Kratos Defense & Security Solutions, Inc. (KTOS): History, Ownership, Mission, How It Works & Makes Money

When you look at the defense sector, how do you defintely spot a technology company like Kratos Defense & Security Solutions, Inc. that is genuinely disrupting the traditional prime contractors?

This is a company that is not just talking about next-generation warfare; it's building it, evidenced by its raised full-year 2025 revenue guidance of between $1.320 billion and $1.330 billion, fueled by a massive 23.7% organic growth in Q3 2025 alone, largely in its Unmanned Systems and Defense Rocket Systems.

With a consolidated backlog of $1.480 billion as of Q3 2025, Kratos Defense & Security Solutions, Inc. is a critical player in the generational recapitalization of the U.S. defense industrial base, focusing on high-demand, low-cost products like jet-powered drones and hypersonic vehicles.

If you want to understand the mission, the money, and the market position of a firm that is positioned squarely at the intersection of national security and disruptive tech, this deep dive is where you need to start.

Kratos Defense & Security Solutions, Inc. (KTOS) History

You want to understand the DNA of Kratos Defense & Security Solutions, Inc. (KTOS), and honestly, it's a classic defense industry evolution story: start with a niche, pivot hard to where the money is, and then double down on next-generation tech. The company you see today-a leader in affordable, jet-powered drones-is a far cry from its origins in telecommunications infrastructure.

The key takeaway is that Kratos's current identity was forged by two major strategic pivots: the shift from commercial telecom to government defense in the early 2000s, and the aggressive move into Unmanned Aerial Systems (UAS) a decade later. This defintely wasn't a straight line.

Given Company's Founding Timeline

Year established

The company was originally established in 1994, initially operating as Wireless Facilities Incorporated (WFI).

Original location

The founding headquarters was in San Diego, California, where the company remains headquartered today.

Founding team members

Wireless Facilities Incorporated (WFI) was founded by brothers Massih Tayebi and Masood Tayebi. They started by focusing on engineering services for telecommunications networks.

Initial capital/funding

Specific details on the initial seed capital are not public. The company's early funding likely came from a combination of bootstrapping and venture capital, supporting a business model centered on software and services for satellite ground systems.

Given Company's Evolution Milestones

Given Company's Transformative Moments

The company's journey to its current form-a technology-focused defense contractor-was defined by a few high-stakes decisions that fundamentally changed its business model. This is where the real value was unlocked.

• The 2007 Rebrand and Pivot: The decision to change the name to Kratos Defense & Security Solutions from Wireless Facilities, Inc. was more than cosmetic; it was a definitive break from the lower-margin, cyclical commercial telecom business. This allowed Kratos to chase higher-margin, mission-critical government contracts.
• The Unmanned Systems Bet: Kratos made an early and heavy investment in the development of affordable, high-performance jet-powered drones, notably the XQ-58A Valkyrie. This was a contrarian move against the industry's focus on expensive, exquisite platforms. This focus is now paying off, with the Unmanned Systems segment seeing a 35.8% organic revenue increase in Q3 2025.
• Vertical Integration of Propulsion: The 2020 acquisition of Technical Directions Inc. (TDI), a small turbojet manufacturer, was a brilliant move. It secured the supply chain for their jet engines, which power platforms like the Gray Wolf cruise missile, and allowed Kratos to control costs and development timelines for their low-cost UAS strategy.
• 2025 Financial Momentum: The market is rewarding these pivots. For the full fiscal year 2025, the company has raised its revenue guidance to between $1.320 Billion and $1.330 Billion, with an expected Adjusted EBITDA between $114 Million and $120 Million. This financial performance, coupled with a Q3 2025 consolidated book-to-bill ratio of 1.2 to 1.0, shows strong demand and future revenue visibility.

If you're looking for a deeper dive into who is betting on this trajectory, you should read Exploring Kratos Defense & Security Solutions, Inc. (KTOS) Investor Profile: Who's Buying and Why?

