Science Applications (SAIC) Q2 2025 Earnings Report

SAIC reported solid Q2 FY2025 results, underscoring resilience in a government IT services environment despite recompete pressures. Organic revenue growth of 2% y/y was supported by new business wins and on-contract growth, while a roughly 5 percentage point headwind from contractor transitions tempered overall growth. Adjusted EBITDA was $170 million with a 9.4% margin, reflecting constructive program execution and a margin trajectory that management expects to improve as the enterprise growth strategy matures. Free cash flow in the quarter reached $241 million, contributing to a first-half FCF of $262 million, more than half of the full-year guidance. The company reaffirmed FY25 guidance, raised adjusted diluted EPS by $0.10 to $8.10–$8.30, and maintained revenue growth guidance of 1.5%–3.5% pro-forma organic, factoring in roughly 5% recompete headwinds. Management reiterated its four-pivot enterprise growth strategy (Portfolio, Go-to-market, Culture, Brand) and signaled that the early indicators—larger submitted bid volume ($14.5B in H1 vs. $17B in FY24) and an expanding qualified pipeline—support a healthier bookings trajectory toward a 1.2x book-to-bill by H1 FY26. The call emphasizes disciplined capital deployment (continued buybacks with capacity for M&A) and a focus on higher-margin, higher-value programs, particularly in Civilian and Enterprise/Mission IT. Investors should monitor: the progression of fixed-price bid execution, recompete timing (NCAPS and Army S-1 as notable headwinds), Civilian margin normalization, and the cadence of backlog conversion into revenue.