Telos (TLS) Q3 2025 earnings summary

Executive summary

• Achieved $51.4 million in Q3 2025 revenue, up 116% year-over-year, driven by 153.5% growth in Security Solutions, mainly from Telos ID, and above guidance of $44–$47 million.

• Launched Xacta.ai, an AI-powered cyber risk management solution, securing its first enterprise customer and demonstrating up to 93% efficiency gains in GRC tasks.

• Expanded TSA PreCheck enrollment centers to 504 locations, surpassing the 2025 target and operating at national scale.

• Net loss improved to $2.1 million from $28.1 million in Q3 2024, with operating expenses down 28.1% year-over-year.

• Announced Q3 2025 earnings and scheduled a webcast for November 10, 2025, with materials available online.

Financial highlights

• Q3 2025 revenue: $51.4 million (Q3 2024: $23.8 million); nine months: $118.0 million (2024: $81.9 million).

• GAAP gross margin was 39.9%, cash gross margin 44.8%, both above guidance and prior year.

• Adjusted EBITDA was $10.1 million (19.6% margin), up $14.2 million year-over-year and exceeding guidance.

• Free cash flow was $6.6 million (12.8% margin); cash flow from operations was $9.1 million in Q3 and $22.2 million for the nine months.

• Adjusted EPS for Q3 2025 was $0.09; net loss per share was $(0.03).

Outlook and guidance

• Q4 2025 revenue forecasted at $44–$46.3 million, up 67%–76% year-over-year; FY 2025 revenue expected at $162–$164.3 million, up 50%–52% year-over-year.

• Q4 cash gross margin expected at 40%–41%; adjusted EBITDA guidance is $4–$5.7 million (9.1%–12.3% margin).

• 2026 outlook: double-digit revenue and adjusted EBITDA growth expected from existing programs, with $180 million revenue baseline, primarily from Telos ID.

• Management expects to recognize 97% of the $65.5 million remaining performance obligations over the next 12 months.

• Additional upside in 2026 possible from Xacta.ai sales and new program wins from a $5 billion pipeline.