Telos : 4Q23 Earnings Call Presentation

Fourth Quarter and Full Year 2023 Earnings

March 15, 2024

1

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 invest, 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 those filings are available at https://investors.telos.comand 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 may 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 and 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 verified 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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FINANCIAL PERFORMANCE SUMMARY

DELIVERED $41.1M OF REVENUE AND 34.3% GAAP GROSS MARGIN

4Q 2023 Summary

• Delivered $41.1M of revenue vs. guidance of $30M to $34M
• • Security Solutions ("SS") down 32% YoY (vs. guidance of down high-30% to low-30%); Up 4% sequentially; Results in line with guidance
  • Secure Networks ("SN") up 20% YoY (vs. guidance of down low-30% to mid- 20%); Up 25% sequentially; Results exceeded guidance due to a $7.8M product delivery that accelerated from 1Q 2024 (favorable supply chain performance)
• Delivered 34.3% GAAP gross margin ("GM") vs. guidance of 35.1% to 36.4%
• • Excluding the lower-margin accelerated product delivery in SN, GAAP gross margin was 40.0%
  • • Revenue mix was 62% SS, in line with guidance
    • Outperformance in SS due to better than forecasted pricing on a large program
    • Several fixed-price programs in SN outperformed due to cost management
• Below The Line ("BTL") expenses, net of stock based compensation ("SBC") and depreciation and amortization ("D&A") slightly above guidance
• Adjusted EBITDA above high end of guidance range due to better than forecasted gross profit

		FY 2023			4Q 2023			4Q 2023
		Actual			Actual			Guidance
Revenue		$145.4M			$41.1M			$30M to $34M
Revenue					-13% YoY			-37% to -28% YoY
Growth		-33% YoY
			+13% Sequential			-17% to -6% Sequential
GAAP		$52.9M			$14.1M
	36.4% GAAP GM			34.3% GAAP GM			35.1% to 36.4% GAAP GM
Gross Profit
	- 3 bps YoY			-434 bps YoY			-350 to -225 bps YoY
		39.5% Cash GM1			38.0% Cash GM1
Adjusted		($5.4M)			($3.2M)			($6.5M) to ($4.5M)
EBITDA		-3.7% Adj. EBITDA Margin			-7.8% Adj. EBITDA Margin			-21.7% to -13.2%
1			1			1
								Adj. EBITDA Margin1
Adjusted		($0.23)			($0.09)
EPS1

Exceeded High End of Revenue and Adjusted EBITDA Guidance Range

Notes:	3
1. Cash Gross Margin (GM), Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS are non-GAAP financial measures. Reconciliations to GAAP financial measures are provided in the appendix.

FINANCIAL PEROFRMANCE SUMMARY

2023 REVIEW

		Original		Reaffirmed		Raised		Raised		FY 2023
		Guidance		Guidance		Guidance		Guidance
						Actuals
		(4Q22 Earnings Call)		(1Q23 Earnings Call)		(2Q23 Earnings Call)		(3Q23 Earnings Call)
Revenue		$115M - $140M		$115M - $140M		$122M - $137M		$134M - $138M		$145.4M
YoY		-47% to -35%		-47% to -35%		-44% to -37%		-38% to -36%		-33.0%
GAAP										36.4%
	31.5% - 36.5%		31.5% - 36.5%		34.9% - 36.4%		36.8% - 37.0%		-3 bps
Gross Margin
									37.9%
								+35 bps to +60 bps
YoY		-500 bps to Flat		-500 bps to Flat		-150 bps to Flat			+149 bps
									excluding accelerated
										product delivery in 4Q
Adjusted
EBITDA1		($27M) - ($17M)		($27M) - ($17M)		($19M) - ($14M)		($9M) - ($7M)		($5.4M)
Adjusted EBITDA		-23% to -12%		-23% to -12%		-16% to -10%		-7% to -5%		-3.7%
Margin1

