One Stop Systems Reports Decline in Revenue and Significant Loss in Q2 2023

One Stop Systems, Inc. (OSS) reported a decline in financial performance for the second quarter of 2023, with total revenue of $17.2 million, down 6% from $18.3 million in the same period last year. For the first half of 2023, revenue also decreased by 3.9% to $34.0 million compared to $35.4 million in the first half of 2022. The company experienced a significant loss of $2.4 million for the quarter, compared to a profit of $322,822 in Q2 2022. The loss for the first half of 2023 totaled $2.8 million, contrasting with a profit of $902,056 in the prior year.

The decline in revenue was primarily attributed to reduced shipments to a major media customer, which OSS anticipates will not contribute significantly to future revenues due to their shift towards cloud technology. Additionally, the company faced challenges from the bankruptcy of an autonomous trucking customer and delays in military orders. In contrast, OSS Europe, the company's subsidiary, reported a 17.7% increase in revenue for the quarter, driven by project-based business and a growing number of smaller accounts.

Operating expenses surged to $8.2 million for the second quarter, up from $4.8 million in the same period last year, largely due to a $2.7 million impairment of goodwill and increased general and administrative costs associated with organizational restructuring. The gross profit margin for the quarter was 27.9%, slightly down from 28.4% in Q2 2022. The company’s total assets decreased to $54.8 million as of June 30, 2023, from $56.4 million at the end of 2022, while cash and cash equivalents increased to $6.1 million.

In terms of strategic developments, OSS has shifted its focus towards the AI Transportables market and military applications, which has led to the appointment of Michael Knowles as the new CEO in June 2023. The company has also formed a strategic advisory board to enhance its efforts in the defense sector. Despite the challenges faced, OSS is actively working to control costs and improve margins through new product lines and operational efficiencies.

Looking ahead, OSS management acknowledges the ongoing economic uncertainties, including inflation and potential recession risks, which could further impact operations. The company plans to continue monitoring these conditions while focusing on acquiring new customer orders to offset lost revenue from its media customer. The outlook remains cautious, with management emphasizing the need for liquidity and potential adjustments to operations in response to market conditions.