Kratos Defense Q2 Earnings and Revenues Outpace Estimates

KTOS’ Revenue Growth Accelerates

Revenues of $458.8 million beat the consensus estimate of $412 million by 11.4% and increased 30.5% year over year. Kratos Government Solutions led the growth, while total organic revenues advanced 19.1%. 

Product sales climbed 33.5% year over year to $289.1 million. Service revenues increased 25.8% to $169.7 million.

Operational Update of Kratos Defense

Selling, general and administrative expenses jumped 35.5% to $73.3 million. Research and development expenses rose 33.3% to $13.6 million.

Amortization of intangible assets increased to $10.1 million from $2.8 million, while depreciation rose to $3.9 million from $3 million. 

Kratos recorded an operating loss of $1.6 million against the operating income of $3.7 million a year earlier.

KTOS’ Segmental Performance

Unmanned Systems: Revenues from this segment totaled $79.1 million compared with $73.2 million in the year-ago quarter. The increase was primarily driven by Valkyrie-related activity.

Kratos Government Solutions: Revenues from this segment amounted to $379.7 million compared with $278.3 million in the year-ago quarter. This rise was due to organic revenue growth across its Defense and Rocket Support business, Turbine Technologies and Microwave Products and Space, Training and Cyber businesses, with organic revenue growth rates of 50.2%, 43.3%, 29.5% and 8.7%, respectively, year over year.

Financial Details of KTOS

As of June 28, 2026, cash and cash equivalents totaled $1.44 billion, up from $0.56 billion as of Dec. 28, 2025.

The company reported other current liabilities of $19.9 million as of June 28, 2026 compared with $9 million recorded as of Dec. 28, 2025.

The net cash used in operating activities amounted to $38.4 million during the first six months of 2026 compared with $40.9 million in the same period of 2025.

KTOS’ Backlog Supports Demand Visibility

Consolidated bookings totaled $492.2 million in the second quarter, resulting in a book-to-bill ratio of 1.1. The last-12-month book-to-bill ratio was 1.3, with bookings of $1.99 billion.

Backlog increased to $2.08 billion as of June 28, 2026 from $2.05 billion at the end of the first quarter. Funded backlog was $1.57 billion, while unfunded backlog totaled $512.7 million. The bid and proposal pipeline expanded to $15 billion from $14.3 billion.

Kratos Defense’s Guidance

KTOS projects second-quarter 2026 revenues to be in the range of $460-$480 million. The Zacks Consensus Estimate for revenues is pegged at $460.3 million, which is at the lower end of the company’s guided range.

Kratos raised its full-year 2026 revenue guidance to $1.75-$1.81 billion compared with the previous range of $1.7-$1.76 billion. The Zacks Consensus Estimate for revenues is pegged at $1.75 billion, which is at the lower end of the company’s guided range.

Kratos Defense now expects operating cash flows to be in the range of $30-$50 million and free cash flow to be in the band of $85-$105 million for 2026.

KTOS’ Zacks Rank

Kratos Defense currently has a Zacks Rank #4 (Sell).

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 2026 adjusted earnings per share (EPS) of $1.89 beat the Zacks Consensus Estimate of $1.66 by 13.9%. The bottom line improved 21.1% from the year-ago quarter’s level of $1.56.

Revenues rose 14.5% year over year to $24.71 billion and outpaced the consensus mark of $22.83 billion by 8.2%.

Northrop Grumman Corporation NOC reported second-quarter 2026 adjusted earnings of $7.68 per share, which beat the Zacks Consensus Estimate of $6.84 by 12.3%. The bottom line, however, declined 5.8% from the year-ago quarter’s level of $8.15.

NOC’s total sales of $10.88 billion in the second quarter outperformed the Zacks Consensus Estimate of $10.80 billion by 0.7%. The top line also improved 5.1% from $10.35 billion reported in the year-ago quarter.

Textron Inc. TXT reported second-quarter 2026 adjusted earnings of $1.62 per share, which surpassed the Zacks Consensus Estimate of $1.52 by 6.6%. The bottom line also rose 4.5% from $1.55 in the year-ago quarter. 

The company reported total revenues of $3.83 billion, which beat the Zacks Consensus Estimate of $3.82 billion by 0.15%. The top line also increased 3% from the year-ago quarter’s level of $3.72 billion.

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