Market Newsdesk

• Net sales from continuing operations of $34.4 million and net loss per share from continuing operations of $0.04, both toward top end of guidance range

• Order backlog increased 39% from December 31, 2025, to $31.6 million

• Reiterates full year fiscal 2026 guidance of net sales from continuing operations in the range of $160 million to $170 million, which represents approximately 10% topline growth at the midpoint, and EPS of $0.48 to $0.62

• Share buybacks totaled $7.3 million with $15.9 million remaining available for repurchase

MINNEAPOLIS, May 06, 2026 (GLOBE NEWSWIRE) — Clearfield, Inc. (NASDAQ: CLFD), a leader in fiber connectivity, reported results for the fiscal second quarter of 2026. Additional commentary is provided in a letter to shareholders available in the Investor Relations section of the Company’s website.

Fiscal Q2 2026 Financial Summary
(in millions except per share data and percentages)	Q2 2026			vs. Q2 2025			Change			Change (%)
Net Sales from Continuing Operations	$	34.4		$	40.6		$	(6.2	)	-15	%
Gross Profit ($) from Continuing Operations	$	11.2		$	14.0		$	(2.8	)	-20	%
Gross Profit (%) from Continuing Operations		32.5	%		34.4	%		-1.9	%	-6	%
(Loss) Income from Operations from Continuing Operations	$	(2.1	)	$	1.7		$	(3.8	)	-223	%
Income Tax (Benefit) Expense from Continuing Operations	$	(0.2	)	$	0.7		$	(0.9	)	-124	%
Net (Loss) Income from Continuing Operations	$	(0.5	)	$	2.5		$	(3.1	)	-121	%
Net (Loss) Income per Diluted Share from Continuing Operations	$	(0.04	)	$	0.18		$	(0.22	)	-122	%
Net Loss from Discontinued Operations, net of tax	$	–		$	(1.2	)	$	1.2		100	%
Net Loss per Diluted Share from Discontinued Operations	$	–		$	(0.09	)	$	0.09		100	%
Consolidated Net (Loss) Income Per Diluted Share	$	(0.04	)	$	0.09		$	(0.13	)	-144	%

Fiscal Q2 YTD 2026 Financial Summary
(in millions except per share data and percentages)	2026 YTD			vs. 2025 YTD			Change			Change (%)
Net Sales from Continuing Operations	$	68.7		$	70.3		$	(1.6	)	-2	%
Gross Profit ($) from Continuing Operations	$	22.5		$	22.6		$	(0.1	)	-0	%
Gross Profit (%) from Continuing Operations		32.8	%		32.2	%		0.6	%	2	%
Loss from Operations from Continuing Operations	$	(3.9	)	$	(0.4	)	$	(3.5	)	971	%
Income Tax (Benefit) Expense from Continuing Operations	$	(0.2	)	$	0.8		$	(1.0	)	-123	%
Net (Loss) Income from Continuing Operations	$	(0.8	)	$	2.2		$	(3.0	)	-137	%
Net (Loss) Income per Diluted Share from Continuing Operations	$	(0.06	)	$	0.16		$	(0.22	)	-138	%
Net Loss from Discontinued Operations, net of tax	$	(0.3	)	$	(2.8	)	$	2.4		88	%
Net Loss per Diluted Share from Discontinued Operations	$	(0.02	)	$	(0.20	)	$	0.18		90	%
Consolidated Net Loss Per Diluted Share	$	(0.08	)	$	(0.04	)	$	(0.04	)	-100	%

Management Commentary

“We are focused on consistent execution while investing in Clearfield’s next phase of growth. We continue to see an early engagement in adjacent markets, with a particularly strong reception for bringing our proven outside plant techniques and strategies to datacenter environments,” said Company President and Chief Executive Officer, Cheri Beranek. “While these opportunities have yet to contribute meaningful revenue, they represent a compelling avenue for future expansion and early indications are encouraging.”

“We are pleased to report revenue and earnings in-line with our guidance. While lumpy on a quarter-over-quarter basis, performance has been driven by a year-to-date revenue increase of 5% in our Community Broadband segment,” said Chief Financial Officer, Dan Herzog. “With backlog up 39% from last quarter, the Company is positioned to achieve our annual guidance of 7% to 14% revenue growth and a return to profitability. We remain committed to our long-term strategy demonstrated by the continued execution of our stock buy-back program this past quarter.”

Financial Results for the Three Months Ended March 31, 2026

Net sales from continuing operations for the second quarter of fiscal 2026 decreased 15% to $34.4 million from $40.6 million in the same year-ago quarter partially due to a pull-in by a large customer into last year’s second quarter from our fiscal year 2025 third quarter.

As of March 31, 2026, order backlog (defined as purchase orders received but not yet fulfilled) was $31.6 million, an increase of $8.9 million, or 39%, compared to $22.8 million as of December 31, 2025, and an increase of $3.5 million, or 12%, from March 31, 2025.

Gross margin from continuing operations for the second quarter of fiscal 2026 was 32.5%, down from 34.4% in the prior year’s second quarter and down slightly from 33.2% in the first quarter of fiscal 2026.

Operating expenses from continuing operations for the second quarter of fiscal 2026 increased 8% to $13.2 million, or 38.5% of net sales, from $12.3 million, or 30.2% of net sales, in the same year-ago quarter.

Net loss from continuing operations for the second quarter of fiscal 2026 totaled $0.5 million, or a net loss of $0.04 per diluted share, compared to net income of $2.5 million, or $0.18 per diluted share, in the same year-ago quarter. The Company repurchased 237,000 shares for $7.3 million during the 3-month period ended March 31, 2026. There is approximately $15.9 million remaining for future repurchases as of March 31, 2026. 

Outlook

The Company reiterates its annual revenue guidance for fiscal 2026 in the range of $160 million to $170 million. For the third quarter of fiscal 2026, Clearfield expects net sales to be in the range of $42 million to $46 million and net income per share to be in the range of $0.17 to $0.21. The net income per share ranges are based on the number of shares outstanding at the end of the second quarter of fiscal 2026 and do not reflect potential additional share repurchases completed in fiscal 2026. Our guidance reflects the potential supply chain constraints of optical fiber mentioned in last quarter’s letter to shareholders, as well as our current understanding of the impact of the evolving tariff situation, which could contribute to uncertainty in our business and in the macroeconomic environment.

Conference Call

Management will hold a conference call today, May 6, 2026, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time) to discuss these results and provide an update on business conditions.

Clearfield’s President and Chief Executive Officer, Cheri Beranek, and Chief Financial Officer, Dan Herzog, will host the presentation, followed by a question-and-answer period.

U.S. dial-in: 1-844-826-3033
International dial-in: 1-412-317-5185
Conference ID: 10207981

The live webcast of the call can be accessed at the Clearfield Investor Relations website along with the company’s earnings press release and presentation.

A replay of the call will be available after 8:00 p.m. Eastern Time on the same day through May 20, 2026, while an archived version of the webcast will be available on the Investor Relations website for 90 days.

U.S. replay dial-in: 1-844-512-2921
International replay dial-in: 1-412-317-6671
Replay ID: 10207981

About Clearfield, Inc.

Clearfield, Inc. (NASDAQ: CLFD) designs, manufactures, and distributes fiber optic management, protection, and delivery solutions that play a critical role in enabling broadband operators to close the digital divide. Our labor lite, craft-friendly platform is leveraged by community broadband, MSOs, incumbent service providers, ISPs, data centers, military, municipalities, and coops – from homes passed to homes connected faster and more efficiently. Headquartered in Minneapolis, MN, Clearfield deploys more than a million fiber ports each year. For more information, visit www.SeeClearfield.com.

Cautionary Statement Regarding Forward-Looking Information

Forward-looking statements contained herein and in any related presentation or in the related Earnings Presentation are made pursuant to the safe harbor provisions of the Private Litigation Reform Act of 1995. Words such as “may,” “plan,” “expect,” “aim,” “believe,” “project,” “target,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could,” “outlook,” or “continue” or comparable terminology are intended to identify forward-looking statements. Such forward looking statements include, for example, statements about the Company’s future revenue and operating performance, the development and marketing of new products, the impact of recent trade policy changes, including new and increased tariffs, retaliatory tariffs, trade disputes, and market and economic reactions to such changes, expected customer ordering patterns and future supply agreements with customers, expectations regarding the impact on our business of M&A activity among our customers, anticipated shipping on backlog and future lead times, future availability of components and materials from the Company’s supply chain, compliance with Build America Buy America (BABA) Act requirements, the impact of the Broadband Equity, Access, and Deployment (BEAD) Program, Rural Digital Opportunity Fund (RDOF) or other government programs on the demand for the Company’s products or timing of customer orders, the Company’s ability to match capacity to meet demand, expansion into new markets and trends in and growth of the FTTx markets, market segments or customer purchases, and other statements that are not historical facts. These statements are based upon the Company’s current expectations and judgments about future developments in the Company’s business. Certain important factors could have a material impact on the Company’s performance, including, without limitation: we depend on the availability of sufficient supply of certain materials and global disruptions in the supply chain for these materials could prevent us from meeting customer demand for our products; we rely on single-source suppliers, which could cause delays, increase costs or prevent us from completing customer orders; changes in trade policy in the U.S. and other countries may adversely affect our business and results of operations; inflationary price pressures and uncertain availability of components, raw materials, labor and logistics used by us and our suppliers could negatively impact our profitability; a significant percentage of our sales in the last three fiscal years have been made to a small number of customers, and the loss of these major customers could adversely affect us; further consolidation among our customers may result in the loss of some customers and may reduce sales during the pendency of business combinations and related integration activities; our business is dependent on interdependent management information systems; we may be subject to risks associated with acquisitions, and the risks could adversely affect future operating results; adverse global economic conditions and geopolitical issues could have a negative effect on our business, and results of operations and financial condition; product defects or the failure of our products to meet specifications could cause us to lose customers and sales or to incur unexpected expenses; we are dependent on key personnel; cyber-security incidents, including ransomware, data breaches or computer viruses, could disrupt our business operations, damage our reputation, result in increased expense, and potentially lead to legal proceedings;
natural disasters, extreme weather conditions or other catastrophic events could negatively affect our business, financial condition, and operating results;
to compete effectively, we must continually improve existing products and introduce new products that achieve market acceptance; our business is dependent upon capital spending by broadband service providers, and any delay, reduction or cancellation in capital spending by broadband service providers could adversely affect our business; if the telecommunications market does not continue to expand, our business may not grow as fast as we expect, which could adversely impact our business, financial condition and operating results; changes in U.S. government funding programs may cause our customers and prospective customers to delay, reduce, or accelerate purchases, leading to unpredictable and irregular purchase cycles; intense competition in our industry may result in price reductions, lower gross profits and loss of market share;
our success depends upon adequate protection of our patent and intellectual property rights; we face risks associated with expanding our sales outside of the United States; our operating results may fluctuate significantly from quarter to quarter, which may make budgeting for expenses difficult and may negatively affect the market price of our common stock; our stock price has been volatile historically and may continue to be volatile – the price of our common stock may fluctuate significantly; anti-takeover provisions in our organizational documents, Minnesota law and other agreements could prevent or delay a change in control of our Company; and other factors set forth in Part I, Item IA. Risk Factors of Clearfield’s Annual Report on Form 10-K for the year ended September 30, 2025 as well as other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update these statements to reflect actual events unless required by law.

