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Telos Second Quarter 2026 Earnings August 10 , 2026
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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 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 shou ld 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 $47.7M OF REVENUE, 35.0% GAAP GROSS MARGIN, 40.6% CASH GM1, AND $8.8M OF CASH FLOW FROM OPERATIONS 32.7% Revenue Growth, 14.4% Adjusted EBITDA Margin1, and 13.9% FCF Margin 1 in 2Q 2026 Notes: 1. Cash Gross Profit, Cash Gross Margin, Adjusted Operating Expenses, Adjusted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, and Free Cash Flow Margin are non-GAAP financial measures. Reconciliations to GAAP financial measures are provided in the appendix. Revenue Adjusted EPS1 Revenue Growth Adjusted EBITDA1 GAAP Gross Profit 2Q 2026 Guidance / Assumptions $44.0M to $46.0M $5.0M to $6.0M ~11.4% to 13.0% Margin1 +22% to +28% YoY ~32.5% GAAP GM ~39.0% Cash GM1 2Q 2026 Actual $47.7M $6.9M 14.4% Margin1 $0.04 +32.7% YoY $16.7M 35.0% GAAP GM 40.6% Cash GM1 Cash Flow $8.8M Cash Flow From Ops 18.5% Margin $6.6M Free Cash Flow1 13.9% Margin1 2Q 2026 Summary • Delivered $47.7M of Revenue vs. guidance of $44.0M to $46.0M; YoY Revenue growth of 32.7% • Security Solutions (“SS”) up 44% YoY; Results exceeded guidance assumptions due to better than forecasted performance within Telos ID • Secure Networks (“SN”) down 69% YoY; Results in line with guidance assumptions • Delivered 35.0% GAAP Gross Margin (“GM”) vs. the guidance assumption of 32.5% • Cash Gross Margin1 was 40.6% and exceeded the guidance assumption primarily due to better than forecasted performance in Telos ID • Adjusted Operating Expenses1 approximately $0.5M higher than guidance assumptions • Adjusted EBITDA1 above top end of guidance range due to higher than forecasted Cash Gross Profit1 • Cash Flow from Operations was $8.8M or an 18.5% margin and Free Cash Flow1 was $6.6M or a 13.9% margin1 • Deployed $4.7M to repurchase over 1.0M shares at an average price of $4.50 per share
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4 Notes: 1. Free Cash Flow Margin is a non-GAAP financial measure. Reconciliations to GAAP financial measures are provided in the appendix. 0% -6% 18% -34% -17% 3% 14% -11% -6% 10% 13% 1% -12% -26% -8% 4% -12% -40% -42% -56% 12% 13% 13% 13% 13% 14% -60% -50% -40% -30% -20% -10% 0% 10% 20% 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 1Q26 2Q26 Telos Quarterly Free Cash Flow Margin1 Since 2020 FINANCIAL PERFORMANCE SUMMARY TRANSFORMATION INTO A CONSISTENT FREE CASH FLOW GENERATOR Revenue Growth, Operating Expense Discipline, and Working Capital Rigor Have Transformed Telos
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5 2026 OUTLOOK 3Q GUIDANCE Notes: 1. Cash Gross Margin, Adjusted Operating Expenses, Adjusted EBITDA, and Adjusted EBITDA Marginare 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 Marginare not available without unreasonable effort. Forecasting Sequential Revenue Growth in 3Q Guidance Assumptions 3Q 2026 Low End $49.2M -4% YoY 3Q 2026 High End $50.6M -2% YoY $6.0M 12.2% Margin1 $6.8M 13.4% Margin1 Revenue Adjusted EBITDA1 Guidance 3Q Assumptions • Revenue forecasted to be up 3% to 6% sequentially (down 3% YoY at the midpoint; up 6% YoY excluding the impact of unusually high non-recurring revenue in 3Q25) • Cash Gross Margin1 approximately 37.5% to 38.5%, down sequentially and YoY due to normal fluctuations in revenue mix and contingency reserves on fixed price contracts • Adjusted Operating Expenses1 approximately flat sequentially (and $0.4M lower YoY) due to ongoing expense management
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6 2026 OUTLOOK UPDATED VS. PRIOR FY GUIDANCE Notes: 1. Cash Gross Margin, Adjusted Operating Expenses, Adjusted EBITDA, and Adjusted EBITDA Marginare 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 Marginare not available without unreasonable effort. Raising Full Year AdjustedEBITDA Guidance Guidance Assumptions FY 2026 Low End $187M +14% YoY FY 2026 High End $195M +18% YoY $23.6M 12.6% Margin1 $28.6M 14.7% Margin1 Revenue Adjusted EBITDA1 Updated Guidance Updates to Full-Year Guidance Assumptions • Starting in the fourth quarter, we expect the resale of single-digit gross margin third-party software to begin phasing-out • Revenue reduced by $2.5M at the midpoint of guidance vs. prior guidance • Cash Gross Margin1 raised to 39.0% to 40.0%, up from 38.2% to 39.5% assumed in prior guidance • Adjusted Operating Expenses1 improved by $1.7M compared to prior guidance assumptions • Adjusted EBITDA1 raised to a range of $23.6M to $28.6M, up $1.8M at the midpoint compared to prior guidance • Adjusted EBITDA Margin1 raised to a range of 12.6% to 14.7%, up 115 basis points at the midpoint compared to prior guidance $187M +14% YoY $200M +21% YoY $20.6M 11.0% Margin1 $28.0M 14.0% Margin1 Revenue Adjusted EBITDA1 FY 2026 Low End FY 2026 High End Prior Guidance
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7 SUMMARY Exceeded 2Q Revenue, Margin, and Adjusted EBITDA Forecasts Generated FCF Margin1 of 13.9% in 2Q and 13.6% in 1H, Accelerated Share Repurchases in 2Q Revenue Growth, Operating Expense Discipline and Working Capital Rigor Have Enabled Consistent Quarterly Cash Generation Robust Pipeline of Submitted and Pending Proposals Awaiting Final Award Decisions Raising Full Year Adjusted EBITDA Guidance Notes: 1. Free Cash Flow Margin is a non-GAAP financial measure. Reconciliations to GAAP financial measures are provided in the appendix.
