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spk05: in the first quarter of 2022 increased $708,000 to $5.1 million. The gross margin for our core OSS business sequentially improved from 33.2% in Q4 2021 to 35.7%, but a decrease of 2.2 percentage points from the prior year due to continued growth and success of our media and entertainment customer. Bresner's gross margin percentage sequentially improved from 19.4% in Q4 2021 to 21%, but reduced from 24.9% in the prior year due to exchange rates and increases in material and transportation costs. overall gross margins for 30.1 percent for the quarter a sequential improvement from 28.3 percent in q4 2021 but a 3.2 percentage point decrease compared to the prior year of 33.3 much of these changes in margins were primarily attributable to the strength of the media and pressure business and due to the timing of shipments to our large military customers. Historically, the predominance of these shipments has occurred in Q3 and Q4 and will be consistent with our shipping schedule for this year. However, in the prior year, there were strong shipments in Q1 2021 due to deferred shipments from Q4 2020. Although the margin percentage is lower, profitability is higher. We are continuing to take action to improve margins through price increases, improve quoting capabilities reflecting real-time parts pricing, manufacturing efficiencies, introduction of higher value standard products, and management's focus on this company imperative. Quarterly revenues increased 28% with our overall quarterly operating expenses only increasing 8% to $4.5 million. Operating expenses as a percentage of revenue decreased to 26.3% compared to 31.1% in the same year-ago quarter. The marginal increase and operating expenses was primarily due to a return to a more normal business environment with fewer COVID-19 restrictions. As such, the company has returned to participating in trade shows, business travel, marketing activities, and adding certain strategic employee hires. GAAP net income totals $579,000 or 3 cents per basic and diluted share, increasing from net income of $41,000 or 0 cents per basic and diluted share. Now, on a non-GAAP basis, net income was $978,000 or 5 cents per basic and diluted share for the quarter, up from $643,000 or 3 cents per basic and diluted share. Adjusted EBITDA, a non-GAAP metric, was 1.4 million or 8.3% of quarterly revenue as compared to 1.1 million or 8% of quarterly revenue in the prior year. All three of these profitable metrics were company records for the first quarter of the year. Now, turning to our balance sheet. On March 31, 2022, cash and cash equivalents totaled $2.2 million, but short-term investments have $13.6 million, combining for $15.8 million. This compares to cash and cash equivalents and short-term investments totaling $19.6 million on December 31, 2021. While OSS is cash flow positive, we are purposely putting our strong cash position to work with carefully thought out inventory investments. Cash provides us stability and flexibility to be able to be responsive to changes in our business and to issues imposed by external global economic influences. This completes our financial review, and now I'd like to turn the call over to our Chief Sales and Marketing Officer, Jim Eisen. Jim?
spk07: Thank you, John, and good afternoon, everyone. In Q1, we generated six new major program wins, including four in autonomous trucking, further validating the value OSS brings to this market. We also added 10 new pending major programs during the quarter, which is the largest increase ever in a single quarter. Six of these 10 opportunities are AI transportable programs for autonomous trucks, military aircraft, and maritime applications. For reference, our pending major programs have a 60% or greater expectation of closing. Our current pipeline of pending major programs has expanded to a record 34, with 20 involving AI transportable applications because of our focused efforts on this market. Now, turning to our thought leader products, our flagship Rigel Edge supercomputer continues to provide pull in autonomous truck and military AI applications, adding opportunities at the high end where, according to our customers, only our products have both the AI performance and ability to survive at the edge. To complement our Rigel compute system, we have recently introduced the Centauri rugged storage accelerator designed in lockstep with the needs of our autonomous trucking customers. While an autonomous truck is on the road, vast amounts of data are generated from the numerous sensors deployed around the vehicle. including LIDAR, radar, telemetry, and video. This information is analyzed by the autonomous driving system to learn or improve its self-driving capabilities. Centauri is a rugged storage accelerator system that uses the highest performance PCI Express Gen 4 NVMe memory while providing high capacity in a compact, hot-swappable