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TSS Inc(TSSI) - 2023 Q3 - Quarterly Report
TSSITSS Inc(TSSI)2023-11-13 21:30

Revenue Performance - Total revenue for the nine-month period ended September 30, 2023, was 30.0million,anincreaseof30.0 million, an increase of 10.3 million or 52% compared to 19.7millioninthesameperiodof2022[75].−Systemsintegrationsegmentrevenuesincreasedby3119.7 million in the same period of 2022[75]. - Systems integration segment revenues increased by 31% during the first nine months of 2023 compared to the same period in 2022, contributing to a 13.7 million increase in total revenue[69]. - Procurement and reseller services revenues for the nine-month period ended September 30, 2023, were approximately 17.7million,up21617.7 million, up 216% or 12.1 million from 5.6millioninthecomparableperiodof2022[77].−Revenueforthethree−monthperiodendedSeptember30,2023,was5.6 million in the comparable period of 2022[77]. - Revenue for the three-month period ended September 30, 2023, was 8.9 million, an increase of 0.8millionor100.8 million or 10% compared to the third quarter of 2022[74]. Profitability and Expenses - Gross profit margin for the three-month period ended September 30, 2023, was 32%, down from 34% in the third quarter of 2022, primarily due to increased costs in the integration business[84]. - Cost of revenue as a percentage of revenue was 68% for the three-month period ended September 30, 2023, compared to 66% for the third quarter of 2022[79]. - Selling, general and administrative expenses increased by 217,000 or 12% for the three-month period ended September 30, 2023, primarily due to higher compensation costs[85]. - Operating income for the three-month period ended September 30, 2023, was 715,000,comparedto715,000, compared to 871,000 in the third quarter of 2022[86]. - Net income for Q3 2023 was 209,000(209,000 (0.01 per share), down from 605,000(605,000 (0.03 per share) in Q3 2022; for the nine-month period, a net loss of 262,000wasrecordedcomparedtoanetincomeof262,000 was recorded compared to a net income of 1,068,000 in the same period of 2022[88]. Cash Flow and Financial Position - Cash and cash equivalents increased to 28.7millionasofSeptember30,2023,from28.7 million as of September 30, 2023, from 20.4 million at the end of 2022[93]. - Cash provided by operating activities was 8.6millionforthenine−monthperiodendedSeptember30,2023,comparedto8.6 million for the nine-month period ended September 30, 2023, compared to 3.6 million in the same period of 2022[94]. - Deferred revenue increased by approximately 11millionandaccountspayablerosebyabout11 million and accounts payable rose by about 10 million at September 2023 compared to September 2022, reflecting higher procurement activities[94]. - Cash used in investing activities was 240,000forthenine−monthperiodendedSeptember30,2023,primarilyforleaseholdimprovements[95].−Cashusedinfinancingactivitieswas240,000 for the nine-month period ended September 30, 2023, primarily for leasehold improvements[95]. - Cash used in financing activities was 33,000 in the nine-month period ended September 30, 2023, significantly lower than 1.7millioninthesameperiodof2022[96].−Thecompanyhasanaccumulateddeficitof1.7 million in the same period of 2022[96]. - The company has an accumulated deficit of 66.6 million as of September 30, 2023, with a history of annual operating and net losses[90]. Future Outlook - Management believes profitability is achievable in the next quarter and for the year ending December 31, 2023, despite previous delays in customer transactions[91]. - The company plans to implement cost reductions if future results do not meet expectations, which may impact product offerings and financial results[98]. Operational Challenges - The facilities business saw a 3.5milliondecreaseinrevenuesfromModularDataCenter(MDC)deploymentsinthefirstninemonthsof2023comparedtothesameperiodin2022[68].−SupplychaindisruptionscontinuetoimpactthetimingofsystemsintegrationandMDCdeploymentrevenue,withexpectationsofongoingissuesforseveralquarters[76].−InterestexpenseforQ32023was3.5 million decrease in revenues from Modular Data Center (MDC) deployments in the first nine months of 2023 compared to the same period in 2022[68]. - Supply chain disruptions continue to impact the timing of systems integration and MDC deployment revenue, with expectations of ongoing issues for several quarters[76]. - Interest expense for Q3 2023 was 661,000, up from 263,000inQ32022,drivenbyanincreaseinfactoredtransactionsfrom263,000 in Q3 2022, driven by an increase in factored transactions from 27.4 million to $61.4 million[87].