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Telos Corporation (TLS) swings to Q2 profit with 33% revenue growth and higher 2026 EBITDA outlook

Filing Impact
(High)
Filing Sentiment
(Neutral)
Form Type
8-K

Rhea-AI Filing Summary

Telos Corporation reported strong second quarter 2026 results with a return to profitability and significant margin expansion. Revenue rose 33% year-over-year to $47.7 million, driven by Security Solutions, where Telos ID benefited from expansion of large programs. Secure Networks declined but is now a small portion of total revenue. GAAP gross margin improved to 35.0% and Cash Gross Margin to 40.6%.

Disciplined cost control was a major contributor. GAAP operating expenses fell 25% year-over-year, aided by sharply lower stock-based compensation, and Adjusted Operating Expenses declined 6%. GAAP net income was $0.7 million (a 1.4% margin), compared with a $9.5 million loss a year earlier. Adjusted EBITDA increased to $6.9 million with margin expanding from 1.1% to 14.4%, reflecting both revenue growth and lower operating costs.

Cash generation was solid. Cash flow from operations was $8.8 million (18.5% of revenue), and Free Cash Flow grew 43% to $6.6 million with a 13.9% margin, the sixth straight quarter above 12%. Telos deployed $4.7 million to repurchase over 1.0 million shares at an average price of $4.50, while period-end cash and cash equivalents were $50.6 million. For the third quarter, the company guides revenue to $49.2–$50.6 million and Adjusted EBITDA to $6.0–$6.8 million. For full-year 2026 it now expects revenue of $187–$195 million (down from $187–$200 million) but higher profitability, with Adjusted EBITDA of $23.6–$28.6 million and margin of 12.6–14.7%.

Positive

  • Revenue grew 33% year-over-year to $47.7 million, led by 44% growth in Security Solutions and expansion of large Telos ID programs.
  • Profitability improved sharply: GAAP net income was $0.7 million versus a $9.5 million loss a year earlier; Adjusted EBITDA rose to $6.9 million with margin expanding from 1.1% to 14.4%.
  • Operating expenses declined materially: GAAP operating expenses fell 25% year-over-year and Adjusted Operating Expenses declined 6%, supporting margin expansion.
  • Cash generation strengthened: Cash flow from operations reached $8.8 million (18.5% of revenue) and Free Cash Flow increased 43% to $6.6 million, with a 13.9% margin.
  • Balance sheet remains strong with $50.6 million in cash and cash equivalents and total assets of $139.7 million, while maintaining positive stockholders’ equity of $93.4 million.
  • Shareholder returns increased as the company repurchased over 1.0 million shares for $4.7 million, continuing an active buyback program.
  • Full-year profit outlook was raised: 2026 Adjusted EBITDA guidance increased to $23.6–$28.6 million with margin expected at 12.6–14.7%, above the prior 11.0–14.0% range.

Negative

  • Full-year revenue guidance narrowed lower, now at $187–$195 million versus the prior $187–$200 million, implying less top-line upside despite improved profitability.

Filing Explained

By June 30, repurchases had not reduced shares outstanding year to date: 74.7 million versus 72.8 million at December 31.

This Form 8-K reports Telos’s second-quarter results and highlights continued repurchases, but issued and outstanding common shares were 74,736,789 at June 30, 2026, versus 72,773,272 at December 31, 2025, despite more than 1.0 million shares repurchased during the quarter.

The filing also says accrued compensation is intended to be settled in common stock, although Telos retains discretion to pay it in cash until payment; the filing does not establish that this compensation was issued in shares. Under the supplied definition, issuing additional shares increases the share count and reduces an existing holder’s percentage ownership absent offsetting changes.

Cash and cash equivalents were $50,647 thousand at June 30, 2026, compared with $53,180 thousand at December 31, 2025; the six-month cash-flow statement reports a $2,532 thousand net decrease in cash, cash equivalents, and restricted cash.

