One Stop Systems at Planet MicroCap Showcase: Strategic Growth and Expansion

On Wednesday, 23 April 2025, One Stop Systems (NASDAQ:OSS) presented at the Planet MicroCap Showcase: VEGAS 2025, outlining a strategic vision for balanced growth across defense and commercial sectors. The company highlighted its solid financial footing, characterized by consistent revenue increases and minimal debt, while also acknowledging challenges in expanding its global presence and maintaining profitability.

Key Takeaways

• One Stop Systems aims for a balanced revenue split between defense and commercial sectors.
• The company achieved consecutive quarter-on-quarter revenue growth in 2024.
• It maintains a strong balance sheet with minimal debt.
• A five-year pipeline of approximately $1 billion is forecasted.
• The company is actively pursuing international expansion and M&A opportunities.

Financial Results

• Achieved consecutive quarter-on-quarter revenue growth in 2024.
• Year-on-year revenue growth was reported at the close of Q4 2024.
• Maintained a strong balance sheet with little to no debt.
• Book-to-bill ratio stood at 1.2 for 2024.
• Bresner segment grew at an annual rate of 7% to 9%, with gross margins between 22% and 24%.
• OSS segment gross margins ranged from 35% to 45%, resulting in consolidated gross margins in the low to mid-thirties.

Operational Updates

• The company operates through two segments: OSS (US-based) and Bresner (Germany-based).
• OSS focuses on rugged edge processing systems, while Bresner acts as a value-added reseller in Germany, the EU, and the Middle East.
• New leadership appointments include a VP of Sales, CFO, and VP of Operations, all with defense program experience.
• Secured multiyear contracts, such as a radar processing project delivering $40 million over seven years with an eight-year extension.

Future Outlook

• Focus on extending growth, pipeline, and book-to-bill ratio in 2025.
• Aiming for increased profitability alongside growth in 2025.
• Planning for international expansion and M&A opportunities in 2026 and beyond.
• Targeting 20% annual organic growth in the OSS segment domestically.
• Five-year unfactored pipeline valued at approximately $1 billion.
• Q1 financial results to be released on May 7.

Q&A Highlights

• The company addresses supply chain risks through diverse sourcing and designs agnostic to specific GPU vendors.
• Tariffs are passed on to customers without significant impact.
• Engaged in discussions with large prime defense integrators for broader technology integration.
• Solved video latency issues for the US Army, positioning for potential large-scale deployments.

Readers are encouraged to refer to the full transcript for a detailed discussion of One Stop Systems’ strategic initiatives and financial performance.

Full transcript - Planet MicroCap Showcase: VEGAS 2025:

Unidentified speaker: We’ve seen consecutive growth inside the company, and we’ve seen the ratio in business working closer to fifty fifty between defense and commercial as we’ve grown in both. We’ve done that by establishing, this position in global markets that are really you’re breeding about every day. Right? Moving artificial intelligence, sensor processing, autonomy out on platforms and vehicles, quite large, markets. I’m gonna show you some data on that.

And then, for a small company, we’re in a we’re in good financial position. 2024, we saw consecutive, growth in revenue quarter on quarter. After, moving on from some legacy contract manufacturing work we had done, We also saw a year on year growth as we closed out Q4 of twenty twenty four. A strong balance sheet with little to no debt and enough cash on our balance sheet to sustain the growth that we’re looking forward going forward. We’re gonna go to this slide next, but this presentation is available on our corporate website.

So, definitely feel free to, download it. Company, as I mentioned, a mix of commercial and defense. The reason you see more commercial in here is I’m gonna take you through. We we run-in two business segments. We have a segment in The US called OSS and a segment in Germany called Bresner.

OSS is, where we focus more on this edge compute capability. Bresner is, more of a value added reseller business that we operate, out of Europe. But you can see the key technology partners, over here on the right, the ones you would expect to see for operating in, in data center type technologies. What that reduces to for us for edge applications is the product set you see there on the bottom. So we will take the biggest, strongest supercomputing capability, that you would find in a data center, and, we can shrink it down and build it into ruggedized into something, legitimately the size of, two shoe boxes, put end to end and, can provide not only the benefits of that compute, but extremely faster, latencies, to be able to move data around.

