TLS · Telos
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $6.89
Note written ·
How this view changed
- · Rating raised from Low to Medium. Results, 9 November 2026: Telos reported third-quarter 2026 revenue of $55.2 million, above its $49.2–50.6 million guide, and raised full-year revenue guidance to $198.2–200.7 million and adjusted EBITDA guidance to $32.3–34.1 million.
Price against the kill line
6.7% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $6.89, set on 12 November 2026. The shares are up 67.4% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $6.89, 10% under the 11 November 2026 close and below the $7.17 first close after the third-quarter report, which would show the post-report gain fading; or full-year 2026 revenue guidance cut below $198.2 million.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 9 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 55.2
- Revenue, change on a year (%)
- +7.3
- Gross margin (%)
- 37.9
- Operating margin (%)
- 7.4
- Free cash flow, four quarters ($M)
- 34.4
- Free-cash-flow yield (%)
- 6.4
All filed numbers
What Telos reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 55.2 | +7.3 | 37.9 | 7.4 |
| first filed | 47.7 | +32.7 | 35.0 | 0.6 |
| first filed | 47.7 | +55.9 | 36.4 | 3.0 |
| first filed | 46.8 | +77.4 | 35.0 | −39.6 |
| first filed | 51.4 | +116.3 | 39.9 | −4.8 |
| first filed | 36.0 | +26.2 | 33.2 | −27.5 |
| Pre-tax income ($M) | 4.5 |
| Net income ($M) four quarters: −9.2 | 4.4 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +5.4 |
| Operating cash flow ($M) | 34.9 |
| Capital spending ($M) | 0.5 |
| Free cash flow ($M) | 34.4 |
| Cash and short-term investments ($M) | 51.8 |
| Debt ($M) | Not available |
| Net cash, cash less debt ($M) | Not available |
| Deferred revenue ($M) +19.1% on a year | 17.1 |
| Backlog, orders not yet delivered ($M) +28.2% on a year | 84.0 |
| Receivables ($M) | 23.7 |
| Inventory ($M) | 3.0 |
| Shareholders' equity ($M) | 94.4 |
| Market value ($M) | 541 |
| Enterprise value, market value plus net debt ($M) | Not available |
| Enterprise value to sales (×) | Not available |
| Enterprise value to operating income (×) | Not available |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 5.7 |
| Free-cash-flow yield (%) | 6.4 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 3.5% of shares outstanding sold short, 4.0 days of average trading to cover, −2.5% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $2.5M |
| 12 monthsfrom | $0 | $9.6M |
The thesis
Telos Corporation beat its own third-quarter forecast and raised its 2026 outlook on 9 November 2026, which makes the shares modestly more likely than not to beat the S&P 500 over the next three months. The open question is 2027. Fourth-quarter results and the first 2027 outlook, expected in early 2027, show whether growth holds once the company stops reselling low-margin third-party software.
Third-quarter revenue was $55.20 million, against $51.44 million a year earlier (10-Q, 9 November 2026). The company had guided to $49.2–50.6 million, a 2% to 4% decline. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) reached $10.6 million, a 19.2% margin, against a $6.0–6.8 million guide. Full-year revenue guidance rose to $198.2–200.7 million from $187–195 million. Adjusted EBITDA guidance rose to $32.3–34.1 million from $23.6–28.6 million.
The shares have already moved. They went from a $4.82 close on 6 November 2026 to $7.65 on 11 November 2026. At that close they sit above Wedbush's raised $7 target and below Needham's $9 and B. Riley's $11 (Benzinga, 10 November 2026). In that range, the price reflects the raised 2026 outlook but not yet a growth year in 2027.
This was the first report under chief executive officer (CEO) Mark Griffin, who took over on 2 November 2026. On the 9 November 2026 call he said he expects no immediate change of strategy, and executive chairman John Wood keeps the product roadmap and long-term sales strategy (MarketBeat transcript summary).
Bullish and bearish views on Telos Corporation
The bull case on Telos Corporation (TLS), in brief: third quarter beat on every line. The bear case: revenue steps down in the fourth quarter.