canister that slides into the Centauri chassis. Centauri connects to an OSS rugged SDS server in the truck cab via PCI Express Gen 4 and stores AI data. Since Centauri is designed to be remote mounted in an externally accessible compartment or the saddlebag of a long-haul autonomous truck, the data canister can be quickly removed, replaced, and transported to the truck depot, keeping the truck on the road as much as possible. The previously mentioned products are currently based on Gen 4 PCI Express technology, but we are well underway with the next generation. PCI Express Gen 5 will bring product advancements in 2022 to our core accelerator technology that allows us to bring the latest products to the rugged edge without compromise. PCI Express Gen 5 doubles the bandwidth of our current leading-edge Gen 4 products for compute, NVMe storage, and accelerator systems such as Rigel and Centauri. We recently posted through social media channels the industry's first known successful Gen 5 PCI Express over 2 meter copper cable data transfer test and look forward to official product releases, demonstrations, and product shipments of this leading edge technology throughout the year. Our ability to lead with technology like PCI Express Gen 5 is one of our differentiating capabilities that distinguishes us from the highly fragmented competitive landscape. Our talented engineering team is progressing on multiple advancements in system management, power, and disruptive liquid cooling technologies, allowing our products such as Rigel and our SDS product line to be deployed in more AI transportable applications. On the marketing front, we have exhibited at the Navy Sea Airspace Show and the AUVSI Exponential Autonomous Vehicle Conference this quarter, where we also moderated an expert autonomous truck panel. The panel addressed the challenges and market dynamics of the truck market. Many of the same challenges exist in our other AI transportable verticals, including mining, drones, and watercraft, where OSS can help customers in these markets generate an immediate and strong ROI. In all, I'm excited about our growing successes, breakthroughs, and increasing activity in AI transportables. Now I'd like to turn the call back over to Dave.
spk03: Thank you, John and Jim. As I believe we have demonstrated, we have continued to execute, providing solid results, primarily from our traditional customer base and applications. Although our value proposition in some of these historic businesses, like media and entertainment, as well as Breschner and Europe, may not generate the margin percentages that we seek in the future years, they generate positive margin dollars and income for OSS. We are pleased this part of the business continues to grow, and help pay for our AI transportable investments. We identified, put together a new strategic plan, and have more recently been able to validate this multi-billion dollar opportunity while remaining cash flow positive, profitable, and not taking on debt. We have done this during a crazy time in history, and our cash position has allowed us to invest in higher inventory levels to assure growth and prosperity
spk11: or OSS. Our objective is clear, leadership in the fast-growing AI transportable market.
spk03: This includes enabling many of these new verticals with performance without compromise in some of the most challenging environments where the fragmented, competitive landscape struggles to participate. This enablement is just the beginning, as we have every intention and we're starting to lay the foundation to be the supplier not only in the early stage, but also when the market develops and high volume shipments are made.
spk11: I look forward to sharing with you on a future call our progress on this front.
spk03: I have personally found immersing myself in the autonomous truck market has been an exciting and rewarding journey. Like my thoughts prior to this crash course MBA on autonomous trucks, most new to this story assume that autonomous trucks are some futuristic looking thing that may or may not ever develop and surely will be after autonomous automobile market develops.
spk11: What they find is just the opposite for one fundamental reason. Pure economics of the autonomous truck market Autonomous market. Where am I going?
spk03: Oh, okay, sorry. Happening now. Like a commercial airline where it only makes money when it is in the air, a truck makes it money being on the road, not sitting in front of the Ramada Inn when its driver is sleeping. The autonomous-enabled truck is expected to double its potential return on investment. Unlike your autonomous automobile, these strong economics create pull for solutions to be implemented as soon as possible, even if not at the fully autonomous Level 5 capability.
spk11: For example, the hub-to-hub model being deployed by several of our customers only tackles the autonomous capabilities on the highway.
