One Stop Systems posts 55% revenue jump in Q1 2026 on defence demand
One Stop Systems (Nasdaq: OSS), the Escondido-based maker of ruggedised edge compute and storage hardware, reported first-quarter 2026 revenue from continuing operations of $8.1 million, up 55% from $5.2 million in the same period a year earlier. Gross margin widened by 610 basis points to 51.6%, driven by a richer revenue mix, engineering efficiencies on customer-funded development programmes, and better manufacturing absorption at higher volumes.
The quarter also produced nearly $15 million in new bookings — described by the company as one of the strongest booking quarters in its history — yielding a book-to-bill ratio of 1.8x. The trailing twelve-month book-to-bill now sits above 1.2x, a threshold OSS has stated as a strategic target. Net cash from continuing operations reached $4.0 million, a swing from the $1.5 million outflow recorded in Q1 2025.
Financial detail
On a GAAP basis, the company posted a net loss from continuing operations of $0.4 million, or $(0.01) per diluted share, narrowing sharply from a $2.3 million loss in Q1 2025. Non-GAAP net income from continuing operations turned positive at $0.3 million, or $0.01 per diluted share, after adding back $0.7 million in stock-based compensation. Adjusted EBITDA from continuing operations was $0.2 million, versus a loss of $1.6 million in the prior-year period.
Revenue growth was attributed to three named customer programmes: higher shipments of data storage products to a defence prime contractor supporting the Boeing P-8A maritime patrol aircraft; liquid-cooled server sales to a medical imaging OEM; and prototype compute systems for an enhanced vision system fitted to combat vehicles. OSS did not disclose individual contract values or customer names beyond those programme references.
The company closed Q1 with $34.4 million in cash, cash equivalents, and short-term investments, alongside $44.7 million in total working capital. OSS completed the sale of its Bressner Technology GmbH subsidiary in Germany on 30 December 2025; Bressner's results are classified as discontinued operations throughout the comparative period.
For the full year 2026, OSS is guiding for revenue growth of 20–25%, gross margin of approximately 40% — notably lower than the 51.6% recorded in Q1, reflecting a normalised product and development mix across the year — and positive EBITDA on both a GAAP and adjusted basis.
Market context
OSS competes in the rugged edge compute segment alongside larger defence electronics integrators such as Mercury Systems and HEICO's Curtiss-Wright unit, as well as specialist GPU-accelerator vendors targeting military and industrial applications. The segment is benefiting from elevated US and allied defence spending on autonomous platforms and AI-enabled sensor fusion, with several multi-year platform programmes under way across land, maritime, and airborne domains.
Supply chain risk remains a material concern: OSS flagged potential component constraints — specifically memory — alongside federal budget uncertainty as factors that could affect 2026 outcomes. The US defence budget cycle and any continuing-resolution periods are structural variables for small suppliers dependent on prime-contractor call-off orders. OSS's Q1 outperformance on gross margin suggests the company is currently managing mix and procurement well, but the lower full-year margin guidance implies that high-margin, customer-funded development revenue will represent a smaller proportion of the annual total than it did in the opening quarter.