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Third Quarter 2025 Earnings November 10, 2025
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2 DISCLAIMERS The information contained in this presentation does not constitute or form part of, and should not be construed as, any offer, sale or subscription of, or any invitation to offer, buy or subscribe for, any securities, nor shall there be any offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful. Telos Corporation (the “Company”) will only make such an offer or sale pursuant to an effective registration statement with the Securities and Exchange Commission (the “SEC”) and related prospectus. Before you i nvest, you should read the Company's filings with the SEC, and in particular the “Risk Factors” contained or incorporated by reference therein, for more complete information about the Company. You may obtain thos e filings are available at https://investors.telos.com and on the SEC’s website at www.sec.gov. Other than statements of historical fact, all information contained in this presentation, including statements regarding the Company’s future operating results and financial position, its business strategy and plans, product, service, and technology offerings, market growth and trends, and objectives for future operations, are forward -looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “plan,” “predict,” “expect,” “estimate,” “anticipate,” “intend,” “goal,” “strategy,” “believe,” and similar expressions and variations thereof. The Company has based these forward-looking statements largely on its current expectations and projections about future events and trends that it believes m ay affect its financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under the heading “Risk Factors” in the Company’s periodic filings with the SEC. Moreover, the Company operates in a very competitive a nd rapidly changing environment, and new risks emerge from time to time. It is not possible for the Company to predict all risks, nor can it assess the effect of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements it may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this presentation may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely on forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. These forward-looking statements speak only as of the date of this presentation and the Company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof. This presentation contains statistical data, estimates, and forecasts that are based on independent industry publications or other publicly available information, as well as other information based on the Company’s internal sources. While the Company believes the industry and market data included in this presentation are reliable and are based on reasonable assumptions, these data involve many assumptions and limitations, and you are cautioned not to give undue weight to these data, estimates and forecasts. The Company has not independently veri fied the accuracy or completeness of the data contained in these industry publications and other publicly available information. The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as the Company’s endorsement of the products or services of the trademark owner, nor as an endorsement by the trademark owner of the Company’s products or services. This presentation also includes certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. The reader is cautioned not to place undue reliance on non-GAAP financial measures and to evaluate them only in conjunction with their nearest GAAP equivalents. Please see the appendix for reconciliations of these non-GAAP financial measures to their nearest GAAP equivalents and for the calculation of certain other financial measures.
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3 FINANCIAL PERFORMANCE SUMMARY DELIVERED $51.4M OF REVENUE, 39.9% GAAP GROSS MARGIN, 44.8% CASH GM1, AND $9.1M OF CASH FLOW FROM OPERATIONS 116.3% Revenue Growth, 51.5% Incremental Adjusted EBITDA Margin1, and 12.8% FCF Margin 1 in 3Q 2025 3Q 2025 Summary Notes: 1. Cash Gross Margin, Adjusted Operating Expenses, Free Cash Flow, Adjusted EBITDA, Incremental Adjusted EBITDA Margin, Adjusted EPS, and FCF Margin are non-GAAP financial measures. Reconciliations to GAAP financial measures are provided in the appendix. • Delivered $51.4M of Revenue vs. guidance of $44.0M to $47.0M; YoY revenue growth of 116% • Security Solutions (“SS”) up 154% YoY; Results exceeded guidance assumptions due to better than forecasted performance within Telos ID • Secure Networks (“SN”) down 9% YoY; Results exceeded guidance assumptions primarily due to better than forecasted performance on a program that ended in 3Q • Delivered 39.9% GAAP Gross Margin (“GM”) vs. ~34.0% - 35.5% assumed in guidance • Cash Gross Margin1 was 44.8% and exceeded the assumed guidance range primarily due to better than forecasted performance in all lines of business • Adjusted Operating Expenses1 approximately $0.5M better than guidance assumptions due to lower than forecasted costs across several areas • Adjusted EBITDA1 above top end of guidance range (YoY growth of $14.2M) primarily due to revenue outperformance in Telos ID, higher than forecasted Cash Gross Margins1 in every line of business, and lower Adjusted Operating Expenses 1 • Cash Flow from Operations was $9.1M; Free Cash Flow1 was $6.6M, YoY growth of $16.5M • Continued share repurchases, deploying approximately $3.6M to repurchase 584,213 shares at a weighted average price of $6.23 per share Revenue Adjusted EPS1 Revenue Growth Adjusted EBITDA1 GAAP Gross Profit 3Q 2025 Guidance / Assumptions $44.0M to $47.0M $4.0M to $5.7M ~9.1% to 12.1% Margin +85% to +98% YoY ~34.0% to 35.5% GAAP GM ~40.0% to 41.0% Cash GM1 3Q 2025 Actual $51.4M $10.1M 19.6% Margin $0.09 +116% YoY $20.5M 39.9% GAAP GM 44.8% Cash GM1 Cash Flow $9.1M Cash Flow From Ops $6.6M Free Cash Flow1
