TSS, Inc. reported third‑quarter 2025 results that marked a sharp reversal from the year‑to‑date momentum. Revenue for the quarter was $41.9 million, a 40% decline from the $70.1 million earned in Q3 2024, and the company posted a diluted earnings‑per‑share loss of $0.06, compared with a $0.10 profit in the same period last year. The loss was driven by a $1.5 million net loss, largely attributable to lower procurement volumes and higher operating costs associated with the new Georgetown, Texas facility.
Segment analysis shows that procurement revenue dropped 49% YoY to $31.1 million, while systems‑integration revenue actually grew 20% to $9.2 million, and facilities‑management revenue fell 19% to $1.6 million. The decline in procurement, the company’s largest revenue driver, was a key factor in the overall revenue drop. Systems‑integration margins contracted from 45% to 13%, reflecting pricing pressure and the need to invest in new integration capabilities.
Despite the quarterly miss, management highlighted a 59% year‑to‑date improvement in adjusted EBITDA, driven by higher gross margins in the systems‑integration segment and disciplined cost management. CEO Darryll Dewan noted that the Georgetown plant, which opened in May, is still in a ramp‑up phase and that “more service and systems process work is needed before our primary OEM customer can move larger volumes of racks to us.” He also emphasized that Q4 rack volumes are expected to be significantly higher than in Q3.
In light of the Q3 performance, TSS raised its full‑year 2025 adjusted EBITDA guidance to a 50%–75% increase versus 2024, a notable upgrade from the prior outlook. The guidance signals management’s confidence that the operational challenges in Q3 are temporary and that the company’s AI‑infrastructure strategy will generate stronger results in the remaining quarters.
Market reaction was muted, with investors focusing on the sharp revenue decline and the net loss. The company’s stock fell sharply in aftermarket trading, reflecting concerns about the sustainability of the current growth trajectory and the impact of the new facility’s ramp‑up costs. Management’s comments about a stronger Q4 outlook and the continued demand for AI rack integration provide a cautious counterpoint to the negative sentiment.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.