Leonardo DRS, Inc. (DRS) shares plummeted 5.89% in intraday trading on Wednesday, despite the defense technology company reporting second-quarter results that exceeded analysts' expectations. The sharp decline suggests that investors are focusing on the company's full-year outlook, which apparently failed to meet market expectations.

For the second quarter of 2025, Leonardo DRS reported impressive results. The company's adjusted earnings per share (EPS) came in at $0.23, surpassing the IBES estimate of $0.21. 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 guidance. 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, highlighting the disconnect between short-term performance and long-term expectations in the defense technology sector.