One Stop Systems Raises 2026 Revenue Growth Forecast to 40% After Strong Results
Key Facts
One Stop Systems raised its 2026 revenue growth forecast to about 40%, from a previous range of 25% to 30%, after third-quarter sales and bookings exceeded management’s expectations. In its results statement issued on October 28, the company said stronger-than-expected performance in the defense and commercial markets, along with anticipated higher revenue from customer-funded development programs, prompted it to revise its guidance. Revenue from continuing operations was $12.6 million in the quarter ended September 30, up 35.9% year over year from $9.3 million. The quarter puts the company on a faster growth trajectory than assumed in its previous full-year guidance. In a separate statement issued on October 26, the company announced that its Gen5 4UP-MAX system had qualified with a global Tier 1 provider of enterprise computing platforms, but it did not link the qualification to the revenue forecast increase.
Growth extended through the first nine months of the year, with revenue from continuing operations rising to $30.0 million from $20.2 million in the same period of 2025, an annual increase of 48.3%. CEO Mike Knowles said increased sales to commercial customers in healthcare, commercial aviation and specialized data center applications were the primary driver of quarterly growth, while the defense business remained strong. The company also cited initial deliveries to a new customer developing a network of self-powered energy nodes. The company also recorded higher deliveries of in-flight entertainment and medical imaging systems, along with increased production volumes for existing customers. This reflects multiple sources of quarterly growth across commercial and defense markets and programs for new and existing customers.
In enterprise AI, qualification of the Gen5 4UP-MAX allows the system to be used by the platform provider, with the capacity to integrate up to 8 AI accelerators rated at 675 watts each into existing server infrastructure. This gives the company a technical entry point into an enterprise computing platform, but does not establish that the qualification has generated orders or revenue. The company expected gross margin for fiscal 2026 to be about 40% to 42%, and adjusted EBITDA to range from $0.5 million to $1.0 million. The forecast comes as third-quarter gross margin fell to 42.6% from 45.6% a year earlier, a decline the company attributed mainly to product mix. The new guidance therefore combines expectations for faster growth with the continued effect of sales mix on margins.
On profitability, continuing operations recorded a loss of $0.6 million in the third quarter, compared with a loss of $0.4 million in the same period of 2025. Adjusted EBITDA was $0.3 million, compared with $0.2 million a year earlier. In the first nine months, the loss from continuing operations widened to $8.3 million from $5.1 million. By contrast, adjusted EBITDA turned to a profit of $0.1 million, after a loss of $3.2 million in the corresponding period. These figures show improvement in the adjusted measure since the start of the year, while operating losses continued and widened year over year.
Net cash used in continuing operations totaled $12.4 million in the first nine months of 2026, compared with $5.9 million in the same period a year earlier. The company said the figure included a $6.25 million legal settlement paid in the second quarter, and a $7.8 million increase in inventory since the start of the year to support expected growth. Cash, cash equivalents and short-term investments totaled $18.9 million on September 30, compared with $31.2 million in cash and short-term investments and $2.2 million in restricted cash on December 31, 2025. For annual revenue, the company reported $32,215,500 in 2025, up from $24,558,809 in 2024, according to its annual report filed with the U.S. Securities and Exchange Commission. The current guidance increase follows two years of annual revenue growth, but comes alongside higher cash use and lower cash and investment balances compared with the end of 2025.
Management said the year-to-date bookings-to-revenue ratio was 1.46 times through September 30, describing it as reflecting strong underlying demand for the company’s solutions. It added that the timing of customer orders affected third-quarter bookings, but it expects to close several large orders worth millions of dollars during the fourth quarter. The company said it is monitoring potential constraints in the supply of some components, including memory, as well as developments in the federal government budget. It said changes in these assumptions could affect 2026 results positively or negatively. In trading, OSS closed at $6.76 on October 27, compared with a close of $5.98 on October 26, according to EL7 data.