Kratos Defense & Security Solutions Inc (Kratos Defense (KTOS)) reported its second-quarter results after the market close on Tuesday, and the numbers were solid. The defense contractor posted revenue of $458.80 million, beating analyst estimates of $410.38 million. Adjusted earnings came in at 21 cents per share, well above the 14 cents analysts were looking for.

Revenue jumped 30.50% year-over-year, with organic growth of 8.10% in the Unmanned Systems segment and 22% in Government Solutions. The company also reported a consolidated backlog of $2.08 billion and a bid and proposal pipeline of $15 billion at quarter's end. Cash and cash equivalents stood at $1.44 billion.

CEO Eric DeMarco credited the company's strategy of making internally funded investments to be first-to-market with hardware and software engineered for affordable mass production at scale. "Kratos' second quarter results are reflective of the execution of the Kratos team and that our strategy... is aligned with the Department of War's [Defense's] priorities," he said in a statement.

DeMarco also highlighted the company's last 12-month book-to-bill ratio of 1.3 to 1.0 and the growing number of opportunities, saying "our business momentum expected to accelerate in the second half of 2026 and into 2027."

Looking ahead, Kratos expects third-quarter revenue of $460 million to $480 million, versus estimates of $461.64 million. The company raised its full-year 2026 revenue outlook to $1.75 billion to $1.81 billion, up from prior guidance of $1.70 billion to $1.76 billion.

Investors seemed pleased. KTOS shares initially popped above $57 when earnings were released, then settled to $52.78 in after-hours trading, up 1.75% at the time of publication. Executives will discuss the quarter further on an earnings call at 5 p.m. ET.