TSS Inc. (TSSI) Q2 2026 Earnings Call: Higher-Margin Systems Integration Drives Profit Growth
Source Tradingkey
Key Takeaways
- Q2 2026 revenue declined 20% year over year to $35.1 million, primarily because Procurement Services revenue fell 45% to $18.2 million.
- Higher-margin businesses expanded sharply. Systems Integration revenue increased 46% to $13.9 million, while Facilities Management revenue rose 84% to $2.7 million.
- The revenue mix improved, with Systems Integration accounting for 39% of total revenue versus 22% in Q2 2025. Consolidated gross margin increased 640 basis points to 22.8%.
- Gross profit rose 11% to $8.0 million and adjusted EBITDA increased 12% to $4.5 million despite the lower total revenue.
- Management expects Q3 Procurement revenue to return to its historical quarterly range of $30 million to $40 million, subject to customer order timing and last-minute adjustments.
- TSS reaffirmed its full-year adjusted EBITDA outlook toward the upper end of the previously announced $20 million to $22 million range and expects the second half of 2026 to be stronger than the first.
Key Financial Data
| Metric | Q2 2026 | Q2 2025 | Change / Commentary |
|---|---|---|---|
| Total revenue | $35.1 million | $44.0 million | Down 20% year over year |
| Procurement Services revenue | $18.2 million | $33.0 million | Down 45% |
| Systems Integration revenue | $13.9 million | $9.5 million | Up 46% |
| Facilities Management revenue | $2.7 million | Not stated | Up 84% |
| Gross profit | $8.0 million | Not stated | Up 11% |
| Consolidated gross margin | 22.8% | 16.4% | Up 640 basis points |
| Operating income | $1.6 million | $1.4 million | Up 16% |
| Net income | $1.4 million | $1.5 million | EPS affected by higher tax expense |
| Diluted EPS | $0.05 | $0.06 | Down $0.01 |
| Adjusted EBITDA | $4.5 million | Not stated | Up 12% |
| Year-to-date adjusted EBITDA | $9.8 million | Not stated | Up 5% |
| Cash and cash equivalents | $67.7 million | — | Quarter-end balance |
| Total debt | $16.1 million | — | Leverage ratio below 1x, according to management |
Business and Operating Performance
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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