TLS: 66.5% TTM Growth and a 0.26 PEG, With Federal-Contract Risk Attached (2026)

The pick in one sentence

Telos Corporation (NASDAQ: TLS) clears this channel’s hard screen on the latest available market snapshot: a $353.89 million market cap, 66.5% TTM revenue growth, a Finviz PEG of 0.26, and positive TTM operating cash flow. The catch is just as important: Telos is still GAAP-unprofitable, 93% of Q1 revenue came from U.S. government agencies, and the growth engine is concentrated in Security Solutions while Secure Networks is shrinking. 1 2

Hard-screen check

Requirement	Latest evidence	Read-through
U.S.-listed, market cap below $10B	NASDAQ: TLS; $353.89M	Pass. The company is incorporated in Maryland and trades on Nasdaq. 3
TTM revenue growth above 30%	$181.93M TTM revenue; +66.5% YoY	Pass. The current TTM window includes Q2 2025 through Q1 2026. 2
PEG below 1	0.26 on Finviz	Pass, but source-sensitive. PEG is a forward estimate-based field, not a GAAP result. 1
Positive operating cash flow	Approximately $32.73M TTM	Pass. This is calculated as FY2025 operating cash flow of $30.182M + Q1 2026 $8.656M - Q1 2025 $6.106M. 4 3

This is a screen pass, not a clean-quality verdict. Telos’s TTM net income is negative $25.92M and its trailing P/E is not meaningful. The positive cash-flow test therefore matters more than a conventional earnings multiple, but it also makes cash conversion and working-capital timing worth tracking each quarter. 2

What Telos actually sells

Telos provides cyber, cloud, and enterprise-security solutions for government and commercial customers. Its two operating segments are Security Solutions and Secure Networks. Security Solutions includes cyber governance, risk and compliance software, identity and biometric services, secure messaging, and related cloud/security work. Secure Networks provides network design, integration, sustainment, defensive cyber operations, secure mobility, and program-management services. 4

The economic center of gravity has moved sharply toward Security Solutions. In 2025, that segment produced $149.6M of revenue, or 90.8% of the company total, up 94.9% from 2024. The main driver was expansion of multiple large Telos ID programs. Secure Networks generated $15.2M, down 51.7%, as projects ramped down without enough new awards to replace them. 4

The product angle is more interesting than the segment labels suggest. Xacta automates cyber governance, risk, and compliance workflows across cloud, on-premises, and hybrid environments. Xacta.ai adds AI-assisted automation and analysis. In April, the full Xacta suite, including Xacta.io and Xacta.ai, received FedRAMP High authorization, expanding the set of sensitive federal environments in which the platform can be used. 5

The operating trend: a real Q1 inflection, with one weak segment

Telos’s reported quarterly series shows why the screen is finding it now:

Calendar quarter	Revenue	GAAP net income (loss)
Q1 2025	$30.616M	$(8.604)M
Q2 2025	$35.968M	$(9.517)M
Q3 2025	$51.444M	$(2.114)M
Q4 2025*	$46.777M	$(16.311)M
Q1 2026	$47.742M	$2.023M

*Q4 2025 is derived from FY2025 less the first three reported quarters; it is not presented here as a separately reported annual line item. The figures come from Telos’s SEC filings. 4 3

Q1 2026 revenue rose 55.9% year over year to $47.742M. Services revenue grew to $42.061M from $28.845M, while product revenue rose to $5.681M from $1.771M. Gross profit increased to $17.375M from $12.182M, operating expenses fell 24.9% to $15.920M, and the company moved from a $9.022M operating loss to $1.455M of operating income. Basic and diluted GAAP EPS were both $0.03, versus $(0.12) a year earlier. 3

The segment split is the key diagnostic. Security Solutions revenue jumped 78.1% to $45.970M, primarily from large Telos ID programs, but its gross margin fell to 36.7% from 42.8% because of mix and higher non-cash infrastructure costs. Secure Networks revenue fell 63.1% to $1.772M. That is the business line that needs new wins, not just a repeat of old contracts. 3

Cash flow was strong: Q1 operating cash flow was $8.656M versus $6.106M a year earlier. Management reported $6.4M of free cash flow, a 13.4% margin, and said this was the fifth consecutive quarter above a 12% free-cash-flow margin. The filing attributes the operating-cash-flow improvement partly to working-capital changes and the timing of customer receipts and vendor payments, so the next two quarters matter more than any single Q1 print. 3 6

Valuation: cheap on the screen, less obvious on other definitions

Finviz shows TLS at 1.95x sales, 1.71x EV/sales, 11.08x price/free cash flow, and 20.24x forward P/E. StockAnalysis shows a materially different 38.77x forward P/E. That discrepancy is a reminder that the 0.26 PEG should be treated as the screen’s source-specific output, not as a universal valuation fact. 1 2

Company	Market cap	Forward P/E	PEG	P/S	EV/Sales	P/FCF
Telos (TLS)	$353.9M	20.24x	0.26	1.95x	1.71x	11.08x
Tenable (TENB)	$4.40B	18.44x	1.27	4.30x	4.36x	17.41x
Progress Software (PRGS)	$1.66B	6.46x	1.95	1.66x	2.88x	5.56x

