Investor Presentation December 2020
2 Other than statements of historical fact, all information contained in this presentation, including
statements regarding the future operating results and financial position of Telos Corporation (the “Company”), 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 Annual Report on Form 10-K for the year ended December 31, 2019, and in the registration statement that the Company has filed with the SEC in connection with the recent initial public offering of its
common stock. Moreover, the Company operates in a very competitive and rapidly changing environment, the 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 estimates. 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 an endorsement
of such products or services.This presentation also includes certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not as 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 measure to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. 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 metrics. Disclaimer
1) Based on Telos management estimates 3 Based on Telos management estimates Telos Investment
HighlightsPremier Provider of Software-based Solutions for the World’s Most Security Conscious Customers Telos Security Solutions consistently deliver more efficient, more effective, and more secure operating environments Endorsed by marquee
intelligence community customers with growing commercial market penetration Large and fast growing total addressable market (TAM) – $80B+1Driven by ongoing cloud adoption and growing security needs in both government and commercial
channels Improving revenue mix and operating leverage to drive significant margin expansionScalable platform delivers strong free cash flow conversion Clear visibility into rapidly accelerating, 85%+ recurring revenue growthGrowth inflection
fueled by key long-term contract wins for Telos’ identity management and cyber misattribution solutions
Note: Reflects fiscal year ended December 31Based on Telos management estimatesRecurring revenue for
each of the last three years Revenue ($MM) $108 $138 $159 $113 $135 350+ Customers Revenue Profile85% recurring250% sole source / limited competition1 4 Revenue ($MM) Intellectual Property3,000+ man-years of IP160% of employees with
Clearance 22% CAGR 20%YoY Telos Snapshot Recently-Awarded, Long-Term Security Solutions Contracts to Accelerate Revenue Growth
5 80% of 2019 Gross Profit 20% of 2019 Gross Profit Unique Solution Set Addressing Urgent
Customer Needs SecuritySolutions SecureNetworks AMHS Governance risk and compliance solution that facilitates cloud migrationMis-attribution obfuscation solution that protects user information and locationTrusted identity solutionsSecure
message and archive system for the government Operation / defense of networks and cyber ops Secure Networks
6 Marquee Customers
7 4.1B Exposed records from data breaches in 1H19 $8.6MM Average cost of data breach in U.S. as
of 2019 954K Average web attacks blocked per day 280 Average days to identify & contain a breach Sources: Comparitech, Symantec Internet Security Threat Report 2019, Cyber Risk Analytics 2019 MidYear Data Breach Report, IBM 2020 Cost
of a Data Breach ReportBased on Telos management estimates Key Security Solutions Expanding TAM ($B)1 14.0%CAGR Demand for Telos’ Security Solutions Has Never Been Greater
8 Telos is at the Forefront of Security Solution
Development 1994 Common Access Card (“CAC”) Largest biometric application in the government 2016 Xacta partnership with Amazon Web Services to provide cloud solution to the CIA 2018 Telos
Ghost launched to shield communications, transactions, and networks 2018 U.S. Census Bureau contract(1MM total enumerators w/in 4 mo. at 1,100 physical service centers) 2019 Microsoft Azure partnershipto optimize Xacta cyber risk
management for sovereign and critical infrastructure clouds 2019 Telos Ghost wins $39MM contract with classified government customer; converting to program of record 2020 TSA PreCheck & Center for
Medicare & Medicaid Services contract wins (10-year contracts)
9 Xacta accounts for common, shared, and customer specific controls On-premises Hybrid Cloud /
Multi Cloud Operationalizes complex frameworks and required reporting Compliance Data Sharing Continuous Monitoring GRC Workflow Automates security compliance activities through inheritance & control mapping Delivers constant and
real-time visibility into cyber risks and compliance status Multi-Cloud Capability Industry-Leading Cyber Risk & Compliance Management Xacta solution enables customers’ cloud journeys Security Solutions 35% % of Business Line Revenue
Xacta: Cloud Focus and “Reference-ability” Expands Market Share and Opportunity 10 Cloud
Providers Additional Fed Gov(IC, DOD, and FedCiv) Commercial International (Partners and customers) Commercial SaaS Vendors C2S Security Solutions % of Business Line Revenue 35%
11 Sources: Gartner, RightScale Worldwide Public Cloud Service Revenue$ in Billions Public Cloud
