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Telos (TLS)
NASDAQ:TLS
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Telos
(NASDAQ:TLS)
43Neutral
Positive Factors
Business Expansion
TLS resolved the protest on the Defense Manpower Data Center (DMDC) which is worth up to $485 million over five years and is currently generating revenue as the program ramps.
Financial Performance
TLS results beat 4Q Revenue and Adj. EBITDA expectations.
Growth Potential
There is potential upside to revenue if Telos can execute on its large contracts.
Negative Factors
Market Risks
New business carries risk in the government due to the new administration.
Revenue Guidance
1Q Revenue guidance came in slightly below consensus.
Segment Performance
Secure Networks revenues declined significantly primarily due to contract run-offs.
Telos (TLS) vs. S&P 500 (SPY)
Market Cap
$172.67M
Dividend YieldN/A
Average Volume (3M)342.14K
Price to Earnings (P/E)―
Beta (1Y)2.69
Revenue Growth-25.52%
EPS Growth-46.44%
CountryUS
Employees504
SectorTechnology
Sector Strength42
IndustryInformation Technology Services
Share Statistics
EPS (TTM)-0.73
Shares Outstanding72,552,120
10 Day Avg. Volume281,738
30 Day Avg. Volume342,141
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.83
Price to Cash Flow (P/CF)-4.70
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$4.88Price Target Upside104.18% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Telos Business Overview & Revenue Model
Company DescriptionTelos Corporation (TLS) is a leading provider of cyber, cloud, and enterprise security solutions. The company is headquartered in Ashburn, Virginia, and serves a diverse clientele including government agencies, commercial enterprises, and various sectors requiring stringent security measures. Telos offers a range of services including cybersecurity, identity management, secure mobility, and cloud security solutions, primarily designed to safeguard critical information and infrastructure.
How the Company Makes MoneyTelos Corporation generates revenue through a mix of product sales, software licensing, and professional services. The company's revenue streams are primarily driven by long-term contracts with government agencies and commercial clients who require advanced security solutions. Telos also earns money through recurring subscription fees for its software-as-a-service (SaaS) offerings, particularly in cloud security and identity management. Additionally, the company forms strategic partnerships with technology providers and systems integrators, which help expand its market reach and contribute to its revenue growth. Major factors contributing to Telos' earnings include its reputation for providing reliable, high-security solutions and its ability to adapt to the evolving cybersecurity landscape.
Telos Financial Statement Overview
Summary
Telos faces significant financial challenges, with declining revenue, persistent losses, and negative cash flows. While the balance sheet shows a strong equity position, the company's inability to generate positive earnings and cash flow raises concerns about its financial sustainability and operational efficiency.Income Statement
Telos has faced declining revenues over recent years, with a notable decrease from $242.4 million in 2021 to $108.3 million in 2024. The company is experiencing persistent losses, with a net income of -$52.5 million for 2024, indicating significant challenges in achieving profitability. Gross profit margins have declined, reflecting increased cost pressures or reduced pricing power. The negative EBIT and EBITDA margins further highlight operational inefficiencies or high fixed costs.35
Negative
Balance Sheet
Telos maintains a relatively strong equity position, with a positive stockholders' equity of $127.1 million in 2024. However, the debt-to-equity ratio remains low, indicating manageable leverage. The equity ratio reflects a healthy asset base supported by equity, but declining total assets and stockholders’ equity over the years signal potential long-term sustainability concerns.45
Neutral
Cash Flow
The company has shown negative free cash flow in recent periods, with a notable decline to -$28.2 million in 2024. Operating cash flow has also turned negative, indicating challenges in generating cash from core operations. This trend is concerning as it suggests difficulties in funding operations without external financing.30
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 108.27M | 145.38M | 216.89M | 242.43M | 179.92M | Gross Profit |
| 34.43M | 52.94M | 79.04M | 86.03M | 62.42M | EBIT |
| -49.50M | -40.31M | -53.85M | -41.46M | 14.05M | EBITDA |
| -46.79M | -24.17M | -46.61M | -36.76M | 19.41M | Net Income Common Stockholders |
| -52.52M | -34.42M | -53.43M | -43.13M | 6.84M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 54.58M | 99.26M | 119.31M | 126.56M | 106.05M | Total Assets |
| 158.24M | 208.70M | 237.40M | 246.08M | 183.82M | Total Debt |
| 8.06M | 11.47M | 21.69M | 15.25M | 17.26M | Net Debt |
| -46.52M | -87.79M | -97.62M | -111.31M | -88.79M | Total Liabilities |
| 31.10M | 49.70M | 65.04M | 65.83M | 56.71M | Stockholders Equity |
| 127.14M | 159.00M | 172.35M | 180.25M | 127.10M |
| Cash Flow | Free Cash Flow | |||
| -28.19M | -13.89M | 2.79M | -5.91M | -9.56M | Operating Cash Flow |
| -25.94M | 1.59M | 16.51M | 7.26M | -2.10M | Investing Cash Flow |
| -16.76M | -15.48M | -13.72M | -19.09M | -7.46M | Financing Cash Flow |
| -1.98M | -6.15M | -9.91M | 32.35M | 108.86M |
Telos Technical Analysis
Negative
2.39
Price Trends
2.99
Negative
3.24
Negative
3.42
Negative
Market Momentum
-0.16
Positive
29.20
Positive
9.73
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TLS, the sentiment is Negative. The current price of 2.39 is below the 20-day moving average (MA) of 2.65, below the 50-day MA of 2.99, and below the 200-day MA of 3.42, indicating a bearish trend. The MACD of -0.16 indicates Positive momentum. The RSI at 29.20 is Positive, neither overbought nor oversold. The STOCH value of 9.73 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TLS.