As you can imagine in this aspect, there’s, also a lot of data moving around. So we offer, storage systems that coincide and work well with the processing power that we have. And then we do have some software capability less at the application lever level, more down closer to the firmware and middleware layer that helps facilitate the efficient processing and control of these data center class systems as they work out in the edge. This is an overview of those two businesses I spoke about. OSS headquartered in Southern California, just north of San Diego, and then our Bresner outfit, which is out of Munich, Germany.

Again, the OSS segment is more about design development, integration, build, test, delivery of these edge processing rugged systems. And Bresner is more of an integrator of existing vendor product lines and deliver those in widely commercial markets, focused in Germany, The EU and The Middle East. Examples of some of the customers that we deliver to there on the OSS side, not surprisingly, a mix of large defense contractors, end use Department of Defense Services, Army, Navy, Air Force, Marines, and then a number of commercial companies that operate. And some of the segments I’ll show you in some upcoming slides. Where we’ve where we found our advantage, our discrimination, clearly we ruggedized this commercial hardware.

In those big buildings, temperature is controlled. The buildings are strong and secure. They can withstand earthquakes and everything else. So there’s not a lot of issues. You throw some simple stuff in a rack.

That’s not gonna work when you put a couple marines in a tank or a combat vehicle. Right? The stuff needs to be able to survive in those environments. Shock five, electromagnetic interface, cooling, saltwater. So we deal with the ruggedization of being able to move these elements there.

We do advanced cooling solutions. If you’re following the, data center world and the and the GPU processing, the wattage of those now are getting up to the point where you cannot cool, the GPUs with fans anymore. You’re having to use newer technologies. We are already using, technologies such as direct to chip liquid cooling, full immersion cooling. You take a whole server processor, immerse it in a liquid, and we have delivered systems in those light.

I mentioned latency. And then we have developed some key key partnerships in particular with NVIDIA. We’re a tier two OEM supplier, So we have, special access in terms of capabilities of what we can do with their GPUs, how we can integrate them, use them, and and and make the highest, center of advancement for that. According to new the technologies that are used in architectures today, you can see there across the bottom some of the advantages, that we’re bringing in terms of, more memory, faster latency, huge advantages in, in computational performance. But the biggest thing likely, though, is we, we bring that down in size, weight, and and power.

So the space that we operate compared to current technologies, and I’ll talk about this a little bit, is significantly less, and we can bring more power capability, in that arena. I won’t spend a lot of time here, but, we did refocus, the team and the ability to, address more broadly, defense programs. I added a new vice president, of sales. We added a new CFO and, and a new VP of operations, not only with experience in running defense programs and and large value defense programs like hundred million dollar plus programs, but the majority of us have all also been part of large defense commercial portfolios in the 200 to $700,000,000 range. So we know what, big companies look like and how they need to run.

And so as we scale and grow the company, we’ve, we’ve got that experience to, help build from the lessons learned, that we’ve already built. I started the company in in 2023 where we started the strategy pivot to augment the commercial with defense. 2024 for us was about establishing a position for growth and driving pipeline and orders. We achieved that with some significant book, to bill ratios in the order of 1.2 for 2024 That led to that growth. 2025 for us is about extending that, that growth and that pipeline and that and that win and book to bill ratio, but, starting to focus on bringing profitability, back up alongside that and growing the company steadily there.

2026 and beyond will represent a point where our profitability and all will continue to support reinvestment in that, and we’ll look to, greater expansion beyond The US, likely international, and, be able to start to look at, M and A opportunities. Where we’re positioned, our products, as I mentioned, on the defense battlefield space, air land seer space. One of the nice things about our company is we’ll design a product, and it’s not bespoke to a certain market or application. It’s actually almost agnostic. Example, one of the servers that we build today, we build and deliver to a UK Navy for their submarine for sonar processing.

