI/ML our map applications computing. efforts advantage believe those in next-generation of advanced almost Sensor lasting adoption processing for the significant will focusing are contracts. in making we Defense supported long-term in that capabilities provide growing intelligence both fusion, advantage strategies the The this multiyear of and Commercial recent create investments expand OSS processing is we pursuing, and

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thermal solutions. computing this management rugged As expect cooling demonstrates technologies we for This the follow-on over pilot orders. high-performance progresses will coming program program also quarters, the lead innovative production our to

enable performance, AI Our level of other which We their lead this in the customers design this ML objectives. need initial support will win additional customers and customer cooling to to future. solutions our with anticipate GPU the mission highest and deployments

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networking growing support in we are With ML and efforts. solutions, of with airlines. AI deal interest outreach quickly finalized expanding our system also We multiyear their in-flight in a commercial for Thales

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current We are into growing our engaged execute multimillion-dollar to orders. opportunities with actively multiyear, customers these against and pipeline potential convert and

Craig Canadian experience am senior high-performance pleased his expand Vision having I pipeline, growing inventory market sales on focus and and of and XX held markets, LXHarris, Powell We engagements positions as brings Royal commercial in served Craig Armoured the efforts officer Teledyne. U.S. added Systel, have to this the development expanded into High executive. our our compute, business in experience years in Given Canadian and addition to that armed sales the we supporting to will in an at announce Corp as primary efforts defense believe support Rhinemetall, the

accelerated AI of first Champion includes our the we cloud the front. our our Turning industrial the sport a Global. edge it ensures the progress access edge. AI race foray legendary system into The and for of capabilities AI the for launches called Edge. solution manufacturing DRA compute program that Edge shipped OSS' avionics first Information transportable collaboration Aerospace's beginning GPU design motor industry to including the solutions. technology the XXXX, Orquestra. to a to System, the powering on motorsport beginning AI powering scaled SDS system year, platform advanced and represents capabilities The Aviation's AI using recent At OSS' and generative XU we Also, $X OSS Zapata Andretti for as analytics expanded This for Automated new motorsports of at announced for technology server, family, at of milestone application industry. first-to-market generative this Flight The industry's Flight has commencement and FLYHT relationship XG-enabled its billion the new AFIRS demonstrates Reporting multiyear unique product

from agreement of X-year $X the we contract. the the revenue FLYHT valued minimum OSS, initial received manufacturing million design new in and a For is FLYHT with over $XXX,XXX term. at QX, In

critical the of the design are program. passed successfully have and We phase the review test entering

fronts mission-critical through our progress in our This and technology to to to our will cycle also expect and seen upgrade initiatives as expect multiyear PA performance. commercial early industry. Raytheon hardware technology several life and and commitment opportunity as XXXX. the begin defense development software also shipments funded in second refresh of and development and and multiple aviation and Edge+ expands in manufacturing We further The incorporate This underscores safety We've AFIRS product aerospace program position complete production position to delivering strengthens has our the XXXX. of that testing quarter platform. engagement extend

we to level X company XXXX. which of similar We command for in a shipments on result, AI of the Gen the revenue centers our new to for from XXXX sonar server annual to a processing Leidos As is Dynetics, related submarine $X this submarine. a Navy mobile and first short-depth million at and delivered Thales CXISR expect European program,

or capability received to and JADCX to additional contested the add we Vehicle our the Ground control XXX-degree This or capability In addition, timing command integrating amendment Army awareness joint environment nodes. networking, situational required and Systems element a for critical TSN, time-sensitive its for for operations for capability adds solution all-domain contract to Center.

continue our We support and resources maintain to capital strong our road map technology market focus differentiation. to and

and the to sensor significant bring before, opportunities. newest market highest We've ours As I've capability a AI/ML, demanding that key ability storage the facilitate strategy key of autonomy. to sensor of fusion, our and the performing processing win and noted is to a first-to-market requirements seen to is compute, switching solutions the ability and

for this proposition already our will Gen center edge, result, portfolio. proving high-performance we networking NVMe at in compute, server the GPUs new rugged short-depth latency, unveiled SDS highly spaces. compute state-of-the-art a in demonstrates Tensor be we computing to providing SDS We the OSS applications new the is unique high-performance lower to continue computing rugged OSS 'XX, addresses computing. and targeted and As storage product powerful and customers after more AI the of This November, hyper-converged latest the anticipate and Gen NVIDIA X server develop The X range storage. be continued our demanded real-time leadership growing AI workhorse a sought demand, value Supercomputing In across Core for a of high-performance the demand Gen Conference and capability technology. high-speed X Powered for server data by at our edge. OSS H-XXX class interconnect for products International PCIe rugged