Telos Risk Analysis
Telos disclosed 44 risk factors in its most recent earnings report. Telos reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Telos Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $30.70B | ― | -1.21% | ― | 27.77% | 89.39% | |
69 Neutral | $18.27B | 1,786.52 | 0.46% | ― | 15.33% | ― | |
67 Neutral | $16.72B | 1,777.39 | -5.91% | ― | 33.10% | -20.31% | |
63 Neutral | $4.23B | ― | -9.73% | ― | 12.68% | 54.80% | |
57 Neutral | $20.94B | 10.43 | -13.41% | 2.52% | 4.53% | -23.34% | |
56 Neutral | $4.55B | ― | -20.26% | ― | 10.38% | 6.88% | |
43 Neutral | $172.67M | ― | -36.71% | ― | -25.52% | -46.44% |
* Technology Sector Average
Performance Comparison
TLS
Telos
2.42
-1.72
-41.55%
VRNS
Varonis Systems
41.56
-4.91
-10.57%
CYBR
CyberArk Software
345.69
83.28
31.74%
OKTA
Okta
105.38
3.22
3.15%
ZS
Zscaler
207.04
20.73
11.13%
TENB
Tenable Holdings
35.16
-12.67
-26.49%
Telos Earnings Call Summary
Earnings Call Date: Mar 10, 2025 | % Change Since: -16.72% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant sequential revenue growth, especially in the Security Solutions segment and TSA PreCheck program expansion. However, cash flow challenges and delays in government awards presented concerns. The company remains optimistic about future growth, with a focus on existing and new business pipelines.Highlights
Significant Revenue Growth and Margins
Telos delivered fourth-quarter revenue near the top end of the guidance range and adjusted EBITDA above the top end. Total company revenue grew 11% sequentially to $26.4 million. GAAP gross margin expanded nearly 600 basis points year-over-year to 40.3%, and cash gross margin expanded nearly 900 basis points year-over-year to 47%, the highest since the IPO in 2020.
Security Solutions Segment Success
Security solutions revenue grew 20% sequentially to $21.9 million or 83% of total company revenue. The transition from the incumbent contractor to the Defense Manpower Data Center (DMDC) program generated significant revenue, and TSA PreCheck enrollments grew over 30% sequentially.
Expansion of TSA PreCheck Program
The TSA PreCheck program expanded its network of enrollment centers from 26 to 218 locations in 2024. The program became the single largest by revenue during 2024 and is expected to deliver significant growth in 2025, with a target of 500 locations by year-end.
Strong Business Pipeline and New Orders
New orders were achieved with several customers, including the Office of Naval Intelligence, the U.S. Department of Energy, and a key renewal with the U.S. Federal government customer in the intelligence community. The automated message handling system (AMHS) business achieved key renewals as well.
Lowlights
Cash Flow Challenges
Cash flow from operations was a $10.5 million outflow, and free cash flow was a $14.8 million outflow, reflecting a short-term buildup of working capital associated with high growth programs and one-time CapEx investments.
Impact of Administrative Changes on New Awards
The change in administration has caused delays in the timing of awards from the government on single awards, affecting the company's ability to secure new contracts.
Revenue Recognition Adjustment
The revenue estimate for the DMDC and DHS programs was adjusted from $60 million to $85 million down to $50 million to $75 million due to the time phasing of revenue recognition during the first year, impacted by the mix of third-party solutions.
Company Guidance
In the Telos Corporation's fourth-quarter 2024 earnings call, the company provided guidance indicating positive momentum for 2025. The first quarter is expected to see a revenue increase of 7% to 15%, reaching $28.2 million to $30.2 million, driven primarily by security solutions. Adjusted EBITDA is forecasted to be a loss between $1.8 million and $800,000, with cash flow expected to be positive. For the full year 2025, Telos anticipates a return to revenue growth, with existing business projected to generate around $70 million, and the DMDC and DHS programs expected to contribute $50 million to $75 million. The TSA PreCheck program is positioned to expand significantly, targeting a market share in a $200 million market, supported by a planned increase in enrollment centers. The company also aims for improved gross margins due to a favorable shift towards higher-margin security solutions.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.