Revenue surged 30.5% YoY to $458.8M in Q2 2026, but gross margin fell to 21.8% and operating income turned negative at -$1.6M, indicating margin pressure from mix shift and rising SG&A (up 45.7% YoY).
Kratos Defense & Security Solutions, Inc. (KTOS) annual income statement — 28-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 | Dec'11 | Dec'10 | Dec'09 | Dec'08 | Dec'07 | Dec'06 | Dec'05 | Dec'04 | Dec'03 | Dec'02 | Dec'01 | Dec'00 | Dec'99 | Dec'98 |
|---|
| Sales/Revenue | 1.52B | 1.35B | 1.14B | 1.04B | 898.3M | 811.5M | 747.7M | 717.5M | 618M | 751.9M | 668.7M | 657.1M | 868M | 950.6M | 969.2M | 723.1M | 408.5M | 147.12M | 297.3M | 193.6M | 327.8M | 375.3M | 397M | 262.2M | 187M | 207.2M | 255.9M | 92.69M | 51.9M |
| Revenue Growth % | 25.5% | 18.52% | 9.57% | 15.45% | 10.7% | 8.53% | 4.21% | 16.1% | -17.81% | 12.44% | 1.77% | -24.3% | -8.69% | -1.92% | 34.03% | 77.01% | 177.66% | -50.51% | 53.56% | -40.94% | -12.66% | -5.47% | 51.41% | 40.21% | -9.75% | -19.03% | 176.08% | 78.59% | - |
| Cost of Goods Sold | 1.19B | 1.05B | 849.1M | 768.5M | 672.3M | 586.4M | 544.5M | 527.5M | 448.3M | 554.6M | 515.1M | 495.3M | 649.8M | 710.6M | 712M | 530.9M | 318.5M | 122.39M | 237.8M | 162M | 274.3M | 291M | 313M | 190.9M | 138.7M | 141M | 139.7M | 51.66M | 26.7M |
| COGS % of Revenue | - | 77.85% | 74.72% | 74.1% | 74.84% | 72.26% | 72.82% | 73.52% | 72.54% | 73.76% | 77.03% | 75.38% | 74.86% | 74.75% | 73.46% | 73.42% | 77.97% | 83.19% | 79.99% | 83.68% | 83.68% | 77.54% | 78.84% | 72.81% | 74.17% | 68.05% | 54.59% | 55.73% | 51.45% |
| Gross Profit | 334.8M | 298.3M | 287.2M | 268.6M | 226M | 225.1M | 203.2M | 190M | 169.7M | 197.3M | 153.6M | 161.8M | 218.2M | 240M | 257.2M | 192.2M | 90M | 24.73M | 59.5M | 31.6M | 53.5M | 84.3M | 84M | 71.3M | 48.3M | 66.2M | 116.2M | 41.03M | 25.2M |
| Gross Margin % | 21.99% | 22.15% | 25.27% | 25.9% | 25.16% | 27.74% | 27.18% | 26.48% | 27.46% | 26.24% | 22.97% | 24.62% | 25.14% | 25.25% | 26.54% | 26.58% | 22.03% | 16.81% | 20.01% | 16.32% | 16.32% | 22.46% | 21.16% | 27.19% | 25.83% | 31.95% | 45.41% | 44.27% | 48.55% |
| Gross Profit Growth % | - | 3.86% | 6.92% | 18.85% | 0.4% | 10.78% | 6.95% | 11.96% | -13.99% | 28.45% | -5.07% | -25.85% | -9.08% | -6.69% | 33.82% | 113.56% | 263.92% | -58.44% | 88.29% | -40.93% | -36.54% | 0.36% | 17.81% | 47.62% | -27.04% | -43.03% | 183.2% | 62.82% | - |
| Operating Expenses | 311.3M | 270.6M | 258.2M | 237.5M | 228.9M | 197.2M | 173.9M | 152M | 135.4M | 178.4M | 160.2M | 166.9M | 196.4M | 214.4M | 210.9M | 151.5M | 63.8M | 12.59M | 154.3M | 56.2M | 84.9M | 67.2M | 76.9M | 49.1M | 103M | 137.7M | 64.2M | 23.4M | 14.5M |