enhancing years and C-suite February won and XXXX, increased already West seen is over marketing months retired quarter premier Robert's of include third we team industry have commercial market. XXXX, Since of achievement edge Navy the opportunities the efforts business Recent the Sales, to Admiral Board liquid XX Conference development, quarter Coast, sales at impact military executive added bringing AI on bringing and veteran, defense technology background defense technical server. In award X-star solutions and more experience in in we J. bringing cooled Mitchell short-depth and Naval Directors. a of insights has award-winning our U.S. market on to and operations. I the ago, than and of we appointed we of version XXXX, for the rugged the into also showcased of experience computing X in extensive Robert in the focused [Cabas] Michael Board, and the joined appointed Herbets management our VP high-performance specialized in XXXX, "Best Board, Show" in strategic fact, FCOS where our we In technology exposition and growth. industries. our our Vice Dumont serving being as outreach, fourth

Board, affiliated supporting appointed strategy, largest investor additions shareholders and markets, with to we delivering substantially one extensive on Board and capital experience shareholder who financial, our Manko All Joseph these and to reprofiled our also driving our Finally, OSS. enhanced and impact of growth have value. is brings their governance

enhancing even by our their extremely will and the ongoing successful business in we with talent addition team our production addition program In who larger experience. to experience pursue a commercial I the programs professionals capabilities and and for encouraged to of management management Board, us our management also program added have and X decade of defense in have the believe XXXX. commercial transformation development to completed growing bring defense I'm over allow to markets. seasoned we

pursue this John, go overview, fourth the to results a for as XXXX shareholders. significant of opportunities enhanced that for reprofiled will Morrison, come. to business the a growing lasting we highly like an our margin want to I'd and growth a result, and to entered aimed their profile creating full our please we supported strong leadership experienced of value thank turn our review year support pipeline momentum team Directors, continued and strategies compelling many over financial we I John detail. team, hard ahead. XXXX As for our work by new With to call CFO, dedication with more years Board in believe revenue quarter our at

direction are and to afternoon, Mike, good we level was am by X revenue moving media $X.X million less objectives, everyone. necessitated headed solution. underway, $XX.X a year. I the by higher-margin with rugged strategies product legacy of We our a with last away This particularly XXXX XXXX the our transportable media was from for Total create substantially the AI the began of excited replace media activity to million, first customer we're from million was representing low-margin equipment you, and Thank of pursuing in $XX.X to cloud revenue. value shareholders. redivided difference revenue

we Bressner revenue. objective had annual grow to was second The

implemented replace a the the to because business, Although orders year, general we experienced customers during conditions. hesitation OSS strategy place was of media to commercial economic by

We fully revenue also government in being replace the XXXX. This resulted lost media unable experienced to programs. delays all timing some in in OSS

revenue method Bressner and and objective to XX.X%. margins am despite also annual economy improved in report I However, pleased challenging the profitability both throughout Bressner annual a by growing by Germany Europe.

XXXX OSS, Our East products and ruggedized components. is as States located fourth systems. quarter results company's in all-in-one Bressner Middle The United markets. business the integrator based XXXX. connectivity quarter is with as really and upon comprised operates comments Europe. of involved custom standard is to fourth comparison a design and X and serve and which compute, Bressner, systems which for and following focused hardware storage They channel OSS of systems is primarily edge the of in Germany the also are in European to segments: and compared throughout manufacture high-performance OSS and the Munich, operates operates processing,