Item 2.02 Results of Operations and Financial Condition Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Q2 2026 Revenue $47.7 million Three months ended June 30, 2026; up 33% year-over-year from $36.0 million
Q2 2026 GAAP Net Income $0.7 million Three months ended June 30, 2026; compared with a $9.5 million net loss in Q2 2025
Q2 2026 Adjusted EBITDA $6.9 million Three months ended June 30, 2026; Adjusted EBITDA Margin 14.4% vs 1.1% a year earlier
Q2 2026 Free Cash Flow $6.6 million Three months ended June 30, 2026; Free Cash Flow Margin 13.9%, sixth consecutive quarter over 12.0%
Share Repurchases Q2 2026 $4.7 million Deployed to repurchase over 1.0 million shares at an average price of $4.50 per share
Cash and Cash Equivalents $50,647 Cash and cash equivalents at June 30, 2026 on the consolidated balance sheet
2026 Revenue Guidance $187–$195 million Full-year 2026 updated revenue outlook vs prior $187–$200 million range
2026 Adjusted EBITDA Guidance $23.6–$28.6 million Full-year 2026 updated Adjusted EBITDA guidance with margin expected at 12.6–14.7%
Adjusted EBITDA financial
"Adjusted EBITDA1 was $6.9 million, exceeding guidance."
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Free Cash Flow Margin financial
"Free Cash Flow Margin1 was 13.9% and represents the sixth consecutive quarter over 12.0%."
Free cash flow margin is a measure of how much cash a company generates relative to its sales, showing the percentage of revenue that remains after covering operating expenses and investments in growth. It indicates how efficiently a company turns its sales into available cash that can be used for things like paying dividends, reducing debt, or expanding the business. A higher margin suggests better financial health and more flexibility to invest or return value to shareholders.
Cash Gross Margin financial
"GAAP Gross Margin was 35.0% and Cash Gross Margin1 was 40.6%."
non-GAAP financial measures financial
"Cash Gross Margin, Adjusted Operating Expenses, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Free Cash Flow Margin are non-GAAP financial measures."
Non-GAAP financial measures are numbers companies use to show their financial performance that exclude certain expenses or income. They help investors see how the company might perform without one-time costs or other unusual items, giving a different perspective from official reports. However, since they can be adjusted, they don’t always tell the full story and should be looked at alongside standard financial figures.
stock-based compensation expense financial
"GAAP Operating Expenses declined 25% year-over-year primarily due to lower stock-based compensation expense."
Stock-based compensation expense is the value that a company records when it gives employees or executives shares or options to buy shares as part of their pay. It matters because it shows the true cost of paying employees this way, which can affect the company's profits and how investors see its financial health.
Incremental Adjusted EBITDA Margin financial
"The Company defines Incremental Adjusted EBITDA Margin as Incremental Adjusted EBITDA as a percentage of the net change"
Revenue $47.7 million Grew 33% year-over-year from $36.0 million
GAAP Net Income $0.7 million Improved from a $9.5 million net loss in Q2 2025
Adjusted EBITDA $6.9 million Margin expanded from 1.1% to 14.4% year-over-year
Free Cash Flow $6.6 million Increased 43% year-over-year; margin 13.9% vs 12.9%
GAAP Operating Expenses $16.4 million Declined 25% year-over-year from $21.8 million
Guidance

Q3 2026: revenue $49.2–$50.6 million, Adjusted EBITDA $6.0–$6.8 million. Full-year 2026: revenue $187–$195 million, Adjusted EBITDA $23.6–$28.6 million, Adjusted EBITDA margin 12.6–14.7%.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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FAQ

How did Telos Corporation (TLS) perform financially in Q2 2026?
Telos reported Q2 2026 revenue of $47.7 million, up 33% year-over-year, and achieved GAAP net income of $0.7 million versus a $9.5 million loss a year earlier, reflecting strong growth and improved profitability.

What were Telos Corporation (TLS) margins and profitability metrics in Q2 2026?
GAAP gross margin was 35.0% and Cash Gross Margin was 40.6%. Adjusted EBITDA was $6.9 million with a margin of 14.4%, up from 1.1% in Q2 2025, driven by revenue growth and lower operating expenses.

How strong was Telos Corporation’s (TLS) cash flow in Q2 2026?
Cash flow from operations was $8.8 million, or 18.5% of revenue, and Free Cash Flow was $6.6 million, up 43% year-over-year with a 13.9% margin, marking the sixth consecutive quarter above 12.0%.

What guidance did Telos Corporation (TLS) provide for Q3 2026?
For Q3 2026, Telos expects revenue of $49.2–$50.6 million and Adjusted EBITDA of $6.0–$6.8 million, implying continued sequential revenue growth and double-digit Adjusted EBITDA margins.

What is Telos Corporation’s (TLS) full-year 2026 outlook?
For full-year 2026, Telos guides revenue to $187–$195 million and Adjusted EBITDA to $23.6–$28.6 million, with expected Adjusted EBITDA margin of 12.6–14.7%, raising profit expectations on slightly lower revenue.

Did Telos Corporation (TLS) repurchase shares in Q2 2026?
Yes. Telos deployed $4.7 million to repurchase over 1.0 million shares of common stock at an average price of $4.50 per share, continuing its share repurchase activity.

How did Telos Corporation’s (TLS) revenue mix evolve in Q2 2026?
Revenue was dominated by Security Solutions at $46.7 million, up from $32.5 million, while Secure Networks contributed $1.1 million, down from $3.5 million, indicating growth concentrated in Security Solutions and Telos ID.
0000320121false00003201212026-08-102026-08-10
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
August 10, 2026
Date of Report (Date of earliest event reported)
TELOS CORPORATION
(Exact name of registrant as specified in its charter)
Maryland001-0844352-0880974
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)
19886 Ashburn Road,
Ashburn, Virginia
20147-2358
(Address of principal executive offices)(Zip Code)
(703) 724-3800
(Registrant’s telephone number, including area code)
NOT APPLICABLE
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common stock, $0.001 par value per shareTLSThe Nasdaq Stock Market LLC
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

