One Stop Systems, Inc.

Good day and welcome to the One Stop Systems fourth quarter 2024 conference call on webcast. At this time, all participants are in the listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. As a reminder, this call is being recorded. As part of the discussion today, the representatives from OSS will be making certain forward-looking statements regarding the company's future financial and operating results including revenue growth, as well as business plans, objectives, and expectations. These statements are based on the company's current beliefs and expectations and should not be regarded as a representation by OSS that any of its plans or expectations will be archived or achieved. Please be advised that these forward-looking statements are covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and that OSS desires to avail itself of the protections of the safe harbor for this statement. Please also be advised that actual results could differ materially from those stated or implied by the forelooking statements due to certain risks and uncertainties, including those describing a company's most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q, and recent press releases. Please read these reports and other future filings that OSS will make with the SEC. OSS disclaims any duty to update or revise its forward-looking statements, except as required by applicable law. It is now my pleasure to turn the conference over to OSS President and CEO, Mr. Mike Knowles. Please go ahead, sir.

Thank you, Ludi. Good morning, everyone, and thank you for joining today's call.

As I mentioned on prior calls, we're working through a multi-year plan to transform the company and pursue growth opportunities driven by the increasing adoption of artificial intelligence, machine learning, sensor processing, and autonomy. While we are still early in our plan, our performance throughout 2024 highlights the progress we have made over the past two years repositioning the company for long-term success. In fact, OSS returned to consolidated year-over-year revenue growth for the fourth quarter, and sequential consolidated growth for every quarter in 2024. This important milestone is driven by strength across both of our operating segments, higher customer-funded development revenue, and a continued focus on converting our OSS segment's $1 billion pipeline to sales. As efforts to reposition the company for revenue growth gained momentum during 2024, we also made certain adjustments to legacy inventory and program-related issues. These efforts are aligned with our focus on improving operational efficiencies and driving profitability. Dan will provide additional color on these changes in his prepared remarks. With this introduction, I want to use my time today to review the progress we made in 2024 and highlight several near-term and longer-term opportunities we are pursuing that we believe will support the next phase of our growth. Looking at the progress of May 2024, from a revenue perspective, we experienced consolidated growth on a sequential basis in every quarter throughout the year, driven by growth in the OSS segment. As a reminder, a former media customer contributed $4.8 million to OSS segment revenue in 2023 that did not occur in 2024. Throughout 2024, we experienced greater adoption within our OSS segment from both defense and commercial end markets. These trends helped grow our customer base and broaden our customer concentration during the year. OSS segment growth in our defense market was from new and existing customers. We experienced demand from several programs within the U.S. Army, a renewal for the U.S. Navy P-8 program, a new HPC solution for a U.S. intelligence agency, and a new design win with a leading defense contractor in Asia for an autonomous maritime application. In our commercial end market, we saw customer demand for our solutions come from several sectors, including motorsport, autonomous trucking, commercial aerospace, and importantly, the data center markets. Growing customer-funded development revenue was an important objective this past year, and I'm pleased that we were able to increase this revenue stream by 118% in 2024 to $3.7 million. While still small numbers now, this customer-funded development is a great indicator that could lead to much larger revenues if our products are adopted in large-scale, multi-year programs, as it establishes OSS in an incumbent position on key military and commercial applications. From a booking standpoint, we lifted our annual book-to-bill ratio to 1.14 for our OSS segment, which includes a delay in certain orders in the fourth quarter, but we expect those opportunities to manifest through 2025. We believe that uncertainty related to business and government spending is likely to continue throughout the first half of 2025, but our embedded position remains strong with our customers, and the programs we have pursued are aligned with our customers' priorities. As a result, we believe it is not a question of if, but when these orders are placed. And we currently expect the 2025 annual book-to-bill ratio for our OSS segment to be on the order of 1.2. We plan to update investors on our book-to-bill ratio on an annual basis going forward. Overall, despite the current environment in Washington, we have seen market interest in our solutions strengthen over the past year as we continue to respond to increasing requests for information, proposals, and white papers. Across our global and defense and commercial markets, customers are looking for technology partners