SAIC reported a solid Q3 FY2025 with organic revenue growth of 4.3% driven by new business and on-contract expansion, offset by a roughly 5-point headwind from contract transitions. Adjusted EBITDA of $197 million yielded a 10% margin, while net income reached $106 million and diluted EPS was $2.13-$2.61 depending on GAAP vs. non-GAAP framing. Free cash flow came in at $134 million for the quarter, reflecting timing dynamics such as an extra payroll cycle and robust collections in Q2. Management signaled a pragmatic, multi-year plan to grow organic revenue around 3% for FY2025 and to accelerate on-contract and new-business wins into FY2026–FY2027, supported by a strengthened enterprise growth model focused on mission IT and enterprise IT. A key through-line is the company’s readiness to navigate an anticipated push for government efficiency, with an emphasis on fixed-price and as-a-service solutions, underpinned by a large, high-quality pipeline and a more agile cost structure.
Looking ahead, SAIC raised FY2025 revenue guidance to $7.425–$7.475 billion (roughly 3% organic growth) and outlined a path to 2–4% revenue growth in FY2026, with an accelerating trajectory into FY2027 as new-business pursuits convert to revenue. The company increased its share-repurchase authorization to $1.2 billion and reiterated a free cash flow per share target of $11–$12 for FY2026–FY2027, signaling a focus on capital allocation and shareholder value. However, near-term risks include recompete headwinds (~2% next year), potential transitions within Cloud One compute/storage, and political/administrative shifts that could affect government funding. Overall, SAIC remains well-positioned to capitalize on ongoing federal IT modernization, particularly in mission IT and enterprise IT, while maintaining margin discipline and robust cash flow generation.