What happened
Shares of Telos (TLS 1.45%) are crashing in Thursday's trading. The cybersecurity company's stock was down roughly 33% in the daily session as of 1 p.m. ET, according to data from S&P Global Market Intelligence.
Telos published its fourth-quarter earnings results before the market opened on March 16, delivering sales and earnings for the period that came in ahead of the market's expectations. But despite delivering top- and bottom-line beats, management's guidance spooked the market and is prompting big sell-offs for the stock.
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So what
Telos reported non-GAAP (adjusted) earnings per share of $0.05 on revenue of $47.34 million. The average analyst estimate had called for an adjusted per-share loss of $0.01 on revenue of $44.77 million. On the other hand, sales were still down roughly 26% year over year in the period, and management's guidance indicates that the business will likely continue to struggle this year.
For the first quarter, the company anticipates sales to come in between $30 million and $33 million, suggesting an approximately 37% year-over-year decline at the midpoint of the target. Meanwhile, Telos is targeting full-year sales to be between $115 million and $140 million, suggesting a roughly 41% annual decline from the $216.9 million in revenue that it posted last year.
Now what
2023 is shaping up to be a transition year for Telos, and the business is focused on trying to lay the groundwork for new growth initiatives next year and beyond. On the other hand, there's not much visibility on what comes next for the company. Telos is losing ground in its corner of the cybersecurity industry.
While the company can make efforts to streamline its operations and pursue cost-cutting initiatives to improve margins, it will eventually need to prove that it can stabilize revenue. For now, Telos' outlook remains highly speculative, and investors without high risk tolerance should take a cautious approach to the stock.
