Slide 1: Investor Presentation August 2021
Solutions that empower and protect the enterprise.TM Invest r Pres ntation August 2021
Slide 2: Disclaimer and forward-looking statements
The information contained in this presentation does not constitute or form part of, and should not be construed as, any offer or sale or subscription of, or any invitation to offer, buy or subscribe for, any securities, nor shall there be any offer, solicitation or sale in any jurisdiction in which
Slide 3: Senior Management Team
John Wood (President, CEO, and Chairman) • Joined Telos as EVP and COO in 1992; named President and CEO in 1994 • Formerly worked in finance for Dean Witter Reynolds, and UBS Securities Mark Bendza (EVP and CFO) • Joined Company in 2021 as EVP and CFO • Brings 20 years of experience from organizatio
Slide 4: Update and Highlights
Update and Highlights • Q2 Revenue and Adjusted EBITDA • Q2 2021 Revenue = $52.6 million • Q2 2021 Net Loss = $18.7 million • Q2 2021 Adjusted EBITDA = $4.2 million • Acquired assets of Diamond Fortress Technologies, including all patents, and will integrate the ONYX touchless fingerprinting softwar
Slide 5: Premier Provider of Software-based Solutions for Security Conscious Customers
1) Based on Telos management estimates Premier Provider of Software-based Solutions for the World’s Most Security Conscious Customers Telos Security Solutions consistently deliver more efficient, more effective, and more secure operating environments • Endorsed by marquee intelligence community cust
Slide 6: Telos Company Snapshot
2017 2018 2019 2020 2021 Guidance Security Solution Secure Networks Telos Company Snapshot Recently-Awarded, Long-Term Security Solutions Contracts to Accelerate Revenue Growth Note: Reflects fiscal year ended December 31 1) Based on Telos management estimates 2) Recurring revenue for each of the la
Slide 7: Unique Solution Set Addressing Urgent Customer Needs
81% of 2020 Gross Profit 19% of 2020 Gross Profit Unique Solution Set Addressing Urgent Customer Needs Security Solutions Secure Networks AMHS • Governance risk and compliance solution that facilitates cloud migration • Mis-attribution obfuscation solution that protects user information and location
Slide 8: Telos is at the Forefront of Security Solution Development
Telos is at the Forefront of Security Solution Development 1994 Common Access Card (“CAC”) Largest biometric application in the government 2016 Xacta partnership with Amazon Web Services to provide cloud solution to the CIA 2018 Telos Ghost launched to shield communications, transactions, and networ
Slide 9: Marquee Customers
Ne ( Marquee Customers Deloitte. vibrent33 BE Microsoft SD ome Azure i aws &> SIEMENS _ accenture : Gsymantee EL” MS2 verizon’ Technologies @_zscaler CloudCheckr = N@RTHROR. Telos
Slide 10: Land and Expand
Land and Expand The Sixteenth Air Force expanded their license from Top Secret to now include Secret The U.S. Social Security Administration upgraded to an enterprise-wide license, and as we recently announced, they also exercised the first option year of this contract The U.S. Department of Energy’
Slide 11: Demand for Telos' Security Solutions Has Never Been Greater
4.1B Exposed records from data breaches in 1H19 $8.6M Average cost of data breach in U.S. as of 2019 954K Average web attacks blocked per day 280 Average days to identify & contain a breach Sources: Comparitech, Symantec Internet Security Threat Report 2019, Cyber Risk Analytics 2019 MidYear Data Br
Slide 12: Investing in Sales and Marketing
Investing in Sales and Marketing New Hires and Industry Leading Experience Foundations of the Channel Security Solutions Security Solutions 12
Slide 13: Industry-Leading Cyber Risk & Compliance Management
Xacta accounts for common, shared, and customer specific controls On-premises Hybrid Cloud / Multi CloudOperationalizes complex frameworks and required reporting Compliance Data Sharing Continuous Monitoring GRC Workflow Automates security compliance activities through inheritance & control mapping
Slide 14: Drivers of Xacta Customer Adoption
Reduced Onboarding Time, Continuous Monitoring, and “Referenceability” Drive Customer Adoption Commercial SaaS Companies U.S. Governmental Agencies C2S/CIA Secure NetworksS curity Solutions Security Solutions 14
Slide 15: AWS and Microsoft Azure Partnerships
3% 11% 12% 12% 19% 52% 61% 6% 8% 9% 16% 22% 16% 16% 8% 7% 6% 13% 14% 9% 7% Alibaba Cloud Oracle Cloud IBM Cloud VMware Cloud on AWS Google Cloud Microsoft Azure AWS Currently Use Experimenting Plan to use Sources: Gartner, RightScale Worldwide Public Cloud Service Revenue $ in Billions Public Cloud
