Kratos Defense & Security Solutions, Inc. (KTOS): Business Model Canvas [Dec-2025 Updated]

You're looking to understand the financial engine driving Kratos Defense & Security Solutions, Inc. (KTOS) as they aggressively push into advanced drone warfare and space systems. Honestly, mapping their late 2025 strategy shows a company betting big on disruptive cost models for the U.S. Department of Defense (DoD). With a contract backlog near $1.48 billion and full-year revenue guidance hitting $1.32 billion to $1.33 billion, their model hinges on proprietary technology like the XQ-58A Valkyrie jet drone and significant investment in hypersonics R&D. It's a fascinating mix of high-fixed-cost manufacturing and high-margin government sustainment contracts. So, let's break down the nine blocks of their Business Model Canvas to see exactly how Kratos Defense & Security Solutions, Inc. is structuring its path forward right now.

Kratos Defense & Security Solutions, Inc. (KTOS) - Canvas Business Model: Key Partnerships

You're looking at the core relationships Kratos Defense & Security Solutions, Inc. (KTOS) relies on to deliver its complex technology portfolio. These aren't just vendors; they are the primary customers and collaborators driving the business forward, especially in late 2025.

U.S. Department of Defense (DoD) and military branches

The relationship with the U.S. Department of Defense and its branches is foundational. Kratos Defense & Security Solutions, Inc. is a key supplier across national security sectors, which is reflected in several recent, significant contract awards. For instance, Kratos secured a sole source production contract valued at approximately $30 million for critical air defence system hardware in April 2025.

The U.S. Navy is leaning on Kratos Defense & Security Solutions for long-term readiness of its Aegis-equipped fleet. Kratos was awarded Phase 1 of Project Anaconda, an agreement with an initial total projected ceiling of $175 million across multiple phases, to develop an organic sustainment capability for the AN/SPY-1 radar systems, which are expected to remain in service through 2065. This effort involves building the 155,000-square-foot Indiana Radar Integration Complex (IRIC), expected to be operational in 2027.

Also, the U.S. Space Force awarded a $25 million task order in March 2025, running through November 2027, to support Evolved Strategic Satellite Communications (ESS) ground system capabilities. This task order falls under a larger C-SAR indefinite delivery/indefinite quantity (IDIQ) contract with a maximum value of $579 million.

These government wins are clearly resonating with the market; the stock showed a 52.7% share price return over the past month and a 303.4% total shareholder return in the last year as of mid-October 2025. Honestly, the company's current ratio of 4.43 suggests a robust ability to fund these long-term projects.

Prime defense contractors (e.g., Lockheed Martin, Boeing) for system integration

While specific contracts with prime defense contractors like Lockheed Martin or Boeing aren't explicitly detailed here, Kratos Defense & Security Solutions, Inc.'s role as a provider of affordable, low-cost systems positions it as a key value-add partner to larger integrators. Kratos views its ability to design systems for rapid, large-quantity, low-cost future manufacturing as a competitive differentiator for its large traditional prime system integrator partners. The work on the AN/SPY-1 radar sustainment, for example, involves Kratos leading a cross-industry team, which inherently requires coordination with the broader defense ecosystem.

Korea Aerospace Industries for manned-unmanned teaming (late 2025)

A major development in late 2025 is the strategic partnership Kratos Defense & Security Solutions, Inc. announced with Korea Aerospace Industries (KAI) on October 27, 2025. This collaboration is specifically aimed at accelerating the development of Manned-Unmanned Teaming (MUM-T) technologies. The joint effort will focus on research and system integration for scalable applications such as autonomous loyal wingmen, distributed sensing, and collaborative strike missions. Kratos brings its experience with proven autonomous jet systems like the XQ-58A Valkyrie, Mako, and Tactical Firejet, while KAI contributes its status as Korea's only full-spectrum aircraft system integrator. The companies will also explore co-development, production, and export opportunities for these MUM-T solutions for U.S. and allied forces.

