One Stop Systems, Inc. (OSS) Bundle
Understanding One Stop Systems, Inc. (OSS) Revenue Streams
Understanding One Stop Systems, Inc. Revenue Streams
One Stop Systems, Inc. generates revenue through various streams, primarily from products and customer-funded development. As of September 30, 2024, the breakdown of revenue sources is as follows:
| Revenue Source | Q3 2024 Revenue | Q3 2023 Revenue | 9M 2024 Revenue | 9M 2023 Revenue |
|---|---|---|---|---|
| Product | $12,682,241 | $13,632,223 | $36,722,411 | $46,865,026 |
| Customer Funded Development | $1,018,856 | $115,940 | $2,831,802 | $876,563 |
| Total Revenue | $13,701,097 | $13,748,163 | $39,554,213 | $47,741,589 |
The year-over-year revenue growth rate shows fluctuations in performance. For the three months ended September 30, 2024, revenue decreased by $47,066 or 0.3% compared to the same period in 2023. However, the company experienced a notable increase in revenue from customer-funded development, which rose by $902,916 or 778.7% year-over-year.
For the nine months ended September 30, 2024, total revenue decreased by $8,187,376 or 17.2% compared to the same period in 2023. The decrease in revenue was primarily attributed to a reduction of approximately $4.8 million in sales to a former media and entertainment customer, which was terminated in the second quarter of the prior year.
Year-over-Year Revenue Growth Rate
The following table illustrates the year-over-year revenue growth rate for One Stop Systems, Inc.:
| Period | 2024 Revenue | 2023 Revenue | Growth Rate |
|---|---|---|---|
| Q3 | $13,701,097 | $13,748,163 | -0.3% |
| 9M | $39,554,213 | $47,741,589 | -17.2% |
Contribution of Different Business Segments to Overall Revenue
As of September 30, 2024, the contribution of different business segments to overall revenue is as follows:
- Products: 92.6% of total revenue in Q3 2024
- Customer Funded Development: 7.4% of total revenue in Q3 2024
This indicates a strong reliance on product sales, which have historically constituted the majority of revenue. The decrease in revenue from the product segment reflects challenges faced in the market.
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams have been observed, particularly in the reduction of sales to key customers. The termination of a relationship with a former media customer resulted in a 21.8% decline in OSS revenue year-to-date. Additionally, economic constraints in the marketplace have affected the performance of the Bressner segment, which saw a decrease of 12.2% in Q3 2024 compared to the same period in the previous year.
The company's management is focusing on acquiring new customer orders to offset lost revenue while navigating the challenges posed by inflation, supply chain constraints, and economic uncertainties.
A Deep Dive into One Stop Systems, Inc. (OSS) Profitability
A Deep Dive into One Stop Systems, Inc.'s Profitability
Gross Profit Margin:
| Period | Revenue | Cost of Revenue | Gross (Loss) Profit | Gross Margin % |
|---|---|---|---|---|
| Three Months Ended September 30, 2024 | $6,460,290 | $(3,310,041) | -51.2% | |
| Three Months Ended September 30, 2023 | $5,500,159 | $1,783,683 | 32.4% | |
| Nine Months Ended September 30, 2024 | $17,516,196 | $(41,199) | -0.2% | |
| Nine Months Ended September 30, 2023 | $22,408,841 | $7,326,681 | 32.7% |
Operating Profit Margin:
| Period | Operating Income (Loss) | Revenue | Operating Margin % |
|---|---|---|---|
| Three Months Ended September 30, 2024 | $(6,734,027) | $6,460,290 | -104.2% |
| Three Months Ended September 30, 2023 | $(3,982,114) | $5,500,159 | -72.4% |
| Nine Months Ended September 30, 2024 | $(10,250,906) | $17,516,196 | -58.5% |
| Nine Months Ended September 30, 2023 | $(7,592,019) | $22,408,841 | -33.9% |
Net Profit Margin:
| Period | Net Income (Loss) | Revenue | Net Profit Margin % |
|---|---|---|---|
| Three Months Ended September 30, 2024 | $(6,815,384) | $6,460,290 | -105.5% |
| Three Months Ended September 30, 2023 | $(3,638,608) | $5,500,159 | -66.1% |
| Nine Months Ended September 30, 2024 | $(10,499,551) | $17,516,196 | -59.9% |
| Nine Months Ended September 30, 2023 | $(6,438,616) | $22,408,841 | -28.8% |
Trends in Profitability Over Time:
- Gross Margin: Decreased significantly from 32.4% in Q3 2023 to -51.2% in Q3 2024 due to increased cost of revenue.