| OpEx % of Revenue | - | 20.09% | 22.72% | 22.9% | 25.48% | 24.3% | 23.26% | 21.18% | 21.91% | 23.73% | 23.96% | 25.4% | 22.63% | 22.55% | 21.76% | 20.95% | 15.62% | 8.56% | 51.9% | 29.03% | 25.9% | 17.91% | 19.37% | 18.73% | 55.08% | 66.46% | 25.09% | 25.24% | 27.94% |
| Selling, General & Admin | 266.8M | 230.6M | 214M | 197.8M | 182.8M | 160.2M | 144.5M | 130.8M | 110.9M | 147.5M | 132.6M | 134.8M | 146.9M | 153M | 193.1M | 142.5M | 63M | 52.8M | 51.7M | 53.5M | 63M | 69.3M | 76.9M | 42.3M | 74.1M | 103.2M | 53.5M | 20.79M | 13.1M |
| SG&A % of Revenue | - | 17.12% | 18.83% | 19.07% | 20.35% | 19.74% | 19.33% | 18.23% | 17.95% | 19.62% | 19.83% | 20.51% | 16.92% | 16.1% | 19.92% | 19.71% | 15.42% | 35.89% | 17.39% | 27.63% | 19.22% | 18.47% | 19.37% | 16.13% | 39.63% | 49.81% | 20.91% | 22.43% | 25.24% |
| Research & Development | 44.1M | 40M | 40.3M | 38.4M | 38.6M | 35.2M | 27M | 18M | 15.6M | 17.8M | 13.9M | 16.2M | 23M | 21.4M | 17.8M | 9M | 2.2M | 1.8M | 1M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| R&D % of Revenue | - | 2.97% | 3.55% | 3.7% | 4.3% | 4.34% | 3.61% | 2.51% | 2.52% | 2.37% | 2.08% | 2.47% | 2.65% | 2.25% | 1.84% | 1.24% | 0.54% | 1.22% | 0.34% | - | - | - | - | - | - | - | - | - | - |
| Other Operating Expenses | 1M | 0 | 3.9M | 1.3M | 7.5M | 1.8M | 2.4M | 3.2M | -1M | 900K | 800K | -700K | 600K | 0 | 0 | 0 | -1.4M | -200K | 101.6M | 2.7M | 21.9M | -2.1M | 0 | 6.8M | 28.9M | 34.5M | 10.7M | 2.61M | 1.4M |
| Operating Income | 23.5M | 27.7M | 29M | 31.1M | -2.9M | 27.9M | 29.3M | 38M | 30.5M | -5.8M | -18.6M | -4.5M | 19.9M | 31.8M | -49.7M | 28.2M | 23.1M | 12.14M | -94.8M | -24.6M | -31.4M | 17.1M | 7.1M | 22.2M | -54.7M | -71.5M | 52M | 17.63M | 10.7M |
| Operating Margin % | 1.54% | 2.06% | 2.55% | 3% | -0.32% | 3.44% | 3.92% | 5.3% | 4.94% | -0.77% | -2.78% | -0.68% | 2.29% | 3.35% | -5.13% | 3.9% | 5.65% | 8.25% | -31.89% | -12.71% | -9.58% | 4.56% | 1.79% | 8.47% | -29.25% | -34.51% | 20.32% | 19.02% | 20.62% |
| Operating Income Growth % | - | -4.48% | -6.75% | 1172.41% | -110.39% | -4.78% | -22.89% | 24.59% | 625.86% | 68.82% | -313.33% | -122.61% | -37.42% | 163.98% | -276.24% | 22.08% | 90.22% | 112.81% | -285.37% | 21.66% | -283.63% | 140.85% | -68.02% | 140.59% | 23.5% | -237.5% | 194.91% | 64.79% | - |
| EBITDA | 113.9M | 87M | 80.9M | 75.8M | 38M | 62.6M | 63.3M | 73.1M | 48.3M | 16.4M | 4.2M | 21M | 59M | 85.2M | 8.3M | 76.2M | 36M | 14.32M | -87.3M | -20.3M | -24.4M | 25.1M | 14.5M | 31M | -45.3M | -49M | 62.7M | 20.24M | 12.1M |
| EBITDA Margin % | 7.48% | 6.46% | 7.12% | 7.31% | 4.23% | 7.71% | 8.47% | 10.19% | 7.82% | 2.18% | 0.63% | 3.2% | 6.8% | 8.96% | 0.86% | 10.54% | 8.81% | 9.73% | -29.36% | -10.49% | -7.44% | 6.69% | 3.65% | 11.82% | -24.22% | -23.65% | 24.5% | 21.84% | 23.31% |
