Kratos Defense Beats Q2 Earnings Estimates, Hikes '25 Revenue View

Kratos Defense & Security Solutions, Inc.’s (KTOS) shares gained 8.1% to reach $63.88 on Aug. 8 following the release of its second-quarter 2025 results.

The company reported second-quarter 2025 adjusted earnings of 11 cents per share, down 21.4% from 14 cents in the prior-year quarter. The bottom line, however, surpassed the Zacks Consensus Estimate of nine cents by 22.2%.

Kratos Defense reported GAAP earnings of two cents per share compared with five cents reported in the second quarter of 2024.

The decline in the bottom line can be primarily attributed to higher costs as well as operating expenses incurred in the second quarter of 2025 compared with the second quarter of 2024.

KTOS’ Total Revenues

Total revenues were $351.5 million, which beat the Zacks Consensus Estimate of $307 million by 14.6%. The figure also rose 17.1% from $300.1 million recorded in the year-ago quarter.

The year-over-year improvement can be attributed to the Kratos Government Solutions segment’s revenue growth.

Kratos Defense & Security Solutions, Inc. Price, Consensus and EPS Surprise

Kratos Defense & Security Solutions, Inc. price-consensus-eps-surprise-chart | Kratos Defense & Security Solutions, Inc. Quote

Operational Update of Kratos Defense

Kratos Defense’s selling, general and administrative expenses increased 9.1% year over year. Research and development expenses were in line with the prior-year quarter. Depreciation expenses surged 11.1% year over year.

Expenses related to the amortization of intangible assets increased 27.3% from the year-ago figure.

The company reported operating income of $3.7 million, which declined from the year-ago quarter’s $12.5 million.

It posted a consolidated book-to-bill ratio of 0.7-1.0, with bookings worth $257 million.

The total backlog at the end of the second quarter was $1.41 billion compared with $1.51 billion at the end of the first quarter of 2025.

KTOS’ Segmental Performance

Unmanned Systems: Net revenues declined 14.7% year over year to $73.2 million from $85.8 million. The revenues were lower because of the absence of revenues worth $17.4 million from an international drone shipment, generated in the prior-year quarter.

Kratos Government Solutions: Net revenues rose 29.9% to $278.3 million on a year-over-year basis. The revenue improvement can be attributed to notable growth witnessed in all of its business units, especially in its C5ISR, Defense Rocket Support, microwave products, space, satellite and cyber, as well as turbine technologies businesses. Positive synergies from the acquisition of certain assets from Norden Millimeter, Inc. also contributed to this segment’s top-line growth.

Financial Details of KTOS

As of June 29, 2025, cash and cash equivalents totaled $783.6 million, up from $329.3 million as of Dec. 29, 2024.

The long-term debt amounted to $233 million as of June 29, 2025, down from $239 million recorded as of Dec. 29, 2024.

The net cash outflow from operating activities amounted to $40.9 million during the first six months of 2025 compared with the net cash outflow of $2 million in the previous year.

Kratos Defense’s 2025 Guidance

Kratos Defense has introduced its third-quarter guidance and partially updated its full-year 2025 guidance.

KTOS projects third-quarter 2025 revenues in the range of $315-$325 million. The Zacks Consensus Estimate for revenues is pegged at $323 million, higher than the mid-point of the company’s guided range.

KTOS now expects 2025 revenues in the $1.29-$1.31 billion range, higher than the previous guidance of $1.26-$1.29 billion. The Zacks Consensus Estimate for revenues is pegged at $1.28 billion, which is below the company’s newly guided range.

Kratos Defense continues to expect operating cash flows in the range of $50-$60 million and free cash outflow in the range of $75-$85 million for 2025.

KTOS’ Zacks Rank

Kratos Defense currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

RTX Corporation’s (RTX) second-quarter 2025 adjusted earnings per share (EPS) of $1.56 beat the Zacks Consensus Estimate of $1.45 by 7.6%. The bottom line also improved 10.6% from the year-ago quarter’s level of $1.41.

RTX’s second-quarter sales totaled $21.58 billion, which surpassed the Zacks Consensus Estimate of $20.53 billion by 5.1%. The top line also surged a solid 9.4% from $19.72 billion recorded for the second quarter of 2024.

Lockheed Martin Corporation (LMT) reported second-quarter 2025 adjusted earnings of $7.29 per share, which beat the Zacks Consensus Estimate of $6.49 by 12.3%. The bottom line increased 2.5% from the year-ago quarter's reported figure of $7.11.

Net sales were $18.16 billion, which missed the Zacks Consensus Estimate of $18.56 billion by 2.2%. The top line, however, inched up 0.2% from $18.12 billion reported in the year-ago quarter.

Northrop Grumman Corporation (NOC) reported second-quarter 2025 adjusted earnings of $7.11 per share, which beat the Zacks Consensus Estimate of $6.71 by 6%.

NOC’s total sales of $10.35 billion in the second quarter beat the consensus estimate of $10.06 billion by 2.9%. The top line also rose 1.3% from $10.22 billion reported in the year-ago quarter.

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