Financial Data and Key Metrics Changes - Total company revenue grew 11% sequentially to $26.4 million in Q4 2024, near the top end of guidance [9] - Adjusted EBITDA improved sequentially by $4 million to a $200,000 loss [34] - GAAP gross margin expanded nearly 600 basis points year-over-year to 40.3%, and cash gross margin expanded nearly 900 basis points year-over-year to 47% [11] Business Line Data and Key Metrics Changes - Security solutions revenue grew 20% sequentially to $21.9 million, representing 83% of total company revenue [9] - Revenue from TSA PreCheck enrollments grew over 30% sequentially [9] - Secure Networks delivered $4.5 million of revenue, representing 17% of total company revenue, but declined sequentially as expected [10] Market Data and Key Metrics Changes - The TSA PreCheck program became the single largest program by revenue during 2024, with significant growth expected in 2025 [18] - The company increased its enrollment centers from 26 to 218 locations across the U.S. [16] Company Strategy and Development Direction - The company is focusing on optimizing performance for customers through automation and is prioritizing task orders from existing contract vehicles due to delays in single awards [40] - The company aims to target 500 TSA PreCheck enrollment locations by the end of 2025 [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the new administration being generally positive for the company, despite delays in single awards [40] - The company expects to generate positive cash flow in Q1 2025 and significant improvements in revenue, profit, and cash flow for the full year [36] Other Important Information - The company anticipates revenue for the full year 2025 to be driven by existing business, TSA PreCheck, and new program wins with DMDC and DHS [29][30] - The company is experiencing delays in the timing of awards from the government but is not seeing similar delays on task orders [23] Q&A Session Summary Question: Impact of the change in administration on single award programs - Management noted that while the new administration is generally positive, single awards are being held back for review, leading to a focus on task orders from existing contracts [40] Question: Details on revenue recognition for DMDC and DHS programs - Management clarified that the mix of third-party content is more weighted to software, affecting revenue recognition timing in the first year [44][45] Question: TSA PreCheck revenue potential based on current rollout - Management confirmed that the framework for estimating TSA PreCheck revenue is correct, with expectations for revenue to ramp as more locations open [51] Question: Cash flow expectations for Q1 and the full year - Management indicated that Q1 cash flow will benefit from working capital buildup and expects positive free cash flow for the full year, with breakeven adjusted EBITDA around $155 million to $160 million in revenue [54][55]

Fourth Quarter and Full Year 2024 Earnings March 10, 2025 DISCLAIMERS The information contained in this presentation does not constitute or form part of, and should not be construed as, any offer, sale or subscription of, or any invitation to offer, buy or subscribe for, any securities, nor shall there be any offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful. Telos Corporation (the "Company") will only make such an offer or sale pursuant to an effect ...

Group 1 - Telos Corporation reported a quarterly loss of $0.04 per share, better than the Zacks Consensus Estimate of a loss of $0.09, representing an earnings surprise of 55.56% [1] - The company posted revenues of $26.37 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.42%, but down from $41.06 million year-over-year [2] - Telos has surpassed consensus EPS estimates for four consecutive quarters [2] Group 2 - The stock has underperformed, losing about 16.1% since the beginning of the year compared to the S&P 500's decline of 1.9% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.07 on revenues of $31.52 million, and for the current fiscal year, it is -$0.14 on revenues of $150.13 million [7] - The Computers - IT Services industry, to which Telos belongs, is currently ranked in the top 22% of over 250 Zacks industries, indicating a favorable outlook [8]