| EBITDA Growth % | 53.5% | 7.54% | 6.73% | 99.47% | -39.3% | -1.11% | -13.41% | 51.35% | 194.51% | 290.48% | -80% | -64.41% | -30.75% | 926.51% | -89.11% | 111.67% | 151.38% | 116.4% | -330.05% | 16.8% | -197.21% | 73.1% | -53.23% | 168.43% | 7.55% | -178.15% | 209.71% | 67.31% | - |
| D&A (Non-Cash Add-back) | 90.4M | 59.3M | 51.9M | 44.7M | 40.9M | 34.7M | 34M | 35.1M | 17.8M | 22.2M | 22.8M | 25.5M | 39.1M | 53.4M | 58M | 48M | 12.9M | 2.18M | 7.5M | 4.3M | 7M | 8M | 7.4M | 8.8M | 9.4M | 22.5M | 10.7M | 2.61M | 1.4M |
| EBIT | 28.1M | 44.5M | 41.7M | 32.8M | -14.7M | 28.1M | 30.4M | 39.2M | 30.3M | -28M | -17.1M | -8.6M | 7.2M | 32M | -48.1M | 29.6M | 24.3M | -26.7M | -94.7M | -24.6M | -31.5M | 3.2M | 5.6M | 27.5M | -54.7M | -71.5M | 52M | 17.63M | 10.7M |
| Net Interest Income | 3.4M | 5M | -3M | -20.5M | -17.7M | -23.4M | -22.8M | -21.6M | -20.8M | -28.6M | -34.7M | -36M | -39.2M | -46.2M | -66.1M | -51.1M | -22.3M | -10.4M | -10M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Income | 7.9M | 15.5M | 12.2M | 1.2M | 600K | 300K | 800K | 1.9M | 800K | 500K | 0 | 0 | 200K | 200K | 300K | 100K | 100K | 26.38K | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 4.5M | 10.5M | 15.2M | 21.7M | 18.3M | 23.7M | 23.6M | 23.5M | 21.6M | 29.1M | 34.7M | 36M | 39.4M | 46.4M | 66.4M | 51.2M | 22.4M | 1.56M | 10M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Income/Expense | 17.3M | 6.3M | -2.5M | -20M | -30.1M | -23.5M | -22.5M | -22.3M | -21.8M | -45.1M | -34.3M | -40.1M | -78.2M | -46.6M | -64.5M | -52.3M | -22.9M | -10.3M | -11.5M | -2.3M | -700K | -13.6M | -2.8M | -8.3M | 1M | -3.6M | 100K | -824K | -500K |
| Pretax Income | 40.8M | 34M | 26.5M | 11.1M | -33M | 4.4M | 6.8M | 15.7M | 8.7M | -50.8M | -52.3M | -44.6M | -72.9M | -31.9M | -114.5M | -22.8M | 1.9M | 10.6M | -106.3M | -26.9M | -32.2M | 16.8M | 4.7M | 23.5M | -53.7M | -75.1M | 52.1M | 16.81M | 10.2M |
| Pretax Margin % | 2.68% | 2.52% | 2.33% | 1.07% | -3.67% | 0.54% | 0.91% | 2.19% | 1.41% | -6.76% | -7.82% | -6.79% | -8.4% | -3.36% | -11.81% | -3.15% | 0.47% | 7.21% | -35.76% | -13.89% | -9.82% | 4.48% | 1.18% | 8.96% | -28.72% | -36.25% | 20.36% | 18.13% | 19.65% |
| Income Tax | 9.9M | 12M | 10.2M | 8.7M | 200K | 3.9M | -73.5M | 4.8M | 4.6M | -8.2M | 8.1M | -11.4M | 5.1M | 69M | -1.6M | 1.9M | -12.7M | 5.1M | -700K | 1.3M | 14.5M | 5.4M | -2.7M | -1.3M | 10.1M | -15M | 20.3M | 7.2M | 5.5M |
| Effective Tax Rate % | 24.26% | 35.29% | 38.49% | 78.38% | -0.61% | 88.64% | -1080.88% | 30.57% | 52.87% | 16.14% | -15.49% | 25.56% | -7% | -216.3% | 1.4% | -8.33% | -668.42% | 48.12% | 0.66% | -4.83% | -45.03% | 32.14% | -57.45% | -5.53% | -18.81% | 19.97% | 38.96% | 42.85% | 53.92% |