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4 FINANCIAL PERFORMANCE SUMMARY SIGNIFICANT YEAR-OVER-YEAR BUSINESS EXPANSION CONTINUES Notes: 1. Cash Gross Margin, Cash Gross Profit, Adjusted EBITDA, Incremental Adjusted EBITDA Margin, Adjusted Operating Expenses, Free Cash Flow, and Free Cash Flow Margin are non-GAAP financial measures. Reconciliations to GAAP financial measures are provided in the appendix. 44.1% Revenue Growth, 56.1% Incremental Adjusted EBITDA Margin1, and 12.7% FCF Margin 1 in 9M 2025 Free Cash Flow(1)GAAP Gross ProfitRevenue Adjusted EBITDA(1) Free Cash Flow(1)GAAP Gross ProfitRevenue Adjusted EBITDA(1) • Revenue: Security Solutions up 154% to $46.5M primarily due to expansion within the Telos ID portfolio. Secure Networks down 9% to $5.0M primarily due to the completion of certain programs as expected. • Gross Profit: GAAP Gross Profit up $17.4M partially due to higher Revenue. GAAP GM up 2,672 bps primarily due to impairment charges in 3Q24. Cash GM1 up 78 bps primarily due to revenue mix partially offset by increased costs on a specific program. • Adjusted EBITDA1: Up $14.2M to $10.1M; Higher Cash Gross Profit1 (primarily due to higher Revenue) and lower Adjusted Operating Expenses1 excluding depreciation and amortization. • Free Cash Flow1: Total company up $16.5M due to higher Adjusted EBITDA1, lower capitalized software development costs, and favorable working capital dynamics. FCF margin1 was 12.8%. • Capital: Deployed $3.6M to repurchase 584K shares at a weighted average price of $6.23 per share. YoY Commentary 3Q YoY9M YoY • Revenue: Security Solutions up 91% to $104.8M primarily due to expansion within the Telos ID portfolio. Secure Networks down 51% to $13.3M primarily due to the completion of certain programs as expected. • Gross Profit: GAAP Gross Profit up $20.8M partially due to higher Revenue. GAAP GM up 877 bps primarily due to impairment charges in 3Q24. Cash GM1 up 31 bps primarily due to revenue mix. • Adjusted EBITDA1: Up $20.3M to $10.8M; Higher Cash Gross Profit1 (primarily due to higher Revenue) and lower Adjusted Operating Expenses1 excluding depreciation and amortization. • Free Cash Flow1: Total company up $39.9M due to higher Adjusted EBITDA1, lower capitalized software development costs, and favorable working capital dynamics. FCF margin1 was 12.7%. • Capital: Deployed $7.6M to repurchase 2.1M shares at a weighted average price of $3.69 per share. YoY Commentary $3.1M $20.5M 3Q24 3Q25 $23.8M $51.4M 3Q24 3Q25 ($4.1M) $10.1M 3Q24 3Q25 ($9.9M) $6.6M 3Q24 3Q25 $81.9M $118.0M 9M24 9M25 ($9.4M) $10.8M 9M24 9M25 ($24.9M) $15.0M 9M24 9M25 $23.8M $44.7M 9M24 9M25 13.2% GAAP GM 44.0% Cash GM1 39.9% GAAP GM 44.8% Cash GM1 29.1% GAAP GM 42.7% Cash GM1 37.8% GAAP GM 43.0% Cash GM1 -30.4% Free Cash Flow Margin1 12.7% Free Cash Flow Margin1 -41.7% Free Cash Flow Margin1 12.8% Free Cash Flow Margin1 UP 116% UP 554% UP $14.2M UP $16.5M UP 44% UP 88% UP $20.3M UP $39.9M
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5 RECENT BUSINESS UPDATES TSA PRECHECK EXPANSION • Expanded network of TSA PreCheck® enrollment centers to 504 locations. • Locations distributed across key markets in 41 states and Puerto Rico. • Achieved target of 500 enrollment locations in 2025. • Continue to process enrollments and renewals at https://tsaprecheckbytelos.tsa.dhs.gov/. XACTA.AI LAUNCH • Telos releases Xacta.ai™: An enterprise AI software capability added to the Xacta® platform, already the proven solution for cyber risk management compliance for the world’s most security conscious organizations. • Significantly enhances the power of the Xacta platform by embedding over 25 years of cybersecurity expertise within our AI capability. • Solution is completely customizable to an organization’s environment, resulting in faster, more informed decisions and the acceleration of GRC initiatives. • Smart Insights: Comprehensive, context-driven analyses of potential gaps with AI-powered insights. • Time Savings: Can achieve up to 93% time savings when implementing controls via Xacta.ai, over and above savings already realized from previous Xacta versions. • Effortless Compliance: Enhance decision-making with actionable data that accelerates compliance initiatives. • Future capability expected to include expanded AI capability with agentic automations to further increase the power of Xacta.ai. • With Xacta.ai, fast and accurate compliance is within reach.
