Financial Data and Key Metrics Changes - Total company revenue grew 16% sequentially to $30.6 million, exceeding guidance [7] - GAAP gross margin was 39.8%, and cash gross margin was 45.3%, both exceeding guidance due to a favorable mix [8] - Adjusted EBITDA was a profit of $362,000 compared to guidance of a loss between $1.8 million to $800,000 [8] - Cash flow from operations was positive at $6.1 million, and free cash flow was positive at $3.8 million [9] Business Line Data and Key Metrics Changes - Security Solutions revenue grew 18% sequentially to $25.8 million, while Secure Networks revenue grew 8% sequentially to $4.8 million [8] - Security Solutions revenue increased from 63% of total company revenue in Q1 2024 to 84% in Q1 2025 [10] - Adjusted operating expenses declined by $1.3 million year over year due to a restructuring and cost reduction plan [11] Market Data and Key Metrics Changes - Revenue grew 3% year over year, driven by a 39% increase in Security Solutions, partially offset by contraction in Secure Networks [9] - Cash flow from operations increased by $6.5 million year over year, and free cash flow increased by $7.4 million [11] Company Strategy and Development Direction - The company is focusing on expanding its TSA PreCheck program, targeting 500 enrollment locations by the end of 2025 [12][13] - The DMDC program is expected to be a major source of revenue growth over the next several quarters [13] - The company anticipates year-over-year growth in revenue, adjusted EBITDA, and cash flow to accelerate in the second half of 2025 [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver mission-critical offerings to government customers and highlighted the robust pipeline of opportunities [19][29] - The company expects cash flow to significantly improve year over year, driven by TSA PreCheck performance [31] - Management acknowledged that the renewal market is expected to contract significantly this year [52] Other Important Information - The company has achieved new orders with several customers, including federal government agencies and a Fortune 100 technology company [14] - The business pipeline remains robust, with over $4 billion in opportunities [29] Q&A Session Summary Question: Any changes on the new business front and margin profile for DMDC? - Management indicated that DMDC will generate substantial revenue but will be dilutive to overall margins as lower margin revenue streams ramp up [25][26] Question: What is the expected cash gross margin by year-end? - Management suggested a potential step down of approximately 600 basis points in cash gross margin from the first half to the second half of the year [37] Question: Performance of existing TSA PreCheck footprint and rollout visibility? - Management expressed confidence in TSA PreCheck as a key driver of financial performance, with significant cash flow expected [31] Question: Expectations for free cash flow in Q2 and full year? - Management did not provide specific guidance for Q2 free cash flow but indicated a significant improvement year over year compared to the previous year [42][48] Question: Which business line was the bigger outperformer in Q1? - Management confirmed that Security Solutions was the bigger outperformer, driven by both TSA PreCheck and DMDC [49][50]