DARPA for advanced autonomous and hypersonic system development

The Defense Advanced Research Projects Agency (DARPA) is a key partner for Kratos Defense & Security Solutions, Inc.'s advanced technology maturation efforts. Kratos was awarded a $6.5 million, two-year contract by DARPA's Defense Sciences Office (DSO) to provide flight testing for hypersonic research, which began in August 2023. This work focuses on developing, characterizing, and validating critical hypersonic components for technology maturation and risk reduction. Kratos leverages its flight-proven, affordable hypersonic test beds, including the Erinyes flyer, to rapidly validate modeling and simulation (M&S) tools for future hypersonic flight testing.

Furthermore, Kratos is building out its own testing infrastructure to support these advanced programs, securing a $68.3 million contract for Project Helios to design and build a mid-tier arc jet and coupled fiber laser facility for hypersonic materials evaluation.

Here's a quick look at some of the major contract values associated with these key relationships:

Finance: draft 13-week cash view by Friday.

Kratos Defense & Security Solutions, Inc. (KTOS) - Canvas Business Model: Key Activities

You're looking at the core engine driving Kratos Defense & Security Solutions, Inc. (KTOS) right now, which is all about executing on high-tech defense programs, especially in the unmanned space. The numbers from the third quarter of 2025 really show where the action is.

Design and manufacturing of high-performance jet drones (Valkyrie)

This is the growth narrative, plain and simple. The Unmanned Systems (KUS) segment is firing on all cylinders, with Q3 2025 revenues hitting $87.2 million, showing a massive 35.8 percent organic growth year-over-year. The XQ-58A Valkyrie program achieved Program of Record status with the U.S. DoD in 2025, which is a huge deal for future funding stability. To meet anticipated demand, Kratos Defense & Security Solutions, Inc. launched production on a second batch of 24 Valkyries, having already built two prior lots of 12 units speculatively. Management is projecting deliveries of 15-20 XQ-58 Valkyrie aircraft in 2026. You can see the immediate impact of this activity in the February 2025 award modification from the U.S. Marine Corps for $34,856,449 supporting the MUX TACAIR integration for the Valkyrie variant.

Research and Development (R&D) in hypersonics and space systems

Kratos Defense & Security Solutions, Inc. is actively funding future capabilities. Company-funded Research and Development (R&D) expense for the third quarter of 2025 was $10.0 million, covering efforts across Space, Satellite, and Unmanned Systems. Honestly, R&D spending generally sits around 3-4% of sales as they co-invest with customers on new tech. The hypersonics work is definitely moving forward; the secret hypersonic drone program revealed in March 2025 is officially named Icarus. Plus, the Space, Training, and Cyber businesses within the Kratos Government Solutions (KGS) segment saw organic revenue growth of 21.2 percent in Q3 2025.

Developing virtualized ground systems for satellite Command and Control (C2)

This falls under the KGS segment, which is a stable cash generator for the firm. The KGS segment brought in revenues of $260.4 million in Q3 2025, with organic growth of 20.0 percent. While specific revenue for just the virtualized ground systems isn't broken out, the segment benefits from Space/communications projects, including control systems for satellite constellations. The overall KGS backlog at the end of Q3 2025 was a substantial $1.15 billion, supporting these long-term execution activities.

Managing and executing large, multi-year government contracts

Execution on these large deals dictates the financial health you see. Consolidated bookings for Q3 2025 were $414.1 million, leading to a healthy book-to-bill ratio of 1.2 to 1.0 for the quarter. Total consolidated backlog as of September 28, 2025, stood at $1.480 billion, with $1.234 billion of that being funded. Revenues generated from U.S. federal government contracts accounted for approximately 67% of Q3 2025 revenues. The company increased its full-year 2025 revenue guidance to a range of $1,320 to $1,330 million based on this execution momentum. They are also keeping a massive $13.5 billion bid and proposal pipeline ready for future work.

The mix of contracts in Q3 2025 was heavily weighted toward fixed-price work.