.
.
Item 2.02.    Results of Operations and Financial Condition.
On Monday, August 10, 2026, Telos Corporation (the “Company”) issued a press release announcing a conference call to discuss its financial results for the quarter ended June 30, 2026, and posted those financial results on its website. A copy of the press release and financial results for the quarter ended June 30, 2026 are attached as Exhibit 99.1 and Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.
The Company will conduct a conference call to discuss its financial results on Monday, August 10, 2026, at 9:30 a.m., Eastern Time. A live broadcast of the conference call along with a supplemental presentation will be available to the public through links on the Investor Relations section of the Company’s website (https://investors.telos.com).
The information in this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2 attached hereto, is furnished pursuant to Item 2.02 of this Current Report on Form 8-K. Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 9.01.    Financial Statements and Exhibits.
99.1
Press Release, issued August 10, 2026
99.2
Second Quarter 2026 Financial Results
104Inline XBRL for the cover page of this Current Report on Form 8-K.
.
.
S I G N A T U R E S

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

TELOS CORPORATION
By:/s/ Mark Bendza
Mark Bendza
Chief Financial Officer
Date: August 10, 2026
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Exhibit 99.1

image_telos.jpg
Telos Corporation Announces Second Quarter 2026 Earnings
Ashburn, Va. – August 10, 2026 – Telos Corporation (NASDAQ: TLS), a leading provider of cyber, cloud and enterprise security solutions for the world’s most security-conscious organizations, has posted its 2026 second quarter financial results on its investor relations website at https://investors.telos.com.
Telos will host a live webcast to discuss its second quarter 2026 financial results today, August 10, 2026, at 9:30 a.m. ET. To access the webcast, visit https://edge.media-server.com/mmc/p/yjs9gxmi.
Related presentation materials will be available in the investors section of the Company’s website. In addition, an archived webcast will be posted on the website approximately two hours after the live event concludes.
About Telos Corporation
Telos Corporation (NASDAQ: TLS) empowers and protects the world’s most security-conscious organizations with efficient, adaptable, and secure solutions that safeguard people, systems, and information. We deliver advanced capabilities across cyber governance, risk, and compliance (GRC) with Xacta®; identity and biometric solutions; secure networks and communications; and TSA PreCheck® enrollment services. Serving the U.S. federal government, regulated industries, and global enterprises, Telos helps customers stay ahead of evolving threats, accelerate compliance, and achieve mission success. Driven by purpose and guided by our core values, we build trusted partnerships, deliver superior solutions, and help create a more secure, interconnected world. Learn more at https://www.telos.com.
Media: media@telos.com
Investors: InvestorRelations@telos.com


Exhibit 99.2
image_0.jpg
Second Quarter 2026 Financial Results
August 10, 2026
Telos Corporation Reports 33% Revenue Growth and Continued Robust Cash Flow Margins; Raises Full Year Profit Guidance
•Substantial Growth: Revenue grew 33% year-over-year to $47.7 million, exceeding guidance, and driven by 44% growth in Security Solutions primarily due to the expansion of large programs in Telos ID.
•Healthy Gross Margins: GAAP Gross Margin and Cash Gross Margin1 both exceeded guidance assumptions and expanded YoY primarily due to performance of Telos ID. GAAP Gross Margin was 35.0% and Cash Gross Margin1 was 40.6%.
•Disciplined Cost Management: GAAP Operating Expenses declined 25% year-over-year primarily due to lower stock-based compensation expense. Adjusted Operating Expenses1 declined 6% primarily due to restructuring and ongoing cost management initiatives.
•Expanded Operating Margins: GAAP Net Income was $0.7 million; Adjusted EBITDA1 was $6.9 million, exceeding guidance. GAAP Net Income Margin was 1.4%; Adjusted EBITDA Margin1 expanded from 1.1% to 14.4% year-over-year primarily due to revenue growth in Telos ID and lower operating expenses.
•Robust Cash Flow Margins: Cash Flow from Operations was $8.8 million or 18.5% of revenue. Free Cash Flow1 increased 43% year-over-year to $6.6 million. Free Cash Flow Margin1 was 13.9% and represents the sixth consecutive quarter over 12.0%.
•Continued Share Repurchases: Deployed $4.7 million to repurchase over 1.0 million shares at an average price of $4.50 per share.
•Forecast: Sequential revenue growth and ongoing share repurchases in the third quarter. Raising full year profit outlook on slightly lower revenues.
Financial Guidance for the Third Quarter and Full Year Ending December 31, 2026
Third QuarterFull Year
PriorUpdated
Revenue$49.2 million - $50.6 million$187 million - $200 million$187 million - $195 million
Year-Over-Year Growth (4%) - (2%)14% - 21%14% - 18%
Adjusted EBITDA2
$6.0 million - $6.8 million$20.6 million - $28.0 million$23.6 million - $28.6 million
Adjusted EBITDA Margin2
12.2% - 13.4%11.0% - 14.0%12.6% - 14.7%



1 Cash Gross Margin, Adjusted Operating Expenses, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Free Cash Flow Margin are non-GAAP financial measures. Refer to “Non- GAAP Financial Measures” below.
2Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. The Company has not provided a reconciliation to the most directly comparable GAAP measures to these forward-looking non-GAAP financial measures because certain items are out of the Company’s control or cannot be reasonably predicted. Accordingly, reconciliations of forward-looking Adjusted EBITDA and Adjusted EBITDA Margin are not available without unreasonable effort.