spk03: Many are surprised to learn that these autonomous enabled 40-ton vehicles have logged hundreds of thousands of miles on the same highways you may travel on. It is likely that you have passed one on the road. Although we elected not to provide too much information on this front until our earnings call seven weeks ago, OSS products have also traveled over 100,000 miles as the compute and or Our products provide the hardware needed to perform the autonomous compute and storage, working in conjunction with our customers' AI software. While these extremely innovative companies focus on enormous demand of the software to enable a truck to go coast to coast without a human in the driver's seat, our mission is to make sure we are bringing the right hardware solutions to the market today and down the road when a million of these trucks are hitting the road in production. Our compute and storage solutions work directly with autonomous trucking software to gather data from the multiple sensors embedded around the vehicle, including LIDAR, radar, telemetry, and cameras. Such software is combined with OSS technology. Vast amounts of data can be captured from the sensors, processed, analyzed, and stored on OSS compute
spk11: or storage platforms.
spk03: Although these innovative market leaders with names like Kodiak, Torque, Embark, TuSimple may or may not be familiar to you, they are backed by some of the largest and wealthiest companies that can benefit from this deployment. Well over $10 billion have been invested in this market for this reason. Although the cost of a compute and storage system for these trucks today is very high, we expect the volume, eventual competitive pressures, and normal market dynamics will drive the overall solution down in price, as with any market like this. Even with these lower price points, the market size for these type of products will range between a half a billion and $10 billion over time per year. As I said earlier, it is our intent
spk11: and are planning to be the leading supplier to this market.
spk03: Now looking forward to Q2, our revenue outlook is $17.3 million for the second quarter, which represents 15% growth over Q2 of last year. We would like to remind our investors of our upcoming shareholder meeting on Wednesday, May 18th at 11 a.m. Pacific Daylight Time. We encourage you to vote by proxy
spk11: for the proposals outlined in the Notice of the Annual Meeting of Stockholders and Proxy States.
spk03: We also encourage you to also visit our IR website page after this call or tomorrow to view our just released latest corporate presentation with more information and color on the topics we covered today. There will be two versions. One will be your standard PDF And the other has my voice over it in an MP4 file. A link to these two presentations can be found on today's earnings press release. As an alternative, you can go to our standard web page at onestopsystems.com, followed by selecting Investor section in the menu at the top of the page, and then clicking on Presentations.
spk11: Now with that, I'd like to open the call to address your questions. All right.
spk00: Thank you. Thank you. If you would like to ask a question at this time, please press star followed by the number one on your telephone keypad. If you're calling from a speakerphone, please make sure your mute function is turned off to ensure your signal can reach our equipment. Again, star one to ask a question.
spk10: We'll go first to Joe Gomez with Noble Capital.
spk08: Good evening, David, John, and Jim. Nice quarter.
spk11: Thank you. Thanks, Joe.
spk08: So I wanted to kind of start off with your nice quarter. You talk about the skies now running at pre-pandemic levels, Bresner up very nicely. What does that mean for the rest of the business in terms of its revenues? Outside of those, Bresner and the entertainment client, how are the rest of the business holding up there? Are you seeing organic growth there? Is You know, the defense just waiting for the third and fourth quarters, maybe a little more color on some of the other parts of the business would be appreciated.
spk11: Our business and our backlog is very strong, and there's no business segment I can think of that's decreasing.
spk03: It's really, as you said, the timing of the military primarily, and then it's just a matter of time of getting the AI transportable business. And we touched on margins and things like that. And what I want to stress there is that we wish they were higher. The bottom line is we're making money, and it's funding this AI transportable strategy that we feel really good that we're validating.
spk11: So those are my thoughts. Okay. Thanks for that.
spk08: And just, again, on the military issue, Anything new in terms of contracts or awards there or any update you can kind of give us on that side of the aisle?
spk03: First of all, we're working on a number of different things there, but what I like to focus on is personally the AI transportable stuff, and that's where we're seeing that vertical start to open up. It's a little premature to give you a lot of details, but we're doing some exciting and disruptive things on that front. And then, Jim, do you want to add anything to that?
spk07: We just have had additional shipments to some of these diverse Raytheon programs that still fall under Raytheon, GPU-based systems, things like that, that are not under, say, a five-year contract. but do get funded as they go.
