Good day. Thank you for standing by. Welcome to the Telos Corporation First Quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Brinlea Johnson. Please go ahead. Good afternoon. Thank you for joining us to discuss Telos Corporation's first quarter 2021 financial results. With me today is John Wood, CEO and Chairman of Telos, and Michele Nakazawa, CFO of Telos. Let me quickly review the format of today's presentation. John will begin with some brief remarks on the first quarter results, a brief corporate overview, and Telos' strategic priorities. Michele will cover the financials and guidance. I'm going to turn the call over to the analysts for Q&A. The earnings press release was issued earlier today and is posted on the Telos website, where this call is being simultaneously webcast. Before we get started, we want to emphasize that some of our statements on this call are forward-looking statements and are made under the safe harbor provisions of the Federal Securities Law. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ for various reasons, including the factors described in today's earnings press release and the comments made during this conference call and our SEC filings. We do not undertake any duty to update any forward-looking statements. In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental and clarifying measures to help investors understand Telos' financial performance. These non-GAAP financial measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results, in our earnings press release and on the investor relations page of the Telos website. The webcast replay of this call will be available for the next year on our company website under the investor relations link. With that, I'll turn it over to John. Well, thank you, Brinlea. Hey, everyone. I'm John Wood, Chairman and CEO of Telos Corporation. Welcome to our first-quarter 2021 financial results conference call. I'm proud of our execution this year, delivering 43% year-over-year revenue growth and continuing to win meaningful contracts and exceeding our prior guidance, giving us even greater confidence for the full year. We surpassed our expectations on both the top and bottom lines as we were able to execute on our customers' requests to accelerate deliveries expected in the second quarter into the first quarter. Since we covered a great deal of Q1 during the last earnings call, which was only six weeks ago, today, I will focus on recent events as well as any new developments. I'd like to share with you the first-quarter business highlights and updates. In the first few months of 2021, we secured two large wins. First, the General Services Administration, or GSA, named Telos and seven other companies as a contract team lead on the second-generation information technology contract known as 2GIT, which is $5.5 billion that enables streamlined government-wide IT purchasing. In addition to providing access to pre-vetted hardware and software IT vendors to all agencies across the entire federal government, 2GIT provides a simple path for the government to obtain all of Telos' security solution offerings, including Xacta, Telos Ghost, AMHS, and IDTrust360. Telos was also awarded a five-year, $35 million U.S. Army contract for implementing and securing communication systems in the Korean Peninsula as a part of the Yongsan relocation plan and land partnership. This realignment effort is critical to U.S. military operations on the Korean Peninsula; there's no greater honor than to support our men and women who bring peace and stability to this vital region of the world. Following our initial public offering in November, we've been busy growing our channel partner program and bolstering our sales and marketing teams. The formal launch of our channel program, called Telos CyberProtect, is slated for later this month. At the end of Q1 2021, Microsoft Azure expanded its Xacta licensing to all U.S. government cloud instances, including Azure Government, Azure Government Secret, and Azure Government Top Secret, to bring faster cloud compliance to Azure Government customers. By incorporating Azure with Xacta, Microsoft customers can automatically generate a large portion of the required evidence that their systems are operating in a secure way. This accelerates the CIS workloads to the Azure cloud. Microsoft is a tremendous partner and, from the very beginning, has believed that Xacta is the right solution to significantly streamline the risk management and compliance process for themselves as well as for their customers, which will ultimately accelerate cloud adoption and do it in a much more secure way. Our solution development teams have been hard at work in the first months of 2021. I'd like to highlight the continued innovation within Xacta and Telos Ghost. In January of 2021, we unveiled our Xacta offering for cyber supply chain risk management, or SCRM, to address the ongoing threat of cyber supply chain breaches and incursions. This Xacta module operationalizes supply chain risk management standards like the NIST SP 800-161, which we believe are essential for organizations to thwart future SolarWinds-like attacks. We recently introduced another Xacta module to help organizations address third-party vendor cybersecurity compliance standards, such as the NIST SP 800-171 and the Cybersecurity Maturity Model Certification, known as CMMC. This Xacta module meets the needs of more than 300,000 organizations that must comply with these cybersecurity standards. In March, Xacta was named an SC Magazine Award finalist in the Best Risk Management Solution category. We're pleased to be recognized for this well-regarded product award, one which is determined by a panel of technology peers. Moving to our virtual obfuscation offering, or Telos Ghost, we have begun integrating Telos Ghost directly into complementary networks to protect video security systems, industrial Internet of Things, or IoT, and other connected technologies