TLS - Earnings call transcript Q2 2022

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Operator

Good day and thank you for standing by. Welcome to the Telos Corporation Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, today’s conference is being recorded. to Mouzavires. conference like speaker to now Christina today, would hand over the your I ahead. go Please

Christina Mouzavires

Good morning. me for and of quarter Wood, Thank Telos. you and Mark XXXX Corporation’s discuss Chairman President financial second Bendza, Telos Executive results. and of With CEO today Vice John joining is Telos; us CFO to

the open Let begin the results on will cover also Vice remarks second quarter join questions-and-answers Investor this and where Telos and with was and Mark review being Mark will strategic financials our year President format and we earnings today’s of The the Griffin, and the today press quickly release Relations for webcast. brief me website the Executive for presentation. will is priority, line us. issued call Telos’ Solutions third John guidance on full Then of simultaneously XXXX posted Security earlier will quarter where XXXX. is

website. our Additionally, we have Relations provided on presentation Investor slides

Before in to harbor we safe on update risks duty SEC based including expectations release any in and and that the statements. emphasize under statements for of today’s begin, this laws. filings. Actual and during undertake federal could earnings are We forward-looking not made to These the various and subject forward-looking and some our uncertainties. to the materially call differ conference call press securities results current do reasons, factors are this are are described we any comments of statements the want provisions on our statements assumptions that made

assessed as investors non-GAAP considered for results. measures Telos’ or isolation which measures GAAP financial help financial performance. we as to we be in to call today’s supplemental will understand addition, In non-GAAP discuss should addition not that measures, believe clarifying useful from and and in These financial are during

replay will on Investor our Relations these will company note John. comparisons of next I unless earnings additional With Please website. call specified. release portion year-over-year over find this webcast the the that, also disclosures regarding available for in the turn our Relations at to reconciliations that non-GAAP press GAAP be The call and comparable including the results page. website our on Investor can under otherwise measures, financial You with year are

John Wood

Thank Christina, morning, and good you, everyone.

in begin today Let’s on three. again pleased this in a Telos key the financial delivered in later am at on second our financial million, guidance metrics revenue second slide million XXXX. of above report range year-over-year level, to was call, I range to XX.X%, quarter XX%. to guidance our will sequentially. and but Gross over $XX discuss performance high Mark that we of $XX.X quarter, above margin delivered our of XX% the $XX million up of X% XX%,

the range $X.X $X.XX EPS. of high above adjusted delivered negative $X million we positive to EBITDA, of adjusted of of guidance our million $X Finally, end million and

Now, to highlights discuss let’s our updates. recent turn slide and to four business

and today’s organizations enterprise to cyber security IBM for a and are unique compliance. governance the partnership quarter are challenges increasingly approach risk IBM’s clients’ customers announced AGS risk comprehensive offering and AGS the new large of provide and Security. energy. include address the in with significantly such global IBM financial markets in service services, Target to coupling suite with healthcare, environment. strategic offering, This challenging tools a with or improve of cyber with Xacta teaming and cybersecurity services to telecommunications significant efficiency security the is new Telos the partner as expertise is launch management active Telos facing IBM. to capabilities we organizations

our also leading opportunity for future tools in to relationship the suite and Telos. effectively enables brings the cybersecurity space. global IBM, drive Xacta leading with We of for our global broaden of partner growth that a management sales are capability leadership This marketplace in very organization recognized to reach us this excited to about thought

have we momentum current partnership, maintain IBM the continued in to Beyond the environment.

Missile the Within also of of of the Department renewals The Salesforce. Central OmniHealth. Environmental U.S. Agency, the The Security Intelligence The Solutions company key U.S. including with as U.S. Protection Army well as Energy, a Interior, Space Department Reserve customers, Department The and Telos received U.S. new customer, Technologies U.S. Palantir business, and U.S. Security, Federal foreign Xacta Homeland was contracts Agency, several with our awarded government The and The Command, Bank

We customer renewal space, also Ghost received the continue continue in company a regulated to support. The and government commercial on providing industries. classified to with focus important an and particular, prioritizing

XX-year Additionally, Administration. Security a Transportation with expand we our U.S. and continue were to practice awarded to the security contract up aviation

Our won Challenge by the Mobile place and of the posted Fingerprint Institute National ONYX technology in first Standards Technology. Information