• Fixed Price Contracts: 70% of the contract mix
• Cost Plus Fixed Fee Contracts: 27% of the contract mix
• Time and Material Contracts: 3% of the contract mix

Finance: draft 13-week cash view by Friday.

Kratos Defense & Security Solutions, Inc. (KTOS) - Canvas Business Model: Key Resources

You're looking at the core assets Kratos Defense & Security Solutions, Inc. (KTOS) relies on to execute its strategy, which are heavily weighted toward proprietary defense technology and government contracts. These aren't just ideas; they are tangible capabilities and secured revenue streams.

The foundation of Kratos Defense & Security Solutions, Inc.'s (KTOS) Key Resources is its intellectual property and the physical assets needed to produce advanced defense systems. This includes the XQ-58A Valkyrie, a stealthy, combat Unmanned Aerial System (UAS) designed as a Collaborative Combat Aircraft (CCA). Kratos officials have stated the company could produce between 250 to 500 Valkyries per year. As of late 2025, Kratos had launched production of a second batch of 24 Valkyries and had 15 to 20 units ready for immediate delivery. The Valkyrie platform itself boasts a range of over 3,000 nautical miles (approximately 5,666 kilometers) and a top speed of 0.86 Mach, with an operational altitude up to 45,000 feet (approximately 13,716 meters).

The financial visibility provided by secured work is a critical resource. As of September 28, 2025, Kratos Defense & Security Solutions, Inc. reported a consolidated total contract backlog of approximately $1.480 billion. This total backlog breaks down into $1.234 billion of funded backlog and $246.3 million of unfunded backlog.

To support the increasing demand, Kratos Defense & Security Solutions, Inc. has expanded its physical production capabilities. This includes specialized manufacturing facilities:

• Propulsion Manufacturing Facility in Auburn Hills, MI, established in November 2025, signaling a shift toward large-scale industrial engine manufacturing.
• A 60,000-sq-ft microwave electronics facility in Jerusalem.
• The $50 million State-of-the-Art Hypersonic System Indiana Payload Integration Facility, which is on track for 2026 completion.

The company's intellectual property portfolio is heavily focused on digital transformation in space and integrated combat systems. A key example is the work supporting the U.S. Space Force (USSF) Space Systems Command (SSC) for Evolved Strategic Satellite Communications (SATCOM) (ESS). Kratos Defense & Security Solutions, Inc. secured a $25 million task order for this effort, which falls under a larger, maximum value $579 million Command and Control System-Consolidated (CCS-C) Sustainment and Resiliency (C-SAR) indefinite delivery/indefinite quantity (IDIQ) contract. This work leverages the OpenSpace Platform, which is marketed as the first commercially available, fully orchestrated, software-defined ground system. Kratos Defense & Security Solutions, Inc.'s primary business areas also explicitly include C5ISR and virtualized ground systems for satellites.

Here's a quick look at the scale of some of these technology-related resources as of late 2025:

The Unmanned Systems segment showed organic revenue growth of 35.8% in the third quarter of 2025, largely driven by international Valkyrie shipments. To be fair, the Unmanned Systems backlog was $302.5 million at the end of Q3 2025, down from $337.6 million in Q2 2025, showing some segment-specific pressure. Finance: draft 13-week cash view by Friday.

Kratos Defense & Security Solutions, Inc. (KTOS) - Canvas Business Model: Value Propositions

Kratos Defense & Security Solutions, Inc. provides value by delivering mission-critical defense capabilities with a focus on cost-efficiency and speed, setting it apart from traditional prime contractors.

Affordable, high-performance defense systems (disruptive cost model)

Kratos Defense & Security Solutions, Inc. operates on the principle that affordability is a technology. The value proposition centers on delivering a decisive edge to customers without the multi-billion-dollar price tags common in the sector. This is achieved by designing products and systems upfront for successful rapid, large quantity, low-cost future manufacturing. The company has recently bolstered its capacity to deliver on this model, including the announced acquisition of Orbit Technologies for $356.3 million, which is expected to be immediately accretive across financial metrics.

