Telos Goes Public

Nearly a month after McAfee made its second appearance on the public market, the Virginia-based provider of security services to government and commercial organizations makes its own debut.

Telos Corp., provider of IT services to federal government agencies, military, intelligence, and large commercial organizations, today made its debut in the public market with an initial public offering of 14.97 million shares priced at $17 a share of its common stock.
The Ashburn, Va.-based company, established in 1969, will use the proceeds from the IPO for general corporate purposes, to retire debt, and to repurchase a noncontrolling interest in its Telos identity management unit, among other things.
With 2019 revenues of around $160 million, Telos is among a handful of security vendors that have
gone public
this year. The others include McAfee, which in October raised $740 million in what was actually its second IPO; Palantir, which went public in September with a valuation of around $22 billion; and Sumo Logic, which in September raised some $325 million via an IPO that valued the company at more than $2.15 billion.
In a conversation with Dark Reading Thursday, Telos CEO John Wood described the initial investor response to the IPO as overwhelmingly positive.
The investment marketplace really, really like our story, Wood says. We are hugely oversubscribed, and the quality of the investors that came in blew me away.
Wood believes much of the positive sentiment is tied to the fact that 85% of Telos revenue is recurring and that nearly 100% of its customers are referenceable and repeat buyers.
Wood is bullish about the outlook for several of the companys core technologies. One of them is Telos Ghost, a new capability the company announced last year for helping organizations avoid attacks by essentially making them invisible to adversaries.
Its a misattribution and obfuscation solution that operates under the principal that if we can make you disappear off the attack vector, you cant be hacked, Wood says. What is unique about Telos Ghost is that we have a series of algorithms that we wrap around IP hopping activity.
That enables IP addresses to essentially shift and change in such a manner that makes it hard for attackers to draw a bead on an organizations Internet presence.
You hop around the world in random ways and literally disappear off the network, Wood says.
Customers of the technology include the US intelligence community, military, and law enforcement. Wood also points to a large education platform that is using Ghost to protect school kids working out of home as an example of the broadening use cases for the technology.
Risk Management and Compliance Story
Another technology that Wood says has broad appeal is Xacta, a risk management and compliance automation technology that numerous organizations — especially within the federal government — are using to monitor for compliance with security standards like FedRAMP, NIST CSF, GLBA, and HIPAA.
Telos counts the US Department of Homeland Security and the US intelligence community among the many users of the technology, which initially was designed for on-premises use but is now cloud-enabled. According to Wood, Xactas main selling points include its ability to monitor multiple environments — cloud, on-premises, and hybrid — at the same time.
Identity management is another big focus area. The company recently secured two 10-year, multibillion-dollar contracts for technology that allows organizations to continuously monitor and vet users activity for potential suspicious behavior. One of the contracts is with the TSA, which will use Telos to enroll users for its PreCheck program. The other contract is with the US Centers for Medicare & Medicaid services.
Wood says the decision to go public at this time was prompted by a desire to bring in some long-term investors to the company.
This is the first time we have ever taken long-term permanent capital. We have bootstrapped our growth so far, he says. We are going to clean out the balance sheet, put plenty of juice into the tank, and get really moving from the standpoint of revenue acceleration.

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