Telos Corporation (TLS): Business Model Canvas [Dec-2025 Updated]

You're trying to map out the actual financial engine behind Telos Corporation (TLS), and frankly, it's a blend of high-stakes government compliance and consumer transactions. Honestly, the core driver is their Security Solutions segment, which accounted for roughly 90% of their Q2 2025 revenue, all while they guide full-year 2025 revenue between $162.0 million and $164.3 million. We need to see how they manage the high costs of specialized engineers and R&D for platforms like Xacta.ai against the $7.0 million in operating cash flow they posted in Q2. Keep reading below for the precise breakdown of their nine building blocks, from their deep DoD partnerships to their transactional fees from TSA PreCheck enrollments.

Telos Corporation (TLS) - Canvas Business Model: Key Partnerships

You're looking at the structure that lets Telos Corporation deliver its security and compliance solutions across government and commercial sectors. The partnerships are critical, especially given their deep roots in federal work.

U.S. government agencies (e.g., TSA, DoD) for major programs

Telos Corporation maintains significant partnerships with U.S. government entities, evidenced by recent contract awards and long-term opportunities. The company's financial health supports these long-term engagements, reporting approximately $57 million in cash and cash equivalents as of June 30, 2025, with zero outstanding debt. For Q2 2025, Telos reported revenue of $36 million, a 26% year-over-year increase.

Key government-related contracts and opportunities include:

Telos also holds contract positions with the Defense Logistics Agency (DLA JETS 2.0), U.S. Air Force (USAF BIM), U.S. Army (IMOD CAPSET), U.S. Marine Corps (USMC ISTC BAN), and the FBI (IT-SSS2).

Retail chains (Office Depot/OfficeMax) for TSA PreCheck enrollment locations

The partnership with Office Depot/OfficeMax is central to expanding consumer access to TSA PreCheck enrollment services. As of October 28, 2025, Telos surpassed 500 TSA PreCheck enrollment locations nationwide, with many situated inside participating Office Depot and OfficeMax stores. This is an expansion from the 161 total centers reported in October 2024, of which 158 were at Office Depot and OfficeMax locations.

The pricing structure for this service is transparent:

• New enrollment fee: $85
• Renewal fee (for 5 years): $70

A limited-time promotion, the Families on the Fly BOGO Offer, ends December 31, 2025, and provides $15 off the second enrollment for two family members signing up together. Most applicants receive their Known Traveler Number (KTN) within 3-5 business days, though processing can take up to 60 days.

Channel partners via the Telos CyberProtect Partner Program

The Telos CyberProtect Partner Program is structured to drive growth across federal, state and local, education, healthcare, and financial services markets. The program is segmented to accommodate different partner capabilities and revenue models.

Partner categories include:

• Consulting: Advise, recommend, implement, or deliver Telos solutions
• Security Reseller: Resell, manage, and support Telos offerings like Xacta
• Technology Alliance Partner: Collaborate to design, develop, and deploy innovative solutions
• Implementation: Meet specialized customer needs in cyber, cloud, and enterprise security

Premier partners benefit from deal registration and access to sales/marketing resources, with no annual revenue obligation or technical certification requirements. Telos supports recurring revenue for partners by honoring the same margin on subscription renewals as the original sale.

System integrators and security resellers for solution delivery

System integrators and professional services firms fall under the Consulting and Implementation categories of the CyberProtect Program. Security Resellers are explicitly defined as partners looking to resell or manage Telos offerings, such as Xacta, to enhance customer IT GRC capabilities.

Technology alliances for complementary product integrations like IBM Security

Telos Corporation has a technology alliance with IBM Security, specifically integrating the Telos Xacta IT Risk Management platform with IBM's Active Governance Services (AGS). This collaboration allows enterprises to operationalize and automate cybersecurity compliance and regulatory risk activities. The AGS solution combines IBM's expertise with Xacta to automate time-consuming compliance tasks like control selection, validation, reporting, and monitoring.

