Quarterly Financial Report Discussion for Telos (TLS) in Q2 2025

Quarterly Financial Report Discussion for Telos (TLS) in Q2 2025

Telos Reports Strong Q2 Performance and Q3 Guidance

In a press release issued on Monday, August 11, 2025, at 1:30 p.m. ET, Telos Corporation announced its financial results for the second quarter of 2025, along with its Q3 2025 guidance.

The company reported a significant year-over-year improvement in free cash flow, with a figure of $8.4 million, or a 12.6% margin, in the first half of 2025. This improvement was primarily driven by a 82% growth in security solutions, partially offset by a contraction in secure networks. The same trends were observed in year-over-year revenue, profit, and cash flow for the entire first half of 2025.

The revenue growth in Q2 2025 was primarily attributed to the security solutions segment, which accounted for approximately 90% of the total company revenue. The TSA PreCheck program expansion also contributed to the growth, with the nationwide network increasing to 415 centers across 40 states and Puerto Rico, up 43% since the last earnings call in May 2025.

Telos reported a GAAP gross profit growth of 23% in Q2 2025, and an adjusted EBITDA improvement of $3.3 million, returning to a profit. The cash gross margin for the quarter was 38.4%, within the guidance and historical range of the last five years.

In terms of financial guidance, Telos projected a revenue range of $44 million to $47 million for Q3 2025, representing an 85% to 98% year-over-year growth. The expected adjusted EBITDA margin for Q3 2025, based on the adjusted EBITDA guidance of $4 million to $5.7 million, implies a margin range of approximately 9% to 12.9%.

The company resumed share repurchases in the second quarter, deploying $4 million to repurchase approximately 1.5 million shares at a weighted average price of $2.69 per share. Adjusted operating expenses are forecast to be approximately $14.3 million in Q3 2025.

Telos's Q3 2025 revenue guidance signals strong operational performance and margin expansion amid the company’s strategic growth initiatives in cybersecurity and federal program enrollment services. The company's capital allocation priority remains on continuing share buybacks, with a disciplined approach to M&A, focusing on organic growth.

[1] Telos Corporation Press Release, August 11, 2025. [2] Telos Corporation Q2 2025 Earnings Call Transcript, August 11, 2025. [3] Consensus analyst estimates as of August 11, 2025. [4] Calculated using the provided Q3 2025 revenue and adjusted EBITDA guidance.

1. Telos's strong Q2 performance and Q3 guidance indicate a positive outlook for the company's earnings, particularly in the areas of security solutions and technology-driven growth.
2. The company's focus on financial management and business strategy, as evident in its strategic initiatives in cybersecurity and federal program enrollment services, will likely contribute to further improvements in finance and cash flow.
3. As part of its capital allocation strategy, Telos plans to prioritize share buybacks, demonstrating its commitment to increasing shareholder value through technology-driven business growth and smart financial decisions.

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