Kratos Defense & Security Solutions, Inc. (KTOS) Ownership Structure

Kratos Defense & Security Solutions, Inc. (KTOS) is a publicly traded company, meaning its ownership is broadly distributed, but the majority of its stock is held by large institutional investors. This structure ensures that while the company is subject to public market scrutiny, its strategic direction is heavily influenced by a core group of major asset managers like BlackRock and Vanguard.

Kratos Defense & Security Solutions, Inc.'s Current Status

Kratos Defense & Security Solutions, Inc. is a publicly traded entity listed on the Nasdaq Global Select Market (NasdaqGS) under the ticker symbol KTOS. This status requires rigorous financial transparency and adherence to Securities and Exchange Commission (SEC) regulations, which is critical for a company focused on national security and defense technologies.

As of November 2025, the company's stock price was approximately $70.24 per share, reflecting a significant increase of over 188% from the previous year, which shows strong market confidence in its strategy, particularly in unmanned systems and satellite communications. You can learn more about the company's long-term vision here: Mission Statement, Vision, & Core Values of Kratos Defense & Security Solutions, Inc. (KTOS).

Kratos Defense & Security Solutions, Inc.'s Ownership Breakdown

The company's ownership is dominated by institutional investors, a common pattern for established defense contractors. This concentration means that quarterly and annual performance is defintely scrutinized by some of the world's largest investment funds.

Here's the quick math: With institutional ownership at nearly 76%, the trading volume and stock stability are heavily reliant on the investment decisions of a few hundred major funds. That's a powerful concentration of control.

Kratos Defense & Security Solutions, Inc.'s Leadership

Kratos is steered by a seasoned management team with an average tenure of over 10 years, providing a stable and experienced hand at the helm. This long-standing leadership is crucial in navigating the complex, long-cycle procurement processes of the U.S. Department of Defense (DoD).

• Eric DeMarco, CEO, President & Director: Appointed in 2004, his total compensation for the 2025 fiscal year was approximately $7.36 million.
• Deanna Lund, Executive VP, Chief Financial Officer & Director: Oversees the company's financial strategy and reporting.
• William Hoglund, Chairman of the Board: Provides oversight and governance, leading the independent directors.
• Phillip Carrai, President of Space, Training, & Cyber Division: Focuses on high-growth, next-generation space and cyber solutions.
• Steven Fendley, President of Unmanned Systems Division: Drives the development and production of the company's high-performance, low-cost unmanned aerial systems (UAS).

The leadership team's focus is clear: rapid, affordable technology delivery to the DoD. This strategy is what has driven the company's recent revenue growth, which was up 26.0% in the most recent reported quarter, with revenue hitting $347.60 million.

Kratos Defense & Security Solutions, Inc. (KTOS) Mission and Values

Kratos Defense & Security Solutions, Inc. stands for delivering mission-critical technology to the warfighter, focusing on innovation and affordability to maintain national security readiness. Their cultural DNA is built on a commitment to execution, ensuring that progress is never defeated by process.

Kratos Defense & Security Solutions, Inc.'s Core Purpose

As a seasoned financial analyst, I look past the glossy annual report to see what a company actually prioritizes. For Kratos Defense & Security Solutions, Inc., their core purpose is clear: to be a disruptive change agent in the defense industry, delivering high-performance systems at a lower cost and faster pace than traditional prime contractors.

This focus on value is tangible. For example, their planned capital expenditures for 2025 are substantial, ranging from $125 million to $130 million, specifically earmarked for expanding manufacturing and production in key areas like Rocket Systems and Hypersonic businesses. That's a serious commitment to scaling affordable delivery.

• Be a disruptive technology leader.
• Deliver high-performance-per-cost systems.
• Enable U.S. and allied defense forces' readiness.

Official mission statement

While Kratos Defense & Security Solutions, Inc. does not always publish a single, rigid mission statement, their operating philosophy centers on a dual mandate: technical expertise and customer mission support. They exist to combine deep domain knowledge with technical know-how to deliver solutions that directly support their customers' critical missions.

