Leonardo DRS Raises 2025 Revenue Growth Outlook to 9%-11% on Strong Backlog and Defense Funding

Leonardo DRS has raised its 2025 revenue growth outlook to 9%-11% due to a robust backlog and defense funding tailwinds. In Q2 2025, the company reported $853 million in bookings and a total backlog of $8.6 billion. CEO William J. Lynn said the company is seeing sustained momentum in capturing customer demand and expanding profitability and margin.

Leonardo DRS (NASDAQ:DRS) has revised its 2025 revenue growth outlook to 9%-11%, driven by a robust backlog and favorable defense funding tailwinds. The company reported $853 million in bookings and a total backlog of $8.6 billion during the second quarter of 2025. CEO William J. Lynn noted sustained momentum in capturing customer demand and expanding profitability and margin.

The company's strong performance in the first half of 2025 has led to an upward revision of its full-year revenue guidance. Leonardo DRS now expects annual revenue between $3.525 billion and $3.600 billion, up from the previous guidance of $3.425 billion to $3.525 billion. This represents a 9% to 11% increase from 2024, compared to the prior guidance of 6% to 9% growth.

The company's adjusted diluted earnings per share (EPS) guidance has also been raised to $1.06-$1.11, reflecting a 14% to 19% growth, compared to the prior guidance of $1.02-$1.08. The adjusted EBITDA range was slightly narrowed to $437-$453 million while maintaining the same growth rate of 9% to 13%.

Leonardo DRS attributed the upward revision to strong first-half performance, consistent customer demand, and rising backlog, while also accounting for a more dynamic operating environment, higher R&D investments, and elevated raw material costs, particularly germanium.

The company's presentation highlighted the resilience of customer demand across its innovative technology offerings, supporting the increased full-year revenue growth expectations. However, management acknowledged the challenges of executing in a dynamic and complex operating environment.

The decision to incorporate higher R&D investment suggests a strategic focus on maintaining technological leadership in defense electronics, advanced sensing, and computing systems. The specific mention of elevated raw material input costs for germanium indicates a potential supply chain challenge that the company is navigating.

Despite these challenges, the company's consistent performance across both quarters of 2025 thus far demonstrates its ability to execute effectively while positioning itself for continued growth in the defense technology sector.

References:
[1] https://in.investing.com/news/company-news/leonardo-drs-q2-2025-slides-reveal-profit-surge-and-raised-revenue-outlook-93CH-4934326
[2] https://www.fool.com/earnings/call-transcripts/2025/07/30/leonardo-drs-drs-q2-2025-earnings-transcript/