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.
Adjusted diluted EPS reached $2.16, a 24% increase year-over-year, with adjusted EBITDA margin at 14.7%, above the high end of the target range.
Cash flow was impacted by payment delays, resulting in operating cash outflow of $183 million and free cash flow outflow of $198 million for the quarter.
Days sales outstanding (DSO) increased to 96 days, expected to peak this quarter with improvements anticipated in Q4.
Maximus reported Q3 fiscal 2025 revenue of $1.35 billion, representing 2.5% year-over-year growth and 4.3% organic growth.
Outside U.S. segment revenue decreased to $147 million due to divestitures but showed 7.3% organic growth; operating margin improved to 4.0%.
Total debt stood at $1.67 billion with net leverage ratio at 2.1x, expected to fall below 2x by September 30, 2025.
U.S. Federal Services segment revenue increased 11.4% organically to $761 million, with an operating margin of 18.1%, a new high watermark.
U.S. Services segment revenue decreased slightly to $440 million due to prior year Medicaid unwinding volumes; operating margin was 10.2%.
Dafinchi