Al Root

Military drone maker Kratos Defense & Security Solutions delivered strong third-quarter results and even gave investors a look into 2027. Shares, however, dropped shortly after results were released.

Expectations were running high.

Tuesday evening, the company announced earnings per share of 14 cents from sales of $347.6 million, up from $276 million in the third quarter of 2024. Wall Street was looking for 13 cents and $322 million, respectively, according to FactSet.

Orders were $414.1 million in the quarter, about 10% higher than sales.

Guidance for fourth quarter sales is $320 million to $330 million. Wall Street currently projects $333 million. The company guidance is a little light of estimates, but there are 2026 and 2027 to consider.

Guidance for 2026 sales growth is 15% to 20%. Guidance for 2027 sales growth is 18% to 23%. That implies 2026 and 2027 sales of about $1.6 billion and $1.9 billion, respectively. Wall Street projects $1.6 billion and $1.8 billion, respectively.

The U.S. military i s using, and will use, a lot more Kratos technology. Still, shares were down 7.3% in after-hours trading at $83.64.

Expectations might have been running high. Through Tuesday trading, Kratos' stock was up 242% year to date.

Along with earnings, Kratos announced the acquisition of Orbit Technologies for $356.3 million. Kratos will fund the deal through cash on the balance sheet.

Orbit is a provider of "mission-critical satellite-based communication systems for mobile and unmanned aerial, seaborne, undersea and land systems, military vehicles and other systems."

Drones need to talk to one another, and Orbit adds to Kratos' capabilities to do just that.

Write to Al Root at allen.root@dowjones.com

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November 04, 2025 17:10 ET (22:10 GMT)

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