Kratos Reports First Quarter 2026 Financial Results and Increases Fiscal FY26 Financial Guidance

First Quarter 2026 Revenues of $371.0 MillionReflect 22.6 Percent Growth and 15.8 Percent Organic Growth Over First Quarter 2025 Revenues of $302.6 Million

Unmanned Systems First Quarter 2026 Revenues of $82.6 Million Reflect 30.9 Percent Organic Growth Over First Quarter 2025 Revenues of $63.1 Million

Kratos Government Solutions First Quarter 2026 Revenues of $288.4 Million Reflect 11.8 Percent Organic Growth Over First Quarter 2025 Revenues of $239.5 Million

First Quarter 2026 Consolidated Book to Bill Ratioof 1.6 to 1 and Bookings of $605.2 Million

Last Twelve Months Ended March 29, 2026, Consolidated Book to Bill Ratio of 1.2 to 1 and Bookings of $1.715 Billion

Fiscal 2026 Revenue Forecast of $1.700 Billion to $1.760 Billion and Adjusted EBITDA Forecast of $170.0 Million to $176.0 Million, including Recently Closed Orbit Technologies, Ltd. Acquisition

SAN DIEGO, May 06, 2026 (GLOBE NEWSWIRE) — Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), a leader in defense, national security and global markets, today reported its first quarter 2026 financial results, including Revenues of $371.0 million, Operating Income of $4.7 million, Net Income of $11.9 million, Adjusted EBITDA of $38.7 million and a consolidated book to bill ratio of 1.6 to 1.0.

First quarter 2026 Net Income and Operating Income includes non-cash stock compensation expense of $15.0 million, and Company-funded Research and Development (R&D) expense of $10.7 million, including efforts in our Space, Satellite, Unmanned Systems and Microwave Electronic businesses.

Kratos reported in the first quarter 2026 GAAP Net Income of $11.9 million and GAAP Net Income per share of $0.07, compared to GAAP Net Income of $4.5 million and GAAP Net Income per share of $0.03, for the first quarter of 2025. Adjusted earnings per share (EPS) were $0.16 for the first quarter of 2026, compared to $0.12 for the first quarter of 2025.

First quarter 2026 Revenues of $371.0 millionincreased $68.4 million, reflecting 22.6 percent growth and 15.8 percent organic growth from first quarter 2025 Revenues of $302.6 million. Organic revenue growth was reported in our Unmanned Systems (KUS) segment of 30.9 percent and in our Government Solutions (KGS) segment of 11.8 percent. The most notable growth in our KGS Segment was in our Defense Rocket Systems, Turbine Technologies and Microwave Products businesses, with organic revenue growth rates of 45.8 percent, 20.3 percent and 12.3 percent, respectively, compared to the first quarter of 2025.

First quarter 2026 Cash Flow Used in Operations was $27.4 million, primarily reflecting the working capital requirements related to the 22.6 percent revenue growth impacting our receivables, and also including increases in inventory balances related to ramps in production and investments we are making related to certain development initiatives in our KUS segment. Free Cash Flow Used in Operations for the first quarter of 2026 was $43.1 million after funding $19.9 million of capital expenditures, and after netting $4.2 million of proceeds from sales of company owned Valkyries.

For the first quarter of 2026, KUS generated Revenues of $82.6 million, compared to $63.1 million in the first quarter of 2025, with the increase primarily driven by Valkyrie-related activity. KUS’s Operating Income was $1.3 million in the first quarter of 2026, compared to an Operating Loss of $1.7 million in the first quarter of 2025. KUS’s Adjusted EBITDA for the first quarter of 2026 was $5.2 million, compared to $1.7 million for the first quarter of 2025, reflecting the impact of the revenue volume and mix. KUS’s book-to-bill ratio for the first quarter of 2026 was 1.2 to 1.0 and 1.1 to 1.0 for the twelve months ended March 29, 2026, with bookings of $96.2 million for the three months ended March 29, 2026, and bookings of $340.0 million for the twelve months ended March 29, 2026. Total backlog for KUS at the end of the first quarter of 2026 was $375.4 million, compared to $361.7 million at the end of the fourth quarter of 2025.