Investor Relations Contact:

Greg McNiff
The Blueshirt Group
773-485-7191
[email protected]

CLEARFIELD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
		Three Months Ended								Six Months Ended
		March 31,								March 31,
			2026				2025				2026				2025
Net sales		$	34,391			$	40,621			$	68,732			$	70,319
Cost of sales			23,230				26,660				46,183				47,683
Gross profit			11,161				13,961				22,549				22,636
Operating expenses
Selling, general and administrative			13,230				12,279				26,442				23,000
(Loss) income from continuing operations			(2,069	)			1,682				(3,893	)			(364	)
Net investment income			1,365				1,588				2,911				3,332
(Loss) income from continuing operations before income taxes			(704	)			3,270				(982	)			2,968
Income tax (benefit) expense			(176	)			722				(177	)			775
(Loss) income from continuing operations, net of tax			(528	)			2,548				(805	)			2,193
Loss from discontinued operations, net of tax			–				(1,221	)			(337	)			(2,772	)
Net (loss) income		$	(528	)		$	1,327			$	(1,142	)		$	(579	)
(Loss) income per share
Basic
Continuing operations		$	(0.04	)		$	0.18			$	(0.06	)		$	0.16
Discontinued operations			–				(0.09	)			(0.02	)			(0.20	)
Basic (loss) income per share		$	(0.04	)		$	0.09			$	(0.08	)		$	(0.04	)
Diluted
Continuing operations		$	(0.04	)		$	0.18			$	(0.06	)		$	0.16
Discontinued operations			–				(0.09	)			(0.02	)			(0.20	)
Diluted (loss) income per share		$	(0.04	)		$	0.09			$	(0.08	)		$	(0.04	)
Weighted average shares outstanding:
Basic			13,670,470				14,095,341				13,771,086				14,154,830
Diluted			13,670,470				14,095,341				13,771,086				14,154,830

CLEARFIELD, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
	March 31, 2026 (Unaudited)				September 30, 2025
Assets
Current assets
Cash and cash equivalents	$	9,404			$	21,493
Short-term investments		81,665				84,484
Accounts receivables, net		20,865				17,991
Inventories, net		36,920				42,031
Prepaid and other current assets		14,148				11,152
Current assets held for sale		–				21,337
Total current assets		163,002				198,488
Property, plant and equipment, net		9,453				9,682
Long-term investments		56,004				59,822
Goodwill		4,709				4,709
Intangible assets, net		8,398				9,353
Right-of-use lease assets		10,640				8,420
Deferred tax asset		10,852				10,263
Other non-current assets		489				608
Non-current assets held for sale		–				4,828
Total assets	$	263,547			$	306,173
Liabilities and Shareholders’ Equity
Current liabilities
Current portion of lease liability	$	2,892			$	2,823
Accounts payable		3,678				7,028
Accrued compensation		5,015				6,598
Accrued expenses		1,108				2,197
Current liabilities held for sale		–				17,957
Total current liabilities		12,693				36,603
Other liabilities
Long-term portion of lease liability		8,047				5,934
Non-current liabilities held for sale		–				7,473
Total liabilities		20,740				50,010
Shareholders’ equity
Preferred stock, $0.01 par value; 500,000 shares; no shares issued or outstanding		–				–
Common stock, authorized 50,000,000, $0.01 par value; 13,618,216 and 13,839,675 shares issued and outstanding as of March 31, 2026 and September 30, 2025, respectively		136				138
Additional paid-in capital		137,045				147,382
Accumulated other comprehensive (loss) income		(144	)			1,731
Retained earnings		105,770				106,912
Total shareholders’ equity		242,807				256,163
Total Liabilities and Shareholders’ Equity	$	263,547			$	306,173

CLEARFIELD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
	Six Months Ended				Six Months Ended
	March 31,				March 31,
		2026				2025
Cash flows from operating activities (continuing)
Net loss	$	(1,142	)		$	(579	)
Loss from discontinued operations, net of tax		337				2,772
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		3,190				3,061
Amortization of premium and discount on investments, net		(270	)			(1,202	)
Deferred taxes		(536	)			(188	)
Stock-based compensation		2,589				2,221
Changes in operating assets and liabilities, net of acquired amounts:
Accounts receivable		(2,874	)			(4,543	)
Inventories, net		5,111				11,980
Other assets		(2,876	)			(3,240	)
Accounts payable and accrued expenses		(6,041	)			2,168
Net cash (used in) provided by operating activities (continuing)		(2,512	)			12,450
Cash flows from investing activities (continuing)
Purchases of property, plant and equipment and intangible assets		(2,007	)			(3,074	)
Purchases of investments		(52,009	)			(59,234	)
Proceeds from maturities of investments		58,660				75,176
Cash paid on disposal of business		(1,012	)			–
Net cash provided by investing activities (continuing)		3,632				12,868
Cash flows from financing activities (continuing)
Proceeds from issuance of common stock under employee stock purchase plan		239				301
Repurchase of shares for payment of withholding taxes for vested restricted stock grants		(1,001	)			(494	)
Withholding related to exercise of stock options		(63	)			(12	)
Repurchase of common stock		(12,597	)			(11,015	)
Net cash used in financing activities (continuing)		(13,422	)			(11,220	)
Cash flows from discontinued operations
Net cash provided by (used in) operating activities		1,380				(2,252	)
Net cash used in investing activities		–				(1,648	)
Net cash (used in) provided by financing activities		(1,196	)			2,465
Net cash provided by (used in) discontinued operations		184				(1,435	)
Effect of exchange rates on cash and cash equivalents		(13	)			18
Net (decrease) increase in cash and cash equivalents		(12,131	)			12,681
Change in cash held for sale		42				806
Cash and cash equivalents, beginning of period		21,493				14,148
Cash and cash equivalents, end of period	$	9,404			$	27,635
Supplemental disclosures for cash flow information
Cash (refunded) paid for income taxes, net	$	(21	)		$	403
Right of use assets obtained through lease liabilities	$	3,553			$	–
Non-cash financing activities
Cashless exercise of stock options	$	2,388			$	97

ATLANTA, May 06, 2026 (GLOBE NEWSWIRE) — Gray Media has named Nicole Lewis as the next General Manager/Director of Sales for KBTX, the CBS affiliate in Bryan-College Station, Texas, effective May 4, 2026.

Nicole is a senior media sales leader with 30+ years of experience building high-performing broadcast and digital revenue organizations and delivering growth across major markets. She brings deep expertise in linear and digital revenue growth, pricing strategy, forecasting, and multi-platform go-to-market execution.

Most recently, Lewis served as Sales Manager at WKMG (CBS) in Orlando, where she oversaw a 9-person team and managed initiatives related to linear and digital revenue programs. Prior to WKMG, Lewis was Vice President/General Sales Manager at FOX in Houston, where she led go-to-market planning, OTT/streaming initiatives, and multi-platform revenue operations. She previously held Director of Sales roles at NBC in Charlotte and FOX in Greensboro, with responsibilities that included revenue target management, team leadership, and client sales efforts across multiple platforms.

About


Gray


Media:

Gray Media, Inc. (NYSE: GTN) is a multimedia company headquartered in Atlanta, Georgia. We are the nation’s largest owner of top-rated local television stations and digital assets serving 118 full-power television markets that collectively reach approximately 37% of US television households. The portfolio includes 80 markets with the top-rated television station and 100 markets with the first and/or second highest rated television station in average all-day ratings across 117 of such markets that were measured by Nielsen in 2025. We also own the largest Telemundo Affiliate group with 47 markets and Gray Digital Media, a full-service digital agency offering national and local clients digital marketing strategies with the most advanced digital products and services. Our additional media properties include video production companies Raycom Sports, Tupelo Media Group, and PowerNation Studios, and studio production facilities Assembly Atlanta and Third Rail Studios. For more information, please visit www.graymedia.com.

Gray


Contact:

Sandy Breland, Executive Vice President, Chief Operating Officer, 404-266-8333

#        #        #

MINNEAPOLIS, May 06, 2026 (GLOBE NEWSWIRE) — Nortech Systems Incorporated (Nasdaq: NSYS), a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical imaging, medical device, aerospace & defense and industrial markets, will hold a live conference call and webcast at 3:30 p.m. Central Time on Thursday, May 14, 2026, to discuss the Company’s first quarter 2026 financial results. The call will be hosted by Jay D. Miller, Chief Executive Officer and President, and Andrew D. C. LaFrence, Chief Financial Officer. To access the live audio conference call, US participants may call 888-506-0062 and international participants may call 973-528-0011. Participant Access Code: 361581. Participants may also access the call via webcast at: https://www.webcaster5.com/Webcast/Page/2814/53855.

###

About Nortech Systems Incorporated

 

Nortech Systems Incorporated (“Nortech”) is a leading provider of design and manufacturing solutions for complex electromedical devices, electromechanical systems, assemblies, and components. Nortech primarily serves the medical device, medical imaging, aerospace & defense, and industrial markets. Its design services span concept development to commercial design, and include medical device, software, electrical, mechanical, and biomedical engineering. Its manufacturing and supply chain capabilities are vertically integrated around wire/cable/interconnect assemblies, printed circuit board assemblies, as well as system-level assembly, integration, and final test. Headquartered in Maple Grove, MN, Nortech currently has six manufacturing locations and design centers across the U.S., Latin America, and Asia. Nortech is traded on the NASDAQ Stock Market under the symbol NSYS. Nortech’s website is www.nortechsys.com.

Contact

Andrew D. C. LaFrence
Chief Financial Officer and Senior Vice President of Finance
[email protected]
952-345-2243

First Quarter 2026 Revenues of $371.0 Million Reflect 22.6 Percent Growth and 15.8 Percent Organic Growth Over First Quarter 2025 Revenues of $302.6 Million

Unmanned Systems First Quarter 2026 Revenues of $82.6 Million Reflect 30.9 Percent Organic Growth Over First Quarter 2025 Revenues of $63.1 Million

Kratos Government Solutions First Quarter 2026 Revenues of $288.4 Million Reflect 11.8 Percent Organic Growth Over First Quarter 2025 Revenues of $239.5 Million

First Quarter 2026 Consolidated Book to Bill Ratio of 1.6 to 1 and Bookings of $605.2 Million

Last Twelve Months Ended March 29, 2026, Consolidated Book to Bill Ratio of 1.2 to 1 and Bookings of $1.715 Billion

Fiscal 2026 Revenue Forecast of $1.700 Billion to $1.760 Billion and Adjusted EBITDA Forecast of $170.0 Million to $176.0 Million, including Recently Closed Orbit Technologies, Ltd. Acquisition

SAN DIEGO, May 06, 2026 (GLOBE NEWSWIRE) — Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), a leader in defense, national security and global markets, today reported its first quarter 2026 financial results, including Revenues of $371.0 million, Operating Income of $4.7 million, Net Income of $11.9 million, Adjusted EBITDA of $38.7 million and a consolidated book to bill ratio of 1.6 to 1.0.

