Kratos Defense & Security Solutions announced on February 26, 2026 that it had completed the Critical Design Review (CDR) for the Space Development Agency’s Advanced Fire Control Ground Infrastructure (AFCGI) system. The $116.7 million prime contract, awarded in November 2024, now moves into the implementation phase on an accelerated schedule.
The CDR was achieved ten months after the Preliminary Design Review, which closed in April 2025, correcting the earlier claim of an eight‑month interval. The review was completed with zero liens, a milestone that removes a key risk and clears the way for the next development phase.
AFCGI integrates advanced software, resilient ground systems, and secure networks into a unified, operational cloud architecture that supports real‑time fire‑control missions for the Space Development Agency. The system will provide a common, enduring ground infrastructure that reduces cost and complexity for multiple AFC prototype efforts.
Kratos’ Q4 2025 earnings, released on February 23, 2026, showed revenue of $345.1 million—up 20 % year‑over‑year—and adjusted EPS of $0.18, beating the consensus estimate of $0.14 by $0.04. The revenue beat was driven by strong demand in the Unmanned Systems and Government Solutions segments, which reported $68.5 million and $276.6 million in revenue, respectively. CEO Eric DeMarco said, “We finished 2025 exceeding our financial objectives for the fourth quarter, generating approximately 20 percent Q4 year‑over‑year organic Revenue growth, generating a 1.3 to 1.0 book to bill ratio on top of this 20 percent organic growth, having a record backlog of $1.573 billion, and a record opportunity pipeline of $13.7 billion, with the opportunity set for Kratos having never been stronger and continuing to increase.” The earnings beat reflected disciplined cost control and a favorable mix of high‑margin contracts.
Investors responded with mixed sentiment, citing guidance that fell short of expectations for 2026 and concerns about cash‑flow impairment from production ramp‑ups and inventory increases. The company’s record backlog and pipeline, however, reinforce its strategic position as a prime contractor for the SDA and other defense programs.
The CDR milestone positions Kratos to deliver the AFCGI system on schedule, supporting the Space Development Agency’s mission to provide real‑time fire‑control capabilities to the joint warfighter. The achievement also strengthens Kratos’ broader strategy of building vertically integrated, affordable defense platforms and underscores its ability to advance complex, software‑driven systems on a rapid timeline.
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