In practice, this means providing mission-critical engineering, IT services, and warfighter solutions, which is why their focus on affordability is a technology in itself. Honestly, they aim to democratize advanced defense capabilities.

• Provide mission-critical engineering and IT services.
• Deliver warfighter solutions to support defense needs.
• Focus on cost-effective, innovative technology.

Vision statement

The vision for Kratos Defense & Security Solutions, Inc. is straightforward: to achieve market leadership and technological prominence by being the premier provider of mission-critical solutions in the defense and security sector. They want to be seen as the agile leader, delivering systems at the 'speed of relevance.'

This vision is backed by real investment, not just words. In the first quarter of 2025 alone, the company allocated $10.0 million to company-funded research and development (R&D), focusing on next-generation technologies like Unmanned Systems and Hypersonics. That R&D spend is the engine for their long-term vision.

If you want to dig into the numbers behind this vision, you should check out Breaking Down Kratos Defense & Security Solutions, Inc. (KTOS) Financial Health: Key Insights for Investors.

Kratos Defense & Security Solutions, Inc. slogan/tagline

The company's brand tagline, updated in August 2025, perfectly encapsulates their mission-driven focus and commitment to their clients. It's a clean one-liner that cuts right to their value proposition.

• Readiness Delivered.

This tagline highlights their core promise to enable U.S. and allied defense forces to deter and defeat threats affordably and at speed. It's a commitment to execution and delivery, whether it's hypersonics, drones, or propulsion systems, and it reflects the company's projected strong performance, including an estimated 10% organic revenue growth for the full year 2025.

Kratos Defense & Security Solutions, Inc. (KTOS) How It Works

Kratos Defense & Security Solutions, Inc. (KTOS) operates as a technology company that designs, develops, and fields high-performance, cost-effective platforms and systems for U.S. national security, primarily making money by selling advanced products like jet drones and providing specialized services like satellite ground systems. The company focuses on delivering affordable mass-producing a large quantity of military-grade, technologically advanced solutions quickly-to support evolving defense priorities.

Kratos Defense & Security Solutions, Inc.'s Product/Service Portfolio

The company's business is organized into two primary segments: Unmanned Systems (US) and Kratos Government Solutions (KGS). The KGS segment typically generates the majority of the revenue.

Kratos Defense & Security Solutions, Inc.'s Operational Framework

Kratos creates value by combining internal research and development (R&D) with agile, high-rate manufacturing to deliver mission-critical defense technology faster and cheaper than many legacy competitors. This is how they translate contracts into revenue.

• Internal R&D Investment: Kratos funds its own research and development, totaling $10.0 million in Q3 2025 alone, to rapidly develop next-generation platforms like the fifth-generation jet drone.
• High-Rate Production Scaling: The company is expanding its manufacturing footprint, such as the new 22,500-square-foot Propulsion Manufacturing Facility in Auburn Hills, Michigan, designed to produce over 50,000 Spartan engines per year. That's a huge volume increase.
• Segmented Revenue Stream: Revenue comes from two main sources: the Kratos Government Solutions (KGS) segment, which reported $260.4 million in Q3 2025, and the Unmanned Systems (US) segment, which reported $87.2 million.
• Strong Backlog Conversion: A robust consolidated backlog of $1.480 billion as of Q3 2025 provides clear visibility into future revenue and demonstrates a book-to-bill ratio of 1.2 to 1.0 for the quarter, meaning they are securing more new business than they are billing.

Here's the quick math: The company's full-year 2025 revenue is projected to be between $1.320 billion and $1.330 billion, which shows strong execution on that backlog.

Kratos Defense & Security Solutions, Inc.'s Strategic Advantages

The company's ability to compete against much larger defense primes rests on a few key differentiators, focusing on technology and cost structure.