| Net Income | 30.9M | 22M | 16.3M | -8.9M | -36.9M | -2M | 79.6M | 12.5M | -3.5M | -42.7M | -60.5M | 19.8M | -78M | -37.2M | -114.4M | -24.2M | 14.5M | 7.17M | -111.1M | -40.8M | -57.9M | 3.7M | 5M | 23.5M | -63.9M | -60.1M | 31.8M | 9.61M | 4.7M |
| Net Margin % | 2.03% | 1.63% | 1.43% | -0.86% | -4.11% | -0.25% | 10.65% | 1.74% | -0.57% | -5.68% | -9.05% | 3.01% | -8.99% | -3.91% | -11.8% | -3.35% | 3.55% | 4.88% | -37.37% | -21.07% | -17.66% | 0.99% | 1.26% | 8.96% | -34.17% | -29.01% | 12.43% | 10.36% | 9.06% |
| Net Income Growth % | 113.1% | 34.97% | 283.15% | 75.88% | -1745% | -102.51% | 536.8% | 457.14% | 91.8% | 29.42% | -405.56% | 125.38% | -109.68% | 67.48% | -372.73% | -266.9% | 102.15% | 106.46% | -172.3% | 29.53% | -1664.86% | -26% | -78.72% | 136.78% | -6.32% | -288.99% | 231.03% | 104.39% | - |
| Net Income (Continuing) | 30.9M | 22M | 16.3M | 2.4M | -33.2M | 500K | 80.3M | 10.9M | 4.1M | -46.9M | -57.6M | -33.2M | -75.7M | -29.5M | -112.9M | -23.5M | 14.6M | -38.3M | -104M | -28.2M | -46.7M | 11.3M | 3.4M | 14.3M | -63.9M | -60.1M | 31.8M | 9.61M | 4.7M |
| Discontinued Operations | 0 | 0 | 0 | 200K | 900K | -2.1M | -900K | 1.7M | 0 | 4.2M | 0 | 53M | 0 | -5.3M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 9.4M | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 22.5M | 11.2M | 15.2M | 14.8M | 15M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 300K | 300K | 300K | 200K | 100K | 337.9K | 0 |
| EPS (Diluted) | 0.16 | 0.13 | 0.11 | -0.07 | -0.29 | -0.02 | 0.67 | 0.11 | -0.03 | -0.48 | -0.99 | 0.34 | -1.35 | -0.65 | -2.44 | -0.88 | 0.86 | -2.99 | -11.95 | -5.51 | -7.88 | 0.20 | 2.20 | 0.30 | -13.28 | -13.09 | 6.30 | 2.70 | 1.50 |
| EPS Growth % | 70.4% | 18.18% | 257.14% | 75.86% | -1350% | -102.99% | 509.09% | 433.33% | 93.13% | 51.52% | -391.18% | 125.19% | -107.69% | 73.36% | -177.27% | -202.33% | 128.76% | 74.98% | -116.88% | 30.08% | -4040% | -90.91% | 633.33% | 102.26% | -1.45% | -307.78% | 133.33% | 80% | - |
| EPS (Basic) | - | 0.13 | 0.11 | -0.07 | -0.29 | -0.02 | 0.69 | 0.12 | -0.03 | -0.48 | -0.99 | 0.34 | -1.35 | -0.66 | -2.44 | -0.88 | 0.87 | -2.99 | -11.95 | -5.51 | -7.88 | 0.20 | 2.20 | 0.30 | -13.28 | -13.09 | 7.60 | 3.30 | 1.70 |
| Diluted Shares Outstanding | 190.1M | 173.05M | 150.9M | 130.4M | 126.7M | 128M | 118.7M | 109.2M | 106.1M | 89.5M | 61.3M | 58.7M | 57.6M | 56.8M | 46.9M | 27.4M | 16.9M | 13.9M | 9.3M | 7.4M | 7.35M | 7.5M | 6.77M | 6.84M | 4.81M | 4.59M | 5.05M | 3.52M | 3.07M |
| Basic Shares Outstanding | 188.6M | 172.25M | 149M | 130.4M | 126.7M | 124.6M | 115.5M | 106M | 103.8M | 89.5M | 61.28M | 58.7M | 57.6M | 56.73M | 46.85M | 27.4M | 16.6M | 13.9M | 9.3M | 7.4M | 7.35M | 7.4M | 6.77M | 6.84M | 4.81M | 4.59M | 4.18M | 2.91M | 2.84M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
Quick answers to the most common questions about buying KTOS stock.
