Kratos Defense & Security Solutions reported its fourth‑quarter and full‑year 2025 results on February 23, 2026. Revenue rose 21.9% to $345.1 million in the quarter and 16.6% to $1.347 billion for the year, while adjusted earnings per share climbed to $0.18, beating the consensus estimate of $0.16. GAAP net income increased to $5.9 million from $3.9 million a year earlier.
The top‑line growth was driven by strong demand in the company’s core defense segments. Unmanned Systems revenue grew 12.1% organically to $68.5 million, and Government Solutions revenue increased 22.2% to $61.1 million. The company also reported a 35.8% organic growth in the Defense Rocket Support segment, a 32.4% rise in Microwave Products, and a 22.7% increase in Space Training and Cyber, underscoring robust performance across its portfolio.
Adjusted EBITDA for the quarter reached $34.1 million, slightly above the high end of the company’s $29 million to $34 million range. Operating income improved to $17.3 million from $11.0 million in Q4 2024, reflecting higher volume and a more favorable revenue mix. However, the company noted that elevated bid and proposal costs and rising subcontractor and material expenses on certain multi‑year fixed‑price contracts in the unmanned systems business partially offset the margin expansion.
In its earnings call, President and CEO Eric DeMarco highlighted the company’s record backlog of $1.573 billion and a record opportunity pipeline of $13.7 billion, stating that the “opportunity set for Kratos has never been stronger.” Chief Financial Officer Deanna Lund explained that the federal government shutdown had delayed the timing of some contract funding, leading to an increase in customer accounts receivable days sales outstanding.
Investors reacted to the results with a focus on the company’s first‑quarter 2026 revenue guidance, which fell short of analyst expectations. The guidance of $335 million to $345 million, below the consensus range of $342.4 million to $355.4 million, combined with the company’s high valuation multiples and significant capital‑expenditure plans, tempered enthusiasm for the earnings beat.
Despite the near‑term guidance miss, Kratos reaffirmed its 2026 revenue outlook of $1.595 billion to $1.675 billion and adjusted EBITDA guidance of $157 million to $167 million. Management expressed confidence that the company’s strong backlog, growing pipeline, and continued investment in hypersonics and unmanned systems will sustain growth and margin expansion in the coming years.
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