Slide 1: Third Quarter 2023 Earnings
Third Quarter 2023 Earnings November 9, 2023 1
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: $36.2M Revenue and 36.0% Gross Margin
FINANCIAL PERFORMANCE SUMMARY DELIVERED $36.2M OF REVENUE AND 36.0% GROSS MARGIN 3Q 2023 Summary 3Q 2023 3Q 2023 Actual Guidance • Delivered $36.2M of revenue vs. guidance of $30M to $34M • Security Solutions (“SS”) down 39% YoY (vs. guidance of down mid-50% to mid- 40%); Up 15% sequentially; Result
Slide 4: Recent Business Highlights
RECENT BUSINESS HIGHLIGHTS NOTABLE EVENTS • Achieved formal launch of the TSA PreCheck program • https://tsaprecheckbytelos.tsa.dhs.gov/ • Awarded Xacta® renewals with key government and commercial customers: • Government clients include the National Geospatial-Intelligence Agency, Federal Bureau of
Slide 5: 3Q and 9M 2023 Year-over-Year Comparison
FINANCIAL PERFORMANCE SUMMARY 3Q AND 9M 2023 YEAR-OVER-YEAR COMPARISON Revenue GAAP Gross Profit Adjusted EBITDA(1) Free Cash Flow(1) 3Q YoY Commentary $12.0M Cash Flow $0.8M Cash Flow • Revenue: SS down 39% to $19.8M primarily due to lower revenues on two from Operations from Operations ongoing pro
Slide 6: 2023 Outlook: 4Q 2023 Guidance Assumptions
2023 OUTLOOK 4Q 2023 Guidance Assumptions 4Q 2023 4Q 2023 • Revenue range primarily driven by risks and opportunities on preexisting programs Low End High End • SS revenue assumptions: • Down high-30% to low-30% YoY (down MSD to up MSD sequentially) Revenue $30M $34M • Primarily driven by Telos ID a
Slide 7: 2023 Guidance Progression
2023 OUTLOOK 2023 GUIDANCE PROGRESSION Original Reaffirmed Raised Raised Guidance Guidance Guidance Guidance Changes Driving Improvement vs. Original Guidance (as of 4Q22 Earnings Call) (as of 1Q23 Earnings Call) (as of 2Q23 Earnings Call) (as of 3Q23 Earnings Call) • SS revenue assumptions: • ~$3M
Slide 8: Summary
SUMMARY Delivered results above the high end of the guidance range on all financial metrics TSA PreCheck program formally launched; first full quarter of revenue generation exceeded expectations Managing 2023 to better than originally expected results; raising full-year guidance ranges again to refl
Slide 9: Appendix
Appendix 9
Slide 10: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES In addition to Telos' results determined in accordance with U.S. GAAP, Telos believes the non-GAAP financial measures of EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income/(Loss), Adjusted Earnings Per Share ("EPS"), Non-GAAP Gross Profit,
Slide 11: Updated Guidance vs. Prior Guidance
2023 OUTLOOK UPDATED GUIDANCE VS. PRIOR GUIDANCE Updated Guidance Updated Guidance Assumptions FY 2023 FY 2023 • SS revenue assumptions: Low End High End • Down high-30% to mid-30% YoY • Expected lower revenues on two ongoing programs (~$45M) and a program loss (~$10M), $134M $138M partially offset
Slide 12: 2023 Additional Modeling Inputs
2023 ADDITIONAL MODELING INPUTS 2022 2023E 2023E Full Year Full Year 4Q 2023E Full Year YoY Commentary • SS slightly down YoY, SN slightly up. GAAP Gross Margin 36.4% 36.8% - 37.0% 35.1% - 36.4% • Revenue mix between SS and SN roughly flat Stock Based • Final vesting/amortization of IPO-related gran
Slide 13: 2024 Telos PreCheck Modeling Inputs
2024 TELOS PRECHECK MODELING INPUTS New Enrollments Renewals 2024 Additional Inputs (Per Transaction) (Per Transaction) • Approximate last 12 months total market size2 Gross Applicant Fee(1) 85.00 70.00 • New enrollments: ~4M applicants (market volume has nearly doubled from pre-COVID highs; unclear
Slide 14: 2022 and 2023 GAAP and Adjusted First 9M Results
2022 AND 2023 GAAP AND ADJUSTED FIRST 9M RESULTS (Amounts in thousands, unaudited) 2022 2023 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Three Months Ended March 31, 2023 Three Months Ended June 30, 2023 Three Months Ended September 30, 2023 Nine Months Ended September
Slide 15: 2022 GAAP and Adjusted Full Year Results
2022 GAAP AND ADJUSTED FULL YEAR RESULTS (Amounts in thousands, unaudited) NOTE: As previously revised 2022 Three Months Ended March 31, 2022 Three Months Ended June 30, 2022 Three Months Ended September 30, 2022 Three Months Ended December 31, 2022 Twelve Months Ended December 31, 2022 GAAP SBC Oth
Slide 16: 2022 and 2023 Non-GAAP Gross Profit and Gross Margin First 9M Results
2022 AND 2023 NON-GAAP GROSS PROFIT AND NON-GAAP GROSS MARGIN FIRST 9M RESULTS (Amounts in thousands, unaudited) 2022 2023 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended September 30, 2022 September 30, 2022 March 31, 2023 June 30, 2023 September 30, 2023 September 30, 202
Slide 17: 2022 Non-GAAP Gross Profit and Gross Margin Full Year Results
2022 NON-GAAP GROSS PROFIT AND NON-GAAP GROSS MARGIN FULL YEAR RESULTS (Amounts in thousands, unaudited) 2022 Three Months Ended Twelve Months Ended March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 December 31, 2022 Revenue Security Solutions $ 26,919 $ 30,819 $ 32,440 $ 30,276 $ 12
Slide 18: Reconciliations: EBITDA and Adjusted EBITDA
RECONCILIATIONS EBITDA, Adjusted EBITDA, EBITDA Margin and Adjusted EBITDA Margin (Unaudited) For the Three Months Ended For the Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Amount Margin Amount Margin Amount Margin Amount Margin (dollars in thousands
Slide 19: Reconciliations: Adjusted Net Income and Adjusted EPS
RECONCILIATIONS Adjusted Net Income/(Loss) and Adjusted EPS (Unaudited) For the Three Months Ended For the Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Earnings Per Earnings Per Earnings Per Earnings Per Amount Share Amount Share Amount Share Amount S
Slide 20: Reconciliations: Non-GAAP Gross Profit and Gross Margin
RECONCILIATIONS Non-GAAP Gross Profit and Non-GAAP Gross Margin (Unaudited) For the Three Months Ended For the Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Amount Margin Amount Margin Amount Margin Amount Margin (dollars in thousands) Gross profit $ 1
Slide 21: Reconciliations: Free Cash Flow
RECONCILIATIONS Free Cash Flow (Unaudited) For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2023 2022 2023 2022 (in thousands) Net cash provided by/(used in) operating activities $ 846 $ 11,986 $ (3,367) $ 20,118 Adjustments: Purchases of p
Slide 22: Solutions that empower and protect the enterprise.
Solutions that empower TM and protect the enterprise.