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6 2025 OUTLOOK FORECASTING 67% To 76% YEAR-OVER-YEAR REVENUE GROWTH IN 4Q Notes: 1. Cash Gross Margin, Adjusted Operating Expenses, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP financial measures. The Company has not provided a reconciliation to the most directly comparable GAAP measure to these forward-looking non-GAAP financial measures because certain items are out of the Company’s control or cannot be reasonably predicted. Accordingly, reconciliations of forward-looking Cash Gross Margin, Adjusted Operating Expenses, Adjusted EBITDA, and Adjusted EBITDA Margin are not available without unreasonable effort. Raising 2H Outlook 4Q Guidance Assumptions 4Q 2025 Low End $44.0M +67% YoY 4Q 2025 High End $46.3M +76% YoY $4.0M 9.1% Margin $5.7M 12.3% Margin Revenue Adjusted EBITDA1 Guidance • Revenue forecasted to grow 67% to 76%, primarily due to rapidly scaling programs in Telos ID • GAAP Gross Margin approximately 34.0% – 34.5% • Cash Gross Margin1 approximately 40.0% – 41.0% • More favorable revenue mix overall between SS and SN YoY • SS to contribute approximately 95% – 96% of Revenue (vs. 83% in 4Q24) • SS Cash GM1 down YoY due to mix and significantly higher non-cash infrastructure costs • SN Cash GM1 up YoY primarily due to mix • Adjusted Operating Expenses1 approximately $0.6M to $1.3M higher YoY primarily as a result of higher depreciation and amortization, potentially lower software capitalization and potential cash expense increases • Adjusted EBITDA1 improves from a $0.2M loss in 4Q24 • 2H outlook improved vs. 2Q earnings call • Revenue improved from approximately $91.0M at the midpoint to $96.6M • Adjusted EBITDA1 improved from approximately $9.7M at the midpoint to $14.9M • Adjusted EBITDA Margin1 improved from approximately 10.7% to 15.4% FY 2025 Low End $162.0M +50% YoY FY 2025 High End $164.3M +52% YoY $14.8M 9.2% Margin $16.5M 10.1% Margin Revenue Adjusted EBITDA1
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7 SUMMARY 116% Year-Over-Year Revenue Growth in 3Q; Significantly Exceeded 3Q Revenue and Adjusted EBITDA Guidance Robust Cash Flow Funded Continued Share Repurchases in 3Q Launched Xacta.ai with Enhanced Capability to Dramatically Improve Efficiency and Effectiveness of Customer Compliance Activities Forecasting 67% To 76% Year-Over-Year Revenue Growth In 4Q; Raised 2H Outlook Strong Revenue Base Supporting Continued Growth into 2026
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Appendix
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9 NON-GAAP FINANCIAL MEASURES In addition to Telos' results determined in accordance with U.S. GAAP, Telos believes the non-GAAP financial measures of EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Incremental Adjusted EBITDA, Incremental Adjusted EBITDA Margin, Adjusted Net Income (Loss), Adjusted Earnings Per Share ("EPS"), Adjusted Gross P rofit, Adjusted Gross Margin, Cash Gross Profit, Cash Gross Margin, Cash Operating Expenses, Adjusted Operating Expenses, Free Cash Flow and Free Cash Flow Margin are useful in evaluating operating and cash f low performance. Telos believes that this non-GAAP financial information, when taken collectively with GAAP results, may be helpful to readers of the financial statements because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies. A reconciliation is provided below for each of these non-GAAP financial measures to the most directly comparable financial measure stated in accordance with GAAP. Telos believes that EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Incremental Adjusted EBITDA, Incremental Adjusted EBITDA Margin, Adjusted Net Income (Loss), Adjusted EPS, Cash Operating Expenses, and Adjusted Operating Expenses provide the Board, management and investors with a clear representation of the Comp any’s core operating performance and trends, provide greater visibility into the long-term financial performance of the Company, and eliminate the impact of items that do not relate to the ongoing operating pe rformance of the business. Further, Adjusted EBITDA is used by the Board and management to prepare and approve the Company’s annual budget and to evaluate the performance of certain management personnel when determining incentive compensation. Adjusted Gross Profit, Cash Gross Profit, Adjusted Gross Margin and Cash Gross Margin provide management and investors a clear representation of the core economics of gross profit and gross margin without the impact of non-cash expenses and sunk costs expended. Telos uses Free Cash Flow and Free Cash Flow Margin to understand the cash flows that directly correspon d with our operations and the investments the Company must make in those operations, using a methodology that combines operating cash flows and capital expenditures. Further, Free Cash Flow may be u seful to management and investors in evaluating the Company's operating performance and liquidity, and to the Board to evaluate the performance of certain management personnel when determining ince ntive compensation. Telos believes these non-GAAP financial measures facilitate the comparison of the Company’s operating performance on a consistent basis between periods by excluding certain items that m ay, or could, have a disproportionately positive or negative impact on the Company’s results of operations in any particular period. When viewed in combination with the Company’s results prepared in accordance with GAAP, these non-GAAP financial measures help provide a broader picture of factors and trends affecting the Company’s results of operations.