First quarter 2026 Net Income and Operating Income includes non-cash stock compensation expense of $15.0 million, and Company-funded Research and Development (R&D) expense of $10.7 million, including efforts in our Space, Satellite, Unmanned Systems and Microwave Electronic businesses.

Kratos reported in the first quarter 2026 GAAP Net Income of $11.9 million and GAAP Net Income per share of $0.07, compared to GAAP Net Income of $4.5 million and GAAP Net Income per share of $0.03, for the first quarter of 2025. Adjusted earnings per share (EPS) were $0.16 for the first quarter of 2026, compared to $0.12 for the first quarter of 2025.

First quarter 2026 Revenues of $371.0 million increased $68.4 million, reflecting 22.6 percent growth and 15.8 percent organic growth from first quarter 2025 Revenues of $302.6 million. Organic revenue growth was reported in our Unmanned Systems (KUS) segment of 30.9 percent and in our Government Solutions (KGS) segment of 11.8 percent. The most notable growth in our KGS Segment was in our Defense Rocket Systems, Turbine Technologies and Microwave Products businesses, with organic revenue growth rates of 45.8 percent, 20.3 percent and 12.3 percent, respectively, compared to the first quarter of 2025.

First quarter 2026 Cash Flow Used in Operations was $27.4 million, primarily reflecting the working capital requirements related to the 22.6 percent revenue growth impacting our receivables, and also including increases in inventory balances related to ramps in production and investments we are making related to certain development initiatives in our KUS segment. Free Cash Flow Used in Operations for the first quarter of 2026 was $43.1 million after funding $19.9 million of capital expenditures, and after netting $4.2 million of proceeds from sales of company owned Valkyries.

For the first quarter of 2026, KUS generated Revenues of $82.6 million, compared to $63.1 million in the first quarter of 2025, with the increase primarily driven by Valkyrie-related activity. KUS’s Operating Income was $1.3 million in the first quarter of 2026, compared to an Operating Loss of $1.7 million in the first quarter of 2025. KUS’s Adjusted EBITDA for the first quarter of 2026 was $5.2 million, compared to $1.7 million for the first quarter of 2025, reflecting the impact of the revenue volume and mix. KUS’s book-to-bill ratio for the first quarter of 2026 was 1.2 to 1.0 and 1.1 to 1.0 for the twelve months ended March 29, 2026, with bookings of $96.2 million for the three months ended March 29, 2026, and bookings of $340.0 million for the twelve months ended March 29, 2026. Total backlog for KUS at the end of the first quarter of 2026 was $375.4 million, compared to $361.7 million at the end of the fourth quarter of 2025.

For the first quarter of 2026, our KGS segment Revenues of $288.4 million increased from Revenues of $239.5 million in the first quarter of 2025, reflecting a 20.4 percent increase and an 11.8 percent organic growth rate, excluding the impact of the recent acquisitions of Nomad Global Communication Solutions (Nomad) and Orbit Technologies Ltd (Orbit). The increased Revenues includes organic revenue growth across our Defense and Rocket Support business, Turbine Technologies and Microwave Products businesses, with organic revenue growth rates of 45.8 percent, 20.3 percent, and 12.3 percent, respectively, over the first quarter of 2025.

KGS reported Operating Income of $20.4 million in the first quarter of 2026 compared to $17.0 million in the first quarter of 2025, primarily reflecting a favorable mix in revenues and increased volume. First quarter 2026 KGS Adjusted EBITDA was $33.5 million, compared to first quarter 2025 KGS Adjusted EBITDA of $25.0 million, primarily reflecting the volume and mix in revenues and resources.

KGS reported a book-to-bill ratio of 1.8 to 1.0 for the first quarter of 2026, a book-to-bill ratio of 1.2 to 1.0 for the last twelve months ended March 29, 2026, and bookings of $509.0 million and $1.375 billion for the three and last twelve months ended March 29, 2026, respectively. KGS’s total backlog was $1.635 billion at the end of the first quarter of 2026, compared to $1.212 billion at the end of the fourth quarter of 2025.

Kratos reported consolidated bookings of $605.2 million and a book-to-bill ratio of 1.6 to 1.0 for the first quarter of 2026, and consolidated bookings of $1.715 billion and a book-to-bill ratio of 1.2 to 1.0 for the last twelve months ended March 29, 2026. Consolidated backlog was $2.010 billion on March 29, 2026, as compared to $1.573 billion on December 28, 2025. Kratos’ bid and proposal pipeline was $14.3 billion on March 29, 2026, as compared to $13.7 billion on December 28, 2025. Backlog on March 29, 2026 included funded backlog of $1.457 billion and unfunded backlog of $553.5 million.

Eric DeMarco, Kratos’ President and CEO, said, “Kratos’ balanced business model, including making internally funded investments in property, plant, equipment and facilities, and the rapid development and fielding of relevant products for the Department of War, while generating growth and profitability, is accelerating as reflected in our Q1 results and 1.6 to 1.0 book to bill ratio. There is a generational recapitalization of the U.S. defense industrial base underway and Kratos is committed to doing its part to ensure that the Department and our country are successful.”

Mr. DeMarco continued, “Since our last report, the Department communicated that they intend to spend last year’s entire $156 billion Reconciliation Bill defense related funding in fiscal 2026, which includes funding for Kratos’ Hypersonic, Valkyrie CCA, Solid Rocket Motor, Jet Engines for Drones, Missiles and Loitering Munitions, and other Kratos initiatives. Additionally, the Fiscal 2027 National Security spend is currently projected to be $1.5 trillion, an approximate $400 billion increase above Fiscal Year 2026, with what we believe a very limited number of companies, like Kratos, are qualified with real existing capability and products, to successfully address.”

Mr. DeMarco went on, “Additionally, the Department is executing multi-year weapon system production framework agreements with industry, including with Kratos partners, which is good for our country and for Kratos. Building military-grade hardware and software that must work every time is hard, and Kratos’ industry-recognized capability is a differentiator for our Company. We routinely meet with DoW leadership, and we are confident that Kratos’ strategy, business plan, and approach are aligned with the Department’s objectives. The Department’s demand signals are real, the results are happening, and Kratos is continuing to step up to ensure success.”

Mr. DeMarco concluded, “Kratos’ alignment with the Department’s objectives, increasing funding, our relevant past performance qualifications, the number of opportunities that Kratos continues to successfully receive, and the number of new opportunities that are being presented to Kratos, has our Company positioned for success. We believe that the scarcity value of Kratos is clear, we are investing to further increase our capabilities and manufacturing capacity, and we are laser focused on the mission, execution and delivering for all Kratos stakeholders.”

Financial Guidance

We are providing our initial second quarter and increased full year 2026 guidance, which includes the estimated impact of the recent Nomad and Orbit acquisitions, and our assumptions, including as related to: current forecasted business mix, expected employee sourcing, hiring and retention; potential manufacturing, production and supply chain disruptions; potential parts shortages and related continued significant cost and price increases in each of these areas, which are impacting the industry and Kratos. We are making significant investments in bid, proposal and other new program opportunity areas, and increasing staffing to enable us to ramp production levels, all of which is currently adversely impacting our profit margins and free cash flow generation. We are also making significant investments in inventory, property, plant, equipment and facilities, consistent with the Department of War’s National Security Strategy and its stated expectations of U.S. National Security government contractors. These investments are expected to continue at least into Kratos’ fiscal year 2027, as our opportunity pipeline continues to increase.

Kratos’ cash flow guidance also assumes certain investments in our Rocket Systems and Unmanned Systems businesses, related to the procurement of rocket motors and related systems and our plan to begin producing approximately 40 Valkyries annually beginning by the end of 2027, as well as the completion of certain of our unmanned systems and related derivatives and vehicles. Additional forecasted investments in 2026 include our funding of the Prometheus joint venture, our Anaconda radar program, our Helios hypersonic and arc chamber program, our Indiana hypersonic integration facility, our Birmingham advanced manufacturing facility for hypersonic systems, expansion and new microwave electronics facilities in Israel and the U.S., our GEK and BladeWorks engine facilities, the continued build of our second lot of 12 Valkyrie aircraft, certain manufacturing and production related equipment for our recently acquired Nomad acquisition, certain drone related investments, and our Vulcan, Kraken, Elysium, Nemesis, Hermes and other initiatives. In summary, Kratos continues to make the required investments to support the rebuild of the U.S. defense industrial base and related infrastructure, take advantage of the ongoing generational recapitalization of strategic and other weapon and National Security related systems, and generate value for all Kratos stakeholders, including the warfighter and Kratos shareholders.

Our previous full year 2026 guidance included the Nomad acquisition which closed on February 11, 2026. Our second quarter and full year 2026 guidance ranges now includes the recently completed Orbit Technologies Ltd. acquisition, and a summary of the forecasted investments for new programs and opportunities are presented below.

Forecasted Financial Performance
$M			Q226		FY26
Revenues			$400 – $410		$1,700 – $1,760
R&D			$12 – $14		$50 – $53
Operating Income (loss)			($6 – $8)		$18 – 23
Depreciation			$11 – $12		$48 – $50
Amortization			$12 – $13		$43 – $46
Stock Based Compensation			$15 – $16		$58 – $60
Adjusted EBITDA			$30 – $35		$170 – $176
Operating Cash Flow					$60 – $70
Capital Expenditures					$155 – $165
Free Cash Flow Use					($85 – $105)

FY26 Forecasted Investments for New Program and Opportunities ($M)
Capital Expenditures		Estimated Spend						Program/Opportunity
Advanced Manufacturing Facility for Hypersonics/Engines & Test Cell		$	14	–	$	15		Various Customer Opportunities
Payload Integration Facility		$	13	–	$	14		MACH-TB and Other
Nomad Plant Improvements and Machinery		$	8		$	9		Various Customer Opportunities
Materials and Hardware		$	12		$	13		Various Drone Opportunities
C5ISR Facility and Machinery		$	6	–	$	7		Various Air Defense Programs
BladeWorks Turbo Fan Facility and Test Cells and New Designs		$	18	–	$	19		Various Engine Opportunities
Microwave Products New/Expanded Facilities and Machinery		$	14	–	$	15		Various Customer Opportunities
Space and Satellite Additional Secure Facility Build-Out		$	7	–	$	8		Various Confidential Programs
Valkyrie Second Production Lot 12 Build		$	25	–	$	27		Various Customer Opportunities
		$	117	–	$	127
Normal Maintenance Capital Expenditures		$	38	–	$	38
Total FY26 Forecasted Capital Expenditures		$	155	–	$	165
Other Investments included in Working Capital (Operating Cash Flow)
Rocket System Inventory Build – Zeus/Oriole		$	40		$	45		Various including MACH-TB
Unmanned Systems Initiative/Enhancements			3			5		Various Customer Opportunities
		$	43		$	50
Estimated Funding for Investments
Funding Investment in Prometheus		$	50		$	55
Total FY26 Forecasted Total Investments		$	248		$	270

We expect our second half of fiscal 2026 will have significantly higher Revenue than the first half, as we expect to begin to receive in the second half of 2026 certain long-lead time items related to existing customer funded programs, including solid rocket motors and other hardware related to certain hypersonic and other programs, hardware and components related to jet engine and propulsion system development and production, and hardware related to air defense, missile, radar and other National Security system production.