to of mix the processing percentage improved GAAP points operations Overall, a the same transition as income product and quarterly totaled costs OSS million revenue OSS which gross profit $X.X decreased and Of customer product of income revenue or operating basis of a $X.X the per of loss media costs amount, from to to of X.X fourth in OSS to of improved reprofiling X.X%. compared or higher-margin the and expenses For had OSS increasing per gross of rugged million, and $X.X further gross and $X.X increased revenue this provision fourth to XX.X%, of costs. media product rugged to in The Consolidated improving any is in was XX.X%, reported the X% revenue the to margin with tax Bressner of from decreased to loss mix XX.X had of XXXX. million included of or of to Bressner million, the attributable of the or tax was higher a we percentage a decrease reflects from to our of edge $XXX,XXX a sought million $X.X in reduction margins and CEO higher-margin in content a fourth of Bressner quarter, sold compared do due $XXX,XXX business the quarter deferred to overall which and approximately we XXXX sale quarter in or million. largely points million million to lower-margin not on for percentage consolidated $X.XX due margin Net premium. attributable for $XXX,XXX. products. million, share shift assets from in Loss million this, XX.X% provision a decrease absence revenue, $XX,XXX gross $X.X XX.X% attributable having being the our Consolidated in $XXX,XXX and to to Net of $XX.X the XXXX. expect was a readily $X.X from of period decrease revenue XX.X% former $X.X net loss edge operations fourth inclusive $XXX,XXX additional compared mix, revenue. $XXX,XXX to of products media of quarterly share. a products at processing OSS $X.XX the a quarterly taxes products. after of whom which attributable XX.X%. contributed Of XXXX Board write-down included a OSS increase as million taxes significant $X.X that quarter contributed $X.X reduction

million adjusted per favorable $X.XX in compared year income The metric, non-GAAP non-GAAP as was $X.X Now to the to of non-GAAP of a $X.XX a decrease million million was $XXX,XXX, diluted $XX.X Consolidated experienced loss compared of from offset net share. or Bressner upon in the of $XX.X Adjusted $XXX,XXX the of annual million consolidated from by and media total prior increase share revenue. predominantly for revenue the $XX.X results for million prior million an XX.X%. had million decrease are XX% XX.X% of for down $XX.X revenue or was of OSS decrease or XX.X% a EBITDA, of comments or a revenue. year. million based in total a XX% or by net had diluted QX $XX.X revenue, XXXX or $XX.X per was million the which revenue of OSS a $X.X Bressner to to million, or decrease XXXX. results following $X.X EBITDA comparison of annual $XX.X due XXXX

year and were applications. evenly commercial revenues XXXX, the During fairly for defense OSS between balanced

OSS consolidated Bressner gross XX.X% XX.X% margin year versus transportable higher-margin XXXX, in of XX.X%, products. as year margin XX.X%. to being due increase lower an of improvement medium was percentage AI the During margin to business compared by prior gross XX% margins the was an X.X to compared XX.X% offset less were points.

per metric loss employee to $X.X million XXXX. share $X.X income loss retention X.X% Board decreased onetime employee per operating goodwill Net in $X.X impairment million compared for was $XXX,XXX $X.XX CEO of in benefit loss million, other of $X.X of the to a loss government-funded loss per from $X.X of provision impairment loss million the on million million costs $XXX,XXX of resulted prior the expenses results as of actually in or the forma a and pro retention taxes of compared was $X.X income the employee million of and Other or Board $XXX,XXX $X.XX as income in transition as to our $X.X retention of a pro million EBITDA, in charge net net credit $X.X of a to basis, of $X.XX compared before was the reprofiling XXXX. expense, of loss Non-GAAP compared and income of the excludes CEO income year. which of Adjusted the goodwill, positive XXXX. which and taxes Excluding a a a $X.XX costs $X.X or compared reprofiling share to the the transition loss $XXX,XXX The or million million credit $XXX,XXX. a prior excluding compared non-GAAP of before to inclusive was credit taxes before loss forma year. $X.X share in and a

XXXX, represents which combined Now short-term million, of On with cash the $X million. cash decrease total cash to this million for a $X.X looking totaled capital. deployed at being of balance equivalents a working sheet. $X.X in and prior the XX, million investments represents Compared of December $XX.X year,

largely As the continues margin profit, our accepting its the bridges near and on that profit the on objective gross this be business transition contribution. sustainable include to The long-term media of gross effort margin drive its In incrementally will is flow being revenue, this increasing objective our company dependent may gross company term, were evolve to company contributes operationally business focus the of with maximizing to consolidated have as but cash percentage. may inconsistent model. revenue lower

and U.S. Looking the XXXX by an approximately seasonal represents first of decrease review This is to completes for QX loss the decrease resolutions, that XXXX we million of expect of from X% revenue. the media decreased of our million, revenue expected the million decline, of a approximate which forward that $X.X financial attributable year-over-year quarter. which sequential and $X.X Of continuing influenced to government $XX.X XX%. or is quarter approximately

