TSS Reports Massive Revenue Growth Driven by AI Infrastructure Demand

TSS Reports Second Quarter 2025 Revenue of $44.0 Million, Up 262%

Upward Revision to 2025 Outlook Reflects Confidence in Continued Momentum GEORGETOWN, TX, August 6, 2025 (Newswire.com) - TSS, Inc. (Nasdaq:TSSI), a data center services company that integrates AI and other high-performance computing infrastructure and software and provides related data center services, today reported results for its second quarter ended June 30, 2025. "In the second quarter, we delivered substantial year-over-year growth across key financial metrics, including a 262% increase in revenue, a 103% increase in Adjusted EBITDA and strong positive operating cash flow, commented Darryll Dewan, CEO of TSS, Inc. "Total revenue for the first half of 2025 exceeded total revenue in the second half of 2024. These results reflect strong operational execution and the growing leverage in our business model. Our Georgetown facility is now fully operational across all capabilities, enabling us to integrate more racks featuring the latest advanced AI technologies, shorten delivery timelines and serve a large share of the market. "The outlook for our industry remains exceptionally strong, and demand across our core markets-particularly in data center infrastructure and AI rack integration-continues to accelerate, reinforcing our belief that we are in a significant and sustained growth cycle. With the strategic groundwork in place, we are positioned to scale capacity and address complexity to capitalize on opportunities before us and meet the growing demand for advanced, AI-driven systems." Second Quarter 2025 Financial Highlights: (All comparisons are to Second Quarter 2024) * Revenues of $44.0 million, up 262% * Gross profit of $7.8 million, up 72% * Net income of $1.5 million, up $0.1 million * Diluted EPS of $0.06 compared to $0.06 * Adjusted EBITDA of $4.0 million, up 103% Year-to-Date 2025 Financial Highlights (All comparisons are to the First Six Months of 2024 unless otherwise noted) * Revenues of $142.9 million, up 410% * Gross profit of $17.0 million, up 135% * Net income of $4.5 million, up 215% * Diluted EPS of $0.17, up 183% from $0.06 * Adjusted EBITDA of $9.3 million, up 278% 2025 Outlook "Given the strength of our first-half performance and increasing visibility into the second half of the year, we are raising our full-year 2025 Adjusted EBITDA outlook from at least 50% growth to at least 75% growth compared to 2024," Dewan continued. "The foundational pieces of our business are in place, and we believe a full wave of demand is still ahead. We will continue to position ourselves to grow our business organically, while exploring potential strategic opportunities." 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 number is 664241. Investors may also access a live audio webcast of this conference call and replay the call until August 6, 2026 at https://www.webcaster4.com/Webcast/Page/2294/52763. 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, 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. 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," "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, 2024. 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 James Carbonara (646) 755-7412 Brett Maas (646) 536-7331 [email protected] TSS, Inc. Danny Chism, CFO (512) 310-4908 [email protected] -- Tables Follow - TSS, Inc. Consolidated Balance Sheets (In thousands except par values) TSS, Inc. Unaudited Condensed Consolidated Statements of Operations (In thousands except per-share values) TSS, Inc. Adjusted EBITDA Reconciliation (GAAP to non-GAAP) (In thousands, unaudited)