For the first quarter of 2026, our KGS segment Revenues of $288.4 million increased from Revenues of $239.5 million in the first quarter of 2025, reflecting a 20.4 percent increase and an 11.8 percent organic growth rate, excluding the impact of the recent acquisitions of Nomad Global Communication Solutions (Nomad) and Orbit Technologies Ltd (Orbit). The increased Revenues includes organic revenue growth across our Defense and Rocket Support business, Turbine Technologies and Microwave Products businesses, with organic revenue growth rates of 45.8 percent, 20.3 percent, and 12.3 percent, respectively, over the first quarter of 2025.

KGS reported Operating Income of $20.4 million in the first quarter of 2026 compared to $17.0 million in the first quarter of 2025, primarily reflecting a favorable mix in revenues and increased volume. First quarter 2026 KGS Adjusted EBITDA was $33.5 million, compared to first quarter 2025 KGS Adjusted EBITDA of $25.0 million, primarily reflecting the volume and mix in revenues and resources.

KGS reported a book-to-bill ratio of 1.8 to 1.0 for the first quarter of 2026, a book-to-bill ratio of 1.2 to 1.0 for the last twelve months ended March 29, 2026, and bookings of $509.0 million and $1.375 billion for the three and last twelve months ended March 29, 2026, respectively. KGS’s total backlog was $1.635 billion at the end of the first quarter of 2026, compared to $1.212 billion at the end of the fourth quarter of 2025.

Kratos reported consolidated bookings of $605.2 millionand a book-to-bill ratio of 1.6 to 1.0 for the first quarter of 2026, and consolidated bookings of $1.715 billionand a book-to-bill ratio of 1.2 to 1.0 for the last twelve months ended March 29, 2026. Consolidated backlog was $2.010 billion on March 29, 2026, as compared to $1.573 billion on December 28, 2025. Kratos’ bid and proposal pipeline was $14.3 billion on March 29, 2026, as compared to $13.7 billion on December 28, 2025. Backlog on March 29, 2026 included funded backlog of $1.457 billion and unfunded backlog of $553.5 million.

Eric DeMarco, Kratos’ President and CEO, said, “Kratos’ balanced business model, including making internally funded investments in property, plant, equipment and facilities, and the rapid development and fielding of relevant products for the Department of War, while generating growth and profitability, is accelerating as reflected in our Q1 results and 1.6 to 1.0 book to bill ratio. There is a generational recapitalization of the U.S. defense industrial base underway and Kratos is committed to doing its part to ensure that the Department and our country are successful.”

Mr. DeMarco continued, “Since our last report, the Department communicated that they intend to spend last year’s entire $156 billion Reconciliation Bill defense related funding in fiscal 2026, which includes funding for Kratos’ Hypersonic, Valkyrie CCA, Solid Rocket Motor, Jet Engines for Drones, Missiles and Loitering Munitions, and other Kratos initiatives. Additionally, the Fiscal 2027 National Security spend is currently projected to be $1.5 trillion, an approximate $400 billionincrease above Fiscal Year 2026, with what we believe a very limited number of companies, like Kratos, are qualified with real existing capability and products, to successfully address.”

Mr. DeMarco went on, “Additionally, the Department is executing multi-year weapon system production framework agreements with industry, including with Kratos partners, which is good for our country and for Kratos. Building military-grade hardware and software that must work every time is hard, and Kratos’ industry-recognized capability is a differentiator for our Company. We routinely meet with DoW leadership, and we are confident that Kratos’ strategy, business plan, and approach are aligned with the Department’s objectives. The Department’s demand signals are real, the results are happening, and Kratos is continuing to step up to ensure success.”

