Telos Corporation Reports $8.6 Million Net Loss Despite 3.4% Revenue Growth in Q1 FY 2025

Telos Corporation reported a net loss of $8.6 million for the first quarter of fiscal year 2025, compared to a net loss of $7.4 million in the same period of the previous year. The company's revenue increased to $30.6 million, up from $29.6 million in the first quarter of 2024, marking a year-over-year growth of approximately 3.4%. The increase in revenue was primarily driven by a significant ramp-up in the Security Solutions segment, which saw a 38.5% rise in revenue, attributed to the successful transition to full operational capacity of a major program and increased product sales.

Despite the revenue growth, Telos experienced a decline in gross margin, which fell to 39.8% from 37.0% in the prior year. This decrease was influenced by a less favorable program mix and increased costs associated with specific programs. Operating expenses rose by 9.3% to $21.2 million, largely due to a $3.4 million increase in selling, general, and administrative expenses, driven by higher stock-based compensation costs. The company reported an operating loss of $9.0 million, compared to an operating loss of $8.4 million in the first quarter of 2024.

In terms of operational metrics, Telos reported a cash and cash equivalents balance of $57.8 million as of March 31, 2025, an increase from $54.6 million at the end of 2024. The company also noted a significant improvement in cash flow from operating activities, which generated $6.1 million in the first quarter, a substantial increase from a cash outflow of $0.4 million in the same period last year. This positive cash flow was attributed to improved timing of customer payments and vendor payments.

Telos continues to focus on its core segments, with the Security Solutions segment generating 89% of total revenue from U.S. government contracts. The company is also navigating challenges related to government spending and procurement processes, which could impact future revenues. Looking ahead, Telos anticipates recognizing approximately 95% of its remaining performance obligations, valued at $51.4 million, over the next 12 months, indicating a positive outlook for revenue generation in the near term.

Overall, while Telos Corporation has shown revenue growth and improved cash flow, it faces ongoing challenges with profitability and operational costs. The company remains committed to leveraging its strengths in cybersecurity and cloud solutions to capitalize on market opportunities while managing the risks associated with government contracts and spending.