Slide 16: Inheritance Creates Channel Partnerships to Drive Incremental Revenue
Prospective & PendingCurrent Cloud customers and partners use Xacta to automatically inherit common compliance data Automated inheritance accelerates cloud adoption and creates incremental demand for Xacta solution Cloud infrastructure owners share control information with partners and customers via
Slide 17: Telos Ghost: Reduce Attack Surface, Hide Digital Exhaust
Encrypted communications, storage and applications Private Network Access Private Web Access Cloaked Services Secure, private network in the cloud Anonymous worldwide internet access Reduce Attack Surface, Hide Digital Exhaust & Disguise Identity You can’t attack what you can’t see Security Solution
Slide 18: Advancing Capabilities & Proven Validation Driving New Customer Wins
1) Based on Telos management estimates derived from customer / sponsor contract assumptions FBI Fingerprint Capture • SaaS biometric web capture • Pre-employment screening • Identity vetting TSA - Airports Employee Vetting • Continuous monitoring of airport employees – Security Threat Assessment • F
Slide 19: IDTrust360
Affiliated Service Providers Fully integrated suite of Telos ID and commercial services for identity verification, enrollment, fingerprinting, insider threat management, biometric matching, and personnel security IDTrust360 has direct interfaces to: • The FBI's criminal records • DHS's terrorist wat
Slide 20: Secure Mobility and Network Management / Defense
• Productivity — Mobile / remote access • Coverage — Seamless roaming between Wi-Fi and cellular on any device, anywhere • Cost Savings — Single integrated enterprise mobility management solution • Efficiency — Simplify the process of updating devices with the most recent version of apps and content
Slide 21: Financial Highlights & Objectives
Financial Highlights & Objectives 21
Slide 22: Revenue, Adjusted EBITDA and Key New Contract Wins
$108 $138 $159 $180 $289 2.2% 3.8% 6.3% 6.3% 11.9% 2017 2018 2019 2020 2021 Guidance Security Solution Secure Networks Adjusted EBITDA as a % of Revenue • TSA PreCheck – $1.7B+1 total 10-year contract potential • CMS – $2.0B2 total 10-year contract potential • U.S. Govt Ghost Customer – $39M1 with s
Slide 23: Growth Strategies
Grow revenue & expand margins by building robust sales channels Target & replace inefficient legacy products within organizations Leverage diverse Security Solutions to expand commercial market presence Extend Security Solutions platform & ecosystem to capitalize on massive scalability Broaden exist
Slide 24: Long-Term Aspirational Goals
Revenue $1B Gross Margin 50% Adj. EBITDA Margin 30% Free Cash Flow $150M 1) This is a forward-looking statement. Please refer to forward-looking statement disclaimer on page 2. Long-Term Aspirational Goals1 24
Slide 25: Investment Highlights
1) Based on Telos management estimates Telos Security Solutions consistently deliver more efficient, more effective, and more secure operating environments • Endorsed by marquee intelligence community customers with growing commercial market penetration Large and fast growing total addressable marke
Slide 26: Appendix
Appendix Telos
Slide 27: Historical Income Statement
Historical Income Statement ($ in thousands) FY 2019 FY 2020 Six Months Ended June 30, 2021 Revenue $159,218 $179,917 $108,317 Costs and Expenses Cost of Sales 106,874 117,497 73,402 Selling, General & Administrative Expenses 47,319 62,123 66,965 Operating Income (Loss) $5,025 $297 $(32,050) Other I
Slide 28: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation1 ($ in thousands) FY 2019 FY 2020 Six Months Ended June 30, 2021 Net income (loss) attributable to Telos Corporation $(6,401) $1,687 $(33,507) Non-controlling interest 4,264 5,154 – Non-operating income (201) (20) 1,022 Interest Expense 7,467 7,259 388 (Benefit) provis
Slide 29: Enterprise EBITDA and Adjusted EBITDA definitions
Enterprise EBITDA and Adjusted EBITDA are supplemental measures of operating performance that are not made under GAAP and do not represent, and should not be considered as, an alternative to net income (loss) or earnings per share as determined by GAAP. The Company defines Enterprise EBITDA as net i
Slide 30: Customer Need / Pain Point and Telos Solution
Customer Need / Pain Point Telos Solution Solution Capabilities • Time, cost, effort of cyber risk and compliance management • Compliance as an obstacle to cloud adoption • Audit fatigue – many standards • Automated cyber risk management workflow • Inheritance and control mapping • Automated continu
Slide 31: Solutions that empower and protect the enterprise
Solutions that empower and protect the enterprise.TM 31