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Here are 1-2 brief analogies for Kratos Defense & Security Solutions (KTOS):

• Imagine a **Lockheed Martin for advanced, tactical military drones**, specializing in cost-effective, high-performance unmanned aerial systems.
• Think of it as a more agile, technology-focused **Northrop Grumman**, concentrating on cutting-edge unmanned systems and satellite communication ground infrastructure.

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• Unmanned Aerial Systems (UAS): Manufactures high-performance, jet-powered target drones and tactical unmanned aircraft primarily for military applications, including reconnaissance, strike, and combat support.
• Satellite & Space Ground Systems: Provides advanced ground infrastructure and solutions for satellite communication, telemetry, tracking, and command, including large antenna systems and signal processing equipment.
• Training & Simulation Systems: Develops and delivers sophisticated simulation and training solutions for military personnel, encompassing jet engine test cell controls, virtual combat environments, and aircrew training devices.
• Microwave Electronics & RF Systems: Designs and produces a variety of mission-critical microwave electronic products and radio frequency (RF) systems, such as power amplifiers, filters, and antennas, for defense and space applications.

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Kratos Defense & Security Solutions (KTOS) sells primarily to government entities and other defense contractors, rather than individuals.

Its major customers include:

• U.S. Government (principally the Department of Defense, including the Air Force, Army, Navy, and Marine Corps)
• Foreign Governments
• Lockheed Martin (LMT)
• Northrop Grumman (NOC)
• Boeing (BA)
• RTX Corporation (RTX)

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Eric DeMarco, President & Chief Executive Officer

Mr. DeMarco joined Kratos Defense & Security Solutions, Inc. in November 2003 as President and Chief Operating Officer, assuming the role of CEO in April 2004. He has been instrumental in transforming Kratos from a commercial communication business into a national security-focused technology provider through strategic acquisitions and organic growth. Prior to joining Kratos, Mr. DeMarco served as President and Chief Operating Officer of The Titan Corporation, which was later acquired by L-3 (now L3Harris Technologies). Under his leadership, Titan's annualized revenue grew significantly to $1.5 billion with a backlog of over $4 billion, helping to establish it as one of the largest government information technology companies in the U.S. During his six-year tenure at Titan, he also held roles including Executive Vice President and Chief Financial Officer, and was responsible for raising approximately $1.0 billion in equity and debt financing and integrating over 20 businesses. Earlier in his career, he worked in public accounting, focusing on large multinational corporations.

Deanna Lund, Executive Vice President & Chief Financial Officer

Ms. Lund has served as Executive Vice President and Chief Financial Officer of Kratos Defense & Security Solutions, Inc. since April 2009, having previously been Senior Vice President and CFO from April 2004 to March 2009. She joined Kratos' Board of Directors in 2021. In her role, Ms. Lund oversees all financial matters, including accounting, SEC reporting, and budgeting, and has played a key role in the company's transformation through various divestitures and acquisitions. Before her tenure at Kratos, Ms. Lund was the Vice President and Corporate Controller of Titan Corporation from July 1998 to 2004, and also held positions as Corporate Controller and Corporate Manager of Operations Analysis at Titan. She began her career at Arthur Andersen, LLP.

Marie Mendoza, Senior Vice President, General Counsel & Secretary

Ms. Mendoza was promoted to Senior Vice President and General Counsel in June 2020, having served as Vice President and General Counsel since December 2015. She joined Kratos in 2011 as a Senior Corporate Attorney. Prior to Kratos, Ms. Mendoza was a partner at the law firms of Burke, Williams & Sorensen, LLP and GCR, LLP in San Diego, where she represented public agencies and commercial companies in various legal areas, including contract negotiation, labor and employment, and trademark infringement.

Steven Fendley, President, Unmanned Systems Division

Mr. Fendley serves as the President of the Unmanned Systems Division and holds the title of Corporate Senior Vice President. His division is a key part of Kratos' focus on unmanned aerial, ground, and seaborne systems.

Brian Shepard, Chief Information Officer

Mr. Shepard was appointed Chief Information Officer in September 2025. He joined Kratos in 2006 and has over 30 years of experience in information technology, with 20 of those years at Kratos. Since 2021, he served as Vice President of Information Technology, leading the company's IT organization. Before joining Kratos, he was Director of Infrastructure at Haverstick Consulting, which Kratos acquired. He also served for four years in the U.S. Marine Corps.

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1. Dependence on U.S. Government Contracts and Funding: Kratos's business is heavily reliant on contracts with the U.S. Department of Defense and other government agencies. Significant risks include potential changes, cutbacks, or delays in government spending, shifts in procurement laws, regulations, policies, and budgets, and intense competition for these contracts. The timing, rescheduling, or cancellation of major customer contracts or the loss of key customers could materially impact Kratos's financial results. Furthermore, some of Kratos's contracts with the U.S. Government are classified, which can limit investor insight into certain parts of their business.
2. Cost Overruns and Profitability on Fixed-Price Contracts: Kratos has experienced cost growth on certain multiyear fixed-price contracts, particularly within its Unmanned Systems business, due to increased material and subcontractor costs. The company's ability to recover these increased costs is often contingent on the renewal of future production lot contracts, which can span multiple years. This risk directly impacts Kratos's operating margins and overall profitability, which have been noted as weak for an industrials business and have decreased over the last five years.
3. Fluctuations in Financial Results and Capital Management: Kratos's revenue and operating results can vary significantly from quarter to quarter, potentially leading to lower profitability due to a relatively large amount of fixed expenses. The company may also incur substantial operating expenses during the initial stages of large contracts before recognizing corresponding revenue. Additionally, there is a risk that Kratos may need additional capital to fund its business growth, and such financing might not be available on favorable terms or at all. Challenges in improving its Return on Invested Capital (ROIC) and diluted earnings per share (EPS) growth also highlight concerns about the efficiency of capital deployment and overall financial performance.

