TSS Systems Integration Growth Slows After First-Quarter Pace
Second-quarter revenue was $35.1 million as systems integration rose 46% to $13.9 million and procurement fell 45%.
TSS, Inc. (TSSI), a data center services company that integrates AI and high-performance computing infrastructure, reported second-quarter revenue of $35.1 million, down 20% from a year earlier, as the mix of the business continued to tilt away from lower-margin procurement toward systems integration and facilities management.
Systems integration revenue was $13.9 million, up 46% from the year-ago quarter. That pace slowed from the 88% year-over-year increase recorded in the first quarter, when the line was $14.1 million. Systems integration represented 39% of total revenues in the second quarter, compared with 22% in the prior-year quarter.
Procurement revenue was $18.2 million, down 45% year over year, after a 56% year-over-year decline in the first quarter. Facilities management revenue was $2.7 million, up 84% from a year earlier, reversing a 1% year-over-year decline in the first quarter. Operating lease income of $0.3 million appeared as the company began warehouse operations on May 1, 2026, using the former Round Rock integration facility.
Gross profit was $8.0 million, up 11% year over year, after a 4% year-over-year decline in the first quarter. Adjusted EBITDA was $4.5 million, up 12% year over year, after a 1% year-over-year increase in the first quarter. Pre-tax income was up 19% year over year on favorable leveraging of the expense structure. Net income was $1.4 million, or $0.05 a share, compared with $1.5 million and $0.06 a share a year earlier after a full tax provision following the fourth-quarter 2025 removal of a valuation allowance on a deferred tax asset.
The company began deploying capital for a planned $17 million investment in readiness for next-generation AI data center technology, which is expected to convert into higher systems integration revenues beginning in the third quarter of 2026. Chief executive Darryll Dewan said the company expects growth in systems integration to continue to outpace the other segments given demand signals and the company’s ability to address complex technology needs.
For the six months ended June 30, 2026, revenue was $90.5 million, down 37% from the first six months of 2025. Procurement was $58.2 million, down 53%. Systems integration was $28.0 million, up 65%. Facilities management was $4.0 million, up 44%. Gross profit was $16.8 million, up 2%, reflecting $1.9 million of depreciation allocated to cost of goods sold versus $0.6 million in the year-earlier period. Pre-tax income was $4.5 million, down 1%. Net income was $3.7 million, or $0.13 a share, compared with $4.5 million and $0.17 a share. Adjusted EBITDA was $9.8 million, up 5%.
The company maintained its 2026 outlook for Adjusted EBITDA at the upper end of a $20 million to $22 million range. Dewan said the second half of the year is expected to be stronger than the first half, with accelerated growth in systems integration as demand remains strong across the business.
Cash and cash equivalents were $67.7 million at June 30, 2026, compared with $85.5 million at year-end 2025. Property and equipment, net, was $45.9 million. Long-term debt, including the current portion, was $16.1 million. Stockholders’ equity was $80.3 million.