FY Performance vs. Original Guidance

• SS revenue
• • $3.6M above midpoint
  • Risk mitigation at low end of guidance range, strong renewal rates in IA and SC, new contract wins in SC, better than expected performance on TSA PreCheck®
• SN revenue
• • $14.2M above midpoint
  • Risk mitigation at low end of guidance range, favorable supply chain performance, and expanded revenues on a large program
• GAAP gross margin outlook improved across portfolio
• • SS above midpoint by 322 bps primarily due to revenue mix
  • SN above midpoint by 430 bps due to strong program and cost management, including accelerated product delivery in 4Q
  • GAAP gross profit up $9.1M at midpoint (Cash gross profit1 up $11.7M)
• BTL (Net of D&A) more favorable than midpoint by ~$5.0M
• • Higher capitalization
  • Disciplined cost management and results of restructuring

Exceeded Original Full Year Revenue and Adjusted EBITDA Guidance

Notes:	4
1. Adjusted EBITDA, Adjusted EBITDA Margin, and Cash Gross Profit are non-GAAP financial measures. Reconciliations to GAAP financial measures are provided in the appendix.

RECENT BUSINESS HIGHLIGHTS

Telos' prime partners received awards on new programs worth up to $525M to Telos' Security Solutions

business over five years, subject to customary protest periods and favorable resolution of protests.

OTHER NOTABLE EVENTS

• Awarded Xacta® renewals include the U.S. Department of Energy and a large federal intelligence agency, as well as new orders and incremental scope on existing contracts from the U.S. Department of the Interior, U.S. Government Publishing Office, multiple other U.S. federal agencies, the Australian government, and a large well-knowncommercial customer in the technology sector.
• Telos AMHS achieved several major contract renewals including with the U.S. Special Operations Command, Intelligence Community Defense Information Systems Agency, and several other U.S. federal government customers.
• Successful delivery and completion of a global satellite communications solution for the U.S. Air Force in Secure Networks.

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2024 OUTLOOK

1Q 2024

		Guidance
		1Q 2024		1Q 2024
		Low End		High End
Revenue		$28M		$29M
	-21% YoY		-18% YoY
Adjusted		($5.5M)		($5.0M)
EBITDA1

Assumptions

• Revenue range primarily driven by risks and opportunities on preexisting programs
• SS revenue assumptions:
• • Down low teens to HSD % YoY (down mid teens to low teens % sequentially)
  • • Primarily driven by expected timing of revenue in Telos ID ("ID") YoY, partially offset by significant growth in TSA PreCheck revenue
• SN revenue assumptions:
• • Down low-30% to high-20% YoY (down high to mid-40% sequentially)
  • • Primarily driven by accelerated product delivery into 4Q 2023
• GAAP gross margin down ~400 bps YoY (approximately flat sequentially); Cash gross margin1 approximately flat:
• • SS GM down primarily due to higher amortization of software development costs with some additional dilutive impact due to mix
  • SN GM down slightly
  • More favorable mix between SS and SN YoY
  • • SS to contribute approximately 62% (vs. 56% in 1Q 2023)
• Cash BTL expenses (i.e. adjusted for capitalized software, stock based compensation, restructuring costs, and D&A) approximately $0.3M higher primarily due to increased expenses associated with TSA PreCheck

1Q Guidance Primarily Reflects Accelerated Product Delivery Into 4Q 2023

Notes:	6
1. Cash Gross Margin and Adjusted EBITDA are non-GAAP financial measures. The Company has not provided the most directly comparable GAAP measure to this forward-lookingnon-GAAP financial measure because certain items are out

of the Company's control or cannot be reasonably predicted. Accordingly, a reconciliation of forward-looking Adjusted EBITDA is not available without unreasonable effort.

