stockrowWhat it does
L3Harris Technologies supplies technology and services for defense, national security and civil government customers. Its work spans space, aircraft, land vehicles, ships and cyber systems. Customers use its products to communicate securely, detect and track threats, gather intelligence and power missiles and spacecraft.
The company makes tactical radios and battlefield communications networks, night-vision equipment, sensors and electronic warfare systems. It also integrates equipment into aircraft, supplies satellite systems and payloads, and manufactures rocket propulsion and armament products. Alongside making hardware, L3Harris designs, develops, modernizes and supports systems throughout their working lives.
Its largest customers include U.S. government departments and agencies, the defense contractors that work for them, and international allies. L3Harris can serve as the prime contractor responsible for a program, a subcontractor to another company, or a supplier of components used on different customers’ platforms. Some of its technology also has commercial applications.
The company was founded in 2019 and is headquartered in Melbourne, Florida. Sam Mehta is its chief executive officer. L3Harris had approximately 45,000 employees at the end of fiscal 2025, including approximately 18,000 engineers and scientists. In fiscal 2026, it reorganized from four reporting segments into three.
How it makes money
L3Harris earns revenue by designing, developing, producing, integrating and supporting technology under government and commercial contracts. Its role varies by program: it may deliver a complete system as prime contractor, supply equipment to a prime, or work as a subcontractor. Its products are used across multiple customer platforms.
The company now reports three segments. Space and Mission Systems includes space and missile-warning programs, intelligence and surveillance aircraft, air traffic control modernization and aircraft control systems. Communications and Spectrum Dominance includes secure radios, communications equipment, electronic warfare and counter-drone systems. Missile Solutions provides missile propulsion and related products. In the third quarter of 2026, L3Harris closed the sale of its commercial space propulsion business while retaining an ownership interest.
Contract terms affect how the company is paid and who bears cost overruns. Most production contracts are fixed-price: under firm fixed-price terms, L3Harris keeps cost savings but bears overruns. Development contracts are generally cost-type, under which allowable costs are reimbursed and the company earns a fee that can depend on performance. Some development work is fixed-price. L3Harris also sells tactical radios using a commercial model, investing in products in anticipation of customer demand.
Work can continue beyond an initial sale through modernization, sustainment and lifecycle management. Production programs can involve years of deliveries, although awards and revenue do not arrive evenly. L3Harris reported $6.1 billion in revenue in the third quarter of 2026. At the end of that quarter, its backlog was $53.2 billion.
Customers and how it sells
L3Harris sells to U.S. government departments and agencies, international governments and allies, and aerospace and defense prime contractors. Its customers also include state and local first responders, utilities and transit agencies. NASA uses its space propulsion and technology capabilities, while its mission networks business supplies communications and networking for air traffic management.
In fiscal 2025, most revenue came from U.S. government customers, either directly or through prime contractors. That figure includes foreign military sales funded through the U.S. government. No other customer accounted for more than 5% of revenue.
Revenue associated with end consumers outside the U.S. was $4.8 billion (22% of our revenue) in fiscal 2025. It came from over 100 countries, with no single foreign country accounting for more than 5% of total revenue. This geographic measure includes foreign military sales funded through the U.S. government, so it overlaps with the government-customer measure. International revenue represented 24% of total revenue in the third quarter of 2026.
The company conducts much of its international marketing through subsidiaries in Europe, the Middle East and Africa, Asia-Pacific and Canada. It also uses international marketing organizations and regional sales offices. Products can reach a government customer directly or through another contractor.
Suppliers and costs
L3Harris buys a range of materials, including electronic components, printed circuit boards, metals and plastics. It depends on suppliers and subcontractors for many components and subsystems, and on a limited number of certified suppliers for microelectronics. The company has experienced component shortages following events such as natural disasters and changes in regulations.
Printed circuit board manufacturing constraints reduced third-quarter 2026 revenue growth in Communications and Spectrum Dominance. The company said it had worked through those constraints and did not expect a material effect in the following quarter. For Missile Solutions, L3Harris is investing in supply-chain capacity, including developing multiple sources for bottleneck items and helping existing suppliers modernize equipment.
Costs also include employees, facilities, research and development, and outside services. L3Harris conducts research both with its own funds and under customer contracts. It invested $536 million (2% of total revenue) in company-funded research and development in fiscal 2025. Its fixed-price contracts expose it to cost overruns, while allowable costs on cost-type government contracts are reimbursed. Certain expenses, including some financing and acquisition costs, are not allowable for reimbursement.
