Summary
- Telos provides security solutions to organizations.
- Of course, this is a very interesting and lucrative market segment, although the company seems more project-driven than an organic software growth play.
- Relative sales multiples might look compelling, although growth is a bit underwhelming compared to other IPO high-fliers, yet, contrary to many recent IPOs, is already profitable.
- I am not convinced about the product and the strength, although I am intrigued to learn about the anticipated revenue run-up in the years to come following recent project wins.
Telos is a play on organization security solutions and while this segment is very compelling, I have some reservations about the underlying business. While the company is growing and posts profits, and certainly is well-positioned, it unfortunately is not a SaaS play and seems to rely largely on large project awards.
Relative sales multiples look reasonable given the pace of growth and actual profitability, yet absolute earnings valuations look quite pricey. However, the entire technology market, or at least large segments of this industry, are driven by sales multiples.
While the high absolute valuations do not necessarily look very compelling, I am interested to hear that the company expects solid revenue growth in the years ahead driven by large project awards. If working out as planned, this means that the company should see a big jump in sales in the coming one or two years.