out of the box. The success of Telos Ghost in its initial product launch, the ability to eliminate cyberattack surfaces on the internet, is all being leveraged for evolutionary innovations to expand beyond its initially intended use, which was for military and intelligence use cases, to commercial applications. We're embedding Telos Ghost into critical infrastructure to hide specific network resources from being seen on the public internet, thereby inhibiting the ability of cyber adversaries to attack, because you can't attack what you can't see. Hiding servers from cyber adversaries is a core capability of Telos Ghost and has allowed us to prepare the launch of new partner initiatives to hide video surveillance cameras, secure the network for campus security and gun detection solutions, and protect the privacy and security of students, whether they're in school or operating remotely. Efforts are also being pursued to protect internet-based networking use for software download and updates from cloud-based repositories to software-enabled vehicles, as an example. These initiatives are in the early stages, but Telos and its partners are excited about the prospects of using a technology that has been proven to protect intelligence and military operations but also to protect critical infrastructure used to ensure the safety of people and critical assets in a commercial environment. Next thing I'd really like to talk about a little bit is the industry landscape. I know firsthand how important it is to stay in tune with the pulse of the industry. With that in mind, there are three trends of particular interest to our organization that have the potential to positively impact our revenue in 2021 and beyond. The first is the Internet of Things, or IoT. According to Gartner, there are currently 20.4 billion IoT devices globally, and that number is expected to grow to 75 billion by 2025. Every aspect of our society is on the verge of touching the internet. As more smart device platforms are placed online, our critical resources become harder to protect. What if you could make IoT devices, users, information, and resources invisible on the network and keep them hidden from unauthorized view and access? That's all possible with Telos Ghost, a virtual obfuscation or misattribution network that allows these connections to be totally isolated from the public internet through the use of a number of virtual network nodes, varying pathways, and eliminating source and destination IP addresses to make their presence and communications invisible. We believe Telos Ghost is a viable answer to the concerns of IoT security. The second trend that will have an impact on our business is the increased occurrence of audit fatigue for organizations. With personal and enterprise security and privacy among the top concerns of our day, governments at all levels are responding with compliance requirements designed to protect citizens and defend networks. What is the business aspect of this growing number of security and privacy regulations? This question led to a research study we commissioned with a third-party research firm, which we believe to be the first attempt to quantify the growing problem of audit fatigue. The study, which polled 300 IT security professionals, revealed that on average, organizations must comply with at least 13 different IT security and privacy regulations, and they spend at least $3.5 million annually on compliance activities, with compliance audits consuming 58 working days each quarter. That means security compliance teams spend 232 working days each year responding to audit evidence requests, in addition to the millions of dollars spent on compliance activities and fines. This level of financial and time commitment is really unsustainable. The answer is to simplify and automate the compliance process, which promises many benefits, which include reduced workload for already strained IT security personnel; increased employee satisfaction and retention; limited reputational damage that comes with failing an audit; and increased savings in expensive compliance activities and costly fines. Commercial organizations are ready and looking for ways to realize these benefits by streamlining compliance activities and automating the audit processes. Telos' Xacta is well-positioned to alleviate this compliance burden and help organizations achieve their business initiatives much more quickly. The third trend we are watching is the increase in air travel. Month-over-month, TSA is reporting ever-increasing passenger numbers. Pre-pandemic, TSA was screening over 2 million passengers daily. Current passenger volumes are seeing highs of 1.6 million passengers screened daily, with summer traffic expected to surge. In February of 2021, TSA announced their intent to hire 6,000 screeners to prepare for the summer season. TSA, like the airports and airlines, is seeing the return of travel due in large part to leisure travel. Telos is also experiencing a similar uptick in our IDTrust360 Airport programs, where our aviation workers' biometric enrollment submissions have increased 177% from April 2020 to April 2021. Airports, airport concessionaires, and airlines are bringing these workers back to the airports to meet an increase in service support levels not seen since February of 2020. In conclusion, our company's exceptional results continue to be driven by strong demand for our advanced security solutions, recent long-term contract wins, and our growing sales channel. We are well-positioned to continue to execute as a leading world-class organization in the cyber, cloud, and enterprise security marketplace. I'll now pass it over to our CFO, Michele Nakazawa, who will discuss the financials in more detail. Michele? Thank you, John, and thank you all for joining us today. I'm very pleased with our first quarter 2021 financial results, and I am excited about our future revenue and earnings growth for 2021 and the years