Elbit Systems Ltd. (ESLT)

How it makes money

Most revenue comes from long-cycle government contracts — fixed-price or cost-plus agreements with the Israeli Ministry of Defense, NATO allies and other foreign militaries — that are booked into a multi-year order backlog well before the equipment is delivered. That backlog, currently over $25 billion, gives revenue strong visibility years in advance, but fixed-price contracts also mean Elbit bears the risk if a program's actual costs exceed what was quoted at signing.

Revenue by segment

Selling defense equipment requires years of security clearances, integration into a customer's existing weapons platforms, and trust built through decades of deliveries — barriers that discourage militaries from switching suppliers mid-program. Elbit's deepest relationship, with the Israeli Ministry of Defense, is especially hard for any foreign rival to contest, but Elbit still competes hard for export contracts against larger global defense primes.

Government defense budgets, not household or corporate spending, drive Elbit's revenue, so demand tends to hold up or even rise in economic downturns. Current growth is further boosted by heightened Israeli and European defense spending following recent regional conflict, though that also means demand is unusually concentrated in one geopolitical situation that could eventually ease.

Key risks

• Concentration in Israeli defense spending — Israel represents about a third of revenue, currently elevated by wartime demand; a return to more normal Israeli defense spending, or a shift in government priorities, would remove a significant source of growth.
• Regional conflict and operational disruption — Ongoing conflict in the region has disrupted supply chains, delayed shipments, and pulled employees into military reserve duty, and some facilities have been targeted by hostile groups.
• Export and country restrictions — Some governments restrict or avoid contracts with Israeli defense companies for political reasons, and those restrictions can expand or tighten with little warning, closing off specific export markets.
• Fixed-price contract execution risk — Many contracts are signed at a fixed price agreed years before delivery; if actual development or production costs run higher than estimated, Elbit absorbs the difference rather than the customer.
• Currency and cost-base mismatch — A large share of costs is incurred in Israeli shekels while much of revenue is priced in dollars or other currencies, so exchange-rate swings can affect margins independent of underlying business performance.

Top customers account for 32% of revenue

Israel, largely the Israeli Ministry of Defense, accounted for 32.2% of 2025 revenue, making it by far the largest single buyer; demand from that one customer has recently been unusually elevated.