Kratos Defense shares jumped 5.41% to $51.87 after the defense contractor posted second-quarter revenue of $458.8 million, a 30.5% climb from $351.5 million a year ago. The stock added another 0.52% in after-hours trading. Organic growth hit 19.1%, driven by stronger demand across unmanned systems and government programs.
The company's Valkyrie drone operations proved to be the standout performer. Unmanned Systems revenue grew to $79.1 million from $73.2 million, with Valkyrie activity lifting the segment's operating income into positive territory at $1.2 million, compared to a $300,000 loss in the prior year. Quarterly bookings for the division hit $78.4 million.
Guidance Raised as Backlog Swells
Total company bookings exceeded $492 million for the quarter, with the Government Solutions unit driving much of the growth. Kratos' backlog now sits at $2.08 billion, prompting management to raise its 2026 organic growth outlook. The company generated adjusted EBITDA of $38.2 million and reported net income of $4.4 million, though adjusted earnings per share nearly doubled to $0.21 from $0.11.
The strong results reflect elevated defense spending priorities. Kratos invested heavily in research and development, with company-funded R&D totaling $13.6 million and stock-based compensation at $16.3 million. The firm also recorded $12.5 million in amortization as it builds out satellite, space systems, unmanned aircraft, and microwave electronics capabilities.
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