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Karman Space and Defense (KRMN) is trading lower after reporting its Q4 results last night. The company missed EPS expectations, while revenue growth accelerated, increasing 47.5% yr/yr to a record $134.5 mln and coming in ahead of expectations. KRMN also raised its FY26 revenue guidance to $715-730 mln from $700-715 mln, above expectations.

• Tactical Missiles and Integrated Defense Systems led the way, with revenue increasing 77% yr/yr to $50 mln, driven by loitering munitions, advanced drones, and higher GMLRS production rates.
• Hypersonics and Strategic Missile Defense revenue jumped 42% yr/yr to $48 mln, reflecting strength in missile programs, higher volumes on classified programs, and increased test bed activity.
• Space and Launch revenue increased 25% yr/yr to $36 mln, driven by orders for critical content supporting both legacy and emerging launch providers.
• Gross margin expanded to 40% from 38%, while adjusted EBITDA jumped 59% yr/yr to $42 mln, reflecting the strong growth and improved leverage on higher volumes.
• On the demand backdrop, KRMN expects conditions to remain favorable through the end of the decade and beyond, supported by national security priorities and what it described as a generational increase in demand across the missile and munitions programs it supports.
• That strength is reflected in its backlog, which increased 38% yr/yr to $801 mln and has since grown to more than $1 bln as of March 20.
• KRMN's FY26 revenue guidance of $715-730 mln implies roughly 53% yr/yr growth, a meaningful acceleration from 36% growth in FY25, while its adjusted EBITDA outlook of $207-218 mln implies about 46% yr/yr growth at the midpoint.

Briefing.com Analyst Insight

KRMN wrapped up FY25 on a strong note, and while the EPS miss may have capped upside enthusiasm given the stock's strong run into the report, the broader story remains one of accelerating growth and a favorable demand backdrop driven by exposure to missiles, hypersonics, space, and other high-priority defense programs. Management was notably bullish on that setup, describing it as a generational increase in demand across the programs it supports. To capture that opportunity, KRMN is expanding its footprint and investing in capacity, equipment, hiring, and operating systems to support higher output and improve throughput. Execution on acquisitions also appears solid, with Seemann and MSC integration progressing according to plan and expected to be completed by Q4. KRMN also has solid visibility, with backlog already covering roughly 80% of the midpoint of its FY26 revenue outlook. Ultimately, the story comes down to execution as KRMN scales to meet a favorable multi-year demand opportunity.