The commitment to cost-effective solutions is reflected in the financial performance, with the company raising its full-year 2025 revenue guidance to a range of $1.32 billion to $1.33 billion in November 2025.

Rapid development cycles (disruptive cost model)

Kratos Defense & Security Solutions, Inc. emphasizes its approach designed to reduce cost, schedule and risk, enabling them to be first to market with cost-effective solutions. This focus on speed is evidenced by significant capital investment in infrastructure specifically for rapid fielding. For instance, the company broke ground on its $50 million, 68,000-square-foot Hypersonic System Indiana Payload Integration Facility (IPIF) in March 2025, a project designed to support payload integration and testing for the MACH-TB program and reduce the time between concept and deployment.

Mission-critical capabilities in hypersonics and jet drones

The company is a key player in both the hypersonic and unmanned aerial systems markets, securing major contracts in these areas throughout 2025.

• Kratos Defense & Security Solutions, Inc. is the sole source producer of the BQM-167 for the USAF, the BQM-177 for the USN, and the MQM-178 for the US Army.
• The Unmanned Systems (KUS) segment achieved 35.8 percent organic revenue growth in Q3 2025, reaching $87.2 million.
• Kratos secured a $3.4 million U.S. Navy contract in March 2025 for logistics and engineering support for its BQM-177A target drone.
• The company unveiled the Ragnarok Low-Cost Cruise Missile (LCCM) system, which features a 500-nautical-mile range and an 80-pound payload.
• For hypersonics, Kratos was awarded an approximate $100 million total potential value hypersonic system program award, with $15 million in funding received at contract award.
• The company was awarded a $68.3 million contract by the Department of War to develop a materials testing center for its hypersonic program.

Secure, resilient satellite ground system solutions (e.g., OpenSpace Platform)

Kratos Defense & Security Solutions, Inc. is deploying its OpenSpace Platform, a modern, containerized, and orchestrated architecture, to modernize military satellite communications (MILSATCOM) ground systems. This value proposition was validated by a significant contract award from the U.S. Space Force for the Evolved Strategic SATCOM (ESS) program.

The specific task order utilizing the OpenSpace Platform has a contract value of $25 million with a performance period running from March 2025 to November 2027. This work is accomplished under the larger C-SAR single-award indefinite delivery/indefinite quantity (IDIQ) contract, which has a maximum value of $579 million. The OpenSpace Platform enables the Space Force to dynamically select capabilities via software modules, improving availability and resiliency for critical Nuclear Command, Control, and Communications (NC3) infrastructure.

Kratos Defense & Security Solutions, Inc. (KTOS) - Canvas Business Model: Customer Relationships

Kratos Defense & Security Solutions, Inc. maintains relationships heavily weighted toward the U.S. defense apparatus, which accounted for the majority of its business in late 2025.

Dedicated, high-touch strategic relationship with government agencies

The core relationship is a direct, strategic engagement with government entities, reflecting deep integration into national security missions. For the third quarter of 2025, revenues generated from the U.S. federal government-including Department of War (DoW), non-DoW federal agencies, and Foreign Military Sales (FMS) contracts-represented approximately 67% of total revenues. This reliance on government funding is supported by a substantial pipeline, with the total consolidated backlog reaching $1.480 billion as of September 28, 2025, of which $1.234 billion was funded backlog.

The Kratos Government Solutions (KGS) segment, which houses many of these direct relationships, posted revenues of $260.4 million in the third quarter of 2025.

Long-term sustainment and resiliency contracts (e.g., USSF C-SAR)

The relationship structure is cemented by multi-year commitments for maintaining critical, long-life systems. A concrete example is the Phase 1 award from the U.S. Navy to develop an organic sustainment capability for the AN/SPY-1 radar systems, internally dubbed 'Project Anaconda.' This single-award agreement carries an initial projected ceiling of $175 million across multiple phases. The systems supported by this contract are expected to remain in service through the year 2065, underscoring the long-term nature of Kratos Defense & Security Solutions, Inc.'s service commitments. The company is also a recognized leader in providing unmanned aerial target drone systems essential for training and weapons testing for U.S. military branches and allies.