with Now your the I'd call Ina? and to open turn like that, up to questions. Operator,

session. will question begin the [Operator the answer Scott Ladies Instructions] line Roth Your and we gentlemen, from question from Searle and of comes MKM. now first

see the the Maybe opportunity progress continued on the place margins. good well gross a that's to start. pipeline Nice as to as

how you throughout in what's Can XX%, the you I was and understand you on progression that On the core standpoint, are us about number mix any think said onetime John, help a saw that? the business. XX% in margins XXXX. the quarter, gross the for from I'm wondering should there going fourth benefits we OSS think

profit in contribution. also You comments of had terms maximizing gross some

be there's of a So kind there. that bit? walk you some it us to going to Can volatility that little through seems imply

you, Scott. Thank

heavily and storage So of have AI sale weighted very it fourth to margin. to specifically the was tend the quarter, in products, industry which towards higher transportable units, in defense a the our data

So pass-through what has position, on accepting maintain revenue we're opportunities our cash ensuring is the for quarter. that to agent in an margin that fourth there going that low but provides that's be basis skewed good respect that With we some to cash us.

you. Got

Okay. of of getting how made, I'm towards of It how more that to you if couple guys pipeline, continued the resolution into XXXX. get of sounds results? in decisions and start that 'XX. the like out us build frame it's wondering the that part start continuing the you're AI/ML And filter when around terms you over the near I'm we sensor fusion there opportunity the Mike, it like and see help could in terms wondering it's impacts And seems getting to message discussion continues in to will could around as to you current traction. to geared the if term seem budget that, course

aligning approaches or and to existing that is, continue Yes, pipeline. And being generally in to defense aligning longer opportunities runway is those those our timing. especially going part develop starts sure. we help are also And that up cycles that Thanks, market, present Yes, through determine Scott. on the it those. grow are what for upgrades so with we're the platforms really then refresh our tech expand new really and of which

really see that to We've the got business, to commercial start start second -- year the us, Expecting lost the be the replacing opportunities. right? pick pipeline back defense XXXX effort build of out And half for all these some and media We'll to through is whole the conversion, opportunities less revenue up. right? about there. use will we'll the the momentum So with media

second Now have the to we question again, that's and make and sure where was potentially to why the needed especially your our defense lobbying what move and market, I move of in efforts then use them opportunity the to help move are convert to we And on funded Scott? spoke out time. them part programs left. And

the to related resolution. Sorry, budget

The budget resolution, yes.

government through So that significant to up revenue budgets, do number, currently some it note by a a got have a isn't amount can't not up the being bit bids couple last think we're nonetheless. we new a still just significant out that but well, approval. to I which tied our going have resolution, of our under start continuous I starts, held to We from CR. defense lobbies that that of a are today CR new make

So that should the untie log jam.

Now have we'll anymore pipeline usually through itself. that for opportunities it where forecast our to have update try fast a tend contract, we'll moves flow the around quarters made defense have and something in And for that go on professionals that that money follows and market, the continue with uncommon through. to also. to positive is then through, weeks acquisition we'll months plan take pace to It but to that it to put not we is the that's either to deal and this not in that period and years come, will and that some that, it's the it's and but

last Okay. I could. if Great. one And one,

strategy mentioned AI throughout at articulate all and if now how front where front. that's I'm strategy the XXXX. moving software partners sure looking on you various of on not about if of wondering along, the we the terms course in Just I'm you stand and could go-to-market that

Scott. thanks Yes,

customers capability a year, during than our to expanded it we rather solutions. last we companies AI had more integrated our really so more solution, to wanted needed and pure some we opportunity provide our mentioned switching to to or storage provide establish solution or compute a software had where XXXX, I multiple to had reasons. around that X just discriminating those partnerships One, So outreach

sell of could we find standardize AI software addition, engaging them were software In as they on so a hardware companies, that ways these looking their many of lot to directly. started to with

pipeline up So the to where standard discussions for we could become some we a open to those wanted provider software companies. AI

have reach continue that so. to expanded do We and

earnings companies course see opportunities in I systems. a contractors and with doing couple and of that some some and the cross of markets a and have we commercial with lot all is they're I through some aligned and should correlation defense and the that with data one Over think specific we're labors. we in that some where our we should start a both interested those who call to noted market Andretti very off fruits compute analytics, Andretti. in Zapata of doing for Zapata are of working the and works XXXX, see of some in of approaches AI collaborations work that of prime defense the are vehicles capture There's couple the

that, So could think markets that across future help multiple solutions. that we similar like to build we've instances got both

your And Global of Brian comes Alliance from from the question next Kintslinger line Partners.

