Telos(US:TLS)2025-11-10 15:30Financial Data and Key Metrics Changes - Revenue grew 116% in Q3 2025 to $51.4 million, exceeding guidance of $44-$47 million [7] - GAAP gross margin was 39.9%, and cash gross margin was 44.8%, both above guidance and previous quarter margins [7] - Adjusted EBITDA was $10.1 million, surpassing guidance of $4-$5.7 million, with an adjusted EBITDA margin of 19.6% [8][10] - Free cash flow was $6.6 million, representing a 12.8% free cash flow margin [8] Business Line Data and Key Metrics Changes - Telos ID was a significant driver of revenue growth, contributing to the overall performance [5][15] - Adjusted operating expenses were approximately $500,000 better than guidance due to cost discipline [7] Market Data and Key Metrics Changes - The company achieved a cumulative revenue growth of 44% in the first nine months of 2025 [9] - Cash gross margin expanded by 30 basis points to 43% year-over-year [9] Company Strategy and Development Direction - The company plans to continue evolving its Xacta platform with increased automation and new features [11] - The TSA PreCheck program has reached 504 enrollment locations, with plans for further evaluation and improvement [12][13] - The company forecasts existing programs will generate approximately $180 million in revenue for 2026, driven by growth in Telos ID [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the government shutdown has caused delays in awards and administrative processes, but the impact on P&L has been modest [18][19] - The company maintains a robust pipeline of opportunities, with several tens of millions of revenue expected from new business in 2026 [21][41] - Management expressed confidence in continued year-over-year growth into the fourth quarter and 2026 [15][68] Other Important Information - The company has a multi-billion dollar pipeline of new business opportunities, with expectations for significant awards in the coming months [21][41] - The company has deployed $7.6 million to repurchase 2.1 million shares at a weighted average price of $3.69 per share [10] Q&A Session Summary Question: Impact of government shutdown on award decisions - Management indicated that awards are stalled and generally delayed due to the government shutdown, but the impact on P&L has been modest [18][19] Question: Initial feedback on Xacta AI product - Management reported strong initial traction with one major enterprise deployment and positive customer feedback [22][29] Question: Growth plans for TSA PreCheck program - Management stated that they will continue to evaluate and expand the network of enrollment locations to serve travelers better [36][38] Question: Revenue potential from the pipeline for 2026 - Management confirmed that the pipeline remains robust, with several tens of millions of revenue expected from new business opportunities [41][56] Question: Upsell potential for existing Xacta customers - Management noted significant excitement among existing customers for Xacta AI, with plans to target the installed base first [44][45]