Kratos Defense & Security Solutions, Inc. Q3 2026 Earnings Recap

Kratos’ shares rose 5.1% after the company reported 35.7% revenue growth, a 2.2:1 book-to-bill ratio and record backlog, alongside initial 2027 guidance. The outlook is cautious: management cited budget uncertainty and supply-chain challenges, and said Q1 2027 should be the lightest quarter.

Key Takeaways

• Q3 revenue grew 35.7%, including 23.2% organic growth; bookings were $1.04 billion and backlog reached a record $2.6 billion.
• Adjusted EBITDA was $50.9 million, or a 10.8% margin; management said margins reflected leverage as production quantities increase and the business scales.
• Initial 2027 guidance is revenue of $2.1 billion–$2.2 billion and adjusted EBITDA of $230 million–$240 million, with revenue growth of approximately 18%–22% over the increased 2026 guidance range.
• Management said its internal 2027 forecast is considerably higher than the initial guide, but cited the continuing resolution, congressional uncertainty and supply-chain challenges as reasons for caution. It expects Q1 to be the lightest quarter, with substantially greater revenue and EBITDA in Q3 and Q4 if funding is appropriated early in the year.
• Kratos received a Valkyrie low-rate initial production award but could not disclose details; it expects additional awards in 2027. The company also plans to roughly triple Firejet production capacity by the end of 2027.