Mr. DeMarco concluded, “Kratos’ alignment with the Department’s objectives, increasing funding, our relevant past performance qualifications, the number of opportunities that Kratos continues to successfully receive, and the number of new opportunities that are being presented to Kratos, has our Company positioned for success. We believe that the scarcity value of Kratos is clear, we are investing to further increase our capabilities and manufacturing capacity, and we are laser focused on the mission, execution and delivering for all Kratos stakeholders.”

Financial Guidance

We are providing our initial second quarter and increased full year 2026 guidance, which includes the estimated impact of the recent Nomad and Orbit acquisitions, and our assumptions, including as related to: current forecasted business mix, expected employee sourcing, hiring and retention; potential manufacturing, production and supply chain disruptions; potential parts shortages and related continued significant cost and price increases in each of these areas, which are impacting the industry and Kratos. We are making significant investments in bid, proposal and other new program opportunity areas, and increasing staffing to enable us to ramp production levels, all of which is currently adversely impacting our profit margins and free cash flow generation. We are also making significant investments in inventory, property, plant, equipment and facilities, consistent with the Department of War’s National Security Strategy and its stated expectations of U.S. National Security government contractors. These investments are expected to continue at least into Kratos’ fiscal year 2027, as our opportunity pipeline continues to increase.

Kratos’ cash flow guidance also assumes certain investments in our Rocket Systems and Unmanned Systems businesses, related to the procurement of rocket motors and related systems and our plan to begin producing approximately 40 Valkyries annually beginning by the end of 2027, as well as the completion of certain of our unmanned systems and related derivatives and vehicles. Additional forecasted investments in 2026 include our funding of the Prometheus joint venture, our Anaconda radar program, our Helios hypersonic and arc chamber program, our Indiana hypersonic integration facility, our Birmingham advanced manufacturing facility for hypersonic systems, expansion and new microwave electronics facilities in Israel and the U.S., our GEK and BladeWorks engine facilities, the continued build of our second lot of 12 Valkyrie aircraft, certain manufacturing and production related equipment for our recently acquired Nomad acquisition, certain drone related investments, and our Vulcan, Kraken, Elysium, Nemesis, Hermes and other initiatives. In summary, Kratos continues to make the required investments to support the rebuild of the U.S. defense industrial base and related infrastructure, take advantage of the ongoing generational recapitalization of strategic and other weapon and National Security related systems, and generate value for all Kratos stakeholders, including the warfighter and Kratos shareholders.

Our previous full year 2026 guidance included the Nomad acquisition which closed on February 11, 2026. Our second quarter and full year 2026 guidance ranges now includes the recently completed Orbit Technologies Ltd. acquisition, and a summary of the forecasted investments for new programs and opportunities are presented below.

We expect our second half of fiscal 2026 will have significantly higher Revenue than the first half, as we expect to begin to receive in the second half of 2026 certain long-lead time items related to existing customer funded programs, including solid rocket motors and other hardware related to certain hypersonic and other programs, hardware and components related to jet engine and propulsion system development and production, and hardware related to air defense, missile, radar and other National Security system production.

We expect Kratos’ second half of fiscal 2026 Adjusted EBITDA and operating cash flow to be greater than our first half, as our Revenue increases, Adjusted EBITDA margins expand and are impacted by both expected increased scale and product mix, and customer contract funding is expected to increase coming off of the late 2025 and early 2026 U.S. Governmentshutdown and extended Continuing Resolution. We continue to expect Kratos’ full year 2026 Adjusted EBITDA margin rates to be approximately 100 bps greater than our reported 2025 Adjusted EBITDA margin rates, including the Orbit and Nomad acquisitions.

We expect to provide full year 2027 financial guidance, which will include the Orbit and Nomad acquisitions, when we report our third quarter of fiscal 2026 later this year. We continue to expect our 2027 Adjusted EBITDA margin rates to increase an additional 100 bps above forecast 2026 Adjusted EBITDA margin rates, when we provide full year 2027 guidance later this year.