Second Quarter 2026 Financial Highlights
Three Months Ended
June 30, 2026June 30, 2025
(amounts in millions, except per share data)
Revenue$47.7 $36.0 
Gross Profit$16.7 $11.9 
Gross Margin35.0 %33.2 %
Adjusted Gross Profit1
$16.9 $12.1 
Adjusted Gross Margin1
35.4 %33.6 %
Cash Gross Profit1
$19.4 $13.8 
Cash Gross Margin1
40.6 %38.4 %
GAAP Net Income (Loss)$0.7 $(9.5)
GAAP Net Income (Loss) Margin1.4 %(26.5 %)
Adjusted Net Income (Loss)1
$3.4 $(2.3)
EBITDA1
$3.7 $(7.4)
Adjusted EBITDA1
$6.9 $0.4 
Adjusted EBITDA Margin1
14.4 %1.1 %
GAAP EPS, basic$0.01 $(0.13)
Weighted-average Shares of Common Stock Outstanding, basic (GAAP)74.9 73.2 
GAAP EPS, diluted2
$0.01 $(0.13)
Weighted-average Shares of Common Stock Outstanding, diluted/basic2 (GAAP)
77.5 73.2 
Adjusted EPS1
$0.04 $(0.03)
Weighted-average Shares of Common Stock Outstanding, diluted/basic2 (non-GAAP)
77.5 73.2 
Cash Flow from Operations$8.8 $7.0 
Free Cash Flow1
$6.6 $4.6 
Free Cash Flow Margin1
13.9 %12.9 %
1 Adjusted Gross Profit, Adjusted Gross Margin, Cash Gross Profit, Cash Gross Margin, Adjusted Net Income (Loss), EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EPS, Free Cash Flow, and Free Cash Flow Margin are non-GAAP financial measures. Refer to "Non-GAAP Financial Measures" below.
2 This line is labeled “diluted/basic” because for a period of net loss, potentially dilutive shares are not included in the calculation of diluted earnings (loss) per share, because to do so would be anti-dilutive. For the second quarter of 2025, the basic and diluted weighted-average share of common stock outstanding are the same due to a Net Loss position.
Forward-Looking Statements
This summary contains forward-looking statements, including all of the information described as “forecast” or “guidance”, which are made under the safe harbor provisions of the federal securities laws. These statements are based on the Company’s management’s current beliefs, expectations and assumptions about future events, conditions, and results and on information currently available to them. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company believes that these risks and uncertainties include, but are not limited to, those described under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth from time to time in the Company’s filings and reports with the U.S. Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K for the year ended December 31, 2025, and its Quarterly Reports on Form 10-Q, as well as future filings and reports by the Company, copies of which are available at https://investors.telos.com and on the SEC’s website at www.sec.gov.
Although the Company bases these forward-looking statements on assumptions that its management believes are reasonable when made, the Company cautions the reader that forward-looking statements are not guarantees of future performance and that the Company’s actual results of operations, financial condition and liquidity, and industry developments may differ materially from statements made in or suggested by the forward-looking statements contained in this summary. Given these risks, uncertainties, and other factors, many of which are beyond its control, the Company cautions the reader not to place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date of such statement and, except as required by law, the Company undertakes no obligation to update any forward-looking statement publicly, or to revise any forward-looking statement to reflect events or developments occurring after the date of the statement, even if new information becomes available in the future. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.
2

