Telos (TLS) investor relations material

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 programs.

• Adjusted EBITDA was $7.9 million (16.5% margin), up from 1.2% year-over-year, reflecting operational discipline and efficiency initiatives.

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

• Interim leadership structure in place due to CEO's medical leave, with no disruption to operations or strategic priorities.

• $2.2 million was used to repurchase 0.5 million shares at an average price of $4.25, with further acceleration expected in Q2.

Financial highlights

• GAAP gross margin was 36.4%; cash gross margin reached 42.3%, both above expectations due to favorable revenue mix.

• Adjusted operating expenses were $400K below guidance and down $1.2M year-over-year; operating expenses fell 24.9% due to lower stock-based compensation and cost discipline.

• Operating cash flow was $8.7 million (18.1% margin); Free Cash Flow was $6.4 million (13.4% margin), up 69% year-over-year.

• 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%.

• Full-year 2026 revenue guidance reaffirmed at $187M–$200M (14%–21% growth); adjusted EBITDA expected at $20.6M–$28.0M (11.0%–14.0% margin).

• Adjusted operating expenses projected to decline by $1.3M year-over-year; margin expansion expected.

• Additional update to outlook anticipated after Q2.

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