Tss 2025 Q3 Earnings Sharp Revenue Drop Masks AI-Driven Momentum

Tss (TSSI) reported Q3 2025 results that missed expectations due to a 40.2% revenue decline, though the company raised its full-year adjusted EBITDA guidance to 50%-75% growth. CEO Darryll Dewan attributed the revenue drop to procurement timing and operational delays at the new Georgetown facility, while emphasizing strong AI infrastructure demand and a projected Q4 rebound.

Revenue

Tss’s total revenue fell to $41.88 million in Q3 2025, down from $70.07 million in the prior year. The Procurement segment, which accounts for most of the company’s revenue, declined 49% to $31.1 million, impacted by challenging year-over-year comparisons and government shutdown delays. Systems Integration revenue grew 20% to $9.19 million, driven by AI rack deployments, while Facilities Management dropped 19% to $1.59 million. Equipment sales and other services contributed $577,000, reflecting operational diversification efforts.

Earnings/Net Income

The company swung to a net loss of $1.50 million ($0.06 per share), a 156.6% deterioration from a $2.65 million profit in 2024 Q3. Despite the loss, CEO Dewan highlighted a “record high” for fiscal Q3 net income over the past three years, underscoring confidence in long-term AI-driven growth.

Post-Earnings Price Action Review

Tss shares plunged 52.16% month-to-date following the earnings report, with a 47.98% weekly drop and 11.93% intraday decline. The selloff reflected short-term concerns over the revenue slump and operational challenges, though the company’s raised EBITDA guidance and CEO optimism about Q4 recovery suggested underlying resilience. Retail investors on platforms like Stocktwits remained “extremely bullish,” citing long-term AI infrastructure potential.

CEO Commentary

Dewan emphasized Tss’s transformational growth, with year-to-date 2025 revenue up 88% and adjusted EBITDA rising 59%. He attributed the Q3 dip to temporary procurement delays and facility scaling challenges but expressed confidence in a Q4 rebound. Strategic investments in Georgetown, including power upgrades, are critical for scaling AI rack integration. Dewan also highlighted plans to expand AI infrastructure, explore M&A, and leverage Dell partnerships while maintaining disciplined capital allocation.

Guidance

Tss updated its full-year 2025 adjusted EBITDA guidance to 50%-75% growth, with Q4 expected to show a rebound driven by higher systems integration volumes. For 2026, the company projects 40%-50% organic EBITDA growth, supported by stronger AI demand and operational improvements.

Additional News

1. Georgetown Facility Expansion: Tss opened a new facility in Georgetown, Texas, to scale AI rack integration and operational capacity, with CEO Dewan noting “critical” power and process upgrades.

2. Strategic Acquisitions and Partnerships: The company is exploring M&A opportunities in AI and edge computing, while deepening partnerships with Dell Technologies, including appointing a Dell veteran to its board.

3. Capital Raise: Tss completed a $58.7 million stock offering in August 2025 to fund AI infrastructure expansion and operational scaling, with plans to leverage proceeds for M&A and partnerships.