Telos Corporation (TLS) - Canvas Business Model: Key Activities

You're looking at the core engine driving Telos Corporation's current performance, which is heavily weighted on executing large, specialized government programs and advancing its core software platform. This isn't just about bidding; it's about the day-to-day work that turns contract wins into recognized revenue and cash flow. Honestly, the numbers from the second and third quarters of 2025 really show where the focus is.

Developing and enhancing the Xacta cyber GRC platform, including Xacta.ai

The Xacta cyber governance, risk, and compliance (GRC) platform is central to the Security Solutions segment. A major activity here is continuous enhancement, highlighted by the launch of Xacta.ai in early October 2025, which already secured its first enterprise customer. This AI capability is touted to improve efficiency in cyber governance and compliance tasks by up to 93%. The platform's development is directly tied to securing high-level government work, as evidenced by a recent $3.7 million option year contract with the U.S. Air Force Intelligence Community in June 2025, specifically for the Xacta platform within a FedRAMP High environment.

Rapidly scaling the TSA PreCheck enrollment and DMDC programs

Scaling these two programs is a massive operational undertaking and a primary revenue driver. The TSA PreCheck enrollment network saw a 43% increase in Q2 2025, moving from 56 locations at the end of Q2 2024 to 357 locations by the end of Q2 2025, with a total of 415 locations across 40 states. By late October 2025, Telos Corporation announced it had surpassed the 500 location goal, reporting 502 enrollment sites nationwide. This TSA PreCheck effort is currently a $70 million annual revenue driver. Meanwhile, the Defense Manpower Data Center (DMDC) program ramp-up is forecasted to contribute between $50 million and $75 million in revenues for the full year 2025.

Providing specialized cybersecurity consulting and engineering services

These services are bundled with the software and are critical for securing large federal awards. The success of the Security Solutions segment, which made up 84% of total company revenue in Q1 2025, reflects the execution of these specialized services alongside the Xacta platform. The company's Q3 2025 revenue of $51.4 million, a 116% year-over-year increase, was driven by the Telos ID business, which falls under this segment.

Securing and executing large, multi-year federal government contracts

Securing and executing these contracts is the lifeblood of Telos Corporation. The company's Q3 2025 results showed revenue significantly exceeding guidance, with management raising the outlook for the second half of 2025. The company reported $13.1 million in Operating Cash Flow and $8.4 million in Free Cash Flow for the first half of 2025. Furthermore, Telos is maintaining a strong balance sheet to support execution, reporting no outstanding debt and approximately $57 million in cash as of June 30, 2025.

Maintaining FedRAMP High and other critical government certifications

This is a non-negotiable activity for operating in the federal space. Telos Corporation's Xacta platform achieved FedRAMP High authorization in July 2025, the highest security level in the program, allowing it to handle unclassified but highly sensitive information. This designation is crucial for market access and trust. The company also secured StateRAMP High authorization.

Here's a quick look at how the key operational drivers translated into recent financial performance, focusing on the Security Solutions segment which houses Xacta, TSA PreCheck, and DMDC:

The operational focus on these activities is clearly reflected in the segment mix. The Security Solutions segment saw 39% year-over-year growth in Q1 2025, while the Secure Networks segment contracted. This shift is intentional, as Security Solutions is the higher-margin, growth-oriented area for Telos Corporation.

• Xacta platform achieved FedRAMP High Authorization on July 15, 2025.
• The company resumed share repurchases in Q2 2025, deploying $4.0 million.
• Security Solutions revenue grew 81.8% year-over-year in Q2 2025, driven by growth programs.
• Q3 2025 Adjusted EBITDA reached $10.1 million, with an adjusted EBITDA margin of 19.6%.
• The company's cash position was approximately $57 million with no debt as of June 30, 2025.