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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 correspond 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 FINANCIAL PERFORMANCE SUMMARY 2Q AND 1H YEAR-OVER-YEAR COMPARISON Notes: 1. Cash Gross Margin, Cash Gross Profit, Adjusted Operating Expenses, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, and Free Cash Flow Margin are non-GAAP financial measures. Reconciliations to GAAP financial measures are provided in the appendix. Continued Year-Over-Year Improvement in Key Financial Metrics Free Cash Flow1GAAP Gross ProfitRevenue Adjusted EBITDA1 Free Cash Flow1GAAP Gross ProfitRevenue Adjusted EBITDA1 • Revenue: Security Solutions up 44% to $46.7M due to expansion within the Telos ID portfolio. Secure Networks down 69% to $1.1M due to the successful completion of certain programs as expected. • Gross Profit: GAAP Gross Profit up $4.8M primarily due to higher Revenue. GAAP GM up 178 bps and Cash GM1 up 229 bps, both primarily due to more favorable mix. SS revenue increased from 90% of total company revenue in 2Q25 to 98% in 2Q26. • Adjusted EBITDA1: Up $6.5M to $6.9M; Higher Cash Gross Profit1 (primarily due to higher Revenue) and lower Adjusted Operating Expenses1 excluding depreciation and amortization due to ongoing cost discipline and restructuring. • Free Cash Flow1: Total company up $2.0M due to improved revenue and profitability. FCF margin1 was 13.9%. • Capital Deployment: Deployed $4.7M to repurchase over 1.0M shares at an average price of $4.50 per share. YoY Commentary 2Q YoY1H YoY • Revenue: Security Solutions up 59% to $92.6M due to expansion within the Telos ID portfolio. Secure Networks down 66% to $2.9M due to the successful completion of certain programs as expected. • Gross Profit: GAAP Gross Profit up $10.0M due to higher Revenue. GAAP GM down 54 bps and Cash GM1 down 9 bps primarily due to higher non-cash infrastructure costs. SS revenue increased from 88% of total company revenue in 1H25 to 97% in 1H26. • Adjusted EBITDA1: Up $14.0M to $14.7M; Higher Cash Gross Profit1 (due to higher Revenue) and lower Adjusted Operating Expenses1 excluding depreciation and amortization due to ongoing cost discipline and restructuring. • Free Cash Flow1: Total company up $4.6M due to improved revenue and profitability. FCF margin1 was 13.6%. • Capital Deployment: Deployed $6.9M to repurchase 1.6M shares at an average price of $4.42 per share. YoY Commentary $11.9M $16.7M 2Q25 2Q26 $36.0M $47.7M 2Q25 2Q26 $0.4M $6.9M 2Q25 2Q26 $4.6M $6.6M 2Q25 2Q26 $66.6M $95.5M 1H25 1H26 $8.4M $13.0M 1H25 1H26 $24.1M $34.1M 1H25 1H26 33.2% GAAP GM 38.4% Cash GM1 35.0% GAAP GM 40.6% Cash GM1 36.2% GAAP GM 41.6% Cash GM1 35.7% GAAP GM 41.5% Cash GM1 12.6% Free Cash Flow Margin1 13.6% Free Cash Flow Margin1 12.9% Free Cash Flow Margin1 13.9% Free Cash Flow Margin1 UP 33% UP 40% UP $6.5M UP $2.0M UP 43% UP 41% UP $14.0M UP $4.6M $0.7M $14.7M 1H25 1H26 1.1% Adjusted EBITDA Margin1 14.4% Adjusted EBITDA Margin1 1.1% Adjusted EBITDA Margin1 15.4% Adjusted EBITDA Margin1
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11 2026 OUTLOOK 2026 3Q ADDITIONAL MODELING ASSUMPTIONS Stock Based Compensation (SBC) Depreciation & Amortization Weighted Average Share Count for EPS Tax Rate CAPEX & Capitalized Software Cash Operating Expenses1 GAAP Gross Margin Adjusted Operating Expenses1 • Down YoY due to ongoing expense management • See Cash GM1 commentary below 2026E 3Q Commentary2025 3Q $9.4M $3.2M 72.6M (Basic) / 75.6M (Diluted) (1.0%) $2.5M $15.0M 39.9% • Not meaningful 2026E 3Q ~$3.7M ~$3.4M ~74.8M (Basic) / ~77.1M (Diluted) - ~$2.1M ~$14.4M ~32.0% - 33.0% • ~24% is included in Adjusted Operating Expenses1 in 3Q26 • ~$0.2M in COS in 3Q26 • Primarily down YoY due to lower spend as indicated above; Partially offset by lower capitalization of software development costs$13.8M ~$13.4M Cash Gross Margin1 44.8% ~37.5% - 38.5% • SS and SN down YoY • More favorable revenue mix between SS and SN (SS 98% vs. 90% in 3Q25) • 3Q26 CAPEX ~$0.3M Notes: 1. Cash Gross Margin, Cash Operating Expenses, and Adjusted Operating Expenses are non-GAAP financial measures. Reconciliations to the historical non-GAAP financial measures are provided in the appendix. The Company has not provided reconciliations to the most directly comparable GAAP measures to the 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, Cash Operating Expenses, and Adjusted Operating Expenses are not available without unreasonable effort. • Basic shares are used when the profitability metric is in a net loss position and diluted shares are used when in a net profit position; 2026 excludes any benefit due to future share repurchases