Non-GAAP Financial Measures
In addition to our results determined in accordance with U.S. GAAP, we believe the non-GAAP financial measures of EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Incremental Adjusted EBITDA, Incremental Adjusted EBITDA Margin, Adjusted Net Income (Loss), Adjusted Earnings Per Share ("EPS"), Adjusted Gross Profit, Adjusted Gross Margin, Cash Gross Profit, Cash Gross Margin, Adjusted Operating Expenses, Cash Operating Expenses, Free Cash Flow and Free Cash Flow Margin are useful in evaluating our operating and cash flow performance. We believe that this non-GAAP financial information, when taken collectively with our GAAP results, may be helpful to readers of our financial statements because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies. A reconciliation is provided below for each of these non-GAAP financial measures to the most directly comparable financial measure stated in accordance with GAAP.
Telos believes that EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Incremental Adjusted EBITDA, Incremental Adjusted EBITDA Margin, Adjusted Net Income (Loss), Adjusted EPS, Cash Operating Expenses, and Adjusted Operating Expenses provide the Board of Directors, management and investors with a clear representation of the Company’s core operating performance and trends, provide greater visibility into the long-term financial performance of the Company, and eliminate the impact of items that do not relate to the ongoing operating performance of the business. Further, Adjusted EBITDA is used by the Board of Directors and management to prepare and approve the Company’s annual budget, and to evaluate the performance of certain management personnel when determining incentive compensation. Adjusted Gross Profit, Cash Gross Profit, Adjusted Gross Margin and Cash Gross Margin provide management and investors a clear representation of the core economics of gross profit and gross margin without the impact of non-cash expenses and sunk costs expended. Telos uses Free Cash Flow and Free Cash Flow Margin to understand the cash flows that directly correspond with our operations and the investments the Company must make in those operations, using a methodology that combines operating cash flows and capital expenditures. Further, Free Cash Flow may be useful to management and investors in evaluating the Company's operating and cash flow performance and liquidity, and the Board of Directors uses this measure to evaluate the performance of certain management personnel when determining incentive compensation. Telos believes these non-GAAP financial measures facilitate the comparison of the Company’s operating and cash performance on a consistent basis between periods by excluding certain items that may, or could, have a disproportionately positive or negative impact on the Company’s results of operations in any particular period. When viewed in combination with the Company’s results prepared in accordance with GAAP, these non-GAAP financial measures help provide a broader picture of factors and trends affecting the Company’s results of operations.
EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Incremental Adjusted EBITDA, Incremental Adjusted EBITDA Margin, Adjusted Net Income (Loss), Adjusted EPS, Adjusted Gross Profit, Adjusted Gross Margin, Cash Gross Profit, Cash Gross Margin, Adjusted Operating Expenses, Cash Operating Expenses, Free Cash Flow and Free Cash Flow Margin are supplemental measures of operating and cash flow performance that are not made under GAAP and do not represent, and should not be considered as an alternative to gross profit, gross margin, net (loss) income, earnings per share, operating expenses or net cash flows (used in) provided by operating activities, as determined by GAAP.
The Company defines EBITDA as net income (loss), adjusted for non-operating (income) expense, interest expense, provision for (benefit from) income taxes, and depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA, adjusted for stock-based compensation expense, impairment loss on goodwill and intangible assets, and restructuring expenses (adjustments). The Company defines EBITDA Margin, as EBITDA as a percentage of total revenue. The Company defines Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenue. The Company defines Incremental Adjusted EBITDA as the net change between current and prior year Adjusted EBITDA. The Company defines Incremental Adjusted EBITDA Margin as Incremental Adjusted EBITDA as a percentage of the net change between current and prior year total revenue. The Company defines Adjusted Net Income (Loss) as net (loss) income, adjusted for non-operating (income) expense, stock-based compensation expense, impairment loss on goodwill and intangible assets, and restructuring expenses (adjustments). The Company defines Adjusted EPS as Adjusted Net Income (Loss) divided by the weighted-average number of common shares outstanding for the period. The Company defines Adjusted Gross Profit as gross profit, plus stock-based compensation expense, impairment loss on intangible assets, and restructuring expenses charged under cost of sales. The Company defines Adjusted Gross Margin as Adjusted Gross Profit as a percentage of total revenue. The Company defines Cash Gross Profit as Adjusted Gross Profit, plus depreciation and amortization. The Company defines Cash Gross Margin as Cash Gross Profit as a percentage of total revenue. The Company defines Adjusted Operating Expenses as operating expenses, adjusted for stock-based compensation expenses, impairment loss on goodwill and intangible assets, and restructuring expenses (adjustments). The Company defines Cash Operating Expenses as Adjusted Operating Expenses, adjusted for depreciation and amortization, and capitalized software development costs. Free Cash Flow is defined as net cash (used in) provided by operating activities, less net purchases of property and equipment, and capitalized software development costs. The Company defines Free Cash Flow Margin as Free Cash Flow as a percentage of total revenue.
3

EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Incremental Adjusted EBITDA, Incremental Adjusted EBITDA Margin, Adjusted Net Income (Loss), Adjusted EPS, Adjusted Gross Profit, Adjusted Gross Margin, Cash Gross Profit, Cash Gross Margin, Adjusted Operating Expenses, Cash Operating Expenses, Free Cash Flow, and Free Cash Flow Margin each has limitations as an analytical tool, and you should not consider any of them in isolation, or as a substitute for analysis of results as reported under GAAP. Among other limitations, each of EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Incremental Adjusted EBITDA, Incremental Adjusted EBITDA Margin, Adjusted Net Income (Loss), Adjusted EPS, Adjusted Gross Profit, Adjusted Gross Margin, Cash Gross Profit, Cash Gross Margin, Adjusted Operating Expenses, Cash Operating Expenses, Free Cash Flow and Free Cash Flow Margin does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments, does not reflect the impact of certain cash and non-cash charges resulting from matters considered not to be indicative of ongoing operations, and does not reflect income tax expense or benefit. Other companies in the Company’s industry may calculate Adjusted EBITDA, Adjusted EBITDA Margin, Incremental Adjusted EBITDA, Incremental Adjusted EBITDA Margin, Adjusted Net Income (Loss), Adjusted EPS, Adjusted Gross Profit, Adjusted Gross Margin, Cash Gross Profit, Cash Gross Margin, Adjusted Operating Expenses, Cash Operating Expenses, Free Cash Flow and Free Cash Flow Margin differently than Telos does, which limits its usefulness as a comparative measure. Because of these limitations, neither EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Incremental Adjusted EBITDA, Incremental Adjusted EBITDA Margin, Adjusted Net Income (Loss), Adjusted EPS, Adjusted Gross Profit, Adjusted Gross Margin, Cash Gross Profit, Cash Gross Margin, Adjusted Operating Expenses, Cash Operating Expenses, Free Cash Flow, nor Free Cash Flow Margin should be considered as a replacement for gross profit, gross margin, net (loss) income, earnings per share, operating expenses, net cash flows (used in) provided by operating activities, or operating cash flow margin as determined by GAAP, or as a measure of profitability. Telos compensates for these limitations by relying primarily on the Company’s GAAP results and using non-GAAP measures only for supplemental purposes.
About Telos Corporation
Telos Corporation (NASDAQ: TLS) empowers and protects the world’s most security-conscious organizations with efficient, adaptable, and secure solutions that safeguard people, systems, and information. We deliver advanced capabilities across cyber governance, risk, and compliance (GRC) with Xacta®; identity and biometric solutions; secure networks and communications; and TSA PreCheck® enrollment services. Serving the U.S. federal government, regulated industries, and global enterprises, Telos helps customers stay ahead of evolving threats, accelerate compliance, and achieve mission success. Driven by purpose and guided by our core values, we build trusted partnerships, deliver superior solutions, and help create a more secure, interconnected world. Learn more at www.telos.com.
Media:
media@telos.com
Investors:
InvestorRelations@telos.com
4

TELOS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

For the Three Months EndedFor the Six Months Ended
June 30, 2026June 30, 2025June 30, 2026June 30, 2025
(in thousands, except per share amounts)
Revenue – Security Solutions$46,662 $32,474 $92,632 $58,292 
Revenue – Secure Networks1,083 3,494 2,855 8,292 
Total revenue47,745 35,968 95,487 66,584 
Cost of sales – Security Solutions (excluding depreciation and amortization)27,651 19,462 54,165 32,719 
Cost of sales – Secure Networks (excluding depreciation and amortization)888 2,859 2,145 6,533 
Depreciation and amortization2,514 1,715 5,110 3,218 
Total cost of sales31,053 24,036 61,420 42,470 
Gross profit16,692 11,932 34,067 24,114 
Operating expenses:
Research and development expenses1,345 1,512 2,702 3,083 
Selling, general and administrative expenses15,037 20,303 29,600 39,936 
Total operating expenses16,382 21,815 32,302 43,019 
Operating income (loss)310 (9,883)1,765 (18,905)
Other income501 553 1,198 1,114 
Interest expense(107)(141)(218)(288)
Income (loss) before income taxes704 (9,471)2,745 (18,079)
Provision for income taxes(44)(46)(62)(42)
Net income (loss)$660 $(9,517)$2,683 $(18,121)
Net income (loss) per share:
Basic$0.01 $(0.13)$0.04 $(0.25)
Diluted$0.01 $(0.13)$0.03 $(0.25)
Weighted-average shares outstanding:
Basic74,895 73,163 74,361 72,940 
Diluted77,547 73,163 77,576 72,940 
5

TELOS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)

June 30, 2026December 31, 2025
(in thousands, except per share amount and share data)
Assets:
Cash and cash equivalents$50,647 $53,180 
Accounts receivable, net18,000 17,000 
Inventories, net 4,917 996 
Prepaid expenses7,562 10,565 
Deferred program expenses13,920 10,006 
Other current assets1,779 2,666 
Total current assets96,825 94,413 
Property and equipment, net2,490 3,071 
Finance lease right-of-use assets, net3,560 4,170 
Operating lease right-of-use assets, net298 410 
Goodwill 3,006 3,006 
Intangible assets, net29,213 30,281 
Other assets4,357 4,513 
Total assets$139,749 $139,864 
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable$6,390 $4,087 
Accrued liabilities5,673 6,900 
Accrued compensation and benefits8,985 12,309 
Contract liabilities – current portion17,220 11,223 
Finance lease obligations – current portion2,113 2,033 
Operating lease obligations – current portion255 232 
Total current liabilities40,636 36,784 
Contract liabilities – non-current portion874 1,124 
Finance lease obligations – non-current portion4,536 5,608 
Operating lease obligations – non-current portion62 186 
Deferred income taxes 57 53 
Other liabilities 171 159 
Total liabilities46,336 43,914 
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value, 250,000,000 shares authorized, 74,736,789 shares and 72,773,272 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively
113 111 
Additional paid-in capital454,611 459,828 
Accumulated other comprehensive loss(101)(96)
Accumulated deficit(361,210)(363,893)
Total stockholders’ equity93,413 95,950 
Total liabilities and stockholders’ equity$139,749 $139,864 