Telos Corporation (TLS) - Canvas Business Model: Key Resources

You're looking at the core assets Telos Corporation (TLS) relies on to deliver its security assurance and compliance services. These aren't just line items; they are the proprietary engines and government-backed permissions that create a high barrier to entry for competitors.

The foundation of Telos Corporation's value proposition rests heavily on its proprietary software platforms. You see Xacta, which is their cyber risk management suite, now featuring Xacta 360 for always-on authorization and Xacta.ai for actionable insights in risk and compliance. Then there's Telos ID, which leverages advanced biometrics to reduce identity risks and simplify compliance for secure identities. While the prompt mentions Telos Ghost, the public filings emphasize Xacta and Telos ID as key differentiators in cyber GRC (Governance, Risk, and Compliance) and identity assurance.

These technological assets are supported by critical, hard-to-replicate government credentials. Telos Corporation maintains designations that allow them to operate in highly regulated spaces. These certifications are not just badges; they are operational requirements for major federal contracts. Honestly, losing these would severely impair the Security Solutions segment.

Here's a quick look at the quantifiable elements that make up these Key Resources:

The intellectual property is deeply embedded in the compliance automation capabilities. Xacta administers key elements of over 100 leading regulations and policies. Think about that scope: NIST RMF, DoD IT, FedRAMP, and the DoD's CMMC program are all managed through their platform. This deep integration into federal compliance frameworks is a massive intangible asset.

Furthermore, the human capital is specialized and cleared. Telos Corporation boasts a team with deep expertise, highly desirable clearances, and industry-recognized certifications across network engineering, mobility, and security. This specialized cybersecurity and engineering talent pool is a direct resource for delivering complex services.

The government certifications Telos Corporation maintains include:

• FBI-approved Channeler designation.
• TSA PreCheck enrollment provider status.
• Financial Industry Regulatory Authority Electronic Fingerprint Submission provider.
• Designated Aviation Channeling Services (ACS) provider.

Finally, the financial health directly supports resource maintenance and growth. For the second quarter of 2025, Telos Corporation generated $7.0 million in Cash Flow from Operations. That positive cash generation, coupled with a Free Cash Flow Margin of 12.9% for the quarter, shows the operational assets are effectively converting service delivery into usable cash, which helps fund the ongoing R&D for those proprietary platforms.

Finance: draft 13-week cash view by Friday.

Telos Corporation (TLS) - Canvas Business Model: Value Propositions

You're looking at the core value Telos Corporation (TLS) delivers to its customers, which is heavily weighted toward government and security-conscious enterprises. The numbers here show where the tangible impact is landing as of late 2025.

Automated continuous compliance and risk management via Xacta.

This platform is clearly winning significant government work, which validates its capability in high-security environments. For instance, Telos Corporation secured a $3.7 million contract extension with the U.S. Air Force Intelligence Community for the Xacta platform, covering automation across top secret and secret networks. Separately, an unnamed U.S. federal agency awarded a $2.2 million contract for Xacta deployment within a FedRAMP High environment. The Xacta platform itself holds the FedRAMP High authorization.

Identity and access management for highly security-conscious organizations.

The Security Solutions segment, which includes identity offerings, is the primary revenue engine. This segment delivered $32.5 million in revenue in the second quarter of 2025, representing 90.3% of the total Q2 revenue of $36.0 million.

Reduced cyber attack surface with Telos Ghost secure communications.

No specific financial or statistical data was found for the Telos Ghost secure communications offering in the latest reports.

Fast, convenient, and secure identity enrollment for the public (TSA PreCheck).

This service is scaling rapidly to meet demand. As of October 28, 2025, Telos Corporation surpassed 500 TSA PreCheck enrollment locations nationwide. This is up from 350 locations in 38 states as of June 23, 2025. The active membership in the overall TSA PreCheck program has grown to more than 23 million members. For enrolled travelers, 99% wait less than 10 minutes at security checkpoints. Management projected revenue guidance for TSA PreCheck and federal programs in 2025 to be between $50 million and $75 million.

