One Stop Systems, Inc. (NASDAQ:OSS) Q2 2022 Earnings Conference Call August 11, 2022 5:00 PM ET

Company Participants

David Raun - President, CEO & Director

John Morrison - CFO, Treasurer & Secretary

Jim Ison - Chief Sales & Marketing Officer

Conference Call Participants

Joseph Gomes - NOBLE Capital Markets

Brian Kinstlinger - Alliance Global Partners

David Williams - The Benchmark Company

Maxwell Michaelis - Lake Street Capital Markets

Operator

Good afternoon, and thank you for joining us today to discuss One Stop Systems' Financial Results for the Second Quarter ended June 30, 2022.

With us today are the company's President and Chief Executive Officer, David Raun; and Chief Financial Officer, John Morrison, as well as the company's Chief Sales and Marketing Officer, Jim Ison. Following their remarks, we will open the call to your questions. Then before we conclude today's call, I will provide some important cautions regarding the forward-looking statements made by management during the call.

I would like to remind everyone that the call will be recorded and made available for replay in the Investors section of the company's website. Now I would like to turn the conference over to OSS' President and CEO, David Raun. Please go ahead, sir.

David Raun

Thank you, Nash, and good afternoon, everyone. Q2 was another good quarter for One Stop Systems as we achieved record Q2 revenue of $18.3 million, up 7% sequentially and up 23% over the same year-ago quarter. The strong growth of Q2 was largely attributable to 2 factors: continued strength of our customer and media and entertainment space, the revenue from which grew 135% to a record $6.4 million, and our European unit Bressner, also performed exceptionally well. Bressner continues to leverage strong inventory investments, driving market share increases with revenue up 31% to $7.6 million.

If you've been following our growth, you likely noticed that we have variability in our margins from quarter-to-quarter, primarily based on the revenue and product mix from the top 3 customers within a given quarter. The first half of the current year was marked by a higher volume of lower-margin products in both our U.S. and European markets. That resulted in gross profit from the quarter totaling $5.2 million, which is up 12% from the year ago quarter, yielding a gross margin percentage of 28.4%.

So our aggregate margin percentage was down by a few points. The higher overall revenue and margin dollars enabled investments in increased R&D and marketing for our higher-margin businesses, namely AI Transportables, in both the commercial and military markets throughout the world, including additions to the sales team and our new advisory board made up of industry experts.