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Investig.com -- TSS, Inc. (NASDAQ:TSSI), a data center services company, reported a significant revenue decline in the third quarter, sending shares plummeting over 32% in after-hours trading on Thursday.
The company posted third quarter revenue of $41.9 million, down 40% YoY, with a net loss of $1.5 million or -$0.06 per share. This marked a stark reversal from the $2.6 million profit or $0.10 per share reported in the same quarter last year. The steep revenue drop was primarily driven by procurement revenues falling 49% to $31.1 million.
CEO Darryll Dewan attributed the disappointing results to "unforeseen operational requirements" in the company’s Systems Integration business, which serves the AI market. "The volume of racks we integrated was lower than expected," Dewan explained. "We have implemented new procedures and processes and are seeing dramatically higher rack volumes in our fourth quarter."
Despite the quarterly setback, TSS highlighted its year-to-date performance, with revenue up 88% to $184.8 million and Adjusted EBITDA improving 59% to $10.7 million for the first nine months of 2025.
The company’s Systems Integration segment showed some strength, with quarterly revenue increasing 20% to $9.2 million, while Facilities Management revenue declined 19% to $1.6 million.
Looking ahead, TSS updated its full-year 2025 Adjusted EBITDA outlook, now projecting growth between 50% and 75% compared to 2024. Dewan expressed confidence in a "strong rebound in quarterly EBITDA" for the fourth quarter, though noted the potential impact of the government shutdown on pipeline orders.
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