AI-powered insights for up to 93% efficiency in GRC tasks (Xacta.ai).

The launch of Xacta.ai is tied to dramatic efficiency gains based on pilot testing. You can see the quantifiable improvements below:

The overall financial health supports these investments. For the second quarter of 2025, Telos Corporation delivered revenue of $36 million, a 26.2% year-over-year increase. The company achieved a positive adjusted EBITDA of $400,000 in Q2 2025, and generated Free Cash Flow of $4.6 million, representing a 12.9% margin for that quarter. As of September 30, 2025, the trailing 12-month revenue stood at $144.40M.

Here's a quick look at the key performance indicators supporting these value propositions:

• Q2 2025 Revenue: $36.0 million
• Security Solutions Revenue Share (Q2 2025): 90.3%
• Q2 2025 Adjusted EBITDA: $400,000
• Q2 2025 Free Cash Flow Margin: 12.9%
• TSA PreCheck Locations (as of Oct 2025): Surpassed 500
• TSA PreCheck Membership (Total): Over 23 million

Finance: draft 13-week cash view by Friday.

Telos Corporation (TLS) - Canvas Business Model: Customer Relationships

You're looking at how Telos Corporation (TLS) manages its diverse customer base, which is heavily weighted toward the U.S. Federal Government. Honestly, the relationship style shifts dramatically depending on whether you're talking about a mission-critical defense system or a traveler signing up for expedited screening.

Dedicated, high-touch relationship management for key federal contracts is the bedrock here. The Federal government accounts for more than 80% of Telos Corporation's total revenues. This means the relationship is deeply embedded, requiring dedicated teams to manage complex requirements. For instance, the Defense Manpower Data Center (DMDC) program is a significant revenue driver within the Security Solutions segment. New, specific wins, like the recent $2.2 million contract with an unnamed U.S. federal agency for the Xacta platform, require direct, high-touch support to deploy within a FedRAMP High environment.

This high-touch approach supports long-term, sticky contracts with the U.S. Defense and Intelligence Communities. The stickiness comes from deep integration into classified systems. A great example is the $3.7 million contract extension secured with the U.S. Air Force Intelligence Community for the Xacta platform, which automates compliance across top secret and secret networks. This type of renewal suggests high client satisfaction and significant switching costs. Furthermore, the company's opportunity pipeline, as of Q2 2025, shows over 200 unique deals representing an estimated contract value of more than $4 billion, indicating a strong focus on securing future long-term engagements.

In sharp contrast, the self-service and transactional model for consumer-facing services like TSA PreCheck is all about scale and convenience. This segment is growing rapidly, fueling the Security Solutions revenue which made up approximately 90% of total company revenue in Q2 2025. The customer relationship here is purely transactional: sign up, pay the fee, and get expedited service. The focus is on physical access points, not deep integration. The nationwide network expanded from just 26 locations in 2024 to 350 by June 2025, and by late October 2025, Telos Corporation announced it had surpassed 502 enrollment locations nationwide. The overall TSA PreCheck program has active membership exceeding 23 million members.

For commercial clients, the model leans toward partner-led sales and implementation support. This is evident in the TSA PreCheck expansion, where Telos Corporation partnered with major retailers like The ODP Corporation (Office Depot/OfficeMax) to accelerate rollout and reduce customer acquisition costs. While the federal segment dominates revenue, securing new commercial wins, such as a recent contract with a Fortune 100 technology company for Xacta, often involves leveraging these established channel relationships.

Finally, continuous security assurance and compliance support is a core relationship element, especially for government clients. This is embodied by the Xacta software platform, which recently achieved the FedRAMP High Authorization. This certification is a formal recognition that the platform meets the most stringent standards for protecting highly sensitive government data, which is a critical ongoing assurance requirement for their federal partners.