Secure backlog contract a support new SIPRNet continued new the Networks Finally, Force business add to to U.S. to Enterprise Modernization. its including wins, with Air The

the Washington, the level called of signs on budget. Defense out in a provided and $XX House process a Authorization Senate landscape initiatives above XXXX Congress will now much increase. the There number that President. funding but how fall respectively how level industry Telos. turn see for that plays FY $XX meaningful topline customers, indications me the presents D.C., actually by still XXXX our to this Let The billion in provides President are to Biden increasing FY budget for are and to by there recent know defense to billion proposed see some We spending the the boost military for proposed comments defense versions have will opportunities Bill appropriations the for spending, that above of be Annual to plans his

federal against with of infrastructure. which effects consensus needed by understand of great as then and so Appropriations to and and Security’s recognizing of attacks and last recognizes needed legislation. Congress manage interests, that far, challenges cyber the this DHS consideration critical in continued cyber to the agencies to thinking the Congress combat will on warnings importance major the private Senate risks to defense, give departments departments year’s that spending example seeks mitigate resulted side, above more they cybersecurity resources draft A reflect agencies. cybersecurity wait increase We attacks non-defense critical are CISA, state agree the with that face for situation, have appropriations for governments, But under the The in funding. our in the that XX% U.S. agency. of we Bill infrastructure. is to potential on factor against for detect funding On bills more including the and U.S. is to cyberspace. clearly federal, cyber various throughout Ukraine Department works a sector, this and A CISA the is has mission, CISA of local a Homeland

XXXX guidance quarter best has they United can’t effective done retaliation Ukraine. for defenses. our support and up let and in makers policy an quarter and Mark companies including excellent full XXXX. private the and cybersecurity Mark? second I to to the the for will updating and for far, to will continue cyber deploying public what practices, who from the been discuss preventing expected results must follow third job ours had turn be widespread our that financial So call year know States The now in like attacks cyber sectors impacts over and

Mark Bendza

everyone John, today. joining us for Thank you, you thank and

turn five. to Let’s slide

on financial and second with We gross revenue, EBITDA our we quarter, delivered that key results guidance our a high mentioned, exceeded strong metrics. John above reported end adjusted range. As the of guidance margin

year-over-year. increase We free nearly a also $X.X cash four-fold of delivered cash in free million flow flow, representing

XX% some to contribution quarter thereby Networks the the call, year-over-year XX.X% comparison, the the second first our pulled shift XX% the Secure second revenue turn from first last large this the Secure our earnings XX% to quarter everyone I total XXXX the did delivery I gross to customer. year-over-year quarter second quarter Before comparisons in to I again, a year and forward remind second from quarter just of skewing with Networks last of lower from on program XXXX caused we a that of in to request in had as per delivery year. quarter XXXX, of the in of the of to XXXX business in margin XXXX to first our of wanted quarter XXXX that’s of in The margin shift accelerated

as accelerated shipment the provide year. So the the also comparisons will year-over-year for overall to first last the quarter for quarter and for usual second the second I from normalize first to of quarter half

that backdrop, will with details. Okay, I go into

quarter Performance million was due were XX% $XX.X to the and about Networks. Security million completion the driven supply $XX.X strong Security sequentially Census quarter, X% the year-over-year. For of up down high higher revenues and U.S. revenues of from previously pulled of of program, million, favorable classified and growth first offset sales program forward up the up and delivery partially due major Secure on XXXX other year-over-year, higher X% and year-over-year, chain sequentially sales million, mentioned million, management, and XXXX. a up in the strong large programs. programs supply by total of comparison margin chain the end and year-over-year on guidance $XX to variances up XX% favorable to $XX programs Solutions management in $XX to Secure pre-existing sequentially second were Network timing to X% the that range continued lower sales due quarter the by XX% in pre-existing Solutions second were

points by lower returning nearly flow Adjusted flow gross capital first margins nearly free million from below profit, of contracted Board and constant the XX.X%, Directors and at lower favorable cash improved to cash of opportunity compared above as dynamics in XX%, up to a for early to working total profitability held to XXX Secure Security a margin guidance to as percentage of declined revenues Gross flow, previously gross result between within mix Solutions Turning less revenues quarter which contracted in the May our gross the announced cash Free shareholders. margin Security margin line to both expenses. to to approximately range XXth, due declined $XXX,XXX primarily XXXX. improvement margin points from XX.X%. gross year, company’s an The Solution XXXX mentioned in repurchase XX% offset basis trends quarter gross Networks of Security XX% driven $XX begin more was in Secure the last our Solutions. of margin to a declined year-over-year of compared gross and due profit Security Secure by favorable share to million. were that last margin Solutions well to gross by sales XX%. of On the year authorized X%. company capital program the as was The contraction and as outperformance in partially XXX we XXXX, $X.X EBITDA shipments XX% second contraction Networks, stock. created to Networks four-fold the continued basis