- Operating Margin: Operating losses have widened from -72.4% in Q3 2023 to -104.2% in Q3 2024.
- Net Margin: Net losses increased, reflecting the company's struggles to maintain profitability.
Comparison of Profitability Ratios with Industry Averages:
| Metric | OSS (2024) | Industry Average |
|---|---|---|
| Gross Margin % | -0.2% | 20-30% |
| Operating Margin % | -58.5% | 10-15% |
| Net Margin % | -59.9% | 5-10% |
Analysis of Operational Efficiency:
- Cost Management: Significant increase in cost of revenue, particularly due to inventory obsolescence reserves.
- Gross Margin Trends: Adjusted gross margin, excluding obsolescence charges, was approximately 34.6% for the nine months ended September 30, 2024.
- Operating Expenses: Total operating expenses for the nine months ended September 30, 2024, were $15,589,724, reflecting a decrease compared to $21,112,070 in 2023.
Debt vs. Equity: How One Stop Systems, Inc. (OSS) Finances Its Growth
Debt vs. Equity Structure
The company's financing strategy incorporates both debt and equity to support its growth objectives. Understanding its debt levels and equity structure provides critical insights into its financial health.
Overview of Debt Levels
As of September 30, 2024, the company had:
- Long-term Debt: €1,000,000 (approximately $1,114,291)
- Short-term Debt: No outstanding balances on revolving lines of credit.
Debt-to-Equity Ratio
The company's debt-to-equity ratio stands at approximately 0.04, which is significantly lower than the industry average of around 1.0. This indicates a conservative approach to leveraging.
Recent Debt Issuances and Refinancing Activity
In recent months, the company has engaged in refinancing activities:
- On March 28, 2024, a note was extended through March 31, 2025, with a reduced interest rate of 4.75%.
- Outstanding balance on this note as of September 30, 2024, was €500,000 (approximately $557,146).
- Bressner, the subsidiary, had two term loans with an aggregate balance of €1,000,000 (approximately $1,114,291) .
Balance Between Debt Financing and Equity Funding
The company maintains a balanced approach toward financing:
- Total Cash and Cash Equivalents: $9,402,608
- Short-term Investments: $3,180,213
- Total Working Capital: $26,676,256 .
| Type of Debt | Outstanding Balance (Euro) | Outstanding Balance (USD) | Interest Rate | Maturity Date |
|---|---|---|---|---|
| Commerzbank AG Note | 500,000 | 557,146 | 4.75% | March 31, 2025 |
| Bressner Term Loan | 500,000 | 557,145 | 5.55% | December 19, 2024 |
This structure indicates that the company is prioritizing liquidity and operational stability while engaging in selective debt financing to support its growth initiatives.
Assessing One Stop Systems, Inc. (OSS) Liquidity
Assessing Liquidity and Solvency
Liquidity Ratios
The current ratio, a key indicator of liquidity, is calculated as current assets divided by current liabilities. As of September 30, 2024, the current ratio for the company stands at 4.32, reflecting a solid liquidity position. The quick ratio, which excludes inventory from current assets, is reported at 2.76, indicating a strong ability to meet short-term obligations without relying on inventory sales.
