Kratos Raises 2026 Ebitda Outlook After Rocket Systems Surge

The Tip Desk · November 5, 2026 · 3 min read

Third-quarter revenue reached $471.8 million, up 35.7%, with adjusted EBITDA of $50.9 million and a 2.2-to-1 book-to-bill.

Kratos Defense & Security Solutions (KTOS), a defense technology, hardware and systems company, reported third-quarter 2026 revenue of $471.8 million, up 35.7% from $347.6 million a year earlier, as organic growth accelerated for a second consecutive quarter.

Organic revenue growth was 23.2%, after 19.1% organic growth in the second quarter and 15.8% in the first. Adjusted earnings were $0.24 a share, compared with $0.14 a year earlier.

Government Solutions carried the acceleration. Segment revenue was $397.2 million, up 52.5% from $260.4 million in the third quarter of 2025, or 35.8% organically after excluding the Nomad and Orbit acquisitions. That compared with 36.4% reported growth and 22.0% organic growth in the second quarter, and 11.8% organic growth in the first.

The company said the most notable KGS growth was in Defense Rocket Systems, Turbine Technologies, Microwave Products and Space, Training and Cyber, with organic growth of 149.0%, 27.1%, 16.6% and 11.6%, respectively. Defense Rocket Systems organic growth had been 50.2% in the second quarter. KGS operating income was $15.1 million, compared with $13.7 million a year earlier, and KGS adjusted EBITDA was $46.3 million, compared with $24.4 million.

Unmanned Systems revenue was $74.6 million, down from $87.2 million a year earlier, when the segment included $16.1 million from a Valkyrie shipment to an international customer. KUS swung to an operating loss of $0.9 million from operating income of $1.2 million in the second quarter. Adjusted EBITDA in the segment was $4.6 million.

Consolidated results flipped to a GAAP net loss of $0.2 million and an operating loss of $4.9 million, versus net income of $4.4 million in the second quarter. The company said the loss included $18.1 million of non-cash stock compensation, $15.0 million of company-funded research and development and $23.3 million of amortization. Adjusted EBITDA was $50.9 million, or a 10.8% margin, up from $38.2 million in the second quarter.

Bookings were the other inflection. Consolidated bookings were $1.037 billion and the book-to-bill ratio was 2.2 to 1.0, after $492.2 million of bookings and a 1.1-to-1.0 ratio in the second quarter. KGS bookings were $979.9 million and a 2.5-to-1.0 ratio. KUS bookings were $57.4 million and a 0.8-to-1.0 ratio.

Consolidated backlog was a record $2.650 billion on September 27, 2026, up from $2.084 billion on June 28, 2026. KGS backlog was $2.292 billion. KUS backlog was $357.4 million. The bid and proposal pipeline was $15.5 billion. Funded backlog was $2.067 billion and unfunded backlog $582.9 million.

Cash used in operations was $5.2 million. Free cash flow used was $29.4 million after $30.2 million of capital expenditures.

Kratos tightened full-year 2026 revenue guidance to $1.780 billion to $1.810 billion and raised adjusted EBITDA guidance to $176 million to $180 million, from a prior $1.750 billion to $1.810 billion revenue range and a $170.0 million to $176.0 million adjusted EBITDA forecast. Fourth-quarter 2026 revenue is guided at $480 million to $510 million and adjusted EBITDA at $48 million to $52 million.

The company provided an initial fiscal 2027 forecast of $2.100 billion to $2.200 billion of revenue and $230 million to $240 million of adjusted EBITDA, which President and Chief Executive Eric DeMarco said reflects growth of approximately 18% to 22% over the increased 2026 revenue range. The company said it expects the first fiscal quarter of 2027 to be its lightest quarter under an extended continuing resolution, with revenue and adjusted EBITDA increasing in later quarters if annual appropriations are in place.