Kratos Defense Beats on Q3 Earnings, Raises '25 Revenue View

Kratos Defense & Security Solutions, Inc. KTOS reported third-quarter 2025 adjusted earnings of 14 cents per share, which beat the Zacks Consensus Estimate of 12 cents by 16.7%. The bottom line also increased 27.3% from the year-ago quarter’s 11 cents. 

Kratos Defense reported GAAP earnings of 5 cents per share compared with 2 cents in the third quarter of 2024.

KTOS’ Total Revenues

Total revenues were $347.6 million, which beat the Zacks Consensus Estimate of $324 million by 7.1%. The figure also rose 26% from $275.9 million recorded in the year-ago quarter.

Operational Update of Kratos Defense

Kratos Defense’s selling, general and administrative expenses increased 13.8% year over year. Research and development expenses increased 1% compared with the prior-year quarter. Depreciation expenses surged 16% year over year.

Expenses related to the amortization of intangible assets increased 9.1% from the year-ago figure.

The company reported operating income of $7.1 million, which increased from the year-ago quarter’s $6.5 million.

It posted a consolidated book-to-bill ratio of 1.2-1, with bookings worth $414.1 million.

The total backlog at the end of the third quarter was $1.178 billion compared with $1.076 billion at the end of the second quarter of 2025.

KTOS’ Segmental Performance

Unmanned Systems: Revenues from this segment totaled $87.2 million compared with $64.2 million in the year-ago quarter. 

Kratos Government Solutions: Revenues from this segment totaled $260.4 million compared with $211.7 million in the year-ago quarter. The most notable growth in this segment was in the company’s Defense Rocket Systems and Space, Training and Cyber businesses, with organic revenue growth rates of 47.2% and 21.2%, respectively, compared with the third quarter of 2024.

Financial Details of KTOS

As of Sept. 28, 2025, cash and cash equivalents totaled $565.9 million, up from $329.3 million as of Dec. 29, 2024.

The company reported no long-term debt as of Sept. 28, 2025, compared with $174.6 million recorded as of Dec. 29, 2024.

The net cash used in operating activities amounted to $54.2 million during the first nine months of 2025 against $4.1 million net cash provided in the year-ago period.

Kratos Defense’s Guidance

KTOS projects fourth-quarter 2025 revenues to be in the range of $320-$330 million. The Zacks Consensus Estimate for revenues is pegged at $324.5 million, lower than the mid-point of the company’s guided range.

KTOS now expects 2025 revenues to be in the $1.32-$1.33 billion range, higher than the previous guidance of $1.29-$1.31 billion. The Zacks Consensus Estimate for revenues is pegged at $1.31 billion, which is below the company’s newly guided range.

Kratos Defense expects operating cash flows to be in the range of $10-$20 million and free cash flow use to be in the band of $95-$105 million for 2025.

KTOS’ Zacks Rank

Kratos Defense currently has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

The Boeing Company BA incurred an adjusted loss of $7.47 per share in the third quarter of 2025, wider than the Zacks Consensus Estimate of a loss of $3.68. The bottom line improved from the year-ago quarter’s reported loss of $10.44 per share.

Its revenues amounted to $23.27 billion, which outpaced the Zacks Consensus Estimate of $21.92 billion by 6.2%. The top line also surged 30.4% from the year-ago quarter’s reported figure of $17.84 billion.

Textron Inc. TXT reported third-quarter 2025 adjusted earnings of $1.55 per share, which beat the Zacks Consensus Estimate of $1.47 by 5.4%. The bottom line also rose 10.7% from $1.40 in the year-ago quarter.

The company reported total revenues of $3.6 billion, which missed the Zacks Consensus Estimate of $3.71 billion by 2.8%. Moreover, revenues increased 4.9% from the year-ago quarter’s level of $3.43 billion.

RTX Corporation’s RTX third-quarter 2025 adjusted earnings per share (EPS) of $1.70 beat the Zacks Consensus Estimate of $1.42 by 19.7%. The bottom line also improved 17.2% from the year-ago quarter’s level of $1.45.

RTX’s third-quarter sales totaled $22.48 billion, which surpassed the Zacks Consensus Estimate of $21.48 billion by 4.6%. The top line also surged a solid 11.9% from $20.09 billion recorded for the third quarter of 2024.

 

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This article originally published on Zacks Investment Research (zacks.com).

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