Working Capital Trends
As of September 30, 2024, total working capital is $26,676,256. This represents a decrease from $30,000,000 reported at the end of 2023, highlighting a trend of increasing operational challenges. Despite this decrease, the working capital remains sufficient to cover short-term liabilities, which are approximately $6,167,000. The company’s working capital management reflects a focus on maintaining operational liquidity amid fluctuating revenues.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, shows a net cash provided of $2,143,545, a significant increase compared to $225,469 for the same period in 2023. This improvement is largely attributed to better management of working capital, with cash provided by changes in working capital items amounting to $3,296,266 during the current period.
| Cash Flow Activity | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Net Cash Provided by Operating Activities | $2,143,545 | $225,469 |
| Net Cash Provided by Investing Activities | $4,293,263 | $298,401 |
| Net Cash Used in Financing Activities | ($1,144,189) | $135,403 |
| Ending Cash and Cash Equivalents | $9,402,608 | $3,735,005 |
Liquidity Concerns
Despite the robust liquidity ratios, the company faces potential liquidity concerns due to a loss from operations of $10,250,905 for the nine months ended September 30, 2024. Additionally, the overall cash flow from operations has fluctuated significantly, indicating possible challenges in sustaining operational cash flow amidst rising costs and economic pressures.
Furthermore, the company has a line of credit of $2,000,000, which remains unutilized as of September 30, 2024. This credit facility is crucial for maintaining liquidity, particularly given the potential for future operational losses and the need for continued investment in research and development.
Conclusion
The liquidity metrics suggest a stable financial position, but the operational losses and reduced working capital highlight areas of concern that require careful monitoring. Investors should consider the liquidity ratios alongside the broader financial performance to gauge the company’s ability to navigate future challenges.
Is One Stop Systems, Inc. (OSS) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio for the company is not applicable due to negative earnings. The net loss for the nine months ended September 30, 2024, was $10,499,551, resulting in a basic and diluted net loss per share of $(0.50) .
Price-to-Book (P/B) Ratio
The book value per share is calculated based on total stockholders' equity of $30,624,304 and total shares outstanding of 21,114,534, leading to a book value per share of approximately $1.45. With the current stock price at approximately $2.31, the P/B ratio is approximately 1.59 .
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value is calculated as market capitalization plus total debt minus cash and cash equivalents. As of September 30, 2024, the enterprise value is approximately $48,270,000 (total liabilities of $13,049,465 plus estimated market cap) with EBITDA for the nine months at $(10,250,906), making the EV/EBITDA ratio not applicable due to negative EBITDA .
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a high of $5.00 and a low of $1.75. The stock is currently trading at approximately $2.31, reflecting a decrease of about 53.8% from its 52-week high .
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%. The payout ratio is also not applicable given the consistent net losses .
Analyst Consensus
Analyst consensus on the stock valuation is predominantly a hold, reflecting concerns over the company's recent performance and financial health .
Financial Ratios Summary Table
| Metric | Value |
|---|---|
| P/E Ratio | Not Applicable |
| P/B Ratio | 1.59 |
| EV/EBITDA Ratio | Not Applicable |
| Stock Price (Current) | $2.31 |
| 52-Week High | $5.00 |
| 52-Week Low | $1.75 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing One Stop Systems, Inc. (OSS)
Key Risks Facing One Stop Systems, Inc.
The financial health of One Stop Systems, Inc. is influenced by various internal and external risks that investors should carefully consider. Below is a detailed overview of these risks.
Industry Competition
The technology sector is characterized by rapid advancements and fierce competition. As of September 30, 2024, revenues declined $8,187,376 or 17.2% compared to the same period in 2023, highlighting the challenges posed by competitors. The company's revenue from product sales was approximately $36,722,411 for the nine months ended September 30, 2024, down from $46,865,026 in the same period of the previous year.
Regulatory Changes
Changes in regulations, especially those related to technology and data privacy, can significantly impact operations. The implementation of the Tax Cuts and Jobs Act of 2017 requires research and development costs to be capitalized and amortized, potentially increasing tax liabilities and affecting cash flow.
Market Conditions
The global economic environment is volatile, with inflation and potential recessions in key markets such as the U.S. and Germany. As of September 30, 2024, the company reported a net loss of $10,499,551 for the nine months ended, compared to a net loss of $6,438,616 in the same period in 2023.
Operational Risks
Operational challenges include delays in customer project funding and delivery schedules. During the nine months ended September 30, 2024, the company faced a loss from operations of $10,250,906. The overall gross margin percentage was negative 0.2%, a significant decline from 32.7% in the prior year.