It was the exact same box we sold to a commercial company who was doing, autonomy for autonomous long haul trucking. So we do have the benefit of of designing, elements and systems one time and then being agnostic and applicable, almost across, any market. On the commercial side where you might see us, we’re doing some things in some interesting niches in the data center, especially where people are focused on high density of GPUs in a in a small tight space. Anything industrial around robotics, or application of AI or processing in an industrial or manufacturing environment. IoT, smart cities, autonomy, this is where we kind of see that, broad collaboration and connection of autonomy and AI and sensor processing in and around moving, moving things in autonomous fashion throughout cities, and around those environments.

Where you might see us, if you think about a environment where performance and ruggedization are are plotted, if you have no ruggedization and high performance at your data center, not surprising, see NVIDIA, Dell, Super Micro there. If you bring down the, the processing and and highly ruggedized stuff, you may have heard of companies like, Mercury and Curtiss Wright. They’re focused in the highly rugged space. We bring the power and the benefit of both of those, to the market, the highest level of performance at the highest levels of, ruggedization. Where we compete today, there really isn’t, someone delivering similar products.

So we tend to get the majority of our awards sole source. When we do compete, we’re usually competing against older technology and the customer’s looking at making an architecture switch decision. We’ve been winning about 75% of those competitions over the last two years. Why that’s important? The enduring, market opportunity, that’s driving us here.

If you pay attention to just this graphic on the bottom right hand side, embedded VPX, the yellow line, represents a simplistic version of the architectures that are used in this space today for rugged edge computing. Embedded VPX is something about the size of your iPad with an high end Intel CPU on there, something that you might see in this laptop or your desktop at home. When that technology was invented, it hadn’t really imagined AIML. It was more about open systems architectures and anybody’s hardware and anybody’s software, creates flexibility, commodity, lower prices. But as you, have seen and read in the press today, the oncoming movement of AIML to demand on a platform is is is huge.

So, the embedded VPX technology, that yellow line, you can only run about one to two AI algorithms or AI inferences or programs on a on a single card. But you can imagine on, like, an autonomous vehicle or a sensor system aircraft in the military where they have multiple sensors, radar, imagery, infrared, There’s AI algorithms specifically built for each one of those systems. And, generally, you wanna fuse those systems as usually done by AI. So now in a space where you were doing no, none, or one AI algorithm, now you wanna do 10 to 12. And systems, if you use VPX, for example, struggle to meet that.

We were helping a prime customer bid a combat system for, the US army for a helicopter. They had envisioned putting an f 35 combat system in this helicopter equivalent of about 52 AI inferences. That would equate to about 27 of these VPX cards about the size of an iPad in a box. That box would be, about this long, and about this high. That box was almost too big to fit in the aircraft.

What the power of the GPU, the green line, that’s what our company offers, bringing the data center, to the class. We can do 25 to 30 AI inferences in that same space, generally at a thousand times faster latency over the Ethernet standard that the embedded VPX technology uses. What that means is that box is about six feet long, now shrunk down to something about the size of a of a shoebox that was performing of those AI inferences at a thousand times faster latency. So not only better capability, better processing, more power at the edge, but now you significantly reduce the size, weight, and power even though the GPU itself is higher power than a than a CPU, but you’ve you’ve reduced the number. So excited.

You reduce the number of, of, elements that do that. One thing I’ll note on here is that, department of state about ten months ago started banning the sale of data center GPUs and technology to our adversaries. The reason being is, our adversaries were moving, to the green line, to augment their armed forces, creating unfair advantage against our US forces. You can imagine ours are are embedded on the yellow line right now. So the nice thing about our market is not really a question of if, but it’s a question of when and how fast our DOD starts to transition over to the green line technologies and architectures, because, that’s, that’s what they’ll need to do to create the unfair advantage.

Department of State is helping by banning the sale of that technology to adversaries or countries that are contingent and so. Companies working off about an unfactored five year pipeline of about a billion dollars. It breaks out this way across defense and commercial markets. You’ll see on the defense side, any C5ISR is a fancy term for intelligence surveillance and reconnaissance command and control systems in the services. So across air, ground, and maritime, that’s where we’re finding our applications and interest right now.