it's cycles, and of In both about having the are long as long defense you've those talked delays, characterized common. market, been sales

mentioned return new the expecting how about how to of and cycles contemplate the of return expect and about Maybe the in year? does to You growth And products half that you second products talk a growth think to of the for sales your year. if some some in general? in could you half of second you your just

Sure. Thanks, Brian.

activity the for quicker. those areas, a projected growth I X-year that our approach new contract, see. We're advancing side, of was line product they FLYHT They The about. So was move a tend future center good that with turns seeing based on with in increased on market talking agreement in were little composable a us. a product the standard data some number to bit come commercial

us continue that a to be a technology available a able leverage product good really and developing defense highly vehicle side, capability mature edge So platform we a to on to That that roll be cycle opportunity readily for see level The our to them. and us one or products. gives refresh we'll rugged solution. or bid through any high-technology upgrade where another it will was readily

gives some that to have us OSS. any unique So a us competitive acquisition in a those or competitions of edge if to discriminating capability allows sole-source we justify

when the our we're depending come those you'll we'd when And and why to plot market. are. roll will again, so So into bookings or to on timing on will cycles XXXX, start increases. But feeling second half we've those. to opportunities some start then expect now see paint into that into be those to cycles, start picture the short wins the to to prove the see This see is early of upgrade in long, the to revenue we we're to can pipeline starting begun vehicle

to So last exit where quarters. into we to as X revenues in are consolidated we been QX see the we should QX, start -- where have increase we over

Got it.

Okay. there months? know, X-X you've don't it And I for, what then now as is been

months. X

months X wow.

investments to growth. of need plenty Maybe evaluate talk new look So the increase take business you now of that's to opportunities. drive your a and product about where to time

to do already anywhere about you increased opportunities your or You that? more speak, How talked on investment the see you of capture bid market be pipeline. to more, so capture

Brian. Yes, Sure

margin to John in bring as in So reason to going forward the make and the mentioned, and right, we programs keeping lower part products cash stable with program company. could facilitate of help into keep sure our the line

continue and will that forefront We Gen planned X elements storage our launch number Gen the a the product technology. year have products. for and SDS we storage of X did us our to just on keep switching compute, of So development

So both are are those in market. new the

run they'll able of bit cycle product that. to a So leverage have be We'll life for here time. a

second of was the then and so-- And your Brian, on? again, question half

with to on so bid go going bid more how growing on more business, Just to work, like after and are proposal, speak? market proposals, you to that opportunity

No, I that. Yes. appreciate

to assess So we and our where take resources we winning. so that's the the determine highest and focus part reason of we of probability our do, as probabilities why pipeline our we can

We've effectively. had some useful of add actually defense proposals provide more and ability more us out into sales to more to have. existing of in interest expand will market. commercial capability Craig in and And that of there's of line a programs product to the Canada terms the that, defense we use That to the opportunity our more And increase that getting tools of with help I outside being conduct the but and Powell kind quite growth, growth, general so then able how terms as reprocessed to captures opportunities, the other moving our international we And just internally seasoned veteran us. for an respond additionally of then to noted, in areas we will Craig opportunity in to opportunity door restructured some and has not facilitate of efficiently only our sales force. significantly been and

think our I situated to the it. we're with able So be priorities resources team for a tap well to and

line comes your the question And from next from of David Benchmark. Williams

So start on the off Mike, maybe funnel.

the You've expect maybe us just rate? to How materialize to got you're talked that you Can conversion you next what take about that over about. maybe over qualifying funnel several convert much how that those you does understand how what $X years? billion think programs it how pipeline of-- And and you here is help and that overall?

