Overview

• US data center services firm's Q1 revenue fell 44% yr/yr but beat analyst expectations

• Systems Integration revenue rose 88% yr/yr, offset by lower Procurement segment revenue

• Company sees 2026 adjusted EBITDA outlook at high end of $20-22 mln range

Outlook

• TSS expects 2026 adjusted EBITDA toward high end of $20 mln to $22 mln range

• Company says total integration demand continues to exceed volume incorporated into outlook

• TSS expects quarterly EBITDA levels to grow as AI rack volumes increase

Result Drivers

• SYSTEMS INTEGRATION GROWTH - 88% yr/yr increase in Systems Integration revenue driven by strong customer demand and operational execution, with growth particularly high in AI activities, per CEO Dewan

• PROCUREMENT DECLINE - Lower Procurement revenue due to record high volumes in the prior-year quarter, which can vary significantly between periods

• AI RACK INTEGRATION - Scaling of Georgetown, Texas AI rack integration facility contributed to higher-margin revenue and supported adjusted EBITDA growth

Company press release: ID:nACS9qjLsa

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q1 Revenue	Beat	$55.35 mln	$43.19 mln (3 Analysts)
Q1 EPS		$0.08
Q1 Net Income		$2.28 mln
Q1 Basic EPS		$0.08
Q1 Gross Profit		$8.81 mln
Q1 Operating Income		$2.27 mln
Q1 Pretax Profit		$2.67 mln

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 3 "strong buy" or "buy", no "hold" and no "sell" or "strong sell"

• Wall Street's median 12-month price target for TSS Inc is $16.00, about 6.4% below its May 6 closing price of $17.09

• The stock recently traded at 66 times the next 12-month earnings vs. a P/E of 51 three months ago

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