Image source: Kratos Defense & Security Solutions. What: Shares of Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) jumped as much as 21.8% on Friday after reporting second-quarter earnings. At 1:40 p.m. EDT, shares had pulled back slightly to an 18.4% gain for the day. So what: Total revenue rose 5% to $168.2 million and net loss declined 31% to $10.4 million, or $0.17 per share. Adjusted for one-time items and non-cash amortization expenses, the company earned $0.01 per share compared to the $0.07 loss analysts were expecting. Satellite, technology, and training improved the most, increasing revenue 21.2% from a year ago to $70.3 million. Unmanned systems also showed improvement, with revenue up 25.3% sequentially to $17.8 million. Now what: Along with the improving results, management thinks the U.S. defense budget has hit bottom and will be a macro driver of growth in the future. And the company is well positioned in satellite and unmanned systems, two long-term growth opportunities. While the business may be improving, it's still experiencing heavy losses on a GAAP (generally accepted accounting principles) basis. And until that stops, I'll sit on the sidelines of this defense stock. A secret billion-dollar stock opportunity The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.