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12 2026 OUTLOOK 2026 FY ADDITIONAL MODELING ASSUMPTIONS Stock Based Compensation (SBC) Depreciation & Amortization Weighted Average Share Count for EPS Tax Rate CAPEX & Capitalized Software Cash Operating Expenses1 GAAP Gross Margin Adjusted Operating Expenses1 • Down YoY due to ongoing expense management • See Cash GM1 commentary below 2026E FY Commentary2026E Full Year 2025 Full Year 37.0% ~$13.6M$30.2M ~$13.8M$11.5M ~74.6M (Basic) / ~77.4M (Diluted) 72.9M (Basic) / 77.1M (Diluted) -1.8% ~$8.6M$8.9M ~$56.7M$60.3M ~33.0% - 34.0% • Not meaningful • ~24% is included in Adjusted Operating Expenses1 in FY26 • ~$0.9M in COS in FY26 • Primarily down YoY due to lower spend as indicated above; Partially offset by lower capitalization of software development costs~$52.4M$55.5M Cash Gross Margin1 42.7% ~39.0% - 40.0% • SS down YoY; SN slightly down to up YoY • More favorable revenue mix between SS and SN (SS 98% vs. 91% for FY25) • FY26 CAPEX ~$1.0M • Basic shares are used when the profitability metric is in a net loss position and diluted shares are used when in a net profit position; 2026 excludes any benefit due to future share repurchases Notes: 1. Cash Gross Margin, Cash Operating Expenses, and Adjusted Operating Expenses are non-GAAP financial measures. Reconciliations to the historical non-GAAP financial measures are provided in the appendix. The Company has not provided reconciliations to the most directly comparable GAAP measures to the forward-looking non-GAAP financial measures because certain items are out of the Company’s control or cannot be reasonably predicted. Accordingly, reconciliations of forward-looking Cash Gross Margin, Cash Operating Expenses, and Adjusted Operating Expenses are not available without unreasonable effort.
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13 2026 RESULTS GAAP AND ADJUSTED 1H RESULTS (Amounts in thousands, unaudited) GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted Revenue Security Solutions 45,970$ -$ -$ 45,970$ 46,662$ -$ -$ 46,662$ 92,632$ -$ -$ 92,632$ 25,818$ -$ -$ 25,818$ 32,474$ -$ -$ 32,474$ 58,292$ -$ -$ 58,292$ Secure Networks 1,772 - - 1,772 1,083 - - 1,083 2,855 - - 2,855 4,798 - - 4,798 3,494 - - 3,494 8,292 - - 8,292 Total 47,742 - - 47,742 47,745 - - 47,745 95,487 - - 95,487 30,616 - - 30,616 35,968 - - 35,968 66,584 - - 66,584 Gross Profit Security Solutions 16,863 194 - 17,057 16,500 184 - 16,684 33,363 378 - 33,741 11,060 169 - 11,229 11,298 139 - 11,437 22,358 308 - 22,666 Secure Networks 512 22 - 534 192 18 - 210 704 40 - 744 1,122 21 - 1,143 634 10 - 644 1,756 31 - 1,787 Total 17,375 216 - 17,591 16,692 202 - 16,894 34,067 418 - 34,485 12,182 190 - 12,372 11,932 149 - 12,081 24,114 339 - 24,453 Gross Margin Security Solutions 36.7% 0.4% 0.0% 37.1% 35.4% 0.4% 0.0% 35.8% 36.0% 0.4% 0.0% 36.4% 42.8% 0.7% 0.0% 43.5% 34.8% 0.4% 0.0% 35.2% 38.4% 0.5% 0.0% 38.9% Secure Networks 28.9% 1.3% 0.0% 30.2% 17.7% 1.7% 0.0% 19.4% 24.7% 1.4% 0.0% 26.1% 23.4% 0.4% 0.0% 23.8% 18.1% 0.3% 0.0% 18.4% 21.2% 0.4% 0.0% 21.6% Total 36.4% 0.5% 0.0% 36.8% 35.0% 0.4% 0.0% 35.4% 35.7% 0.4% 0.0% 36.1% 39.8% 0.6% 0.0% 40.4% 33.2% 0.4% 0.0% 33.6% 36.2% 0.5% 0.0% 36.7% Operating Expenses Research and Development 1,357 219 - 1,138 1,345 232 - 1,113 2,702 451 - 2,251 1,571 40 - 1,531 1,512 244 - 1,268 3,083 284 - 2,799 Selling, General and Administrative 14,563 2,536 - 12,027 15,037 2,779 - 12,258 29,600 5,315 - 24,285 19,633 6,818 - 12,815 20,303 7,364 - 12,939 39,936 14,182 - 25,754 Total 15,920 2,755 - 13,165 16,382 3,011 - 13,371 32,302 5,766 - 26,536 21,204 6,858 - 14,346 21,815 7,608 - 14,207 43,019 14,466 - 28,553 EBIT / Operating (Loss)/Income 1,455 2,971 - 4,426 310 3,213 - 3,523 1,765 6,184 - 7,949 (9,022) 7,048 - (1,974) (9,883) 7,757 - (2,126) (18,905) 14,805 - (4,100) Interest Expense (111) - - (111) (107) - - (107) (218) - - (218) (147) - - (147) (141) - - (141) (288) - - (288) Other Income 697 - (697) - 501 - (501) - 1,198 - (1,198) - 561 - (561) - 553 - (553) - 1,114 - (1,114) - Earnings