spk03: Let me just add a little color about my comment on the verticals. There are multiple markets and multiple very large well-known opportunities in the market that we have not been able to participate in, but the presence and the ability to deliver a RIGEL and the roadmap we have and our capabilities is really getting noticed. We're feeling good about that because We're inside the door, and now it's our job.
spk11: We need to continue to execute like we've done on the autonomous truck front. Okay.
spk08: On the autonomous truck front, you said you're shipping, I think, to three. Any color on what kind of sale price for a system is there today? Is there major differences between the systems that you're shipping to the various clients, or are they pretty much all standard on that side? And any timing as to when you think some of the ones that you're speaking with now will go begin to make orders?
spk03: Yeah, so first of all, the three we're shipping to, so we're not waiting for orders. And it's multiple products, and it's kind of like – This guy used two or three of our products here, and the next one might be one of the same products or two of them, and maybe one that's a little different, but there's a lot of similarity between them, all focused in compute and storage. And then we're talking to other ones that we hope to be able to even see revenue later this year on. And just for clarity, so we have a total of five wins, so that's five wins among those three customers.
spk11: It's not by customers, but we're working with additional ones. Okay, thanks for the clarity there.
spk08: Maybe if I could just get one more in here. You talk about the entertainment customer again, and we're seeing a return to some of the outdoor events or in-person events, let's call them, and that's being layered upon their other products, and you're thinking that you should still see continued growth through the rest of the year. What's given you confidence that you will continue to see growth at the entertainment customer? And, you know, maybe can you talk about maybe how big a growth are we talking about here?
spk03: First of all, I'd say it's steady growth. It's not like double or tripling or anything like that. But they're doing extremely well at the bottom line. And the fact that the virtual product lines, which range anything from creating a virtual newsroom to a virtual music video to doing some filming or whatever, that continues to do well. And then with the large gathering coming back, that gives us a lot of potential for growth. And that's why we're very comfortable. It looks like we'll really have two vectors driving it the rest of the year.
spk11: looks attractive to us, and we feel good about it. Great. Thank you. Great quarter. Look forward to seeing what's going forward here, and I will get back in queue. Thank you, Joe.
spk10: Thank you.
spk00: We'll go next to David Williams with the Benchmark Company.
spk12: Hey, good afternoon, everyone. Thanks for letting me ask a question, and congrats on the good quarter. Thank you. I guess not to beat this into the ground here, but just kind of thinking about the margin side. I know last, and you talked about this in your prepared remarks, but last quarter you seemed a little more confident in the snapback of the margin, thinking that business might level off some after the very strong 4Q. I'm just trying to understand maybe the puts and takes here. And if I recall correctly, the media business was about a 600 basis point impact to the margin. You recovered about 180. How should we think about making that progress going forward? And then perhaps just kind of given the value brought forth through your products, do you have an opportunity to improve the margin profile in that media and entertainment business as we move forward?
spk03: We've done some work on that, and we have some opportunities by being more efficient basically in the production line, and we are putting things in place to do that. So that will help us, but it's not going to radically change it. That's the bottom line. That business is changing. what it is and we can't drive it up significantly. But like I said, it's good business for the company other than when you put a percent, you know, percent mark next to some number. So, I mean, that's really, I missed part of the question. I've got the, I don't know. I got something. I'm sick to some degree. I don't have COVID. So I'm sorry I'm a little off today. No, you're good. Understandable.
spk05: Yeah, the one portion there is that, obviously, as our media and entertainment customer becomes a greater proportion of our revenue, it does put downward margin pressure. So I think, as we've shared in the past, that we basically have three segments of our business. We have pressure that typically represents about one-third. We have our media and entertainment that represents one-third. And then we have our AI transportable, more military-type business that represents one-third. Well, when you're looking at 66% of your business or two-thirds that are operating more in those lower margins of 20% to 23%, it has an effect on an aggregate basis of reducing that margin on an overall basis. However, that one-third portion of the business is where we're really focusing on, where we look like we have margin expansion. And so they have that. The other thing is it's more consistent with our historical performance. The military portion of the business is not really kicking in until Q3 and Q4. Those are purchase orders that are in hand, but you won't see the margin improvement significantly until you see that revenue coming into Q3 and Q4.
