TSS (TSSI) Q2 2026 earnings summary

Executive summary

• Higher-margin systems integration and facilities management segments drove a strategic revenue mix shift, improving earnings quality and profitability despite a 20-21% year-over-year revenue decline due to lower procurement activity.

• Systems integration revenue grew 46% year-over-year to $13.9 million, now representing 39% of total revenue, while facilities management revenue increased 84% to $2.7 million.

• Recurring revenue base expanded, supported by investments in integration capacity and new warehousing/logistics services for a key customer.

• Net income for Q2 2026 was $1.4 million ($0.05 per diluted share), down from $1.5 million ($0.06) last year, reflecting higher SG&A and increased share count.

• Adjusted EBITDA for Q2 2026 was $4.5 million, up 12% year-over-year; full-year outlook reaffirmed at the upper end of $20 million-$22 million, with expectations for a stronger second half of 2026.

Financial highlights

• Q2 2026 total revenue was $35.1 million (down from $44 million in Q2 2025), with gross profit up 11% to $8 million and blended gross margin improving to 22.8%.

• Year-to-date 2026 revenues were $90.5 million, down 37% from the first half of 2025, with gross profit up 2% to $16.8 million.

• Adjusted EBITDA for the first six months of 2026 was $9.8 million, up 5% year-over-year.

• SG&A expenses increased to $5.6 million from $4.7 million, driven by higher equity compensation and headcount.

• Ended quarter with $67.7 million in cash and $16.1 million in total debt; leverage ratio below one.

Outlook and guidance

• Procurement revenue expected to return to the $30 million-$40 million range in Q3 2026.

• Full-year Adjusted EBITDA expected at the upper end of $20 million-$22 million.

• Second half of 2026 anticipated to be stronger, with incremental revenue from new investments and service offerings.