TELOS CORP

Overview

Telos Corporation empowers and protects the world’s most security-conscious organizations with efficient, adaptable, and secure solutions that safeguard people, systems, and information. We deliver advanced capabilities across cyber governance, risk, and compliance ("GRC") with Xacta; identity and biometric solutions; secure networks and communications; and TSA PreCheck® enrollment services. Our primary customers include the U.S. federal government, large commercial organizations, state and local governments, and global enterprises. Telos helps customers stay ahead of evolving threats, accelerate compliance, and achieve mission success. Driven by purpose and guided by our core values, we build trusted partnerships, deliver superior solutions, and help create a more secure, interconnected world.

In the fourth quarter of 2025, Telos launched Xacta.ai TM, the artificial intelligence ("AI") capability at the core of the Xacta cyber GRC platform, which is designed to significantly reduce compliance time and effort. Xacta.ai delivers expert-level guidance and real-time insights, empowering organizations to move from reactive compliance to proactive risk management.

Business Environment

U.S. Federal Government

Our consolidated revenue is largely attributable to prime contracts or to subcontracts with a prime contractor engaged in work for the U.S. federal government, with the remaining revenue attributable to state and local governments and commercial markets. We generated approximately 92.7% and 90.9% of our total revenue from contracts with U.S. government agencies in the first nine months of 2026 and 2025, respectively.

Our business performance is affected by the overall level of U.S. government spending and the alignment of our offerings and capabilities with the budget priorities of the U.S. government. At present, government funding is available under a continuing resolution. The administration's current priorities are focused on areas such as national security, cybersecurity, and AI and technology leadership, while constraining non-defense discretionary spending. While certain administration priorities present greater opportunity for our products and services, turmoil within the federal government (including federal workforce and budgetary uncertainty) has lengthened our sales cycle in certain cases. We continuously monitor U.S. federal budget, legislative, and contracting trends and activities, align our capabilities with federal budget priorities, and take steps to maintain a competitive cost structure in response to these developments.

Macroeconomic Conditions

The U.S. economy in 2026 has demonstrated overall resilience, though it faces persistent challenges from inflation and geopolitical developments. Strong AI investment and technology enterprise capital expenditure are driving economic growth. However, underlying inflation and the ongoing conflict in the Middle East have created pressure and volatility in the global economy. This volatility has resulted in, and may be expected to continue to result in, rising energy prices and supply chain disruptions, among other consequences. Nonetheless, to date our business has not been materially impacted by these consequences, in part due to the importance of our offerings to our customers, the type of solutions we provide, and the nature of our largest customers. If global volatility continues to increase and the conflict in the Middle East is prolonged or intensifies, the economic uncertainty inherent in such global instability may affect our operating results. Management continues to monitor these dynamics and the evolving geopolitical situation.