spk03: Yeah, and to hit it head on earlier in your question, which I kind of fumbled on, Yeah, we said we thought we'd snap back to about the annual level, which our annual level last year was, I think, 31.7%. So we did fall short of that. But part of that, we did have an assumption that there was going to be a little military in there, and we were wrong on that. So, I mean, that's the bottom line.
spk12: Great color. I certainly appreciate that. Thanks so much. And then maybe just kind of thinking about the platforms on the autonomous vehicles. Do you think there's an opportunity to maybe drive a little deeper integration with some of the sensor platforms and work, maybe either co-develop or work together with some of the other platforms to help really drive the value of your products?
spk03: We're already looking at that and we're already engaged and having conversations on many different fronts with many potential different partners and also maybe down the road M&A targets. So we're You know, we're very serious about this market. We're not sitting still. We're looking at it, trying to be the thought leader and be one that can offer a lot of value in where it's headed and do things like you just said.
spk12: Yeah, fantastic. And then maybe just maybe longer term on the replacement cycle, as you kind of think about the life of these units in the vehicle, is this something you think would require replacing once in the life of the vehicle, or would this be maybe every two years or three years? How do you think maybe about the replacement cycle potential?
spk11: Yeah, and that depends on the advancements.
spk07: Most of the time when you're putting a system in a vehicle, it's doing several things, not just driving. I mean, it's also doing fuel economy and things like that. As those applications get larger, you can see maybe a three-year cycle where you need refreshes of the technology as it moves forward and adding more of those capabilities in there, plus just the life cycle of say, GPUs and NVMe drives and technology inside the system.
spk03: One of the things we're doing is trying to understand that more so that what can we do to extend those lives and be better at it than anyone else. I mean, we have a lot of focus in that area.
spk12: And just one more, if you don't mind. I just want to see if maybe you could talk a little bit about the development cycle. earlier that you were in discussion with three of the different customers. How quickly can that move from early conversations to shipping product and receiving revenue?
spk11: Are you talking about the autonomous truck space?
spk12: Yes.
spk11: Or another?
spk03: Yeah, trucking, please. Well, just to be clear, I may be misinterpreting your question, but we are shipping today to three of them. We are engaged with two more pretty seriously, meaning proposals back and forth, multiple meetings, good dialogue, and we reached out in early discussion with another handful. So what I'm saying is we're already in revenue with three of them, and we'll have most likely multiple autonomous truck people be in our top ten list in 2022.
spk07: Yeah, and I think to add to that, kind of the standard – It usually takes from a wind to production about 12 months to 18 on the military side. On the commercial side, it's more that six to nine months. Some of these are happening really fast to get to its pre-production, but that six to nine months probably stays steady with this market as compared to the rest of our commercial market.
spk03: The one dynamic is that would be the normal thing, but the tonnage truck market You know, they're expecting like a million trucks in 2030, right, and then 100,000 in 2025. So those are more the production volumes. But the modeling we've done and looked at, the business looks very attractive between now and then.
spk11: But that's when we could, you know, if we do this all right, we could have explosive-type growth. Thanks again for the color. I appreciate it. Best of luck on the quarter. Thank you, David.
spk00: Once again, if you'd like to ask a question, press star one. Thank you. We'll go next to Brian Kinslinger with Alliance Global Partners.
spk01: Hello, this is Laura Surrell calling in for Brian Kinslinger, and thank you for taking our questions. So regarding the companies already listed, So regarding the companies already within your pipeline, may you just please quantify how many of those companies are actually already in both the autonomous trucking plus the autonomous vehicles within the agriculture markets? And regarding that, may you also please provide a bit of insight on the estimate sales cycle timing?
spk11: Yeah.
spk03: So first of all, I would say we view both agriculture and mining as future verticals. that are not quite developed and ready for the kind of sophistication we have. So we could see a repeat of what we're seeing in autonomous trucks, but we see it out in time. That doesn't mean we're not engaged with them, but we just think the type of level of autonomy that they're going to want is further out. What else would you say to that, Jim, on those particular markets?
