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1. Company Snapshot

1.a. Company Description

Telos Corporation, together with its subsidiaries, provides information technology (IT) solutions and services worldwide.It provides Xacta, a premier platform for enterprise cyber risk management and security compliance automation solutions to large commercial and government enterprises; and Telos Ghost, a solution to eliminate cyber-attack surfaces by obfuscating and encrypting data, masking user identity and location, and hiding network resources, as well as provides security and privacy for intelligence gathering, cyber threat protection, securing critical infrastructure, and protecting communications and applications.The company also offers Telos Automated Message Handling System, a web-based organizational message distribution and management platform for mission-critical communications used by military field operatives; and Telos ID that provides identity trust and digital services through IDTrust360, an enterprise-class digital identity risk platform for extending cloud identity services for mobile and enterprise and custom digital identity services that reduces threats through the integration of advanced technologies that fuse biometrics, credentials, and other identity-centric data used for continuously monitor trust.


In addition, it provides secure network services, including secure mobility solutions for business and government that enable remote work and minimize operational and security concern across and beyond the enterprises; and network management and defense services for operating, administrating, and defending complex enterprise networks and defensive cyber operations.It serves to the United States federal government, large commercial businesses, state and local governments, and international customers.The company was founded in 1968 and is headquartered in Ashburn, Virginia.

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1.b. Last Insights on TLS

Negative drivers behind Telos Corporation's recent performance include declining revenue and weak fundamentals. The company's Q4 2024 earnings report showed a loss of $0.04 per share, which was narrower than the Zacks Consensus Estimate of a loss of $0.09. However, revenue declined, and profitability was weak. Additionally, Telos has struggled with revenue decline and weak fundamentals, as noted in a recent research report. Despite this, the company has secured several contracts, including a $5.8 million award to support the U.S. Department of Defense's Microwave Line of Sight program.

1.c. Company Highlights

2. Telos Corporation's Q3 2025 Earnings Exceed Expectations

Telos Corporation reported a strong third quarter of 2025, with revenue surging 116% year-over-year to $51.4 million, accompanied by an adjusted EBITDA of $10.1 million, surpassing the guided range of $4 million to $5.7 million. The company's earnings per share (EPS) came in at $0.09, significantly beating estimates of $0.02. The revenue growth was primarily driven by Telos ID, which contributed to a 44% year-over-year revenue increase in the first nine months of 2025. The adjusted EBITDA margin expansion is a positive indicator, as the company continues to scale its operations.

Publication Date: Dec -02

📋 Highlights
  • Q3 2025 Revenue Growth:: Revenue surged 116% YoY to $51.4M, exceeding guidance with adjusted EBITDA of $10.1M.
  • Telos ID Revenue Growth:: Achieved 44% YoY growth in first 9 months of 2025, driving outperformance.
  • 2026 Revenue Baseline:: Existing programs projected to generate $180M in 2026, with $5B pipeline offering $100M+ incremental revenue potential.
  • Xacta.ai Upside Potential:: Customers reported 93% efficiency gains in cyber governance, with upsell opportunities to existing Xacta clients.
  • EBITDA Margin Target:: Aims for 10–11% adjusted EBITDA margin at $180M baseline, with incremental revenue expected to boost margins to 20–30%.

Operational Highlights and Future Outlook

The company achieved significant milestones, including the launch of its new Xacta.ai product, securing its first enterprise customer, and reaching 500 enrollment locations for the TSA PreCheck program. For the fourth quarter, Telos forecasts revenue growth of 67% to 76% year-over-year to a range of $44 million to $46.3 million, with adjusted EBITDA of $4 million to $5.7 million. The company expects existing programs to generate approximately $180 million of revenue in 2026, with potential upside from sales of Xacta.ai software and new program wins.

Valuation and Growth Prospects

Analysts estimate next year's revenue growth at 19.7%. With a current P/S Ratio of 2.85, the market is pricing in moderate growth expectations. The EV/EBITDA ratio stands at -18.38, indicating that the company's valuation is sensitive to changes in its EBITDA. The company's ROIC and ROE are currently negative, but this is expected to improve as the business continues to grow. With a pipeline of $5 billion, offering a revenue opportunity of several tens of millions for 2026, Telos is well-positioned for future growth.

Xacta.ai and Expansion Opportunities

The company is optimistic about the potential of Xacta.ai, with positive feedback from customers indicating potential improvements in efficiencies of up to 93% across cyber governance, risk, and compliance tasks. Telos sees an upsell potential to existing Xacta customers and plans to continue expanding its TSA program, serving both TSA and community enrollment and renewal populations. The primary target for Xacta.ai remains the existing installed base, with a great deal of excitement from customers.

