Kratos’ earnings call provided insights into the contracts it has received for 2026, noting it is slated for margin expansion this year.
- CEO Eric DeMarco added that Kratos Turbine Technologies is now under contract in the high-profile eVTOL area.
- The company’s fourth-quarter revenue rose 20% to $345.1 million, beating expectations of $327.51million, according to data from Fiscal AI.
- Kratos said it expects first-quarter revenue to come between $335 million and $345 million, below Wall Street expectations of $346.84 million.
Shares of Kratos Defense & Security Solutions fell more than 3% in after-hours trading after the company’s first-quarter revenue forecast came below Wall Street expectations, even after beating fourth-quarter results and estimating a better-than-expected 2026.
Heading into earnings, Wall Street and retail traders flagged concerns about margins, but the company said it expects the full-year 2026 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin rate to be nearly 100 bps higher than 2025.
The company’s stock has gained over 24% so far this year on the back of several contracts and Kratos's selection for the Phase 1 Gauntlet of the Office of the Secretary of War’s Drone Dominance Program.
Newer Contracts For 2026 And Beyond
Kratos said it was well-positioned with contracts in programs in certain of the highest-priority areas, including the hypersonic segment, which is going to be a significant growth driver for the company. The company also noted that it won a “brand-new,” just under $500 million program in its space and satellite business.
The company expects the small engines segment to kick off later this year, accelerate in 2027, and continue to accelerate in 2028. “Kratos' global owned and operated Space Domain Awareness system, with approximately 190 worldwide sensors and more than 20 sites, is a Kratos crown jewel and one of the most valuable, technologically advanced dual-use assets of our company,” CEO Eric DeMarco said during a post-earnings call.
DeMarco added that Kratos Turbine Technologies is now under contract in the high-profile eVTOL area. “Under what we refer to internally as Project Pegasus, where Kratos is designing and is expected to deliver propulsion systems, including for a very well-known eVTOL company,” he said.
The company also intends to execute a plan to increase our Valkyrie production from the current approximately 8 aircraft annually to a projected annual production rate of approximately 40 aircraft by the end of 2028.
Earnings In A Nutshell For Kratos
The company’s fourth-quarter revenue rose 20% to $345.1 million, beating expectations of $327.51million, according to data from Fiscal AI. The company’s adjusted earnings per share came in at $0.18, topping analysts’ estimates of $0.15.
Kratos said it expects first-quarter revenue to come between $335 million and $345 million, below Wall Street expectations of $346.84 million. However, the company’s forecast full-year revenue is $1.60 billion to $1.68 billion, compared with estimates of $1.60 billion.
What Is Retail Thinking?
Retail sentiment on Kratos jumped to ‘extremely bullish’ from ‘bearish’ territory a week ago, with message volumes at ‘high’ levels, according to data from Stocktwits.
A user on Stocktwits noted that the company always “delivers and beats” and has a “great management team” with a fortress balance sheet and almost zero debt.
A bullish user on the platform said that the company had several projects coming up, and it was “really outstanding.”
Shares of Kratos have gained 287% in the last 12 months.
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