spk07: Yeah, I think nothing current on the agriculture has contributed to any of the wins.
spk11: So, yeah, it's more of a 2023 type target.
spk01: Got it, got it. And also as a follow-up, and you touched a bit on this previously with past questions, but how many of the autonomous vehicle companies are currently past the testing phase as it relates to your technology and are now instead moving towards or are presently in the revenue generating or the production phase?
spk07: Yeah, I would say what you're looking for is we're not in the tens of thousands or 20s of thousands of trucks in production type phase. So it's how you define that. When you say testing, we're doing actually on-the-road testing, on-the-road autonomous driving in fleets. So it's called the production phase. wherever you want to draw the line.
spk03: Yeah, to give you an idea, it might be they're deploying 25 trucks next month kind of thing, and they plan to do 25 more several months from now. And what they're primarily doing is continue to build their database and understand it and start negotiating contracts with potential partners to use their technology.
spk01: All right, got it. Thank you. Yeah, thank you all for your insights and congratulations so far on your accomplishments for this past quarter.
spk11: Thank you very much, Laura.
spk10: Thank you.
spk00: And finally, we'll go to Scott with Waltz Capital.
spk04: Hey, good afternoon. Thanks for taking the questions. Hey, guys, appreciate all the color on the call as it relates to AI transportables. I'll back clean up here and just get a couple of clarifications. You know, in terms of the media and entertainment customer, I'm not sure if I heard correctly, but it sounds like, did you say it would be a record year for them, or is it returning to normal levels, just to kind of clarify on that front? And it sounds like, Dave, you're not seeing much, if any, cannibalization with live events versus virtual. Is that correct?
spk03: Yeah, so we don't see any, and I've asked that exact question, they're just different markets, so they really don't cannibalize each other. I think maybe they would say it's a 5% overlap or something. That's a wild number, but it's not obviously that it's anything greater than that. As far as the year, I mean, they're on track that we will do more with them than any previous year.
spk04: Okay, great. Very helpful. And John, on the gross margin front, just want to clarify, I know there's some near-term headwinds. I don't know if you quantified the impact in the quarter, or if there was revenue that was left on the table as a result of supply chain issues. I wonder if you could comment on that. And then just as it relates to the overall gross margin profile for core OSS, how are you thinking about that this year? I think, you know, it was still a good quarter, you know, kind of netting out Bresner and even with the contribution from the skies. Is it in line with the last couple of years, or are you able to actually increase that? Because it seems like you're doing good despite a difficult environment.
spk05: Okay. On the first question on where we are on the revenue, I will tell you we have probably one of the strongest backlogs we've ever had, and we are having to pull or push out things in order and consistent with when the supplies are available. We are having supply chain issues, but we are resolving those. But there are times where we have to pull something in or push something out based upon the availability of parts. We are taking that in consideration when we do provide expectations on revenue for the next quarter. We do look at our parts availability, but we do get surprised and we know those surprises that come. So we do have things that we have to look at in our backlog to see if we can pull those in to replace that revenue. So it's an active management on a daily basis, on a weekly basis, based upon availability of product.
spk03: Yeah, Scott, I would add to it. I think I've said it before that going into the quarter, we have extremely good visibility on backlog. The supply, it looks like we have really good visibility on supply, but what's getting companies like us is all of a sudden out of the blue, something doesn't show up, and then they say, you're going to see it in three months. That's the issue. So we have a heart-to-heart discussion before we provide guidance. We say, look, guys, it's We'd love it to all come in this way, but we're going to assume that, like every other quarter, we're going to get surprised, and so we bake that into what we communicate to you guys, and I think that's the only responsible thing to do at this time.
spk04: Hey, Dave, not to get too deep into the minutia, but in terms of then product redesigns to try and mitigate the impact from those problematic components, have you been able to do that, or does that create recertification problems with your existing customer base?