Bull case
- Third quarter beat on every line. Adjusted earnings per share were $0.09 against a $0.04 consensus, and revenue was $55.198 million against a $50.004 million consensus (Benzinga, 9 November 2026). Generally accepted accounting principles (GAAP) net income was $4.4 million, against a $2.1 million loss a year earlier (IDTechWire, 9 November 2026).
- Telos ID carries the growth. Security Solutions revenue rose to $54.2 million from $46.5 million (IDTechWire, 9 November 2026). Chief financial officer Mark Bendza cited stronger-than-expected Transportation Security Administration (TSA) PreCheck transaction volumes on the 9 November 2026 call.
- Fourth-quarter guide sits above consensus. The company guided fourth-quarter revenue to $47.5–50.0 million, against a $45.571 million consensus, with adjusted EBITDA of $7.0–8.8 million (Benzinga, 9 November 2026).
- New Xacta orders support 2027. Information Assurance booked $58 million in net new Xacta and professional-services orders, which the company expects to produce about $20 million of 2027 revenue (IDTechWire, 9 November 2026).
- Analysts raised targets after the report. B. Riley raised its target to $11 from $9 and kept a buy rating. Needham kept a buy rating with a $9 target, and Wedbush kept a neutral rating with a target raised to $7 (Benzinga, 10 November 2026).
- The company bought back stock below today's price. Telos spent $5.7 million on more than 1.2 million shares at an average of $4.59 in the third quarter (MarketBeat call summary, 9 November 2026).
Bear case
- Revenue steps down in the fourth quarter. The $47.5–50.0 million guide is below the $55.2 million third quarter (company guidance, 9 November 2026). The MarketBeat call summary gives no reason for the drop.
- 2027 starts with a $32 million hole. Bendza forecast a $32 million year-over-year revenue reduction from ending low-margin software resale. Asked about 2027 growth, he said the company has "a really good shot" at it, and the company gave no formal 2027 guidance (9 November 2026 call).
- Gross margin slipped. GAAP gross margin was 37.9% in the third quarter, down from 39.9% a year earlier (IDTechWire, 9 November 2026). Panabee's review of the quarter attributes much of the profit gain to stock-based compensation falling to $3.0 million from $9.4 million.
- Insiders sold before and after the report. SEC Form 4 filings show controller Donald Terreri selling 9,400 shares at $7.42 on 10 November 2026. In September, Bendza sold 200,000 shares at $4.55, 25,461 at $4.33 and 174,539 at $4.05, and Wood sold 96,151 at $4.05.
- A similar rally faded last year. The shares hit an intraday 52-week high of $8.30 on 11 November 2025 and fell to a $3.88 close on 23 February 2026 in adjusted daily closes. One year's price path does not show what will happen this time.
Price setup
The last close was $7.65 on 11 November 2026, 7.8% below the intraday 52-week high of $8.30 set on 11 November 2025. The shares are up 66.3% over three months from a $4.60 close on 13 August 2026. On 11 November 2026, the 50-day moving average was $4.71 and the 200-day moving average $4.54, both in adjusted daily closes.
The repricing happened in one session. The shares closed at $4.82 on 6 November 2026 and $7.17 on 9 November 2026, the day of the report. They then added to the gain with a $7.67 close on 10 November 2026 and held at $7.65 on 11 November 2026.
The $7.17 close of 9 November 2026 is the first close after the report. The case turns on whether the shares hold above it. The $8.30 intraday high from 11 November 2025 is the prior peak. The 52-week closing low is $3.88, from 23 February 2026.
Catalysts ahead
- ~10 March 2027 (est.): Fourth-quarter and full-year 2026 results, with the first 2027 outlook. Shows whether fourth-quarter revenue lands inside the $47.5–50.0M guide and whether 2027 guidance implies growth after the $32M resale reduction, the question the current price leaves open.
What would change the view
A daily close below $6.89, 10% under the 11 November 2026 close and below the $7.17 first close after the third-quarter report, which would show the post-report gain fading; or full-year 2026 revenue guidance cut below $198.2 million.
The risks this note tracks, each with what would confirm it:
- 2027 revenue declines once software resale ends, because Telos ID and Xacta growth fall short of the $32M resale reduction. Confirmed by: a 2027 revenue outlook at the fourth-quarter report that falls below 2026 revenue after the resale is removed.