Tss (TSSI) Q2 Revenue Surges 262%

Tss (TSSI -0.76%), a provider of data center infrastructure services, reported earnings for Q2 2025 on August 6, 2025. The highlight was a 262% year-over-year increase in total revenue (GAAP), reaching $44.0 million in Q2 2025, with the procurement segment contributing the largest share. However, Gross margin percentage was 17.1% in Q1 2024 and declined in the following quarter, as most revenue gains came from lower-margin procurement work. There were no analyst estimates available for Q2 2025. Diluted earnings per share (GAAP) held steady at $0.06 in Q2 2025, and net income (GAAP) was $1.5 million in Q2 2025. Management called out robust demand for AI-related services, raised its full-year 2025 Adjusted EBITDA growth outlook from at least 50% to at least 75% over 2024, and highlighted strong operating cash flow in the first half of 2025. Overall, the period was defined by dramatic growth, with margin pressure and customer concentration risks noted as areas to watch. What Tss Does and Recent Focus Tss specializes in services for building and supporting data centers, including procurement of hardware, customized installation (systems integration), and ongoing facilities management. It is a technical services firm working behind the scenes for clients in computing infrastructure, particularly in areas that support artificial intelligence (AI) and high-powered computing. The company has focused heavily on expanding capacity and modernizing its integration capabilities. Its main priority has been to keep up with surging demand for AI-specific computing racks and state-of-the-art cooling solutions. Strategic partnerships, especially with one major original equipment manufacturer (OEM) - widely believed to be Dell - are critical. Tss relies on these relationships for large contracts but wants to broaden its customer base. The recent launch of the new Georgetown facility signals the company's intent to lead in advanced technology and address growing customer needs. Performance and Key Events in the Quarter Revenue (GAAP) rose significantly in Q2 2025. The procurement segment, which sources components and systems for clients, generated $33.0 million in GAAP revenue in Q2 2025, representing a 572% jump from a year ago. Systems integration -- which includes assembling, testing, and installing advanced server racks -- grew 91% to $9.5 million (GAAP) in Q2 2025. The smaller facilities management segment, which involves ongoing maintenance and support for data centers, dropped 35% year-over-year to $1.5 million (GAAP) in Q2 2025. This ongoing decline in facilities management reflects a transition period in that business and some lumpy project work in the comparison quarter, as seen in the year-over-year decrease in facilities management revenues. Gross profit (GAAP) was $7.8 million in Q2 2025. However, the Gross margin percentage fell sharply to 9.3% in Q1 2025 from 17.1% in Q1 2024, as procurement is a lower-margin service compared to integration work. Leadership attributed this pressure to the business mix in Q1 2025, as procurement contributed the majority of revenue. There was also significant growth in operating expenses -- totaling $5.6 million, compared to $2.8 million the year prior -- in Q2 2025, driven by expansion and support for the new Georgetown plant. Interest expense more than doubled in Q1 2025 as the company took on additional debt to finance this facility upgrade. The Georgetown facility is now fully operational. This site was purpose-built to handle high-density AI hardware -- specifically advanced rack integration using technologies such as direct liquid cooling (a method of dissipating heat in ultra-dense server setups). Management described this investment as a move to meet current and future industry needs, highlighting a rapid build timeline and the facility's designed-for-AI layout. Facility investment is reflected in the balance sheet, with property and equipment (GAAP) increasing to $35.3 million as of June 30, 2025, from $8.6 million as of December 31, 2024. Strategic risk remains a topic of discussion. The company's dependence on a single major OEM remains, and management directly acknowledged this in the release. Tss is working to diversify its customer base and broaden its service capabilities, saying new business -- either by acquisition, partnership, or product -- remains a priority. There were no material one-time events such as asset divestitures, write-downs, or merger announcements in the quarter. Products, Trends, and Segment Context The procurement segment sources and resells servers, storage units, and networking equipment, generally at lower gross margins; procurement gross margins were 7.8% on a GAAP basis and 6.6% on a non-GAAP gross value basis in Q1 2025. A significant portion of this business is tied to government and enterprise contracts, which can be large but are often unpredictable from quarter to quarter. Systems integration, the company's higher-margin offering, involves assembling and testing AI-enabled server racks. These racks are central to data centers running advanced AI workloads. The company's new Georgetown facility lets it offer more capacity and incorporate direct liquid cooling -- technology vital for high-performance computing as heat output climbs. Management reported that the demand for more sophisticated racks is increasing, with the proportion of business requiring liquid cooling at its highest level to date. Facilities management is the smallest division, covering modular data centers and technical upkeep services. This area has declined as a revenue contributor over time. However, management sees long-term potential if the segment can adapt to trends such as edge computing (bringing computation closer to the source of data generation) and more AI-specific modular infrastructure. Gross margin percentage, which shows how much of each dollar of revenue TSS keeps after covering the cost of goods sold, fell in Q1 2025 primarily due to the shift in business mix toward procurement. Cash flow from operations remained positive during the first half of 2025, and the company ended Q2 2025 with $36.8 million in cash and cash equivalents. Long-term debt increased to $19.5 million as of Q2 2025, reflecting capital investment and financing for Georgetown. Outlook and What to Watch For the full year FY2025, management raised its Adjusted EBITDA (non-GAAP) growth expectations. The new target is at least 75% growth in Adjusted EBITDA for FY2025 over FY2024, up from a previous goal of 50%. This guidance is based on first-half momentum in 2025 and "increasing visibility into the second half of the year," but Tss did not provide formal revenue forecasts for the remainder of 2025. The company's leadership continues to see robust industry demand for data center buildouts and AI infrastructure, referencing a strong sales pipeline. No specific numbers were shared on new contracts or backlog duration. TSSI does not currently pay a dividend. Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.