For fiscal year 2025, Kratos Defense & Security Solutions, Inc. (KTOS) reported total revenue of $1.35B. This represents a 2495.0% increase compared to $51.9M in 1998.
Kratos Defense & Security Solutions, Inc. (KTOS) is profitable, generating $22.0M in net income for the fiscal year ending 2025 with a net profit margin of 1.6%.
Kratos Defense & Security Solutions, Inc. (KTOS) reported an operating income of $27.7M, resulting in an operating profit margin of 2.1%. This margin reflects the operational efficiency of the business before interest and taxes.
Kratos Defense & Security Solutions, Inc. (KTOS) generated $298.3M in gross profit for the year, representing a gross profit margin of 22.1%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Valuation vs. execution risk
Metrics are mathematically derived from official filings.
Revenue Acceleration on Drone Momentum
KTOS revenue surged 30.5% year-over-year in 2026Q2 to $458.8M, the fastest growth in the reported period, according to the latest quarterly data, signaling accelerating demand for unmanned systems.
The 30.5% growth in 2026Q2 marks a clear acceleration from the 22.6% in 2026Q1 and the mid-single-digit rates seen in 2024. This suggests that the Unmanned Systems segment is transitioning from development to production, likely driven by programs like the XQ-58 Valkyrie and the DoD's Replicator initiative. However, the sustainability of this growth depends on continued government funding and the conversion of backlog to revenue, which investors should monitor closely.
Gross Margin Compression from Mix Shift
Gross margin fell to 21.8% in 2026Q2 from 24.3% a year earlier, as reported in financial statements, indicating a mix shift toward lower-margin production contracts and ongoing IRAD investment.
The decline in gross margin from the 24-25% range in 2024 to 21-22% in 2026 suggests that the revenue mix is increasingly weighted toward initial production runs of unmanned systems, which carry lower margins than the more mature KGS segment. This may be a temporary phase as the company scales production, but it also reflects the competitive pricing required to win large-volume contracts. If the mix shift persists, gross margin could remain under pressure, though a successful ramp to full-rate production could eventually drive expansion.
Operating Leverage Elusive Amid Scaling
Despite 30.5% revenue growth in 2026Q2, operating income turned negative at -$1.6M, as per the income statement, indicating that SG&A and R&D spending are outpacing gross profit gains.
The 2026Q2 operating loss, despite strong revenue growth, highlights that the company is investing heavily in SG&A and R&D to support its expansion, with SG&A jumping to $87.3M from $59.9M in the prior year quarter. This suggests that operating leverage is not yet materializing, as the cost base is growing in anticipation of future production volumes. Investors should watch whether SG&A growth moderates as revenue scales, or if the company continues to prioritize market share over near-term profitability.
Net Income Flattered by Interest Income
Net income of $4.4M in 2026Q2 was positive despite an operating loss, as reported in the income statement, likely aided by interest income on the $560M cash balance, masking operational thinness.
The divergence between operating income (-$1.6M) and net income ($4.4M) suggests that non-operating items, such as interest income, are providing a cushion. This implies that the core business is not yet profitable on an operating basis, and the quality of earnings is partially dependent on the company's cash position. As the cash balance is deployed or if rates fall, this support could diminish, making operational profitability more critical.
SG&A Surge Outpaces Revenue Growth
SG&A expenses rose to $87.3M in 2026Q2, up 45.7% year-over-year, according to the income statement, far exceeding the 30.5% revenue growth, indicating aggressive investment in bid and proposal efforts.
The disproportionate increase in SG&A suggests that Kratos is investing heavily in capturing new programs, including the pursuit of large-volume contracts like the XQ-58. This is consistent with management's stated strategy of positioning for 'affordable mass production,' but it also pressures near-term margins. If these investments do not translate into contract wins, the cost structure may become a drag on profitability, warranting close monitoring of SG&A efficiency.
Valuation Priced for Perfection
KTOS trades at a premium to defense peers despite thin operating margins, as per market data, suggesting the market is pricing in a major program win that has yet to materialize in financials.
The market's valuation of KTOS implies expectations of a transformative contract, such as a Program of Record for the XQ-58, which would drive significant revenue growth and margin expansion. However, the current financials show operating losses and gross margins below 22%, indicating that the business is still in an investment phase. If program awards are delayed or competition intensifies, the stock could face significant downside as the market reprices the growth narrative. This risk is heightened by the potential for equity dilution to fund further investments.