Q2 2026 Telos Corp Earnings Call Transcript
Key Points
- Telos Corp (TLS) reported Q2 2026 revenue of $47.7 million, a 33% year-over-year increase, exceeding the high end of its guidance range.
- Adjusted EBITDA reached $6.9 million, surpassing guidance, with the margin expanding to 14.4% from 1.1% in the prior year.
- The company generated strong free cash flow of $6.6 million, marking its sixth consecutive quarter with a free cash flow margin above 12%.
- Telos Corp (TLS) raised its full-year adjusted EBITDA guidance to $23.6-$28.6 million and improved its cash gross margin outlook to 39%-40%.
- The TSA PreCheck program is performing well, with market share up significantly in the first half, and the company is expanding its postal service pilot to additional sites.
- Telos Corp (TLS) expects Q3 2026 revenue to decline slightly year-over-year due to non-recurring revenue from a program startup in the prior year.
- The company is phasing out low-margin third-party software resale, which will reduce full-year revenue by approximately $2.5 million at the midpoint and $33 million annually thereafter.
- Q3 2026 adjusted EBITDA is guided lower sequentially, reflecting contingency reserves on fixed-price contracts and seasonal mix impacts from TSA PreCheck.
- The timing of contract awards for nearly $500 million in submitted proposals remains uncertain, as it is controlled by government customers.
- The company's gross margin is expected to fluctuate quarterly due to revenue mix, with Q3 cash gross margin guided at 37.5%-38.5%, down from Q2's 40.6%.
Good day and thank you for standing by. Welcome to the Telos Corporation's second quarter 2026 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Alison Phillips, Director of Corporate Communications. Please go ahead.
Good morning. Thank you for joining us to discuss Telos Corporation's second quarter 2026 financial results. With me today is John Wood, Chairman and CEO of Telos; Mark Bendza, Executive Vice President and CFO of Telos; and Mark Griffin, Executive Vice President of Security Solutions. I will quickly review the format of today's presentation. Mark Bendza will begin with remarks on our second quarter results and full-year outlook. We will then open the line for Q&A where John Wood and Mark Griffin will also join us.
The second quarter financial results were issued earlier today and are posted on the Telos Investor Relations website, where
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