ahead. For our first quarter financial performance, revenue increased 43% year-over-year to $55.8 million, which exceeds our previous guidance of $49 million - $52 million. Gross profit increased 17% year-over-year to $14.4 million, inclusive of stock-based compensation expense of $737,000. Net loss was a negative $14.8 million. Adjusted net loss after adjustments for a charge for settlement of an outstanding litigation matter and stock-based compensation expense was negative $54,000. Adjusted EBITDA after adjustments for a charge for settlement of an outstanding litigation matter and for stock-based compensation expense was $1.5 million, which exceeded our previous guidance of negative $1.9 million to negative $1.7 million. Our diluted net loss per share was negative $0.23 per share. Adjusted earnings per share of $0.00 per share. Our weighted average diluted shares for Q1 were 64,625,000 shares. Let me provide some additional financial insight into our operations. Revenue for our Security Solutions business was $22.9 million. Gross margin for Security Solutions was 41%, inclusive of stock-based compensation expense of $660,000, compared to 37% for Q1 2020. Revenue for our Secure Networks business was $32.9 million. Gross margin for Secure Networks was 16%, inclusive of stock-based compensation expense of $77,000, compared to 19% for Q1 2020. SG&A expense was $27.9 million, an increase of 135.2% from Q1 of 2020. This is primarily as a result of stock-based compensation of $12.9 million and an increase in labor and other indirect costs of $3.7 million. This increase in expenses reflects our planned investments for expansion in our sales, channel, and marketing teams. Finally, working capital finished the quarter at $102.2 million. Turning to our financial outlook, we are pleased with our continued success at winning new business, combined with our backlog of orders and contracts, and therefore, we are reaffirming our full -year 2021 guidance. We currently expect revenue in the range of $283 million-$295 million, an improvement of 57%-64% compared to 2020, and adjusted EBITDA in the range of $33 million-$36 million, an improvement of 190%-216% compared to 2020. We remain extremely confident in our market opportunities and look forward to providing updates on our progress on our next quarterly call. With that, I will turn the call over to the operator for questions. Operator? Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Our first question comes from the line of Alex Henderson from Needham. Awesome. Thank you. Nice quarter. Thanks for the print. I wanted to get an update on where you were on your sales hires and your expansion on your distribution channels to start with, if I could. Hey, Alex. How are you? This is John. We're doing well on that. I think we'll have the full boat, if you will, done by the end of June. We're about at 40 right now in sales, marketing, and channel activities. So that we're doing well against our plan. Any change in the distribution partnership stuff? No. We're on the same course as we were, sir. Perfect. The second question, when we talked earlier, I think you had mentioned that there was a change in the government's approach to how they're talking to the cloud companies in terms of their requirements, which essentially effectively requires them to have several Xacta copies running if they had any intention of bringing any government programs onto their networks. Can you talk about the degree to which that's an accurate statement? Has that been legislated? How do we think about the validity and validate that viewpoint? Yeah. Thanks for that question. The way to think about it is that it was really the intelligence community that we were talking about earlier, and in the intelligence community, they started out with a single cloud provider, being AWS, and then very recently decided that they were going to move to multiple cloud environments to include IBM, Oracle, Google, Azure, and AWS. I don't think I missed one, did I? I don't think so. That they want the formats of all of the bodies of evidence in Xacta, which means ultimately the cloud providers are using Xacta, both for the high side, meaning the top secret regions, and for the secret regions. Does that extend to the other vendors such as IBM, Oracle, and Google over time if they want to carry any government business? At the end of the day, basically what the government's telling the vendors, the cloud providers, is, We want everything in an Xacta format. When I say the government, in this case, really what we're talking about is the intelligence community. When you think about the intelligence community, there's also a component of the intelligence community that includes the military, so the military intelligence community. We do see a way to get into the rest of the DoD, if you will, through the backdoor, and I mean that not in a negative way, but it's because it becomes a common lexicon for the entirety of the government to use. Ultimately, we do see our Xacta becoming the standard throughout the government. One last one on this subject. Any update on Microsoft and Amazon reselling Xacta, where we are on ramping that opportunity? Yes. We're not planning on anything coming out of that channel until, I think, Q4. I think. I think it was Q4, Alex. I think we're going to see a great deal of activity coming out of Azure. Although recently the guys at Amazon have reaffirmed their commitment to Telos, there's more activity happening there, although we don't have enough data to be able to tell you exactly what the result's going to be out of that. One last question, and then I'll cede the floor. Obviously, a very big increase in commitment to security by Biden Administration. How is that impacting your thoughts on the outlook for the year and going forward and for Xacta specifically? Thank you. You're welcome. I think this is a question that most people, I think, would probably have. We think that it