Kratos Defense & Security Solutions (KTOS) reported second-quarter 2026 adjusted earnings of 21 cents per share, blowing past the Zacks Consensus Estimate of 13 cents by 61.5%.
That bottom-line result marked a 90.9% jump from the year-ago quarter’s adjusted earnings of 11 cents per share, signaling strong operational momentum.
GAAP earnings came in at 2 cents per share, matching the year-ago quarter’s result on that basis.
Revenues of $458.8 million beat the consensus estimate of $412 million by 11.4% and surged 30.5% year over year, driven by broad-based growth across the company’s business segments.
Product sales climbed 33.5% year over year to $289.1 million, while service revenues rose 25.8% to $169.7 million, with total organic revenues advancing 19.1%.
Selling, general and administrative expenses jumped 35.5% to $73.3 million, and research and development expenses rose 33.3% to $13.6 million during the quarter.
Kratos recorded an operating loss of $1.6 million in Q2, compared to operating income of $3.7 million in the same period a year earlier, reflecting increased investment activity.
The company’s Unmanned Systems segment generated revenues of $79.1 million, up from $73.2 million a year ago, with the increase primarily driven by Valkyrie-related activity.
The Kratos Government Solutions segment delivered revenues of $379.7 million compared to $278.3 million in the prior-year quarter, posting organic growth rates of 50.2%, 43.3%, 29.5%, and 8.7% across its key business units respectively.
As of June 28, 2026, cash and cash equivalents totaled $1.44 billion, a significant increase from $0.56 billion recorded as of December 28, 2025.
Consolidated bookings totaled $492.2 million in the second quarter, producing a book-to-bill ratio of 1.1, while the last-12-month book-to-bill ratio stood at a stronger 1.3.
Backlog grew to $2.08 billion as of June 28, 2026, up from $2.05 billion at the close of the first quarter, with funded backlog reaching $1.57 billion and unfunded backlog at $512.7 million.
The bid and proposal pipeline expanded to $15 billion from $14.3 billion, underlining continued demand across Kratos’ defense and security markets.
Kratos raised its full-year 2026 revenue guidance to a range of $1.75 to $1.81 billion, compared with its previous guidance of $1.7 to $1.76 billion.
The company now projects 2026 operating cash flows in the range of $30 to $50 million and free cash flow of $85 to $105 million.
Peers also posted strong results in the defense sector, with RTX Corporation (RTX) reporting Q2 adjusted EPS of $1.89, beating estimates of $1.66 by 13.9%, on revenues of $24.71 billion.
Northrop Grumman (NOC) reported Q2 adjusted earnings of $7.68 per share, topping the Zacks Consensus Estimate of $6.84 by 12.3%, though the result declined 5.8% from the prior-year quarter’s $8.15.
Textron (TXT) reported Q2 adjusted earnings of $1.62 per share, surpassing the consensus estimate of $1.52 by 6.6%, on total revenues of $3.83 billion.