Before Taxes (EBT) 2,041 2,971 (697) 4,315 704 3,213 (501) 3,416 2,745 6,184 (1,198) 7,731 (8,608) 7,048 (561) (2,121) (9,471) 7,757 (553) (2,267) (18,079) 14,805 (1,114) (4,388) Benefit from (Provision for) Income Taxes (18) - - (18) (44) - - (44) (62) - - (62) 4 - - 4 (46) - - (46) (42) - - (42) Net (Loss)/Income 2,023$ 2,971$ (697)$ 4,297$ 660$ 3,213$ (501)$ 3,372$ 2,683$ 6,184$ (1,198)$ 7,669$ (8,604)$ 7,048$ (561)$ (2,117)$ (9,517)$ 7,757$ (553)$ (2,313)$ (18,121)$ 14,805$ (1,114)$ (4,430)$ Share Count - Basic 73,822 73,822 73,822 73,822 74,895 74,895 74,895 74,895 74,361 74,361 74,361 74,361 72,715 72,715 72,715 72,715 73,163 73,163 73,163 73,163 72,940 72,940 72,940 72,940 Share Count - Diluted 77,615 77,615 77,615 77,615 77,547 77,547 77,547 77,547 77,576 77,576 77,576 77,576 72,715 72,715 72,715 72,715 73,163 73,163 73,163 73,163 72,940 72,940 72,940 72,940 EPS - Basic 0.03$ 0.04$ (0.01)$ 0.06$ 0.01$ 0.04$ (0.01)$ 0.05$ 0.04$ 0.08$ (0.02)$ 0.10$ (0.12)$ 0.10$ (0.01)$ (0.03)$ (0.13)$ 0.11$ (0.01)$ (0.03)$ (0.25)$ 0.20$ (0.02)$ (0.06)$ EPS - Diluted 0.03$ 0.04$ (0.01)$ 0.06$ 0.01$ 0.04$ (0.01)$ 0.04$ 0.03$ 0.08$ (0.02)$ 0.10$ (0.12)$ 0.10$ (0.01)$ (0.03)$ (0.13)$ 0.11$ (0.01)$ (0.03)$ (0.25)$ 0.20$ (0.02)$ (0.06)$ Net (Loss)/Income 2,023$ 2,971$ (697)$ 4,297$ 660$ 3,213$ (501)$ 3,372$ 2,683$ 6,184$ (1,198)$ 7,669$ (8,604)$ 7,048$ (561)$ (2,117)$ (9,517)$ 7,757$ (553)$ (2,313)$ (18,121)$ 14,805$ (1,114)$ (4,430)$ Other Income (697) - 697 - (501) - 501 - (1,198) - 1,198 - (561) - 561 - (553) - 553 - (1,114) - 1,114 - Interest Expense 111 - - 111 107 - - 107 218 - - 218 147 - - 147 141 - - 141 288 - - 288 (Benefit from) Provision for Income Taxes 18 - - 18 44 - - 44 62 - - 62 (4) - - (4) 46 - - 46 42 - - 42 Depreciation & Amortization 3,429 - - 3,429 3,347 - - 3,347 6,776 - - 6,776 2,336 - - 2,336 2,509 - - 2,509 4,845 - - 4,845 EBITDA 4,884$ 2,971$ -$ 7,855$ 3,657$ 3,213$ -$ 6,870$ 8,541$ 6,184$ -$ 14,725$ (6,686)$ 7,048$ -$ 362$ (7,374)$ 7,757$ -$ 383$ (14,060)$ 14,805$ -$ 745$ Net cash provided by (used) in operating activities 8,656$ 8,833$ 17,489$ 6,106$ 6,950$ 13,056$ Capitalized Software Development Costs (2,132) (1,970) (4,102) (2,214) (2,187) (4,401) Purchase of Property and Equipment (145) (246) (391) (123) (134) (257) Free Cash Flow 6,379$ 6,617$ 12,996$ 3,769$ 4,629$ 8,398$ 2025 Three Months Ended March 31, 2026 Three Months Ended June 30, 2026 Six Months Ended June 30, 2026 Three Months Ended June 30, 2025 Six Months Ended June 30, 2025Three Months Ended March 31, 2025 2026
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14 2025 RESULTS GAAP AND ADJUSTED FULL YEAR 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 Impairment Restructure Adj* Adjusted GAAP SBC Other Inc Impairment Restructure Adj* Adjusted Revenue Security Solutions 25,818$ -$ -$ 25,818$ 32,474$ -$ -$ 32,474$ 46,478$ -$ -$ -$ 46,478$ 44,830$ -$ -$ -$ -$ -$ 44,830$ 149,600$ -$ -$ -$ -$ -$ 149,600$ Secure Networks 4,798 - - 4,798 3,494 - - 3,494 4,966 - - - 4,966 1,947 - - - - - 1,947 15,205 - - - - - 15,205 Total 30,616 - - 30,616 35,968 - - 35,968 51,444 - - - 51,444 46,777 - - - - - 46,777 164,805 - - - - - 164,805 Gross Profit Security Solutions 11,060 169 - 11,229 11,298 139 - 11,437 19,286 142 - - 19,428 15,915 144 - - 401 - 16,460 57,559 594 - - 401 - 58,554 Secure Networks 1,122 21 - 1,143 634 10 - 644 1,260 12 - - 1,272 442 15 - - 93 - 550 3,458 58 - - 93 - 3,609 Total 12,182 190 - 12,372 11,932 149 - 12,081 20,546 154 - - 20,700 16,357 159 - - 494 - 17,010 61,017 652 - - 494 - 62,163 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% 35.5% 0.3% 0.0% 0.0% 0.9% 0.0% 36.7% 38.5% 0.4% 0.0% 0.0% 0.3% 0.0% 39.1% 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% 0.8% 0.0% 0.0% 4.8% 0.0% 28.2% 22.7% 0.4% 0.0% 0.0% 0.6% 0.0% 23.7% 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% 35.0% 0.3% 0.0% 0.0% 1.1% 0.0% 36.4% 37.0% 0.4% 0.0% 0.0% 0.3% 0.0% 37.7% Operating Expenses Research and Development 1,571 40 - 1,531 1,512 244 - 1,268 1,899 421 - - 1,478 2,075 533 - - 150 - 1,392 7,057 1,238 - - 150 - 5,669 Selling, General and Administrative 19,633 6,818 - 12,815 20,303 7,364 - 12,939 21,115 8,813 - - 12,302 17,874 5,265 - - 857 - 11,752 78,925 28,260 - - 857 - 49,808 Goodwill Impairment - - - - - - - - - - - - - 14,916 - - 14,916 - - - 14,916 - - 14,916 - - - Total 21,204 6,858 - 14,346 21,815 7,608 - 