One Stop Systems, Inc. (OSS) reported a revenue of $16.78 million for the three months ended March 31, 2023, reflecting a decrease of 1.6% compared to $17.05 million in the same period of 2022. The company's gross profit for the quarter was $5.07 million, with a gross margin of 30.2%, slightly up from 30.1% in the prior year. However, OSS experienced a net loss of $400,512, or $(0.02) per share, compared to a net income of $579,234, or $0.03 per share, in the previous year. The decline in profitability was attributed to increased operating expenses, which rose to $5.27 million from $4.49 million year-over-year.
The financial performance of OSS was impacted by significant changes in customer demand, particularly in the media and entertainment sector, which saw a notable decrease in shipments. Revenue from OSS's European operations, however, increased by 26% to $8.15 million, driven by project-based business and a growing number of smaller accounts. The overall cost of revenue decreased by 1.7% to $11.71 million, primarily due to reduced sales to the media and entertainment customer.
Strategically, OSS has undergone organizational changes to align its operations with a focus on the AI Transportables market and military applications. This included the announcement of CEO David Raun stepping down, with a search for his successor underway. The company also implemented a reduction in force, laying off 12 employees, and appointed James Ison as the new chief product officer. These changes are part of OSS's efforts to strengthen its management team and enhance its market position.
Operationally, OSS reported an increase in inventory levels, which rose to $23.64 million from $20.78 million, as the company sought to mitigate supply chain disruptions and secure necessary components. The total current assets increased to $47.88 million, while current liabilities also rose to $13.12 million, resulting in a working capital of $34.76 million. The company’s cash and cash equivalents stood at $3.47 million, up from $3.11 million at the end of 2022.
Looking ahead, OSS management expressed caution regarding the economic landscape, citing ongoing inflation, geopolitical instability, and potential recession risks. The company plans to continue controlling costs, conserving cash, and focusing on new product lines to improve margins. However, the ability to accurately forecast revenues remains challenging due to the uncertain market conditions and changing customer demands.
About ONE STOP SYSTEMS, INC.
One Stop Systems, Inc. specializes in rugged high-performance computing solutions for edge applications, focusing on AI, machine learning, and sensor processing. Targeting industries like autonomous vehicles, military, and medical sectors, OSS offers advanced products such as the Rigel supercomputer and Short-depth Servers. With a growing market opportunity projected at $5 billion, the company emphasizes innovation and strategic partnerships to enhance its technology and expand its customer base.
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