Kratos Defense & Security Solutions (KTOS) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenues reached $371 million, up 22.6% year-over-year, with 15.8% organic growth, driven by Unmanned Systems, Turbine Technologies, and Microwave Products, and supported by recent acquisitions.

• Net income increased to $11.9 million from $4.5 million in the prior year quarter; adjusted EPS was $0.16 versus $0.12 year-over-year.

• Book-to-bill ratio reached 1.6:1, with bookings of $605.2 million and backlog rising to a record $2.011 billion, supported by major contract wins and acquisitions.

• Major contract wins included a $447 million US Space Force contract and a multi-hundred million dollar directed energy weapon system program.

• Strategic investments in property, plant, equipment, and R&D are positioning the company for future growth and value generation.

Financial highlights

• Q1 2026 revenue was $371 million, above guidance; organic revenue growth was 15.8%.

• Adjusted EBITDA was $38.7 million, exceeding guidance and up from $26.7 million in Q1 2025.

• Service revenues grew 30.9% to $134 million; product sales increased 18.4% to $237 million.

• Cash flow used in operations was $27.4 million, reflecting working capital needs for growth and inventory build.

• Free cash flow used in operations was $43.1 million, including $19.9 million in capital expenditures.

Outlook and guidance

• Q2 2026 revenue guidance is $400–$410 million, with 4–7% organic growth over Q2 2025.

• Full-year 2026 revenue guidance is $1.7–$1.76 billion, with 15–19% organic growth; adjusted EBITDA guidance is $170–$176 million.

• EBITDA margin expected to increase by 100 basis points year-over-year in both 2026 and 2027.

• Expectation to recognize 37% of backlog as revenue in 2026, 25% in 2027, and the remainder thereafter.

• Continued investments in manufacturing, inventory, and new program development expected to continue into 2027.