TSS, Inc. (TSSI) has been in the limelight thanks to its stock skyrocketing over 5000% in the past year. The firm looks to continue its impressive earnings growth with a recently secured significant multi-year contract with Dell (DELL). TSS is poised to capitalize on this growth alongside Dell amid burgeoning investments in AI hardware and cloud computing. The company has recently filed a prospectus for a $150 million mixed securities shelf and secured a $20 million credit facility to enhance capacity and facilitate plans for expansion to a larger facility early in 2025. Investors might want to keep this one on their radar.
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TSS’ Impressive List of Clients
TSS, Inc. is a company that specializes in providing comprehensive integration services for data centers, facilitating systems integration, procurement, deployment, and facilities maintenance. It functions in two sectors, namely Facilities and Systems Integration, delivering single-source solutions targeted at data centers, operations centers, and other IT facilities. Its services extend to technology consulting, project management, and systems installation.
The company’s impressive client list includes tech giants like Microsoft (MSFT) and Walmart (WMT). However, its principal customer is Dell Technologies, specifically the data center segment. Dell accounted for approximately 100% of TSS’s revenues in the third quarter, underscoring the substantial client concentration.
TSS Secures Financial Backing to Expand Infrastructure for AI
TSS announced the filing of a $150 million mixed securities shelf prospectus. It has also recently secured a $20 million credit facility from Texas-based Susser Bank. This credit facility is aimed at supporting the necessary capacity expansion to meet the escalating demand for AI-enabled technologies.
Concurrently, TSS has disclosed a long-term lease agreement for 212,793 square feet of space in Georgetown Logistics Park, Texas. This lease was initiated as part of the company’s expansion strategy to enhance its power infrastructure in light of the anticipated AI integration growth under a recently announced long-term customer agreement. The funds from the new credit agreement will be utilized to effect improvements at the Georgetown facility.
Stellar Revenue Growth
The company reported impressive growth for the third quarter of 2024, with revenue totaling $70.1 million, a 689% increase year-over-year. The figures for systems integration, facility management, and procurement revenues saw hikes of 361%, 8%, and 1,016%, respectively. Further, gross profit increased 179% to $7.9 million, significantly driven by growth in higher-margin services and a noteworthy surge in procurement revenue. The company’s net income expanded by 1,166% to reach $2.6 million with earnings per share (EPS) of $0.10, compared to $0.01 the year prior.
Management is optimistic for the future with promising revenue and profit trajectories. Based on current visibility, the company forecasts the results for the first half of 2025 will be comparable to the second and third quarters of 2024.
Ongoing Positive Momentum
The stock has continued its upward trajectory, climbing over 27% so far in 2025. It trades near the upper end of its 52-week price range of $0.24 – $18.26 and shows ongoing positive price momentum as it trades above the major moving averages.
Wall Street coverage on the stock is light, making it difficult to use analyst ratings and price targets as a guide for the stock. While the surging share price is impressive, long-term investors may want to hold off and validate the company’s ability to continue growing earnings while diversifying its sources of revenue.
TSSI Stock in Summary
TSS has seized the market’s attention with its remarkable rise in stock value and consistent revenue growth. Its strong partnership with Dell and strategic investments in AI technology and cloud computing have been key drivers of its success. The new multi-year contract with Dell and the company’s ambitious expansion plans lay a promising groundwork for sustained growth. With powerful third-quarter results and a stock price on the rise, this firm’s prospects look promising. However, investors should remain cautious, keeping a keen eye on the company’s continued earnings growth and potential to diversify its revenue streams.
