Oct 28, 2026 earnings call — OSS raises outlook; bookings and production drive growth
Company raised full-year revenue growth outlook to approximately 40%.
Revenue $0.0B (est $0.0B) · EPS $0.01 (est $0.01)
Key quotes
"Year-to-date, we have generated more than $43.6 million in bookings, producing a book-to-bill of 1.46, even as our sales have grown."
"This week, we announced that our flagship Gen5 4UP-MAX expansion system was qualified for use with a Tier 1 global enterprise computing platform provider."
"Excluding these 2 items, adjusted EBITDA would have been approximately $1.2 million or nearly 10% of quarterly revenue."
Analyst Q&A 4
transformative deals and component inventory
Q (Eric Martinuzzi · Lake Street): Are the potentially transformative opportunities included in 2026 guidance or are they longer term? Also, how should we think about component inventory and supply chain risk for 2027?
A: They are not included in the 2026 guidance and 2026 guidance is all in backlog. Management said the opportunities are showing up across both defense and commercial, built in a pipeline over 3 years. They also said long lead times remain for memory, some switch chips and GPUs, they built inventory to support Q4 and early 2027, and will keep monitoring the supply chain.
"Yes, we're seeing now these opportunities across both defense and commercial." — Michael Knowles (CEO)
Q4 margins, EBITDA, and big opportunities
Q (Scott Searle · ROTH Capital): Why is implied Q4 gross margin down and does the adjusted EBITDA guide include the Q3 bad debt and legal items? Also, what are early thoughts on 2027 and the size/timing of transformative opportunities and impact of recent communications issues on autonomous mission solutions?
A: The EBITDA guide of $500,000 to $1 million includes the negative impact of the Q3 items; the guide would be about $1.4 million higher without them. Q4 gross margins are expected lower mainly due to mix: some lower-margin production shipments and a notable pickup in lower-margin customer-funded development, while full-year 2026 gross margin is guided to 40% to 42%. Timing on larger transformative opportunities is hard to pin down, they exist in defense and commercial and can look like programs of $100 million or greater over a 3-, 4-year period, and recent connectivity issues strengthen the case for on-platform compute solutions.
"Yes, the guide for EBITDA, the $500,000 to $1 million, that includes the negative impact of the items that we called out in Q3." — Daniel Gabel
customer concentration in Q4
Q (Gregory Pendy · Clear Street): How concentrated will Q4 revenue be by customer, especially with new energy node and in-flight entertainment customers?
A: They expect a couple of customers will probably be in the 10% or greater range, which typically are large defense primes. More broadly, the company is seeing a growing mid-tier of customers that are each less than 10% but more than 2% of revenue, which builds visibility and diversity across platforms and customers.
"You'll have a couple of customers probably in the 10% or greater range." — Daniel Gabel
pricing, Army 360 system, working capital
Q (Brian Kinstlinger): Does OSS have pricing power amid stronger demand and supply constraints? Also, what is the status of Army 360 vision system evaluations and how should we think about working capital after Q3?
A: They said they have been able to maintain pricing and protect margins despite industry-wide memory price increases. On the Army 360 system, the original system remains in test and evaluation and they are being asked to extend it into enhanced vision and a broader sensor distribution system for low-latency, high-performance multi-sensor data distribution supporting ground and counter-UAS missions, though timing to adoption is hard to pin down. For working capital, inventory was flat in Q3 but accounts receivable drove the drain due to about $5.6 million of milestone collections pushed to October; they ended Q3 with about $13 million of AR and $2 million of AP, expect some working capital benefit in Q4, and expect full year operating cash flow to be slightly negative.
"And we're being kind of further asked to extend that system more broadly as a sensor distribution system that would allow for low latency, high-performance computing distribution of multi-sensor data in single platforms or operations of platforms." — Michael Knowles (CEO)