Time for cyber teams, not stovepipes: Telos' CEO tells Wall Street
By
Ross Wilkers
Telos Corp. is starting to tell its story to Wall Street just as cybersecurity is once again at or near the top of the agenda for federal agencies after two recent and significant compromises.
November of last year saw Telos Corp. undertake its initial public offering and the subsequent months since have seen cybersecurity go even higher on the agenda of federal agencies than it was before.
Both of the significant compromises involving Solarwinds and Microsoft Exchange products used by agencies sharpened the focus on vulnerabilities across federal networks.
They have also apparently renewed conversations around public-private partnerships should it happen again. During Telos’ fourth quarter (and first-ever) earnings call Thursday, CEO John Wood indicated that conversation has been needed for some time.
“There’s a profound focus now with Solarwinds and Exchange which I think is long overdue,” Wood told investors.
“I think there is a very active dialogue between industry and government now about how we can work much more closely together in dealing with adversaries as a team versus as stovepipes.”
Conversation item number two between government and industry that goes hand-in-hand with cybersecurity is today’s world of remote work amid the coronavirus pandemic and what that will look like tomorrow.
Wood told analysts that line of dialogue is happening across the government and is not exclusive to intelligence agencies, for which substantially all classified work must happen at the designated government facility.
“We haven’t gotten there yet, nor will we for any period of time that I can see in front of us soon, where you’re going to be able do classified work in a remote environment,” Wood said. “But they may be doing things where they are declassifying some elements of the workloads so you can get some work done remote.”
Enter cloud computing into the picture of a physically dispersed workforce, for which Telos is pushing its Xacta cyber risk management tool to continually monitor IT assets and users accessing them in a cloud environment.
“The other big strategic change in general across our customer base is multiple clouds,” Wood said. “Everybody doesn’t want to get so invested in one cloud provider so I think that’s why having a multiple cloud capability like we do inside of Xacta is very relevant.”
Ashburn, Virginia-headquartered Telos reported $179.9 million in revenue last year to register 13-percent growth for the full 12 months. The company sees an even better 2021 on the top line: $283 million-to-$295 million in sales, which means an increase of between 57 and 64 percent.
Telos is also telling the same story on the bottom line. The company sees that tripling over last year from $11.4 million to between $33 million and $36 million in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).
The IPO fetched $292.6 million in gross proceeds to help Telos eliminate all of its debt, which also gives the company more room to put that added capital into bolstering its sales and marketing functions so it can push further into commercial markets.
Commercial still represents a smaller portion of Telos’ revenue profile, of which its annual report indicates that 95.4 percent comes from U.S. federal work. The remaining 4.6 percent is classified as “state and local, and commercial).
Increasing the number of channel partners is also a part of that outreach effort, which Wood said got an added boost through the visibility of an IPO process. Telos will have to do both direct sales and those through the channel, he added.
“We want to be able to sell through to get to the commercial marketplace much better than having to build our own direct salesforce,” Wood said.
“We’re not going to turn away from the government because we feel like it’s a great place to have a steady state biz, but we’re absolutely going to augment into those other areas.”