- TSA PreCheck transaction volumes slow, taking away the main driver of the 2026 raise. Confirmed by: management citing weaker PreCheck volumes, or fourth-quarter revenue below the $47.5M low end of the guide.
- Gross margin keeps slipping on program mix, so profit gains depend on lower stock compensation rather than operating leverage. Confirmed by: fourth-quarter GAAP gross margin below the third quarter's 37.9% with no lift from the resale exit.
- Federal budget disruption delays awards and task orders on a business that depends on federal agencies. Confirmed by: management citing funding delays or award slippage, or pending proposals decided later than the 'coming months' timing given on 9 November 2026.
- Senior insiders keep selling at post-report prices. Confirmed by: form 4 filings showing open-market sales by Griffin, Wood or Bendza after 9 November 2026.
What it trades with
Telos trades mostly on its own contract awards and guidance, because nearly all of its revenue comes from US federal agencies. US stocks rallied broadly on 9 November 2026, according to Benzinga. Telos's move from $4.82 to $7.17 that day followed its own report and raised outlook.
Its identity business also ties results to air-travel demand through TSA PreCheck enrollment volumes, which the chief financial officer cited as a driver on 9 November 2026. Analyst coverage groups Telos with Cybersecurity names: Wedbush covers it alongside Check Point, Fortinet and Varonis. Telos's weekly moves have followed its own news more than that group's.
The evidence, claim by claim (8)
- Third-quarter 2026 revenue was $55.20M versus $51.44M a year earlier, above the company's $49.2–50.6M guide. Telos 10-Q for the quarter ended 30 September 2026 · as of
- Q3 2026 adjusted EBITDA was $10.6M (19.2% margin); GAAP net income was $4.4M versus a $2.1M loss a year earlier; GAAP gross margin was 37.9% versus 39.9%. Telos Q3 2026 results, reported by IDTechWire · as of
- FY2026 revenue guidance was raised to $198.2–200.7M from $187–195M, and adjusted EBITDA guidance to $32.3–34.1M from $23.6–28.6M. Telos Q3 2026 results, reported by IDTechWire and Benzinga · as of
- Q4 2026 revenue was guided to $47.5–50.0M versus a $45.571M consensus, with adjusted EBITDA of $7.0–8.8M. Benzinga; IDTechWire · as of
- The CFO forecast a $32M year-over-year 2027 revenue reduction from ending software resale; $58M of net new Xacta orders are expected to add about $20M of 2027 revenue. Q3 2026 earnings call, MarketBeat summary; IDTechWire · as of
- B. Riley raised its target to $11 from $9 (buy); Needham kept a buy rating with a $9 target; Wedbush kept a neutral rating and raised its target to $7. Benzinga analyst headlines · as of
- Controller and chief accounting officer Donald Terreri sold 9,400 shares in the open market at $7.42. SEC Form 4 filed 10 November 2026 · as of
- Telos repurchased more than 1.2 million shares for $5.7M at an average of $4.59 in Q3 2026. Q3 2026 earnings call, MarketBeat summary · as of
Sources
- Telos Raises 2026 Outlook as Telos ID Programs Lift Security Solutions Revenue 17 Percent · idtechwire.com ·
- What Telos (TLS) Said on Its Q3 Earnings Call · marketbeat.com ·
- Telos Q3 Revenue Rises 7% to $55 Million as Profitability Reaches IPO High · panabee.com ·
Related · shared themes
EPAM
EPAM Systems
EPAM Systems is modestly more likely than not to beat the S&P 500 as its $1.8 billion buyback, including a $500 million UBS repurchase…
GDYN
Grid Dynamics Holdings
Grid Dynamics' AI work is lifting the IT-services firm back toward double-digit growth at margins near 20%, which favors the shares beating…
INTU
Intuit
Intuit's shares hold a modest edge over the S&P 500 as AI agents, Credit Karma Tax and the Sequence deal target price-driven customer…
MANH
Manhattan Associates
Manhattan Associates' cloud revenue grew 28% and its backlog 25% in the 27 October 2026 report, making the shares modestly more likely than…
See also · stocks to watch