Leonardo DRS 2025 Q3 Earnings Beats Expectations with 26.3% Net Income Growth

Leonardo DRS (DRS) reported Q3 2025 earnings that exceeded expectations, with revenue rising 18.2% to $960 million and net income increasing 26.3% to $72 million. The company raised its full-year revenue guidance to $3.55–3.6 billion, reflecting confidence in sustained demand for defense technologies.

Revenue

Leonardo DRS’s total revenue surged 18.2% to $960 million in Q3 2025, driven by strong performance across key segments. The Advanced Sensing and Computing (ASC) division led with $580 million in revenue, while the Integrated Mission Systems (IMS) segment contributed an additional $383 million. Corporate & Eliminations reported a net of -$3 million, rounding out the total. The growth was fueled by robust demand for counter-UAS systems, electric propulsion, naval computing, and infrared sensing programs.

Earnings/Net Income

The company’s EPS increased 22.7% to $0.27, with adjusted EPS at $0.29, marking consistent profitability for six consecutive years. Net income grew to $72 million, a 26.3% year-over-year rise. The EPS and net income growth reflect strong profitability, supported by consistent earnings performance over the past six years.

Post-Earnings Price Action Review

Leonardo DRS has historically demonstrated a 90% success rate in beating revenue estimates over the past five years, with 100% success in the last four quarters. Recent results, including a $35.21 million revenue surprise in Q3 2025, triggered a 1.52% pre-market stock surge. While the company’s 19.6% premium to the S&P 500 suggests valuation risks, its track record of outperforming estimates and strategic exposure to U.S. defense spending position it as a high-conviction growth pick. However, short-term volatility, such as the 20.59% month-to-date stock decline, underscores the need for caution. <visualization dataurl="https://cdn.ainvest.com/news/visual/visual_components/viz_7o0kqsox.json"></visualization>

CEO Commentary

Bill Lynn, CEO, emphasized “broad-based customer demand” driving $1.3 billion in bookings and organic revenue growth. He highlighted progress in strengthening germanium supply and disciplined program execution, reiterating confidence in double-digit revenue growth for 2025.

Guidance

Leonardo DRS raised 2025 revenue guidance to $3.55–3.6 billion and adjusted EPS to $1.07–1.12, while lowering the tax rate to 18%. The company maintained its adjusted EBITDA guidance of $437–453 million and reaffirmed a $0.09 per-share dividend.

Additional News

Key non-earnings updates include CEO Bill Lynn’s retirement effective January 1, 2026, with COO John Baylouny succeeding him. The company also declared a $0.09 per-share dividend and invested $15 million in Hoverfly Technologies, increasing its stake to 25%. Additionally, Leonardo DRS secured a contract to equip Thailand’s Stryker vehicles with C4I systems, expanding its international footprint.

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