Slide 1: First Quarter 2022 Earnings
First Quarter 2022 Earnings May 10, 2022
Slide 2: Disclaimers
DISCLAIMERS The information contained in this presentation does not constitute or form part of, and should not be construed as, any offer, 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
Slide 3: Financial Performance Summary
FINANCIAL PERFORMANCE SUMMARY 1Q 2022 Summary 1Q 2022 1Q 2022 Actual Guidance • Delivered revenue above high end of guidance range (effective supply chain management and favorable timing shifts from second quarter to first quarter) Revenue $50.2M $44M to $48M • Security Solutions up 18% YoY (vs. gui
Slide 4: Recent Business Highlights
RECENT BUSINESS HIGHLIGHTS TELOS ADVANCED CYBER ANALYTICS NOTABLE WINS AND SUCCESSES With Telos Advanced Cyber Analytics (Telos ACA), customers can: • Key wins and renewals include a new Xacta foreign government • In near real time: customer, the U.S. Air Force, EY, Amazon Web Services, the • Detect
Slide 5: 1Q 2022 Year Over Year Financial Performance
1Q 2022 YEAR OVER YEAR FINANCIAL PERFORMANCE Revenue Gross Profit Adjusted EBITDA(1) Adjusted EPS(1) Free Cash Flow(1) Down Up Down Down Up 10% 30% $0.5M $0.01 $6.4M $55.8M $50.2M $18.9M $14.5M $1.5M $1.0M $0.00 1Q21 1Q22 1Q21 1Q22 1Q21 1Q22 ($0.01) ($3.1M) 1Q21 1Q22 ($9.5M) 1Q21 1Q22 • Security Sol
Slide 6: Gross Margin and Free Cash Flow Trajectory
GROSS MARGIN AND FREE CASH FLOW TRAJECTORY Quarterly Trailing 12 Months Gross Margin Quarterly Trailing 12 Months Free Cash Flow(1) 38.2% $0.5M +530 bps 35.5% 34.9% $(5.9M) 34.5% 32.9% $(14.1M) $(15.0M) +$19.6M +$19.6M $(19.1M) 1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022 1Q 2021 2Q 2021 3Q 2021 4Q 2021
Slide 7: 2Q 2022 Guidance
2Q 2022 GUIDANCE 2Q 2022 2Q 2022 Assumptions Low End High End • Security Solutions growth assumptions: Revenue $50M $54M • Down low to high teens YoY Excluding TSA • Completion of U.S. Census program and lower revenue on a single TSA Gross Rev. program in Secure Communications - - • No TSA PreCheck
Slide 8: Full Year 2022 Guidance
FULL YEAR 2022 GUIDANCE FY 2022 FY 2022 Assumptions Low End High End • Security Solutions growth assumptions: Revenue • +/- MSD YoY excluding contribution from TSA PreCheck; Mid teens with TSA $226M $245M Excluding TSA PreCheck net revenue on high end (~31% with gross revenue equivalent) • Modest gr
Slide 9: Summary
SUMMARY Reported substantial gross margin expansion and gross profit growth; delivered on 1Q guidance Generated significant free cash flow improvement in the quarter; free cash flow turned positive for the trailing twelve months Launched new growth vector with Telos Advanced Cyber Analytics offering
Slide 10: Appendix
Appendix Telos
Slide 11: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES In addition to its results determined in accordance with GAAP, the Company believes the non-GAAP financial measures of Enterprise EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income (Loss), Adjusted EPS and Free Cash Flow are useful in evaluating its oper
Slide 12: 2022 Additional Modeling Inputs
2022 ADDITIONAL MODELING INPUTS 2021 2022E 2022E Full Year Full Year 2Q 2022E Full Year YoY Commentary • Flat to up gross margins due to TSA PreCheck and favorable Gross Margin 35.5% 35.5% to 38% 33% to 35% mix shift between Security Solutions and Secure Networks $70M to $19M to Stock Comp $60.2M •
Slide 13: 2021 and 2022 GAAP and Adjusted Quarterly Results
2021 AND 2022 GAAP AND ADJUSTED QUARTERLY RESULTS (Amounts in thousands) 2022 2021 Q1 Q1 Q2 Q3 Q4 FY GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted Revenue Security Solutions 26,9
Slide 14: Reconciliations: Enterprise EBITDA and Adjusted EBITDA
RECONCILIATIONS Enterprise EBITDA and Adjusted EBITDA (Unaudited, amounts in thousands) Three Months Ended March 31, 2022 2021 Net loss $ (14,983) $ (14,778) Adjustments: Non-operating (income) expense (12) 1,054 Interest expense 190 196 Provision for income taxes 71 34 Depreciation and amortization
Slide 15: Reconciliations: Adjusted Net Income (Loss) and Adjusted EPS
RECONCILIATIONS Adjusted Net Income (Loss) and Adjusted EPS (Unaudited) Three Months Ended March 31, Three Months Ended March 31, 2022 2021 Diluted Diluted Net Loss Earnings Per Net Loss Earnings Per Share Share (in thousands) (in thousands) Reported GAAP measure $ (14,983) $ (0.22) $ (14,778) $ (0.
Slide 16: Reconciliations: Free Cash Flow
RECONCILIATIONS Free Cash Flow (Unaudited, amounts in thousands) Three Months Ended March 31, 2022 2021 Net cash flows provided by (used in) operating activities $ 249 $ (6,882) Adjustments: Purchases of property and equipment (546) (480) Capitalized software development costs (2,795) (2,165) Free c
Slide 17: Reconciliations: Revenue Growth
RECONCILIATIONS Revenue Growth (Unaudited, amounts in thousands) 2021 2022 Q1 Q1 vs PY Revenue Secure Networks 32,928 23,241 Large Program (18,935) (6,427) Total 13,993 16,814 20.2% 2021 2022 Q1 Q1 vs PY Revenue Telos 55,757 50,160 Large Program (18,935) (6,427) Total Telos 36,822 43,733 18.8% 17
Slide 18: Reconciliations: Trailing Months Gross Margin
RECONCILIATIONS Trailing 12 Months Gross Margin (Unaudited, amounts in thousands) 2020 2021 2022 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Revenue 48,610 47,440 44,887 55,757 53,644 68,981 64,051 50,160 Trailing 12 Months Revenue 196,694 201,728 223,269 242,433 236,836 Gross Profit 17,573 16,562 16,043 14,469 22,534
Slide 19: Reconciliations: Trailing Months Free Cash Flow
RECONCILIATIONS Trailing 12 Months Free Cash Flow (Unaudited, amounts in thousands) 2020 2021 2022 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Net income (loss) $ 3,072 $ 2,494 $ 2,735 $ (14,778) $ (17,644) $ (5,222) $ (5,490) $ (14,983) Stock-based compensation — 4 — 13,670 21,336 12,372 12,853 14,298 Subtotal 3,072 2