Management will discuss the Company’s financial results at a conference call beginning at 2:00 p.m.Pacific (5:00 p.m. Eastern) today. The call will be available at www.kratosdefense.com. Participants may register for the call using this Online Form. Upon registration, all telephone participants will receive the dial-in number along with a unique PIN that can be used to access the call. For those who cannot access the live broadcast, a replay will be available on Kratos’ website.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, hardware, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field relevant solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as the innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing, which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe our probability of win is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of probability of win is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include, virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, command, control, communication, computing, combat, intelligence surveillance and reconnaissance (C5ISR) and microwave electronic products for missile, radar, air defense, missile defense, space, satellite, counter unmanned aircraft systems (CUAS), directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com

Notice Regarding Forward–Looking Statements
This news release contains certain forward-looking statements that involve risks and uncertainties, including, without limitation, express or implied statements concerning the Company’s expectations regarding its future financial performance, including the Company’s expectations for its second quarter, first half, second half, and full year 2026 revenues, R&D, operating income, depreciation, amortization, stock based compensation expense, and Adjusted EBITDA, and full year 2026 operating cash flow, capital expenditures, investments, and free cash flow, forecasted company and business unit organic revenue growth, estimated revenue and organic revenue growth for 2026 and 2027, Adjusted EBITDA margins in 2026 and 2027, future initiation of higher margin programs and negotiation of lower margin contracts which are expected to be renewed in the future, expected future investments in property, plant, facilities, and equipment (including expected investments in the Prometheus joint venture and other programs, opportunities, and initiatives), expected future production of Valkyries, the ability of the Company’s customers to respond to industry and market conditions, the impact of acquired companies and businesses on the Company’s operations and financial condition, the Company’s bid and proposal pipeline and backlog, including the Company’s ability to timely execute on its backlog, demand for its products and services, including the Company’s alignment with today’s National Security requirements and the positioning of its C5ISR and other businesses, ability to successfully compete and expected new customer awards, the impact of federal government shutdowns on the Company’s operations and financial condition, the availability and timing of government funding for the Company’s offerings, availability of an experienced skilled workforce, inflation and increased costs, risks related to potential cybersecurity events or disruptions of our information technology systems, and delays in our financial projections, industry, business and operations, including projected growth. Such statements are only predictions, and the Company’s actual results may differ materially from the results expressed or implied by these statements. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Factors that may cause the Company’s results to differ include, but are not limited to: risks to our business and financial results related to the reductions and other spending constraints imposed on the U.S. Government and our other customers, including as a result of sequestration and extended continuing resolutions, the Federal budget deficit and Federal government shut-downs; risks of adverse regulatory action or litigation; risks associated with debt leverage; risks that our cost-cutting initiatives will not provide the anticipated benefits; risks that changes, cutbacks or delays in spending by the DoW may occur, which could cause delays or cancellations of key government contracts; risks of delays to or the cancellation of our projects as a result of protest actions submitted by our competitors; risks that changes may occur in Federal government (or other applicable) procurement laws, regulations, policies and budgets; risks of the availability of government funding for the Company’s products and services due to performance, cost growth, or other factors, changes in government and customer priorities and requirements (including cost-cutting initiatives, the potential deferral of awards, terminations or reduction of expenditures to respond to the priorities of Congress and the Administration, or budgetary cuts resulting from Congressional committee recommendations or automatic sequestration under the Budget Control Act of 2011, as amended); risks related to tariffs or import duties which could affect the Company’s supply chain and customer affordability; risks related to Executive Orders issued by the Trump Administration and resultant changes to the DoW procurement policies and Federal Acquisition Regulations; risks related to DoW reorganization and DOGE; risks that the unmanned aerial systems and unmanned ground sensor markets do not experience significant growth; risks that products we have developed or will develop will not become programs of record; risks that we cannot expand our customer base or that our products do not achieve broad acceptance which could impact our ability to achieve our anticipated level of growth; risks of increases in the Federal government initiatives related to in-sourcing; risks related to security breaches, including cyber security attacks and threats or other significant disruptions of our information systems, facilities and infrastructures; risks related to our compliance with applicable contracting and procurement laws, regulations and standards; risks related to the new DoW Cybersecurity Maturity Model Certification; risks relating to the ongoing conflict in Ukraine and the Israeli-Palestinian military conflict; risks to our business in Israel including our expanded operations in Israel following the Orbit acquisition; risks related to contract performance; risks related to failure of our products or services; risks associated with our subcontractors’ or suppliers’ failure to perform their contractual obligations, including the appearance of counterfeit or corrupt parts in our products; changes in the competitive environment (including as a result of bid protests); failure to successfully integrate acquired operations and compete in the marketplace, which could reduce revenues and profit margins; risks that potential future goodwill impairments will adversely affect our operating results; risks that anticipated tax benefits will not be realized in accordance with our expectations; risks that a change in ownership of our stock could cause further limitation to the future utilization of our net operating losses; risks that we may be required to record valuation allowances on our net operating losses which could adversely impact our profitability and financial condition; risks that the current economic environment will adversely impact our business, including with respect to our ability to recruit and retain sufficient numbers of qualified personnel to execute on our programs and contracts, as well as expected contract awards and risks related to increasing interest rates; currently unforeseen risks associated with any public health crisis, and risks related to natural disasters or severe weather. These and other risk factors are more fully discussed in the Company’s Annual Report on Form 10-K for the period ended December 28, 2025, and in our other filings made with the Securities and Exchange Commission.

