Kratos Defense & Security Solutions (KTOS) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue reached $458.8 million, up 30.5% year-over-year, with 19.1% organic growth, driven by strong performance in defense, hypersonics, rocket support, turbine technologies, and space-related businesses.

• Net income for Q2 2026 was $4.4 million, up from $2.9 million in Q2 2025; adjusted EBITDA was $38.2 million, surpassing guidance.

• Major acquisitions of Orbit Technologies and Nomad Global Communication Solutions contributed to revenue and backlog growth.

• Backlog reached $2.084 billion, with a consolidated book-to-bill ratio of 1.3 for the last twelve months and $1.99 billion in bookings.

• Significant new program awards in hypersonics, directed energy, and space domain awareness, with a robust pipeline and increasing business momentum forecast into 2027.

Financial highlights

• Q2 2026 revenue was $458.8 million (+30.5% YoY), with 19.1% consolidated organic growth; six-month revenue was $829.8 million (+26.9% YoY).

• Adjusted EBITDA for Q2 2026 was $38.2 million, up from $28.3 million in Q2 2025.

• Q2 2026 gross margin was 21.8%, up from 21.0% YoY; six-month gross margin was 22.9%.

• Cash and equivalents at June 28, 2026, were $1.44 billion, up from $560.6 million at year-end 2025.

• Free cash flow used was $18.9 million, with $17.2 million in capital expenditures.

Outlook and guidance

• Full-year 2026 revenue guidance raised to $1.75–$1.81 billion, with organic revenue growth forecast at 18–23%.

• Q3 2026 revenue guidance is $460–$480 million, with 19–25% organic growth expected.

• Adjusted EBITDA margin improvement of ~100 basis points over 2025 anticipated, with further improvement in 2027.

• 35% of $2.084 billion backlog expected to be recognized as revenue in 2026, another 35% in 2027.

• Full-year EBITDA negatively impacted by $5–$7 million due to Israeli shekel strength.