Financial Data and Key Metrics Changes - Total company revenue grew 16% sequentially to $30.6 million, exceeding guidance [7] - GAAP gross margin was 39.8%, and cash gross margin was 45.3%, both exceeding guidance due to a favorable mix [8] - Adjusted EBITDA was a profit of $362,000, compared to guidance of a loss between $1.8 million to $800,000 [8] - Cash flow from operations was positive at $6.1 million, and free cash flow was positive at $3.8 million [9] - Year-over-year revenue grew 3%, driven by a 39% increase in security solutions, partially offset by a contraction in secure networks [9] Business Line Data and Key Metrics Changes - Security solutions revenue grew 18% sequentially to $25.8 million, while Secure Networks grew 8% sequentially to $4.8 million [7] - Security solutions revenue increased from 63% of total company revenue in Q1 2024 to 84% in Q1 2025 [10] - Adjusted operating expenses declined by $1.3 million year over year due to a restructuring and cost reduction plan [11] Market Data and Key Metrics Changes - The TSA PreCheck program is expanding, with 73 new enrollment locations added, totaling 291 locations across the U.S. [12] - The DMDC program is ramping on schedule and is expected to be a major source of revenue growth [13] Company Strategy and Development Direction - The company aims to achieve 500 TSA PreCheck enrollment locations by the end of 2025 [13] - The focus remains on expanding security solutions, particularly through the DMDC and TSA PreCheck programs [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving year-over-year growth in revenue, adjusted EBITDA, and cash flow, particularly in the second half of 2025 [20] - The company anticipates a significant turnaround in cash flow for the full year, driven by TSA PreCheck performance [31] Other Important Information - The company expects revenue for the full year to be comprised of existing business and new programs, estimating DMDC and DHS programs could generate $50 million to $75 million [17] - The overall market for renewals is expected to contract significantly this year [52] Q&A Session Summary Question: Any changes on the new business front and margin profile for DMDC? - Management indicated that DMDC will generate substantial revenue but will be dilutive to overall margins, with lower margin revenue streams ramping [25][26] Question: What is the cash gross margin outlook for the year? - Management expects approximately 600 basis points of sequential cash gross margin dilution from the first half to the second half of the year [37] Question: Will free cash flow be negative in Q2 2025? - Management did not guide on Q2 free cash flow but indicated a significant improvement compared to the previous year [42][48] Question: Which business line was the bigger outperformer in Q1? - Security solutions was identified as the bigger outperformer, driven by both TSA PreCheck and DMDC [49][50] Question: What is the outlook for the renewal market? - The renewal market is expected to contract significantly this year, as observed in Q1 [52]

Financial Data and Key Metrics Changes - Total company revenue grew 16% sequentially to $30.6 million, exceeding guidance [6] - Security solutions revenue increased 18% sequentially to $25.8 million, while Secure Networks revenue grew 8% sequentially to $4.8 million [7] - GAAP gross margin was 39.8%, and cash gross margin was 45.3%, both exceeding guidance [7] - Adjusted EBITDA was a profit of $362,000, compared to guidance of a loss between $1.8 million and $800,000 [7] - Cash flow from operations was positive at $6.1 million, and free cash flow was positive at $3.8 million [8] Business Line Data and Key Metrics Changes - Security solutions revenue represented 84% of total company revenue in Q1 2025, up from 63% in Q1 2024 [10] - Revenue growth in security solutions was driven by the successful transition of the DMDC program and TSA PreCheck enrollment volume [9] - Secure Networks contracted due to the completion and ramp down of multiple programs [10] Market Data and Key Metrics Changes - The company expects TSA PreCheck to be a significant driver of financial performance, with 291 locations currently operational and a target of 500 by the end of 2025 [12][13] - The DMDC program is expected to be a major source of revenue growth over the next several quarters [13] Company Strategy and Development Direction - The company is focused on expanding its TSA PreCheck enrollment network and has added 73 new locations in the past nine weeks [12] - A restructuring and cost reduction plan was implemented to maximize operating leverage as the company returns to growth in 2025 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving year-over-year growth in revenue, adjusted EBITDA, and cash flow, particularly in the second half of 2025 [19] - The company anticipates revenue growth of 14% to 21% year-over-year for Q2 2025, primarily driven by security solutions [15] Other Important Information - The company has a robust business pipeline exceeding $4 billion, with several hundred opportunities being pursued [30] - The renewal market is expected to contract significantly this year, impacting overall market dynamics [52] Q&A Session Summary Question: Changes on the new business front and DMDC margin profile - Management indicated that the DMDC program will be dilutive to overall margins, with lower margin revenue streams ramping up [25] Question: Incremental new business this year - The business pipeline remains robust, with several hundred opportunities, but any incremental growth will likely be single-digit [30] Question: Performance of existing TSA PreCheck footprint - Management expressed confidence in TSA PreCheck's contribution to cash generation and overall financial performance [32] Question: Cash gross margins and DMDC revenues - Management projected a potential step down in cash gross margins by approximately 600 basis points from the first half to the second half of the year [37] Question: Free cash flow expectations for Q2 2025 - Management did not provide specific guidance but indicated a significant improvement compared to the previous year [44] Question: Outperformance from security solutions and secure networks - Security solutions were identified as the bigger outperformer, driven by both DMDC and TSA PreCheck [50]

May 9, 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 effective registration statement with the Securities ...

