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- **AI Infrastructure Growth**: Q4 rack volumes exceed Q3 levels, with 2026 guidance for 40-50% EBITDA growth.
- **Customer Diversification**: 40% of revenue not directly tied to Dell, with new Board member Vivek Mohindra driving strategic relationships.
- **Financial Discipline**: 2025 EBITDA up 50-75% YoY, with $3 million secondary offering supporting expansion.
- **Operational Efficiency**: Fixed power costs offset by growing billings, with no plans for additional capital raises.

**【Management Opening Remarks】**
- CEO Darryll Dewan highlighted the company's strategic focus on AI and high-performance computing infrastructure, noting investments in a new Georgetown facility and expanded electrical capacity to meet customer demand.
- CFO Daniel Chism reported Q3 2025 revenue of $41.9 million, down 41% year-over-year due to government procurement delays, but emphasized strong cash flow generation and EBITDA growth of 50-75% year-to-date.
- The company raised $3 million in a secondary offering, with $16.3 million drawn on a construction loan, supporting facility expansion and strategic initiatives.

**【CEO Commentary】**
- CEO emphasized the company's position as a leading AI infrastructure integrator, with Q4 rack volumes expected to exceed Q3 levels despite delays in government procurement.
- Discussed new Board member Vivek Mohindra's industry expertise and potential to diversify customer relationships beyond Dell.
- Outlined 2026 guidance for 40-50% EBITDA growth, driven by facility utilization and strategic acquisitions, while maintaining financial discipline.

**【CFO Financial Commentary】**
- Q3 2025 financials showed: 
  - Procurement revenue $31.1 million (down 52% YoY due to government shutdown)
  - Systems Integration $9.2 million (up 20% YoY)
  - Facilities Management $1.6 million (down 19% YoY)
- Gross margin challenges from $1.6 million in facility-related depreciation and $866,000 in fixed power costs.
- Operating expenses increased 35% YoY due to stock compensation and audit costs.
- 2025 full-year EBITDA expected to exceed $8.2 million, with 2026 guidance for $40-50 million in EBITDA growth.

**【Q&A Highlights】**
- Investors questioned the concentration of Dell as a customer, with management clarifying that 60% of revenue is directly tied to Dell's AI infrastructure needs.
- CEO confirmed the Georgetown facility's 15 MW power capacity is fully utilized, with plans to expand to 20 MW in 2026.
- CFO detailed $5 million in incremental power costs, offset by $3.3 million in customer billings, and $1.5 million in net interest expense.
- Management reaffirmed commitment to strategic M&A to diversify the customer base beyond Dell.

TSS, Inc. (TSSI) Q3 2025 Earnings Call Transcript

Revenue

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Financing Services Revenue

Other Revenue

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Cost of Financing Services

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Gross Profit

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Operating Expenses

Selling, General and Administrative Expenses

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Net Interest Expense

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TSSI

TSSI fundamentals

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