As previously released on March 3, 2026 (the "March 3 News Release"), the Company entered into a definitive agreement to acquire Covelya Group Limited ("Covelya Group"), a leading international provider of mission-critical underwater technology solutions, for total consideration of $615 million, subject to adjustment (the "Covelya Acquisition"). For further details on the Covelya Acquisition, please see the March 3 News Release.
KEY HIGHLIGHTS
Q1 2026 revenue of $21.7 million, up 35% from Q1 2025, and Adjusted EBITDA1 of $3.0 million.
Product revenue grew 50% from subsea battery and Synthetic Aperture Sonar ("SAS") demand.
Demand for Kraken's products increased further bringing product orders in 2026 to $97 million.
Year-to-date order intake for Covelya's products also strengthened and now total $165 million.
Signed an agreement with SEFINE SISAM to integrate KATFISH into their mission planning software providing a fully integrated autonomous solution for seabed warfare and mine countermeasures.
The Covelya Acquisition remains on track to close near the end of the second quarter 2026.
Reiterating stand-alone 2026 outlook for revenue of $165 million to $175 million and Adjusted EBITDA of $40 million to $50 million. At the mid-point, this represents annual revenue growth of over 65% and EBITDA growth of 80%. New guidance that reflects the Covelya Acquisition will be issued at closing.
MANAGEMENT COMMENTS
"Our first quarter results were in-line with our expectations, with financial performance expected to improve throughout 2026, consistent with prior years due to the seasonal nature of our business," said Greg Reid, President and CEO of Kraken Robotics. "We continue to execute on securing new products orders, including growing traction with new defence customers, and recently expanded our battery manufacturing capacity to support anticipated growth. Industry fundamentals across our business remain strong, driven by the growing demand for autonomous underwater vehicles in the defence and offshore energy sectors. This increasing demand presents a significant opportunity for Kraken to drive future growth. Looking ahead, we are excited for the expected closing of our strategic combination with Covelya. This transformative acquisition is expected to accelerate our growth and position Kraken as a major supplier of mission-critical subsea intelligence solutions for maritime security and offshore energy."
Q1 2026 FINANCIAL HIGHLIGHTS
Consolidated revenue increased to $21.7 million, up 35% from $16.1 million in Q1 2025. Revenue growth was primarily driven by increased demand in Kraken's SeaPower subsea batteries and SAS products, in addition to growth in the subsea services division. Q1 2026 results, and service revenue, also included the contribution from the acquisition of 3D at Depth, Inc., which was completed in April 2025.
Product revenue totaled $13.8 million, up 50% from $9.2 million in Q1 2025, driven by increased demand for the Company's SAS and subsea battery products.
Service revenue of $7.9 million in Q1 2026 was up 14% in comparison to $7.0 million in Q1 2025. Quarterly revenues and year-over-year comparisons can fluctuate significantly due to seasonality in the offshore services business.
Gross profit2 increased to $12.2 million, up 21% from $10.1 million in Q1 2025. The Company's gross profit margin2 during the quarter equated to 56%, compared to 63%. Gross profit margin can fluctuate within a given quarter based on the mix of product and service revenue.
Adjusted EBITDA of $3.0 million in Q1 2026, was up 7% from $2.8 million in Q1 2025. The Company's Adjusted EBITDA margin3 equated to 14%, down from 17% in Q1 2025. Adjusted EBITDA margin for Q1 2026 was slightly impacted by higher administrative expenses reflecting a larger employee base. Kraken's Adjusted EBITDA margin is expected to improve throughout 2026 based on expected revenue growth. The mid-point of Kraken's annual guidance implies an Adjusted EBITDA margin of over 26%.
Total assets on March 31, 2026, were $715.9 million, compared to $179.0 million on March 31, 2025. Total assets at the end of Q1 2026 included $394.5 million of subscription receipt proceeds held in escrow from the Company's March 3, 2026 public offering, which was completed to partially fund the Covelya Acquisition, as detailed later in this release.
Long-term obligations and lease liabilities at the end of the quarter were $38.4 million, compared to $30.5 million in Q1 2025. Kraken maintains a strong balance sheet with a cash position of $108.7 million as at March 31, 2026, up from $59.3 million at the end of Q1 2025, and working capital of $162.4 million, up from $94.6 million at the end of Q1 2025.
