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ASHBURN, VA – Telos Corporation (TLS), a $233 million market cap company specializing in integrated computer systems design, has overcome a significant hurdle as the U.S. Department of Homeland Security's Cybersecurity and Infrastructure Security Agency (CISA) disclosed the denial of a protest against a $40 million contract. According to InvestingPro data, the company maintains a strong liquidity position, holding more cash than debt on its balance sheet. The announcement, released today, confirms the lifting of a Stop-Work Order on the award, which is projected to benefit Telos' Security Solutions business over the next five years.
This development follows a series of events that began on March 15, 2024, when Telos first announced teaming agreements with prime partners for federal government awards potentially worth up to $525 million. However, these awards were subject to protests during a standard post-award period. InvestingPro subscribers have access to 6 additional key insights about Telos's financial position and growth prospects. On August 28, 2024, Telos reported the resolution of one protest in favor of its prime partner through a Form 8-K filing.
The recently resolved award, worth up to $40 million, was initially protested but has now seen the objection denied, with the Stop-Work Order formally lifted as of January 6, 2025. The deadline for any further protests expired on January 17, 2025, paving the way for the contract's execution.
Telos' filings with the SEC, including its Annual Report for the year ended December 31, 2023, and subsequent Quarterly Reports, detail the inherent risks and uncertainties of forward-looking statements. These documents are available to the public on the Telos investor relations website and the SEC's website.
The company's management cautions investors not to place undue reliance on these forward-looking statements, which are not guarantees of future performance. Actual results may differ due to numerous factors, many of which are beyond the company's control. With the stock currently trading below its Fair Value according to InvestingPro analysis, investors seeking deeper insights can access the comprehensive Pro Research Report, available exclusively to subscribers, which provides detailed analysis of Telos's financial health and growth prospects among 1,400+ top US stocks.
This news is based on a press release statement and reflects the latest update in a series of contract-related announcements by Telos Corporation. The company remains focused on fulfilling its obligations under the contract and contributing to the nation's cybersecurity infrastructure.
In other recent news, Telos Corporation has made significant strides in its financial performance. The company's Q3 results exceeded expectations, with revenue reaching $23.8 million, largely driven by their TSA PreCheck program. Despite a significant charge in Q3, Telos managed to improve its adjusted gross margin and reported a smaller adjusted EBITDA loss than anticipated.
DA Davidson and BMO Capital Markets have both responded to these developments by upgrading their stock price targets for Telos to $3.50 and $4.50 respectively, while maintaining neutral ratings. These adjustments reflect the companies' recognition of Telos' potential amidst ongoing restructuring and the expected expansion of its TSA business.
In addition to these financial results, Telos has also announced a restructuring plan that is expected to bring the company to a slightly positive EBITDA by 2025. This plan is complemented by the initiation of new programs that are expected to contribute approximately $60-85 million in revenue by 2025.
Looking forward, Telos projects a revenue growth in Q4, with estimates ranging from $24.5 million to $26.5 million. By 2025, the company aims to establish 500 TSA PreCheck enrollment locations and expects substantial annual revenue growth, supported by a robust business pipeline valued at approximately $4.1 billion. Despite projecting an adjusted EBITDA loss for Q4, Telos is optimistic about generating positive free cash flow as contracts mature.
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