spk03: You know, that always does, but, you know, the customer base is more flexible on that than they've ever been in the history of my so many, too many years in this industry, right? Because they know if they don't, they're not going to get it, you know? And what's crazy about it, it can be a, you know, a 50 cent connector that's holding up a shipment of a $10,000 system, right? And, but there's times where you just can't get it. And so one of the things we'll do, identify it, get engineering, start working on that connector, start talking to the customer and and look at this deal, either ship it four months from now or a month from now, let us know what you want to do. And when you put it in that perspective, we get a lot more cooperation.
spk04: Okay, great.
spk05: On your second question about margin, we shared with you today that the Brezhner business grew at 37%. We shared with you that the media and entertainment business is growing at an exponential rate and will be actually a record for this year. So what's happening is these two components are on an aggregate basis and a percentage calculation on margin is having an impact. If you were to look consistently on the volume, if you left volume static, you would see growing margins, but you are not seeing that on an aggregate basis because there's more and more as a proportion of this 20% to 23% business coming into the company. So I don't anticipate that our margins on an annual basis are going to be significantly different than they were in prior years, just because of the... media and entertainment and browser business.
spk03: There's so many, Scott, there's so many dynamics. For example, you know, one of the things that hit cost of goods was some of our shipping costs tripled on the portion that we bring in because of the dynamics in the Ukraine and all the different things in China, you know, where there's only one way to get the product here, maybe ship it by air rather than normally going by ship or because it can't fly over, it can't go through Ukraine, it has to go somewhere else. So You know, those things, we don't get into a lot of detail on them, but there's so many of those little dynamics that we deal with every day.
spk04: Gotcha. Very helpful. And lastly, if I could, on the AI transportables front, I really appreciate all the color, Dave and Jim, on autonomous trucking. It sounds like, I guess maybe to clarify, in terms of the design wins and the engagements, you ultimately expect that you're going to have both edge compute and ruggedized storage in most trucks. of these customers in design, which I know it's early and Centauri just came out, but is the expectation that largely you're going to occupy both of those slots? And then Dave, you had indicated you expect multiple autonomous trucking companies to be 10% plus customers this year. That's a pretty big ramp. That's a pretty impressive number. I was wondering, thinking to 2023, what's the magnitude of the potential contribution or range of outcomes, or at least at the lower end of the expectation? of what autonomous trucking could be in 23. Thanks so much.
spk03: I don't want to give you a number on that. I've got to study it more. Some of these guys say they're going into higher volume in 23. Then you'll talk to someone else and they say it's 25. I'm still trying to get my arms around that part of your question. I have the other part.
spk07: So, you know, inside of, if you just take autonomous trucking, but this can go to military vehicles and things like that, there's at least five different places that we can wind up into an autonomous truck, whether it be the compute that connects to the sensors, the compute that does the autonomous driving, so that's the compute acceleration. So there's two compute elements. There's also two storage elements, the same inside the truck, when we show you the server and the Centauri that can be the removability. But that also leaves, once you have a removable canister, now you need the depot. So we have opportunities where we're putting the Centauri in the truck and also getting the truck depots. And there could be 20, 30, 40 depots around the country full of systems that need to put that storage into a server. There's about five different places that we can go in the autonomous truck alone.
spk04: Great. Very helpful. Thanks so much, guys.
spk11: All right. Thank you.
spk00: Thank you. We'll now take our last question from Max with Lake Street Capital.
spk02: Hey, guys. Nice quarter. Nice guide.
spk11: Thank you.
spk05: Good afternoon, Max.
spk02: Hey. So, yeah, most of my questions have been answered. I guess I just got two quick ones. You guys, it looks like you had a couple of nice major wins during the quarter. I guess I just had a question on what your expected contribution for these wins are going forward to the top line.
spk03: Well, I guess I would lead it to what I said before, which is the autonomous truck wins. Some of those will pop into our top 10 this year. They should all be much larger in 23. And at some point, assuming everything goes as planned and we're the leading guy, which we expect to be, we could see some explosive growth that happens somewhere late 23 to 25 because the size of this market is a size that's so much larger than we are as a company even. And then the other ones, we've already got pretty good revenue from those wins from last quarter, right, Jim? So we're already seeing revenue from those guys.