Capital expenditures/intangible assets purchased were $7.0 million in the quarter, compared to $2.8 million in Q1 2025. This increase in growth capital reflects remaining expenditures related to Kraken's new subsea power manufacturing facility in addition to new marine assets to support revenue growth. The Company expects more moderate capital spending during the remainder of 2026, with an annual budget of $15 million to $18 million, as highlighted later in the release.
The Company reported a net loss of $3.3 million in Q1 2026, or ($0.01) per share diluted, compared to net income of $0.2 million, or $0.00 per share diluted, in the comparable quarter in the prior year period. Excluding restructuring and acquisition costs, the Company reported Adjusted net income4 in Q1 2026 of $0.3 million, or $0.00 per share diluted, compared to $0.7 million, or $0.00 per share diluted in the prior year period.
OTHER COMPANY HIGHLIGHTS
During Q1 2026, Kraken completed a successful demonstration of its new KATFISH towed SAS and autonomous launch and recovery systems (LARS) from SEFINE's RD-22 unmanned surface vessel (USV). The demonstration, which took place off the coast of Istanbul, Türkiye, focused on rapid detection and classification of mine-like objects and critical underwater infrastructure. Subsequent to this demonstration, Kraken signed a memorandum of understanding (MOU) with SEFINE SISAM to integrate KATFISH into its mission planning software and develop automatic target recognition (ATR) capabilities for Kraken SAS. Together, both companies are advancing autonomous solutions for seabed warfare and mine countermeasures. This MOU was previously announced on May 6, 2026.
As previously announced, Kraken entered into an agreement to acquire Covelya Group during Q1 2026. This accretive acquisition aligns with the Company's strategy to deliver market-leading value to customers through a portfolio of leading-edge technologies and a culture centered around innovation. The Covelya Acquisition is expected to position Kraken as a major supplier of dual-use subsea technology, expand its product offering and total addressable market, allow for deeper relationships with its customers, improve its business diversification, and bolster its technological capabilities. During Q1 2026, Kraken also completed a $402.5 million public offering of subscription receipts (the "Offering") at a price of $8.50 per subscription receipt. The gross proceeds of the Offering, less a portion of the reimbursable expenses and commission payable to the underwriters in connection with the Offering, were deposited in escrow with an escrow agent pending the satisfaction of certain release conditions. The Company intends to use the net proceeds of the Offering to partially fund the Covelya Acquisition. For additional details, see the Company's news releases dated March 3, 2026 and March 12, 2026.
Subsequent to the quarter, the Company attended the 2026 edition of SeaSEC Challenge Weeks, "Data2Sea", an advanced maritime security exercise focused on the protection of critical underwater infrastructure. Kraken supported various end users in exercises on pre-defined mission sets with the use of its SAS and MP-SAS on multiple unmanned underwater vehicles (UUVs). Established by the Ministries of Defence of Germany, the Netherlands, Finland, Denmark, Sweden, and Norway, SeaSEC is a collaborative platform with a mission to protect the continuity of energy and data supply.
2026 ORDERS, KRAKEN & COVELYA
Since releasing its 2025 year-end results, Kraken has secured additional product orders for its SeaPower subsea batteries and SAS. Announced orders in 2026 now total approximately $97 million, up from $87 million as previously reported on April 16, 2026.
Covelya has also continued to generate solid order intake, with orders in 2026 at approximately $165 million, up from $135 million as previously reported on April 16, 2026.
2026 FINANCIAL GUIDANCE
The Company remains on track with its annual financial guidance, which remains unchanged from the guidance last provided on April 16, 2026. Consistent with prior years, revenue in 2026 is expected to be weighted toward the second half of the year.
Kraken expects revenue in 2026 to be between $165 million and $175 million and Adjusted EBITDA5 to be between $40 million to $50 million, excluding any contribution from the Covelya Acquisition. Capital expenditures are expected to range from $15 million to $18 million.
A summary table of the Company's 2026 guidance range and a comparison to 2025 results is provided below. Kraken plans to release updated annual guidance for the combined company upon closing of the Covelya Acquisition, which is expected near the end of the second quarter 2026, subject to the satisfaction of customary closing conditions and receipt of required regulatory approvals.
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