Core Viewpoint - Telos Corporation has released its first quarter financial results for 2025, highlighting its position as a leading provider of security solutions for organizations with high security needs [1][3]. Financial Results - The financial results for the first quarter of 2025 are available on Telos' investor relations website [1]. - A live webcast to discuss these results is scheduled for May 9, 2025, at 9:30 a.m. ET, with an archived version available shortly after [2]. Company Overview - Telos Corporation specializes in cybersecurity, cloud security, and enterprise security solutions, catering to commercial enterprises, regulated industries, and government customers globally [3]. - The company's offerings include IT risk management, information security, cloud-based asset protection, identity and access management, secure mobility, organizational messaging, and network management [3].

Financial Performance - Telos Corporation reported $30.6 million in revenue for Q1 2025, a 16.1% sequential growth from Q4 2024, with 84.3% of revenue from Security Solutions[1][4] - The GAAP gross margin increased to 39.8%, up 278 basis points year-over-year, while cash gross margin rose to 45.3%, an increase of 313 basis points[1][4] - Adjusted EBITDA for Q1 2025 was $0.4 million, a $2.7 million improvement year-over-year, attributed to revenue growth and lower adjusted operating expenses[1][4] - Cash flow from operations was $6.1 million, and free cash flow was $3.8 million, driven by revenue growth and favorable working capital dynamics[1][4] - For Q2 2025, the company forecasts revenue growth of 14% to 21% year-over-year, estimating revenues between $32.5 million and $34.5 million[2] Operational Highlights - The Defense Manpower Data Center (DMDC) program is ramping towards full operational capacity, contributing to revenue growth in Security Solutions[4] - The company expanded its TSA PreCheck enrollment locations to 291, further driving growth in its Security Solutions segment[4] Loss and Expenses - GAAP net loss for Q1 2025 was $8.6 million, compared to a net loss of $7.4 million in Q1 2024[1][5] - Adjusted net loss improved to $2.1 million from $5.7 million year-over-year, reflecting operational improvements[5] - Operating expenses for the three months ended March 31, 2025, were $21,204,000, an increase from $19,399,000 in the same period of 2024[27] - Stock-based compensation expense for the three months ended March 31, 2025, was $7,048,000, compared to $2,984,000 in the same period of 2024[22] Balance Sheet - Total assets as of March 31, 2025, were $158,061,000, a slight decrease from $158,235,000 as of December 31, 2024[19] - The total stockholders' equity decreased to $126,114,000 as of March 31, 2025, from $127,137,000 as of December 31, 2024[19] - Cash and cash equivalents at the end of the period were $57,930,000, up from $54,717,000 at the beginning of the period[21] Profitability Metrics - Adjusted EBITDA for the three months ended March 31, 2025, was $362,000, a significant improvement from an adjusted EBITDA loss of $2,335,000 in the same period of 2024[22] - Gross profit for the three months ended March 31, 2025, was $12,182,000, with a gross margin of 39.8%, compared to a gross profit of $10,961,000 and a margin of 37.0% in the prior year[25] - Free cash flow for the three months ended March 31, 2025, was $3,769,000, a turnaround from a negative free cash flow of $3,649,000 in the same period of 2024[26]

Core Viewpoint - Telos Corporation will report its first quarter 2025 financial results on May 9, 2025, and will host a webcast to discuss these results and the business outlook [1][2]. Group 1: Financial Results Announcement - The financial results for the first quarter of 2025 will be reported on May 9, 2025 [1]. - A webcast will be held at 9:30 a.m. ET to discuss the financial results and business outlook [1][2]. - An on-demand replay of the webcast will be available on the company's investor relations website [2]. Group 2: Company Overview - Telos Corporation provides cybersecurity, cloud, and enterprise security solutions for security-conscious organizations [3]. - The company's offerings include IT risk management, information security, cloud security, identity and access management, secure mobility, organizational messaging, and network management [3]. - Telos serves commercial enterprises, regulated industries, and government customers globally [3].