14,207 23,014 9,234 - - 13,780 34,865 5,798 - 14,916 1,007 - 13,144 100,898 29,498 - 14,916 1,007 - 55,477 EBIT / Operating (Loss)/Income (9,022) 7,048 - (1,974) (9,883) 7,757 - (2,126) (2,468) 9,388 - - 6,920 (18,508) 5,957 - 14,916 1,501 - 3,866 (39,881) 30,150 - 14,916 1,501 - 6,686 Interest Expense (147) - - (147) (141) - - (141) (136) - - - (136) (129) - - - - - (129) (553) - - - - - (553) Other Income 561 - (561) - 553 - (553) - 511 - (511) - - 1,600 - (1,600) - - - - 3,225 - (3,225) - - - - 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 (17,037) 5,957 (1,600) 14,916 1,501 - 3,737 (37,209) 30,150 (3,225) 14,916 1,501 - 6,133 Benefit from (Provision for) Income Taxes 4 - - 4 (46) - - (46) (21) - - - (21) 726 - - - - - 726 663 - - - - - 663 Net (Loss)/Income (8,604)$ 7,048$ (561)$ (2,117)$ (9,517)$ 7,757$ (553)$ (2,313)$ (2,114)$ 9,388$ (511)$ -$ 6,763$ (16,311)$ 5,957$ (1,600)$ 14,916$ 1,501$ -$ 4,463$ (36,546)$ 30,150$ (3,225)$ 14,916$ 1,501$ -$ 6,796$ 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 73,053 73,053 73,053 73,053 73,053 - 73,053 72,878 72,878 72,878 72,878 72,878 - 72,878 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 73,053 73,053 73,053 73,053 73,053 5,136 78,189 72,878 72,878 72,878 72,878 72,878 4,253 77,131 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$ (0.22)$ 0.08$ (0.02)$ 0.20$ 0.02$ -$ 0.06$ (0.50)$ 0.41$ (0.04)$ 0.20$ 0.02$ -$ 0.09$ EPS - Diluted (0.12)$ 0.10$ (0.01)$ (0.03)$ (0.13)$ 0.11$ (0.01)$ (0.03)$ (0.03)$ 0.13$ (0.01)$ -$ 0.09$ (0.22)$ 0.08$ (0.02)$ 0.20$ 0.02$ -$ 0.06$ (0.50)$ 0.41$ (0.04)$ 0.20$ 0.02$ -$ 0.09$ Net (Loss)/Income (8,604)$ 7,048$ (561)$ (2,117)$ (9,517)$ 7,757$ (553)$ (2,313)$ (2,114)$ 9,388$ (511)$ -$ 6,763$ (16,311)$ 5,957$ (1,600)$ 14,916$ 1,501$ -$ 4,463$ (36,546)$ 30,150$ (3,225)$ 14,916$ 1,501$ -$ 6,796$ Other Income (561) - 561 - (553) - 553 - (511) - 511 - - (1,600) - 1,600 - - - - (3,225) - 3,225 - - - - Interest Expense 147 - - 147 141 - - 141 136 - - - 136 129 - - - - - 129 553 - - - - - 553 (Benefit from) Provision for Income Taxes (4) - - (4) 46 - - 46 21 - - - 21 (726) - - - - - (726) (663) - - - - - (663) Depreciation & Amortization 2,336 - - 2,336 2,509 - - 2,509 3,177 - - - 3,177 3,429 - - - - - 3,429 11,451 - - - - - 11,451 EBITDA (6,686)$ 7,048$ -$ 362$ (7,374)$ 7,757$ -$ 383$ 709$ 9,388$ -$ -$ 10,097$ (15,079)$ 5,957$ -$ 14,916$ 1,501$ -$ 7,295$ (28,430)$ 30,150$ -$ 14,916$ 1,501$ -$ 18,137$ Net cash provided by (used) in operating activities 6,106$ 6,950$ 9,146$ 7,980$ 30,182$ Capitalized Software Development Costs (2,214) (2,187) (2,095) (1,680) (8,176) Purchase of Property and Equipment (123) (134) (452) (30) (739) Free Cash Flow 3,769$ 4,629$ 6,599$ 6,270$ 21,267$ *Adjusted for potentially dilutive shares due to adjusted net income 2025 Three Months Ended March 31, 2025 Three Months Ended June 30, 2025 Three Months Ended September 30, 2025 Three Months Ended December 31, 2025 Twelve Months Ended December 31, 2025
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15 2026 RESULTS CASH GROSS PROFIT & CASH GROSS MARGIN 1H RESULTS (Amounts in thousands, unaudited) Three Months Ended Three Months Ended Six Months Ended Three Months Ended Three Months Ended Six Months Ended March 31, 2026 June 30, 2026 June 30, 2026 March 31, 2025 June 30, 2025 June 30, 2025 Revenue Security Solutions 45,970$ 46,662$ 92,632$ 25,818$ 32,474$ 58,292$ Secure Networks 1,772 1,083 2,855 4,798 3,494 8,292 Total 47,742$ 47,745$ 95,487$ 30,616$ 35,968$ 66,584$ GAAP Gross Profit Security Solutions 16,863$ 16,500$ 33,363$ 11,060$ 11,298$ 22,358$ Secure Networks 512 192 704 1,122 634 1,756 Total 17,375$ 16,692$ 34,067$ 12,182$ 11,932$ 24,114$ GAAP Gross Margin Security Solutions 36.7% 35.4% 36.0% 42.8% 34.8% 38.4% Secure Networks 28.9% 17.7% 24.7% 23.4% 18.1% 21.2% Total 36.4% 35.0% 35.7% 39.8% 33.2% 36.2% Stock Based Compensation - Cost of Sales Security Solutions 194$ 184$ 378$ 169$ 139$ 308$ Secure Networks 22 18 40 21 10 31 Total 216$ 202$ 418$ 190$ 149$ 339$ Adjusted Gross Profit Security Solutions 17,057$ 16,684$ 33,741$ 11,229$ 11,437$ 22,666$ Secure Networks 534 210 744 1,143 644 1,787 Total 17,591$ 16,894$ 34,485$ 12,372$ 12,081$ 24,453$ Adjusted Gross Margin Security Solutions 37.1% 35.8% 36.4% 43.5% 35.2% 38.9% Secure Networks 30.1% 19.4% 26.1% 23.8% 18.4% 21.6% Total 36.8% 35.4% 36.1% 40.4% 33.6% 36.7% Depreciation & Amortization - Cost of Sales Security Solutions 2,593$ 2,511$ 5,104$ 1,501$ 1,714$ 3,215$ Secure Networks 3 3 6 2 1 3 Total 2,596$ 2,514$ 5,110$ 1,503$ 1,715$ 3,218$ Cash Gross Profit Security Solutions 19,650$ 19,195$ 38,845$ 12,730$ 13,151$ 25,881$ Secure Networks 537 213 750 1,145 645 1,790 Total 20,187$ 19,408$ 39,595$ 13,875$ 13,796$ 27,671$ Cash Gross Margin Security Solutions 42.7% 41.1% 41.9% 49.3% 40.5% 44.4% Secure Networks 30.3% 19.7% 26.3% 23.9% 18.5% 21.6% Total 42.3% 40.6% 41.5% 45.3% 38.4% 41.6% 2026 2025