• The Affordable Mass Model: Kratos's strategy is centered on delivering high-performance systems at a significantly lower cost point, making its jet drones and propulsion systems viable for large-scale, attritable use-a key shift in modern military doctrine. They offer a cheaper, faster alternative.
• First-Mover in Disruptive Tech: The company has a strong position in emerging, high-growth areas like unmanned jet drones and hypersonics, with programs like MACH-TB expected to be a major growth driver.
• Deep Government Ties: Kratos maintains strong relationships with the U.S. Government, which accounted for approximately 71% of its total revenues in the second quarter of 2025. This customer concentration is a risk, but honestly, it's also a massive, reliable advantage.
• Agile Development Cycle: Unlike traditional defense contractors with long, expensive development timelines, Kratos utilizes its in-house 'Ghost Works' lab for rapid prototyping and fielding of new technologies, which allows them to adapt defintely faster to evolving mission needs.

If you want to understand the capital flow driving these programs, you should check out Exploring Kratos Defense & Security Solutions, Inc. (KTOS) Investor Profile: Who's Buying and Why?

The focus on high-volume, low-cost production is what allows them to capture market share from competitors who are often limited to producing fewer, more expensive platforms.

Kratos Defense & Security Solutions, Inc. (KTOS) How It Makes Money

Kratos Defense & Security Solutions, Inc. primarily generates revenue by developing and selling high-performance, affordable technology, platforms, and systems-like jet drones, hypersonic systems, and advanced satellite communication gear-to the U.S. government and its allies for national security and defense purposes. This business model is centered on a high-volume, cost-effective approach to advanced defense technology, which is a key differentiator in the defense industrial base.

Kratos Defense & Security Solutions, Inc.'s Revenue Breakdown

The company operates through two main reporting segments. Based on the strong third quarter of 2025, which saw total revenue of $347.6 million, the revenue split clearly favors the Government Solutions segment.

The Kratos Government Solutions (KGS) segment, which accounts for nearly three-quarters of revenue, includes a diverse set of products and services: microwave electronic products, space, training, cybersecurity, C5ISR (Command, Control, Computers, Communications, Cyber, Intelligence, Surveillance, and Reconnaissance) systems, turbine technologies, and defense/rocket support services.

The Unmanned Systems (KUS) segment focuses on high-performance, cost-effective jet drones for training, target practice, and tactical missions, like the Valkyrie. This is the company's high-growth engine, showing a much faster organic growth rate in the third quarter of 2025 than KGS.

Business Economics

Kratos's economic engine is fueled by long-term government contracts and a strategic focus on 'affordability as a technology,' which means delivering advanced capabilities at a lower cost than traditional prime contractors.

The core of their strategy is to capture market share in high-demand, next-generation defense areas like hypersonics and jet drones by offering systems that are attritable (meaning they can be lost in combat without a massive financial hit) and rapidly developed. This approach allows them to secure substantial contracts and build a significant backlog.

• Pricing Strategy: The company uses a mix of fixed-price and cost-plus contracts, but its competitive edge lies in the lower unit cost of its products, such as its jet drones, which are designed to be high-performance but affordable.
• Backlog Strength: As of the end of Q3 2025, the consolidated backlog stood at a substantial $1.480 billion, with $1.234 billion of that being funded. This provides a clear line of sight to future revenue.
• Book-to-Bill Ratio: The consolidated book-to-bill ratio for Q3 2025 was 1.2 to 1.0, meaning they booked $1.20 in new orders for every $1.00 of revenue recognized. This indicates a healthy, expanding business pipeline.
• Pipeline: The bid and proposal pipeline is massive, at approximately $13.5 billion as of September 28, 2025, reflecting robust demand tied to the recapitalization of the U.S. defense industrial base.

The company is making the necessary investments now, with full-year 2025 capital expenditures forecasted to be between $105 million and $115 million, mainly to expand manufacturing for its rocket systems, hypersonic programs, and jet drones.

