This article first appeared on GuruFocus .
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Total Revenue:$35.1 million in Q2 2026, down 20% from $44 million in Q2 2025.
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Systems Integration Revenue:Increased 46% year over year to $13.9 million, representing 39% of total revenue (up from 22% in Q2 2025).
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Facilities Management Revenue:Increased 84% year over year to $2.7 million.
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Procurement Revenue:Decreased 45% year over year to $18.2 million, down from $33 million in Q2 2025.
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Gross Profit:Increased 11% year over year to $8 million.
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Gross Margin:Improved 640 basis points to 22.8% from 16.4% in Q2 2025.
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Systems Integration Gross Margin:31.6% in Q2 2026, down from 37.5% in Q2 2025.
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Facilities Management Gross Margin:57.1% in Q2 2026, down from 74.3% in Q2 2025.
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Procurement Gross Margin:Improved to 11% in Q2 2026 from 7.7% in Q2 2025.
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Operating Income:Increased 16% year over year to $1.6 million from $1.4 million.
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Net Income:$1.4 million, or $0.05 per diluted share, compared to $1.5 million, or $0.06 per diluted share, in Q2 2025.
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Adjusted EBITDA:Improved 12% year over year to $4.5 million in Q2 2026; year-to-date adjusted EBITDA improved 5% to $9.8 million.
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Cash and Cash Equivalents:$67.7 million at end of Q2 2026.
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Total Debt:$16.1 million at end of Q2 2026.
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SG&A Expenses:$5.6 million in Q2 2026, up from $4.7 million in Q2 2025.
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Interest Expense:$322,000 in Q2 2026, compared to fully capitalized interest in Q2 2025.
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Interest Income:Increased to $565,000 in Q2 2026 from $175,000 in Q2 2025.
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Income Tax Expense:$413,000 in Q2 2026, compared to $69,000 in Q2 2025.
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Full-Year Adjusted EBITDA Outlook:Reaffirmed toward the upper end of the $20 million to $22 million range.
Release Date: August 13, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Systems integration revenue grew 46% year-over-year, now representing 39% of total revenue versus 22% a year ago.
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Facilities management revenue surged 84% year-over-year, driven by strong discrete project work.
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Gross profit increased 11% and adjusted EBITDA rose 12% despite a 20% decline in total revenue, reflecting a favorable mix shift.
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The company is investing $17 million to support NVIDIA's Vera Rubin platform, expected to drive incremental high-margin revenue in Q4 and beyond.
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Management reaffirmed full-year adjusted EBITDA guidance toward the upper end of the $20 million to $22 million range, with a stronger second half expected.
Negative Points
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Total revenue declined 20% year-over-year due to a 45% drop in procurement revenue, which fell to $18.2 million from $33 million.
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Systems integration gross margin decreased to 31.6% from 37.5% due to higher depreciation from the Georgetown facility.
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Facilities management gross margin fell to 57.1% from 74.3%, returning to more normal levels after an unusually high prior-year quarter.
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Maintenance revenue in facilities management declined to $746,000 from $1 million as some customers did not renew older MDC agreements.
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Net income slipped to $1.4 million from $1.5 million, impacted by higher interest expense and a full tax provision following the release of the valuation allowance.
Q & A Highlights
Q: Can you provide more detail on the $17 million investment for AI readiness and enhanced testing, and how it will impact systems integration revenue? A: Danny Chism (CFO) explained that the $17 million investment is primarily directed toward additional power infrastructure and cooling capability, specifically to prepare for NVIDIA's Vera Rubin configuration, which requires more power and cooling. This investment should directly drive incremental revenues in future periods, with some contribution in Q3 and primarily in Q4, as it will be recognized fairly rapidly over the term of the multi-year agreement for AI rack integration.
