L3Harris Space Business Flat in ‘25, Projects Growth in ‘26 With Reorganized Segments

Why It Matters

The reorganization positions L3Harris to capture growing defense‑space demand and improves visibility into future earnings, signaling stronger competitive footing in multi‑domain warfare markets.

Key Takeaways

• Space segment revenue flat at $6.9 B in 2025.
• Operating margin rose 50 bps to 12.3%.
• 2026 forecast targets $23‑$23.5 B total revenue.
• New SMS segment to generate $11.5 B in 2026.
• Communications & Spectrum Dominance to hit $8 B revenue.

Pulse Analysis

L3Harris’s decision to flatten its Space and Airborne Systems segment in 2025 reflects broader fiscal pressures from the U.S. government shutdown, which postponed contract awards and compressed fourth‑quarter cash flow. Despite the revenue plateau, the company’s disciplined cost‑reduction program boosted operating margins, underscoring its ability to maintain profitability even when top‑line growth stalls. This performance sets a baseline for the upcoming fiscal year, where management expects a more favorable contract environment and a clearer path to revenue expansion.

The 2026 outlook hinges on a strategic realignment that consolidates space capabilities into the newly formed Space & Mission Systems (SMS) segment. By merging SAS with Integrated Mission Solutions, L3Harris aims to deliver integrated, multi‑domain defense solutions that address rising demand for ISR aircraft missionization and advanced space systems. The SMS segment is projected to contribute roughly $11.5 billion, a substantial portion of the $23‑$23.5 billion company‑wide target, indicating that space and mission‑critical technologies will be a primary growth engine.

Complementing SMS, the Communications & Spectrum Dominance (CSD) segment and the Missile Solutions (MSL) segment are each assigned ambitious revenue goals of $8 billion and $4.4 billion respectively. CSD’s inclusion of satellite terminals, electronic warfare, and the Next Generation Jammer program positions L3Harris to capitalize on the accelerating shift toward resilient, software‑defined communications. Meanwhile, MSL leverages Aerojet’s missile expertise to meet heightened defense spending on precision strike capabilities. Together, these reorganized units enhance market clarity for investors and signal L3Harris’s commitment to capturing high‑growth defense sectors.