- Revenue$21.9B
- Cost of revenue−$16.2B
- Selling, general and administrative−$3.4B
- Operating income$2.2B
Competitive position
L3Harris competes in domestic and international defense markets against large defense companies, including BAE Systems, Boeing, General Dynamics, Lockheed Martin, Northrop Grumman, RTX and Thales. It also identifies Anduril, Ursa Major and Silvus Technologies as non-traditional defense competitors. Companies can compete on one program while partnering or subcontracting on another.
Competition depends on quality and reliability, technology, service, past performance, the ability to integrate complex systems, delivery schedules and cost-effectiveness. Some competitors in each of L3Harris’s markets are larger and can sustain higher research and development spending. In Army radio programs, L3Harris competes for individual radio models, and it has integrated its technology with Anduril and Lockheed Martin in demonstrations of command-and-control networks.
L3Harris owns patents, trade secrets, know-how and other intellectual property. It also designs, integrates and supports complex systems, and its equipment is used on multiple platforms. The company said it was the only company awarded prime contracts across all five space and missile warning and missile defense tranches.
Our reading: The combination of systems integration, program experience and support capabilities provides a competitive advantage, but its strength varies by program because awards remain contested. Our reading: Intellectual property and platform breadth support differentiation, although government patent licenses and competitors’ research spending limit the protection they provide.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| BAE Systems | Domestic and international defense markets | High |
| Boeing | Domestic and international defense markets | High |
| General Dynamics | Domestic and international defense markets | High |
| Lockheed Martin | Defense markets and command-and-control programs | High |
| Northrop Grumman | Domestic and international defense markets | High |
| RTX | Domestic and international defense markets | High |
| Thales | Domestic and international defense markets | High |
| Anduril | Defense markets and command-and-control programs | Medium |
Growth opportunities
L3Harris identifies four areas for continued investment: missiles and missile products; space; resilient communications and electronic warfare; and multi-domain sensing. Its investment plans include expanding manufacturing capacity, developing technology and improving delivery and execution.
In the third quarter of 2026, the company booked $11 billion of contractual backlog for the PAC-3 and THAAD missile programs. It plans to triple THAAD solid rocket motor deliveries in 2027 compared with 2026. L3Harris is also building the Arkansas Advanced Propulsion Facilities, which it expects to increase large solid rocket motor manufacturing capacity six-fold.
In space, the company won a $955 million AMDT3 award and plans to invest roughly $175 million over the three years in research and development. Communications and electronic warfare awards included an $876 million NextGen Jammer low-band contract in the third quarter. For sensing, L3Harris secured $323 million in missionized business jet awards in that quarter, bringing the year-to-date total to nearly $1.5 billion.
The company expects organic revenue growth of 9% to 10% for 2026 and reaffirmed an organic growth expectation of 8% in its 2028 framework. It also expects 2028 free cash flow of $3 billion, down from its previous expectation of $3.5 billion. The revised outlook reflects cash funding of company retirement contributions, lower segment margin and changes in capital expenditure timing.
- $17.8BFY2021
- $17.1BFY2022
- $19.4BFY2023
- $21.3BFY2024
- $21.9BFY2025
- $23.5BFY2026 guidance
Structural risks
- Government funding and competition: L3Harris depends on winning profitable government business in competitive markets. Changes in U.S. or international spending priorities can affect its programs, and funding and contract-award timing can shift revenue between periods.
- Contract execution and costs: Firm fixed-price contracts leave the company responsible for cost overruns. Changes in the estimates used to account for programs can adversely affect financial results. International surveillance aircraft programs can also be large and difficult to time.
- Suppliers and manufacturing: Disruptions or failures among suppliers and subcontractors can delay production or lead to unsatisfactory deliveries. The company relies on a limited number of certified microelectronics suppliers and has experienced component shortages.
- International operations: Foreign business is exposed to changes in export controls, restrictions on transactions, delayed or non-payment, currency fluctuations and uncertainty over local laws and enforcement of contract and intellectual property rights.
- Strategic transactions: Acquisitions and divestitures can involve integration delays, unanticipated costs, retained liabilities and the loss of employees or customers. The planned Missile Solutions initial public offering also involves risks and uncertainties.
- Backlog and capacity execution: L3Harris is investing in missile manufacturing and supplier capacity to deliver on its programs. The company has identified execution of those investments and production as work ahead.
Bottom line
Our reading
Our reading: L3Harris is a defense technology and manufacturing business whose breadth spans individual components, communications equipment and integrated systems. Its backlog and program positions provide work across several years, but government funding and contract timing remain central to demand. The principal execution test is turning that backlog into deliveries while managing supplier constraints, capacity investment and fixed-price costs.