Here's a quick look at the scale of these customer relationships as of late 2025:

The nature of these relationships is further defined by the specific deliverables that lock in the customer:

• The Xacta platform is used to automate cyber governance, risk, and compliance (GRC) requirements.
• The DMDC program ramp-up is a key driver of sequential revenue growth.
• The company resumed share repurchases in Q2 2025, deploying $4 million to buy back approximately 1.5 million shares.
• The Q2 2025 Security Solutions segment revenue grew 82% year-over-year.
• The company reported a current ratio of 2.65 and no outstanding debt as of June 30, 2025.

Finance: draft 13-week cash view by Friday.

Telos Corporation (TLS) - Canvas Business Model: Channels

You're looking at how Telos Corporation gets its solutions, especially the high-growth Security Solutions, into the hands of its customers as of late 2025. The numbers show a heavy reliance on large, secure government and enterprise channels.

The direct sales effort targets federal and large commercial enterprises, which is clearly working given the Q2 2025 revenue hit $36.0 million, with Security Solutions making up 90.3% of that, or $32.5 million. This segment saw 81.8% year-over-year growth in Q2 2025.

The Telos CyberProtect Partner Program structures how resellers, consultants, and integrators engage. The program defines specific tiers for channel engagement:

• Consulting: For professional services firms and consultancies.
• Security Resellers: For those reselling Telos offerings.
• Technology Alliance Partner: For integration partners.
• Elite partners: Share benefits with Premier partners but gain the ability to perform implementation services after technical certification.

The physical enrollment center model, which you mentioned, is a key channel for the TSA PreCheck program. As of August 2025, the network has expanded to 415 locations, up from 357 at the end of the second quarter of 2025. Management had targeted around 500 locations by year-end 2025. This rollout involved partnerships, such as with The ODP Corporation (ODP).

Government contracting vehicles are central to Telos Corporation's scale. The Defense Manpower Data Center (DMDC) program alone is forecasted to recognize between $50 million to $75 million in revenue for the full year 2025. Furthermore, the overall contract pipeline stands at over $4 billion. A recent example of securing business through these vehicles is the $2.2 million contract won with an unnamed U.S. federal agency for the Xacta platform.

Here's a quick look at the revenue scale driving these channel activities as of the latest reported figures:

The company's total revenue for the trailing twelve months (TTM) is reported at $144.40 million, with analysts projecting a full-year 2025 consensus of $158 million.

Telos Corporation (TLS) - Canvas Business Model: Customer Segments

You're looking at the core groups Telos Corporation (TLS) serves, which are heavily weighted toward the U.S. public sector and highly regulated entities. Honestly, the numbers show a clear pivot to Security Solutions, which made up about 90% of total revenue in Q2 2025, reaching $32.5 million that quarter.

U.S. Federal Government (DoD, Intelligence Community, Civilian Agencies)

This segment is the bedrock, with significant contract activity across the Department of Defense (DoD) and Intelligence Community (IC). For instance, Telos Corporation secured a $3.7 million option year contract extension with the U.S. Air Force Intelligence Community in June 2025, utilizing the Xacta platform for cyber governance, risk, and compliance (GRC) automation. Also, a contract with the Defense Information Systems Agency (DISA) for the Automated Message Handling System (AMHS) is valued at $14 million over five years, supporting entities including the DoD, IC, and non-DoD U.S. Government Agencies. Another specific DoD award for the Microwave Line of Sight (MLoS) program was for $5.8 million in April 2025. A larger, though completed, contract for Defensive Cyber Operations (DCO) Whitespace Bridge with Air Combat Command had a potential award value up to $64,235,350.

The full-year 2025 revenue outlook suggests that revenue from the DMDC and DHS programs is estimated to be between $50 million to $75 million. The existing business, excluding these major programs and TSA PreCheck, is expected to generate approximately $70 million for the full year 2025.

