Kratos Defense Beats on Q3 Earnings, Raises '25 Revenue View

Core Insights - Kratos Defense & Security Solutions, Inc. (KTOS) reported third-quarter 2025 adjusted earnings of 14 cents per share, exceeding the Zacks Consensus Estimate of 12 cents by 16.7% and increasing 27.3% from the previous year's 11 cents [1][8] - Total revenues reached $347.6 million, surpassing the Zacks Consensus Estimate of $324 million by 7.1% and rising 26% from $275.9 million in the same quarter last year [2][8] Financial Performance - Selling, general and administrative expenses increased by 13.8% year over year, while research and development expenses rose by 1% compared to the prior-year quarter [3] - Operating income was reported at $7.1 million, up from $6.5 million in the year-ago quarter [3] - The company had cash and cash equivalents of $565.9 million as of September 28, 2025, an increase from $329.3 million as of December 29, 2024, with no long-term debt reported [7] Operational Metrics - The consolidated book-to-bill ratio was 1.2-1, with bookings totaling $414.1 million, and total backlog increased to $1.178 billion from $1.076 billion at the end of the second quarter of 2025 [4] - Revenues from the Unmanned Systems segment totaled $87.2 million, up from $64.2 million in the year-ago quarter [5] - Revenues from the Kratos Government Solutions segment reached $260.4 million, compared to $211.7 million in the previous year, with notable organic revenue growth rates of 47.2% in Defense Rocket Systems and 21.2% in Space, Training and Cyber businesses [6] Guidance and Projections - For the fourth quarter of 2025, KTOS projects revenues to be in the range of $320-$330 million, with the Zacks Consensus Estimate at $324.5 million [10] - The company raised its 2025 revenue guidance to $1.32-$1.33 billion from the previous projection of $1.29-$1.31 billion, with the Zacks Consensus Estimate at $1.31 billion [10] - Operating cash flows are expected to be between $10-$20 million, while free cash flow use is projected to be in the range of $95-$105 million for 2025 [11]