Margin Expansion and Cash Flow

Telos targets a low double-digit adjusted EBITDA margin, around 10% to 11%, at the base $180 million of revenue. As additional growth comes in above that, the adjusted EBITDA margin is expected to run higher. The company expects another good year of free cash flow in 2026, with potential for upside to the base adjusted EBITDA margin depending on the margin profile of additional revenue and growth investments. The incremental EBITDA margin for new business wins is expected to be above the baseline, likely in the 20% to 30% range.

3. NewsRoom

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Mawson Infrastructure Group (NASDAQ:MIGI) & Telos (NASDAQ:TLS) Head to Head Survey

Dec -07

Source: defenseworld.net

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CyberArk Unveils Free Tool and Powerful TLS Certificate Scan to Help Organizations Tackle Soaring Labor Costs and Disruptive System Outages

Nov -19

Source: businesswire.com

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Acadian Asset Management LLC Sells 145,540 Shares of Telos Corporation $TLS

Nov -14

Source: defenseworld.net

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Telos Corporation (TLS) Q3 2025 Earnings Call Transcript

Nov -10

Source: seekingalpha.com

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Telos Corporation (TLS) Beats Q3 Earnings and Revenue Estimates

Nov -10

Source: zacks.com

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Telos Corporation Announces Third Quarter 2025 Earnings

Nov -10

Source: globenewswire.com

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Telos Corporation to Participate in Upcoming Investor Conferences

Nov -03

Source: globenewswire.com

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Telos Corporation to Announce Third Quarter 2025 Financial Results on November 10, 2025

Oct -27

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (13.32%)

6. Segments

Security Solutions

Expected Growth: 14.07%

Telos Corporation's Security Solutions segment growth of 14.07% is driven by increasing demand for cloud-based security solutions, expansion into new markets, and strategic partnerships. Additionally, the growing need for cybersecurity and compliance solutions, particularly in the government and enterprise sectors, contributes to the segment's growth.

Secure Networks

Expected Growth: 12.47%

Telos Corporation's Secure Networks segment growth of 12.47% is driven by increasing demand for cybersecurity solutions, expansion into new markets, and strategic partnerships. The company's expertise in vulnerability assessment and penetration testing, as well as its compliance with government regulations, have contributed to its growth. Additionally, the rising need for secure network infrastructure and cloud security solutions has fueled the segment's growth.

7. Detailed Products

Cyber Mission Assurance

Telos Corporation's Cyber Mission Assurance provides cybersecurity solutions to protect sensitive information and prevent cyber threats.

Xacta

Xacta is a risk management and compliance solution that helps organizations manage and mitigate risks.

Telos Ghost

Telos Ghost is a secure, cloud-based platform that provides secure communication and collaboration tools for sensitive information.

Telos ID

Telos ID is an identity management solution that provides secure authentication and access control.

Continuous Diagnostics and Mitigation (CDM)

CDM is a cybersecurity solution that provides continuous monitoring and mitigation of cyber threats.

8. Telos Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Telos Corporation operates in a niche market with limited substitutes, but the threat of substitutes is still present due to the evolving nature of the industry.

Bargaining Power Of Customers

Telos Corporation's customers have limited bargaining power due to the specialized nature of the company's products and services.

Bargaining Power Of Suppliers

Telos Corporation's suppliers have some bargaining power due to the company's reliance on specialized components, but the company's strong relationships with suppliers mitigate this risk.

Threat Of New Entrants

The threat of new entrants is high in Telos Corporation's industry due to the relatively low barriers to entry and the attractiveness of the market.

Intensity Of Rivalry

The intensity of rivalry in Telos Corporation's industry is high due to the presence of several established competitors and the high stakes involved in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 6.73%
Debt Cost 6.85%
Equity Weight 93.27%
Equity Cost 8.38%
WACC 8.28%
Leverage 7.21%

11. Quality Control: Telos Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Cantaloupe

A-Score: 5.2/10

Value: 3.3

Growth: 8.7

Quality: 7.1

Yield: 0.0

Momentum: 7.0

Volatility: 5.0

1-Year Total Return ->

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IBEX

A-Score: 5.0/10

Value: 5.0

Growth: 5.7

Quality: 6.1

Yield: 0.0

Momentum: 10.0

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
WidePoint

A-Score: 3.8/10

Value: 5.1

Growth: 4.6

Quality: 4.4

Yield: 0.0

Momentum: 7.5

Volatility: 1.3

1-Year Total Return ->

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Stock-Card
Conduent

A-Score: 3.6/10

Value: 8.4

Growth: 3.7

Quality: 4.2

Yield: 0.0

Momentum: 1.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Telos

A-Score: 3.6/10

Value: 6.8

Growth: 0.8

Quality: 3.3

Yield: 0.0

Momentum: 10.0

Volatility: 0.7

1-Year Total Return ->

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Stock-Card
Grid Dynamics

A-Score: 2.9/10

Value: 4.3

Growth: 4.3

Quality: 5.5

Yield: 0.0

Momentum: 0.5

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

6.08$

Current Price

6.08$

Potential

-0.00%

Expected Cash-Flows