Telos (TLS) investor relations material

Executive summary

• Revenue increased 26% year-over-year to $36M in Q2 2025, driven by Security Solutions growth and expanded TSA PreCheck enrollment centers.

• Security Solutions contributed approximately 90% of total revenue, with strong performance from DMDC and TSA PreCheck programs.

• Net loss widened to $9.5M due to higher stock-based compensation and SG&A expenses, despite improved adjusted EBITDA.

• Achieved FedRAMP High authorization for Xacta software, reinforcing position in government cloud security.

• $4M was used to repurchase 1.5M shares at an average price of $2.69 per share.

Financial highlights

• Q2 2025 revenue: $36M, up from $28.5M in Q2 2024, exceeding guidance of $32.5M–$34.5M.

• GAAP gross margin was 33.2%; cash gross margin 38.4%, both within guidance.

• Adjusted EBITDA was $0.4M, a $3.3M improvement year-over-year, surpassing guidance.

• Free cash flow margin reached 12.9% in Q2 and 12.6% for the first half of 2025.

• Net cash provided by operating activities for the first half of 2025 was $13.1M, a $21.4M improvement year-over-year.

Outlook and guidance

• Q3 2025 revenue forecasted at $44M–$47M, representing 85%–98% year-over-year growth, with Security Solutions expected to contribute ~90%.

• Q3 adjusted EBITDA expected at $4M–$5.7M (9.1%–12.1% margin); cash gross margin forecasted at 40%–41%.

• Adjusted operating expenses projected at $14.3M, a $1.6M year-over-year reduction.

• Management expects to recognize 95% of the $51.7M funded backlog over the next 12 months.

• Liquidity remains strong with $57M in cash and a $30M undrawn credit facility.