Kratos raises 2026 EBITDA forecast and tightens revenue range

Kratos (KTOS) tightened its full-year 2026 revenue range and raised its Adjusted EBITDA forecast, after third-quarter revenue of $471.8 million, up 35.7%.

Shares fell 1.3% after hours at 5:57 p.m. ET, from a $33.19 close.

Adjusted EPS of 24 cents topped the 21-cent consensus, while revenue was below the $479.52 million consensus.

Here's how the company did:

• Adjusted EPS: 24 cents vs. 21 cents expected
• Revenue: $471.8 million vs. $347.6 million a year earlier
• GAAP net loss: $0.2 million vs. net income of $8.7 million a year earlier
• Adjusted EBITDA: $50.9 million vs. $30.8 million a year earlier

Organic revenue rose 23.2%. Kratos Government Solutions led, with revenue up 52.5% to $397.2 million. Adjusted EBITDA margin reached 10.8%. CEO Eric DeMarco said the company was “demonstrating leverage of the business as production quantities increase.”

2026 guidance and 2027 forecast

Kratos now expects full-year 2026 revenue of $1.78 billion to $1.81 billion, tightened from $1.75 billion to $1.81 billion. Adjusted EBITDA is forecast at $176 million to $180 million, up from $173 million to $176 million.

For the fourth quarter of 2026, the company forecasts revenue of $480 million to $510 million and Adjusted EBITDA of $48 million to $52 million.

The initial 2027 forecast calls for revenue of $2.1 billion to $2.2 billion and Adjusted EBITDA of $230 million to $240 million, growth of about 18% to 22% over the current 2026 revenue range.

The first quarter of 2027 is expected to be the lightest, because U.S. defense funding runs under a continuing resolution. The forecast assumes it runs into the first fiscal quarter of 2027. If it extends beyond March 31, 2027, Kratos will reassess its 2027 forecast. A federal government shutdown would require a reassessment of both the 2026 guidance and the 2027 forecast.

Operating and free cash flow guidance for 2027 comes with the fourth-quarter and full-year 2026 report, expected in late February 2027.

Segment results

Unmanned Systems revenue fell to $74.6 million from $87.2 million. The year-earlier period included $16.1 million from a shipment of Valkyries to an international customer. The segment posted an operating loss of $0.9 million, against operating income of $2.7 million a year earlier.

Kratos Government Solutions operating income rose to $15.1 million from $13.7 million. Its Adjusted EBITDA reached $46.3 million, up from $24.4 million, on volume and mix in revenues.

Cash and backlog

Cash used in operations was $5.2 million in the quarter, reflecting working capital tied to revenue growth. Free cash flow used in operations was $29.4 million after $30.2 million of capital expenditures.

Bookings were $1.037 billion, for a book-to-bill ratio of 2.2 to 1. Backlog stood at $2.650 billion on September 27, 2026, up from $2.084 billion on June 28, 2026.