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10 2025 OUTLOOK 2025 4Q ADDITIONAL MODELING ASSUMPTIONS Stock Based Compensation (SBC) Depreciation & Amortization Basic Weighted Average Share Count Tax Rate CAPEX & Capitalized Software Cash Operating Expenses1 GAAP Gross Margin Adjusted Operating Expenses1 Notes: 1. Cash Gross Margin, Cash Operating Expenses, and Adjusted Operating Expenses are non-GAAP financial measures. The Company has not provided reconciliations to the most directly comparable GAAP measures to these forward-looking non-GAAP financial measures because certain items are out of the Company’s control or cannot be reasonably predicted. Accordingly, reconciliation of forward-looking Cash Gross Margin, Cash Operating Expenses, and Adjusted Operating Expenses are not available without unreasonable effort. • Up YoY due to potential increases in expense across several areas • See Cash GM commentary below 2025E 4Q Commentary2024 4Q 2024 Full Year 31.8% $7.4M$21.4M $2.5M$11.9M 72.4M71.9M (0.1%)(0.1%) $4.3M$13.8M $15.0M$68.2M 40.3% • Not meaningful 2025E 4Q ~$6.4M ~$3.7M ~73.5M - ~$2.1M - $2.4M ~$15.1M - ~$16.2M ~34.0% – 34.5% • ~30% is included in Adjusted Operating Expenses in 4Q25 • ~$0.2M in COS in 4Q25 • Up YoY due to higher potential spend as indicated above as well as higher depreciation and amortization and potentially lower capitalization of software development $13.5M$62.4M ~$14.1M - ~$14.8M Cash Gross Margin1 43.7% 47.0% ~40.0% – 41.0% • SS down YoY due to mix and non-cash infrastructure costs; SN up YoY • More favorable revenue mix between SS and SN
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11 2025 RESULTS GAAP AND ADJUSTED 9M RESULTS (Amounts in thousands, unaudited) GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adj* Adjusted GAAP SBC Other Inc Adj* Adjusted GAAP SBC Other Inc Impairment Restructure Adjusted GAAP SBC Other Inc Impairment Restructure Adjusted Revenue Security Solutions 25,818$ -$ -$ 25,818$ 32,474$ -$ -$ 32,474$ 46,478$ -$ -$ -$ 46,478$ 104,770$ -$ -$ -$ 104,770$ 18,332$ -$ -$ -$ -$ 18,332$ 54,839$ -$ -$ -$ -$ 54,839$ Secure Networks 4,798 - - 4,798$ 3,494 - - 3,494 4,966 - - - 4,966 13,258 - - - 13,258 5,451 - - - - 5,451 27,061 - - - - 27,061 Total 30,616 - - 30,616 35,968 - - 35,968 51,444 - - - 51,444 118,028 - - - 118,028 23,783 - - - - 23,783 81,900 - - - - 81,900 Gross Profit Security Solutions 11,060 169 - 11,229 11,298 139 - 11,437 19,286 142 - - 19,428 41,644 450 - - 42,094 2,310 117 - 5,333 272 8,032 18,201 455 - 5,333 272 24,261 Secure Networks 1,122 21 - 1,143 634 10 - 644 1,260 12 - - 1,272 3,016 43 - - 3,059 833 (2) - - 121 952 5,610 145 - - 121 5,876 Total 12,182 190 - 12,372 11,932 149 - 12,081 20,546 154 - - 20,700 44,660 493 - - 45,153 3,143 115 - 5,333 393 8,984 23,811 600 - 5,333 393 30,137 Gross Margin Security Solutions 42.8% 0.7% 0.0% 43.5% 34.8% 0.4% 0.0% 35.2% 41.5% 0.3% 0.0% 0.0% 41.8% 39.7% 0.4% 0.0% 0.0% 40.2% 12.6% 0.6% 0.0% 29.1% 1.5% 43.8% 33.2% 0.8% 0.0% 9.7% 0.5% 44.2% Secure Networks 23.4% 0.4% 0.0% 23.8% 18.1% 0.3% 0.0% 18.4% 25.4% 0.2% 0.0% 0.0% 25.6% 22.7% 0.3% 0.0% 0.0% 23.1% 15.3% 0.0% 0.0% 0.0% 2.2% 17.5% 20.7% 0.5% 0.0% 0.0% 0.4% 21.7% Total 39.8% 0.6% 0.0% 40.4% 33.2% 0.4% 0.0% 33.6% 39.9% 0.3% 0.0% 0.0% 40.2% 37.8% 0.4% 0.0% 0.0% 38.3% 13.2% 0.5% 0.0% 22.4% 1.7% 37.8% 29.1% 0.7% 0.0% 6.5% 0.5% 36.8% Operating Expenses Research and Development 1,571 40 - 1,531 1,512 244 - 1,268 1,899 421 - - 1,478 4,982 705 - - 4,277 2,409 188 - - 164 2,057 7,038 (261) - - 164 7,135 Selling, General and Administrative 19,633 6,818 - 12,815 20,303 7,364 - 12,939 21,115 8,813 - - 12,302 61,051 22,995 - - 38,056 23,225 8,511 - - 890 13,824 56,346 13,678 - - 880 41,788 Impairment loss on intangible assets - - - - - - - - - - - - - - - - - - 6,373 - - 6,373 - - 6,373 - - 6,373 - - Total 21,204 6,858 - 14,346 21,815 7,608 - 14,207 23,014 9,234 - - 13,780 66,033 23,700 - - 42,333 32,007 8,699 - 6,373 1,054 15,881 69,757 13,417 - 6,373 1,044 48,923 EBIT / Operating (Loss)/Income (9,022) 7,048 - (1,974) (9,883) 7,757 - (2,126) (2,468) 9,388 - - 6,920 (21,373) 24,193 - - 2,820 (28,864) 8,814 - 11,706 1,447 (6,897) (45,946) 14,017 - 11,706 1,437 (18,786) Interest Expense (147) - - (147) (141) - - (141) (136) - - - (136) (424) - - - (424) (157) - - - - (157) (492) - - - - (492) Other Income 561 - (561) - 553 - (553) - 511 - (511) - - 1,625 - (1,625) - - 983 - (983) - - - 3,299 - (3,299) - - - Earnings Before Taxes (EBT) (8,608) 7,048 (561) (2,121) (9,471) 7,757 (553) (2,267) (2,093) 9,388 (511) - 6,784 (20,172) 24,193 (1,625) - 2,396 (28,038) 8,814 (983) 11,706 1,447 (7,054) (43,139) 14,017 (3,299) 11,706 1,437 (19,278) Benefit from (Provision for) Income Taxes 4 - - 4 (46) - - (46) (21) - - - (21) (63) - - - (63) (17) - - - - (17) (51) - - - - (51) Net (Loss)/Income (8,604)$ 7,048$ (561)$ (2,117)$ (9,517)$ 7,757$ (553)$ (2,313)$ (2,114)$ 9,388$ (511)$ -$ 6,763$ (20,235)$ 24,193$ (1,625)$ -$ 2,333$ (28,055)$ 8,814$ (983)$ 11,706$ 1,447$ (7,071)$ (43,190)$ 14,017$ (3,299)$ 11,706$ 1,437$ (19,329)$ Share Count - Basic 72,715 72,715 72,715 72,715 73,163 73,163 73,163 73,163 72,580 72,580 72,580 - 72,580 72,819 72,819 72,819 - 72,819 72,309 72,309 72,309 72,309 72,309 72,309 71,654 71,654 71,654 71,654 71,654 71,654 Share Count - Diluted 72,715 72,715 72,715 72,715 73,163 73,163 73,163 73,163 72,580 72,580 72,580 2,972 75,552 72,819 72,819 72,819 2,073 74,892 72,309 72,309 72,309 72,309 72,309 72,309 71,654 71,654 71,654 71,654 71,654 71,654 EPS - Basic (0.12)$ 0.10$ (0.01)$ (0.03)$ (0.13)$ 0.11$ (0.01)$ (0.03)$ (0.03)$ 0.13$ (0.01)$ - 0.09$ (0.28)$ 0.33$ (0.02)$ - 0.03$ (0.39)$ 0.12$ (0.01)$ 0.16$ 0.02$ (0.10)$ (0.60)$ 0.20$ (0.05)$ 0.16$ 0.02$ (0.27)$ EPS - Diluted (0.12)$ 0.10$ (0.01)$ (0.03)$ (0.13)$ 0.11$ (0.01)$ (0.03)$ (0.03)$ 0.13$ (0.01)$ (0.00)$ 0.09$ (0.28)$ 0.33$ (0.02)$ (0.00)$ 0.03$ (0.39)$ 0.12$ (0.01)$ 0.16$ 0.02$ (0.10)$ (0.60)$ 0.20$ (0.05)$ 0.16$ 0.02$ (0.27)$ Net (Loss)/Income (8,604)$ 7,048$ (561)$ (2,117)$ (9,517)$ 7,757$ (553)$ (2,313)$ (2,114)$ 9,388$ (511)$ -$ 6,763$ (20,235)$ 24,193$ (1,625)$ -$ 2,333$ (28,055)$ 8,814$ (983)$ 11,706$ 1,447$ (7,071)$ (43,190)$ 14,017$ (3,299)$ 11,706$ 1,437$ (19,329)$ Other Income (561) - 561 - (553) - 553 - (511) - 511 - - (1,625) - 1,625 - - (983) - 983 - - - (3,299) - 3,299 - - - Interest Expense 147 - - 147 141 - - 141 136 - - - 136 424 - - - 424 157 - - - - 157 492 - - - - 492 (Benefit from) Provision for Income Taxes (4) - - (4) 46 - - 46 21 - - - 21 63 - - - 63 17 - - - - 17 51 - - - - 51 Depreciation & Amortization 2,336 - - 2,336 2,509 - - 2,509 3,177 - - - 3,177 8,022 - - - 8,022 2,748 - - - - 2,748 9,368 - - - - 9,368 EBITDA (6,686)$ 7,048$ -$ 362$ (7,374)$ 7,757$ -$ 383$ 709$ 9,388$ -$ -$ 10,097$ (13,351)$ 24,193$ -$ -$ 10,842$ (26,116)$ 8,814$ -$ 11,706$ 1,447$ (4,149)$ (36,578)$ 14,017$ -$ 11,706$ 1,437$ (9,418)$ Net cash provided by (used) in operating activities 6,106$ 6,950$ 9,146$ 22,202$ (7,080)$ (15,420)$ Capitalized Software Development Costs (2,214) (2,187) (2,095) (6,496) (2,789) (9,104) Purchase of Property and Equipment (123) (134) (452) (709) (49) (381) Free Cash Flow 3,769$ 4,629$ 6,599$ 14,997$ (9,918)$ (24,905)$ *Adjusted for potentially dilutive shares due to adjusted net income 20242025 Three Months Ended March 31, 2025 Three Months Ended June 30, 2025 Three Months Ended September 30, 2025 Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024Three Months Ended September 30, 2024
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12 2024 RESULTS GAAP AND ADJUSTED FULL YEAR RESULTS (Amounts in thousands, unaudited) GAAP SBC Other Inc Restructure Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Impairment Restructure Adjusted GAAP SBC Other Inc Restructure Adjusted GAAP SBC Other Inc Impairment Restructure Adjusted Revenue Security Solutions 18,640$ -$ -$ -$ 18,640$ 17,867$ -$ -$ 17,867$ 18,332$ -$ -$ -$ -$ 18,332$ 21,921$ -$ -$ -$ 21,921$ 76,760$ -$ -$ -$ -$ 76,760$ Secure Networks 10,979 - - - 10,979 10,631 - - 10,631 5,451 - - - - 5,451 4,451 - - - 4,451 31,512 - - - - 31,512 Total 29,619 - - - 29,619 28,498 - - 28,498 23,783 - - - - 23,783 26,372 - - - 26,372 108,272 - - - - 108,272 Gross Profit Security Solutions 8,626 176 - - 8,802 7,265 162 - 7,427 2,310 117 - 5,333 272 8,032 9,478 212 - (21) 9,669 27,679 667 - 5,333 251 33,930 Secure Networks 2,335 81 - - 2,416 2,442 66 - 2,508 833 (2) - - 121 952 1,140 16 - (31) 1,125 6,750 161 - - 90 7,001 Total 10,961 257 - - 11,218 9,707 228 - 9,935 3,143 115 - 5,333 393 8,984 10,618 228 - (52) 10,794 34,429 828 - 5,333 341 40,931 Gross Margin Security Solutions 46.3% 0.9% 0.0% 0.0% 47.2% 40.7% 0.9% 0.0% 41.6% 12.6% 0.6% 0.0% 29.1% 1.5% 43.8% 43.2% 1.0% 0.0% -0.1% 44.1% 36.1% 0.9% 0.0% 6.9% 0.3% 44.2% Secure Networks 21.3% 0.7% 0.0% 0.0% 22.0% 23.0% 0.6% 0.0% 23.6% 15.3% 0.0% 0.0% 0.0% 2.2% 17.5% 25.6% 0.4% 0.0% -0.7% 25.3% 21.4% 0.5% 0.0% 0.0% 0.3% 22.2% Total 37.0% 0.9% 0.0% 0.0% 37.9% 34.1% 0.8% 0.0% 34.9% 13.2% 0.5% 0.0% 22.4% 1.7% 37.8% 40.3% 0.9% 0.0% -0.2% 40.9% 31.8% 0.8% 0.0% 4.9% 0.3% 37.8% Operating Expenses Research and Development 3,170 428 - - 2,742 1,459 (877) - 2,336 2,409 188 - - 164 2,057 1,404 140 - (26) 1,290 8,442 (121) - - 138 8,425 Selling, General and Administrative 16,229 2,299 - (10) 13,940 16,892 2,868 - 14,024 23,225 8,511 - - 890 13,824 19,141 7,026 - (89) 12,204 75,487 20,704 - - 791 53,992 Impairment loss on intangible assets - - - - - - - - - 6,373 - - 6,373 - - - 6,373 - - 6,373 - - Total 19,399 2,727 - (10) 16,682 18,351 1,991 - 16,360 32,007 8,699 - 6,373 1,054 15,881 20,545 7,166 - (115) 13,494 90,302 20,583 - 6,373 929 62,417 EBIT / Operating (Loss)/Income (8,438) 2,984 - (10) (5,464) (8,644) 2,219 - (6,425) (28,864) 8,814 - 11,706 1,447 (6,897) (9,927) 7,394 - (167) (2,700) (55,873) 21,411 - 11,706 1,270 (21,486) Interest Expense (175) - - - (175) (160) - - (160) (157) - - - - (157) (152) - - - (152) (644) - - - - (644) Other Income 1,252 - (1,252) - - 1,064 - (1,064) - 983 - (983) - - - 724 - (724) - - 4,023 - (4,023) - - - Earnings Before Taxes (EBT) (7,361) 2,984 (1,252) (10) (5,639) (7,740) 2,219 (1,064) (6,585) (28,038) 8,814 (983) 11,706 1,447 (7,054) (9,355) 7,394 (724) (167) (2,852) (52,494) 21,411 (4,023) 11,706 1,270 (22,130) Benefit from (Provision for) Income Taxes (17) - - - (17) (17) - - (17) (17) - - - - (17) 25 - - - 25 (26) - - - - (26) Net (Loss)/Income (7,378)$ 2,984$ (1,252)$ (10)$ (5,656)$ (7,757)$ 2,219$ (1,064)$ (6,602)$ (28,055)$ 8,814$ (983)$ 11,706$ 1,447$ (7,071)$ (9,330)$ 7,394$ (724)$ (167)$ (2,827)$ (52,520)$ 21,411$ (4,023)$ 11,706$ 1,270$ (22,156)$ Weighted Average Share Count 70,628 70,628 70,628 70,628 70,628 72,017 72,017 72,017 72,017 72,309 72,309 72,309 72,309 72,309 72,309 72,435 72,435 72,435 72,435 72,435 71,850 71,850 71,850 71,850 71,850 71,850 EPS (0.10)$ 0.04$ (0.02)$ -$ (0.08)$ (0.11)$ 0.03$ (0.01)$ (0.09)$ (0.39)$ 0.12$ (0.01)$ 0.16$ 0.02$ (0.10)$ (0.13)$ 0.10$ (0.01)$ -$ (0.04)$ (0.73)$ 0.30$ (0.06)$ 0.16$ 0.02$ (0.31)$ Net (Loss)/Income (7,378)$ 2,984$ (1,252)$ (10)$ (5,656)$ (7,757)$ 2,219$ (1,064)$ (6,602)$ (28,055)$ 8,814$ (983)$ 11,706$ 1,447$ (7,071)$ (9,330)$ 7,394$ (724)$ (167)$ (2,827)$ (52,520)$ 21,411$ (4,023)$ 11,706$ 1,270$ (22,156)$ Other Income (1,252) - 1,252 - - (1,064) - 1,064 - (983) - 983 - - - (724) - 724 - - (4,023) - 4,023 - - - Interest Expense 175 - - - 175 160 - - 160 157 - - - - 157 152 - - - 152 644 - - - - 644 (Benefit from) Provision for Income Taxes 17 - - - 17 17 - - 17 17 - - - - 17 (25) - - - (25) 26 - - - - 26 Depreciation & Amortization 3,129 - - - 3,129 3,491 - - 3,491 2,748 - - - - 2,748 2,499 - - - 2,499 11,867 - - - - 11,867 EBITDA (5,309)$ 2,984$ -$ (10)$ (2,335)$ (5,153)$ 2,219$ -$ (2,934)$ (26,116)$ 8,814$ -$ 11,706$ 1,447$ (4,149)$ (7,428)$ 7,394$ -$ (167)$ (201)$ (44,006)$ 21,411$ -$ 11,706$ 1,270$ (9,619)$ Net cash used in operating activities (350)$ (7,990)$ (7,080)$ (10,518)$ (25,938)$ Capitalized Software Development Costs (3,202) (3,113) (2,789) (2,401) (11,505) Purchase of Property and Equipment (97) (235) (49) (1,871) (2,252) Free Cash Flow (3,649)$ (11,338)$ (9,918)$ (14,790)$ (39,695)$ Three Months Ended March 31, 2024 Three Months Ended June 30, 2024 Twelve Months Ended December 31, 2024 2024 Three Months Ended September 30, 2024 Three Months Ended December 31, 2024
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13 2025 RESULTS CASH GROSS PROFIT & CASH GROSS MARGIN 9M RESULTS (Amounts in thousands, unaudited) Nine Months Ended Three Months Ended Nine Months Ended March 31, 2025 June 30, 2025 September 30, 2025 September 30, 2025 September 30, 2024 September 30, 2024 Revenue Security Solutions 25,818$ 32,474$ 46,478$ 104,770$ 18,332$ 54,839$ Secure Networks 4,798 3,494 4,966 13,258 5,451 27,061 Total 30,616$ 35,968$ 51,444$ 118,028$ 23,783$ 81,900$ GAAP Gross Profit Security Solutions 11,060$ 11,298$ 19,286$ 41,644$ 2,310$ 18,201$ Secure Networks 1,122 634 1,260 3,016 833 5,610 Total 12,182$ 11,932$ 20,546$ 44,660$ 3,143$ 23,811$ GAAP Gross Margin Security Solutions 42.8% 34.8% 41.5% 39.7% 12.6% 33.2% Secure Networks 23.4% 18.1% 25.4% 22.7% 15.3% 20.7% Total 39.8% 33.2% 39.9% 37.8% 13.2% 29.1% Stock Based Compensation - Cost of Sales Security Solutions 169$ 139$ 142$ 450$ 117$ 455$ Secure Networks 21 10 12 43 (2) 145 Total 190$ 149$ 154$ 493$ 115$ 600$ Impairment - Cost of Sales Security Solutions -$ -$ -$ -$ 5,333$ 5,333$ Secure Networks - - - - - - Total -$ -$ -$ -$ 5,333$ 5,333$ Restructuring Costs - Cost of Sales Security Solutions -$ -$ -$ -$ 272$ 272$ Secure Networks -$ - - - 121 121 Total -$ -$ -$ -$ 393$ 393$ Adjusted Gross Profit Security Solutions 11,229$ 11,437$ 19,428$ 42,094$ 8,032$ 24,261$ Secure Networks 1,143 644 1,272 3,059 952 5,876 Total 12,372$ 12,081$ 20,700$ 45,153$ 8,984$ 30,137$ Adjusted Gross Margin Security Solutions 43.5% 35.2% 41.8% 40.2% 43.8% 44.2% Secure Networks 23.8% 18.4% 25.6% 23.1% 17.5% 21.7% Total 40.4% 33.6% 40.2% 38.3% 37.8% 36.8% Depreciation & Amortization - Cost of Sales Security Solutions 1,501$ 1,714$ 2,354$ 5,569$ 1,488$ 4,800$ Secure Networks 2 1 2 5 2 7 Total 1,503$ 1,715$ 2,356$ 5,574$ 1,490$ 4,807$ Cash Gross Profit Security Solutions 12,730$ 13,151$ 21,782$ 47,663$ 9,520$ 29,061$ Secure Networks 1,145 645 1,274 3,064 954 5,883 Total 13,875$ 13,796$ 23,056$ 50,727$ 10,474$ 34,944$ Cash Gross Margin Security Solutions 49.3% 40.5% 46.9% 45.5% 51.9% 53.0% Secure Networks 23.9% 18.5% 25.7% 23.1% 17.5% 21.7% Total 45.3% 38.4% 44.8% 43.0% 44.0% 42.7% 20242025 Three Months Ended
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14 2024 RESULTS CASH GROSS PROFIT & CASH GROSS MARGIN FULL YEAR RESULTS (Amounts in thousands, unaudited) Twelve Months Ended March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 December 31, 2024 Revenue Security Solutions 18,640$ 17,867$ 18,332$ 21,921$ 76,760$ Secure Networks 10,979 10,631 5,451 4,451 31,512 Total 29,619$ 28,498$ 23,783$ 26,372$ 108,272$ GAAP Gross Profit Security Solutions 8,626$ 7,265$ 2,310$ 9,478$ 27,679$ Secure Networks 2,335 2,442 833 1,140 6,750 Total 10,961$ 9,707$ 3,143$ 10,618$ 34,429$ GAAP Gross Margin Security Solutions 46.3% 40.7% 12.6% 43.2% 36.1% Secure Networks 21.3% 23.0% 15.3% 25.6% 21.4% Total 37.0% 34.1% 13.2% 40.3% 31.8% Stock Based Compensation - Cost of Sales Security Solutions 176$ 162$ 117$ 212$ 667$ Secure Networks 81 66 (2) 16 161 Total 257$ 228$ 115$ 228$ 828$ Impairment - Cost of Sales Security Solutions -$ -$ 5,333$ -$ 5,333$ Secure Networks - - - - - Total -$ -$ 5,333$ -$ 5,333$ Restructuring Costs - Cost of Sales Security Solutions -$ -$ 272$ (21)$ 251$ Secure Networks - - 121 (31) 90 Total -$ -$ 393$ (52)$ 341$ Adjusted Gross Profit Security Solutions 8,802$ 7,427$ 8,032$ 9,669$ 33,930$ Secure Networks 2,416 2,508 952 1,125 7,001 Total 11,218$ 9,935$ 8,984$ 10,794$ 40,931$ Adjusted Gross Margin Security Solutions 47.2% 41.6% 43.8% 44.1% 44.2% Secure Networks 22.0% 23.6% 17.5% 25.3% 22.2% Total 37.9% 34.9% 37.8% 40.9% 37.8% Depreciation & Amortization - Cost of Sales Security Solutions 1,275$ 2,037$ 1,488$ 1,596$ 6,396$ Secure Networks 3 2 2 1 8 Total 1,278$ 2,039$ 1,490$ 1,597$ 6,404$ Cash Gross Profit Security Solutions 10,077$ 9,464$ 9,520$ 11,265$ 40,326$ Secure Networks 2,419 2,510 954 1,126 7,009 Total 12,496$ 11,974$ 10,474$ 12,391$ 47,335$ Cash Gross Margin Security Solutions 54.1% 53.0% 51.9% 51.4% 52.5% Secure Networks 22.0% 23.6% 17.5% 25.3% 22.2% Total 42.2% 42.0% 44.0% 47.0% 43.7% 2024 Three Months Ended
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15 RECONCILIATIONS EBITDA, ADJUSTED EBITDA, EBITDA MARGIN, ADJUSTED EBITDA MARGIN, INCREMENTAL ADJUSTED EBITDA, AND INCREMENTAL ADJUSTED EBITDA MARGIN (Amounts in thousands, unaudited) For the Three Months Ended For the Nine Months Ended September 30, 2025 September 30, 2024 Year-over-Year Change September 30, 2025 September 30, 2024 Year-over-Year Change Amount Margin Amount Margin Amount Margin Amount Margin Amount Margin Amount Margin Net loss $ (2,114) (4.1) % $ (28,055) (118.0) % $ 25,941 93.8% $ (20,235) (17.2) % $ (43,190) (52.8) % $ 22,955 63.5% Other income (511) (1.0) % (983) (4.1) % 472 1.7% (1,625) (1.4) % (3,299) (4.0) % 1,674 4.7% Interest expense 136 0.3 % 157 0.6 % (21) (0.1)% 424 0.4 % 492 0.6 % (68) (0.2)% Provision for income taxes 21 — % 17 0.1 % 4 —% 63 0.1 % 51 0.1 % 12 —% Depreciation and amortization 3,177 6.2 % 2,748 11.6 % 429 1.6% 8,022 6.8 % 9,368 11.4 % (1,346) (3.7)% EBITDA (Non-GAAP) 709 1.5 % (26,116) (109.8) % 26,825 97.0% (13,351) (11.3) % (36,578) (44.7) % 23,227 64.3% Stock-based compensation expense (1) 9,388 18.2 % 8,814 37.1 % 574 2.1% 24,193 20.5 % 14,017 17.1 % 10,176 28.2% Impairment loss on intangible assets — — % 11,706 49.2 % (11,706) (42.4)% — — % 11,706 14.3 % (11,706) (32.4)% Restructuring expenses (2) — — % 1,447 6.1 % (1,447) (5.2)% — — % 1,437 1.8 % (1,437) (4.0)% Adjusted EBITDA (Non-GAAP) $ 10,097 19.6 % $ (4,149) (17.4) % $ 14,246 51.5% $ 10,842 9.2 % $ (9,418) (11.5) % $ 20,260 56.1% (1) The stock-based compensation expense to EBITDA is made up of stock-based compensation expense for the awarded RSUs, PSUs, and stock options, and other sources. Stock-based compensation expense for the awarded RSUs, PSUs and stock options was $7.4 million and $19.8 million for the three and nine months ended September 30, 2025, respectively, and $8.4 million and $12.4 million for the three and nine months ended September 30, 2024, respectively. Stock-based compensation expense from other sources was $1.9 million and $4.4 million for the three and nine months ended September 30, 2025, respectively, and $0.5 million and $1.6 million for the three and nine months ended September 30, 2024, respectively. The other sources of stock-based compensation consist of accrued compensation, which the Company intends to settle in shares of the Company's common stock. However, the Company has the discretion to determine whether this compensation will ultimately be paid in stock or cash up until the date at which it is paid. Any change to the expected payment form would result in out-of-quarter adjustments to this add back to Adjusted EBITDA. (2) The restructuring expenses include severance and other related benefit costs (including outplacement services and continuing health insurance coverage), external consulting and advisory fees related to implementing the restructuring plan. (1) The stock-based compensation expense to EBITDA is made up of stock-based compensation expense for the awarded RSUs, PSUs, and stock options, and other sources. Stock-based compensation expense for the awarded RSUs, PSUs and stock options was $7.4 million and $19.8 million for the three and nine months ended September 30, 2025, respectively, and $8.4 million and $12.4 million for the three and nine months ended September 30, 2024, respectively. Stock-based compensation expense from other sources was $1.9 million and $4.4 million for the three and nine months ended September 30, 2025, respectively, and $0.5 million and $1.6 million for the three and nine months ended September 30, 2024, respectively. The other sources of stock-based compensation consist of accrued compensation, which the Company intends to settle in shares of the Company's common stock. However, the Company has the discretion to determine whether this compensation will ultimately be paid in stock or cash up until the date at which it is paid. Any change to the expected payment form would result in out-of-quarter adjustments to this add back to Adjusted EBITDA. (2) The restructuring expenses include severance and other related benefit costs (including outplacement services and continuing health insurance coverage), external consulting and advisory fees related to implementing the restructuring plan.