like OSS to support their expanding needs for rugged enterprise class compute solutions. Driving these trends are the emerging requirements for artificial intelligence, machine learning, autonomy, and sensor processing at the edge. The company's best-in-class hardware and software platforms bring the latest data center performance to harsh and challenging applications that we believe will allow OSS to take advantage of current and future demand trends. As we look to 2025, we expect certain development programs that we worked on during 2024 to transition to orders and sales. This includes commercial applications in data center, healthcare, and aerospace markets, combined with multiple opportunities across the U.S. Department of Defense. We have several orders that we believe will close shortly. On the commercial side, we have a new order from a healthcare customer that is expected to develop into significant production orders over the next five years. On the defense side, we are broadening our platform application with several defense contractors. One of these expanded relationships is expected to lead to a new program win with production orders in 2025. I look forward to updating investors on these near-term opportunities as they develop. I also want to highlight the progress we made in 2024 on potentially transformative opportunities underway across our commercial and defense markets. While none of these opportunities are a given and remain subject to fielding and funding decisions, they do represent transformative opportunities for OSS segment solutions. In the commercial space, the Composable Infrastructure for Data Centers represents what we expect to be a $200 million multiyear pipeline opportunity for OSS. Composable infrastructure is an architecture that connects compute, storage, and networking resources to optimize applications and improve performance. We are working with leaders in the space that have mandates from their end customers to increase the density of GPU processing capability within data centers. This specialized application supports users that need data center capabilities near their operations but lack the footprint to build a large-scale data center, representative of universities, corporations, organizations, or public service entities. The acceleration systems we built for this application utilizes our expertise delivering high GPU concentration solutions that effectively manage temperature, power, and optimize performance. These solutions also leverage our discriminating leadership in PCIe technology, which is a high-speed interface that connects computer components such as expansion cards and storage devices to a motherboard. In 2024, we announced an initial contract for 100 accelerator units with a customer. We expect our best-in-class solution will expand to multiple customers in 2025, leading to increased revenue potential for 2025 and beyond. On the defense side, we successfully delivered a rugged, 360-degree situational awareness system to the U.S. Army for their assessment and testing. This system provides military-spec, low-latency video processing to support on-vehicle video dissemination. The Army will test and assess the system for application to their combat vehicle inventory which we currently expect to occur sometime in the second half of 2025. OSS is uniquely positioned for this application as we developed and built a ruggedized compute visualization system using OSS's PCIe Gen4 switch fabric technology and NVIDIA Jetson AGX ORN system on modules. If as a result of test and assessment the Army chooses to fund and field the capability across one or multiple combat vehicles, classes, We estimate the value of such an opportunity could exceed $200 million in production orders over a three- to five-year period, with additional opportunities for follow-on logistics, support, and tech refresh options. Our product solution has also gained the attention of multiple defense prime contractors in the combat vehicle market, driving requests for information and proposal that would align with the Army opportunity. While it will take time for these opportunities to formulate and develop into potential production orders, We are working hard with our customers and Congress to ensure the fielding of this capability is funding and realized. The composable infrastructure and Army visualization programs will have important milestones over the next two years, and I look forward to providing updates in future calls. As we look to 2025, we are off to a good start in both segments and anticipate a projected consolidated revenue of $59 to $61 million for the full year of 2025. This includes inspected OSS segment revenue of approximately $30 million, representing over 20% year-over-year growth in the OSS segment. In addition, the company expects to be even a break-even for the full year of 2025. We expect revenue and profitability to improve at a higher rate in the second half of 2025 based on current trends and our expanding sales pipeline. While we expect some near-term volatility associated with budget delays and uncertainty related to impact tariffs we'll have on the economy, We feel good about our financial position and the potential for 2025. We believe we have the right products, the right team, and the right strategy in place to capture significant opportunities across defense and commercial markets as customers look for technology partners like OSS to support their expanding needs for rugged enterprise class compute solutions. With this overview, I'd like to now turn the call over to Dan. Dan?