has very big implications for Telos, both in terms of Xacta and Ghost. When you nail it down at the most simple level, what Xacta's doing is providing the automation that you are actually cyber clean, if you will; "cyber cleanliness" or "cyber hygiene" is a better term. I think the combination of Xacta providing that level of body of evidence and Ghost providing the ability to hide network assets like servers is right down the middle of what the Administration is looking for. We feel strongly that that's a capability that's not just of interest to the government but also to the commercial world. Great. Thank you very much. I'll cede the floor. Thank you. Thank you. Our next question comes from the line of Andy Nowinski from D.A. Davidson. Your line is now open. Great. Thanks, and congrats on the nice quarter. Just had a question. You solidly exceeded your guidance in Q1, and I think you talked, John, about the increase in TS activity, TSA activity that you're seeing. You didn't roll through the upside into the annual outlook. I'm wondering, is there anything that changed with regard to your confidence or your visibility into the back half of the year? Andy, thank you for your question. No, there's nothing that's changed. It's been driven into our heads that we have to meet or exceed our numbers; we can tell you guys that we feel very confident about the year. As we get closer to the second half of the year, we will make a decision as to whether or not we're going to adjust to the upside. Just from our standpoint, we're just trying to be conservative. Super. Understood. Next question I had: I want to go back to a partnership that you announced last quarter with Johnson Controls. I know it's a massive IoT play, and they're using Ghost. I'm just wondering if you could give us an update on how that's progressed. Sure. Again, this is a relationship. It's this long-term strategic relationship. To put it in plain English, we did not plan on revenues for this year out of that relationship. The idea is to start with the cameras and then move into other areas of the organization, like their HVAC systems, which account for a much bigger percentage of their revenue. I think where we are in general is we're moving strongly with them. They're applying resources; we're applying resources. One of the first things we're going to do is do a showcase, if you will, of that capability right here in our headquarters. It's going to be, I think, a combination of that along with the gun detection capability that we announced with Omnilert. Okay, thank you. Actually, just one more clarification for you, John. If we look at how the course of revenue maps out for the remainder of the year, and you look at it from a product perspective, where do you see a lot of the growth coming from in Q3 and Q4? Is it mostly from IDTrust and the TSA and CMS awards that you won there that are driving some of that big uptick in growth in the back half of the year? Is there something else we should be watching? Yeah. Initially, as we went public, that clearly was where a lot of the growth came from. Just to remind you guys, we were awarded a large pilot, I think it's $34 million, and we weren't able and we're still not able to disclose who the customer is or the use case. The way to think about it is we sell it by unit, and it's about $17,000 per unit, roughly. That's about one-third of secure networks and two-thirds of security solutions. That, we think, is going to be much bigger over time. Call it another 6 - 10 of similar size kind of opportunities. That's something that could easily, if you will, overshadow some of the growth that we have in the second half of the year. In any event, it makes us feel that much more confident as it relates to the total year's performance. Well, that's great. Thank you, John. Keep up the good work. Thank you, Andy. Thank you. Our next question comes from the line of Dan Ives from Wedbush. Your line is now open. Thanks. Could you maybe just give us a little insight, John, into just how the conversations are changing in terms of Telos and how it's being viewed within the Beltway, especially with everything we're seeing, more shifts to the cloud, and, of course, the cyberattacks as well as the Biden mission? Talk about maybe comparing and contrasting in terms of conversations you're having today versus even a year ago and how that's changed anecdotally. Sure. Good to hear your voice, by the way. What I would say is that in the past, we were seen as sort of an IT security company, almost like a necessary evil, if you will. That's probably not the right term, or something like that. As these hacks become very public, both commercially and in the government, we're seen as part of the mission. I think that has changed pretty dramatically for us. As we have more and more offerings that we'll be conveying to the market and sharing with the market, you'll see why we're getting to become much more part of the mission, if you will. When you're part of the mission, it's just easier to find funding. It's easier to close faster, and so I think there's going to be a lot more of that happening. From our point of view, what it does is it helps accelerate the sales cycle and make the opportunities larger. You're saying when John Wood calls, it doesn't go straight to voicemail anymore? Yes, that's exactly right. Okay. Just the last sort of follow -on. When we think about the opportunities, obviously, you guys have a ton of opportunities across Federal. If we sit here a year from now, what do you think is the area that really Telos could really transform in terms of the types of deals that you're seeing that maybe we don't see today? Is it just more of the same? Thanks. We have one large financial services company. Again, unfortunately, we can't disclose their name. We have a crazy confidentiality agreement with them, which is actually harder than the one we have with the agency, which is ironic because you can always