Highlights

  • Second quarter 2026 revenue rose 31% to $458.8 million, and net income was $4.4 million, or $0.02 per diluted share.
  • The company posted an operating loss of $1.6 million as SG&A expense climbed to $87.3 million from $59.9 million.
  • Total backlog reached about $2.084 billion at June 28, 2026, of which $1.572 billion was funded.
  • Cash and equivalents grew to $1,437.6 million after a February stock offering and the Orbit and Nomad acquisitions.

Kratos Defense & Security Solutions (NASDAQ:KTOS) shares were trading near their 52-week low at USD 38.90 on October 21, 2026, down 0.14%. The defense technology company completed the Nomad acquisition and a $1.38 billion stock offering in February, and reported fiscal second quarter 2026 results in a Form 10-Q filed on August 4.

Kratos is a Delaware corporation headquartered in Round Rock, Texas. It describes itself as a technology, products, system and software company serving defense, national security and commercial markets, investing its own funds in development to field affordable solutions. It reports two segments: KGS, which spans microwave electronics, space and satellite, training, turbine technologies, and defense and rocket support services; and its US segment, which covers unmanned aerial, ground and seaborne systems and command and control businesses.

Second Quarter: Revenue Up, Operating Result Down

Revenue for the quarter ended June 28, 2026 was $458.8 million, up $107.3 million from $351.5 million. KGS revenue rose $101.4 million, driven mainly by defense rocket support and hypersonic systems work, plus $18.8 million from Nomad and $21.4 million from Orbit Technologies. US segment revenue was $79.1 million, up $5.9 million, mainly from Valkyrie aircraft production.

Gross profit improved to $100.1 million from $73.8 million. Selling, general and administrative expense rose $27.4 million to $87.3 million, which the company attributed mainly to $8.8 million of added amortization from the Nomad and Orbit acquisitions, $7.7 million more stock compensation, and higher volume and headcount. The result was an operating loss of $1.6 million, against operating income of $3.7 million a year earlier.

Net interest income of $10.2 million, versus net interest expense of $1.2 million, helped lift net income to $4.4 million from $2.9 million. Diluted earnings per share were $0.02 in both periods. For the six months, revenue was about $829.8 million against $654.1 million, net income was $16.3 million against $7.4 million, and diluted earnings per share were $0.09 against $0.05.

Backlog, Cash Flow and Capital

Total backlog was approximately $2.084 billion at June 28, 2026, including $1.572 billion of funded backlog, compared with $1.414 billion and $1.125 billion a year earlier. Management expects to recognize roughly 35% of the remaining total backlog as revenue in fiscal 2026 and another 35% in fiscal 2027.

Cash and cash equivalents were $1,437.6 million, up from $560.6 million at December 28, 2025. Operating activities used $38.4 million in the first six months, partly because of advance purchases of materials meant to offset supply chain disruption. Investing used $375.3 million, including $346.8 million for acquisitions. Financing provided $1,291.2 million, including net stock offering proceeds of about $1,348.4 million from the sale of 16,428,571 shares on February 26, 2026.

On February 20, 2026, Kratos replaced its 2022 credit facility with a new five-year, $300 million senior secured revolving credit facility.

The filing also lists continuing pressures: higher labor and input costs, supply chain delays, and dependence on federal appropriations, with fiscal 2027 defense funding proposals still subject to Congressional approval.

Outlook: Investments and Production Plans

The 10-Q contains no earnings guidance. Management said it plans continued internally funded investment ahead of expected customer demand, including unmanned jet aircraft such as Valkyrie ahead of a potential contract award, a hypersonic fabrication facility in Indiana, long-lead items for 60 Oriole and 60 Zeus motors, and small jet engine capacity in Michigan and Oklahoma. It expects 2026 capital expenditures in its US segment of roughly $35 million to $40 million, including $25 million to $30 million for aerial drones and support equipment.