Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated gross margin increased by 320 basis points year over year to 32.6%, with the OSS segment achieving a strong gross margin of 45.5%.
- OSS announced a record contract award of $6.5 million with a large defense prime, alongside new multi-year relationships and renewals valued at $6 million.
- The company has a strong and growing pipeline of opportunities across defense and commercial markets, leveraging high-performance edge compute solutions.
- OSS segment experienced strong bookings with a book-to-bill ratio of 2.0 for the quarter, contributing to a trailing 12-month ratio of 1.33.
- The company is well-positioned to capitalize on multi-year growth opportunities driven by AI, machine learning, autonomy, and sensor fusion at the edge.
Negative Points
- Consolidated revenue decreased by 3.1% year over year, with lower revenue in both the OSS and Brezner segments.
- The company reported a GAAP net loss of $2 million, or $0.09 per share, compared to a net loss of $1.3 million in the prior year quarter.
- Adjusted EBITDA showed a loss of $1.1 million, compared to a loss of about $500k in the prior year first quarter.
- Operating expenses increased by 19.2% to $5.9 million, driven by higher marketing, selling, and R&D costs.
- Certain OSS segment orders were delayed due to near-term market conditions, affecting the timing of expected revenue.
Q & A Highlights
Q: How much of the $30 million core OSS revenue expected this year is from signed contracts versus new business?
A: It's a mix of both. We are generating bookings in the first half that will lead to expected revenue in the second half, with a smaller percentage of backlog from the end of 2024 contributing to second-half deliveries. - Mike Knowles, President and CEO
Q: Will the $6.5 million contract for high-performance servers be delivered in 2025?
A: Yes, we expect all of it to be delivered and converted to revenue within 2025, spread across Q2, Q3, and Q4. - Daniel Gabel, CFO
Q: Can you provide details on the $200 million opportunity with the Army for situational awareness?
A: We developed a rugged solution for the Army to process video from combat vehicles. It's under evaluation, and if adopted, could lead to significant opportunities across thousands of vehicles, potentially worth hundreds of millions over 3-5 years. - Mike Knowles, President and CEO
Q: What is the timeline for the data center opportunity and international partnerships?
A: We expect to extend sales of our 4U and 6U product lines in the second half of the year. For international partnerships, we anticipate generating revenue from these concepts by late Q2 or early Q3. - Mike Knowles, President and CEO
Q: How are current government budgets impacting your programs, and what is the multiplier effect of customer-funded opportunities?
A: The government is working under a continuing resolution, causing some delays. However, the 2026 budget cycle is back on track. Customer-funded development can lead to significant revenue, as seen with our P-8 program, which started with a $1 million development effort and has generated about $40 million in revenue. - Mike Knowles, President and CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
