Slide 1: Fourth Quarter 2021 Earnings and 2022 Outlook
Fourth Quarter 2021 Earnings and 2022 Outlook March 16, 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: 2021 Performance Summary
2021 PERFORMANCE SUMMARY 4Q 2021 Highlights FY 2021 4Q 2021 4Q 2021 Actual Actual Guidance • Delivered 43% revenue growth (guidance midpoint), driven by 37% growth in Security Solutions and 49% growth in Secure $61.6M to Revenue $242.4M $64.1M Networks $66.6M • Expanded gross margin 196 bps to 37.7%
Slide 4: Senior Management / Board Leadership Announcements
SENIOR MANAGEMENT / BOARD LEADERSHIP ANNOUNCEMENTS Senior Management Board of Directors HUTCH ROBBINS BRAD JACOBS EVP, General Counsel Director • Oversees the legal team, advising the • Serves on the Audit Committee company on a variety of legal matters • Brings financial leadership experience • Bri
Slide 5: New Reporting Segment Structure
NEW REPORTING SEGMENT STRUCTURE Revenue by Segment by Year • Governance risk and compliance Security Solutions solution that facilitates cloud migration • Virtual obfuscation solution that $117.3M $123.5M Security protects user information and location $101.9M $86.6M Solutions Mark Griffin • Trusted
Slide 6: Since Going Public…
SINCE GOING PUBLIC… Bolstered Financial Flexibility Invested For Long Term Growth Launched Channel And Improved Cash Flow And Also Expanded Margins Ecosystem • Repaid all debt and preferred stock • Doubled investments in Sales and Marketing • Launched the Telos CyberProtect Partner • Highly liquid a
Slide 7: 4Q 2021 Financial Performance
4Q 2021 FINANCIAL PERFORMANCE Revenue Gross Profit Adjusted EBITDA(1) Adjusted EPS(1) Free Cash Flow(1) Up Up Up Up Up 43% 51% $11.5M $0.19 $8.2M $64.1M $24.1M $8.8M $0.11 $44.9M $16.0M 4Q20 4Q21 4Q20 4Q21 ($2.6M) ($7.2M) 4Q20 4Q21 ($0.08) ($15.4M) 4Q20 4Q21 4Q20 4Q21 • Security Solutions up 37%, dr
Slide 8: 2021 Bridge: Adj. EBITDA Original Guidance to Actual Results
2021 BRIDGE: ADJ. EBITDA ORIGINAL GUIDANCE TO ACTUAL RESULTS Adjusted EBITDA(1) Commentary • Excluding the impact of customer delays, outperformed original Adjusted EBITDA guidance by nearly $11 million due to: • Telos ID revenue and margin performance • Lower below the line costs and actions to re-
Slide 9: TSA PreCheck Accounting (Gross versus Net Revenue)
TSA PRECHECK ACCOUNTING (GROSS VERSUS NET REVENUE) We have determined Telos to be an “Agent,” as defined by ASC 606, as it relates to the per-applicant fee for service collected by Telos and paid to the TSA and FBI as part of Telos’ upcoming TSA PreCheck enrollment services offering. In accordance w
Slide 10: Full Year 2022 Guidance
FULL YEAR 2022 GUIDANCE FY 2022 FY 2022 Assumptions Low End High End • Security Solutions growth assumptions: Revenue • +/- MSD 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 growth
Slide 11: 1Q 2022 Guidance
1Q 2022 GUIDANCE FY 2022 FY 2022 Assumptions Low End High End • Security Solutions growth assumptions: Revenue • Up mid-teens $44M $48M Excluding TSA • Driven by Telos ID TSA Gross Rev. • No TSA PreCheck contribution - - Equiv.(1) • Secure Networks revenue down low 30% to mid 40% due to $14 million
Slide 12: Summary
SUMMARY Developed our leadership team and board of directors Delivered significant growth and margin expansion Reported a strong finish to a challenging year; delivered on 4Q guidance Closely monitoring return on investment; managing costs, margins, and cash flow Balancing Investments in Long Term G
Slide 13: Appendix
Appendix Telos
Slide 14: 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 15: 2022 Additional Modeling Inputs
2022 ADDITIONAL MODELING INPUTS 2021 2022E 2022E Full Year Full Year 1Q 2022E Full Year Commentary • Flat to up gross margins due to TSA PreCheck and favorable Gross Margin 35.5% 35.5% to 38% 35% to 37% mix shift between Security Solutions and Secure Networks $70M to $14M to • ~$4M included in COS f
Slide 16: Reconciliations
RECONCILIATIONS Enterprise EBITDA and Adjusted EBITDA (Unaudited, amounts in thousands) 16
Slide 17: Reconciliations
RECONCILIATIONS Adjusted Net Income (Loss) and Adjusted EPS (Unaudited) 17
Slide 18: Reconciliations
RECONCILIATIONS Adjusted Net Income (Loss) and Adjusted EPS (Unaudited) 18
Slide 19: Reconciliations
RECONCILIATIONS Free Cash Flow (Unaudited) 19