TSS Inc. Reports Robust Growth Amid AI Demand

TSS ((TSSI)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call for TSS Inc. painted a picture of robust growth and a promising future, despite some challenges. The company reported significant increases in revenue and operational capacity, largely fueled by the burgeoning demand for AI infrastructure. While there were some hurdles, such as a decline in facilities management revenue and a decrease in gross margins, the overall sentiment was optimistic, with a strong performance and positive outlook for the future.

Record Year-Over-Year Revenue Growth

TSS Inc. achieved an impressive year-over-year revenue growth of 262%, reaching $44 million in Q2 2025. This remarkable increase was primarily driven by the high demand for AI-enabled infrastructure and procurement services, marking a significant milestone for the company.

Successful Operational Transition to New Facility

The company successfully transitioned to a new 213,000 square foot facility in Georgetown, Texas. This move has enhanced TSS Inc.’s capacity to support larger and more complex customer deployments, positioning the company well for future growth.

Significant Growth in Procurement Services

Procurement services saw a staggering 572% year-over-year revenue growth, reaching $33 million. This surge was largely due to increased infrastructure investments to support AI workloads, highlighting the company’s strategic focus on this high-demand area.

Positive Cash Flow from Operations

For the first six months of 2025, TSS Inc. generated positive cash flow from operations, strengthening its financial foundation and providing a solid base for future expansion.

Adjusted EBITDA Growth

Adjusted EBITDA more than doubled to $4 million in Q2 2025. The company has raised its full-year 2025 adjusted EBITDA outlook from at least 50% growth to at least 75% growth compared to 2024, reflecting confidence in its strategic initiatives.

Decline in Facilities Management Revenue

The Facilities Management segment experienced a 35% decline in revenue year-over-year. This was partly due to the evolution of the modular data center market, indicating a shift in industry dynamics.

Decrease in Consolidated Gross Margins

Consolidated gross margins fell to 17.8% in Q2 2025 from 37.3% in Q2 2024. This decline was impacted by a higher portion of lower-margin procurement services, a challenge the company will need to address moving forward.

Increased Interest Expense

Interest expenses rose to $859,000 in Q2 2025, up from $378,000 in the prior year quarter. This increase was driven by procurement transactions and a new construction loan, reflecting the company’s investment in growth.

Forward-Looking Guidance

Looking ahead, TSS Inc. provided a robust financial outlook for the remainder of 2025. The company is optimistic about its trajectory, raising its full-year adjusted EBITDA growth outlook to at least 75% compared to 2024. This positive guidance underscores their strategic positioning in the high-demand AI infrastructure market and the operational success of their new Georgetown facility.

In summary, TSS Inc.’s earnings call conveyed a strong performance and a positive outlook, despite some challenges. The company’s significant revenue growth, successful operational transitions, and strategic investments in AI infrastructure position it well for continued success. Investors and stakeholders can look forward to a promising future as TSS Inc. continues to capitalize on the growing demand for AI-enabled solutions.