Financial Data and Key Metrics Changes - Total company revenue grew 11% sequentially to $26.4 million in the fourth quarter, near the top end of the guidance range [7] - Adjusted EBITDA improved sequentially from a $4.2 million loss in the third quarter to a $200,000 loss in the fourth quarter [11][26] - GAAP gross margin expanded nearly 600 basis points year over year to 40.3%, while cash gross margin expanded nearly 900 basis points year over year to 47%, the highest since the IPO in 2020 [9][10] Business Line Data and Key Metrics Changes - Security Solutions revenue grew 20% sequentially to $21.9 million, representing 83% of total company revenue [7][9] - Revenue from TSA PreCheck enrollments grew over 30% sequentially, contributing significantly to revenue growth [8] - Secure Networks revenue delivered $4.5 million, or 17% of total company revenue, but declined sequentially as expected due to the ramp down of existing programs [9] Market Data and Key Metrics Changes - The TSA PreCheck program expanded from 26 enrollment centers to 218 locations across the U.S. in 2024, becoming the single largest program by revenue [13][14] - The company anticipates a pro rata share of the TSA PreCheck market, estimated at approximately $200 million on a net revenue basis [22] Company Strategy and Development Direction - The company is focusing on optimizing performance for customers through automation and is prioritizing task orders from existing contract vehicles due to delays in single awards [30] - The company aims to resume a higher pace of enrollment center rollouts and targets 500 locations by the end of the year [14][26] - The strategy includes discontinuing lower-margin solutions to invest in higher growth programs, maximizing operating leverage and cash flow [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the new administration being generally positive for the company, despite delays in single award programs [30] - The company expects significant improvements in revenue, profit, and cash flow for 2025, driven by successful operations in key programs [46] Other Important Information - Cash flow from operations was a $10.5 million outflow, and free cash flow was a $14.8 million outflow, attributed to a short-term buildup of working capital [11] - The company expects to generate positive cash flow during the first quarter of 2025 [20] Q&A Session Summary Question: Impact of the change in administration on single award programs - Management noted that while the new administration is generally positive, single awards are being held back for review, focusing instead on task orders from existing contracts [30] Question: Details on revenue recognition for DMDC and DHS programs - Management clarified that the mix of third-party content is more weighted towards software, affecting revenue recognition timing in the first year [31][32] Question: TSA PreCheck revenue projections - Management confirmed that the framework for TSA PreCheck revenue is correct, with expectations for ramping locations to drive revenue growth [37] Question: Cash flow expectations for Q1 and full year - Management indicated that positive cash flow in Q1 will benefit from working capital liquidation and expects overall cash flow to outperform P&L in 2025 [39][40]

Core Insights - Telos Corporation has released its fourth quarter and full year financial results for 2024 on its investor relations website [1] - A live webcast to discuss these financial results is scheduled for March 10, 2025, at 9:30 a.m. EST [2] - Related presentation materials and an archived webcast will be available on the company's website [3] Company Overview - Telos Corporation (NASDAQ:TLS) provides cybersecurity, cloud, and enterprise security solutions for highly security-conscious organizations [4] - The company's offerings include IT risk management, information security, cloud security, identity and access management, secure mobility, organizational messaging, and network management [4] - Telos serves a diverse clientele, including commercial enterprises, regulated industries, and government customers globally [4]

Revenue Performance - Revenue for Q4 2024 was $26.4 million, with $21.9 million (83.1%) from Security Solutions and $4.5 million (16.9%) from Secure Networks, meeting the top end of guidance [4]. - Sequential revenue growth of 10.9% from Q3 2024, driven by a 19.6% increase in Security Solutions due to a new program with DMDC and growth in TSA PreCheck enrollment locations, expanding to 218 locations with a target of 500 for FY 2025 [4]. - Total revenue for Q4 2024 was $26,372, a decrease of 35.7% compared to $41,059 in Q4 2023 [16]. - Revenue from Security Solutions increased to $21,921, up 6.1% from $20,652 in the same quarter last year [16]. - Q1 2025 guidance forecasts sequential revenue growth of 7% to 15%, with revenues expected between $28.2 million and $30.2 million, and positive cash flow [4]. Profitability and Margins - GAAP gross margin for Q4 was 40.3%, exceeding guidance, while cash gross margin was 47.0%, the highest since the company's IPO in 2020 [4]. - Full year GAAP gross margin was 31.8% and cash gross margin was 43.7%, the highest since 2000 [4]. - Gross profit for the three months ended December 31, 2024, was $10.62 million, with a margin of 40.3%, compared to $14.09 million and a margin of 34.3% in 2023 [27]. - Adjusted EBITDA for the year ended December 31, 2024, was $(9.62) million, with a margin of (8.9)%, compared to $(5.36) million and a margin of (3.7)% in 2023 [22]. - Cash gross profit for the year ended December 31, 2024, was $47.34 million, with a margin of 43.7%, compared to $57.39 million and a margin of 39.5% in 2023 [27]. Net Loss and Expenses - GAAP net loss for Q4 was $9.3 million, with an adjusted EBITDA loss of $0.2 million, also above the top end of guidance [4]. - Net loss for Q4 2024 was $9,330, compared to a net loss of $6,980 in Q4 2023, representing a 33.5% increase in losses [16]. - Operating loss for the year ended December 31, 2024, was $55,873, compared to $40,315 in 2023, reflecting a 38.5% increase in operating losses [16]. - The company reported a basic net loss per share of $0.73 for the year ended December 31, 2024, compared to $0.50 in 2023 [16]. - Free cash flow for the year ended December 31, 2024, was $(39.70) million, compared to $(13.89) million in 2023 [28]. Cash Flow and Working Capital - Cash flow from operations was a $10.5 million outflow, and free cash flow was a $14.8 million outflow, reflecting short-term working capital buildup [4]. - Cash flows from operating activities showed a net cash used of $25,938 for the year, compared to a net cash provided of $1,587 in 2023 [20]. - The company reported a net cash flow used in operating activities of $(10.52) million for the three months ended December 31, 2024, compared to $4.95 million in 2023 [28]. Assets and Liabilities - Cash and cash equivalents decreased to $54,578 as of December 31, 2024, down 45.0% from $99,260 in 2023 [18]. - Total assets decreased to $158,235, a decline of 24.2% from $208,699 in the previous year [18]. Research and Development - Research and development expenses for the year were $8,442, down 28.5% from $11,760 in 2023 [16]. - Total operating expenses for the year were $90,302, a slight decrease of 3.3% from $93,257 in 2023 [16]. Other Financial Metrics - Stock-based compensation expense for the three months ended December 31, 2024, was $7.39 million, representing 28.0% of total expenses, compared to $1.93 million and 4.7% in 2023 [24]. - The adjusted net loss for the three months ended December 31, 2024, was $(2.83) million, with an adjusted earnings per share of $(0.04), compared to $(6.46) million and $(0.09) in 2023 [26]. - The company incurred restructuring expenses of $(0.17) million for the three months ended December 31, 2024, compared to $(0.07) million in 2023 [26]. - The impairment loss on intangible assets for the year ended December 31, 2024, was $11.71 million, contributing to the overall financial performance [26].