find them looking for Xacta personnel online. Anyway, that opportunity is roughly 200 projects a year, and we get about $4 million a year from that customer-ish, and it's going to go up to about 1,000 projects. I think what's happening now is that we have a reputation that is really strong here. As more people move from government to commercial, meaning more leadership actors, if you will, move from government to commercial, our phone gets picked up much more easily than it has in the past. I think the opportunity for us is around Xacta and Ghost and sort of being belt and suspenders, if you will, to deal with the kind of anything from ransomware to any of the hacking activities that you've been seeing out there. I think there's a tremendous opportunity for us in the commercial world, for sure. Awesome. Congrats. Thank you. Thank you. Our next question comes from the line of Keith Bachman from Bank of Montreal. Your line is now open. Hi, thank you. I had a couple questions, please. First, I'm going to tie two things together. Your gross margin percentages were, looking at our model and the Street model, three to 500 basis points lower than what was expected. Your cash flow from operations was, call it negative nine for rough numbers, and Street and our models had a small CFO positive of, call it a few million dollars. It's a pretty material swing to the negative on both gross margins and cash flow from operations. Can you help reconcile what was the issue surrounding both gross margins and cash flow from operations, please? Sure. I'm going to turn that one to Ed, if you will, Keith. Hi, Keith. On the gross margin aggregate, you're correct. If you look at the breakdown between our secure networks business and our security solutions business, we are actually trending positive year-to-year on the secure solutions stuff, slightly down on the secure network stuff. We did a tremendous amount of secure networks revenue in Q1; the blended margin is slightly down; it doesn't change our view or our outlook from a margin position. The secure solutions are trending in a positive direction. I also think, Keith, that on the secure networks side of the house, we had customers wanting to accelerate orders, which would cause the increase in revenue as well, right? Yeah. There are some industry-wide shortages of some technology stuff that forced a little bit more expedited shipping costs, which hit us as well. You had a question on cash flow. On the cash flow, I would. Yeah. It was about, depending on what numbers you want to use, an $11 million swing on CFO cash flow from operations. What were the issues there? Why did cash flows turn so negative on Q1? Well, I do know we had about $13.7 million of stock-based compensation. That wouldn't hit the cash flow. Yeah, that wouldn't hit cash flow. Michele, David, you guys. Yeah, Keith. Frankly, it's just the timing of the differences between our AP and AR that really drove most of it. Based on the revenue as it came in and the timing of such and the AR that had not converted to cash as of the end of the quarter. We should see that flip. Okay. Well, you led me perfectly to the next question. How do you want us to think about the calendar year 2021? How should we think about both gross margin and cash flow from operations, please? Okay. Our position on gross margin for the year really hasn't changed from the IPO view. Cash flow really hasn't changed either. As Michele indicated, it's really just the timing sometimes when we get a lot of the revenue and therefore the billings in the third month of the quarter, and then they just haven't converted yet, basically. Okay no fundamental change to any of the base business assumptions. Okay. Well, you're going to have to have a pretty steep ramp then for the balance of the year to kind of make our street numbers. Okay. My other question relates to. Thank you, Keith. Yeah. This is John, real quick. Remember, in the third and the fourth quarter, there's a lot of ramp coming from PreCheck and CMS, and also that pile I referred to earlier. There is going to be a significant ramp from Q1 - Q4. There was always planned to be that ramp, so nothing from our point of view has changed there. Okay. Remember. Okay From a TSA perspective, this is a very important point to keep in your heads. TSA is a point of sale. When you sign up to TSA and you swipe your credit card, that payment comes to us directly, which drives down our DSOs significantly. Understood. Makes sense. I just want to hear a little; my final question is I want to hear a little bit about mix. Is there a way to talk about bookings that you had or revenues in terms of the mix? What I'm really asking is, has there been incremental momentum surrounding the commercial side of the business? Last week talking, you can keep TSA as a government business. Has there been any pipeline bookings? Anything you can talk about regarding how the commercial side of the business may be gaining a bit more traction here? Yeah. We can talk. We have announced some of the bookings, like. I'm going to put you guys on hold for one second. In general, what I'd say is our pipeline has gone from, if you're looking at it as a V, a relatively skinny V for commercial purposes to, just like I am, a relatively fat V. The opportunities have been fairly significant. The other thing I'll say in general is that we are closing commercial business. We don't have the permission yet to give out the names of the companies that we have been awarded business to, but it's in line with the cloud strategy that we outlined for you guys for the IPO and the follow-on. In general, I'd say that we are absolutely making progress, and I think we're going to see revenue before the second half of 2022, which is when I think we said we wouldn't see much from the channel until then. I think that's a very conservative assumption. Okay. All right. Well, why don't I jump back in the queue? Many thanks. Thank you, Keith. Thank