Science Applications International Corporation (SAIC) reported QQ2 2025 revenue of $1.818 billion, up 4.66% YoY, with a gross profit of $210 million and a gross margin of 11.55%. Operating income reached $134 million (operating margin 7.37%), and net income was $81 million, translating to $1.59 per share (non-diluted) and $1.58 per share (diluted). The quarter delivered meaningful margin expansion versus prior-year levels, contributing to a 107.7% YoY increase in net income and a 112% YoY rise in EPS. EBITDA stood at $165 million (EBITDA margin 9.08%). Cash flow remained robust, with operating cash flow of $138 million and free cash flow of $132 million, supporting a positive cash conversion and an active capital return program. On the balance sheet, SAIC carries a sizable debt load: total debt of $2.325 billion and net debt of approximately $2.277 billion, against total equity of $1.625 billion, yielding a net debt level that suggests elevated leverage even as interest coverage remains solid at about 4.32x. Liquidity metrics show a current and quick ratio of 0.854x and a cash ratio of 0.037x, signaling modest near-term liquidity headroom and potential funding concerns if working capital dynamics materially deteriorate.
Overall, the QQ2 2025 quarter demonstrates solid profitability and strong cash generation, underpinned by SAIC’s government IT services focus. The result supports a cautious but constructive investment thesis for investors who can tolerate elevated leverage and the cyclicality of defense/tederal IT spend. Key questions for investors remain: how quickly SAIC can deleverage given heavy debt investment, how durable the government IT modernization cycle proves to be, and how the company navigates liquidity pressures in a rising-rate environment.