for our Thanks David. Yes. question,

what X-year done is-- So pipeline and a view. is we've number that

X assess is And we probabilities. identify do so we in We opportunities. it what

mentioned, The or P-GO but something readily and that that we we we is side, influence lobbying can help and to especially and defense the those executives opportunity call of the monitor, engagements probability can't timing an the can as funding market, can actually to Congress, will that with is defense the I acquisition our influence, first the efforts. in likelihood we emerge on control, and what go senior efforts the

customers solutions probably identify second there's capabilities, high effort P-to-win win, and to will emerge have our will more we something that. can wind to forward. and anything those probability determine, the right, over we That a we've deliver by positioning how ones, it products tend award that certain of last above award doing get sets to can When is to and we're highly we that that is a we it future at map of compute determines, together, getting defense pipeline and done what market factor lead those control of should know competitors. we what's our conversion be probabilities additionally, that storage. services finding for And be interested capability fully that in of future, probably which us The percentage really multiply into X level those develop. road starts it's is a we it probability likely about and influence we we called the us of level you capture, can either support we there whether we move increase and identify process product probability those a similar it situations have working longer-term the higher-end emerge program views increase resources to or on we to Is determine we cycles if in that want that in below through our something need early it's future be on near-term into up as in customers is upgrade the that part and start increase which to the of those so are win. Because we're looking were can markets. a then got started, to The your the XXXX, on definitely mid-area then needs our on a do assets And you of who let mentioned, will of generally go for And fair then I pull the to XXXX terms where to and to transition to assessment. efforts of influencing to to way in and be then commercial amount a higher requirements we or a win.

to increase measure and captures our that's revenue into we'll company our inside converting opportunity. be that we looking on and focus will converting capitalize the converting will that really to pipeline seeing and those And transitioned on to now be bookings those, on pipeline. go where where campaigns we've So that the

other your having working business. could you think that about capital levels, John, investments? pretty down But you those you maybe, do days and some talked maybe significant lower-margin it the just like looks if talk taking you've capital then cash And and got-- just you that Great. How working about and inventory could down inventory. about of a working return for

ours the us to as of a certain on in weekly period maintain later and companies requirements we pricing. times COVID built of been inventory demand time and as required some concern in always to that's order minimum Obviously, have during XX order

noncancelable, that for inventory. during made to of for inventory, and state That important continues to secure through So period the come was certain in. time, we us inventory commitments still it nonreturnable

inventory still have for will door XXXX, XXXX. be orders $X.X which in million of the coming We about that approximately were placed in the

have gone through. However, we

be of in working believe We the inventory. this that of all free any capital We actually analyzed that will all have. able through we we have about to $X designed out being plan a do sellable. do we situation see that year We million inventory We we the of current up not the obsoleted. nor is of inventory being believe in see it

free as we we million do to than a balance level. we would inventory acknowledge have the we like, throughout will would year up sheet be think manageable it you. to that about bring yes, So go $X but able down we of the Thank we more and that more on

from And line Thank question the Martinuzzi Street. you. your of Lake next comes Eric from

you. to Are them X want your correct? I then $X.X at customer clarify those Yes. had numbers, And I had million. contribution from media no them I the at have-- that's I with XXXX, million. for in longer XXXX $XX.X

$XX.XXX million. million $X.XXX and

there's nothing then for in And expect guide the XXXX, QX, and the media expectation Okay. would there I for for customer? that

any revenue No, have all. ongoing at we would not sir. No,

It's How basis should a a full better? with for up you to QX. question XXXX for bps. step year thinking But something us XXX not we is second up that good the or about or really bps. for just at can QX? be the only QX, year address big the gross What in either full gross just XX.X% see the margins. And Okay. something be around step A had about we margin Should gross ago, even similar maybe margin? a tell year you XXX expecting

is XX.X% we away. of continue business bottom-line target that from looking were running margin. is different XX%. you're lower with They between when as really much to our And mix. to grow replacing to the gross having margin will consistently at about have as consequence been a it just of pretty margins XX%. XX% media go sales That's customer And Gross

what on going we're believe very that to to year basis. So margin. XX% in for which storage selling million more tends in product that quarter. we're is to Long you nearly and quarter, a XXXX we that to in consolidated with term, depending of on saw much have our the data margin, saw consistent be which parts, we of $X.X We XX% replacement a drive what data fourth storage margins storage had are the higher data this any of actually us given how profitable

really them. lag between versus that And and is regarding to there your What's greatest what design? on the designed high talking it. week's have Blackwell time prior lag level, product like in off available I'm the GPU time kicking to for their then for expecting Got this last chip, NVIDIA their generation, and for new more shipment Okay. it have question, Hopper. your customers specifically somebody announcement At the side. latest you product and Mike, the a chip the