Adoption% of All Respondents 14% CAGR Rick Trinidad, Worldwide Public Sector, AWS “With Xacta’s…inheritance and provider project features and capabilities, AWS expects a dramatic increase in efficiencies and effectiveness in completing ATOs,
in some cases up to 90% faster.” AWS and Microsoft Azure Partnerships “We recognize the value of Xacta in addressing the unique compliance needs of our customers, and we’re working with them to accelerate development time and bring this cyber
risk management solution directly to Microsoft Azure users.” Lily Kim, General Manager, Azure Global at Microsoft Security Solutions 35% % of Business Line Revenue
Prospective & Pending Current Cloud customers and partners use Xacta to automatically
inherit common compliance data Automated inheritance accelerates cloud adoption and creates incremental demand for Xacta solution Cloud infrastructure owners share control information with partners and customers via Xacta Automated
inheritance accelerates workload migration by operationalizing shared security and enabling reciprocity Cloud provider customer relationships create channel to sell Xacta into new organizations 12 Inheritance Creates Channel Partnerships to
Drive Incremental Revenue Security Solutions 35% % of Business Line Revenue
Encrypted communications, storage and applications Private Network Access Private Web Access Cloaked
Services Secure, private network in the cloud Anonymous worldwide internet access 13 Reduce Attack Surface, Hide Digital Exhaust & Disguise Identity You can’t attack what you can’t see Security Solutions 10% % of Business Line
Revenue
14 Mission-Critical Cybersecurity Where it is Needed Most Security Solutions 10% % of Business
Line Revenue
50% Based on Telos management estimates derived from customer / sponsor contract
assumptions FBIFingerprint Capture SaaS biometric web capture Pre-employment screeningIdentity vetting TSA - AirportsEmployee Vetting Continuous monitoring of airport employees – Security Threat AssessmentFingerprint capture and FBI
records check 100+ significant airports, airlines, general aviation customers DMDCMilitary ID Provider of the largest identity application in the US Government – Military ID (CAC)Biometric captureSmart cards PreCheck & CMS
Wins TSA PreCheck™ Enrollment Provider – 2MM new members per year over 10-year contract1Provider Enrollment & Oversight (PEO) contract holder Background checks for 1.5MM Centers for Medicare & Medicaid (CMS) health providers each
year1 15 Advancing Capabilities & Proven Validation Driving New Customer Wins Security Solutions % of Business Line Revenue
Affiliated Service Providers Fully integrated suite of Telos ID and commercial services for identity
verification, enrollment, fingerprinting, insider threat management, biometric matching, and personnel security IDTrust360 has direct interfaces to: The FBI's criminal recordsDHS's terrorist watch listTreasury's pay.govOther government identity
risk management systemsNumerous commercial identity, intelligence, and risk-based data sources 16 IDTrust360 Cloud Business Security Solutions Technology Support Center Customer Service Cloud Apps Cloud Apps Outside ATO NOC/SOC
Infrastructure Test & Staging Adjunction & Onboarding Core Services Customer Applications Enrollment Centers 50% % of Business Line Revenue
Productivity — Mobile / remote accessCoverage — Seamless roaming between Wi-Fi and cellular on any
device, anywhereCost Savings — Single integrated enterprise mobility management solutionEfficiency — Simplify the process of updating devices with the most recent version of apps and contentSecurity — Centrally managed security policy Network
Operations — Situational awareness of networks, including users, systems and security postureNetwork Maintenance — Preventive maintenance, troubleshooting and repairsDefensive Cyber Operations — Real-time threat monitoring, analysis and
remediation Secure Mobility Solutions Network Management Solutions 17 Secure Mobility and Network Management / Defense Secure Networks % of Business Line Revenue
John Wood(President, CEO, and Chairman) Joined Telos as EVP and COO in 1992; named President and CEO in
1994 Formerly worked in finance for Dean Witter Reynolds, and UBS Securities Michele Nakazawa(EVP and CFO) Joined Company in 2004 as VP and Controller; named CFO in 2005Former experience includes senior financial leadership roles with Ubizen,
National Security Analysts, and Federal Systems Division of IBM Edward Williams(EVP and COO) Joined Company in 1992 as SVP responsible for finance, pricing, purchasing, and Defense Contract Audit Agency compliance; named COO in 2000; also
served as CFO 2003-2005Formerly served as CFO at US Government contractors Centel Federal Systems and M/A.com Information Systems Richard Tracy(SVP, CSO, and CTO) Joined Company in 1986; appointed SVP and Chief Security Officer in
2005Co-invented Xacta in 2000 and principal inventor named on five issued-patents involving security risk and compliance management 18 Senior Management Team
Financial Highlights 19
TSA PreCheck – $1.7B+1 total 10-year contract potentialCMS – $2.0B2 total 10-year contract potentialU.S.