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16 2025 RESULTS CASH GROSS PROFIT & CASH GROSS MARGIN FULL YEAR RESULTS (Amounts in thousands, unaudited) Twelve Months Ended March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 December 31, 2025 Revenue Security Solutions 25,818$ 32,474$ 46,478$ 44,830$ 149,600$ Secure Networks 4,798 3,494 4,966 1,947 15,205 Total 30,616$ 35,968$ 51,444$ 46,777$ 164,805$ GAAP Gross Profit Security Solutions 11,060$ 11,298$ 19,286$ 15,915$ 57,559$ Secure Networks 1,122 634 1,260 442 3,458 Total 12,182$ 11,932$ 20,546$ 16,357$ 61,017$ GAAP Gross Margin Security Solutions 42.8% 34.8% 41.5% 35.5% 38.5% Secure Networks 23.4% 18.1% 25.4% 22.7% 22.7% Total 39.8% 33.2% 39.9% 35.0% 37.0% Stock Based Compensation - Cost of Sales Security Solutions 169$ 139$ 142$ 144$ 594$ Secure Networks 21 10 12 15 58 Total 190$ 149$ 154$ 159$ 652$ Impairment - Cost of Sales Security Solutions -$ -$ -$ -$ -$ Secure Networks - - - - - Total -$ -$ -$ -$ -$ Restructuring Costs - Cost of Sales Security Solutions -$ -$ -$ 401$ 401$ Secure Networks - - - 93 93 Total -$ -$ -$ 494$ 494$ Adjusted Gross Profit Security Solutions 11,229$ 11,437$ 19,428$ 16,460$ 58,554$ Secure Networks 1,143 644 1,272 550 3,609 Total 12,372$ 12,081$ 20,700$ 17,010$ 62,163$ Adjusted Gross Margin Security Solutions 43.5% 35.2% 41.8% 36.7% 39.1% Secure Networks 23.8% 18.4% 25.6% 28.2% 23.7% Total 40.4% 33.6% 40.2% 36.4% 37.7% Depreciation & Amortization - Cost of Sales Security Solutions 1,501$ 1,714$ 2,354$ 2,605$ 8,174$ Secure Networks 2 1 2 2 7 Total 1,503$ 1,715$ 2,356$ 2,607$ 8,181$ Cash Gross Profit Security Solutions 12,730$ 13,151$ 21,782$ 19,065$ 66,728$ Secure Networks 1,145 645 1,274 552 3,616 Total 13,875$ 13,796$ 23,056$ 19,617$ 70,344$ Cash Gross Margin Security Solutions 49.3% 40.5% 46.9% 42.5% 44.6% Secure Networks 23.9% 18.5% 25.7% 28.4% 23.8% Total 45.3% 38.4% 44.8% 41.9% 42.7% 2025 Three Months Ended Twelve Months Ended March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 December 31, 2025 Revenue Security Solutions 25,818$ 32,474$ 46,478$ 44,830$ 149,600$ Secure Networks 4,798 3,494 4,966 1,947 15,205 Total 30,616$ 35,968$ 51,444$ 46,777$ 164,805$ GAAP Gross Profit Security Solutions 11,060$ 11,298$ 19,286$ 15,915$ 57,559$ Secure Networks 1,122 634 1,260 442 3,458 Total 12,182$ 11,932$ 20,546$ 16,357$ 61,017$ GAAP Gross Margin Security Solutions 42.8% 34.8% 41.5% 35.5% 38.5% Secure Networks 23.4% 18.1% 25.4% 22.7% 22.7% Total 39.8% 33.2% 39.9% 35.0% 37.0% Stock Based Compensation - Cost of Sales Security Solutions 169$ 139$ 142$ 144$ 594$ Secure Networks 21 10 12 15 58 Total 190$ 149$ 154$ 159$ 652$ Impairment - Cost of Sales Security Solutions -$ -$ -$ -$ -$ Secure Networks - - - - - Total -$ -$ -$ -$ -$ Restructuring Costs - Cost of Sales Security Solutions -$ -$ -$ 401$ 401$ Secure Networks - - - 93 93 Total -$ -$ -$ 494$ 494$ Adjusted Gross Profit Security Solutions 11,229$ 11,437$ 19,428$ 16,460$ 58,554$ Secure Networks 1,143 644 1,272 550 3,609 Total 12,372$ 12,081$ 20,700$ 17,010$ 62,163$ Adjusted Gross Margin Security Solutions 43.5% 35.2% 41.8% 36.7% 39.1% Secure Networks 23.8% 18.4% 25.6% 28.2% 23.7% Total 40.4% 33.6% 40.2% 36.4% 37.7% Depreciation & Amortization - Cost of Sales Security Solutions 1,501$ 1,714$ 2,354$ 2,605$ 8,174$ Secure Networks 2 1 2 2 7 Total 1,503$ 1,715$ 2,356$ 2,607$ 8,181$ Cash Gross Profit Security Solutions 12,730$ 13,151$ 21,782$ 19,065$ 66,728$ Secure Networks 1,145 645 1,274 552 3,616 Total 13,875$ 13,796$ 23,056$ 19,617$ 70,344$ Cash Gross Margin Security Solutions 49.3% 40.5% 46.9% 42.5% 44.6% Secure Networks 23.9% 18.5% 25.7% 28.4% 23.8% Total 45.3% 38.4% 44.8% 41.9% 42.7% 2025 Three Months Ended
