Elbit Systems (ESLT) Q3 2025 earnings summary

Executive summary

• Achieved double-digit year-over-year growth in revenues, backlog, and EPS for the seventh consecutive quarter, with Q3 2025 revenues at $1.92 billion and a record $25.2 billion order backlog, 69% from outside Israel.

• Free cash flow was $101 million for Q3 2025, marking five consecutive quarters of positive free cash flow.

• Announced the largest contract in company history, a $2.3 billion international deal over eight years, and a $1.625 billion European contract for advanced defense systems.

• Ranked 22nd in the 2024 Defense News Global 100 Defense Companies, employing approximately 20,000 people globally.

• Strong demand driven by global conflicts and increased defense budgets, especially in Europe and Israel.

Financial highlights

• Q3 2025 revenues reached $1,922 million, up 12% year-over-year; nine-month revenues up 18%.

• GAAP gross margin improved to 24.9% from 24% year-over-year; non-GAAP gross margin rose to 25.2% from 24.4%.

• GAAP operating income was $171.4 million (8.9% of revenues), up from $125.8 million (7.3%) last year; non-GAAP operating income was $186.7 million (9.7% of revenues), up from $140.7 million (8.2%).

• GAAP diluted EPS was $2.80, up from $1.77; non-GAAP diluted EPS was $3.35, up from $2.21.

• Operating cash flow for the nine months was $461 million, up from $82.5 million year-over-year; free cash flow for Q3 2025 was $101 million.

Outlook and guidance

• Backlog reached $25.2 billion as of September 30, 2025, up 14% year-over-year, supporting long-term revenue visibility.

• Backlog CAGR of 18% and revenue CAGR of 11% from 2020 to LTM Q3 2025.

• Management expects continued strong demand, especially from Europe and Israel, due to ongoing global security challenges.

• Aerospace segment expected to see single-digit growth, with strong demand for UAVs and loitering munitions.

• No specific profitability guidance for 2026, but internal targets remain focused on improving profitability and cash conversion.