Note Regarding Use of Non-GAAP Financial Measures and Other Performance Metrics
This news release contains non-GAAP financial measures, including organic revenue growth rates computed as the revenue growth rate excluding the current year impact of the contribution from acquisitions, Adjusted EPS (computed using income before income taxes, excluding depreciation, amortization of intangible assets, amortization of capitalized contract and development costs, stock-based compensation expense, acquisition and restructuring related items and other, which includes, but is not limited to, legal related items, non-recoverable rates and costs, and foreign transaction gains and losses, less the estimated impact of current and deferred income taxes) and Adjusted EBITDA (which excludes, among other things, acquisition and restructuring related items, stock compensation expense, foreign transaction gains and losses, and the associated margin rates). Additional non-GAAP financial measures include Free Cash Flow from Operations computed as Cash Flow from Operations less Capital Expenditures plus proceeds from sale of assets and Adjusted EBITDA related to our KUS and KGS businesses. Kratos believes this information is useful to investors because it provides a basis for measuring the Company’s available capital resources, the actual and forecasted operating performance of the Company’s business and the Company’s cash flow, excluding non-recurring items and non-cash items that would normally be included in the most directly comparable measures calculated and presented in accordance with GAAP. The Company’s management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating the Company’s actual and forecasted operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and investors should carefully evaluate the Company’s financial results calculated in accordance with GAAP and reconciliations to those financial results. In addition, non-GAAP financial measures as reported by the Company may not be comparable to similarly titled amounts reported by other companies. As appropriate, the most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the Company’s financial results prepared in accordance with GAAP are included in this news release.

Another Performance Metric the Company believes is a key performance indicator in our industry is our Book to Bill Ratio as it provides investors with a measure of the amount of bookings or contract awards as compared to the amount of revenues that have been recorded during the period and provides an indicator of how much of the Company’s backlog is being burned or utilized in a certain period. The Book to Bill Ratio is computed as the number of bookings or contract awards in the period divided by the revenues recorded for the same period. The Company believes that the rolling or last twelve months’ Book to Bill Ratio is meaningful since the timing of quarter-to-quarter bookings can vary.