Collaborative development with prime contractors and allies

Kratos Defense & Security Solutions, Inc. actively engages in joint development efforts, moving beyond simple vendor status. Program momentum on the Valkyrie unmanned system includes a partnership with Airbus for a German variant. Furthermore, a strategic partnership was formed with Korea Aerospace Industries in October 2025 to advance manned-unmanned teaming technologies. The company's bid and proposal pipeline stood at $13.5 billion at September 28, 2025, indicating ongoing, deep engagement in future program development.

Managed services for complex defense and security systems

The company provides ongoing support and management for its deployed hardware and software systems. This is evident in the Kratos Government Solutions (KGS) segment, which saw organic revenue growth of 20.0 percent in the third quarter of 2025 over the prior year. The company is also expanding its operational footprint to support increased demand, announcing the opening of a new Propulsion Manufacturing Facility in Auburn Hills, MI, in November 2025, designed for large-scale industrial engine manufacturing.

• KGS segment Q3 2025 organic revenue growth: 20.0 percent.
• New microwave electronics facility opened in Jerusalem (late 2025).
• Acquired Orbit Technologies for $356.3 million in November 2025 to add satcom capabilities.

Kratos Defense & Security Solutions, Inc. (KTOS) - Canvas Business Model: Channels

You're looking at how Kratos Defense & Security Solutions, Inc. gets its products and services to the customer base, which is heavily skewed toward the U.S. government. The channel strategy relies on direct relationships built over years, supplemented by strategic partnerships.

Direct sales channel to the U.S. Department of Defense and agencies

This channel is primarily represented by the Kratos Government Solutions (KGS) segment, which is the core revenue driver. For the third quarter of 2025, KGS generated revenues of $260.4 million, showing a 20.0 percent organic growth rate over the third quarter of 2024 revenues of $211.7 million. The overall TTM revenue ending September 30, 2025, was $1.285B. This segment's success is directly tied to securing and executing on large, multi-year government programs.

The channel success is visible in specific contract wins:

• Secured Phase 1 for AN/SPY-1 Organic Sustainment with an initial ceiling of $175 million across multiple phases.
• Awarded a $68.3 million contract for a hypersonic materials testing facility, Project Helios.
• Secured a $25 million task order from the U.S. Space Force under the larger $579 million C-SAR IDIQ contract.

Prime contractor teaming agreements for large programs

Kratos Defense & Security Solutions, Inc. frequently engages in teaming to access larger contract vehicles or specific technical requirements. These agreements allow Kratos to place its technology, like the OpenSpace Platform, within larger system integrations managed by prime contractors. The success in securing large, single-award agreements, such as the $175 million AN/SPY-1 Phase 1, suggests strong positioning within these teaming structures, even if the prime is not explicitly named in the announcement. The company's bid and proposal pipeline stood at $13.5 billion as of September 28, 2025, much of which is pursued through these collaborative channels.

Here's a look at the revenue contribution from the primary segments that utilize these channels:

Direct international sales to allied nations' militaries

International sales are a component, often channeled through the Unmanned Systems (KUS) segment, particularly for target drones. While the overall strategy emphasizes domestic defense, international activity is present. For instance, the KUS segment's Q2 2025 revenue of $73.2 million was lower than Q2 2024's $85.8 million, primarily due to the absence of a $17.4 million international target drone shipment in the current year period. The company's long-term guidance for 2026 and 2027 growth is supported by new international opportunities following MTCR export rule adjustments, defintely signaling an increased focus on this channel.

Industry conferences and government procurement portals

Participation in events like the Military Space Situational Awareness Conference 2025 is key for visibility and pipeline development. Government procurement portals and contract vehicles, such as the C-SAR IDIQ contract, serve as the formal entry points for many of the task orders awarded. The consolidated backlog on September 28, 2025, reached $1.480 billion, which is the direct result of successful engagement across all these formal and informal channels.