We expect Kratos’ second half of fiscal 2026 Adjusted EBITDA and operating cash flow to be greater than our first half, as our Revenue increases, Adjusted EBITDA margins expand and are impacted by both expected increased scale and product mix, and customer contract funding is expected to increase coming off of the late 2025 and early 2026 U.S. Government shutdown and extended Continuing Resolution. We continue to expect Kratos’ full year 2026 Adjusted EBITDA margin rates to be approximately 100 bps greater than our reported 2025 Adjusted EBITDA margin rates, including the Orbit and Nomad acquisitions.

We expect to provide full year 2027 financial guidance, which will include the Orbit and Nomad acquisitions, when we report our third quarter of fiscal 2026 later this year. We continue to expect our 2027 Adjusted EBITDA margin rates to increase an additional 100 bps above forecast 2026 Adjusted EBITDA margin rates, when we provide full year 2027 guidance later this year.

Management will discuss the Company’s financial results at a conference call beginning at 2:00 p.m. Pacific (5:00 p.m. Eastern) today. The call will be available at www.kratosdefense.com. Participants may register for the call using this Online Form. Upon registration, all telephone participants will receive the dial-in number along with a unique PIN that can be used to access the call. For those who cannot access the live broadcast, a replay will be available on Kratos’ website.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, hardware, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field relevant solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as the innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing, which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe our probability of win is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of probability of win is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include, virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, command, control, communication, computing, combat, intelligence surveillance and reconnaissance (C5ISR) and microwave electronic products for missile, radar, air defense, missile defense, space, satellite, counter unmanned aircraft systems (CUAS), directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com

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This news release contains certain forward-looking statements that involve risks and uncertainties, including, without limitation, express or implied statements concerning the Company’s expectations regarding its future financial performance, including the Company’s expectations for its second quarter, first half, second half, and full year 2026 revenues, R&D, operating income, depreciation, amortization, stock based compensation expense, and Adjusted EBITDA, and full year 2026 operating cash flow, capital expenditures, investments, and free cash flow, forecasted company and business unit organic revenue growth, estimated revenue and organic revenue growth for 2026 and 2027, Adjusted EBITDA margins in 2026 and 2027, future initiation of higher margin programs and negotiation of lower margin contracts which are expected to be renewed in the future, expected future investments in property, plant, facilities, and equipment (including expected investments in the Prometheus joint venture and other programs, opportunities, and initiatives), expected future production of Valkyries, the ability of the Company’s customers to respond to industry and market conditions, the impact of acquired companies and businesses on the Company’s operations and financial condition, the Company’s bid and proposal pipeline and backlog, including the Company’s ability to timely execute on its backlog, demand for its products and services, including the Company’s alignment with today’s National Security requirements and the positioning of its C5ISR and other businesses, ability to successfully compete and expected new customer awards, the impact of federal government shutdowns on the Company’s operations and financial condition, the availability and timing of government funding for the Company’s offerings, availability of an experienced skilled workforce, inflation and increased costs, risks related to potential cybersecurity events or disruptions of our information technology systems, and delays in our financial projections, industry, business and operations, including projected growth. Such statements are only predictions, and the Company’s actual results may differ materially from the results expressed or implied by these statements. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Factors that may cause the Company’s results to differ include, but are not limited to: risks to our business and financial results related to the reductions and other spending constraints imposed on the U.S. Government and our other customers, including as a result of sequestration and extended continuing resolutions, the Federal budget deficit and Federal government shut-downs; risks of adverse regulatory action or litigation; risks associated with debt leverage; risks that our cost-cutting initiatives will not provide the anticipated benefits; risks that changes, cutbacks or delays in spending by the DoW may occur, which could cause delays or cancellations of key government contracts; risks of delays to or the cancellation of our projects as a result of protest actions submitted by our competitors; risks that changes may occur in Federal government (or other applicable) procurement laws, regulations, policies and budgets; risks of the availability of government funding for the Company’s products and services due to performance, cost growth, or other factors, changes in government and customer priorities and requirements (including cost-cutting initiatives, the potential deferral of awards, terminations or reduction of expenditures to respond to the priorities of Congress and the Administration, or budgetary cuts resulting from Congressional committee recommendations or automatic sequestration under the Budget Control Act of 2011, as amended); risks related to tariffs or import duties which could affect the Company’s supply chain and customer affordability; risks related to Executive Orders issued by the Trump Administration and resultant changes to the DoW procurement policies and Federal Acquisition Regulations; risks related to DoW reorganization and DOGE; risks that the unmanned aerial systems and unmanned ground sensor markets do not experience significant growth; risks that products we have developed or will develop will not become programs of record; risks that we cannot expand our customer base or that our products do not achieve broad acceptance which could impact our ability to achieve our anticipated level of growth; risks of increases in the Federal government initiatives related to in-sourcing; risks related to security breaches, including cyber security attacks and threats or other significant disruptions of our information systems, facilities and infrastructures; risks related to our compliance with applicable contracting and procurement laws, regulations and standards; risks related to the new DoW Cybersecurity Maturity Model Certification; risks relating to the ongoing conflict in Ukraine and the Israeli-Palestinian military conflict; risks to our business in Israel including our expanded operations in Israel following the Orbit acquisition; risks related to contract performance; risks related to failure of our products or services; risks associated with our subcontractors’ or suppliers’ failure to perform their contractual obligations, including the appearance of counterfeit or corrupt parts in our products; changes in the competitive environment (including as a result of bid protests); failure to successfully integrate acquired operations and compete in the marketplace, which could reduce revenues and profit margins; risks that potential future goodwill impairments will adversely affect our operating results; risks that anticipated tax benefits will not be realized in accordance with our expectations; risks that a change in ownership of our stock could cause further limitation to the future utilization of our net operating losses; risks that we may be required to record valuation allowances on our net operating losses which could adversely impact our profitability and financial condition; risks that the current economic environment will adversely impact our business, including with respect to our ability to recruit and retain sufficient numbers of qualified personnel to execute on our programs and contracts, as well as expected contract awards and risks related to increasing interest rates; currently unforeseen risks associated with any public health crisis, and risks related to natural disasters or severe weather. These and other risk factors are more fully discussed in the Company’s Annual Report on Form 10-K for the period ended December 28, 2025, and in our other filings made with the Securities and Exchange Commission.

Note Regarding Use of Non-GAAP Financial Measures and Other Performance Metrics

This news release contains non-GAAP financial measures, including organic revenue growth rates computed as the revenue growth rate excluding the current year impact of the contribution from acquisitions, Adjusted EPS (computed using income before income taxes, excluding depreciation, amortization of intangible assets, amortization of capitalized contract and development costs, stock-based compensation expense, acquisition and restructuring related items and other, which includes, but is not limited to, legal related items, non-recoverable rates and costs, and foreign transaction gains and losses, less the estimated impact of current and deferred income taxes) and Adjusted EBITDA (which excludes, among other things, acquisition and restructuring related items, stock compensation expense, foreign transaction gains and losses, and the associated margin rates). Additional non-GAAP financial measures include Free Cash Flow from Operations computed as Cash Flow from Operations less Capital Expenditures plus proceeds from sale of assets and Adjusted EBITDA related to our KUS and KGS businesses. Kratos believes this information is useful to investors because it provides a basis for measuring the Company’s available capital resources, the actual and forecasted operating performance of the Company’s business and the Company’s cash flow, excluding non-recurring items and non-cash items that would normally be included in the most directly comparable measures calculated and presented in accordance with GAAP. The Company’s management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating the Company’s actual and forecasted operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and investors should carefully evaluate the Company’s financial results calculated in accordance with GAAP and reconciliations to those financial results. In addition, non-GAAP financial measures as reported by the Company may not be comparable to similarly titled amounts reported by other companies. As appropriate, the most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the Company’s financial results prepared in accordance with GAAP are included in this news release.

Another Performance Metric the Company believes is a key performance indicator in our industry is our Book to Bill Ratio as it provides investors with a measure of the amount of bookings or contract awards as compared to the amount of revenues that have been recorded during the period and provides an indicator of how much of the Company’s backlog is being burned or utilized in a certain period. The Book to Bill Ratio is computed as the number of bookings or contract awards in the period divided by the revenues recorded for the same period. The Company believes that the rolling or last twelve months’ Book to Bill Ratio is meaningful since the timing of quarter-to-quarter bookings can vary.

Press Contact:

Claire Cantrell
[email protected] 

Investor Information:

877-934-4687
[email protected]

