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SAN DIEGO - Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) reported second quarter 2025 revenue of $351.5 million, significantly exceeding analyst expectations of $307.14 million, representing 17.1% growth compared to $300.1 million in the same quarter last year. However, shares fell 2.7% following the earnings release as the company’s third quarter revenue guidance came in below analyst estimates.
The defense technology company posted adjusted earnings per share of $0.11, beating the analyst consensus of $0.09. The company reported 15.2% organic growth for the quarter, with particularly strong performance in its Kratos Government Solutions (KGS) segment, which saw 27.1% organic growth. The Defense Rocket Systems and C5ISR businesses were standout performers with organic growth rates of 116.6% and 25.4%, respectively, compared to the second quarter of 2024.
Despite the strong quarterly results, investors appeared concerned about Kratos’ third quarter 2025 revenue guidance of $315-325 million, which fell short of the $328 million consensus estimate. The company did, however, increase its full-year 2025 revenue and adjusted EBITDA guidance.
"A generational recapitalization of strategic weapon systems is underway, with significant global funding being committed by the U.S. and its allies," said Eric DeMarco, Kratos’ President and CEO. "The Global Defense and National Security Market is currently approximately $2.5 trillion, led by the United States peace through strength posture and is expected to grow for the foreseeable future."
The company reported a consolidated book-to-bill ratio of 0.7 to 1.0 for the second quarter and 1.2 to 1.0 for the last twelve months. Kratos ended the quarter with a total backlog of $1.414 billion, compared to $1.508 billion at the end of the first quarter, and a bid and proposal pipeline of $13.0 billion.
Operating income for the quarter was $3.7 million, down from $12.5 million in the second quarter of 2024, while adjusted EBITDA came in at $28.3 million compared to $29.9 million in the same period last year.
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