---
title: "Kratos booked $1.04 billion of orders, 2.2 times revenue, while burning $29.4 million of cash"
description: "Pentagon demand is arriving at Kratos as orders long before it arrives as cash: the maker of jet drones and cruise-missile engines burned $29.4 million of free cash last quarter and does not expect sustained positive cash flow until 2029. Whether the record backlog converts now depends on an appropriations calendar the midterm election just scrambled."
publisher: "The Inference"
section: "Robotics & Defense"
published: 2026-11-09T14:49:28.736Z
modified: 2026-11-09T14:49:28.736Z
canonical: https://theinference.org/article/kratos-booked-1-04-billion-of-orders-2-2-times-revenue-while-burning-29-4-million-of-cash
language: en
keywords: "Kratos Defense, Defense, Earnings, Drones, Cash Flow"
---

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

> Pentagon demand is arriving at Kratos as orders long before it arrives as cash: the maker of jet drones and cruise-missile engines burned $29.4 million of free cash last quarter and does not expect sustained positive cash flow until 2029. Whether the record backlog converts now depends on an appropriations calendar the midterm election just scrambled.

[Kratos](https://theinference.org/markets/companies/kratos-defense) [booked $1.037 billion of new orders in the third quarter](https://www.globenewswire.com/news-release/2026/11/05/3396983/0/en/Kratos-Reports-Third-Quarter-2026-Financial-Results.html), 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.

*Chart: **Revenue has climbed for eight quarters while free cash flow stayed negative in seven** Line chart of Kratos quarterly revenue and free cash flow from Q4 2024 to Q3 2026, showing revenue rising while free cash flow stays negative in seven of eight quarters*

*Free cash flow is operating cash flow less capital expenditure, per Kratos's quarterly SEC filings; the company's press-release figure also nets asset sales and state grants. Dollars in millions. [7][1]*

## The demand is already funded

Hypersonics, the fastest line, is [on track for roughly $700 million of 2027 revenue](https://finance.yahoo.com/markets/stocks/articles/kratos-defense-ktos-q3-2026-083103379.html) [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](https://theinference.org/article/kratos-is-building-a-drone-line-for-35-40-aircraft-a-year-its-order-book-is-four) 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](https://theinference.org/article/the-vote-repriced-the-war-drone-and-missile-stocks-fell-double-digits-and-kratos-reports-tomorrow), 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](https://breakingdefense.com/2026/11/republicans-have-a-ticking-clock-what-can-they-get-done-on-defense/) [4]. CSIS [expects the funding fight to tangle with the debt ceiling early next year](https://www.csis.org/analysis/fy-2027-defense-funding-potential-post-midterm-outcomes) [5].

DeMarco [calls the 2027 outlook, $2.1 billion to $2.2 billion of revenue, "extremely conservative"](https://www.bullished.co/kratos-ceo-calls-2027-outlook-extremely-conservative-says-internal-forecast-is-far-higher-a16d2d71/) 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 [1][2]. The buffer is what carries the plan to 2029 [1][2]. The markers that decide the story are plain: days sales outstanding turning down, and an appropriation landing by March 31 [1][2]. The Pentagon has picked its suppliers. Congress decides when they get paid.

*Chart: **Equity raises took Kratos's cash from $264 million to $1.4 billion in eight quarters** Line chart of Kratos's cash and equivalents by quarter from Q4 2024 to Q3 2026, rising from about $300 million to $1.4 billion after equity raises in 2025 and 2026*

*Cash and equivalents at each quarter end, from Kratos's quarterly SEC filings. The company reported $1.4 billion on hand at the end of the third quarter and says no further equity raises are coming. Dollars in billions. [7]*

## Takeaway

Kratos has the demand, the engines and $1.4 billion of cash; whether 2027 guidance holds now depends on Congress passing an appropriation by March 31.

## Sources

1. [Kratos Defense & Security Solutions, press release, 'Kratos Reports Third Quarter 2026 Financial Results,' GlobeNewswire, 5 November 2026](https://www.globenewswire.com/news-release/2026/11/05/3396983/0/en/Kratos-Reports-Third-Quarter-2026-Financial-Results.html)
2. [The Motley Fool via Yahoo Finance, 'Kratos Defense (KTOS) Q3 2026 Earnings Call Transcript,' 6 November 2026](https://finance.yahoo.com/markets/stocks/articles/kratos-defense-ktos-q3-2026-083103379.html)
3. [GuruFocus, 'Kratos Defense & Security Solutions Inc (KTOS) (Q3 2026) Earnings Call Highlights,' 9 November 2026](https://www.gurufocus.com/news/9184368/kratos-defense-security-solutions-inc-ktos-q3-2026-earnings-call-highlights-record-26-billion-backlog-and-23-organic-growth-fuel-optimistic-2027-outlook)
4. [Breaking Defense, 'Republicans have a ticking clock. What can they get done on defense?,' 5 November 2026](https://breakingdefense.com/2026/11/republicans-have-a-ticking-clock-what-can-they-get-done-on-defense/)
5. [CSIS, Seamus P. Daniels, 'FY 2027 Defense Funding: Potential Post-Midterm Outcomes,' 28 October 2026](https://www.csis.org/analysis/fy-2027-defense-funding-potential-post-midterm-outcomes)
6. [Bullished, 'Kratos CEO Calls 2027 Outlook Extremely Conservative, Says Internal Forecast Is Far Higher,' 9 November 2026](https://www.bullished.co/kratos-ceo-calls-2027-outlook-extremely-conservative-says-internal-forecast-is-far-higher-a16d2d71/)
7. [Kratos Defense, quarterly figures from its SEC filings, retrieved 9 November 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001069258)


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Kratos booked $1.04 billion of orders, 2.2 times revenue, while burning $29.4 million of cash — The Inference. Canonical: https://theinference.org/article/kratos-booked-1-04-billion-of-orders-2-2-times-revenue-while-burning-29-4-million-of-cash