Telos Corporation Reports 55.9% Revenue Growth in First Quarter of Fiscal Year 2026

Telos Corporation reported significant financial improvements in its first quarter of fiscal year 2026, with total revenue reaching $47.7 million, a 55.9% increase from $30.6 million in the same period last year. The growth was primarily driven by a 78.1% surge in revenue from the Security Solutions segment, which accounted for $46.0 million of total revenue. The company also saw a notable increase in product revenue, which rose to $5.7 million from $1.8 million in the prior year. Gross profit for the quarter was $17.4 million, up from $12.2 million, although the gross margin slightly decreased to 36.4% from 39.8% due to changes in revenue mix and higher infrastructure costs.

Operating expenses decreased by 24.9% year-over-year to $15.9 million, primarily due to lower stock-based compensation and disciplined cost management. This reduction contributed to an operating income of $1.5 million, a significant turnaround from an operating loss of $9.0 million in the first quarter of 2025. Net income for the quarter was $2.0 million, compared to a net loss of $8.6 million in the previous year, marking a $10.6 million improvement. The company also reported cash flow from operations of $8.7 million, an increase of $2.6 million from the prior year.

In terms of operational developments, Telos launched Xacta.ai, an artificial intelligence capability integrated into its Xacta cyber governance, risk, and compliance platform. This launch is expected to enhance compliance efficiency for clients. The company continues to focus on its core customer base, which remains predominantly U.S. federal government agencies, accounting for 93% of total revenue in the first quarter. The company’s workforce has been streamlined as part of a restructuring plan initiated in late 2025, which is expected to yield further operational efficiencies.

As of March 31, 2026, Telos had total assets of $139.9 million, with cash and cash equivalents amounting to $50.2 million. The company’s liabilities totaled $43.4 million, resulting in stockholders' equity of $96.5 million. The company also repurchased approximately 517,000 shares of its common stock for $2.2 million during the quarter, reflecting its commitment to returning value to shareholders. Looking ahead, Telos anticipates continued growth driven by its strategic initiatives and the ongoing demand for cybersecurity solutions, although it remains vigilant regarding potential macroeconomic challenges and government spending fluctuations.