• Total Consolidated Backlog (September 28, 2025): $1.480 billion.
• Funded Backlog (September 28, 2025): $1.234 billion.
• Bid and Proposal Pipeline (September 28, 2025): $13.5 billion.

Kratos Defense & Security Solutions, Inc. (KTOS) - Canvas Business Model: Customer Segments

You're looking at Kratos Defense & Security Solutions, Inc.'s customer base as of late 2025. Honestly, the numbers show a clear focus on the defense and government side, which is where the bulk of their revenue is coming from right now. For the twelve months ending September 30, 2025, Kratos posted total revenues of $1.285B.

The most granular breakdown we have is from the first quarter of 2025, which gives us a good snapshot of where the money was flowing early in the year:

• U.S. federal government contracts accounted for approximately 68% of revenues in Q1 2025, covering the Department of Defense (DOD), non-DOD federal agencies, and Foreign Military Sales (FMS) contracts.
• Foreign customers represented 20% of revenues in Q1 2025.
• Commercial customers generated 12% of revenues in Q1 2025.

This structure is reinforced by recent contract wins. For instance, Kratos secured a single-award contract valued at $68.3 million through the Department of War's Industrial Base Analysis and Sustainment Program to build a hypersonic materials testing facility, which supports all branches of the U.S. Armed Forces.

U.S. Military (Air Force, Navy, Space Force) and Federal Government Agencies

This segment is the bedrock, primarily captured within the Kratos Government Solutions (KGS) segment. In the third quarter of 2025, KGS brought in $260.4 million in revenues, showing 20.0 percent organic growth over Q3 2024. You see their direct support through specific branch awards, like a recent $25 million task order with the U.S. Space Force (USSF) for Evolved Strategic Satellite Communications (SATCOM) ground system capabilities. The Navy is also a major client, evidenced by a recent $3.4 million base-year contract for logistics support on the BQM-177A aerial target system, with a potential total value of approximately $19.1 million if all option years are exercised. Plus, they landed a potential $175 million Phase 1 contract, internally called Project Anaconda, to initiate organic sustainment for the Navy's AN/SPY-1 radar systems. It's clear the U.S. government drives the majority of their recognized revenue.

International Allied Governments and Defense Ministries

While smaller than the domestic government business, international sales are a significant component, making up 20% of Q1 2025 revenue. The Unmanned Systems (KUS) segment saw a revenue increase in Q3 2025, partly driven by certain tactical Valkyrie shipments to an international customer, with KUS reporting $87.2 million in revenue for that quarter. The company's long-term guidance suggests new international opportunities following adjustments to MTCR (Missile Technology Control Regime) export rules.

Major Prime Defense Contractors (as a sub-system supplier)

Kratos Defense & Security Solutions, Inc. often operates as a key supplier of specialized technology, like advanced components or subsystems, which are then integrated into larger platforms managed by prime contractors. While we don't see a direct revenue line item for this specific customer type, their work in microwave electronic products, C5ISR (Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance, and Reconnaissance), and rocket support-all part of the KGS segment-naturally flows through these larger prime contracts. For example, their Defense Rocket Support Systems business saw a massive 47.2 percent organic revenue growth in Q3 2025. This suggests strong demand for their specialized parts within larger defense programs managed by primes.

Commercial satellite operators and telecommunications firms

This group constitutes the commercial segment, which was 12% of Q1 2025 revenue. Kratos's capabilities in space, satellite command and control (C2) systems, and microwave products serve this market. Their KGS segment includes space and cybersecurity businesses that support these commercial needs, alongside their government work. The company's overall bid and proposal pipeline stood at $13.5 billion as of September 28, 2025, which includes potential commercial opportunities alongside government pursuits.

Here's a quick look at the revenue contribution based on the Q1 2025 data:

Finance: draft 13-week cash view by Friday.