spk06: We've seen revenue, and we have millions in orders.
spk05: One point I think I'd like to clarify is that right now we are in the prototype and test phase. We are also ensuring that our products that we have have the capability and the price points to be in the production phase. So we aren't here just to look at revenues for prototyping and testing. We're looking to be able to be the option of choice when we go into the production phase and that we can share in that long-term revenue stream.
spk02: All right. Thanks, guys. And then my just last one. I know you guys were looking to invest in headcount after last quarter. I was wondering what your current headcount is and what your expectations are for the year.
spk11: Well, we haven't added a lot of people.
spk03: You know, we're planning on adding, you know, two or three a quarter kind of thing, but we will adjust that accordingly. For example, if we see an opportunity where hiring some people would accelerate the stuff we're working on, I won't hesitate to do that without going crazy and throwing the P&L upside down.
spk11: All right. That's it for me, guys. Next quarter. Thank you.
spk10: Thank you. We have no more questions.
spk00: I'd like to turn the conference back to David Ryan for closing remarks.
spk03: Thank you, Laura. And thank you, everyone, for joining us today. We continue to believe the best is yet to come for sure. And we look forward to meeting with you again for the annual stockholder meeting next week and reporting our progress again in August as we pursue the many opportunities and it It's fun to chat with you guys and tell you about the successes that we're seeing. Meanwhile, please continue to stay safe and healthy, and feel free to reach out to John, Jim, and myself anytime. And my apologies for my stumbling. I'm going to go take a nap. Laura, you can go ahead and wrap it up.
spk00: Thank you. Now, before we conclude today's call, I would like to provide the company's safe harbor statement that includes important cautions regarding forward-looking statements made during today's call. One-stop systems caution you that statements in the presentation are not a description of historical facts or forward-looking statements. These statements are based on companies' current beliefs and expectations. Such forward-looking statements include those regarding the company's expectations for revenue growth generated by new products, design wins or M&A activities. The inclusion of such forward-looking statements and others should not be regarded as a representation by OSS that any of its plans will be achieved. Actual results may differ from those set forth in the presentation due to risk and uncertainties inherent in our business, including without limitation, that the market for our product is developing and may not develop as we expect. Global pandemics or other disasters or public health concerns, including COVID-19 in regions of the world where we have operations, Customers or source material or sell products may affect such market. Our operating results may fluctuate significantly, which would make our future operating results difficult to predict and could cause operating results to fall below expectations or guidance. Our ability to successfully integrate the operation systems, technologies, product offerings and personnel with acquired companies may prove difficult and adversely affect our financial results. Our products are subject to competition, including competition from the customers to whom we may sell and competitive pressure from new and existing companies may harm our business sales, growth rates and market share. Our future success depends on our abilities to develop and successfully introduce new and enhanced products that meet the needs of our customers. The likelihood of our design proposals becoming design wins is uncertain and revenue may never be realized. Our product fulfills specialized needs and functions within the technology industry and such needs or functions may become unnecessary or the characteristic of such needs and functions may shift in such a way as to cause our products to no longer fulfill such needs or functions. New entrants into our market may harm our competitive position. We rely on the limited number of suppliers to support a manufacturer design process and if we cannot protect our proprietary design rights and intellectual property rights. Our competitive position could be harmed or we could incur significant expenses to enforce our rights, our international sales and operations subjectors to additional risk that can adversely affect our operating results and financial condition and we fail to remedy material weaknesses in our internal controls or financial reporting, we may not be able to accurately report our financial results. Another risk described in our prior press release and in our filling filings with the Securities and Exchange Commission, SEC, including under the heading risk factors, in our annual report on Form 10-K and any subsequent filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of the conference call, and we undertake no obligation to revise or update this information to reflect events or circumstances after this date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbour provision of the Private Securities Litigation Reform Act of 1995. Before we end today's conference, I would like to remind everyone that this call will be available for a replay starting later this evening through May 26, 2022. Please refer to today's press release for dial-in and replay instructions available via the company's website at ir.onestopsystems.com. Thank you for joining us today. This concludes our conference. You may now disconnect.
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