Telos Misses On Q2, Notes Margin Pressure

Telos Corp TLS reported second-quarter FY22 revenue growth of 4% year-on-year to $55.8 million, missing the consensus of $76 million. Services revenue rose 2.6% Y/Y to $50.3 million.
The gross margin contracted by 450 bps to 37.5%. Adjusted EPS of $0.04 missed the consensus of $0.11.
Telos generated $5.4 million in free cash flow in the quarter and held $122.6 million in cash and equivalents.
Telos formed a strategic partnership with International Business Machines Corp IBM and initiated a share buyback program.
Outlook: Telos sees Q3 revenue of $58 million - $62 million, representing (16%) - (10)% change Y/Y.
Telos cut its FY22 revenue from $226 million - $257 million to $226 million – $242 million, representing (7%) - 0% change Y/Y.
Price Action: TLS shares traded higher by 0.57% at $8.87 on the last check Tuesday.