During the stock a $X.XX quarter. quarter, deployed to the continued over million we shares daily XXX,XXX repurchase and third price we during $X of second average repurchasing at weighted have

we During quarter an the $X.X till XXX,XXX repurchase Friday, weighted $X.XX. third a nearly deployed of million average price last at shares additional to

the the for quarter of the the Now normalize half let’s accelerated to recap shipments XXXX. first from quarter on overall first second to

half program. due programs X%. as Solutions the primarily to of revenues Security wind associated the large headwind grew due revenues declined two down a expected, XX%, to First up confidential X%, revenues ramp Secure ongoing Networks declined in XXXX. the of with

well and gross gross margin SG&A, million gross by of Solutions in as company Solutions. XX.X% ramp X%. sales favorable Solutions, margin percentage due points Security Secure a XX% Solutions declined gross and from XXXX expanded total more Networks, a million profit. Secure of gross revenues The XXX points basis increased to Adjusted revenues within gross within driven expansion half mix higher increased XXXX EBITDA of in was XX.X%. Security as XX.X% XXX margin margin Security expansion $X.X $X.X to high to Security margin First basis and higher due basis Networks as expanded XX% to gross contracted the points margin to XXX profit progress. to offsetting

quarters. on the performed guidance, forecast in higher million timing has working and favorable driving deliveries favorable and cash management. and due primarily capital and free programs $XX.X of first chain the second pre-existing our due in second half ahead and supply cash dynamics, first differences half -- variances to Overall, diligent better flow from the flow between significantly first was half operations orders Lastly, to

discuss six third the Now, let’s outlook slide quarter. to to for turn our

single to in down mid- down For sales $XX the due Solutions XX% be on Census and forecast $XX up high-teens XX% to pre-existing to perpetual of orders licensing. XX% range completion a Program quarter, expected XXXX million to We primarily X% and program the a to XXXX, of to year-over-year, lower the year-over-year. third lumpiness forecast in we of Security sequentially million, revenues

for the expected We but continue in minimis. TSA progress this revenues be PreCheck make to are program program, de XQ, good any, to if on

mid-teens Secure expect the down two to Networks to mid-single large down a successful be of revenues to wind coming ongoing year-over-year programs We digits to completion. due

down representing Below approximately to R&D to EBITDA during the X% the $X.X million, $X year-over-year, be expected Security a mark. line points margins both G&A XXX approximately X% is basis expenses, revenues Networks revenue points and weighting margin ramp lower the a due are expected Solutions excluding quarter. slightly and to in compensation primarily XXX We be expense, of to expect to within segment million be lower Security mixing high Secure gross basis our Solutions to million due to stock XXXX. and higher $X investments to of to Adjusted

seven to for our updated to outlook Now, let’s XXXX. discuss turn slide

full from high revenues revenues new of$XXX to There our of and low to range to on of $XXX range For million revenue business Reduction guidance million. pre-existing in reflects change our prior the offset the no end $XXX at revenue. the narrowed by half, second our Security range $XXX have TSA to programs million year, lower of the partially within on end higher updated is assumption Solutions. PreCheck the the we million

business. range We reduction -- by than the impact end lowered million new performing slightly half, ahead performing $XX with reflects planned, including previously and range line expenses. of narrowed low continue, and are EBITDA our the more fourth and have to on first million lower are high in to that the expect of widely to lower the revenue million. sequential we previously as half, gross growth is offset reduction sales to partially Secure taking our well, into The forecast of the it $XX third pass second to cautious performed our the well have John of the forecasted of core than in slide business our range our The million I more result new below we growth corresponding business the could second associated for primarily gross wrap reduction, With part initiatives eight. in adjusted forecasted that, the the to in prior updated profit the Networks a reflects from of quarters $XX as new will at business expected continue programs the half create at guidance on and margins on which end macro reflects lower Overall, $XX complex in we a is environment, of the who short-term. originally pre-existing approach some to range headwinds will up our back