Kratos Defense & Security Solutions, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in millions, except per share data)
			Three Months Ended
			March 29,				March 30,
				2026				2025
Service revenues			$	134.0			$	102.4
Product sales				237.0				200.2
Total revenues				371.0				302.6
Cost of service revenues				99.3				75.7
Cost of product sales				182.1				153.3
Total costs				281.4				229.0
Gross profit – service revenues				34.7				26.7
Gross profit – product sales				54.9				46.9
Total gross profit				89.6				73.6
Selling, general and administrative expenses				62.7				52.3
Merger and acquisition expenses				1.9				–
Research and development expenses				10.7				10.0
Depreciation				3.8				2.6
Amortization of intangible assets				5.8				2.1
Operating income				4.7				6.6
Interest income (expense), net				4.5				(0.9	)
Other income (loss), net				0.6				(0.3	)
Income before income taxes				9.8				5.4
Provision (benefit) for income taxes				(2.1	)			0.9
Net Income			$	11.9			$	4.5
Basic income per common share			$	0.07			$	0.03
Diluted income per common share			$	0.07			$	0.03
Weighted average common shares outstanding:
Basic				176.8				154.2
Diluted				179.4				156.2
Adjusted EBITDA (1)			$	38.7			$	26.7
Unaudited Reconciliation of GAAP to Non-GAAP Measures
Note: (1) Adjusted EBITDA is a non-GAAP measure defined as GAAP net income adjusted for net interest income (expense), provision for income taxes, depreciation and amortization expense of intangible assets, amortization of capitalized contract and development costs, stock-based compensation, acquisition and restructuring related items and other, and foreign transaction (gain) loss.
Adjusted EBITDA as calculated by us may be calculated differently than Adjusted EBITDA for other companies. We have provided Adjusted EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to should not be construed as either an alternative to net income (loss) or as an indicator of our operating performance or an alternative to cash flows as a measure of liquidity. The adjustments to calculate this non-GAAP financial measure and the basis for such adjustments are outlined below. Please refer to the following table below that reconciles GAAP net income (loss) to Adjusted EBITDA.
The adjustments to calculate this non-GAAP financial measure, and the basis for such adjustments, are outlined below:
Interest income and interest expense, net. The Company receives interest income on investments and incurs interest expense on loans, capital leases and other financing arrangements, including the amortization of issue discounts and deferred financing costs. These amounts may vary from period to period due to changes in cash and debt balances.
Income taxes. The Company’s tax expense can fluctuate materially from period to period due to tax adjustments that may not be directly related to underlying operating performance or to the current period of operations and may not necessarily reflect the impact of utilization of our NOLs.
Depreciation. The Company incurs depreciation expense (recorded in cost of revenues and in operating expenses) related to capital assets purchased, leased or constructed to support the ongoing operations of the business. The assets are recorded at cost or fair value and are depreciated over the estimated useful lives of individual assets.
Amortization of intangible assets. The Company incurs amortization of intangible expense related to acquisitions it has made. These intangible assets are valued at the time of acquisition and are amortized over the estimated useful lives.
Amortization of capitalized contract and development costs. The Company incurs amortization of previously capitalized software development and non-recurring engineering or design costs related to certain products or offerings in its Unmanned Systems, rocket support and services, and space and satellite businesses as related units are sold or over the estimated useful life, as applicable.
Stock-based compensation expense. The Company incurs expense related to stock-based compensation included in its GAAP presentation of selling, general and administrative expense. Although stock-based compensation is an expense of the Company and viewed as a form of compensation, these expenses vary in amount from period to period, and are affected by market forces that are difficult to predict and are not within the control of management, such as the market price and volatility of the Company’s shares, risk-free interest rates and the expected term and forfeiture rates of the awards. Management believes that exclusion of these expenses allows comparison of operating results to those of other companies that disclose non-GAAP financial measures that exclude stock-based compensation.
Foreign transaction (gain) loss. The Company incurs transaction gains and losses which are not hedged related to transactions with foreign customers in currencies other than the U.S. dollar. In addition, certain intercompany transactions can give rise to realized and unrealized foreign currency gains and losses.
Acquisition and transaction related items. The Company incurs transaction related costs, such as legal and accounting fees and other expenses, related to acquisitions and divestiture activities. Management believes these items are outside the normal operations of the Company’s business and are not indicative of ongoing operating results.
Restructuring costs. The Company incurs restructuring costs for cost reduction actions which include employee termination costs, facility shut-down related costs and lease commitment costs for unused, excess or exited facilities. Management believes that these costs are not indicative of ongoing operating results as they are either non-recurring and/or not expected when full capacity and volumes are achieved.
Legal related items. The Company incurs costs related to pending legal settlements and other legal related matters. Management believes these items are outside the normal operations of the Company’s business and are not indicative of ongoing operating results.
Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. The Company expects to continue to incur expenses similar to the Adjusted EBITDA financial adjustments described above, and investors should not infer from the Company’s presentation of this non-GAAP financial measure that these costs are unusual, infrequent, or non-recurring.
Reconciliation of Net Income attributable to Kratos to Adjusted EBITDA is as follows:
			Three Months Ended
			March 29,				March 30,
				2026				2025
Net income			$	11.9			$	4.5
Interest (income) expense, net				(4.5	)			0.9
Provision (benefit) for income taxes				(2.1	)			0.9
Depreciation (including cost of service revenues and product sales)				11.0				8.3
Stock-based compensation				15.0				8.7
Foreign transaction (gain) loss				(0.1	)			0.4
Amortization of intangible assets				5.8				2.1
Amortization of capitalized contract and development costs				1.8				0.9
Acquisition and restructuring related items and other				1.9				–
Reversal of contingent acquisition consideration				(2.0	)
Adjusted EBITDA			$	38.7			$	26.7
Kratos Defense & Security Solutions, Inc.
Unaudited Segment Data
(in millions)
			Three Months Ended
			March 29,				March 30,
				2026				2025
Revenues:
Unmanned Systems			$	82.6			$	63.1
Kratos Government Solutions				288.4				239.5
Total revenues			$	371.0			$	302.6
Operating income (loss)
Unmanned Systems			$	1.3			$	(1.7	)
Kratos Government Solutions				20.3				17.0
Unallocated corporate expense, net				(16.9	)			(8.7	)
Total operating income			$	4.7			$	6.6
Note: Unallocated corporate expense, net includes costs for certain stock-based compensation programs (including stock-based compensation costs for the employee stock purchase plan and restricted stock units), the effects of items not considered part of management’s evaluation of segment operating performance, and acquisition and restructuring related items, corporate costs not allocated to the segments, legal related items, and other miscellaneous corporate activities.
Reconciliation of Segment Operating Income (Loss) to Adjusted EBITDA is as follows:
			Three Months Ended
			March 29,				March 30,
				2026				2025
Unmanned Systems
Operating income (loss)			$	1.3			$	(1.7	)
Other income				0.1				0.1
Depreciation				2.8				2.3
Amortization of intangible assets				1.0				1.0
Amortization of capitalized contract and development costs				–				–
Adjusted EBITDA			$	5.2			$	1.7
% of revenue				6.3	%			2.7	%
Kratos Government Solutions
Operating income			$	20.3			$	17.0
Other income				0.4				–
Depreciation				8.2				6.0
Amortization of intangible assets				4.8				1.1
Amortization of capitalized contract and development costs				1.8				0.9
Reversal of contingent acquisition consideration				(2.0	)			–
Adjusted EBITDA			$	33.5			$	25.0
% of revenue				11.6	%			10.4	%
Total Adjusted EBITDA			$	38.7			$	26.7
% of revenue				10.4	%			8.8	%
Kratos Defense & Security Solutions, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in millions)
			March 29,				December 28,
				2026				2025
Assets
Current assets:
Cash and cash equivalents			$	1,464.3			$	560.6
Accounts receivable, net				194.5				165.0
Unbilled receivables, net				334.1				292.4
Inventoried costs, net				225.7				188.2
Prepaid expenses				22.5				12.9
Other current assets				69.3				43.8
Total current assets				2,310.4				1,262.9
Property, plant and equipment, net				414.2				361.9
Operating lease right-of-use assets				45.4				43.4
Goodwill				884.1				595.7
Intangible assets, net				219.7				53.9
Other assets				161.9				144.4
Investment in joint venture				7.0				5.0
Total assets			$	4,042.7			$	2,467.2
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable			$	112.0			$	69.6
Accrued expenses				58.7				60.5
Accrued compensation				88.8				82.3
Billings in excess of costs and earnings on uncompleted contracts				108.1				73.4
Current portion of operating lease liabilities				13.9				12.8
Current portion of finance lease liabilities				4.8				3.4
Other current liabilities				24.4				9.0
Total current liabilities				410.7				311.0
Operating lease liabilities, net of current portion				34.7				33.8
Finance lease liabilities, net of current portion				132.0				95.8
Other long-term liabilities				55.3				30.3
Total liabilities				632.7				470.9
Commitments and contingencies
Stockholders’ equity:
Common stock				0.2				0.2
Additional paid-in capital				4,038.7				2,635.9
Accumulated other comprehensive income (loss)				1.1				2.1
Accumulated deficit				(630.0	)			(641.9	)
Total equity				3,410.0				1,996.3
Total liabilities and stockholders’ equity			$	4,042.7			$	2,467.2
Kratos Defense & Security Solutions, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)
			Three Months Ended
			March 29,				March 30,
				2026				2025
Operating activities:
Net income			$	11.9			$	4.5
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization				16.8				10.4
Amortization of lease right-of-use assets				3.4				3.0
Deferred income taxes				1.2				0.2
Stock-based compensation				15.0				8.7
Amortization of deferred financing costs				0.1				–
Changes in assets and liabilities, net of acquisitions:
Accounts receivable				(2.0	)			0.8
Unbilled receivables				(26.7	)			(38.0	)
Inventoried costs				(14.7	)			(5.4	)
Prepaid expenses and other assets				(26.5	)			(12.8	)
Operating lease liabilities				(3.7	)			(3.0	)
Accounts payable				30.8				0.7
Accrued expenses				(16.1	)			(1.8	)
Accrued compensation				(6.4	)			5.4
Billings in excess of costs and earnings on uncompleted contracts				0.1				(0.7	)
Income tax receivable and payable				(3.8	)			(1.1	)
Other liabilities				(6.8	)			(0.1	)
Net cash used in operating activities				(27.4	)			(29.2	)
Investing activities:
Cash paid for acquisitions, net of cash acquired				(347.4	)			–
Proceeds from sale of assets				4.2				–
Investment in joint venture				(2.0	)			–
Capital expenditures				(19.9	)			(22.6	)
Net cash used in investing activities				(365.1	)			(22.6	)
Financing activities:
Repayment under credit facility and term loan				–				(2.5	)
Proceeds from the issuance of common stock, net of issuance costs				1,348.6				–
Debt issuance costs				(1.1	)			–
Payment under finance leases				(0.9	)			(0.4	)
Payments of employee taxes withheld from share-based awards				(54.9	)			(16.2	)
Proceeds from shares issued under equity plans				5.3				4.6
Proceeds from state grant for capital construction				0.3				–
Net cash provided by financing activities				1,297.3				(14.5	)
Net cash flows				904.8				(66.3	)
Effect of exchange rate changes on cash and cash equivalents				(1.1	)			0.7
Net increase in cash and cash equivalents				903.7				(65.6	)
Cash and cash equivalents at beginning of period				560.6				329.3
Cash and cash equivalents at end of period			$	1,464.3			$	263.7
Kratos Defense & Security Solutions, Inc.
Unaudited Non-GAAP Measures
Computation of Adjusted Earnings Per Share
(in millions, except per share data)
Adjusted income and adjusted income per diluted common share (Adjusted EPS) are non-GAAP measures for reporting financial performance and exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. Management believes that exclusion of these items assists in providing a more complete understanding of the Company’s underlying results and trends and allows for comparability with our peer company index and industry. The Company uses these measures along with the corresponding GAAP financial measures to manage the Company’s business and to evaluate its performance compared to prior periods and the marketplace. The Company defines adjusted income before amortization of intangible assets and capitalized contract and development costs, depreciation, stock based compensation, foreign transaction gain/loss, and acquisition and restructuring related items and other. The estimated impact to income taxes includes the impact to the effective tax, current tax provision and deferred tax provision, and excludes the impact of discrete items, including transaction related expenses and release of valuation allowance, or benefit related to the add-backs.*
Adjusted EPS reflects adjusted income on a per share basis using weighted average diluted shares outstanding.
The following table reconciles the most directly comparable GAAP financial measures to the non-GAAP financial measures.
			Three Months Ended
			March 29,				March 30,
				2026				2025
Net income			$	11.9			$	4.5
Less: GAAP provision (benefit) for income taxes				(2.1	)			0.9
Income before taxes				9.8				5.4
Add: Amortization of intangible assets				5.8				2.1
Add: Amortization of capitalized contract and development costs				1.8				0.9
Add: Depreciation				11.0				8.3
Add: Stock-based compensation				15.0				8.7
Add: Foreign transaction (gain) loss				(0.1	)			0.4
Add: Acquisition and restructuring related items and other				1.9				–
Less: Reversal of contingent acquisition consideration				(2.0	)
Non-GAAP Adjusted income from consolidated operations before income taxes				43.2				25.8
Income taxes on Non-GAAP measure Adjusted income*				14.6				6.9
Non-GAAP Adjusted net income			$	28.6			$	18.9
Diluted earnings per common share			$	0.07			$	0.03
Less: GAAP provision for income taxes				(0.01	)			0.01
Add: Amortization of intangible assets				0.03				0.01
Add: Amortization of capitalized contract and development costs				0.01				0.01
Add: Depreciation				0.06				0.05
Add: Stock-based compensation				0.08				0.05
Add: Foreign transaction loss				–				–
Add: Acquisition and restructuring related items and other				0.01				–
Less: Reversal of contingent acquisition consideration				(0.01	)			–
Income taxes on Non-GAAP measure Adjusted income*				(0.08	)			(0.04	)
Adjusted income per diluted common share			$	0.16			$	0.12
Weighted average diluted common shares outstanding				179.4				156.2
*The impact to income taxes is calculated by recasting income before income taxes to include the add-backs involved in determining Adjusted Income before income taxes and recalculating the income tax provision, including current and deferred income taxes, using the Adjusted Income before income taxes. The recalculation also adjusts for any discrete tax expense, including transaction related expenses and the release of valuation allowance, or benefit related to the add-backs.

