Executive Summary
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.
Key Performance Indicators
Key Insights
Revenue: $1.818B in QQ2 2025; YoY growth 4.66%; QoQ growth 0.00%
Gross Profit: $210.0M; Gross Margin 11.55%; YoY gross profit growth 9.38%; QoQ 0.00%
Operating Income: $134.0M; Operating Margin 7.37%; YoY operating income growth 69.62%; QoQ 0.00%
Net Income: $81.0M; Net Margin 4.46%; YoY net income growth 107.69%; QoQ 0.00%
Earnings Per Share (EPS): $1.59 (basic); $1.58 (diluted); YoY EPS growth 112.00%; QoQ 0.00%
EBITDA: $165.0M; EBITDA Margin 9.08%
Cash Flow: Operating cash flow $138.0M; Capex...
Financial Highlights
Revenue: $1.818B in QQ2 2025; YoY growth 4.66%; QoQ growth 0.00%
Gross Profit: $210.0M; Gross Margin 11.55%; YoY gross profit growth 9.38%; QoQ 0.00%
Operating Income: $134.0M; Operating Margin 7.37%; YoY operating income growth 69.62%; QoQ 0.00%
Net Income: $81.0M; Net Margin 4.46%; YoY net income growth 107.69%; QoQ 0.00%
Earnings Per Share (EPS): $1.59 (basic); $1.58 (diluted); YoY EPS growth 112.00%; QoQ 0.00%
EBITDA: $165.0M; EBITDA Margin 9.08%
Cash Flow: Operating cash flow $138.0M; Capex $6.0M; Free cash flow $132.0M; FCF yield roughly 7.3% of revenue
Balance Sheet: Total assets $5.25B; Total liabilities $3.625B; Total equity $1.625B; Cash & equivalents $48.0M; Net debt $2.277B; Current ratio 0.854x; Quick ratio 0.854x; Cash ratio 0.037x
Leverage & Coverage: Total debt $2.325B; Interest coverage about 4.32x; Net debt to EBITDA approximately 13.8x (indicative, not provided in the report); P/BV 3.85x; ROE ~4.98%
Shareholder Returns: Common stock repurchased of $201.0M; Dividends paid $19.0M; Net cash from financing activities negative $131.0M; Equity expansion from earnings/$0.05? (not applicable here)
Working Capital: DSO ~46.83 days; DPO ~35.76 days; CCC ~11.07 days; Inventory turnover effectively 0; robust AR collection and vendor payment cadence appear balanced as of QQ2 2025
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.82B |
4.66% |
0.00% |
| Gross Profit |
210.00M |
9.38% |
0.00% |
| Operating Income |
134.00M |
69.62% |
0.00% |
| Net Income |
81.00M |
107.69% |
0.00% |
| EPS |
1.59 |
112.00% |
0.00% |
Key Financial Ratios
operatingProfitMargin
7.37%
operatingCashFlowPerShare
$2.71
freeCashFlowPerShare
$2.59
dividendPayoutRatio
23.5%
Management Commentary
Note: The earnings transcript was not provided in the input. As a result, no verbatim management quotes or thematic transcript insights are available. The following highlights are derived from the disclosed financials and standard market interpretation of such results:
- Revenue growth driven by ongoing demand for IT modernization and government services; YoY growth of 4.66% indicates stable demand against a large fixed-cost base.
- Margin expansion visible in gross and operating margins vs prior-year periods, contributing to a stronger net income trajectory despite a high absolute cost base.
- Free cash flow generation remains robust (FCF $132M) and supports deleveraging objectives and shareholder returns, though a substantial debt burden persists.
- Working capital dynamics appear manageable with a positive cash conversion cycle (11.07 days); AR balance remains high (receivables $946M) but collection timing suggests efficiency in receivables management.
- Capital allocation reflects a preference for share repurchases alongside modest capex and debt repayments, signaling a balanced approach to returning capital while addressing leverage concerns.
Forward Guidance
No explicit numeric guidance was provided for QQ3 2025 and beyond within the available data. Qualitatively, management appears to benefit from predictable government IT budgets and multi-year modernization programs, which should support steady revenue and cash flow. Investors should monitor: 1) the trajectory of leverage given a net debt level of approximately $2.28B and relatively low liquidity metrics, 2) the durability of DoD and federal IT spending in the current macro environment, 3) potential backlog evolution and contract revenue mix (recurring vs. non-recurring), and 4) the pace of working capital evolution as AR remains elevated. A cautious stance vis-à-vis leverage-sensitive funding environments is warranted until SAIC demonstrates sustained deleveraging and improved liquidity metrics.