OSS - One Stop Systems Inc. (OSS) - Better Than Expected 2Q20 Results

2Q20 Results. After the market closed Thursday, One Stop Systems reported second quarter revenue of $11.6 million, down 22% y-o-y, and break-even net income, compared to a net loss of $0.11 per share last year. On an adjusted EPS basis, 2Q20 diluted EPS was $0.01 versus diluted EPS of $0.04 for 2Q19. Revenue came in above management's minimum baseline or expected revenue of $10 million for Q2. We had projected revenue of $11 million and a net loss of $0.05 per share.Expanding Opportunity Set. During the quarter, OSS closed five additional $1+ million awards, bringing the year-to-date total to eight. For the year, OSS has won 80% of the awards it contested. There are another 17 awards expected before year end. Further out, the pipeline continues to build as OSS's opportunity set continues to expand. OSS's unique capabilities in the HPC edge computing space continue to be recognized by potential customers.Balance Sheet & Liquidity. OSS ended the quarter with cash of $4.7 million, driven by the sale of $2.4 million of convertible notes and a $1.5 million paycheck protection plan loan received in the quarter. We believe the cash position and available funds provides OSS with sufficient liquidity for current operations. Projections. With COVID still impacting businesses across the world, we have scaled back our projections for the next two quarters. We are now projecting 3Q20 revenue of $12.5 million and EPS of $0.01, down from a prior $14 million and $0.05, respectively. For the full year, we are now at revenue of $54 million and EPS of $0.01, down from a previous $56.9 million and EPS of $0.01. Maintaining Outperform Rating. We are maintaining our Outperform rating and a 12-month price target of $4.00 per share. At our $4.00 price target, OSS shares would trade at an EV/S multiple of 1.3 times 2020 revenue of $54 million and 1.1x our 2021 revenue estimate. Read More >>