The earnings call reflected a mixed outlook with significant achievements such as strong revenue performance, growth in Security Solutions, successful resolution of the DMDC protest, and expansion of TSA PreCheck centers. However, these were offset by notable restructuring costs, declines in Secure Networks revenue, and challenges in meeting previous revenue forecasts.

Company Guidance

During the Telos Corporation's Q3 2024 earnings call, the company provided detailed fourth-quarter guidance, projecting revenue growth of 3% to 11% sequentially, amounting to $24.5 million to $26.5 million. Security Solutions is anticipated to drive this growth, with expected sequential increases of low teens to low 20%, bolstered by the TSA PreCheck enrollments and the Defense Manpower Data Center (DMDC) program. Secure Networks revenues are expected to decline sequentially, contributing to over 80% of total company revenues coming from Security Solutions. GAAP gross margin is projected to expand by 170 to 230 basis points year-over-year, and cash gross margin by 465 to 580 basis points. Adjusted EBITDA loss is forecasted between $4.5 million and $3.5 million. The company also outlined 2025 revenue drivers, estimating existing business to generate $60 million to $65 million and DMDC and DHS programs potentially contributing $60 million to $85 million in a typical year.

Revenue and EBITDA Performance

Telos delivered revenue near the top end of the guidance range at $23.8 million and adjusted EBITDA above the top end of the guidance range, with a $4.1 million loss compared to a guidance loss of $8 million to $6.5 million.

Security Solutions Growth

Security Solutions delivered $18.3 million or 77% of total revenue, with a 3% sequential growth due to double-digit growth in Telos ID, driven by the TSA PreCheck program.

TSA PreCheck Program Expansion

The TSA PreCheck program accelerated its network of enrollment centers, doubling the footprint from 83 to 173 locations, with plans to reach 500 locations by 2025.

Resolution of DMDC Protest

The protest on the Defense Manpower Data Center (DMDC) program worth up to $485 million was resolved in favor of Telos, and revenues are currently being generated.

Cash Gross Margin Improvement

Cash gross margin expanded 250 basis points year-over-year to 44%, marking the company's highest cash gross margin since its IPO in 2020.

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Telos (TLS) Earnings, Revenues Date & History

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TLS Earnings History

Report Date	Fiscal Quarter	Forecast / EPS	Last Year's EPS	EPS YoY Change	Slides	Play Transcript
Mar 25, 2021	2020 (Q4)	- / 0.08	-0.054	248.15% (+0.13)	―	―
May 17, 2021	2021 (Q1)	-0.04 / 0.00	―	―	―	―
Aug 16, 2021	2021 (Q2)	0.02 / 0.04	―	―	―	―
Nov 15, 2021	2021 (Q3)	0.10 / 0.10	-0.005	2100.00% (+0.11)	―	―
Mar 16, 2022	2021 (Q4)	0.04 / 0.11	0.08	37.50% (+0.03)	―	―
May 10, 2022	2022 (Q1)	-0.01 / -0.01	0	―	―	―
Aug 09, 2022	2022 (Q2)	-0.03 / 0.04	0.04	0.00% (0.00)	―	―
Nov 09, 2022	2022 (Q3)	0.02 / 0.10	0.1	0.00% (0.00)
Mar 16, 2023	2022 (Q4)	>-0.01 / 0.05	0.11	-54.55% (-0.06)
May 10, 2023	2023 (Q1)	-0.13 / -0.04	-0.01	-300.00% (-0.03)

The table shows recent earnings report dates and whether the forecast was beat or missed. See the change in forecast and EPS from the previous year.

Beat

Missed

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TLS Earnings-Related Price Changes

Report Date	Price 1 Day Before	Price 1 Day After	Percentage Change
Nov 12, 2024	$4.24	$3.92	-7.55%
Aug 09, 2024	$3.77	$2.00	-46.95%
May 10, 2024	$3.38	$3.42	+1.18%
Mar 15, 2024	$3.15	$3.96	+25.71%

Earnings announcements can affect a stock’s price. This table shows the stock's price the day before and the day after recent earnings reports, including the percentage change.

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