The comparison is directional, not apples-to-apples. Tenable has much higher gross and operating margins but slower TTM sales growth; Progress is profitable and more mature, but its PEG is above 1. TLS trades at a much lower sales multiple than Tenable, while the negative trailing earnings and lower margins explain why the stock should not be valued like a mature software compounder. 1 7 8

Balance sheet and ownership

At March 31, 2026, Telos held $50.230M of cash, $95.625M of current assets, and $36.982M of current liabilities. That implies a 2.59x current ratio and $58.6M of working capital. The company disclosed a $15M revolving facility maturing December 30, 2026, plus an expansion feature of up to another $15M; the Q1 filing did not state a revolver balance. 3

The share-count direction deserves more attention than the headline buyback. Shares outstanding rose from 72.773M at December 31, 2025 to 74.819M at March 31, 2026, roughly 2.8%, while Q1 repurchases totaled $2.198M for 517,136 shares at an average $4.25. Stock-based compensation, vesting, and equity-plan issuance were also disclosed. Finviz reports 30.47% insider ownership, 65.17% institutional ownership, and 4.12% short float. 3 1

Catalysts to track

Government proposal decisions in H2 2026. Management said nearly $500M of proposals were outstanding, including two around $90M each, with most of the awards typically structured as shorter contracts of roughly two years. The company expects award decisions in the second half, but the government controls timing and the pipeline is not backlog or revenue. 6
Xacta.ai adoption. Management said more than 400 Xacta.ai licenses had been sold and installed, with additional RFP activity anticipated later in the year. The July 9 Air Force Distributed Common Ground System award adds perpetual Xacta.ai licenses plus Xacta 360 and Xacta.io support and maintenance; no contract value was disclosed. 6 9
Aviation and identity expansion. On July 14, Hawaii’s transportation department continued Telos aviation-worker-vetting services across five state airports. Telos said the relationship dates to 2018 and that its aviation channeling service supports nearly 100 aviation partners. TSA PreCheck enrollment was also a major Q1 growth driver; management said enrollments were performing well into Q2, while noting that the business is usually seasonally weaker in the second half. 10 6
Leadership uncertainty has a concrete update. John Wood returned from medical leave and resumed his duties on May 28; the interim CEO and chairman arrangements ended. That removes the immediate transition issue, but the episode remains a reason to monitor execution and disclosure. 11

Risks with measurable checkpoints

Federal-budget and award timing risk. U.S. government agencies represented 93% of Q1 revenue, up from 89% in the prior-year quarter; 88% of billed and unbilled receivables were with federal customers. As a simple stress case, a 10% timing delay applied to a Q1-like government revenue base would put roughly $4.4M of quarterly revenue at timing risk. That is a scenario, not a company forecast. Watch federal-award timing, funded backlog, and cash receipts. 3
Secure Networks needs backfill. Revenue fell 63.1% year over year in Q1 and 51.7% in 2025. A practical checkpoint is a return to positive year-over-year segment growth and new awards that replace the programs already ramping down. Until then, consolidated growth is being carried by one segment. 3 4
Margin and cash-quality risk. Security Solutions gross margin fell six percentage points year over year in Q1, and the filing attributes cash-flow improvement partly to working-capital timing. The company’s stated Q2 targets are approximately 39% cash gross margin, $5M-$6M adjusted EBITDA, and 11.4%-13% adjusted EBITDA margin; a miss plus a free-cash-flow margin below the recent 12% benchmark would weaken the screen’s quality case. 3 6
GAAP losses and dilution. TTM net income is negative, the trailing P/E is unavailable, and shares outstanding increased about 2.8% in Q1 despite repurchases. Track GAAP profitability, stock-based compensation, and diluted shares rather than relying only on adjusted EBITDA or the PEG ratio. 2 3

Price action and analyst expectations

The latest available close before this issue was $4.73 on July 17, 2026. Finviz shows a 52-week range of $2.37-$8.36, average daily volume of 765.57K shares, and a year-to-date return of -7.25%. The stock is therefore roughly 43% below its 52-week high while still nearly double its 52-week low. 1

Six analysts tracked by StockAnalysis have a Buy consensus and an average 12-month target of $6.83. The low target is $4.00 and the high is $9.00, which translates to a range from roughly 15% downside to 90% upside from $4.73. The wide spread is a better description of the uncertainty than the average target alone. 12

The next scheduled earnings date is August 10, 2026. The first questions for that report are straightforward: did Q2 revenue land inside the $44M-$46M guide, did Secure Networks begin to stabilize, and did operating cash flow remain positive without a working-capital reversal? 2 6

Bottom line

TLS is a valid new screen pass and a more interesting research candidate than its tiny market cap suggests: the current TTM growth rate is high, Q1 reached GAAP profitability, and cash generation is positive. But the thesis is conditional on government-funded programs, Telos ID execution, and a recovery or replacement plan for Secure Networks. The right follow-up is not to buy the 0.26 PEG; it is to verify the August 10 report against the Q2 guide, cash-flow quality, segment mix, share count, and the timing of the nearly $500M proposal pipeline.

Screen result only; this is not investment advice. Metrics are snapshots and can change with market prices, estimates, filings, and source methodology.

TLS: 66.5% TTM Growth and a 0.26 PEG, With Federal-Contract Risk Attached