On the commercial markets, we’ve been showing up mostly in commercial aerospace, areas around autonomy that I talked about before, and this, composable infrastructure, this area of the data center where, high density of GPUs, becomes important. Our Bressler segment, interesting part of the business. It’s more value added reselling, taking the likes of ASUS, Digi, NVIDIA, and and integrating them and delivering the customer sets. It’s been a a decent sized company for us. Grows around 7% to 9% a year.

They’ve been doing on the order of 22 to 24%, gross margins. As a counter to that, the OSS, part of the business that’s doing more of this bespoke, edge computing elements has been, we do generally tend to do more like 35 to 45%, gross margins, across the business. Consolidated wise, we’re sitting in the in the low to mid thirties. We, have been using the Bresner segment, though, as a way to facilitate sales into Europe and and Germany, as a channel to market to help move some of these higher end, higher profitable highly profitable elements, in and across Europe. So where we’re looking to grow?

I mentioned that, that big pipelines. We have a five year unfactored pipeline, about a billion dollars. If we factor that down, we’ve generally got enough room in the OSS segment of the business to grow 20% a year, domestic US, organically. We’re looking to expose and grow those gross margins and and and use that then to generate cash and, move back into the business. How this looks for us and where we’re our focuses are today, we, lead with those best in class rugged products.

They are still built on open standards, so the defense department is still very interested in those because they’re not bespoke, specifically to one company’s proprietary solution. However, the way we ruggedize them, the work we’ve done in the firmware, and the way we integrate and build the PC board technologies that tie all these systems together is, kinda like Coke secret sauce, for us. There’s ways we do that. The data centers, are meant to run something twenty four seven nonstop and don’t change out on the edge. Right?

You’re always turning things off, turning things on. You’re always changing software. You’re always moving data in different directions. So, we had to adjust and adopt things to make that happen. We’ve also started that while we do, invest our money in developing standard product, we have started to build up a portfolio of a customer funded development revenue.

This is so that, we can continue to establish product lines, especially on the defense side. This allows us to find an incumbent position on a platform. So imagine something like being on an aircraft or a tank or a or a surface ship so you could be as part of that program as an incumbent piece of the architecture for, for years. This allows you to get a, multiyear program, so that you have guaranteed steady revenue over the years. And, the basis of that, provides steady revenue, and input, and that’s what that next bullet was about is rather than, worrying on quarter to quarter, just a normal sales cycle is by establishing platform incumbent positions, we can get these multiyear contracts.

And I’ll show you an additional slide, on on why that’s important. We talked about the, the product line, already, in terms of servers and storage. Some of the key things in the technology, we’re known for in addition to the ones I mentioned. That latency is really driven through the standard called PCIe Express. We have been a longtime leader in that technology through the six generations, that it’s been around and have been noted in the market as a as a key purveyor of that technology.

And then I mentioned, the NVIDIA areas down there below. This just takes a look, as I mentioned, how our our pipeline is, kind of built out in areas, which we’ve, kind of already talked to across the, ground air and maritime domains and defense. And one of the interesting ones I’ll highlight here on the right is that, 62% of our, of our pipeline today represents opportunities that are multiyear, with, with customers that will allow us to get to those recurring multiyear contracts. Why that’s important, I would just highlight here on the right. So in the overall pipeline, we have about a little better than $450,000,000 of platform opportunities.

The interesting thing about these is we have you have a program. You win upfront. You get a couple million dollars of development, then you move into low rate and full rate production, then you move into a long chain of, service support and tech refresh update. And so when you can establish yourself on platforms and each, life cycle, especially in the Department of Defense, could last ten, fifteen, twenty years, you start stacking up stable year over year over year revenue. And that provides for some financial stability.

It finds, supports a stable growth. And it all starts with the customer fronted upfront development, which we’ve been steadily increasing, since I joined the company in in 2023 and see that growing, significantly over the years. Here’s an example of that. We won a program back in 2018, small development contract for about a million dollars for a storage system for radar processing and AI on the Navy P-eight aircraft. That program, since 2018, that small development program, has delivered $40,000,000 in revenue over that, over that seven years, and we just signed this year another eight year extension on this program.