Core Viewpoint - Telos Corporation will report its fourth quarter and full year 2024 financial results on March 10, 2025, and will host a webcast to discuss these results and the business outlook [1][2]. Group 1: Financial Reporting - The financial results for the fourth quarter and full year 2024 will be announced on March 10, 2025 [1]. - A webcast will be held at 9:30 a.m. ET to discuss the financial results and business outlook [1][2]. Group 2: Company Overview - Telos Corporation is a provider of cyber, cloud, and enterprise security solutions, focusing on security-conscious organizations [3]. - The company's offerings include cybersecurity solutions for IT risk management, cloud security solutions for compliance, and enterprise security solutions for identity and access management [3]. - Telos serves commercial enterprises, regulated industries, and government customers globally [3].

Core Insights - Telos Corporation has been awarded a prime contractor position under the U.S. Navy's SeaPort Next Generation (SeaPort NxG) contract, which allows the company to bid on task orders until 2028 [1][2][3] - The SeaPort NxG contract is a mandatory approach for the Navy to procure professional support services, enhancing Telos's relationship with the U.S. Navy [2][3] - Telos's CEO expressed optimism about providing various support services, including network engineering and cyber risk assessment, to the Navy [3] Market Access and Opportunities - The combination of SeaPort NxG and other federal government contracts positions Telos to access a market estimated at approximately $35 billion [3] - Telos has secured positions on multiple federal government blanket purchase agreements (BPA) and indefinite-delivery/indefinite-quantity (IDIQ) contract vehicles since 2023, expanding its business opportunities [3][7] Company Overview - Telos Corporation specializes in cybersecurity, cloud security, and enterprise security solutions, serving a range of clients including commercial enterprises and government customers [5] - The company's offerings include IT risk management, information security, cloud-based asset protection, and identity and access management [5]

Core Points - Telos Corporation has achieved StateRAMP High authorization for its Xacta cyber governance, risk, and compliance (GRC) solution, demonstrating its commitment to cybersecurity for state and local government agencies [1][2][3] - The Xacta platform has passed all necessary StateRAMP readiness and security assessments, ensuring it meets stringent cybersecurity requirements for data integrity and confidentiality [2][4] - This achievement positions Telos as a trusted partner for government agencies seeking secure cloud-based solutions that comply with StateRAMP standards [3][4] Company Overview - Telos Corporation provides cybersecurity, cloud, and enterprise security solutions, serving security-conscious organizations globally [7] - The company’s offerings include IT risk management, information security, cloud security, identity and access management, and network management [7] - Xacta has gained trust from prominent government agencies and regulated organizations over the past 20 years, addressing complex challenges in managing cyber risk and compliance [4]

Core Viewpoint - Telos Corporation (TLS) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][2]. Earnings Estimates and Stock Price Impact - Changes in a company's future earnings potential, as indicated by earnings estimate revisions, are strongly correlated with near-term stock price movements [3]. - Institutional investors often rely on earnings estimates to determine the fair value of a company's shares, leading to significant stock price movements based on their buying or selling actions [3]. Telos Corporation's Earnings Outlook - The upgrade for Telos reflects an improvement in the company's underlying business, which is expected to positively influence its stock price [4]. - For the fiscal year ending December 2024, Telos is projected to earn -$0.34 per share, representing a 47.8% decrease from the previous year's reported figure [7]. - Over the past three months, the Zacks Consensus Estimate for Telos has increased by 8.4%, indicating a positive trend in earnings estimates [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [6]. - The Zacks rating system maintains a balanced distribution of 'buy' and 'sell' ratings, ensuring that only the top 20% of stocks receive a 'Strong Buy' or 'Buy' rating, indicating superior earnings estimate revisions [8][9]. - Telos's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].