Kratos: The Drone Stock That Doubled Without Delivering

Margins are thin, cash is burning, and key programs are still in prototype phase — is Kratos ready for prime time, or just priced like it is?

Kratos ($KTOS): +122% YoY — and nobody knows what it is

While everyone’s busy tweeting about Palantir and Anduril, Kratos quietly 2x’ed in 12 months and crossed a $10B market cap.

No CNBC headlines.
No viral Reddit threads.
No “defense disruptor” cover story in the WSJ.

But here’s what’s really going on:

• Kratos builds and sells hypersonic engines, jet-powered drones, and microwave weapons.

• They’re already executing DoD contracts worth hundreds of millions.

• And they’re doing it with GAAP profitability.

📉 The market still treats $KTOS like a speculative tech stock.
📈 But in reality, it’s building the infrastructure for the next war.

From Training Drones to Hypersonics: How Kratos Quietly Shifted the Defense Landscape

Kratos Defense & Security Solutions was founded in 1994 under the name Wireless Facilities Inc., originally focused on telecom engineering. By 2007, it had restructured and rebranded into Kratos, shifting toward defense technology.

For years, it stayed in the background — supplying target drones, satellite ground systems, and simulation tools. But in the last 5 years, Kratos made a calculated pivot:

• Focused on low-cost, attritable unmanned systems

• Acquired key IP in turbine propulsion and microwave systems

• Built production capacity before locking in major contracts

This strategy wasn’t flashy. But it was deliberate — and it aligned perfectly with the Pentagon’s evolving priorities: faster deployment, modular systems, and affordability at scale.

Now, Kratos is in full execution mode — and its financials are starting to reflect that. But it’s not the glossy story the market wants to believe.

Business Structure and Strategic Focus

Kratos Defense operates through two primary reporting segments: Kratos Unmanned Systems (KUS) and Kratos Government Solutions (KGS). While the KUS segment is centered exclusively on the company’s autonomous aerial platforms—most notably the XQ-58A Valkyrie—KGS encompasses a broader portfolio that includes microwave electronics, turbine technologies, C5ISR systems, missile and rocket support services, as well as space, training, and cybersecurity solutions.

This organizational structure reflects a clear internal separation between Kratos’ experimental and scalable unmanned technologies and its more traditional, contract-based defense operations. Importantly, while KUS continues to receive strategic visibility, the bulk of the company’s revenue still originates from the KGS segment.

Customer Base and End Markets

Kratos’ customer portfolio is overwhelmingly dominated by U.S. federal agencies, with the Department of Defense (DoD) accounting for a significant portion of total revenue. Within the DoD, Kratos supports a variety of branches, including the U.S. Air Force, Navy, Army, and Space Force, often via subcontracts tied to prime defense contractors.

The company also engages with DARPA, the Missile Defense Agency, and NASA, particularly through its space and propulsion divisions. International contracts exist but remain limited, and commercial exposure is virtually nonexistent. This reliance on U.S. government funding provides stability, but also exposes Kratos to program-specific volatility and budget cycles.