John Wood

solid outpaced financial formed second strategic which In we Mark. key partnership IBM Thanks, metrics. we summary, a and quarter with delivered on a our during new guidance

begun flow to to shareholders gross and have of share expansion half delivered year also free the We return repurchases. flow free through strong in first margin the and cash cash

continue are pre-existing and the that we performing core business year. to the expect balance of for well and Our programs

We half more accordingly. and slightly the to new With are a our that, business in of forecasting we second are to cautious expenses year approach happy are take managing questions. taking the

Operator

Thank with you. with B. Davidson, of line first Cummins I from D.A. oh, question Riley. [Operator Our that comes the am sorry Instructions] Zach

open. Please Your go ahead. line is

Zach Cummins

maybe why to year? TSA the approach here a business more Thanks the really I questions. taking making Mark. year. for assumptions guidance granularity geared in you Hi, little half for John. are Mark, Hi, more you morning. can wins of the new slightly Good updated my I -- PreCheck for a the question Thanks. give mean is Yeah. taking the second around you my are and towards cautious

Mark Bendza

Yeah. for Sure, question. Zach. Thanks your

down dissect a I range, the are revenue. don’t PreCheck little $XX So, why of by you? the So bit that million sales the $XX of we million for at $XX net million, guidance end is high taking

that certainly, it to end PreCheck Obviously, and assuming process the we is of progressing million. we So more lower the business we are at assumptions PreCheck we complicated now revenues on the the for performing driven net the being million seeing seeing forecast. expect new The of half. that we wanted net leave are that second this business right core The items least guide take the previously down, quarter yet impact in you a very acknowledge assumed to as for impacted the ATO balance reductions we high PreCheck, the the there business, though our but $X some environment macro core the other across The million, to well, guidance, the by felt But $X the now the year. revenue have forecast as results. of by recognition and risk in still don’t million, in really look from portfolio, there is, is thought we in appropriate higher the is wanted of at wanted of in so $X broader take a to environment rest it’s our ATO even macro $XX not at well. are the primarily we second scrub not we

a For customers selling where markets, we example, approach new to slightly to solution cautious take wanted end new anywhere there. we for solutions new more pre-existing in are

And reduction million To nonetheless. are by in to represent macro in sales, end, you nod, end That the reduction. revenue Secure a $X adjusted business guidance, at we million partially below reduction the at the but modest of new so the at On put year-over-year of lower a about EBITDA what perspective, corresponding the adjusted the gross points in EBITDA in additional is So gross of the of seeing net would taking the of that by part as but on in high margin modest the is profit $X environment, midpoint reduction the XX half. that’s primarily change range in lower low expense. very $X are offset the growth, line basis Networks, million. very to then reduction, the no that to second in the

Zach Cummins

of the Understood. That’s coming in luck helpful. best Much and appreciated quarter.

John Wood

Thanks a lot.

Mark Bendza

Zach. Thanks,

Operator

Our next question the from Kessinger comes Davidson. D.A. Rudy with line of

Your line Please go ahead. is open.

Rudy Kessinger

Hey, guys.

up pipeline reps, the just build picture, the the secondly, sales on of question on year? I as a half I driver incremental channel from, ex-TSA XXXX? the reduction top the year your how I conservative ask, I start expectations anything baked more guide the rest and and do $X production there, just portfolio. into the in And just we bigger million direct guess, on into much the guess, how of meeting say, this big sales am have be, growth And can in maybe I end, So get just following IBM the that guess would are then, or they you second for this IBM? year say, IBM, -- at

John Wood

Hey, one. I Mark will question Rudy. will This second is take first take and -- I Griffin I answer the John. to the first ask will

to our couple this year. of a it have hundred for model relates dollars purposes IBM, of thousand we As in

the to up countries, how governance large happened as am pipeline be modeling is consider able really rapidly their -- be they companies, to number Xacta not pharmaceutical that difficult that big I on advanced as you embedded however What get cetera, names, what’s give it to solutions. I large manufacturers, -- sizable for can relates is -- our in -- you what have is et places quite a say their partner to quite would it into the perspective give with As able filling think to that could car Tier would good a their think me that’s banks, be, X not and be can and yet. I that’s we very own its us it I launch not large

it’s think got I front in potential lot of So a us. of

I coming are much providers, blossoming fully for much the As the with had was quite sure -- detail. we have a really happy aware how we in slower. XXXX, be out it will with give our hoped cloud been guide am relationship am well But put out I I service quite, but greater way, to how is that as they you like going you

