Kratos Defense & Security Solutions Inc
Q2 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +2.36%.
Did KTOS Beat Earnings? Q2 2025 Results
Kratos Defense & Security Solutions posted a decisive beat in the second quarter of fiscal 2025, reporting adjusted EPS of $0.11 against a consensus estimate of $0.09 — a 17.77% beat — while revenue of $351.50 million topped expectations of $305.83 million by 14.93% and climbed 17.1% year-over-year. The headline driver was an explosive quarter within the Kratos Government Solutions segment, where Defense Rocket Systems revenue surged 116.6% on hypersonic mission timing and C5ISR grew 25.4%, pushing KGS to 27.1% organic growth. Those gains more than offset weakness in the Unmanned Systems segment, which saw revenue fall to $73.20 million from $85.80 million as a large prior-year international drone shipment did not repeat. For <a href="https://247wallst.com/investing/2025/12/27/defense-stocks-are-booming-these-are-the-2-hottest-contractors-to-buy-for-2026/">investors watching defense contractors</a>, management's raised full-year guidance — revenue of $1.29 billion to $1.31 billion and Adjusted EBITDA of $114 million to $120 million — alongside a record $13.00 billion bid pipeline and the pending $750 million Poseidon contract, underscores the company's momentum heading into 2026.
- Defense Rocket Systems business organic revenue growth of 116.6% driven by timing of hypersonic missions
- C5ISR business organic revenue growth of 25.4%
- KGS segment 27.1% organic growth across all businesses
- Generational recapitalization of strategic weapon systems with increasing global defense budgets
“A generational recapitalization of strategic weapon systems is underway, with significant global funding being committed by the U.S. and its allies, including as represented by a planned U.S. 2026 National Security spend exceeding $1 trillion, NATO committing 5% of member GDP to defense, and Asian allies looking to do the same.”
Kratos Defense & Security Solutions CEO, on the earnings call
Forward Guidance & Outlook
Kratos raised full-year 2025 guidance: revenue of $1,290M–$1,310M and Adjusted EBITDA of $114M–$120M. Q3 2025 guidance calls for revenue of $315M–$325M and Adjusted EBITDA of $25M–$30M. FY2025 operating cash flow is expected at $50M–$60M, capital expenditures of $125M–$135M, and free cash flow use of ($75M)–($85M). The company expects increased EBITDA margins beginning in 2026 as higher-margin programs ramp and lower-margin legacy fixed-price contracts are renegotiated. Post-quarter, Kratos was informed it won a single-award prime contract potentially worth up to $750M (code name Poseidon), expected to be formally awarded by year-end, and was down-selected on another large program of record (code name Deimos). The bid and proposal pipeline reached a record $13.0 billion.
KTOS YoY Financials
KTOS Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.