RTX Has a $268 Billion Backlog. About a Quarter of It Is Next Year's Revenue.

There is a number RTX likes to lead with, and it is genuinely enormous: $268 billion of backlog at the end of 2025, up from $218 billion a year earlier.⁹ The pitch writes itself - here is a company with three years of revenue already booked, the missiles already ordered, the engines already sold, the cash flow visible out past the horizon. In a world that prizes predictability, RTX appears to have bottled it. The headline begs to be read as certainty.

The official story is that RTX is a defense company sitting on a giant defense backlog that locks in years of revenue. Nearly every word of that compresses something the filings say more carefully. It isn't mostly defense. It isn't mostly near-term. And a booked order is not a banked profit.

The quarter that's real, and the three-quarters that's a promise

Start with the line RTX prints in its own 10-K and the bulls quietly skip. Of that $268 billion remaining performance obligation, the company expects only about 25% to be recognized as revenue within the next twelve months.² The same ~25% figure appears against the prior year's $218 billion backlog too¹ - this is not a one-off, it is the structure. So the visible-next-year piece is roughly a quarter. The other three-quarters is a multi-year promise, and a multi-year promise is exactly where program slippage, cost escalation, and cancellation live. Backlog tells you what has been ordered. It does not tell you when, at what margin, or whether the buyer changes its mind.

It says 'defense.' The order book says 'airlines.'

The second slip is the word defense. RTX makes Patriot interceptors and Tomahawks, so the mental shortcut is that the backlog is a wall of government contracts. The mix says otherwise. As of the first quarter of 2024, of a $202 billion backlog, $125 billion was commercial and only $77 billion was defense.⁴ By the third quarter of 2024 the record $221 billion broke down to $131 billion commercial and $90 billion defense.⁵ By the third quarter of 2025, $148 billion commercial against $103 billion defense.¹⁰ Commercial has won every quarter. Collins Aerospace and Pratt & Whitney engines - the parts that ride on airlines buying jets, not Congress buying missiles - are the larger half of the book. The 'defense visibility' thesis is leaning on the smaller pile.

And it cuts both ways. Because commercial leads the book, RTX's so-called defense visibility is partly exposure to airline order cycles and engine demand - a different risk than a multi-decade weapons program, and a more cyclical one. The backlog grows because book-to-bill runs above one; in early 2024 it hit 1.34x.⁴ That is healthy. It is also not the same thing as a guaranteed government revenue stream.

What the word 'backlog' is built to leave out

Here is the subtle part, and it runs in RTX's favor as often as against it. The company defines backlog as its remaining performance obligations - firm orders for goods and services not yet delivered - and explicitly excludes unexercised contract options and potential orders under IDIQ contracts.³ In plain terms: the headline number is the floor of what's been firmly committed, not the ceiling of what's addressable. The full pipeline is larger and far less certain than the filed figure. So the same definition that disciplines the number also means the number is neither a forecast nor a cap. It is a snapshot of firm commitments, useful precisely because of what it refuses to count.

The steelman: isn't a giant firm order book genuinely valuable?

The fair objection is that I'm being too cute, and the backlog is exactly the asset it appears to be. It is filed with the SEC, it grew $50 billion in a single year⁹, book-to-bill is above one⁴, and management is plainly building toward it - RTX poured over $2.6 billion of capex into manufacturing capacity in 2024 specifically to convert that book into shareowner value.⁶ All true, and it matters. A growing wall of firm orders is a real signal that demand is durable and that RTX has the contracts others wish they had. The point is not that the backlog is fake. The point is that visibility and certainty are different words. Backlog gives RTX an unusually clear view of the demand ahead. It does not tell you the timing, the mix, or the margin - and on a fixed-price defense program, the margin is the whole game. The signal is strong. The guarantee is not in it.

RTX's backlog is real, growing, and worth having - and it is not the thing the headline says it is. Roughly a quarter is next year's revenue; most of the rest is a years-out commitment exposed to program risk. Most of the book is airlines, not arsenals. And a booked order says nothing about the margin that survives delivery. The number is a floor of demand, not a ceiling of certainty. The genius isn't that RTX has bottled the future. It's that it has bottled enough of the present to see the shape of it - which is a smaller, truer claim, and the only one the 10-K will sign its name to.