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Sep 30, 2025
Leonardo DRS Q3 2025 Earnings Report
Leonardo DRS reported strong financial results for the third quarter of 2025, with significant increases in revenue, net earnings, and EPS, driven by broad-based customer demand and robust bookings.
Key Takeaways
Leonardo DRS delivered an impressive third quarter in 2025, with revenue climbing 18% year-over-year to $960 million and net earnings increasing 26% to $72 million. The company saw strong demand across its segments, leading to record backlog and healthy cash flow generation, while also revising its full-year guidance upwards for revenue and Adjusted Diluted EPS.
Revenue increased by 18% year-over-year to $960 million, primarily driven by counter UAS, electric power and propulsion, naval network computing, and advanced infrared sensing programs.
Net Earnings rose 26% to $72 million, and Adjusted EBITDA grew 17% to $117 million, reflecting higher operational profitability and lower net interest expense.
Bookings reached $1.3 billion, resulting in a strong book-to-bill ratio of 1.4x, and total backlog hit a new record of $8.9 billion, up 8% year-over-year.
The company generated $77 million in free cash flow, an increase from the prior year, attributed to higher net profitability and a more favorable working capital position.
Revenue by Segment
Forward Guidance
Leonardo DRS has revised its 2025 guidance, increasing the lower end of its revenue outlook and raising the range for Adjusted Diluted EPS, while maintaining its Adjusted EBITDA guidance.
Positive Outlook
- The company increased the lower end of its 2025 revenue guidance to $3,550 million, with the upper end remaining at $3,600 million.
- The Adjusted Diluted EPS guidance for 2025 was raised to a range of $1.07 - $1.12, up from the prior guidance of $1.06 - $1.11.
- The tax rate guidance for 2025 was improved to 18%, down from the prior guidance of 19%.
- Adjusted EBITDA guidance for 2025 remains strong at $437 million - $453 million, indicating continued profitability.
- Diluted WASO guidance remains stable at 269 million shares, suggesting consistent share count management.
Challenges Ahead
- While the lower end of revenue guidance increased, the upper end remained unchanged, suggesting some ceiling to growth expectations.
- Adjusted EBITDA guidance remained unchanged, indicating no further upside in profitability expectations despite strong Q3 performance.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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