So it it. also are here at IBM using is internally. They looking completely embraced

to opportunity you think you the great over there sales So the first years the is answer five for with if force? I have a in XX years. on next can IBM question Mark, a And us mic,

Mark Griffin

but Rudy. Griffin. Hello, adoption Mark Commercial than and we happening, obviously, more cautious is took approach slower Sure. a planned. initially

continuing and our capture to area, to maximize efficiencies areas potential. only not also fine-tune development We the are achieve staff, but and the operational and the increase sales business ongoing in

So, yes, is pipeline seeing we The increasing. are progress.

continue We and are across opportunities QX. that seeing -- in that and and staff close for the in look operations from areas. fine-tune some opportunities will and Capture to look QX in we BD But growth late additional additional sales

John Wood

Go ahead.

Operator

Thank our line Alex comes next Needham with Henderson you. from the question And Company. of &

go Please open. is ahead. line Your

Alex Henderson

growth up going it numbers? basis? Thanks. it’s XX%? at The give break flat, noise improvement What actually just true on some understand is one what’s because there’s looking what rate, for double-digit is based difficult the I rate product. around give Can going of kind us any is, TSA. the to some lost underlying growth, a you the is little numbers the two the parameters think on full to just what year the with you producing growth it -- in questions, am Is exactly you Xacta. your and through current us very why It’s primary sense cut Xacta on the it on bit, in guidance just can ask of question

Mark Bendza

Yeah. Alex. Hey, Mark. It’s

it, be digits on say, range going mid probably year, end business it, going year, for are you mean, call -- somewhere the, -- XXXX, the Information we single-digit of we in low-to-mid on that in end at high higher single call to as level. but, our mid-single probably guide the the of digits. to on know, the midpoint say, kind we don’t I I So at But would somewhere Assurance are

Alex Henderson

to it’s optimism you that are going TSA that? to thought was end now I September, close makes year, the it’s thinking improved. then somehow to going of going the mean, it you it actually it still the going for thought reason close in and was think close that to you was close, What at the And we

Mark Griffin

is Sure, Griffin. Alex. This Mark

follow schedule for we ultimately So and launch. TSA guidelines

going We and security their with extensively on plan are launch engaged their through approvals. basis daily them a

getting to of are the sites We deploying this end are operational and enrollment site. for training schedule that enrollment in gearing capabilities and our to up those and now we process

TSA on we indication every schedule. are is expect results So fully our we They are following positive to at year. and this point this launch

Alex Henderson

So you just gearing wouldn’t instructed when an I expense therefore your you say to are understand understand, they are employees up -- carrying training, train they that… stretch and have that you that’s been so they and they

Mark Griffin

Look…

Alex Henderson

you do we if imminent. would that? wasn’t that right reading should the that be …ask it way it Is

John Wood

about... you little Would Yeah. explain more a

Mark Griffin

Sure.

John Wood

could. you …if

Mark Griffin

Alex, yeah, and and entire procedures is the guidance policy program under from TSA.

aspect So TSA. the every reviewed of approved by program and is

personnel, of from And our soft controlled security training procedures to of our to by all launch, process sites, we approval do so to are TSA. everything and

So, reviews of every launch. -- yes, to to we TSA have aspect every document. this are on contractual adhere that delivery deliverables There

when that they launch is but are are year. are in they meeting the a we doing So, are for schedules launch, asking yes, the TSA approval ultimate of this time frame and their asking we everything we

Alex Henderson

Thanks. Great.

Operator

question Nehal next our comes Markets. line of the Northland Capital Chokski you. with from Thank And

Your is open. line ahead. Please go

Nehal Chokski

much you sold four versus of quarters that. ago? you, a relative terms on term basis are deck. guidance commend Mark, Yeah. especially Thank one, perpetual a on very in guys solid Where of results clear you to now percent congrats you software and for the billing and and basis Thank and the two on

John Wood

subscription a we of selling that are majority the the are I are subscription and couple Ghost the versus versus a Xacta, majority based well There in oriented. going are talking as examples talking to of pipeline are are question. there majority term about based or true licenses are of you about say, the you Nehal, term that are or vast of that’s good subscription is a pipeline That’s couple perpetual. exceptions. of There government remaining or perpetual would what now, our whether pipeline, our ACA be but vast or exceptions,

Nehal Chokski

impact on Okay. how does transition Great. that of have much projection for of low-to-mid single-digit And an Xacta? growth the