Kratos Defense & Security Solutions, Inc.'s Financial Performance

For fiscal year 2025, Kratos is projecting strong top-line growth, with the latest revenue guidance raised to a range of $1.320 billion to $1.330 billion.

Here's the quick math: Using the midpoint of the guidance, $1.325 billion, this represents a significant increase over the prior year, driven by strong organic growth across both segments.

• Adjusted EBITDA: The full-year 2025 Adjusted EBITDA is projected to be between $114 million and $120 million, which is a key measure of operational profitability before non-cash charges.
• Gross Margin: The gross margin for Q3 2025 was 22.2%. While this margin is solid for a defense contractor, it was slightly down from the prior year, reflecting the costs associated with ramping up production and making strategic investments in new programs.
• Net Income: Kratos reported Q3 2025 Net Income of $8.7 million, or $0.05 per diluted share, demonstrating tangible profitability as its programs scale.
• Balance Sheet: The company has a strong balance sheet, having fully repaid its long-term debt as of Q3 2025, which significantly de-risks the business and provides financial flexibility for future investments.

The company is defintely investing for the future, which you see in the current margins, but the massive backlog and the strong book-to-bill ratio of 1.2 to 1.0 suggest that the revenue growth is sustainable and the profitability should improve as higher-margin programs mature in 2026 and 2027. You can see how these growth drivers align with the company's long-term goals by reviewing its Mission Statement, Vision, & Core Values of Kratos Defense & Security Solutions, Inc. (KTOS).

Kratos Defense & Security Solutions, Inc. (KTOS) Market Position & Future Outlook

Kratos Defense & Security Solutions is a disruptive force in the defense sector, not a prime contractor, focusing on affordable, high-performance technology like the XQ-58A Valkyrie drone. The company is positioned as a key enabler for the Pentagon's shift toward a high-volume, low-cost 'attritable' defense architecture, with its $1.325 billion full-year 2025 revenue guidance reflecting strong growth in niche, next-generation programs.

Competitive Landscape

To understand Kratos, you have to see it next to the giants and the specialized players. Kratos is not competing to build the next $100 million fighter jet; it's building the $6 million loyal wingman drone that can fly alongside it. Here's the quick math on scale against the overall US defense market, which is estimated at around $320.86 billion in 2025.

Kratos's 0.41% share shows its niche focus, but its technology-especially the Valkyrie program-puts it squarely in the path of future defense spending, often as a partner to the larger primes. That's a good spot to be in.

Opportunities & Challenges

The company's future trajectory hinges on its ability to transition its innovative prototypes into mass production, but that shift comes with its own set of risks. You need to weigh the potential for a revenue spike against the operational hurdles.

Industry Position

Kratos is an industry disruptor, not a market share behemoth. Its position is defined by its strategic alignment with the Department of Defense's (DoD) push for 'Replicator' programs-the rapid, high-volume fielding of affordable autonomous systems.

• Backlog Strength: The consolidated backlog stood at $1.41 billion as of Q2 2025, providing strong revenue visibility, which is a critical indicator of future performance in this industry.
• Growth Drivers: The Unmanned Systems segment is the star, with revenues surging 35.8% year-over-year in Q3 2025, demonstrating real-time capture of the market shift.
• Financial Headroom: Management is guiding for Adjusted EBITDA between $114 million and $120 million for 2025, showing improving profitability despite heavy internal research and development (IR&D) spending.
• Strategic Focus: The company's core strategy is to be the low-cost supplier of high-end, jet-powered drones and sophisticated ground systems. This is a crucial differentiator from the primes who focus on ultra-high-end platforms. You can read more about their core philosophy in the Mission Statement, Vision, & Core Values of Kratos Defense & Security Solutions, Inc. (KTOS).

The key action for any investor or strategist is to monitor the book-to-bill ratio, which was 1.2 to 1.0 for the last twelve months ending June 29, 2025. That ratio confirms that Kratos is still booking new business faster than it is delivering revenue, a clear sign of continued expansion.