So we will be on this platform for sixteen years steadily generating high margin, high margin revenue, for us. What this looks like in the commercial world, we’ve got some proposal infrastructure market I talked about. So the multiyear contracts delivering, products into these data centers, we’ve got some pipeline opportunity in around $200,000,000 to expand out over over that market. And then, some stuff that’s, probably interesting is a little more transformational for the company. We recently did a system for the US Army where they were struggling to move video around a combat vehicle to the crew stations inside.

They weren’t able to drive the vehicle or target with the weapon system, because the latency was so bad. And they were using that yellow line technology. And, we were able to come on board and solve not only their processing capability, but the latency capability. That program is now under field testing, by the US army. While not budgeted or set yet, the US army doesn’t buy things in tens or hundreds.

They buy things in thousands. And so for some of the thing like us, buying systems on the order of a 2,000, or 5,000 represent three to four to five year programs that are well in excess of a hundred to $200,000,000. So, we’ve factored these accordingly, but there are transformational opportunities like this that exist in our pipeline because of the adoption of these technologies, to either update existing vehicles to a greater capability or, to set the architectures, for new vehicles. So that that’s actually a pretty good summary. I’m I’m actually gonna stop there, and, leave some time for questions.

If you wanted to get any of the topics I talked, I also had the CFO here to keep me straight on the numbers. So feel free to ask a number of questions. We’ll share what we, can with you. We will release q one numbers here on May 6 or seventh May 7, so you’ll be able to follow-up on the continued story of the progress we’ve been making. Yes.

Yeah. Great question on the supply chain, especially today and in around tariffs. So, we design all our own PCB boards and everything that go into the system. So, we have a wide range of suppliers in The US and outside that we can roll through, that, development. We do all of our design, integration test and delivery out of The US.

We will source components. If the PCB board manufacturers can’t, we’ll help them source components. Generally, a lot of the processing chips and all will come out of the Taiwan area. We were our most of our products are designed to be agnostic, to GPU. So if it’s not NVIDIA, it’s somebody else.

So we’ll we watch Intel. We watch AMD. We watch others as they’re developing Qualcomm. We actually did some work for, the US Army and the, Army Special Forces on, how to utilize other GPUs that might not come out of Asia, so that we could protect the supply chain. And our designs are agnostic to that, so we have the agility to move GPUs and other processing chipsets in and out based on that.

Generally, we’ve been able to pass any new tariffs on to customers. We’ve been doing that long before the tariff, craziness that’s been going on over the last couple weeks or months, and, we’ve been able to pass those on. So we haven’t really been extremely affected by that. In some respects, it’s actually creating some opportunity for us in the data center market. We were competing with a lot of companies out of Asia and Taiwan that had better, more competitive pricing.

That has been, more equaled out now. And so we’re starting to see some more interest, in the data center market on products that can be sourced and developed, delivered, from The US. Yeah. Yeah. Yeah.

Interestingly enough, as I mentioned, remember, the, the current the way that the big, prime contractors are solving those problems today are with that embedded VPX technology on that yellow line. So they were not able to solve this. As soon as the army lab, we proved to them we could and they started doing it. It’s not surprising that, we’re in engaged discussions now with a lot of large prime defense integrators who then would look to utilize the technology to move it forward. So we’re generally at that at that level.

We usually work through a lot of primes as an integrating element of their overall architecture on the on the vehicle so that we can provide and usually land and expand. You know, we might start with a storage system. We might start with a system like this, but we can work our way into the broader architecture to, as they wanna implement more capability to bring artificial intelligence, machine learning, sensor capabilities onto the system. Yeah. About a minute.

Somebody wants to squeeze one in. Alright. Well, exciting company. We’re in Booth 708 over in the Champagne Room. And, no.

It’s not some, sultry place, but being the champagne room. But come by and talk to us. We’ll be glad to do it. This presentation’s up on the website. Happy to brief anybody more on the company.

Look forward to you being investors. Thanks.

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