6

TELOS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

For the Three Months EndedFor the Six Months Ended
June 30, 2026June 30, 2025June 30, 2026June 30, 2025
(in thousands)
Cash flows from operating activities:
Net income (loss)$660 $(9,517)$2,683 $(18,121)
Adjustments to reconcile net income (loss) to cash flows from operations:
Stock-based compensation3,213 7,757 6,184 14,805 
Depreciation and amortization3,347 2,509 6,776 4,845 
Loss on disposal of fixed assets1 — 52 — 
Provision for inventory obsolescence42 — 42 — 
Amortization of debt issuance costs9 18 17 35 
Deferred income taxes2 31 4 27 
Provision for (recovery from) doubtful accounts— (15)1 (20)
Changes in operating assets and liabilities:
Accounts receivable(1,576)(341)(1,001)86 
Inventories(817)(1,373)(1,942)(1,079)
Prepaid expenses, deferred program expenses, other current assets and other assets7,069 (4,655)4,445 (1,933)
Accounts payable(594)9,628 (2,158)9,540 
Accrued compensation and benefits325 226 (208)601 
Contract liabilities(953)6,207 5,746 6,114 
Accrued liabilities and other liabilities(1,895)(3,525)(3,152)(1,844)
Net cash provided by operating activities8,833 6,950 17,489 13,056 
Cash flows from investing activities:
Capitalized software development costs(1,970)(2,187)(4,102)(4,401)
Purchases of property and equipment(246)(134)(391)(257)
Net cash used in investing activities(2,216)(2,321)(4,493)(4,658)
Cash flows from financing activities:
Payment of tax withholding related to net share settlement of equity awards(1,007)(958)(7,626)(1,062)
Repurchases of common stock(4,691)(4,002)(6,889)(4,002)
Payments under finance lease obligations(501)(462)(992)(914)
Payments for debt issuance costs— — (21)— 
Net cash used in financing activities(6,199)(5,422)(15,528)(5,978)
Net change in cash, cash equivalents, and restricted cash418 (793)(2,532)2,420 
Cash, cash equivalents, and restricted cash, beginning of period50,370 57,930 53,320 54,717 
Cash, cash equivalents, and restricted cash, end of period$50,788 $57,137 $50,788 $57,137 
7

NON-GAAP FINANCIAL MEASURES
(Unaudited)
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA; Net Income (Loss) Margin to EBITDA Margin and Adjusted EBITDA Margin; Incremental Net Income (Loss) and Net Income (Loss) Margin to Incremental Adjusted EBITDA and Incremental Adjusted EBITDA Margin
For the Three Months EndedFor the Six Months Ended
June 30, 2026June 30, 2025Year-over-Year ChangeJune 30, 2026June 30, 2025Year-over-Year Change
AmountMarginAmountMarginAmountMarginAmountMarginAmountMarginAmountMargin
Net income (loss)$660 1.4 %$(9,517)(26.5 %)$10,177 86.4 %$2,683 2.8 %$(18,121)(27.2 %)$20,804 72.0 %
Other income(501)(1.0 %)(553)(1.5 %)52 0.5 %(1,198)(1.3 %)(1,114)(1.7 %)(84)(0.3 %)
Interest expense107 0.2 %141 0.4 %(34)(0.3 %)218 0.2 %288 0.4 %(70)(0.3 %)
Provision for income taxes44 0.1 %46 0.1 %(2)— %62 0.1 %42 0.1 %20 0.1 %
Depreciation and amortization3,347 7.0 %2,509 7.0 %838 7.1 %6,776 7.1 %4,845 7.3 %1,931 6.7 %
EBITDA (Non-GAAP)3,657 7.7 %(7,374)(20.5 %)11,031 93.7 %8,541 8.9 %(14,060)(21.1 %)22,601 78.2 %
Stock-based compensation expense (1)
3,213 6.7 %7,757 21.6 %(4,544)(38.6 %)6,184 6.5 %14,805 22.2 %(8,621)(29.8 %)
Adjusted EBITDA (Non-GAAP)$6,870 14.4 %$383 1.1 %$6,487 55.1 %$14,725 15.4 %$745 1.1 %$13,980 48.4 %
Total revenues$47,745 $35,968 $11,777 $95,487 $66,584 $28,903 
(1) The stock-based compensation expense to EBITDA is made up of stock-based compensation expense for the awarded RSUs, PSUs, and stock options, and other sources. Stock-based compensation expense for the awarded RSUs, PSUs and stock options was $1.9 million and $3.7 million for the three and six months ended June 30, 2026, respectively, and $6.8 million and $12.3 million, for the three and six months ended June 30, 2025, respectively. Stock-based compensation expense from other sources was $1.3 million and $2.5 million for the three and six months ended June 30, 2026, respectively, and $1.0 million and $2.5 million for the three and six months ended June 30, 2025, respectively. The other sources of stock-based compensation consist of accrued compensation, which the Company intends to settle in shares of the Company's common stock. However, the Company has the discretion to determine whether this compensation will ultimately be paid in stock or cash up until the date at which it is paid. Any change to the expected payment form would result in out-of-quarter adjustments to this add back to Adjusted EBITDA.
8

