Telos Raises Full-Year Outlook After Record Quarterly Profit

The Tip Desk · November 9, 2026 · 2 min read

Third-quarter revenue of $55.2 million exceeded guidance as GAAP net income reached $4.4 million, the highest quarterly profit since the IPO.

Telos Corporation (TLS), a provider of cyber, cloud and enterprise security solutions, reported $55.2 million of revenue for the three months ended September 30, 2026, up 7.3% from a year earlier and above its prior outlook. The company said the increase was driven by 16.6% growth in Security Solutions, primarily from expansion of large programs in Telos ID.

GAAP net income was $4.4 million, or $0.06 a share, compared with a $2.1 million loss, or $0.03 a share, a year earlier. The company described the result as the highest quarterly profit since its IPO. Operating income was $4.1 million versus a $2.5 million loss a year earlier. Adjusted EBITDA was $10.6 million, or a 19.2% margin, exceeding guidance; a year earlier Adjusted EBITDA was $10.1 million, or a 19.6% margin.

Security Solutions revenue was $54.2 million. Secure Networks revenue was $1.0 million. GAAP gross margin was 37.9%, versus 39.9% a year earlier. Cash gross margin was 43.1%. The company said both measures exceeded guidance assumptions, primarily due to performance of Telos ID. GAAP operating expenses declined 26.8% year-over-year because of lower stock-based compensation expense, which was $3.0 million versus $9.4 million a year earlier. Adjusted operating expenses increased 1.8%.

Cash flow from operations was $9.4 million, or 17.1% of revenue. Free cash flow increased 11.9% year-over-year to $7.4 million, a 13.4% margin that the company said marked the seventh consecutive quarter above 12.0%. Cash and cash equivalents were $51.8 million at September 30, 2026.

The company deployed $5.7 million to repurchase more than 1.2 million shares at an average price of $4.59 a share. Contract liabilities, current portion, were $16.4 million at quarter-end.

Information Assurance secured $58 million of net new Xacta and professional services orders that the company said are forecasted to generate approximately $20 million of revenue in 2027. Telos raised full-year revenue guidance to $198.2 million to $200.7 million, or 20% to 22% year-over-year growth, from a prior range of $187 million to $195 million. Full-year Adjusted EBITDA guidance was raised to $32.3 million to $34.1 million, or a 16.3% to 17.0% margin, from $23.6 million to $28.6 million. The company said the lift reflects the Information Assurance awards, strength in TSA PreCheck volumes, and margin outperformance on large programs.

Fourth-quarter guidance called for revenue of $47.5 million to $50.0 million, or 2% to 7% year-over-year growth, and Adjusted EBITDA of $7.0 million to $8.8 million, or a 14.7% to 17.6% margin.