Kratos Defense & Security Solutions, Inc. (KTOS) - Canvas Business Model: Cost Structure

You're looking at the core expenditures driving Kratos Defense & Security Solutions, Inc. (KTOS) operations right now. The business model demands substantial upfront and ongoing spending to maintain its specialized capabilities in defense and aerospace.

The company faces persistent negative cash flow and low margins, partly due to high fixed costs associated with manufacturing and maintaining specialized facilities, especially as they expand production for hypersonic and drone systems. This is evident in the significant planned outlay for assets.

Here's a look at some of the concrete investment figures shaping the cost base for 2025:

• Significant investment in company-funded Research and Development (R&D) expense was $10.0 million in Q3 2025.
• Capital expenditures (CapEx) for property, plant, and equipment are projected to be between $105M to $115M for the full year 2025.

Personnel costs are a major component, reflecting the need for highly skilled engineers and technical staff across their Unmanned Systems and Kratos Government Solutions segments. While specific engineer salary costs aren't itemized, the non-cash stock compensation expense gives you a sense of the investment in that talent base.

• Non-cash stock compensation expense included in Q3 2025 Operating Income was $9.1 million.
• SG&A expenses rose by $7.2 million in Q3 2025, partly due to increased headcount.

To give you a clearer picture of the scale of these expenditures relative to recent performance, here's a quick table of key financial metrics from the third quarter and full-year 2025 outlook:

The company is definitely making required investments to grow, but these investments directly translate into the cost structure you're analyzing.

Kratos Defense & Security Solutions, Inc. (KTOS) - Canvas Business Model: Revenue Streams

You're looking at how Kratos Defense & Security Solutions, Inc. (KTOS) actually brings in the money, which is almost entirely through government and defense contracts, plus some product sales. It's a model heavily weighted toward the Kratos Government Solutions (KGS) segment.

Sales of Unmanned Systems (Target and Tactical Drones)

This stream covers the Unmanned Systems segment (KUS). For the third quarter of 2025, this segment brought in $87.2 million in revenue. That was a solid jump, showing 35.8 percent organic growth compared to the third quarter of 2024's revenue of $64.2 million. To be fair, Q2 2025 revenue for KUS was a bit lower at $73.2 million, partly because a significant international target drone shipment didn't repeat from the prior year. Still, management expects the KUS segment to remain profitable from an EBITDA perspective for the full year 2025.

Government Solutions contracts (Space, Training, Cyber, Microwave Electronics)

This is the bigger piece of the pie, the Kratos Government Solutions (KGS) segment. In the third quarter of 2025, KGS generated $260.4 million in revenue, which was 20.0 percent organic growth over the third quarter of 2024's $211.7 million. This segment is where the bulk of the revenue comes from, honestly.

Here's a quick look at the Q3 2025 segment revenue breakdown:

Full-year 2025 revenue guidance of $1.32 billion to $1.33 billion

As of early November 2025, Kratos Defense & Security Solutions, Inc. increased its full-year 2025 revenue guidance to a range of $1,320 to $1,330 million. This reflects management's confidence based on estimated increased volume across their business lines. That's up from earlier guidance, showing momentum building in the second half of the year.

Revenue from long-term sustainment and modernization programs (e.g., Navy AN/SPY-1)

These activities fall squarely within the KGS segment, which supports modernization efforts. We see direct evidence of strong demand in the growth rates reported for specific KGS sub-areas in Q3 2025:

• Defense Rocket Support saw organic revenue growth of 47.2 percent over Q3 2024.
• Space, Training and Cyber businesses showed organic revenue growth of 21.2 percent over Q3 2024.
• The company is making required investments in Rocket Systems and Unmanned Systems for procurement and vehicle completion.
• Management anticipates significant margin improvement in the Unmanned Systems segment starting around 2027-2028 as new contracts replace legacy fixed-price agreements.

The overall contract proposal pipeline was reported at $13.5 billion as of September 28, 2025, which definitely signals future revenue potential in these modernization areas.

Finance: draft 13-week cash view by Friday.