Yahoo Finance

• Total Revenue: $26.4 million, up 11% sequentially.

• Security Solutions Revenue: $21.9 million, 83% of total revenue, up 20% sequentially.

• Secure Networks Revenue: $4.5 million, 17% of total revenue.

• GAAP Gross Margin: 40.3%, expanded nearly 600 basis points year over year.

• Cash Gross Margin: 47%, expanded nearly 900 basis points year over year.

• Adjusted Operating Expenses: Declined by $2.4 million sequentially.

• Adjusted EBITDA: Improved from a $4.2 million loss to a $200,000 loss sequentially.

• Cash Flow from Operations: $10.5 million outflow.

• Free Cash Flow: $14.8 million outflow.

• TSA PreCheck Enrollment Centers: Increased from 26 to 218 locations in 2024.

• First Quarter 2025 Revenue Guidance: $28.2 million to $30.2 million, 7% to 15% sequential growth.

• First Quarter 2025 Adjusted EBITDA Guidance: Loss of $1.8 million to $800,000.

• First Quarter 2025 Cash Flow: Expected to be positive.

• Warning! GuruFocus has detected 3 Warning Signs with TLSRP.PFD.

Release Date: March 10, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Telos Corp (TLSRP.PFD) delivered fourth quarter revenue near the top end of the guidance range, with total company revenue growing 11% sequentially.

• Security Solutions revenue grew 20% sequentially, contributing 83% of total company revenue, driven by significant growth in TSA PreCheck enrollments and the Defense Manpower Data Center program.

• 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%, marking the highest quarter since the IPO in 2020.

• The company successfully expanded its TSA PreCheck program, increasing enrollment centers from 26 to 218 locations in 2024, with plans to reach 500 locations by the end of the year.

• Telos Corp (TLSRP.PFD) expects positive cash flow from operations and positive free cash flow in the first quarter of 2025, driven by high growth programs and one-time CapEx investments.

Negative Points

• Secure Networks revenue declined sequentially as expected due to the ramp down of existing programs, contributing only 17% of total company revenue.

• 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.

• The company is experiencing delays in the timing of awards from the government on single awards due to a change in administration and uncertainty around near-term priorities.

• Revenue recognition for the DMDC and DHS programs is impacted by the mix of third-party solutions, leading to a decrease in estimated revenue for these programs in 2025.

• Despite the positive outlook, the company forecasts an adjusted EBITDA loss of $1.8 million to $800,000 for the first quarter of 2025.