Regulated industries: Financial Services, Healthcare, Critical Infrastructure

While the government focus is clear, Telos Corporation also caters to large commercial and regulated entities needing stringent security. The company reported robust performance in its cybersecurity and cloud security segments, driven by increased demand from both commercial and government clients in Q3 2025. The Xacta platform is used by large commercial enterprises for cyber risk and compliance management. The company is committed to expanding its consumer base, particularly in highly regulated sectors where security is paramount.

Defense Manpower Data Center (DMDC) and Department of Homeland Security (DHS) programs

These two programs are major growth drivers. The DMDC program alone is worth up to $485 million to Telos Corporation over five years, and the DHS program is worth up to $40 million over five years. The DMDC program scaling contributed to an 81.8% growth in Security Solutions revenue in Q2 2025. The company is executing on these long-term programs, which are central to its Security Solutions segment growth.

General public consumers enrolling in trusted traveler programs like TSA PreCheck

The TSA PreCheck enrollment network is expanding aggressively. As of Q2 2025, Telos Corporation had 415 enrollment locations open, up from 56 at the end of Q2 2024. The goal is to reach 500 enrollment locations in 2025. This program is now cited as a $70 million annual revenue driver. The rollout acceleration was aided by partnerships, such as with The ODP Corporation.

Large enterprises requiring complex cyber governance, risk, and compliance (GRC)

This group utilizes the Xacta software for automated cyber risk and compliance management across cloud, on-premises, and hybrid environments. The company has reported securing new and renewed orders for Xacta and cyber services from a Fortune 100 technology company, alongside federal agency wins. The overall business pipeline of opportunities for Telos Corporation is valued at around $4.1 billion.

Here's a quick look at the financial contribution from the key government-related programs as estimated for the full year 2025:

The Security Solutions segment, which houses most of these government and enterprise GRC services, constituted 84% of total company revenue in Q1 2025, up from 63% in Q1 2024. The company has no debt, holding $58 million in cash and equivalents at the end of Q1 2025, providing flexibility. Defintely, this cash position helps fund the expansion efforts listed above.

Key customer engagements and associated contract values include:

• U.S. Air Force Intelligence Community (Xacta): $3.7 million option year.
• DISA Organizational Messaging Service (AMHS): $14 million over five years.
• DoD Microwave Line of Sight (MLoS) Program: $5.8 million contract.
• Total Business Pipeline Value: Approximately $4.1 billion.

Telos Corporation (TLS) - Canvas Business Model: Cost Structure

You're looking at the cost side of the Telos Corporation (TLS) engine, and honestly, it's a story of two segments pulling in different directions, plus heavy investment in future growth drivers. The cost structure is heavily influenced by the nature of their government contracting work and their aggressive expansion into new, high-volume services.

The High cost of revenue for the Secure Networks segment is a clear pressure point. This segment, which was 29% of total revenues for the year ended December 31, 2024, is seeing a significant downturn. For the second quarter of 2025, the Secure Networks revenue declined sharply. Looking ahead to the full year 2025, management expects this segment's revenue to contract low 70% to mid 60% year-over-year. This contraction in a segment that historically involved significant contracting costs means the overall cost of revenue is being managed by a strategic shift.

That shift is toward the Security Solutions segment, which is driving growth but comes with its own set of overheads. You see the cost of specialized talent reflected in the operating expenses. While we don't have a line item just for 'highly-cleared engineers,' the pressure on personnel costs is evident in the widening operating losses driven by increased Selling, General, and Administrative (SG&A) expenses. For instance, the six-month stock-based compensation expense in the first half of 2025 hit $14.805 million, a substantial jump from $5.203 million in the prior year period. That's a direct cost tied to retaining the specialized workforce needed for these sensitive contracts.

