Telos Raises Full-Year Profit Outlook on Telos ID
Second-quarter revenue reached $47.7 million, up 33% from a year earlier, and the company lifted full-year Adjusted EBITDA to as much as $28.6 million.
Telos Corporation (TLS), a provider of cyber, cloud and enterprise security solutions, reported second-quarter revenue of $47.7 million, up 33% from a year earlier, and said the result exceeded its guidance. The company attributed the increase primarily to 44% growth in Security Solutions, driven by the expansion of large programs in Telos ID.
Security Solutions revenue was $46.7 million in the three months ended June 30, 2026. Secure Networks revenue was $1.1 million.
GAAP net income was $0.7 million, or $0.01 a share, compared with a $9.5 million loss, or $0.13 a share, a year earlier. Adjusted EBITDA was $6.9 million, or a 14.4% margin, versus $0.4 million, or a 1.1% margin, in the year-ago quarter. Adjusted earnings were $0.04 a share. Adjusted EBITDA exceeded guidance, and the margin expansion reflected revenue growth in Telos ID and lower operating expenses.
GAAP gross margin was 35.0%. Cash gross margin was 40.6%. Both measures exceeded the company’s guidance assumptions, and the year-over-year expansion was primarily due to the performance of Telos ID. Cash gross profit was $19.4 million.
GAAP operating expenses declined 25% year-over-year, primarily due to lower stock-based compensation expense. Stock-based compensation was $3.2 million in the quarter. Adjusted operating expenses declined 6%, primarily due to restructuring and ongoing cost-management initiatives. Adjusted operating expenses were $13.4 million. Cash operating expenses were $14.5 million.
Cash flow from operations was $8.8 million, or 18.5% of revenue. Free cash flow increased 43% year-over-year to $6.6 million. The free-cash-flow margin was 13.9%, the sixth consecutive quarter above 12.0%.
Telos deployed $4.7 million to repurchase more than 1.0 million shares at an average price of $4.50 a share. Cash and cash equivalents were $50.6 million at June 30, 2026.
For the third quarter, the company forecast revenue of $49.2 million to $50.6 million, implying sequential growth, and Adjusted EBITDA of $6.0 million to $6.8 million, or a 12.2% to 13.4% margin. It expects ongoing share repurchases in the period.
For the full year ending December 31, 2026, Telos raised Adjusted EBITDA guidance to $23.6 million to $28.6 million from a prior range of $20.6 million to $28.0 million. Adjusted EBITDA margin guidance moved to 12.6% to 14.7% from 11.0% to 14.0%. Full-year revenue guidance was lowered to $187 million to $195 million from $187 million to $200 million, with year-over-year growth narrowed to 14% to 18% from 14% to 21%. It raised the full-year profit outlook on slightly lower revenues.
The mix of the quarter was concentrated in Security Solutions, with Telos ID the named driver of both the top-line beat and the gross-margin expansion. Secure Networks remained a small remainder of the $47.7 million total. GAAP results flipped to a modest profit after a year-ago loss, while Adjusted EBITDA and adjusted earnings per share moved to positive territory. Operating expenses fell due to lower stock-based compensation and, on an adjusted basis, restructuring and cost management. Cash generation stayed robust: operating cash flow covered 18.5% of revenue, free cash flow rose 43%, and the free-cash-flow margin held above 12.0% for a sixth straight quarter. The company continued to buy back stock and ended the quarter with $50.6 million in cash and cash equivalents. Third-quarter guidance is for sequential revenue growth and continued buybacks. Full-year profit guidance is higher even as the revenue range is trimmed, the combination the company described as a raise on the profit outlook on slightly lower revenues.