you. Our next question comes from the line of Catharine Trebnick from Colliers. Your line is now open. Thank you for taking my question. Nice print. I have one more on the partner program you're planning to launch. Could you put some more specifics on that, campaigns that you're looking at, any particular products that you're hoping that you push through, and then if you added any new partners in the quarter, and then what's the plan to add other partners? Thank you. Catharine, thank you for that very complex question. The answer is we have a very specific channel partner program, which we will be announcing in detail towards the end of the month. We are adding large partners just out the chute, which we will again announce at the end of the month, companies that you all know well, I'm sure. What we're going to be pushing in the beginning to get started is really Xacta and Ghost, and we actually found some take-up for IDTrust360. I know I'm not giving you very specifics, Catharine, but I think we'll be able to answer the mail on that by the end of May. Okay. As a follow-on to that, built in your guide for the end of the year, how long do you expect these partner programs to help generate incremental revenue? For purposes of the models that we shared with you guys, we didn't put really anything in from the channel partner program until the second half of 2022. I think that that's conservative, and we may or may not update that as we see our progress changing over time. We tried to be as conservative as we could be. Basically what we did was we put all of the investment into the numbers, all of the cost into the numbers, but we didn't put any of the revenues into the numbers until the second half of 2022, Catharine. All right. Thank you very much. Keep up the good work. Thank you, Catharine. Just one last point. Ed reminded me we are actually launching this program a lot sooner than we thought we would be, which again is a reflection of the traction that we're seeing in the market for our offerings. There is a good deal of demand for our offerings, which I think is great. Thank you. Our next question comes on the line from Nehal Chokshi from Northland Capital. Thank you. It's good to see the reaffirmation of the full -year guidance. Last quarter, you guys provided first-quarter guidance. I don't think you guys are providing second -quarter guidance here; is that correct? If so, why? That's right, Nehal. We never intended to provide quarterly guidance in general. I think the reason we did it last quarter is because, as you guys are all well aware, we stubbed our toe as it related to the accounting treatment for the complicated transactions around the IPO, and we had to push the date out. By the time we actually announced, we were so close to the end of Q1 that we felt like we had to get some data out there because it was an obvious question that people would have. In our case, we're going to plan on it on an annual basis, and as long as we don't stub our toe again, which, God forbid, knows I never want to do again, we'll consistently affirm or not affirm the annual numbers. Got it. Okay. That makes a lot of sense. I'm not sure if you really commented on this or not, but how has the order book trended in the past six weeks? At the last conference call at the end of March, you guys noted that year to date, it was up 2x year over year. I'm looking at Ed right now in the hall. Give me a second. In the last six weeks, I'd say it's on plan for the six weeks. Ed's point is, since it's been about six weeks, we're on plan, maybe a bit ahead. I think the way to view it, though, going forward is we intend to see a significant ramp in the second half of the year due to those two 10-year multibillion-dollar contracts that we talked about during the IPO. Got it. Okay. At the beginning of this call, you talked about the 2GIT contract, and you said that there are seven other leads on there. Who are those leads, and do they cover the same functionality as Telos is going to be covering on this contract? We are the only ones that are selling our own solutions on that contract. The rest of them are sort of what I consider to be sort of commodities. Wouldn't you say, Ed? Yeah. Manufacturers themselves. If you're asking who the actual vendors are, Nehal, I'd have to get back to you, but that's public data, and I'm happy to share it with all you guys. I just don't know off the top of my head. Right. Thank you very much. You're welcome. The way I look at those kinds of wins is, number one, they're government-wide, which is really important. Number two, even though that's a big number, $5.5 billion, that's a ceiling. That doesn't necessarily mean the government's going to spend that money. That means that's how much the government can spend over the life of the contract. For us, really, what it is, it's just yet another vehicle that makes it easy for our customers to purchase our stuff. Because it's what's called a GWAC, a government-wide acquisition contract, we find those valuable in the federal government. Got it. Thank you. You're welcome. Thank you. Our next question comes from the line of Zach Cummins from B. Riley Securities. Your line is now open. Hey, good afternoon. Thanks for taking my questions. John, I just wanted to ask about what were some of the incremental upside drivers that we saw in the quarter. I know you highlighted that you had some business, I imagine, in the secure network side that was pulled forward from Q2 to Q1. I'm just trying to get a sense of how much of an impact that was from Q2 - Q1. I think that was a fair amount of it. There was also the pilot I mentioned earlier who is on a pretty quick burn, meaning they want to have it done as fast as possible. This particular item is number one or number two; well, actually, the vaccine is number one for the administration, but it's in the top three, if you will, of the Biden administration's priorities. I think that's going to have an