• Revenue of
  $206.8 million,
  up
  13%
  year-over-year;
  reflecting continued growth in higher-value subscriptions and contributions from compliance product enhancements
• Subscription revenue of $130.2 million
  up
  12%
  year-over-
  year, driven by
  growth in differentiated human-in-the-loop service offerings
• Net income of
  $1.1 million
  and net income margin of
  1%
• Adjusted EBITDA of
  $36.5 million
  and Adjusted EBITDA margin of
  18%
• Commitment to shareholder returns; completed $43.5 million of share repurchases in the quarter
  
• Ended the quarter with cash and cash equivalents of $183.2 million, delivered $47.3 million in cash from operating activities and $41.0 million in free cash flow with no debt outstanding as of March 31, 2026
  

MOUNTAIN VIEW, Calif., May 06, 2026 (GLOBE NEWSWIRE) — LegalZoom (Nasdaq: LZ), America’s #1 online legal services company, today announced results for its first quarter ended March 31, 2026.

“LegalZoom delivered another strong quarter, clearly illustrating that our strategy is working,” said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. “In an AI-driven world, we win by getting customers to the finish line, combining technology with real human expertise to complete the last mile.”

Noel Watson, LegalZoom’s Chief Operating Officer and Chief Financial Officer, added, “We delivered strong first quarter results, with 13% revenue growth ahead of expectations. Our performance was driven by momentum in higher-value subscriptions and increased seasonal strength in annual report filings from our enhanced compliance offering. Importantly, our core growth drivers continue to build and will scale through the back half of the year, supporting our increased full-year revenue outlook.”

First Quarter 2026 Highlights

• Revenue was $206.8 million for the quarter, up 13% year-over-year.
  • Transaction revenue of $76.6 million increased 15% year-over-year.
  • Subscription revenue of $130.2 million grew 12% year-over-year.
• Net income was $1.1 million for the quarter, or 1% of revenue, compared to $5.1 million, or 3% of revenue, in the same period in 2025.
• Adjusted EBITDA was $36.5 million for the quarter, or 18% of revenue, compared to $37.0 million, or 20% of revenue, in the same period in 2025.
• Non-GAAP net income was $22.1 million for the quarter compared to $23.8 million in the same period in 2025.
• Cash and cash equivalents were $183.2 million as of March 31, 2026 compared to $203.1 million as of December 31, 2025.
• Cash flows provided by operating activities were $47.3 million for the quarter ended March 31, 2026 compared to $50.7 million in the same period in 2025.
• Free cash flow was $41.0 million for the quarter ended March 31, 2026 compared to $41.3 million in the same period in 2025.
• Basic and diluted net income per share was $0.01 for the quarter compared to a basic and diluted net income per share of $0.03 for the same period in 2025. Basic and diluted Non-GAAP net income per share was $0.13 and $0.12, respectively, for the quarter in 2026 compared to basic and diluted Non-GAAP net income per share of $0.13 for the same period in 2025.

Key Business Metrics and Non-GAAP Financial Measures

(Unaudited, in thousands except AOV, ARPU and percentages)

	Three Months Ended
	March 31,								% Growth
									(Decline)
		2026				2025			YOY
Total revenue	$	206,781			$	183,110			13	%
Transaction revenue	$	76,623			$	66,853			15	%
Subscription revenue	$	130,158			$	116,257			12	%
Gross profit	$	132,253			$	116,550			13	%
Gross margin		64	%			64	%		—	%
Net Income	$	1,104			$	5,127			(78)%
Net income margin		1	%			3	%		(67)%
Net Income per share — basic:	$	0.01			$	0.03
Net Income per share — diluted:	$	0.01			$	0.03
Net cash provided by operating activities	$	47,282			$	50,703			(7)%
Non-GAAP Financial Measures
Non GAAP net income	$	22,070			$	23,822			(7)%
Non GAAP net income per share — basic:	$	0.13			$	0.13
Non GAAP net income per share — diluted:	$	0.12			$	0.13
Adjusted EBITDA	$	36,462			$	37,012			(1)%
Adjusted EBITDA margin		18	%			20	%		(10)%
Free cash flow	$	40,974			$	41,325			(1)%
Key Business Metrics
Transaction units		375				341			10	%
Business formations		142				131			8	%
Average order value (AOV)	$	205			$	196			5	%
Subscription units at period end		1,920				1,924			—	%
Average revenue per subscription unit (ARPU) at period end	$	263			$	252			4	%
Certain percentages may not recalculate due to rounding.

Financial Guidance and Outlook

LegalZoom is increasing its revenue outlook and maintaining its Adjusted EBITDA outlook for the full year ending December 31, 2026 as follows:

• Revenue is expected to be in the range of $810 million to $830 million, or 8% year-over-year growth at the midpoint. This compares to the Company’s previous revenue outlook in the range of $805 million to $825 million. LegalZoom’s outlook reflects the continued scaling of our higher-value growth initiatives and ongoing momentum from our partner channel through the remainder of the year. 
• Adjusted EBITDA is expected to be in the range of $190 million to $200 million, or 13% year-over-year growth at the midpoint, reflecting improved gross margin, disciplined cost management and AI-driven efficiencies realized in the back-half of the year.

For the second quarter ending June 30, 2026 LegalZoom expects:

• Revenue in the range of $203 million to $207 million, or 6% year-over-year growth at the midpoint. Relative to the first quarter, this growth rate reflects a full lapping of the Formation Nation acquisition as well as a reduced volume of annual reports filings due to seasonality.
• Adjusted EBITDA in the range of $40 million to $42 million, a 5% year-over-year increase at the midpoint.

Webcast and Conference Call Information

A webcast and conference call to discuss first quarter 2026 results is scheduled for today, May 6, 2026, at 4:30 p.m. Eastern time/1:30 p.m. Pacific time. Those interested in participating in the conference call are invited to register Here.

A live audio webcast of the event will be available on the LegalZoom Investor Relations website: https://investors.legalzoom.com/. An archived replay of the webcast also will be available shortly after the live event.

Forward-Looking Statements

This press release contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts contained in this press release may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this press release include, but are not limited to, statements regarding our quarterly and annual guidance.

The forward-looking statements in this press release are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to the following: our dependence on business formations; our dependence on customers expanding the use of our platform, including converting our transactional customers to subscribers and our subscribers renewing their subscriptions with us; the impact of macroeconomic challenges or uncertainty on our business; our ability to sustain our revenue growth rate and remain profitable in the future; our ability to provide high-quality products and services, customer care and customer experience; our ability to continue to innovate and provide a platform that is useful to our customers and that meets our customers’ expectations; the competitive legal solutions market; our dependence on our brand and reputation; our ability to maintain and expand strategic relationships with third parties; our ability to hire and retain top talent and motivate our employees; risks and costs associated with complex and evolving laws and regulations; our ability to maintain effective in our internal control over financial reporting; and any factors discussed in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2026, as well as any factors in our subsequent filings with the SEC. The forward-looking statements in this press release are based upon information available to us as of the date of this press release, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this press release with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this press release, whether as a result of any new information, future events or otherwise.

About Non-GAAP Financial Measures

This press release includes non-GAAP financial measures including Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP net income, Non-GAAP net income margin, Non-GAAP net income per share and free cash flow. We use these non-GAAP financial measures to better understand and evaluate our core operating performance. We believe that these non-GAAP financial measures provide management and our investors with useful information about our financial performance and liquidity, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important measures used by our management for financial and operational decision-making. We also believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. These non-GAAP measures should not be considered in isolation of, or as a substitute or an alternative to, measures prepared and presented in accordance with GAAP.

We define Adjusted EBITDA as net income adjusted to exclude interest expense, interest income, provision for (benefit from) income taxes, depreciation and amortization, other expense (income), net, stock-based compensation and certain non-recurring income and expenses from time to time. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of revenue.

Adjusted EBITDA is one of the primary performance measures used by our management and our board of directors to understand and evaluate our financial performance and operating trends, including period-to-period comparisons, preparing and approving our annual budget and operational planning. In assessing our performance, we exclude certain expenses that we believe are not comparable period over period or that we believe are not indicative of our underlying operating performance. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which include that Adjusted EBITDA:

• may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure;
• does not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments;
• excludes depreciation and amortization and, although these are non-cash expenses, the assets being depreciated may be replaced in the future;
• does not reflect changes in, or cash requirements for, our working capital needs;
• excludes stock-based compensation expense, which has been, and will continue to be, a significant recurring expense for our business and an important part of our compensation strategy; and
• does not reflect certain expenses that we do not consider representative of our underlying operating performance, but that reduce cash available to us.

We define Non-GAAP net income as net income adjusted to exclude amortization of acquired intangible assets, stock-based compensation expense and certain non-recurring income and expenses from time to time, net of related income tax impacts. We define net income margin as net loss as a percentage of revenue. We define Non-GAAP net income margin as Non-GAAP net income as a percentage of revenue. We define Non-GAAP net income per share attributable to common stockholders as Non-GAAP net income divided by basic and diluted weighted-average common stock.