John Wood

are guess It revenue. I I off it perpetual. do, That is say, a in to XX% number the be we -- definitely think was in did we past, is going the don’t and now when subscription. the $X.X majority -- perpetual has But all currently an about top forward or or at we XX% going My know going impact. the my has head. million vast be right term it’s to would

Nehal Chokski

what clear, for capitalized be to -- the... then of And is dollar every term, perpetual what that’s into

John Wood

later Basically basically XXth. all am I is, the it’s delivering for if no million have $X means -- what number June that and got term, by $XX than I a year on to deliver million orders of

Nehal Chokski

do last that, high for but to on on Why of seeing a think my any you are end Great. you alluded not Mark down yet? macro impact any being the yet. And it. take more $XX cautious seeing is Thank you the not then are of impact million in guidance, question Got the outlook out you. you terms that the part

Mark Bendza

Correct.

I business. So our there is what am distinguishing core between

the been the very has business choppier. as core the half strong the through Our became including year first macro of second and in quarter

there. not are we seeing So any impact

to the end again, that and half, finer a just effect new customers, of wanted on second we and to we core pre-existing then, the business I our of growth. really we are customers our point or portfolio the slightly solutions year-over-year new markets selling forecast. net is And outside basis take serve. either points it’s only XX of just markets that again, nature where think and for And the

Nehal Chokski

you. Thank

Operator

of question next Clark our And with Brad the you. Thank comes from BMO. line

open. ahead. go Please Your line is

Brad Clark

it’s a the so to and delay more either those the perspective more given for Thanks to you. new push from side sort being what between or to margin ask the that at and business back guide to is are so or question. the there the I trying from Thank it, the sort not pushed Telos’ this by much slowdown new side out clarification. how it Telos’ of and And customer back of two, trying it’s me. basically am understand business sort about from good from the sort my it in of and more proposed is, customers Hi. question That’s want I profile yeah, or of of business? a taking understand deals

John Wood

So, guide. mainly have it is people side, our we it -- depends built on longer side than and the Brad. The into government’s always think takes customer’s that

the are On what’s over building they commercial time. starting is out I actually having But side, think, small we happening success. and are

So in six-digit, plus starting out year we more it will being if their as for quarter. us customer opportunity rollout per started landed another to expect throughout like it, commercial they offerings. be for a It Xacta this we seven-digit place but you a

I will time it end. would they quickly in the on on enterprise-wide side, but more that of has a doing there and Government, are that commercial more in it is buy the try going as more Federal to a whereas the buy say then small over level that and of pilot, build markets known well there have. So it’s and controlled go out specific typically we middle it, were pilot a very there the license more very, a And just much an based customers some it reputation to an is and beginning, the

Operator

Company. Thank you. Needham the from question & of Alex Henderson with follow-up have And line we a do

ahead. Your line go Please is open.

Alex Henderson

you Great. Thank very much.

-- that bit big reselling what’s chunk about with those could you voice-over-AWS beginning going came on a the you in a business, why not to be and when there year environment this what hoping of long story the so guys they acceleration seem going yet their it were was talk of was starting Can talk out services was it driver is you to guys and or about your materializing. be the the of that of is that I little of taking doesn’t the it’s kind thought and big metastasizing? So

John Wood

word. That’s Thank Metastasizing. you, good Alex. a

that as -- the to made not I using it as pockets hand but launch continue decision own taking IBM to moving and organization to capabilities the frustrating. use is their partner. is the it build it are think whereas slowly, -- a longer. made their buy still is want They of Xacta There on but other build, that It internally.

And so, aren’t doesn’t mean us that a They us. there. the and in cloud us. cloud to there provider service get us is they to that going They the there continue have hoping providers situation just use to we the It’s continue are use was a that got way use more providers have to I It using more. do going not yet.

They we haven’t value of on, -- On the intelligence of that name it intelligence in awards community. the the started the the recent one out recent community. see the announced had we

Defense Now bringing their side in us they into commercial world. be then, a the of of are we Department business. ultimately, to want And

about at different has of the case a of providers So security bit there the gone quite cloud each In way. a and it of on looked the Azure, side compliance of house. it been a bit little in and of has their turnover

Azure. of So start-over we the had to of in have sort case

bit of it, it little each cloud is has provider but a a associated And story so, frustrating. with

Alex Henderson

a of product that’s into used Similarly, you it infrastructure on terms commercializing what’s product talk security going about the can the a outside of progress Ghost there government the and or in bit play?