incremental value to the company's performance over time. If we did have risk, this basically mitigates everything from that standpoint. It's a real big win for us. Understood. Can you give us an update on the authorization process for both the TSA PreCheck and CMS contracts? Kind of when you're anticipated to be live on those. It sounds like it's still tracking pretty close to your plan. Zach, thank you for your question. Yes. In the case of PreCheck, I think we're looking at the end of June, Ed, right? To be officially approved. In the case of CMS, we're thinking Q3 will be approved. Excuse me, allergies and asthma. Obviously, the main thing that the administration wants is the vaccine out there. That's going to be their main priority. They're getting to the other priority of doing the healthcare facility checks. We anticipate that taking up for the rest of the year. It may start a little bit later in the third quarter than we were thinking. I think we had so much upside planned into that contract vehicle anyway that we don't worry about that at all. Understood. I know you can't speak to specific commercial customer names. Can you just give us a sense of kind of the momentum you're seeing there and some of the revenue ramp and potential contribution you're hoping to get from some of those commercial customers as we proceed forward? Sure. Think of our commercial footprint, as it's the same basic strategy as we have in the federal government. You get your nose under the tent, and you begin to deploy. They see the value, they want more instances, more instances, more instances. Then they want cloud, and then they want multiple clouds. We're doing the same thing in the commercial side. I gave the example earlier, Zach, of that large financial services company, with whom we do 200 projects, and we get paid about $4 million a year. We expect them to go to about 1,000 projects. Think of projects as system boundaries. That'll mean that could be for us, call it a $20 million a year account. I think we're going to see the same kind of thing happening with the rest of the commercial accounts that we're looking at. As long as we are able to deliver what we say we're going to deliver, as long as we are able to continue with our reliability, nothing there is going to change. I will point out, if you recall, that during the follow-on publicly, we stated that we're looking at a couple of acquisitions, and one of which will help us in our IDTrust360 offering, and the other will help us with our Ghost offering. We'll announce more about that later, but I do think that's going to happen. One will happen probably no later than the end of June, and the other will happen probably in the Q3 or Q4 kind of timeframe. Understood. You actually just touched on one of my other questions there. Just the final question for me. Under the new executive order, it seems like there could be quite a bit of opportunity for Xacta to potentially work with commercial vendors now that they have stricter standards to work with the federal government. I was just wondering if that's the way that you see it personally in terms of Xacta and how big that opportunity could be as we start to move forward with these initiatives. I do see it that way, and I think Rick's on the phone with me. Rick, are you here? I am. Rick Tracy. Would you comment on the size of the opportunity from your point of view? Just to remind everybody, Rick is the co-inventor of Xacta, and he's either the father or the grandfather of this sort of community around IT risk compliance and automation kind of thing. Rick, what's your perspective here for everybody? The recent Colonial Pipeline hack has really brought to the surface the need to address supply chain risk management, which is not new. NIST has been pushing SCRM for the better part of five years. What the executive order does is expand supply chain risk management to include critical software that's used not just within the government but also within commercial and critical infrastructure. It's basically an expansion of what already exists in terms of supply chain risk management opportunity that addresses many different software companies around the world. The nice thing about it is it's all based on, excuse me, NIST standards, which is, as you know, it's our forte. It's not going to be very difficult or new for us to figure out how to deal with these new standards as NIST develops them over the next year. Understood. Well, thanks for taking my questions, and best of luck with the rest of the year. Thank you, Zach. Thank you. Our next question comes from the line of Alex Henderson from Needham. Your line is now open. Oh, sneaking back in for a double dip here. I was hoping you could talk a little bit about the 2GIT $5 billion mandate. I realize that it's a ceiling and the like, but how do you see that feathering into your outlook, and at what point do you think it actually starts to contribute to revenues? From our standpoint, and obviously from your standpoint as the analysts out there, think of that as an upside. It's something that is going to have a relatively significant amount of upside on the secure network side, and it provides us with additional ways of distributing our security solutions. That's how I would think about it, Alex. Seriously, when does it start is really the question, as opposed to how does it start? It's started. We're on it now. Okay. It's already been implemented, and therefore, it's in process. Okay. That's what I was looking for. Yes, sir. The second question is in one of your filings, you talked about, I think it was 70,000 companies that are selling to the government in one form or another or have a relationship with the government in one form or another; as they move their applications to the cloud, in order to do business with the government, they would need to be compliant with Xacta. Can you talk a little bit about that aspect of the opportunity? Yeah. I think what you're