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17 2025 RESULTS GAAP , ADJUSTED, AND CASH OPERATING EXPENSES (Amounts in thousands, unaudited) 2025 Three Months Ended Twelve Months Ended March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 December 31, 2025 Operating Expenses 21,204 21,815 23,014 34,865 100,898 Adjustments [-] Stock-Based Compensation (6,858) (7,608) (9,234) (5,798) (29,498) [-] Restructuring - - - (1,007) (1,007) [-] Impairment Expenses - - - (14,916) (14,916) Adjusted Operating Expenses (Adjusted OPEX) 14,346 14,207 13,780 13,144 55,477 [-] Depreciation and Amortization (833) (794) (821) (823) (3,271) [+] Capitalized Software Development Costs 2,270 2,149 2,057 1,579 8,055 Cash Operating Expenses (Cash OPEX) 15,783 15,562 15,016 13,900 60,261
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18 2026 RESULTS FREE CASH FLOW AND FREE CASH FLOW MARGIN (Amounts in thousands, unaudited) March 31, 2026 June 30, 2026 Net cash provided by operating activities 8,656$ 8,833$ Adjustments [-] Capitalized software development costs (2,132) (1,970) [-] Purchases of property and equipment, net (145) (246) Free Cash Flow (Non-GAAP) 6,379 6,617 Revenue 47,742 47,745 Operating cash flow margin 18.1% 18.5% Free cash flow margin (Non-GAAP) 13.4% 13.9% 2026 Three Months Ended
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19 2025 RESULTS FREE CASH FLOW AND FREE CASH FLOW MARGIN (Amounts in thousands, unaudited) March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 Net cash provided by operating activities 6,106$ 6,950$ 9,146$ 7,980$ Adjustments [-] Capitalized software development costs (2,214) (2,187) (2,095) (1,680) [-] Purchases of property and equipment, net (123) (134) (452) (30) Free Cash Flow (Non-GAAP) 3,769 4,629 6,599 6,270 Revenue 30,616 35,968 51,444 46,777 Operating cash flow margin 19.9% 19.3% 17.8% 17.1% Free cash flow margin (Non-GAAP) 12.3% 12.9% 12.8% 13.4% Three Months Ended 2025
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20 2024 RESULTS FREE CASH FLOW AND FREE CASH FLOW MARGIN (Amounts in thousands, unaudited) March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 Net cash used in operating activities (350)$ (7,990)$ (7,080)$ (10,518)$ Adjustments [-] Capitalized software development costs (3,202) (3,113) (2,789) (2,401) [-] Purchases of property and equipment, net (97) (235) (49) (1,871) Free Cash Flow (Non-GAAP) (3,649) (11,338) (9,918) (14,790) Revenue 29,619 28,498 23,783 26,372 Operating cash flow margin -1.2% -28.0% -29.8% -39.9% Free cash flow margin (Non-GAAP) -12.3% -39.8% -41.7% -56.1% 2024 Three Months Ended
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21 2023 RESULTS FREE CASH FLOW AND FREE CASH FLOW MARGIN (Amounts in thousands, unaudited)
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22 2022 RESULTS FREE CASH FLOW AND FREE CASH FLOW MARGIN (Amounts in thousands, unaudited)
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23 2021 RESULTS FREE CASH FLOW AND FREE CASH FLOW MARGIN (Amounts in thousands, unaudited) Note: As previously revised
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24 2020 RESULTS FREE CASH FLOW AND FREE CASH FLOW MARGIN (Amounts in thousands, unaudited)
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25 RECONCILIATIONS EBITDA, ADJUSTED EBITDA, EBITDA MARGIN, ADJUSTED EBITDA MARGIN, INCREMENTAL ADJUSTED EBITDA, AND INCREMENTAL ADJUSTED EBITDA MARGIN (Amounts in thousands, unaudited) (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 $1.9 million and $3.7 million for the three and six months ended June 30, 2026, respectively, and $6.8 million and $12.3 million, for the three and six months ended June 30, 2025, respectively. Stock-based compensation expense from other sources was $1.3 million and $2.5 million for the three and six months ended June 30, 2026, respectively, and $1.0 million and $2.5 million for the three and six months ended June 30, 2025, 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. For the Three Months Ended For the Six Months Ended June 30, 2026 June 30, 2025 Year-over-Year Change June 30, 2026 June 30, 2025 Year-over-Year Change Amount Margin Amount Margin Amount Margin Amount Margin Amount Margin Amount Margin Net income (loss) $ 660 1.4% $ (9,517) (26.5 %) $ 10,177 86.4 % $ 2,683 2.8 % $ (18,121) (27.2 %) $ 20,804 72.0 % Other income (501) (1.0)% (553) (1.5 %) 52 0.5 % (1,198) (1.3 %) (1,114) (1.7 %) (84) (0.3 %) Interest expense 107 0.2% 141 0.4 % (34) (0.3 %) 218 0.2 % 288 0.4 % (70) (0.3 %) Provision for income taxes 44 0.1% 46 0.1 % (2) — % 62 0.1 % 42 0.1 % 20 0.1 % Depreciation and amortization 3,347 7.0% 2,509 7.0 % 838 7.1 % 6,776 7.1 % 4,845 7.3 % 1,931 6.7 % EBITDA (Non-GAAP) 3,657 7.7% (7,374) (20.5 %) 11,031 93.7 % 8,541 8.9 % (14,060) (21.1 %) 22,601 78.2 % Stock-based compensation expense (1) 3,213 6.7% 7,757 21.6 % (4,544) (38.6 %) 6,184 6.5 % 14,805 22.2 % (8,621) (29.8 %) Adjusted EBITDA (Non-GAAP) $ 6,870 14.4% $ 383 1.1 % $ 6,487 55.1 % $ 14,725 15.4 % $ 745 1.1 % $ 13,980 48.4 % Revenue $ 47,745 $ 35,968 $ 11,777 $ 95,487 $ 66,584 $ 28,903