Government Telos Ghost Customer – $50MM1 with potential to increase dramatically over 10 years once converted to program of record Key New Contract Wins Note: Reflects fiscal year ended December 31Based on Telos management estimates derived
from customer / sponsor contract assumptionsReflects contract ceiling $108 $138 $159 $113 $135 Note: Reflects fiscal year ended December 31Note: For 9 month periods, Adj. EBITDA Margin reflected on an enterprise basis, before adjustments
for the Non-Controlling InterestsNote: FY 2018 includes one-time indirect rate adjustment benefit of $6.8M. Excluding this adjustment AEBITDA is 1.4%Based on Telos management estimates derived from customer / sponsor contract assumptionsReflects
contract ceiling 6.6%Adj. EBITDA Margin 10.5%Adj. EBITDA Margin 3.7%Adj. EBITDA Margin 6.3%Adj. EBITDA Margin 0.1%Adj. EBITDA Margin 20 22% CAGR 20%YoY Accelerating Revenue Growth and Expanding Margins
Grow revenue & expand margins by building robust sales channels Target & replace inefficient
legacy products withinorganizations Leverage diverse Security Solutions to expand commercial market presence Extend Security Solutions platform & ecosystem to capitalize on massive scalability Broaden existing reach within U.S. federal
government vertical Exploit increasing demand for NIST and other cybersecurity frameworks Expand international footprint through channel partners Note: Increasing demand for NIST framework identified as a near-term growth opportunity for Xacta
and Ghost 21 Growth Strategies
1) Based on Telos management estimates Telos Security Solutions consistently deliver more
efficient, more effective, and more secure operating environments Endorsed by marquee intelligence community customers with growing commercial market penetration Large and fast growing total addressable market (TAM) – $80B+1Driven by ongoing
cloud adoption and growing security needs in both government and commercial channels Clear visibility into rapidly accelerating, 85%+ recurring revenue growthGrowth inflection fueled by key long-term contract wins for Telos’ identity management
and cyber misattribution solutions Improving revenue mix and operating leverage to drive significant margin expansionScalable platform delivers strong free cash flow conversion 22 Investment Highlights Based on Telos management estimates
Premier provider of software-based solutions for the world’s most security conscious customers3,000+1 man-years invested in technology development
Appendix 23
24 Contact Information Investor Relations:The Blueshirt Group - brinlea@blueshirtgroup.comMedia
Relations:Merritt Group - damiano@merrittgrp.com
($ in thousands) FY 2017 FY2018 FY2019 9 mo. 2019 9 mo. 2020 Net
income (loss) attributable to Telos Corporation ($5,833) ($1,640) ($6,401) ($2,921) ($2,178) Interest Expense 6,690 7,258 7,467 5,470 6,026 (Benefit) provision for income
taxes (2,767) 31 (104) (187) (136) Depreciation 1,999 3,028 4,972 3,609 4,018 Stock-based compensation expense 50 Adjusted
EBITDA $139 $8,677 $5,934 $5,971 $7,730 25 Adjusted EBITDA Reconciliation Note: We define Adjusted EBITDA as net income (loss), adjusted for interest expense, loss on extinguishment of debt, (benefit) provision for income taxes,
depreciation and amortization, stock-based compensation expense, acquisition related expense and other (income) expense, net.
Customer Need / Pain Point Telos Solution Solution Capabilities Time, cost, effort of cyber risk
and compliance managementCompliance as an obstacle to cloud adoptionAudit fatigue – many standards Automated cyber risk management workflowInheritance and control mappingAutomated continuous monitoring Massive financial, reputational, and
personal consequences for breaches of mobile / digital assets Secure mobile access anywhereSecurity through encryption and obfuscationVirtual obfuscation network-as-a-service with encryption and managed attribution Reliance on inefficient
identity trust applications Identifying fraud and mitigating the impact of fraudulent activitiesProtection of employee and customer identity data Digital risk management platform offering enterprise identity and scalable security
solutionsOmni-channel services leveraging tech partnersIntegrated suite of advanced services modernizing management of threats and privacy of sensitive data Requirement for secure communications with certainty of delivery and non-repudiation
functionality Web-based; full spectrum of messaging systemsRoutes incoming messages and creates archive Continuous need to protect enterprise networks Solutions across and beyond the enterpriseOperation / defense of networks and cyber
ops AMHS Secure Networks 26 Telos Solution Set Detail
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