Kratos booked $1.04 billion of orders, 2.2 times revenue, while burning $29.4 million of cash

Kratos·−2.76% — Kratos, down 2.76 percent as of its last quote booked $1.037 billion of new orders in the third quarter↗, 2.2 times the revenue it recognized ¹. The San Diego maker of jet drones, hypersonic vehicles and cruise-missile engines still burned cash filling them. Free cash outflow was $29.4 million in the quarter ¹. The full year is guided to $110 million to $120 million of outflow ¹. Management expects the burn to run until production crosses the investment line in 2029 ². Demand is settled; the open question is conversion, and conversion now runs on Congress's calendar.

The demand is already funded

Hypersonics, the fastest line, is on track for roughly $700 million of 2027 revenue↗ ². About $600 million of it is already funded ². CEO Eric DeMarco says a significant majority of Kratos's work sits on production programs funded in the 2026 appropriation, which is why a continuing resolution dents only the first quarter of the 2027 guide ².

The Air Force's affordable-mass missile program is a program of record for 28,000 cruise missiles over five years beginning 2027 ². Kratos is ordering parts to build 3,000 turbojet engines next year ². It expects to deliver about 1,500 of them in 2027, and it has just received a Valkyrie low-rate production contract it cannot yet disclose ².

Cheap jets still need factories

Behind the engines sits the Air Force's turn toward cheap autonomous jets, with Increment 1 of its Collaborative Combat Aircraft effort under way and leaders talking of up to 500 fielded by 2033 ³. The jets exist; the factories are the gap. Kratos is spending shareholders' cash to close it, and requires every facility to clear a return hurdle and carry a customer before it is built ³.

The cash runs on Washington's calendar

Collections lag the orders. Days sales outstanding stretched to 125 days in the quarter ². The 2027 forecast assumes the continuing resolution, expiring December 11, extends into the first quarter and an appropriation follows; a stopgap past March 31 forces a rewrite ¹. The midterm moved those odds the wrong way.

Democrats took both chambers of Congress on November 3, full-year appropriations are now expected to slip into the new Congress, and Capital Alpha analyst Byron Callan puts a 50 percent chance on a shutdown after December 11↗ ⁴. CSIS expects the funding fight to tangle with the debt ceiling early next year↗ ⁵.

DeMarco calls the 2027 outlook, $2.1 billion to $2.2 billion of revenue, "extremely conservative"↗ against a considerably higher internal roll-up ⁶. That word is a bet on the budget calendar, the one link Kratos does not control.

The buffer buys the wait

Kratos holds $1.4 billion of cash after this year's equity raises and says no more are coming ¹². The buffer is what carries the plan to 2029 ¹². The markers that decide the story are plain: days sales outstanding turning down, and an appropriation landing by March 31 ¹². The Pentagon has picked its suppliers. Congress decides when they get paid.