Leonardo DRS Inc (NASDAQ:DRS) Beats Q3 2025 Earnings Estimates and Raises Full-Year Guidance

Leonardo DRS Inc (NASDAQ:DRS) has reported financial results for the third quarter of 2025, delivering a performance that surpassed analyst expectations on both the top and bottom lines. The defense technology provider's strong quarterly results were accompanied by a modest upward revision to its full-year guidance, signaling sustained momentum in its core business areas.

Earnings and Revenue Versus Estimates

The company's third-quarter performance demonstrated clear operational strength, exceeding the financial targets set by market analysts.

• Revenue: Reported $960 million, beating analyst estimates of approximately $934 million.
• Adjusted EPS: Came in at $0.29 per share, above the consensus estimate of $0.28 per share.

This represents a significant year-over-year increase, with revenue growing 18% from the $812 million reported in the same quarter last year. The company attributed this robust growth to strong performance across several key programs, including counter-UAS (unmanned aircraft systems), electric power and propulsion, naval network computing, and advanced infrared sensing.

Market Reaction and Price Action

Following the earnings release, the market responded positively. The stock is showing a pre-market gain of approximately 1%, indicating investor approval of the earnings beat and the company's updated outlook. This positive movement contrasts with the stock's performance over the past month, which had seen a decline of over 11%, suggesting the strong quarterly results may be alleviating prior investor concerns.

Updated 2025 Guidance

Leonardo DRS provided an updated outlook for the full 2025 fiscal year, offering a clearer picture of its expected annual performance. The guidance was slightly raised for revenue and adjusted diluted EPS, while the range for Adjusted EBITDA remained unchanged.

| Measure | Current 2025 Guidance | Prior 2025 Guidance | | :--- | :--- | :--- | | Revenue | $3.55B - $3.60B | $3.525B - $3.60B | | Adjusted EBITDA | $437M - $453M | $437M - $453M | | Adjusted Diluted EPS | $1.07 - $1.12 | $1.06 - $1.11 |

The company's revenue guidance midpoint of $3.575 billion sits comfortably above the analyst sales estimate of $3.617 billion for the full year. Similarly, the implied Q4 2025 revenue based on the guidance appears healthy when compared to analyst projections for the final quarter.

Key Highlights from the Quarter

Beyond the headline earnings figures, the press release highlighted several indicators of financial health and future growth.

• Record Backlog: Total backlog reached a new high of $8.9 billion, an 8% year-over-year increase, fueled by $1.3 billion in new quarterly bookings. This suggests strong future revenue visibility.
• Strong Segment Performance: The Integrated Mission Systems (IMS) segment was a standout, with revenue surging 34% and Adjusted EBITDA growing 47% year-over-year. The Advanced Sensing and Computing (ASC) segment also posted a solid 9% revenue increase.
• Healthy Cash Flow: The company generated $107 million in net cash from operating activities and $77 million in free cash flow, demonstrating an improvement in cash generation linearity.
• Capital Deployment: Leonardo DRS continued to return capital to shareholders through $24 million in dividend payments and $10 million in stock repurchases during the quarter.

Conclusion

Leonardo DRS's third-quarter results paint a picture of a company executing effectively on its financial commitments. Beating earnings estimates, raising its annual guidance, and building a record backlog are all positive signals for investors. The initial market reaction reflects this strength. The company’s focus on advanced defense technologies appears to be resonating with customer demand, positioning it for continued growth.

For a more detailed look at historical earnings and future analyst estimates for Leonardo DRS, visit the earnings estimates page on Chartmill.

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Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. The information presented is based on publicly available data and should not be the sole basis for any investment decisions.