One Stop Systems Raises 2026 Growth Outlook to About 40%
Third-quarter revenue from continuing operations was $12.6 million, up 35.9% from a year earlier, as the company lifted full-year growth guidance from 25% to 30%.
One Stop Systems (OSS), a maker of rugged Enterprise Class compute for AI, machine learning, autonomy and sensor processing at the edge, raised its 2026 revenue-growth outlook to approximately 40% after third-quarter sales and orders came in stronger than expected, from prior guidance of 25% to 30%.
Total revenue from continuing operations was $12.6 million in the three months ended September 30, 2026, up 35.9% from $9.3 million a year earlier. The company said the increase was driven by new customers in 2026 and higher production volumes with certain existing customers. Year-over-year growth had been 55.0% in the first quarter.
President and CEO Mike Knowles said third-quarter results were better than expected and reflected accelerating momentum, with growth primarily from commercial customers across healthcare, commercial aerospace and specialized data center applications, complementing defense. Key drivers included initial deliveries to a new customer developing a network of autonomous energy nodes, higher production deliveries to a commercial aerospace customer for in-flight entertainment systems, and higher sales to a medical imaging OEM supporting a breast cancer screening application. Product revenue was $12.4 million and customer-funded development revenue $0.2 million.
Gross margin from continuing operations was 42.6%, compared with 45.6% in the prior-year quarter. The company attributed the decline primarily to product mix, partially offset by more favorable manufacturing absorption.
Total operating expenses from continuing operations increased 33.7% to $6.2 million. The $1.6 million year-over-year increase included $0.5 million of bad-debt expense related to a former customer’s bankruptcy, $0.4 million of legal fees tied to a previously disclosed settlement with a former customer, and $0.5 million of higher stock-based compensation from a higher grant-date fair value of RSUs. Lower research and development expenses partially offset those items.
The company reported a loss from continuing operations of $0.6 million, or $0.02 a share, versus a $0.4 million, or $0.02 a share, loss a year earlier. Non-GAAP net income from continuing operations was $0.3 million, or $0.01 a share, compared with $31,000, or $0.00 a share, a year earlier.
Adjusted EBITDA from continuing operations rose 33.7% to $0.3 million. Excluding the $0.5 million bad-debt charge and $0.4 million of legal fees, the company said adjusted EBITDA would have been approximately $1.2 million, or nearly 10% of third-quarter total revenue.
Year-to-date book-to-bill was 1.46x, down from a first-quarter book-to-bill of 1.8x. Knowles said third-quarter bookings were influenced by the timing of customer orders and that the company expects several large, multimillion-dollar orders to close in the fourth quarter.
For the full year, OSS expects gross margin of approximately 40% to 42% and adjusted EBITDA of $0.5 million to $1.0 million. The company said it continues to monitor potential supply-chain constraints on certain components, including memory, and the federal government budget outlook.
Cash, cash equivalents and short-term investments were $18.9 million at September 30, 2026, and total working capital was $37.9 million. Net cash used in continuing operations for the nine months ended September 30 was $12.4 million, compared with $5.9 million a year earlier. Year-to-date cash included a $6.25 million legal settlement in the second quarter and a $7.8 million increase in inventories to support expected revenue growth.
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