Financial Risks
As of September 30, 2024, the company had total cash and cash equivalents of $9,402,608 with total working capital of $26,676,256. However, the liquidity position is fragile, especially given the $10,250,906 loss from operations. The company’s reliance on public and private offerings for liquidity is critical, yet uncertain.
Strategic Risks
The company has been focusing on acquiring new customer orders to offset lost revenue from a previous major customer. The loss of approximately $4.8 million in sales due to the termination of a customer relationship significantly impacted revenue. Management has indicated plans to control hiring and operating costs to mitigate these risks.
| Risk Category | Description | Impact (2024) |
|---|---|---|
| Industry Competition | Revenue decline due to competitive pressures | $8,187,376 (17.2% decrease) |
| Regulatory Changes | Impact of R&D capitalization on cash flow | Potential increase in tax liabilities |
| Market Conditions | Economic volatility affecting sales | Net loss of $10,499,551 |
| Operational Risks | Delays in project funding and delivery | Loss from operations of $10,250,906 |
| Financial Risks | Liquidity challenges impacting operations | Total cash and equivalents of $9,402,608 |
| Strategic Risks | Loss of major customer impacting revenue | Loss of $4.8 million in sales |
Future Growth Prospects for One Stop Systems, Inc. (OSS)
Future Growth Prospects for One Stop Systems, Inc.
Analysis of Key Growth Drivers
One Stop Systems, Inc. is positioned to leverage several growth drivers as it navigates the marketplace in 2024. Key areas of focus include:
- Product Innovations: The company has initiated shipments on a government contract for a mobile application, leading to a revenue increase of $960,131, or 17.5%, compared to the same period in 2023.
- Market Expansions: Plans for expanding into new markets, particularly within defense and AI transportables, are underway, potentially enhancing revenue streams.
- Acquisitions: The company aims to acquire new customer orders to replace lost revenue from a former media and entertainment customer, which contributed to a revenue reduction of $4.8 million.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ending September 30, 2024, total revenue decreased by $8,187,376, or 17.2%, compared to the same period in 2023, primarily due to the loss of a major customer. Projections indicate a focus on recovering this lost revenue through strategic initiatives, which could stabilize and potentially grow revenue in the subsequent quarters.
Revenue estimates for the upcoming fiscal period suggest a rebound as new contracts and product lines are fully integrated. The anticipated revenue for the year is expected to reflect an improvement, contingent upon successful execution of current projects and market conditions.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company has entered into strategic partnerships aimed at enhancing product offerings and expanding its reach. These initiatives include:
- Collaborations with Defense Contractors: Expanding into the defense sector aligns with government spending trends, particularly in technology and cybersecurity.
- Investment in R&D: Continued focus on research and development to foster innovation in product offerings, which has seen a slight decrease in R&D expenses by 11.1% for the nine months ending September 30, 2024.
Competitive Advantages that Position the Company for Growth
One Stop Systems, Inc. possesses several competitive advantages, including:
- Established Brand Recognition: The company has built a reputation within its niche, enhancing customer trust and loyalty.
- Technological Expertise: A strong focus on high-performance customized computing solutions allows the company to cater to specialized markets effectively.
- Financial Position: As of September 30, 2024, the company reported total cash and cash equivalents of $9,402,608, providing a buffer to invest in growth opportunities.
Revenue and Financial Performance Overview
| Period | Total Revenue | Cost of Revenue | Gross Profit | Gross Margin % |
|---|---|---|---|---|
| Three Months Ended September 30, 2024 | $6,460,290 | $9,770,331 | $(3,310,041) | -51.2% |
| Three Months Ended September 30, 2023 | $5,500,159 | $3,716,476 | $1,783,683 | 32.4% |
| Nine Months Ended September 30, 2024 | $17,516,196 | $17,557,395 | $(41,199) | -0.2% |
| Nine Months Ended September 30, 2023 | $22,408,841 | $15,082,160 | $7,326,681 | 32.7% |
Despite recent challenges, the potential for growth remains as the company focuses on strategic initiatives, market expansion, and product innovation to enhance its financial health moving forward.
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Resources:
- One Stop Systems, Inc. (OSS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of One Stop Systems, Inc. (OSS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View One Stop Systems, Inc. (OSS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.