Detailed narrative
Revenue growth and margin-expansion trajectory
Q3 2025 revenue reached $1.922B, up 12% YoY (18% for the nine months), the seventh consecutive quarter of double-digit growth. GAAP gross margin rose to 24.9% from 24.0% (non-GAAP 25.2% vs 24.4%), and non-GAAP operating margin expanded to 9.7% from 8.2%.
Management attributes the ~1% gross-profitability and ~0.5% operating-expense improvement to better backlog profitability and operational-excellence initiatives (one operational ERP system, robots/cobots in ammunition/munition factories, and AI use), plus scale-driven conversion. This was described as the first quarter showing simultaneous expansion in both gross and operating profitability.
Record backlog and geographic shift toward Europe
Order backlog hit a record $25.2B at September 30, 2025 — $3.1B higher YoY and $1.4B higher sequentially — with the quarter's increase coming mainly from new European orders. Roughly 69% of backlog is now from outside Israel, and about 38% is scheduled for delivery in the remainder of 2025 and 2026, with the rest in 2027 and beyond.
Of the $1.4B sequential increase, $200M came from Israel and $1.2B from outside Israel. Management targets flattish Israel backlog with growth concentrated in Europe going forward⏳.
Segment performance divergence
Land surged 41% YoY (44% for nine months) on ammunition and munition sales in Israel and Europe; C4I and Cyber rose 14% on radio and command-and-control sales in Europe; ISTAR and EW grew 5% on electro-optic, EW and high-power laser sales in Israel.
Aerospace declined 3% on lower PGM sales in Asia Pacific (partly offset by PGM in Israel and UAS in Europe), and Elbit Systems of America fell 2% on weaker electronic-systems and medical-instrument sales, partly offset by Maritime and Warfighter systems.
Cash generation and shareholder return
Quarterly free cash flow was $101M, the fifth consecutive quarter of positive FCF and continued cash-conversion improvement. Nine-month operating cash flow jumped to $461M from $82.5M a year earlier, driven mainly by the strong increase in net income. Financial expenses fell to $34.5M from $45M on lower average net debt, and the effective tax rate dropped to 8.2% from 14.6% on higher deferred tax assets.
The Board declared a $0.75 per-share dividend payable January 5, 2026.
Major contract awards and demand catalysts
Elbit announced its largest-ever contract — an ~$2.3B international strategic-solution deal over 8 years — plus a $1.635B (stated 'USD 1.625 billion (sic)') 5-year contract with a European country covering long-range precision-strike artillery-rocket systems, unmanned reconnaissance and loitering systems, ISTAR/SIGINT/COMINT/EW, EO and night-vision, combat-vehicle upgrades and protection.
Additional orders included Hermes 900 drones, advanced airborne munitions for the IMOD, and a $260M DIRCM contract for Airbus. Post the 12-day Iran campaign, management cites growing interest in Hermes drones, EW systems and training platforms.
Directed energy, UAVs and U.S. expansion
Management sees energy weapons as a key future growth engine: Elbit leads Israel's airborne high-power laser (still in development) and supplies the laser source for the ground IRON BEAM system, expecting more Israeli orders next year and international interest. UAV/loitering-munition demand is strong, with the Hermes 900 selected by over 20 international customers since 2011.
In the U.S. — described as a 'home market' — the night-vision and Sparton sonobuoy acquisitions are growing, avionics and Active Protection (Bradley) are performing well, and management is actively exploring further U.S. M&A and border-protection (CBP) opportunities.