Telos (TLS) Q1 2026 earnings summary

Executive summary

• Revenue increased 56% year-over-year to $47.7 million in Q1 2026, surpassing guidance, driven by 78% growth in Security Solutions, especially Telos ID.

• Net income improved to $2.0 million, reversing a net loss of $8.6 million in the prior year quarter.

• Adjusted EBITDA was $7.9 million (16.5% margin), exceeding guidance due to higher cash gross profit and lower expenses.

• Free Cash Flow rose to $6.4 million (13.4% margin), with cash flow from operations at $8.7 million (18.1% margin).

• Interim leadership structure implemented following CEO's medical leave, with no expected operational disruption.

Financial highlights

• GAAP gross margin was 36.4%, and cash gross margin was 42.3%, both above expectations.

• Gross profit increased to $17.4 million from $12.2 million year-over-year.

• Adjusted operating expenses were $400K below guidance and down $1.2M year-over-year; operating expenses fell 24.9%.

• Net income for Q1 2026 was $2.0 million, or $0.03 per diluted share; adjusted EPS was $0.06.

• Cash and cash equivalents stood at $50.2 million as of March 31, 2026.

Outlook and guidance

• Q2 2026 revenue expected to grow 22%-28% year-over-year ($44M-$46M), with cash gross margin around 39%.

• Adjusted EBITDA for Q2 expected between $5M-$6M (margin 11.4%-13%).

• Full-year 2026 revenue guidance reaffirmed at $187M–$200M (14%–21% growth), with adjusted EBITDA margin projected at 11.0%–14.0%.

• Management expects strong liquidity and sufficient cash and credit facilities for the next 12 months.

• No material disruption anticipated from recent executive changes.