referring to is that they'd have to be compliant with FedRAMP, and Xacta can help them accelerate that process. Again, Rick, I'll ask you to answer this question specifically for Alex, since it's right down your alley. The question's about FedRAMP? I'm sorry. The question is how big of an opportunity is it for us to be able to help customers get FedRAMP ready so that they can sell their own software to the government? There's a huge appetite, as I understand it, for SaaS providers who want to do work with the federal government. The challenge has been the cost of going through the FedRAMP process. It's just really expensive. Our solution reduces a lot of that upfront cost for the advisory services associated with FedRAMP. I don't necessarily have a way to quantify it, because it's not just the number of potential companies, but it's the number of software offerings or SaaS offerings that exist within those software companies. There are tens of thousands, potentially. Does it matter whether it's FedRAMP Low, FedRAMP Moderate, or FedRAMP High? How does it play against the various levels of FedRAMP? Xacta can handle all those, basically. Exactly. If I am able to employ Xacta, then I'm able to very rapidly move from not qualified all the way to FedRAMP High. Is that what you're saying? We're saying that if you take the appropriate steps, the answer is yes, using Xacta. The issue that ultimately the software vendors have to deal with is something called a 3PAO. The 3PAO, for all intents and purposes, is basically an auditor, an audit function that looks at all of the body of evidence that you've created and signs off that, yeah, this is good. Those guys in the past have tended not to be paid to be efficient. They're paid by the hour. Rick, you can probably give some stories here about it, but we're seeing that our customer base wants everything, if they can, to be put into Xacta. Xacta's becoming, if you will, a common lexicon and breaking down barriers that we used to have with players like 3PAOs, general contractors, systems integrators, et cetera. The entire marketplace really is fundamentally moving to the cloud and moving to a much more streamlined and automated way of doing business. A lot of the stuff that we pull together as documentation for the FedRAMP process, for example. It's basically a lot of pedestrian kind of things that people used to do manually. By automating that process, by definition, we're reducing the time by up to 80% for purposes of FedRAMP. How long does the agent approval- Yeah, how long the assessor takes is a different question. We're trying to convince all the assessors or the auditors that they should be using Xacta so there's no paper. That's how the CIA does all their business. They don't generate any more paper anymore. Everything exists inside of Xacta. All the auditors go to Xacta. This is not just for the intelligence community, but it's for the military intelligence community as well. They're very comfortable with using Xacta. Now, if they want to print out a 700-page report, it's sitting in there if they want it. We did one experiment one time just to see if people are actually reading these things. They're called SARs. We turned off the user IDs and passwords for accessing the SARs, and for a full year, not one user asked for their access to their SAR, which tells you that they're not even reading them. Fundamentally, what we're trying to do with Xacta is just get rid of all of the pedestrian manual efforts, use automation where possible, and provide the continuous monitoring of the underlying risk posture so that the process of moving, whether it's workloads to the cloud or getting FedRAMP certified or the supply chain activity, it just becomes much, much more easy and streamlined. One more question, then I'll cede the floor and probably run you out of time here anyway. Can you talk a little bit about where the competitors are relative to getting the TSA pre-certification and to what extent that you have an advantage in that process timeline? Because I think there is a delta there that's pretty advantageous to you, yes? I think that by virtue of the fact that they're using Xacta, the answer is yes. If you're asking about the specifics, Alex, I really don't know exactly where they are in their process. Okay. Any sense of why there might be a difference in the timing and any thoughts on what kind of share implications that might have? We think we'll be faster out the gate than CLEAR because they're not a cyber company. I think fundamentally, the point is that our first thing to go after as far as share is to go after renewals. Just to remind everyone on the phone, there are about 2 million renewals a year roughly, and that's $85 per transaction, roughly. As we get on the path, and you'll see about this acquisition we're talking about for IDTrust360, a lot of what people are trying to do now is they're avoiding going places, even though there's a vaccine out there. Who wants to go hang out in a long line for a long time? We're going to have a couple of announcements, first around IDTrust360, probably this quarter, which I think disintermediates that need to go places. Stay tuned. All right. I'll cede the floor. Thanks. Thank you, sir. Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to management for closing remarks. I just wanted to say, everybody, we really appreciate your support. We're working very hard to make sure that we meet or exceed; most likely we hope to exceed. I shouldn't say it like that. My guys are all shaking their heads. What I'm supposed to say is we continue to reaffirm the FY guidance we have given. Thank you, Michele Nakazawa, our CFO. Anyway, we see a lot of opportunities out there. We really appreciate the support from you guys, and we know how valuable it is. If you need us, please do not hesitate to call. Thanks a lot, everybody. This concludes today's conference call. Thank you for participating. You may now disconnect.