📚Results
• 🟢 Revenue: C$27.3M (+4% YoY); excluding a C$1.5M revenue reversal, revenue would have been C$28.8M (+9%).
• 🟢 Gross profit: C$16.2M (+10% YoY); gross margin expanded to 59% from 56%.
• 🟢 Adjusted EBITDA: C$5.0M (+7% YoY); underlying EBITDA growth was +26% excluding the integration-project impact.
• 🟡 Adjusted EBITDA margin: 18%, unchanged YoY; 20% excluding the revenue reversal impact.
• 🔴 Net loss: C$7.5M vs. C$0.7M loss in Q2 2025, primarily impacted by a C$6.9M non-recurring loss and arbitration-related provision.
• 🟢 Balance sheet: C$91.3M cash and C$151.8M working capital, with minimal net debt following the Covelya acquisition.
• 🟢 New orders: >C$27M during the quarter; announced 2026 orders reached approximately C$355M combined for Kraken and Covelya.
📌Key Takeaways
• 🟢 Underlying operating performance was significantly stronger than headline revenue suggests, with the C$1.5M revenue reversal masking 9% organic revenue growth and 26% Adjusted EBITDA growth.
• 🟢 Gross margin expanded three percentage points to 59%, demonstrating improving economics despite continued investment in manufacturing capacity.
• 🟢 Demand remains strong across sonar, subsea batteries, navigation, monitoring and autonomous underwater systems, with more than C$27M of additional orders secured since July 2.
• 🟢 The new long-term Master Supply Agreement for subsea batteries with an international XL-UUV manufacturer strengthens Kraken's position in the rapidly developing unmanned underwater vehicle market.
• 🟢 The Covelya acquisition closed on July 2, making Q3 the first quarter with combined results and significantly expanding Kraken's addressable market across subsea defence and commercial applications.
• 🟡 Capital expenditure increased to C$8.9M from C$6.3M as Kraken invests in marine assets, manufacturing capacity and equipment to support future growth.
📊2026 Outlook
• 🟢 Revenue: C$290M–C$320M.
• 🟢 Adjusted EBITDA: C$65M–C$75M.
• 🟢 Adjusted EBITDA margin: 22%–23%.
• 🟡 Capital expenditures / intangible assets: C$27M–C$33M.
• 🟢 Guidance unchanged despite the Covelya integration, with the outlook including a half-year contribution from Covelya.
• 🟢 Growth is expected to be driven by the combined portfolio across subsea power, sensors, integrated systems and services, with strong defence demand for UUV mine-countermeasure and critical underwater-infrastructure applications.
💬Management Commentary
CEO Greg Reid said the Q2 and year-to-date results reflect continued investment in long-term growth, supported by new product orders, an expanding customer base and increased manufacturing capacity. He described the Covelya acquisition as a major inflection point, significantly expanding Kraken's total addressable market and strengthening its position across subsea defence and commercial markets.