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The clear emerging threat for Kratos Defense & Security Solutions (KTOS) lies in the **rapid adoption and expansion of cloud-based satellite ground station services** offered by major technology companies, such as Amazon's AWS Ground Station and Microsoft's Azure Orbital.

Kratos has a significant business segment providing traditional satellite ground systems, antennas, and associated software. These cloud-based services offer a disruptive alternative by allowing satellite operators to connect to and control their spacecraft using a global network of shared, pay-as-you-go ground station antennas and infrastructure, integrated directly with cloud computing platforms. This model reduces the need for customers to invest in, build, and maintain their own dedicated physical ground segment infrastructure, potentially eroding a core market for Kratos's traditional offerings in the satellite and geospatial systems sector.

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Kratos Defense & Security Solutions (KTOS) operates in several key markets with varying addressable sizes:

• Unmanned Systems (Drones/UAVs): The global market for Unmanned Systems was valued at USD 27.13 billion in 2024 and is projected to grow to USD 43.54 billion by 2030, with a compound annual growth rate (CAGR) of 8.2%. The defense sector is anticipated to be the largest segment within this market.
• Satellite Communications: The current global satellite communication market is valued at $24.7 billion, with an anticipated annual growth rate of 6.2%. In 2023, service revenues in the Asia Pacific satcom market alone exceeded $21 billion.
• Microwave Electronics: The global microwave devices market size was USD 5.85 billion in 2021 and is projected to increase to USD 9.88 billion by 2029, growing at a CAGR of 7.15%. North America held the largest share of this market in 2021, at USD 1.95 billion.
• Training Solutions: null
• Cybersecurity Solutions: null
• Missile Defense/Hypersonic Systems: null

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Kratos Defense & Security Solutions (KTOS) is expected to drive future revenue growth over the next 2-3 years through several key areas:

1. Growth in Unmanned Systems: Kratos is a leader in developing, building, and flying affordable tactical jet drones. The XQ-58A Valkyrie program has become a program of record with the U.S. Marines under the MUX TACAIR program, and the company has secured international shipments, such as the first Valkyrie shipment to Airbus for the German Air Force. This segment demonstrated significant organic revenue growth of 35.8% in the third quarter of 2025.

2. Expansion of Hypersonic and Defense Rocket Systems: The company's hypersonic franchise is identified as a clear growth driver for the next two to three years, with several classified and unclassified programs moving from development into production phases. Kratos' Defense Rocket Systems business also showed strong organic revenue growth of 47.2% in Q3 2025.

3. Advancements in Space, Satellite, and Cyber Solutions: Kratos is expanding its capabilities in virtualized ground systems for satellites and space vehicles, including its OpenSpace software for command and control. The company's Space, Training, and Cyber businesses reported organic revenue growth of 21.2% in Q3 2025. Furthermore, the acquisition of Orbit Technologies, a global provider of satellite-based communication systems for various mobile and unmanned platforms, is expected to be immediately accretive to Kratos' financial metrics and enhance its position in these markets.

4. Increased Global Defense Spending and Strategic Partnerships: Rising geopolitical tensions and increasing global security demands are driving significant defense spending worldwide. The U.S. is planning substantial allocations for national security, and NATO members are committing to higher defense spending, creating a favorable market environment for Kratos' affordable and scalable solutions. Strategic partnerships with major industry players like Northrop Grumman, Airbus, and Korea Aerospace Industries (KAI) for Manned-Unmanned Teaming (MUM-T) technologies are also expected to contribute to future revenue growth.

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Share Issuance

• In June 2025, Kratos completed a public offering of common stock, raising $575 million in gross proceeds by issuing 14,935,065 shares at $38.50 per share, with net proceeds of approximately $556 million.
• In February 2024, Kratos offered 16,666,667 shares of common stock at $18.78 per share, resulting in approximately $288 million in proceeds before expenses, which could increase to $331.2 million if underwriters fully exercised their option to purchase additional shares.
• The proceeds from these offerings are intended to fund investments and capital expenditures for National Security programs, finance strategic acquisitions, and for general corporate purposes including debt reduction.

Outbound Investments

• In November 2025, Kratos entered a definitive agreement to acquire Orbit Technologies Ltd for approximately $356.3 million via a cash merger.
• Orbit Technologies is a global provider of mission-critical satellite-based communication systems.
• This acquisition is expected to be immediately accretive across virtually every financial metric for Kratos.

Capital Expenditures

• Kratos forecasts capital expenditures for fiscal year 2025 to be in the range of $105 million to $115 million.
• In the first quarter of 2025, capital expenditures were $22.6 million, and in the second quarter of 2025, they were $20.5 million.
• The primary focus of these capital expenditures is to expand manufacturing and production facilities for Microwave Products, Rocket Systems, and Hypersonic businesses, as well as to build two Valkyrie production lines.