Core Viewpoint - Telos Corporation has been awarded a $5.8 million contract to provide Field Service Representative support for the U.S. Department of Defense's Microwave Line of Sight program, emphasizing its commitment to delivering secure communication solutions for military operations [1][3]. Group 1: Contract Details - The contract includes a six-month base period from April 2, 2025, to September 30, 2025, with an option for an additional three months extending to December 31, 2025 [1]. - The MLoS program aims to provide high-bandwidth, low-latency communication infrastructure for warfighters, ensuring critical connectivity across the battlefield [2]. Group 2: Technical Capabilities - Telos' MLoS solutions offer high bandwidth of up to 300 Mbps full duplex and support both point-to-point and point-to-multi-point functionality [4]. - The contract allows for up to 95% repurposing of MLoS equipment costs, providing a cost-effective alternative to traditional fiber solutions [3]. Group 3: Company Expertise - Telos has successfully deployed over 500 systems in the Middle East, providing 24/7 global field support in high-threat environments [4]. - The company boasts a diverse team with 75% prior military service and extensive experience in contingency operations, enhancing its operational readiness [6]. Group 4: Industry Position - This contract reinforces Telos Corporation's position as a trusted leader in secure communication solutions, aligning with U.S. national security objectives [4]. - The company offers a range of cybersecurity solutions, cloud security, and enterprise security services to various sectors, including government and regulated industries [5].

Core Points - Telos Corporation has opened a new permanent TSA PreCheck enrollment center at Eastern Iowa Airport (CID) to enhance convenience for travelers in Cedar Rapids, Iowa [1][2] - The new center will serve both airport employees needing identification badges and travelers enrolling in TSA PreCheck [3] - TSA PreCheck offers expedited security screening, allowing members to keep shoes, belts, and light jackets on, with 99% of members waiting less than 10 minutes at checkpoints [6] Company Overview - Telos Corporation (NASDAQ: TLS) specializes in security solutions, including cybersecurity, cloud security, and identity management [10] - The company operates 228 TSA PreCheck enrollment centers across the U.S., with the CID center being a relocation from a temporary site established in July 2024 [2][5] - Telos aims to improve travel efficiency and reduce stress for passengers through its TSA PreCheck services [5] Enrollment Process - New TSA PreCheck applicants can pre-enroll and schedule appointments via the Telos TSA PreCheck website, with existing members able to renew their enrollment online [7] - The enrollment process includes a 10-minute in-person appointment for identity verification, photo capture, and payment collection [8] - Most applicants receive their Known Traveler Number (KTN) within 3-5 days, although some may take up to 60 days for processing [8][9] Airport Information - Eastern Iowa Airport (CID) offers nonstop service to 18 destinations with five airlines and is served by three air cargo carriers [11] - The airport is undergoing modernization, which includes the new TSA PreCheck enrollment center located in the terminal lobby for increased visibility [4][2]

Core Points - Government Acquisitions, Inc. (GAI) and Telos Corporation have been awarded a contract for the third phase of the Wi-Fi network expansion program at the United States Air Force Academy (USAFA) to enhance academic and operational connectivity [1][2] - The project aims to modernize campus connectivity and improve mission-critical digital capabilities by upgrading and expanding the Wi-Fi system across six locations at the academy in Colorado Springs, Colorado [2][3] - Telos has successfully completed the first two phases of the Wi-Fi network expansion program from 2020 to 2023, demonstrating a strong commitment to enhancing the academy's digital infrastructure [3] Company Overview - Telos Corporation specializes in cybersecurity, cloud security, and enterprise security solutions, serving security-conscious organizations globally [5] - Government Acquisitions, Inc. (GAI) focuses on empowering federal agencies through cutting-edge technologies and collaborative partnerships, with expertise in cybersecurity, infrastructure, analytics, automation, and artificial intelligence [6]