Adjusted EBITDA was a $400,000 profit, outperforming guidance which forecasted a loss between $2.1 million and $600,000.
GAAP gross margin was 33.2%, and cash gross margin was 38.4%, both within guidance ranges but lower year-over-year due to revenue mix.
Operating cash flow was $7 million, and free cash flow was $4.6 million, representing a 12.9% free cash flow margin for the quarter.
Security Solutions accounted for approximately 90% of total revenue and was the primary driver of growth.
Telos reported second quarter 2025 revenue of $36 million, a 26% year-over-year increase, exceeding guidance of $32.5 million to $34.5 million.
Year-to-date free cash flow was $8.4 million or 12.6% margin, with significant improvements driven by revenue growth, cost discipline, and working capital management.
Gross margin improved to 33.3% in Q4, up 120 basis points from prior year, driven by favorable revenue mix and efficiencies.
Healthcare division sales declined in Q4, negatively impacting consolidated growth but with plans for improvement.
Net interest expense decreased to $7.2 million due to lower debt levels and favorable convertible notes impact.
Operating expenses were well controlled with SG&A at 14.8% of sales and R&D increased to 3.7% of revenues reflecting investment in innovation.
Optoelectronics division set a new Q4 record with $113 million in revenues including intercompany sales.
Q4 revenues increased 5% year-over-year to $505 million, driven by a 28% increase in Security division service revenues and 10% growth in Optoelectronics division revenues.
Record Q4 non-GAAP adjusted EPS of $3.24, the highest quarterly adjusted EPS in company history.
Security division revenues in Q4 were $367 million, up 7% year-over-year, with a 50% growth excluding Mexico contracts and acquisitions.
Dafinchi