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16 RECONCILIATIONS ADJUSTED NET INCOME (LOSS) AND ADJUSTED EPS (Amounts in thousands, unaudited) For the Three Months Ended For the Nine Months Ended September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Net loss $ (2,114) $ (28,055) $ (20,235) $ (43,190) Adjustments: Other income (511) (983) (1,625) (3,299) Stock-based compensation expense (1) 9,388 8,814 24,193 14,017 Impairment loss on intangible assets — 11,706 — 11,706 Restructuring expenses (2) — 1,447 — 1,437 Adjusted net income (loss) (Non-GAAP) $ 6,763 $ (7,071) $ 2,333 $ (19,329) Earnings (Loss) per share, diluted $ (0.03) $ (0.39) $ (0.28) $ (0.60) Adjustments: Other income (0.01) (0.01) (0.02) (0.05) Stock-based compensation expense (1) 0.13 0.12 0.33 0.20 Impairment loss on intangible assets — 0.16 — 0.16 Restructuring expenses (2) — 0.02 — 0.02 Adjustment to diluted earnings per share (3) — — — — Adjusted earnings (loss) per share, diluted (Non-GAAP) $ 0.09 $ (0.10) $ 0.03 $ (0.27) Weighted-average shares to compute GAAP earnings (loss) per share, diluted 72,580 72,309 72,819 71,654 Weighted-average shares to compute non-GAAP earnings (loss) per share, diluted (3) 75,552 72,309 74,892 71,654 (1) The stock-based compensation expense to EBITDA is made up of stock-based compensation expense for the awarded RSUs, PSUs, and stock options, and other sources. Stock-based compensation expense for the awarded RSUs, PSUs and stock options was $7.4 million and $19.8 million for the three and nine months ended September 30, 2025, respectively, and $8.4 million and $12.4 million for the three and nine months ended September 30, 2024, respectively. Stock-based compensation expense from other sources was $1.9 million and $4.4 million for the three and nine months ended September 30, 2025, respectively, and $0.5 million and $1.6 million for the three and nine months ended September 30, 2024, respectively. The other sources of stock-based compensation consist of accrued compensation, which the Company intends to settlein shares of the Company's common stock. However, the Company has the discretion to determine whether this compensation will ultimately be paid in stock or cash up until the date at which it is paid. Any change to the expected payment form would result in out-of-quarter adjustments to this add back to Adjusted Net Income (Loss). (2) The restructuring expenses include severance and other related benefit costs (including outplacement services and continuing health insurance coverage), external consulting and advisory fees related to implementing the restructuring plan. (3) For a period of net loss, potentially dilutive shares are not included in the calculation of diluted earnings (loss) per share, because to do so would be anti-dilutive. This is an adjustment used to reconcile GAAP earnings (loss) per share (excluding potentially dilutive shares) with non-GAAP earnings per share (including potentially dilutive shares).
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17 RECONCILIATIONS ADJUSTED GROSS PROFIT, CASH GROSS PROFIT, ADJUSTED GROSS MARGIN, AND CASH GROSS MARGIN (Amounts in thousands, unaudited) For the Three Months Ended For the Nine Months Ended September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Amount Margin Amount Margin Amount Margin Amount Margin Gross profit $ 20,546 39.9% $ 3,143 13.2% $ 44,660 37.8% $ 23,811 29.1% Adjustments: Stock-based compensation expense – cost of sales 154 0.3% 115 0.5% 493 0.4% 600 0.7% Impairment loss on intangible assets – cost of sales — —% 5,333 22.4% — —% 5,333 6.5% Restructuring expenses – cost of sales — —% 393 1.7% — —% 393 0.5% Adjusted gross profit (Non-GAAP) 20,700 40.2% 8,984 37.8% 45,153 38.3% 30,137 36.8% Depreciation and amortization – cost of sales 2,356 4.5% 1,490 6.2% 5,574 4.7% 4,807 5.9% Cash gross profit (Non-GAAP) $ 23,056 44.8% $ 10,474 44.0% $ 50,727 43.0% $ 34,944 42.7%
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18 RECONCILIATIONS FREE CASH FLOW AND FREE CASH FLOW MARGIN (Amounts in thousands, unaudited) For the Three Months Ended For the Nine Months Ended September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Net cash provided by (used in) operating activities $ 9,146 $ (7,080) $ 22,202 $ (15,420) Adjustments: Purchases of property and equipment, net (452) (49) (709) (381) Capitalized software development costs (2,095) (2,789) (6,496) (9,104) Free cash flow (Non-GAAP) $ 6,599 $ (9,918) $ 14,997 $ (24,905) Revenue $ 51,444 $ 23,783 $ 118,028 $ 81,900 Operating cash flow margin 17.8% (29.8)% 18.8% (18.8)% Free cash flow margin (Non-GAAP) 12.8% (41.7)% 12.7% (30.4)%
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19 RECONCILIATIONS ADJUSTED OPERATING EXPENSES AND CASH OPERATING EXPENSES (Amounts in thousands, unaudited) For the Three Months Ended For the Nine Months Ended September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Operating expenses $ 23,014 $ 32,007 $ 66,033 $ 69,757 Adjustments: Stock-based compensation expense (9,234) (8,699) (23,700) (13,417) Impairment loss on intangible assets — (6,373) — (6,373) Restructuring adjustments — (1,054) — (1,044) Adjusted operating expenses (Non-GAAP) 13,780 15,881 42,333 48,923 Depreciation and amortization (821) (1,258) (2,448) (4,561) Software R&D capitalized costs 2,057 2,719 6,476 8,859 Cash operating expenses (Non-GAAP) $ 15,016 $ 17,342 $ 46,361 $ 53,221
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Solutions that empower and protect the enterprise. TM Telos Confidential 20