Free cash flow is a liquidity measure used by management in evaluating the cash generated by our operations after purchases of property and equipment including capitalized internal-use software. We believe free cash flow provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business and strengthening our balance sheet, once our business needs and obligations are met. The usefulness of free cash flow as an analytical tool has limitations because it excludes certain items that are settled in cash, does not represent residual cash flow available for discretionary expenses, does not reflect our future contractual commitments, and may be calculated differently by other companies in our industry.

We are not providing a reconciliation for our non-GAAP outlook on a forward-looking basis (including the information under “Financial Guidance and Outlook” above), as we are unable to provide a meaningful calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that would impact the most directly comparable forward-looking GAAP financial measure that have not yet occurred, are out of LegalZoom’s control and/or cannot be reasonably predicted. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

The tables in this press release contain more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

LegalZoom

LegalZoom is a leading online platform for legal services, transforming how individuals and small businesses navigate the legal system. By combining intuitive technology with access to experienced attorneys—whether through our vast independent attorney network or the LegalZoom-owned law firm—we offer the tools and guidance people need to confidently manage everything from business formation and compliance to estate planning and ongoing legal support.

With over two decades of experience and millions of customers served, LegalZoom helps individuals and small businesses navigate legal needs with confidence. For more information, please visit www.legalzoom.com. 

Contact
Investor Relations
[email protected]

LegalZoom.com, Inc. Unaudited Condensed Consolidated Balance Sheets (In thousands, except par values)
	March 31, 2026				December 31, 2025
Assets
Current assets:
Cash and cash equivalents	$	183,152			$	203,100
Accounts receivable, net of allowance		24,573				20,589
Prepaid expenses and other current assets		20,551				18,234
Total current assets		228,276				241,923
Property and equipment, net		55,589				58,045
Goodwill		140,705				140,705
Intangible assets, net		16,542				18,152
Operating lease right-of-use assets		14,199				13,414
Deferred income taxes		29,446				31,884
Other assets		7,101				7,399
Total assets	$	491,858			$	511,522
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	38,126			$	27,167
Accrued expenses and other current liabilities		57,373				83,361
Deferred revenue		223,242				203,653
Operating lease liability		4,743				4,338
Total current liabilities		323,484				318,519
Operating lease liability, non-current		10,479				10,025
Deferred revenue		260				277
Other liabilities		10,727				10,819
Total liabilities		344,950				339,640
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 100,000 shares authorized at March 31, 2026 and December 31, 2025, none issued or outstanding at March 31, 2026 and December 31, 2025		—				—
Common stock, $0.001 par value; 1,000,000 shares authorized; 173,402 shares and 177,624 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively		175				179
Additional paid-in capital		1,323,587				1,305,936
Accumulated deficit		(1,177,128	)			(1,134,414	)
Accumulated other comprehensive (loss) income		274				181
Total stockholders’ equity		146,908				171,882
Total liabilities and stockholders’ equity	$	491,858			$	511,522

LegalZoom.com, Inc. Unaudited Condensed Consolidated Statements of Operations (In thousands, except per share amounts)
		Three Months Ended March 31,
			2026				2025
Revenue		$	206,781			$	183,110
Cost of revenue			74,528				66,560
Gross profit			132,253				116,550
Operating expenses:
Sales and marketing			78,668				61,378
Technology and development			19,605				21,322
General and administrative			31,216				39,221
Gain on sale of assets held for sale			—				(14,337	)
Total operating expenses			129,489				107,584
Income from operations			2,764				8,966
Interest expense			(676	)			(182	)
Interest income			1,648				1,483
Other income, net			81				347
Income before income taxes			3,817				10,614
Provision for income taxes			2,713				5,487
Net income		$	1,104			$	5,127
Net income attributable to common stockholders—basic and diluted
Net income per share — basic:		$	0.01			$	0.03
Net income per share — diluted:		$	0.01			$	0.03
Weighted-average shares used to compute net income per share — basic:			174,866				176,829
Weighted-average shares used to compute net income per share — diluted:			177,013				180,616

LegalZoom.com, Inc. Unaudited Condensed Consolidated Statements of Cash Flows (In thousands)
	Three Months Ended March 31,
		2026				2025
Cash flows from operating activities
Net income	$	1,104			$	5,127
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		11,137				10,406
Amortization of debt issuance costs		47				56
Amortization of right-of-use assets		968				618
Stock-based compensation		21,314				29,756
Gain on sale of assets held for sale		—				(14,337	)
Change in fair value of other equity security		—				(302	)
Loss on disposal of property and equipment		—				99
Deferred income taxes		2,438				1,996
Change in fair value of other equity security		—				(302	)
Unrealized foreign exchange loss		143				76
Changes in operating assets and liabilities, net of effects of business combination:
Accounts receivable		(3,984	)			(9,148	)
Prepaid expenses and other current assets		(2,348	)			(2,238	)
Other assets		412				204
Accounts payable		11,248				5,329
Accrued expenses and other liabilities		(13,882	)			(3,247	)
Operating lease liabilities		(896	)			(536	)
Income tax payable		7				6
Deferred revenue		19,574				26,838
Net cash provided by operating activities		47,282				50,703
Cash flows from investing activities
Acquisition, net of cash acquired		—				(48,123	)
Purchase of property and equipment		(6,308	)			(9,378	)
Proceeds from sale of assets held for sale		—				37,051
Net cash used in investing activities		(6,308	)			(20,450	)
Cash flows from financing activities
Repayment of capital lease obligations		—				(2	)
Payment of deferred consideration from business acquisition		(12,514	)			—
Repurchase of common stock		(43,467	)			—
Shares surrendered for settlement of minimum statutory tax withholding		(4,887	)			(5,942	)
Proceeds from issuance of stock under employee stock plans		16				43,548
Net cash (used in) provided by financing activities		(60,852	)			37,604
Effect of exchange rate changes on cash and cash equivalents		(70	)			52
Net (decrease) increase in cash and cash equivalents		(19,948	)			67,909
Cash and cash equivalents, at beginning of the period		203,100				142,064
Cash and cash equivalents, at end of the period	$	183,152			$	209,973

Adjusted EBITDA and Adjusted EBITDA Margin

The following table presents a reconciliation of net income to Adjusted EBITDA for each of the periods indicated (unaudited):

		Three Months Ended March 31,
			2026				2025
		(in thousands, except percentages)
Reconciliation of net income to Adjusted EBITDA
Net income		$	1,104			$	5,127
Interest expense			676				182
Interest income			(1,648	)			(1,483	)
Provision for income taxes			2,713				5,487
Depreciation and amortization			11,137				10,406
Other income, net			(81	)			(347	)
Stock-based compensation			21,314				29,756
Transaction-related expenses(1)			604				1,543
Gain on sale of assets held for sale			—				(14,337	)
Restructuring costs(2)			643				678
Adjusted EBITDA		$	36,462			$	37,012
Net income margin			1	%			3	%
Adjusted EBITDA margin			18	%			20	%

(1)	For 2025, transaction-related expenses are primarily related to our acquisition of Formation Nation. For 2026, transaction-related expenses are related to the evaluation and pursuit of strategic transactions.
(2)	For 2026 and 2025, restructuring costs are related to the reduction of our U.S. headcount.

Non-GAAP Net Income, Non-GAAP Net Income Margin and diluted Non-GAAP Net Income Per Share

The following table presents a reconciliation of net income to Non-GAAP net income for each of the periods indicated (unaudited):

		Three Months Ended March 31,
			2026				2025
		(in thousands, except per share amounts)
Reconciliation of net income to Non-GAAP net income
Net income		$	1,104			$	5,127
Amortization of acquired intangible assets			1,610				1,647
Stock-based compensation			21,314				29,756
Transaction-related expenses(1)			604				1,543
Restructuring costs(2)			643				678
Gain on sale of assets held for sale			—				(14,337	)
Income tax effects(3)			(3,205	)			(592	)
Non-GAAP net income			22,070				23,822
Net income margin			1	%			3	%
Non-GAAP net income margin			11	%			13	%
Net income per share — basic		$	0.01			$	0.03
Net income per share — diluted		$	0.01			$	0.03
Non-GAAP net income per share — basic		$	0.13			$	0.13
Non-GAAP net income per share — diluted		$	0.12			$	0.13
Weighted-average shares used to compute net income per share — basic			174,866				176,829
Weighted-average shares used to compute net income per share — diluted			177,013				180,616
Weighted-average shares used to compute Non-GAAP net income per share — basic			174,866				176,829
Weighted-average shares used to compute Non-GAAP net income per share — diluted			177,013				180,616

(1)	For 2025, transaction-related expenses are primarily related to our acquisition of Formation Nation. For 2026, transaction-related expenses are related to the evaluation and pursuit of strategic transactions.
(2)	For 2026 and 2025, restructuring costs are related to the reduction of our U.S. headcount.
(3)	The estimated income tax effect of the non-GAAP pre-tax adjustments is determined by applying the statutory rate of the originating jurisdiction, if applicable.

The following table shows the computation of basic and diluted Non-GAAP net income per share (unaudited):

		Three Months Ended March 31,
			2026			2025
		(in thousands, except per share amounts)
Non-GAAP net income and Non-GAAP net income per share:
Non-GAAP net income		$	22,070		$	23,822
Reconciliation of denominator for net income per share to Non-GAAP net income per share:
Weighted-average shares used to compute net income per share — basic:			174,866			176,829
Effect of potentially dilutive securities:
Options to purchase common stock			36			60
RSUs and PSUs			2,111			3,713
Employee stock purchase plan			—			14
Weighted-average common stock used in computing Non-GAAP net income per share — diluted			177,013			180,616
Non-GAAP net income per share — basic		$	0.13		$	0.13
Non-GAAP net income per share — diluted		$	0.12		$	0.13

Free Cash Flow

The following table presents a reconciliation of net cash provided by operating activities to free cash flow (unaudited):

		Three Months Ended March 31,
			2026				2025
		(in thousands)
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Net cash provided by operating activities			47,282				50,703
Purchase of property and equipment			(6,308	)			(9,378	)
Free cash flow		$	40,974			$	41,325

• Q1 2026 net product revenue for ZORYVE^® (roflumilast) was $105.4 million, a 65% increase compared to Q1 2025, and a 17% decrease compared to Q4 2025
• Continued strong demand for ZORYVE despite typical Q1 seasonality, with continued growth in share of branded non-steroidal topical treatments
• Submitted supplemental New Drug Application (sNDA) for ZORYVE cream 0.05% to the U.S. Food and Drug Administration (FDA) to expand the indication for the treatment of atopic dermatitis in infants ages 3 to 24 months
• Completed enrollment in ZORYVE foam 0.3% Maximum Usage Systemic Exposure (MUSE) trial in children with plaque psoriasis of the scalp and body ages 2 to 11 years
• Initiated Phase 1a/1b, first-in-human study to evaluate safety and tolerability for investigational ARQ-234 in healthy volunteers and adults with moderate to severe atopic dermatitis
• Completed expansion of dermatology sales force at the beginning of May, and initiated the build-out of a primary care and pediatrics-focused organization including the hiring of the head of Primary Care Franchise
• Maintained positive operating cash flow for the quarter

WESTLAKE VILLAGE, Calif., May 06, 2026 (GLOBE NEWSWIRE) — Arcutis Biotherapeutics, Inc. (Nasdaq: ARQT), a commercial-stage biopharmaceutical company focused on developing meaningful innovations in immuno-dermatology, today reported financial results for the quarter ended March 31, 2026, and provided a business update.

