Leonardo DRS, Inc. (DRS) shares tumbled 5.62% in pre-market trading on Wednesday, despite reporting second-quarter results that exceeded analysts' expectations. The defense technology company's stock reaction suggests that investors may be focusing on the company's outlook, which apparently failed to meet market expectations.

For the second quarter of 2025, Leonardo DRS reported earnings per share (EPS) of $0.20, with adjusted EPS coming in at $0.23, surpassing the IBES estimate of $0.21. The company's revenue reached $829 million, slightly above the expected $827.5 million. Adjusted EBITDA stood at $96 million, also beating the estimate of $93.8 million, with an adjusted EBITDA margin of 11.6%.

Despite these positive results, the market's negative reaction appears to stem from the company's full-year outlook. Leonardo DRS projected fiscal year 2025 revenue between $3,525 million and $3,600 million, with adjusted EBITDA ranging from $437 million to $453 million. The company also forecasted adjusted EPS for the full year to be between $1.06 and $1.11. While these figures represent growth, they may not have met the heightened expectations of investors, particularly given the company's strong performance in Q2. The sharp stock decline indicates that market participants were likely anticipating more robust guidance for the remainder of the year.