Kratos Defense & Security Solutions Inc
Q1 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +6.73%.
Did KTOS Beat Earnings? Q1 2025 Results
Kratos Defense & Security Solutions opened 2025 on solid footing, posting Q1 revenue of $302.60 million — a 9.2% gain over the prior-year quarter — while adjusted EPS held steady at $0.12 versus $0.11 a year ago, reflecting disciplined execution even as cash outlays weighed on the balance sheet. The primary engine behind the quarter's growth was the Kratos Government Solutions segment, which generated $239.50 million in revenue on 7.8% organic growth, with Defense Rocket Systems, Microwave Products, and C5ISR businesses each expanding organically between 13.1% and 18.7%. Bookings were a standout, with consolidated orders of $365.60 million producing a healthy 1.2x book-to-bill ratio, pushing total backlog to $1.51 billion. For investors watching the broader <a href="https://247wallst.com/investing/2025/12/27/defense-stocks-are-booming-these-are-the-2-hottest-contractors-to-buy-for-2026/">defense sector's growth trajectory</a>, Kratos reaffirmed full-year 2025 revenue guidance of $1.26 to $1.28 billion and is projecting roughly 14% organic revenue growth in 2026, with management citing government funding clarity and a largely domestic supply chain as key reasons for confidence heading into what it expects to be a particularly strong second half.
- Defense Rocket Systems, Microwave Products, and C5ISR organic revenue growth rates of 13.1%-18.7%
- Increased target drone sales driving KUS organic growth of 6.2%
- Consolidated book-to-bill ratio of 1.2x supporting future revenue visibility
- Growing bid and proposal pipeline of $12.6 billion
“Since our last report to you, the Defense and National Security Funding and priorities environment for the industry and for Kratos has become clearer, including a government full year fiscal 2025 CRA and funding now being put in place, a potential additional $150 billion defense related 2025 Reconciliation Bill progressing and the potential for a $1 trillion fiscal 2026 U.S. National Security Budget, all increasing our confidence in Kratos' 2025 and 2026 full year financial forecasts, including approximately 10 percent and 14 percent year over year, organic revenue growth, respectively.”
Kratos Defense & Security Solutions CEO, on the earnings call
Forward Guidance & Outlook
Kratos reaffirmed its full-year 2025 financial guidance: revenues of $1,260-$1,285 million (approximately 10% organic YoY growth), Adjusted EBITDA of $112-$118 million, operating cash flow of $50-$60 million, capital expenditures of $125-$135 million, and free cash flow use of ($75)-($85) million. Q2 2025 guidance includes revenues of $300-$310 million and Adjusted EBITDA of $21-$25 million. Management expects Q3 and Q4 2025 to be particularly strong as customer-related predictability returns with government funding clarity. For 2026, the company projects approximately 14% organic revenue growth with higher expected EBITDA margins as higher-margin microwave and propulsion businesses continue to scale. The Israel microwave electronics facility move in late June may temporarily impact Q2 manufacturing productivity. Elevated capex reflects expansions in rocket systems, hypersonic, microwave products, jet engine, and secure space facilities.
KTOS YoY Financials
KTOS Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.