Leonardo DRS, Inc.
Leonardo DRS, Inc. designs and builds advanced defense technologies for U.S. national security customers and allied defense forces. Its portfolio centers on sensing, network computing, force protection, and electric power and propulsion systems used on priority military platforms, especially naval and air-defense programs.
Fiscal year 2025 · change from previous year
Development 2020–2025
Business
Share of revenueSensors, infrared systems, and network computing products that support detection, targeting, and mission processing.
Counter-UAS, short-range air defense, and self-protection systems that improve survivability.
Electric power generation, distribution, and propulsion technologies for next-generation naval platforms.
Smaller programs, licenses, and support services across defense and allied markets.
Customers
The U.S. government is the company’s core customer, with the Department of Defense accounting for most revenue through the Navy, Army, Air Force, and other agencies. Leonardo DRS also sells to foreign governments and, to a lesser extent, commercial customers in the U.S. and abroad, mainly for defense applications. Demand is driven by platform modernization, survivability, sensing, and power needs rather than broad consumer adoption.
Buys advanced sensing, computing, force protection, and power systems for military platforms and modernization programs.
Buys electric power and propulsion, shipboard electronics, and related mission systems for naval vessels.
Buys counter-UAS, SHORAD, infrared sensing, and soldier protection technologies.
Buy defense applications through international sales, foreign military sales, and foreign military financing.
Buy smaller volumes of specialized defense and security technologies and support services.
Strategy
Leonardo DRS is focused on being a balanced defense technology company with strong positions in priority DoD capability areas. The strategy emphasizes sensing, AI-enabled computing, self-protection, and naval power systems, while using acquisitions and selective divestitures to broaden technology access and customer reach. The company also aims to convert backlog into execution through program performance, speed, and agility.
These programs align with long-cycle defense spending and create embedded positions.
Customers are shifting toward interconnected, multi-domain systems that require more computing and sensing.
Acquisitions can add technologies and customers, while divestitures can improve strategic focus.
Geography
The business is overwhelmingly U.S.-centric, with about 80% of revenue tied directly or indirectly to the U.S. government. International sales were about 9% of revenue in the first nine months of 2025, reflecting foreign military and direct commercial demand, while the remaining revenue comes from foreign governments and limited commercial activity. Geography matters because U.S. budget timing and priorities drive the largest revenue base, while overseas sales add growth but also foreign-exchange and geopolitical exposure.
Risks
The company is highly exposed to U.S. defense spending, so budget delays, shutdowns, or shifts in DoD priorities can quickly affect bookings and revenue. It also faces execution risk on technically complex, fixed-price defense contracts, plus supply-chain, cyber, and intellectual property risks that are common in defense electronics and systems businesses. International sales add growth potential but also foreign-exchange and geopolitical exposure.
- U.S. defense spending concentrationImpact: HighLikelihood: Medium
Most revenue depends on DoD appropriations and program timing, so budget disruptions can reduce demand.
Exposure - Program execution on complex contractsImpact: HighLikelihood: Low
Defense systems are technologically complex and often fixed-price, so poor execution can compress margins.
Exposure - Cybersecurity and IT disruptionImpact: High
Defense contractors are attractive targets and outages can affect operations, IP, and customer trust.
Exposure - Supplier and subcontractor disruptionImpact: MediumLikelihood: Medium
Key components and services may not arrive on time, delaying production and delivery.
Exposure - Foreign exchange and geopolitical exposureImpact: MediumLikelihood: Medium
International sales can be affected by currency moves and changing defense demand abroad.
Exposure: Foreign military sales and direct commercial sales
Accounting
Judgemental itemsMost contracts use percentage-of-completion accounting, so revised estimates can change current-period revenue and profit.
Impact: Revenue and operating margin timing
Management estimates on complex defense programs can lead to catch-up adjustments and charges when assumptions change.
Impact: Gross margin and operating earnings
Acquired assets and goodwill are large enough that underperformance could trigger write-downs.
Impact: Non-cash impairment expense and equity
Future ownership changes or tax law constraints could limit use of net operating losses.
Impact: Tax expense and cash taxes
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Last updated: 24/09/2026