SUMMARY

Exceeded High End of Original Revenue and Adjusted EBITDA Range in 2023

Prime Partners Received New Program Awards Worth up to $525M to Telos' Security Solutions Business

Over Five Years, Subject to Customary Protest Periods and Favorable Resolution of Protests

Substantial Progress on New Business Capture Provides Path to Sequential Revenue Growth Later in 2024 and Significant Growth in 2025

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Appendix

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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, Adjusted Net Income/(Loss), Adjusted Earnings Per Share ("EPS"), Cash Gross Profit, Cash Gross Margin, and Free Cash Flow are useful in evaluating operating 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-titlednon-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, Adjusted Net(Loss)/Income and Adjusted EPS provide the Board, management and investors with a clear representation of the Company'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 performance of the business. Further, Adjusted EBITDA and Adjusted EBITDA Margin are 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. Cash Gross Profit 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 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 useful to management and investors in evaluating the Company's operating performance and liquidity. 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 may, 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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FINANCIAL PERFORMANCE SUMMARY

4Q AND FY 2023 YEAR-OVER-YEAR COMPARISON

4Q YoY

Revenue

GAAP Gross Profit

Adjusted EBITDA1

$47.3M

$41.1M

$18.3M

$5.4M

$14.1M

38.6% GAAP GM

34.3% GAAP GM

($3.2M)

41.8% Cash GM1

38.0% Cash GM1

4Q22

4Q23

4Q22

4Q23

4Q22

4Q23

Free Cash Flow1

$0.5M $1.8M

4Q22 4Q23

4Q YoY Commentary

• Revenue: SS down 32% to $20.7M primarily due to the previous loss of one program and lower revenues on an ongoing program, partially offset by the ramp in TSA PreCheck. SN up 20% to $20.4M primarily due to favorable timing with the completion of an existing program.
• GAAP Gross Profit: Down $4.2M due to lower revenue and margin.
• Gross Margin: SS GAAP GM up 137 bps to 51% due to improved mix, partially offset by the amortization of software development costs and impact of indirect costs on lower revenue. SS Cash GM1 up 460 bps. SN GAAP GM down 209 bps to 18% primarily due to mix. SN Cash GM1 down 366 bps. Total company GAAP GM down 434 bps and Cash GM1 down 371 bps due to segment shifts and less favorable revenue mix.
• Adjusted EBITDA1: Down $8.6M to ($3.2M); Lower GP and higher BTL expenses.
• Free Cash Flow1: Higher cash flow due to working capital dynamics, lower CAPEX/capitalized software.

Revenue

GAAP Gross Profit

Adjusted EBITDA1

Free Cash Flow1

FY YoY Commentary

FY YoY

$216.9M			$79.0M	$52.9M	$19.5M			$11.2M
	$145.4M
			36.4% GAAP GM	36.4% GAAP GM
			38.7% Cash GM1	39.5% Cash GM1		($5.4M)		($13.9M)
FY22	FY23		FY22	FY23	FY22	FY23	FY22	FY23

Notes:

• Revenue: SS down 36% to $77.4M primarily due to the previous loss of one program and lower revenues on two ongoing programs, partially offset by the ramp in TSA PreCheck and other new business wins. SN down 30% to $68.0M primarily due to the successful completion of large programs and lower revenue on two existing programs, partially offset by other new business wins.
• GAAP Gross Profit: Down $26.1M due to lower revenue.
• Gross Margin: SS GAAP GM down 26 bps to 51% with mix accretion being offset by amortization of software development costs. SS Cash GM1 up 174 bps. SN GAAP GM up 188 bps to 20% primarily due to program cost management. SN Cash GM1 up 147 bps. Total company GAAP GM down 3 bps and Cash GM1 up 78 bps due to segment shifts and less favorable revenue mix.
• Adjusted EBITDA1: Down $24.8M to ($5.4M); primarily lower GP, partially offset by lower BTL expenses.
• Free Cash Flow1: Lower cash flow from operations, higher CAPEX/capitalized R&D.

1. Adjusted EBITDA, Free Cash Flow (FCF) and Cash Gross Margin (GM) are non-GAAP financial measures. Reconciliations to GAAP financial measures are provided in the appendix.

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