Q: What is the potential for growth in the systems integration business, and what are the gating factors to how fast you can grow? A: Darryll Dewan (CEO) stated that the company has significant headroom, estimating 2x to 3x capability over the bare minimum in the contract. Key factors include stellar operational efficiency, staying ahead of the technology curve, and managing constraints around power and space. Danny Chism (CFO) added that the limiting factor has not been demand but rather supply chain issues, such as memory or cable shortages, which can fluctuate quarter to quarter.
Q: What trends are you seeing in order volumes for your largest customer, and how close are you to the weekly minimum commitment? A: Darryll Dewan (CEO) noted that while he couldn't provide granular pipeline details, the outlook is very strong, referencing the customer's increased outlook for AI servers in fiscal year '27. He emphasized the company's desire to exceed the weekly minimum, which has been achieved once or twice year to date, and expressed excitement about the second-half outlook compared to the first half.
Q: Can you explain the small sequential downtick in systems integration revenue and the mix between AI racks and mainstream business? A: Darryll Dewan (CEO) explained that the mix of rack integration business includes AI racks and mainstream (high-performance computing, networking, and compute racks). There was a downturn in Q2 over Q1 in the mainstream business segment, which impacted results, but the AI rack business was up quarter over quarter. Danny Chism (CFO) added that the $17 million investment is for power and cooling infrastructure for Vera Rubin, and the sequential downtick was minimal, with expectations of increases moving forward.
Q: What is the status of the build-out for power and cooling requirements for Vera Rubin, and how should we think about the benefit through the rest of the year? A: Danny Chism (CFO) stated that approximately $7 million to $8 million of the build-out was completed as of quarter end, with completion expected by September. The investment will start driving incremental revenue, some in Q3 and primarily in Q4, recognized over the term of the multi-year agreement for AI rack integration.
Q: Can you provide more color on the warehousing and logistics services provided to your largest customer and its impact? A: Darryll Dewan (CEO) mentioned that effective May 1, the company began providing warehousing and logistics services to its largest customer at their request, fully utilizing the integration facility in Round Rock, Texas, which had been vacant. Danny Chism (CFO) added that this is considered an operating lease for GAAP purposes, reported within the systems integration segment, and will contribute to revenue growth in the second half of 2026.
Q: How is the company's revenue mix shifting, and what impact is it having on profitability? A: Darryll Dewan (CEO) highlighted that the higher-margin systems integration business grew 46% year over year, representing 39% of total revenue compared to 22% in the prior year. Facilities management grew 84%. This shift improved consolidated gross profit by 11% and adjusted EBITDA by 12%, even as total revenue declined 20% due to the expected pullback in procurement. Danny Chism (CFO) noted that blended gross margin improved 640 basis points to 22.8%.
Q: What is the outlook for procurement revenue in the third quarter, and how does it compare to Q2? A: Darryll Dewan (CEO) stated that procurement revenue was $18.2 million in Q2, down from $33 million a year ago, but orders received for Q3 already exceed Q2 procurement revenues, likely returning to the typical $30 million to $40 million range per quarter. Danny Chism (CFO) confirmed that procurement services remains an important part of the business, carrying the lowest margin but with little fixed costs in periods with lower volumes.
Q: Can you discuss the facilities management segment's performance and the mix between maintenance and project work? A: Danny Chism (CFO) reported that facilities management revenue increased 84% to $2.7 million, driven by a spike in discrete project work increasing from under $0.5 million to almost $2 million. Maintenance revenues decreased from $1 million to $746,000 as certain customers opted not to renew maintenance agreements on older MDCs. The gross margin was 57.1%, returning to more normal expectations near 50%, compared to an unusually high 74.3% in the prior year.
Q: What is the company's full-year adjusted EBITDA outlook, and how does the second half compare to the first? A: Darryll Dewan (CEO) reaffirmed the full-year adjusted EBITDA outlook towards the upper end of the previously announced $20 million to $22 million range, expecting the second half of 2026 to be stronger than the first. Danny Chism (CFO) noted that year-to-date adjusted EBITDA improved 5% to $9.8 million, and the company is confident in the outlook given the expected procurement rebound and continued growth in higher-margin segments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