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26 RECONCILIATIONS ADJUSTED NET INCOME (LOSS) AND ADJUSTED EPS (Amounts in thousands except per share data, unaudited) (1) The stock-based compensation expense to net income (loss) 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 $1.9 million and $3.7 million for the three and six months ended June 30, 2026, respectively, and $6.8 million and $12.3 million for the three and six months ended June 30, 2025, respectively. Stock-based compensation expense from other sources was $1.3 million and $2.5 million for the threeand six months ended June 30, 2026, respectively and $1.0 million and $2.5 million for the three and six months ended June 30, 2025, 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 stockor 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). For the Three Months Ended For the Six Months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 (in thousands, except per share data) Net income (loss) $ 660 $ (9,517) $ 2,683 $ (18,121) Adjustments: Other income (501) (553) $ (1,198) $ (1,114) Stock-based compensation expense(1) 3,213 7,757 $ 6,184 $ 14,805 Adjusted net income (loss) (Non-GAAP) $ 3,372 $ (2,313) $ 7,669 $ (4,430) Earnings (loss) per share, diluted $ 0.01 $ (0.13) $ 0.03 $ (0.25) Adjustments: Other income (0.01) (0.01) (0.01) (0.01) Stock-based compensation expense(1) 0.04 0.11 0.08 0.20 Adjusted earnings (loss) per share, diluted (Non-GAAP) $ 0.04 $ (0.03) $ 0.10 $ (0.06) Weighted-average shares to compute GAAP earnings (loss) per share, diluted 77,547 73,163 77,576 72,940 Weighted-average shares to compute non-GAAP earnings (loss) per share, diluted 77,547 73,163 77,576 72,940
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27 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 Six Months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Amount Margin Amount Margin Amount Margin Amount Margin Gross profit $ 16,692 35.0 % $ 11,932 33.2 % $ 34,067 35.7 % $ 24,114 36.2 % Adjustments: Stock-based compensation expense — cost of sales 202 0.4 % 149 0.4 % 418 0.4 % 339 0.5 % Adjusted gross profit (Non-GAAP) 16,894 35.4 % 12,081 33.6 % 34,485 36.1 % 24,453 36.7 % Depreciation and amortization — cost of sales 2,514 5.2 % 1,715 4.8 % 5,110 5.4 % 3,218 4.9 % Cash gross profit (Non-GAAP) $ 19,408 40.6 % $ 13,796 38.4 % $ 39,595 41.5 % $ 27,671 41.6 %
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28 RECONCILIATIONS FREE CASH FLOW AND FREE CASH FLOW MARGIN (Amounts in thousands, unaudited) For the Three Months Ended For the Six Months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Net cash provided by operating activities $ 8,833 $ 6,950 $ 17,489 $ 13,056 Adjustments: Capitalized software development costs (1,970) (2,187) (4,102) (4,401) Purchases of property and equipment (246) (134) (391) (257) Free cash flow (Non-GAAP) $ 6,617 $ 4,629 $ 12,996 $ 8,398 Revenue $ 47,745 $ 35,968 $ 95,487 $ 66,584 Operating cash flow margin 18.5 % 19.3 % 18.3 % 19.6 % Free cash flow margin (Non-GAAP) 13.9 % 12.9 % 13.6 % 12.6 %
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29 RECONCILIATIONS ADJUSTED OPERATING EXPENSES AND CASH OPERATING EXPENSES (Amounts in thousands, unaudited) For the Three Months Ended For the Six Months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Operating expenses $ 16,382 $ 21,815 $ 32,302 $ 43,019 Adjustments: Stock-based compensation expense (3,011) (7,608) (5,766) (14,466) Adjusted operating expenses (Non-GAAP) 13,371 14,207 26,536 28,553 Depreciation and amortization (833) (794) (1,666) (1,627) Software R&D capitalized costs 1,945 2,149 3,987 4,419 Cash operating expenses (Non-GAAP) $ 14,483 $ 15,562 $ 28,857 $ 31,345
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Solutions that empower and protect the enterprise. TM Telos Confidential 30