Telos ID Expansion Drives 33 Percent Quarterly Revenue Growth

Telos Corporation reported second-quarter revenue of $47.7 million, up 33 percent from a year earlier, with growth in its identity business providing the main contribution to the increase.

Revenue in the company’s Security Solutions segment rose 44 percent year over year. Telos attributed the gain primarily to the expansion of large programs in Telos ID, which provides biometric enrollment, identity vetting and credentialing services for government and regulated-sector customers.

The identity work also contributed to higher margins. Telos posted a GAAP gross margin of 35.0 percent, compared with 33.2 percent in the same quarter of 2025, and said Telos ID performance was the primary reason for the improvement. Cash gross margin, a non-GAAP measure, increased to 40.6 percent from 38.4 percent.

Telos recorded GAAP net income of $0.7 million, reversing a $9.5 million loss a year earlier. Adjusted EBITDA reached $6.9 million, up from $0.4 million, while adjusted EBITDA margin expanded to 14.4 percent from 1.1 percent. The company linked that margin growth to Telos ID revenue and lower operating expenses.

Cash flow from operations was $8.8 million. Free cash flow, another non-GAAP measure, increased 43 percent to $6.6 million and represented the sixth consecutive quarter in which the company reported a free cash flow margin above 12 percent.

Telos ID operates enrollment and vetting programs that combine biographic checks with fingerprint and other identity data. Its earlier work has included airport worker background checks in Denver and FINRA-certified fingerprint services for financial-sector screening.

For the third quarter, Telos expects revenue between $49.2 million and $50.6 million. It narrowed its full-year revenue forecast to between $187 million and $195 million, from a prior range that extended to $200 million, while raising the lower end of its adjusted EBITDA outlook to $23.6 million.

The results show that identity programs have become a central growth and profitability driver within Telos rather than a peripheral part of its broader cybersecurity portfolio. The company did not publicly identify the individual Telos ID programs responsible for the quarterly expansion.

Sources: SEC, Telos Form 8-K

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By the ID Tech Editorial Team