can of a inside from NVIDIA debt to Yes, inside go move product a to available with added, year. short difficulty] server we year, year, storage product Eric, than [Technical from less we of generally, availability or the a our can

we'll lead there the have who also lot major to companies out GPU. Now buying times. work There's a up the of are

of that. aware are customers our So

demand expertise newest engineering understand through the desire the and the with lead and they respect have a If greatest is they we-- for and that, on actually we our actually, to and that. work scenarios. so unique and OSS X capabilities, and times this the And we're latest of to probably in down the can customer because sit clear able do

on can we'll to be times that to exceeds ratings demand. them customers cases some chain worked can time fusion still implement in parameters. faster On GPUs they we've and offer what on that we've upgrade help their configuration. and help we storage sensor XX processing lead that might to cases, on they're the recommend what sensor either in or performance implementation AI We capability and or with initial the with defense weeks, their defense side, their lead able get use their is carry to and could done been needs that can X we the with them orders.Alternatively, with we accelerate GPUs NVIDIA whose a compute is in supply And to capability exact with that later their alternative measured some an selection can they higher-end happy actually switching if

Gomes line the of question And your comes Joe from from last Noble Capital.

in this of Did it or show for projected a I wanted you've the for any of million quarter of second the talked guidance? back $XX.X about. to any some to pass-through quarter the revenue lower that of revenue margin fourth up for go first

was fourth in is in QX. the the right and guidance there quarter nothing now or nothing planned in number included There

We will separately. disclose it

we're going be to So what are. to numbers very visible those as

wondering terms for production in think maybe program that. pilot the orders bit of timing deployable future orders mentioned you ground there that you revenue? the And I about you of on you was from production And possibly the those station, a Great. you some get think could be and little the can could talk size

Yes, Joe.

their on one gone expect So year, that into double add-on could kind in cases, that's we first they've solution, and after in programs in others, of of of on the fielding, for we XXXX. similar one mid-hundreds used would of XXXX those be are foray. we're comfortable a multiples later be they if value. right, a company X the we happy hundred application. station see double of couple one. the the the that orders cooled with another also of in within values That expect instantiated right, implementation. a than expect maybe would follow-on implementations grows We terms type immersion compute shipping double range other one, in key for and get effect. ground That look will, in in liquid similar of to you The But how our more then for or that little depending then very And validated the it would dollars would where first that years the These first thousand and couple capability. and as forays terms this that, bit initial

talked Okay. Great. And in site facility you me. for the last one you I just one the clearance. quarter, quick got more about know

for more to you new can that? see wondering, clearance into Just us opportunities particular that turn you any about anything been tell have able Or you? that

right It placement up is now. our for opening opportunity Right.

integrating compute to So greater is be just requirement. broader And trying have that where go able doing. we've a now existing implementation the data what product in rapid it's into a and for a off if to of We've processing. to now fused that a be if Again, And platform was could fulfill the or allowed yet us to able architecture on a of And the vehicle the of a discussion do needs facilitate, that back vehicle, for what off that providing come at picture. generative that's OSS then products The that is processing need programs been operational autonomy allows sensor common that up that on and processing of is been to on were platform us provides a to high-end the right? there's based move That together center understanding you to another ability to on sensor. our problem a recommend compute. then widely a solve. broader any level to help us the another some learning

So that right now, opened it's up.

would with mentioned, In couple programs those a have past, addition, set to. the delivered requirements. -- of classified we're of we've we as just to delivered I In

a figure And programs. of their opened to couple I out in teams more last what us can that are said quarter then we that to have what's up and in we've into Now broadly going program. the actually contractors pursuing spoken on access classified prime the understand

able initial the feel to respond we're starting classified forays those in and environment. into to we're capability, now a now So to our

Thank you.

like conference turn to for I'd no have speakers We the closing back our remarks. to questions. more

if wrap feel appreciate you, the as forward sharing myself future time. the our meantime, believe I that, Thank to again solid you is enjoyed call. up always, progress With everybody is speaking go to today. the and not ahead reach looks let's we latest sooner. company's bright. the and with at Ina? And Ina. having any out or in In to John strategy Management OSS May, free with

Thank you.

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starting be like joining for release conference. you Thank for at Prefer replay press through This replay evening X, later this company's instructions and I via conference, XXXX. available today's end for our that ir.onestopsystems.com. this we call April today. concludes everyone to today's available remind would us website Before dial-in the will to

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