John Wood

And little to a bit. I’d a Sure. extend that comment like made you actually

poem Poem government poem. and commercial that things to things a we And the is in of the in really doesn’t language do about we describe is example. have learned of of of One things commercial verbiage, we anything the equivalent have give the There that Xacta we the we a that, is world. an that Xacta it’s I is to inside had Remediation you do the called our one change will how to something of government. guys. have the mean

more commercial make had product what the itself that in want changes reflected to was which the in. that something is it to had world that we we So it, build also

to -- we you business. a relates relates sales the have to it if cameras continued as as As with Ghost, Ghost continued and we have will be growing their continue will to hidden healthy got product be security the with progress embedded offering their very option cameras. to it on JCI -- internet Those -- an

We offering. you turnover promotions expect of there. not had happen this of over but have with that some to a small And this year -- level out sales again, late

hope be out negotiating players. to with our those will very of inside said we there how ground we JCI players just the has we midst that, organizations things of and off have roll Having are it getting these able do with in that are taken -- and announcements about other longer those liked. is that some that would similar other are than So other we to looking building the capability other are

do we what you, that hidden well. remind is, advanced all to Ghost with just behind analytics activity cyber Now is of as

both existing there our a with well as through are selling there as players. within other Ghost, for So is opportunities set, customer us --

Alex Henderson

ask are Security then about me we first sounds Since I let could just round more, in it’s projects one that to back comment. not into mean into the But forward from networking timing I questions, in was year are like a the the were talk the if some okay. around half just the you half bit business. business of expecting pulled hoping the know. am second going Networks? going and favorable little security Does you that It of that little less If

Mark Griffin

in not chain there of the is Networks, risk. terrific within managing dynamic a So doing supply job Secure team the their Secure Networks, really

they set we guidance we for account been supply outperforming guidance And risk. their risk that and so chain in have when

otherwise side. on within Security so the business more to particular job management in half. is program Solutions I quarter that we there expecting you referencing higher that less margin did the some have So guidance. a come order are The doing were that program one second second or came more teams pull-forward terrific and into think outperforming the that are in We

the So that’s favorable…

Alex Henderson

Mark, but….

Mark Griffin

…there.

Alex Henderson

you supply pulled that out than you pipeline? the availability then your if expected. of deployed of But Doesn’t sooner products come forward

Mark Griffin

sure I the I am understand question. not

Alex Henderson

order an have from a got deploy You a to location… know, government I don’t a, agency choose

Mark Griffin

that think lapped…. I Oh!

Alex Henderson

told because you have don’t deploy product… you and you … the can’t

Mark Griffin

think you I are …. Alex

Alex Henderson

[Inaudible]

Mark Griffin

…referring to year. last

Secure... in on the year about pull-forward the pull-forward talking are You XXXX, last the

Alex Henderson

environment. talking No. am about I the not. am current I Mark,

we they of that an pipeline deploy to get involved. because you as example You business used revenue. are need the have could not order that for But to projects gear in know you a specifically which

expected… sooner If you the than get parts

Mark Griffin

Yeah.

Alex Henderson

that forward pipeline your period, then the into do … reduces correct?

John Wood

static, the assumes is That Alex. pipeline that

is static. pipeline the not So

Alex Henderson

Okay.

erosion within pull-forward year of of no the parts? for outlook the there’s the the in half of So that back because

John Wood

Not the revenue line.

Mark Griffin

Correct.

Alex Henderson

looking what Thank I was for. That’s you.

Mark Griffin

Alex. Thanks, Yeah.

Operator

and Thank you. Wood like for no John further showing back to any questions over And I would to I am further turn remarks. the conference

John Wood

very performance. I the expected. our support. am Oh! well, thank year-to-date pleased as much, our ongoing first, your really I Operator. Thank despite progressed have for recent current our you And has And environment, with well shareholders Well, we

again, our Thanks to We the covering everybody. are and our questions we you and taking and listening asking the to analysts for all approach And want for on and balanced remain focused a to lot for you thank I customers second very a just shareholders. half of our say delivering to stock.

Operator

this This concludes today’s for conference Thank participating call. participating. for today’s you you conference -- call. Thank concludes

may Everyone, have a You disconnect. great day. now

Telos (TLS) 9 Aug 222022 Q2 Earnings call transcript