SAIC reported a solid start to QQ1 2026 (calendar year 2026) with revenue of $1.877 billion, up 3.25% year-over-year and 2.12% quarter-over-quarter, underscoring a resilient demand environment for US government IT services. Despite top-line progress, profitability traces a modest trajectory: gross margin was 11.13%, operating margin 6.45%, and net margin 3.62%, yielding net income of $68 million and EPS of $1.43 (diluted $1.42). EBITDA stood at $152 million with an EBITDA margin of 8.10%, illustrating a still-meaningful but constrained profitability profile against the backdrop of large intangible assets and ongoing modernization spend.
Cash flow remained constructive, with $100 million in net cash from operating activities and free cash flow of $100 million. However, liquidity metrics are tight: cash and cash equivalents at period end were $47 million (cash at end of period $55 million per closing balance), while total debt totaled $2.441 billion (net debt $2.394 billion), contributing to a current ratio of 0.78 and a debt-to-equity ratio of 1.62. The company allocated capital toward shareholder value via $142 million in share repurchases and $19 million in dividends, with debt repayments of $61 million during the period.
Looking ahead, the absence of explicit quarterly guidance in the provided materials necessitates a cautious stance. Growth is likely to hinge on continued DoD modernization programs, cloud migration initiatives, and efficiency improvements that could bolster margins. Investors should monitor backlog development, program awards, and cadence of government funding, as well as ongoing leverage management and cash flow generation. Overall, SAIC remains a large-scale incumbent in a defensible but capital-intensive market, with a balanced but selectively favorable risk-reward profile given its government-centric revenue base.