“Strong product revenue in the first quarter was driven by continued robust demand for ZORYVE, which remains the leading prescribed branded topical across its three approved indications. During the quarter, we also advanced our pipeline with the initiation of a Phase 1 trial for ARQ‑234, our biologic candidate for atopic dermatitis, submission of an sNDA to the FDA to expand the ZORYVE cream indication in atopic dermatitis to patients as young as 3 months, and progress on our Phase 2 proof-of-concept studies of ZORYVE in potential new indications,” said Frank Watanabe, president and chief executive officer. “We also continued to generate positive cash flow, underscoring our focus on financial and operational discipline as we continue to advance our corporate strategy.”

First Quarter 2026 Financial Results and Business Highlights

Commercial Highlights

ZORYVE — a highly potent and selective phosphodiesterase-4 (PDE4) inhibitor in once-daily cream and foam formulations, approved in the United States and Canada for the treatment of plaque psoriasis, atopic dermatitis, and seborrheic dermatitis.

• ZORYVE net product sales for the first quarter of 2026 were $105.4 million, reflecting a 17% sequential decline versus the fourth quarter of 2025 and 65% year-over-year growth. The sequential decline was primarily due to typical first-quarter patient deductible resets and insurance changes.
• The dermatology sales force expansion has been completed, with representatives in the field at the beginning of May, to optimize prescriber targeting and call frequency in order to deepen adoption of ZORYVE.
• Began the build-out of an internal, targeted sales team dedicated to primary care and pediatric healthcare providers with the hiring of Katie Swolfs as the head of Primary Care Franchise. Katie brings an incredible breadth and depth of commercial experience to the role, having held a series of strategic and operational senior leadership positions for dermatology-focused companies.

Clinical and Regulatory Developments

• Submitted an sNDA for ZORYVE cream 0.05% to the FDA to expand the indication for the treatment of mild to moderate atopic dermatitis in infants ages 3 to 24 months.
• Presented new results from the INTEGUMENT-INFANT Phase 2 trial in infants with atopic dermatitis in a late-breaking session at the 2026 American Academy of Dermatology (AAD) Annual Meeting, highlighting that investigational ZORYVE cream 0.05% was well tolerated, improved signs and symptoms of mild to moderate atopic dermatitis, and demonstrated a rapid improvement in itch in as little as 10 minutes in nearly half of infants, as reported by caregivers.
• Prescription Drug User Fee Act target action date for ZORYVE cream 0.3% for the treatment of plaque psoriasis down to 2 years of age is assigned for June 29, 2026.
• Completed enrollment in the 0.3% ZORYVE foam MUSE trial in children with plaque psoriasis of the scalp and body ages 2 to 11 years intended to serve as the basis for an sNDA submission to expand the indication for this age group.
• The Company continues to enroll patients in Phase 2 proof-of-concept studies with ZORYVE foam 0.3% for the treatment of vitiligo and hidradenitis suppurativa, and expects to report results, as well as decisions on program advancement in these indications, in the fourth quarter of 2026 and the first quarter of 2027, respectively.
• Initiated Phase 1a/1b, first-in-human study to evaluate safety and tolerability for investigational ARQ-234, a fusion protein that is a potent and highly selective checkpoint agonist of the CD200 receptor, in healthy volunteers and adults with moderate to severe atopic dermatitis.

Corporate Updates

• ZORYVE cream 0.05% received a strong recommendation in the AAD Clinical Practice Guidelines for the management of pediatric atopic dermatitis.
• Sustained positive cash flow, generating $2.2 million of positive cash flow from operating activities in Q1 2026.

First Quarter 2026 Summary Financial Results

Net Product revenues for the quarter ended March 31, 2026 were $105.4 million compared to $63.8 million for the corresponding period in 2025. Revenues for the quarter were $32.7 million for ZORYVE (roflumilast) cream 0.3%, $49.6 million for ZORYVE (roflumilast) topical foam 0.3%, $21.7 million for ZORYVE (roflumilast) cream 0.15%, and $1.4 million for ZORYVE (roflumilast) cream 0.05%. Year-over-year increases were due to strong unit demand as well as improvements in gross-to-net sales deductions. In addition, the first quarter of 2025 included Other revenues of $2.0 million related to license revenues received in connection with the Huadong Pharmaceutical collaboration and licensing agreement covering China and Greater Asia.

Cost of sales for the quarter ended March 31, 2026 were $9.8 million compared to $8.8 million for the corresponding period in 2025, due to increased ZORYVE sales.

Research and development (R&D) expenses for the quarter ended March 31, 2026 were $30.6 million compared to $17.5 million for the corresponding period in 2025. The year-over-year increase was primarily due to the $10.0 million milestone obligation to former stockholders of Ducentis triggered by the dosing of the first patient in the ARQ-234 Phase 1a/1b trial.

Selling, general, and administrative (SG&A) expenses for the quarter ended March 31, 2026 were $74.1 million compared to $64.0 million for the corresponding period in 2025. The year-over-year increase was primarily due to compensation and personnel-related expenses and to higher sales and marketing expenses related to the Company’s continued commercialization efforts for ZORYVE.

Net loss was $11.3 million, or $0.09 per basic and diluted share, for the quarter ended March 31, 2026 compared to $25.1 million, or $0.20 per basic and diluted share, for the corresponding period in 2025. Cash, cash equivalents, restricted cash, and marketable securities were $224.3 million as of March 31, 2026, compared to $221.3 million as of December 31, 2025. Net cash provided by operating activities was $2.2 million during the first quarter.

Financial Guidance

The Company continues to anticipate net product revenue of between $480 million and $495 million for the full year 2026.

Conference Call and Webcast

Arcutis management will host a conference call and webcast today at 4:30 PM ET to discuss the financial results for the quarter and provide a business update. The webcast for this conference call may be accessed in the “Events” section of the Company’s website. A replay of the webcast will be available on the Arcutis website following the call.

About Arcutis

Arcutis Biotherapeutics, Inc. (Nasdaq: ARQT) is a commercial-stage medical dermatology company that champions meaningful innovation to address the urgent needs of individuals living with immune-mediated dermatological diseases and conditions. With a commitment to solving the most persistent patient challenges in dermatology, Arcutis has a growing portfolio of advanced targeted topicals approved to treat three major inflammatory skin diseases. Arcutis’ unique dermatology development platform coupled with our dermatology expertise allows us to develop differentiated therapies against biologically validated targets, and has produced a robust pipeline for a range of inflammatory dermatological conditions. For more information, visit www.arcutis.com or follow Arcutis on LinkedIn, Facebook, Instagram and X.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. For example, statements contained in this press release regarding matters that are not historical facts are forward-looking statements. These statements are based on the Company’s current beliefs and expectations. Such forward-looking statements include, but are not limited to, statements regarding the potential to address large markets with significant unmet need; the development, submission, and potential approval, and potential commercialization of product candidates and expanded indications; the potential commercial success and growth of ZORYVE in plaque psoriasis, seborrheic dermatitis, and atopic dermatitis; anticipated net product sales for 2026; the expansion of the Company’s dermatology sales force and the success of the Company’s efforts in primary care and pediatric health care providers; the Company’s ability to maintain positive operating cash flow on a quarterly basis; the building and advancement of the Company’s pipeline; and the timing of regulatory filings. These statements involve substantial known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements and you should not place undue reliance on our forward-looking statements. Risks and uncertainties that may cause our actual results to differ include risks inherent in the clinical development process and regulatory approval process, the timing of regulatory filings, the timing, expenses, and success of our commercialization efforts, including uncertainty of future commercial sales and related items that can impact net sales, and our ability to defend our intellectual property. For a further description of the risks and uncertainties applicable to our business, see the “Risk Factors” section of our Form 10-K filed with U.S. Securities and Exchange Commission (SEC) on February 25, 2026, as well as any subsequent filings with the SEC. Any forward-looking statements that the Company makes in this press release are made pursuant to the Private Securities Litigation Reform Act of 1995, as amended, and speak only as of the date of this press release. Except as required by law, we undertake no obligation to revise or update information herein to reflect events or circumstances in the future, even if new information becomes available.

Contacts:

Media



Amanda Sheldon, head of Corporate Communications
[email protected] 

Investors



Brian Schoelkopf, head of Investor Relations
[email protected] 

ARCUTIS BIOTHERAPEUTICS, INC. Condensed Consolidated Balance Sheets (in thousands) (unaudited)
	March 31,				December 31,
		2026				2025
ASSETS
Current assets:
Cash and cash equivalents	$	34,762			$	42,907
Restricted cash		308				308
Marketable securities		189,238				178,075
Trade receivable, net		144,377				146,229
Inventory		37,391				22,634
Prepaid expenses and other current assets		31,980				21,079
Total current assets		438,056				411,232
Property and equipment, net		1,040				1,043
Intangible assets, net		14,250				14,812
Operating lease right-of-use asset		4,361				4,467
Other assets		2,296				1,419
Total assets	$	460,003			$	432,973
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	18,296			$	12,528
Current portion of long-term debt, net		7,950				1,000
Accrued and other current liabilities		136,957				116,310
Total current liabilities		163,203				129,838
Operating lease liability, long-term		5,251				5,266
Long-term debt, net		101,470				107,959
Other long-term liabilities		431				431
Total liabilities		270,355				243,494
Stockholders’ equity:
Common stock		12				12
Additional paid-in capital		1,339,529				1,327,595
Accumulated other comprehensive loss		(514	)			(44	)
Accumulated deficit		(1,149,379	)			(1,138,084	)
Total stockholders’ equity		189,648				189,479
Total liabilities and stockholders’ equity	$	460,003			$	432,973

ARCUTIS BIOTHERAPEUTICS, INC. Condensed Consolidated Statements of Operations (in thousands, except per share data) (unaudited)
	Three Months Ended March 31,
		2026				2025
Revenues:
Product revenue, net	$	105,398			$	63,846
Other revenue		—				2,000
Total revenues		105,398				65,846
Operating expenses:
Cost of sales		9,784				8,830
Research and development		30,627				17,543
Selling, general, and administrative		74,076				64,002
Total operating expenses		114,487				90,375
Loss from operations		(9,089	)			(24,529	)
Other income (expense):
Interest income		2,275				2,537
Interest expense		(4,368	)			(2,982	)
Other income (expense), net		(20	)			193
Loss before income taxes		(11,202	)			(24,781	)
Provision for income taxes		93				279
Net loss	$	(11,295	)		$	(25,060	)
Net loss per share, basic and diluted	$	(0.09	)		$	(0.20	)
Weighted-average shares used in computing net loss per share, basic and diluted		129,365				126,037