Telos(TLS) - 2024 Q4 - Annual Results

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].