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss); EPS to Adjusted EPS
For the Three Months EndedFor the Six Months Ended
June 30, 2026June 30, 2025June 30, 2026June 30, 2025
(in thousands, except per share data)
Net income (loss)$660 $(9,517)$2,683 $(18,121)
Adjustments:
Other income(501)(553)$(1,198)$(1,114)
Stock-based compensation expense(1)
3,213 7,757 $6,184 $14,805 
Adjusted net income (loss) (Non-GAAP)$3,372 $(2,313)$7,669 $(4,430)
Earnings (loss) per share, diluted$0.01 $(0.13)$0.03 $(0.25)
Adjustments:
Other income(0.01)(0.01)(0.01)(0.01)
Stock-based compensation expense(1)
0.04 0.11 0.08 0.20 
Adjusted earnings (loss) per share, diluted (Non-GAAP)$0.04 $(0.03)$0.10 $(0.06)
Weighted-average shares to compute GAAP earnings (loss) per share, diluted77,547 73,163 77,576 72,940 
Weighted-average shares to compute non-GAAP earnings (loss) per share, diluted77,547 73,163 77,576 72,940 
(1) The stock-based compensation expense to net income (loss) is made up of stock-based compensation expense for the awarded RSUs, PSUs, and stock options, and other sources. Stock-based compensation expense for the awarded RSUs, PSUs and stock options was $1.9 million and $3.7 million for the three and six months ended June 30, 2026, respectively, and $6.8 million and $12.3 million for the three and six months ended June 30, 2025, respectively. Stock-based compensation expense from other sources was $1.3 million and $2.5 million for the three and six months ended June 30, 2026, respectively and $1.0 million and $2.5 million for the three and six months ended June 30, 2025, respectively. The other sources of stock-based compensation consist of accrued compensation, which the Company intends to settle in shares of the Company's common stock. However, the Company has the discretion to determine whether this compensation will ultimately be paid in stock or cash up until the date at which it is paid. Any change to the expected payment form would result in out-of-quarter adjustments to this add back to Adjusted Net Income (Loss).

Reconciliation of Gross Profit to Adjusted Gross Profit and Cash Gross Profit; Gross Margin to Adjusted Gross Margin and Cash Gross Margin
For the Three Months EndedFor the Six Months Ended
June 30, 2026June 30, 2025June 30, 2026June 30, 2025
AmountMarginAmountMarginAmountMarginAmountMargin
(dollars in thousands)
Gross profit$16,692 35.0%$11,932 33.2%$34,067 35.7%$24,114 36.2%
Adjustments:
Stock-based compensation expense — cost of sales202 0.4%149 0.4%418 0.4%339 0.5%
Adjusted gross profit (Non-GAAP)16,894 35.4%12,081 33.6%34,485 36.1%24,453 36.7%
Depreciation and amortization — cost of sales2,514 5.2%1,715 4.8%5,110 5.4%3,218 4.9%
Cash gross profit (Non-GAAP)$19,408 40.6%$13,796 38.4%$39,595 41.5%$27,671 41.6%

9

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow and Free Cash Flow Margin
For the Three Months EndedFor the Six Months Ended
June 30, 2026June 30, 2025June 30, 2026June 30, 2025
(dollars in thousands)
Net cash provided by operating activities$8,833 $6,950 $17,489 $13,056 
Adjustments:
Capitalized software development costs(1,970)(2,187)(4,102)(4,401)
Purchases of property and equipment(246)(134)(391)(257)
Free cash flow (Non-GAAP)$6,617 $4,629 $12,996 $8,398 
Revenue$47,745 $35,968 $95,487 $66,584 
Operating cash flow margin18.5 %19.3 %18.3 %19.6 %
Free cash flow margin (Non-GAAP)13.9 %12.9 %13.6 %12.6 %

Reconciliation of Operating Expenses to Adjusted Operating Expenses and Cash Operating Expenses
For the Three Months EndedFor the Six Months Ended
June 30, 2026June 30, 2025June 30, 2026June 30, 2025
(in thousands)
Operating expenses$16,382 $21,815 $32,302 $43,019 
Adjustments:
Stock-based compensation expense(3,011)(7,608)(5,766)(14,466)
Adjusted operating expenses (Non-GAAP)13,371 14,207 26,536 28,553 
Depreciation and amortization(833)(794)(1,666)(1,627)
Software R&D capitalized costs1,945 2,149 3,987 4,419 
Cash operating expenses (Non-GAAP)$14,483 $15,562 $28,857 $31,345 



10

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