Revisiting Our Journey and Future Opportunities
One Stop Systems, Inc. (“OSS” or the "Company") (Nasdaq: OSS), a pioneering force in rugged Enterprise Class compute solutions designed for the demanding edge, recently penned a detailed letter to shareholders. This communication highlights the remarkable strides the company made over the past year and outlines bold expectations for the future.
Dear Fellow Shareholders,
It is with great enthusiasm that we recap the achievements of 2024 and share our vision for the upcoming years. Last year marked a pivotal point for OSS. Through strategic initiatives, we not only revamped our business model but also positioned ourselves as leaders within one of the fastest-growing sectors—high-performance edge compute (HPeC) designed for AI, machine learning (ML), and advanced sensor processing.
Our commitment to innovation and adaptability resulted in consistent revenue growth throughout 2024. With an increase in order volumes and a strengthened sales pipeline, OSS is strategically aligned to harness the rising demand for real-time processing solutions across various industries, encompassing defense, aerospace, and industrial sectors.
Since my appointment in mid-2023, I have been advocating for a long-term strategy aimed at achieving substantial growth within OSS. We executed our first strategic phase with success, which involved enhancing our team with adept management and board members. This pivot in strategy targeted higher-margin and high-growth opportunities across defense and commercial marketplaces, successfully converting our sales pipeline into a formidable asset exceeding $1 billion.
As we progressed through 2024, the second phase of our transformation became our focus. Here, we aimed to translate our burgeoning pipeline into tangible orders while solidifying our competitive stance within the defense sector. We are pleased to report that we launched a customer-funded development revenue stream, enhancing our capability to offer integrated solutions that position OSS as a primary selected partner on extensive, long-term projects.
During this period, our customer-funded development revenue surged by an impressive 118% to reach $3.7 million. While this represents a modest figure, it underscores our initial progress in securing positions on significant military and commercial projects. Although development initiatives typically require one to two years to evolve into actual production orders, we anticipate that several programs initiated in 2024 will yield orders and sales in 2025.
Noteworthy is the growing adoption of our solutions within the OSS segment across both defense and commercial sectors. The demand for our innovative technologies has led to a notable rise in inquiries and proposals from potential clients, illustrating the market's growing appreciation for OSS’s specialized capabilities.
In our defense sector, we saw robust demand stemming from several high-profile programs, particularly from the U.S. Army and U.S. Navy. Our design efforts for a new high-performance compute solution for a U.S. intelligence agency and a strategic collaboration with a leading defense contractor in Asia for an autonomous maritime project are encouraging signs of our expanding reach.
Additionally, we are actively working on a rugged 360-degree Situational Awareness system for the U.S. Army. If funded and deployed effectively across combat vehicles, this project could yield significant production orders valued at over $200 million across several years, offering ongoing logistical and technical support opportunities thereafter.
On the commercial front, our solutions have resonated with various sectors, including motorsport, autonomous transportation, and aerospace, with strong interest from data center markets. We are eyeing a promising $200 million opportunity within the composable infrastructure/data center domain, having already signed an initial contract for 100 units with a data center client. We predict further expansion in 2025 as we continue converting interest into substantial revenue.
While challenges remain—especially due to economic variability affecting the European markets—we are optimistic about the Bressner segment's promising start in 2025. Our commitment to aligning our offerings with client priorities bolsters our confidence as we anticipate a book-to-bill ratio of approximately 1.2x in 2025, accompanied by projected OSS segment revenue growth exceeding 20% year-over-year.
Looking to the future, we project consolidated revenue between $59 and $61 million for the upcoming fiscal year, with the OSS segment contributing about $30 million. This growth, coupled with our anticipated EBITDA breakeven, underlines our positive momentum and the encouraging trend of revenue acceleration projected for the latter half of the year.
Our portfolio remains sought after, with increasing opportunities across defense and commercial markets, despite uncertainties stemming from recent economic and policy shifts. We are vigilant about potential tariff impacts on our supply chain while recognizing our products’ competitive advantages in various segments. As we embark on the third year of our transformational journey, we take pride in our achievements and eagerly anticipate enhanced growth and profitability.
We are confident that the strategic investments made over the past years have primed OSS for scaling our operations and seizing transformative opportunities ahead. With the right innovations, a dedicated team, and a focused strategy, we are well-prepared to address the escalating demand for rugged, enterprise-class computing solutions.
On behalf of the OSS team and the Board of Directors, I extend heartfelt appreciation to our employees for their unwavering commitment, our customers for their trust, and our shareholders for their continued support. We remain dedicated to delivering cutting-edge solutions, fostering sustainable growth, and enhancing shareholder value.
Respectfully,
Mike Knowles
President and CEO
Ken Potashner
Chairman
Frequently Asked Questions
What were the key achievements for One Stop Systems in 2024?
One Stop Systems successfully transitioned its strategic focus to high-performance edge compute solutions, leading to consistent revenue growth and the establishment of a strong sales pipeline.
How does One Stop Systems plan to grow in the coming years?
The company plans to leverage its new customer-funded development revenue stream and expand its existing market presence in both the defense and commercial sectors.
What is the projected revenue for One Stop Systems in 2025?
OSS anticipates consolidated revenue between $59 and $61 million for the 2025 fiscal year, along with substantial growth in its OSS segment.
In which markets is One Stop Systems seeing increased demand?
OSS is experiencing heightened demand across various sectors, including defense, commercial aerospace, motorsport, and data center solutions.
What are OSS's expectations regarding profitability?
OSS expects to achieve EBITDA breakeven for 2025, with revenue and profitability improvements projected for the second half of the year based on current trends.