Next up, the scaling costs for the physical TSA PreCheck enrollment network are a major near-term cash outlay. Telos Corporation is pushing hard to reach a goal of 500 enrollment locations by the end of 2025. They hit 350 locations across 38 states by June 2025 and were reportedly at 492 nationwide by October 2025. While the program is expected to generate between $50 million-$75 million in revenue for 2025, the upfront investment strains cash flow. The company reported positive free cash flow of $4.6 million in Q2 2025, totaling $8.4 million for the first half of 2025. This cash generation is critical to funding the physical build-out.

You must factor in the Research and Development (R&D) investment in new AI capabilities like Xacta.ai. This is a future-proofing cost. R&D Expenses for the first quarter of 2025 alone were reported at $14.2 million. The October 2025 launch of Xacta.ai, which can reduce compliance task timelines from months to just nine days, shows where that investment is going-automating high-value, complex work. This R&D spend is essential to maintaining the competitive edge of their Security Solutions segment, which accounted for approximately 90% of total company revenue in Q2 2025.

Finally, the push to win new business drives the Sales and Marketing expenses. Telos Corporation is actively pursuing a massive opportunity set. The current pipeline stands at over 200 unique opportunities, representing an estimated contract value of over $4 billion. To support this pursuit, advertising expense was $0.8 million for the full year 2023, and the increase in SG&A, which includes sales and marketing, is a necessary cost of capturing these large federal awards, which management expects to be weighted towards the fourth quarter of 2025 and the first quarter of 2026.

Here's a quick look at some of the key financial metrics influencing these cost decisions:

Finance: draft 13-week cash view by Friday.

Telos Corporation (TLS) - Canvas Business Model: Revenue Streams

You're looking at the engine driving Telos Corporation's current financial picture, focusing on where the money actually comes from as we approach the end of 2025. It's a story heavily weighted toward government security work right now.

The Security Solutions segment is the dominant revenue generator. For the second quarter of 2025, this segment delivered $32.5 million, which accounted for 90.3% of the total Q2 2025 revenue of $36.0 million. This trend is expected to continue, with guidance suggesting Security Solutions will generate approximately 90% of total company revenue in the third quarter of 2025.

The full-year 2025 revenue guidance reflects this concentrated focus, projected to land between $162.0 million and $164.3 million. To give you a sense of the acceleration, Q3 2025 revenue hit $51.4 million, a staggering 116% year-over-year increase, with Telos ID driving that outperformance.

Here's a quick look at the key revenue drivers and their reported figures:

Transactional fees from identity services, primarily TSA PreCheck enrollment, are a major component of the Security Solutions revenue. The network has expanded aggressively; as of Q2 2025, there were 415 enrollment locations open, up from 56 at the end of Q2 2024. Management is targeting around 500 enrollment locations by the end of 2025. This program was noted as a $70 million annual revenue driver as of Q1 2025.

Program-based revenue from large federal government contracts, specifically the Defense Manpower Data Center (DMDC) program, is another critical stream. Forecasts for 2025 put the DMDC contribution between $50 million to $75 million in revenues. Some earlier estimates suggested a conservative annual revenue expectation of $60 million to $85 million from the combined DMDC and DHS programs by 2025.

For Software-as-a-Service (SaaS) and subscription licensing, the focus is on the Xacta platform. While specific subscription revenue amounts aren't broken out separately from the Security Solutions segment, the platform's strategic importance is clear. Telos launched Xacta.ai in Q3 2025, following the achievement of FedRAMP High Authorization for the Xacta platform.

The revenue mix is shifting, which impacts margins. For instance, Q2 2025 Cash Gross Margin was 38.4%, but by Q3 2025, it improved to 44.8%.

You should keep an eye on these key operational metrics that feed the revenue:

• TSA PreCheck locations grew from 56 (end of Q2 2024) to 357 (end of Q2 2025).
• The target for TSA PreCheck locations is 500 by year-end 2025.
• The DMDC program is forecasted to contribute $50m to $75m in 2025 revenue.
• Q2 2025 Free Cash Flow Margin was 12.9% of Revenue.

Finance: draft 13-week cash view by Friday.