One Stop Systems (NASDAQ:OSS) highlighted a “defining year” in 2025 as the company completed a strategic repositioning around ruggedized, high-performance compute platforms designed to support artificial intelligence, machine learning, and sensor processing at the edge. Management said that focus drove meaningful financial progress in the fourth quarter and full year, while also enabling a major portfolio move: the sale of its Bressner subsidiary.
Strategic shift: Bressner divestiture and a “pure-play” focus
President and CEO Mike Knowles said OSS completed the “opportunistic sale” of its wholly owned subsidiary Bressner in December, receiving proceeds of $22.4 million, subject to final closing working capital balances. OSS acquired Bressner in October 2018 for approximately $5.6 million, and Knowles said the transaction “unlocks significant value,” simplifies the operating structure, strengthens the balance sheet, and allows OSS to concentrate resources on higher-margin, higher-growth rugged enterprise-class compute opportunities.
Fourth-quarter results: revenue up 70% and record gross margin
Management reported a strong finish to 2025. Knowles said fourth-quarter revenue grew more than 70% year over year, gross margin reached a record 58.5%, and net income from continuing operations was $2 million.
Dan provided additional detail, reporting fourth-quarter revenue of $12.0 million compared with $7.0 million in the prior-year period and $9.3 million in the third quarter of 2025. He said the year-over-year increase was driven primarily by:
- Higher revenue for development and production of custom server products for defense customers
- Higher shipments of data storage products for a defense prime customer
- Shipments of server products to a medical device customer
- Shipments of compute and server products for an autonomous maritime application
Gross margin of 58.5% compared with 9.4% in the prior-year quarter, which Dan noted was impacted by a $1.2 million contract loss. Excluding that charge, he said fourth-quarter 2024 gross margin would have been 26.8%. The improvement in 2025 was attributed primarily to a more profitable product mix, alongside operational efficiency. Dan cautioned that gross margin can vary quarter to quarter based on absorption, mix, and program life cycle, while reiterating that OSS targets “mid-30s to mid-40s” segment margins on a sustaining basis.
Operating expenses rose 21.8% to $5.1 million, largely due to higher R&D investment. OSS posted GAAP net income from continuing operations of $2.0 million, or $0.08 per diluted share, compared with a GAAP net loss from continuing operations of $3.4 million, or $0.16 per share, in the prior-year quarter. Non-GAAP net income from continuing operations was $2.4 million, or $0.09 per diluted share, and Adjusted EBITDA from continuing operations was $2.5 million, compared with an Adjusted EBITDA loss of $2.8 million in the prior-year period.
Defense and commercial programs: multi-year visibility and new development work
Knowles said OSS continues to see momentum as customers adopt its rugged enterprise-class compute platforms, and he pointed to multi-year defense and commercial programs as key drivers of demand and revenue visibility.
In defense, OSS discussed several programs:
- P-8 Poseidon aircraft: Knowles said OSS has secured more than $65 million in total contracted revenue associated with the P-8 program, including over $23 million awarded since the beginning of 2025. He highlighted a recent $10.5 million set of new awards from the U.S. Navy and a defense prime, described as the largest aggregate orders to date tied to the program, expected to contribute to revenue in 2026 and continue into 2027.
- Safran Federal Systems: OSS received a $1.2 million follow-on production order in the fourth quarter for rugged 4U short-depth servers supporting naval and aircraft applications. Knowles said this brought aggregate order value to approximately $1.9 million and that the company expects the relationship to generate more than $7 million in cumulative production orders over the next five years.
- U.S. Army combat vehicles: Knowles said OSS signed a new agreement in January 2026 with a defense prime to design and develop ruggedized integrated compute and visualization systems for an enhanced vision capability. He said initial testing is expected at the U.S. Army Ground Vehicle Systems Center in late 2026. In Q&A, Knowles described the engagement as early-stage development with no formal RFP yet for production deployment, while noting potential scale could be significant if the Army ultimately fields the capability broadly.
On the commercial side, OSS cited growing adoption in robotics, aerospace, and healthcare:
- Autonomous construction and mining robotics: Knowles said OSS was selected by a robotics customer in February 2026 and won the program by displacing an incumbent solution.
- Commercial aerospace cabin systems: OSS discussed an initial $1.5 million order for lighting control and column integration controller units that are DO-160 qualified, with management expecting the program to generate approximately $6 million in revenue over three years.
- Medical imaging OEM: OSS received a $2.0 million follow-on production order for next-generation liquid-cooled compute systems supporting breast imaging devices. Knowles said the platform has become the standard for this customer and is transitioning from development to volume production, with expectations for more than $25 million in cumulative revenue over the next five years.
Knowles also said OSS delivered a book-to-bill ratio of approximately 1.2x during 2025 despite a year-long continuing resolution, delays in defense awards, and extended component lead times.
Balance sheet and 2026 outlook: growth guided at 20%–25%
Dan said OSS ended 2025 with the “strongest balance sheet” in its history, supported by the Bressner sale and an October registered direct offering of common stock. As of December 31, 2025, the company had $31.2 million in cash and cash equivalents, $2.2 million in restricted cash, no debt, and total liabilities of $6.8 million. Working capital rose to $45.3 million from $24.0 million a year earlier, which Dan attributed to higher cash and a 176% increase in accounts receivable tied to revenue growth.
For 2026, management guided for revenue growth of 20% to 25%, gross margin of approximately 40%, and positive EBITDA and Adjusted EBITDA. Dan said the company expects seasonality with about 40% of revenue in the first half and 60% in the second half, and expects negative EBITDA in the first half to be offset by positive EBITDA in the second half.
Management emphasized supply-chain constraints—particularly longer lead times for certain components including memory—as a factor that could affect shipment timing. In Q&A, Knowles said the company’s pipeline entering 2026 remained strong, while noting contracting timing can be affected by defense budgeting and shifting priorities. Dan said the company’s guidance incorporates expectations for extended lead times.
Investment priorities: R&D, sales capacity, and M&A
OSS said it expects research and development to remain central to its strategy, including customer-funded development programs that can lead to future production opportunities. Dan guided that R&D expense in 2026 should be about 10% to 12% of annual sales, down from 2025 due to non-recurring investments made last year, and he expects R&D spend to be weighted to the first half of 2026 (about 60% in the first half and 40% in the second half) based on customer-funded project timing.
On technology, Knowles said OSS introduced a next-generation PCIe Gen 6 card portfolio in the fourth quarter, aimed at addressing increasing bandwidth and processing requirements for AI and sensor-driven workloads.
In response to questions about sales resources, Knowles said OSS believes its current sales force investments can support the 20%–25% growth outlook, while the company continues to evaluate the best approaches to expand market coverage through hiring and external channels. Knowles also said OSS has increased its M&A activity and is evaluating a funnel of opportunities, including hardware-adjacent and potential software capabilities, though he emphasized the company will not be rushed and is focused on strategic fit and valuation.
About One Stop Systems (NASDAQ:OSS)
One Stop Systems, Inc (NASDAQ: OSS) develops and manufactures high-performance computing and storage systems tailored for mission-critical and harsh-environment applications. The company’s solutions are designed to deliver accelerated processing, high-throughput data handling and reliability in confined or ruggedized form factors. OSS leverages advanced cooling, power management and custom enclosures to support demanding workloads in settings where off-the-shelf hardware may fall short.
The company’s product portfolio includes GPU-accelerated servers, embedded single-board computers, high-speed RAID storage arrays and integrated system solutions.
