Defense Demand: Record Backlogs and Drone Program Wins
Companies reported record backlogs and a more established drone opportunity, alongside explicit conditions on funding and conversion to revenue.
Lantronix Inc. (LTRX), a supplier of camera and software technology for military drones, said its drone opportunity progressed during fiscal 2026 from “early validation” to a “meaningful growth engine.” The company described its first drone win, powering Teal Drones’ Black Widow platform for the U.S. Army’s SRR Program, as the foundation for that progression and called the Blue UAS qualification process rigorous.
Voyager Technologies, Inc. (VOYG), a provider of national-security and space technology, and Graham Corp. (GHM), a supplier of defense equipment and systems, reported record backlogs and connected their order activity to future revenue or continuing defense demand. Voyager reported backlog of $336 million and said it provided increasing visibility into future revenue growth. Graham reported backlog of $557 million, with quarterly defense orders including approximately $61.8 million for submarine programs and heavyweight torpedo hardware.
Kratos Defense & Security Solutions, Inc. (KTOS), whose business includes KGS, reported funded backlog of $1.57 billion at June 28, above the level reported in its first-quarter release. Its quarterly book-to-bill ratio eased from 1.6 to 1.0 in the first quarter to 1.1 to 1.0 in the second quarter. Kratos also reported a larger bid and proposal pipeline in its second-quarter update.
Intest Corp. (INTT), whose markets include Defense/Aerospace and Auto/EV, reported first-quarter Defense/Aerospace orders that rose 184.1% year over year and 13.1% sequentially. Its total backlog subsequently fell 12.4% from March 31 to $45.4 million at June 30. The company reiterated the full-year revenue outlook it had raised in July, citing diversified demand supported by backlog and improving second-half order flow and product mix.
Ducommun Inc. (DCO), which serves military, space and commercial aerospace markets, attributed its backlog increase primarily to those markets and expected $844 million of total backlog to be delivered over the next 12 months. AIRO Group Holdings, Inc. (AIRO), whose business includes drones, expected the majority of its approximately $163 million drone backlog at June 30 to convert to revenue over the next 12 months. AIRO said that figure excluded U.S. backlog.
Ducommun said backlog is subject to delivery delays and program cancellations. AIRO said customers generally purchase through orders without long-term commitments and may cancel, reduce or reschedule them. Booz Allen Hamilton Holding Corp. (BAH), a provider of services to the U.S. government, reported funded-backlog additions of $11.1 billion in fiscal 2026, down from $12.2 billion in fiscal 2025. The company said it “cannot guarantee” recognition of revenue from backlog, identifying schedule changes, contract modifications and staff deployment among the risks.
Government funding remained an explicit condition on converting defense opportunities into revenue at Lantronix, Voyager and Booz Allen. Lantronix said continued expansion in drone and defense technology depends partly on customers winning government contracts, with appropriations and spending constraints affecting awards and performance. Voyager warned that budget delays could postpone procurement and that reductions, delays or cancellations of funding could materially affect its business. Booz Allen identified expiration of appropriated funding and difficulties deploying qualified personnel as obstacles to recognizing revenue from funded backlog.
Graham said its defense orders span multiple years and can be significantly larger than other orders, making quarterly order activity uneven. The company expects demand for its defense equipment and systems to remain strong and expand, citing defense budget plans and accelerated shipbuilding schedules attributable to geopolitical tensions.