With $22 billion in submitted bids through the third quarter, we now expect to submit more than $25 billion for the full year… We now see a pipeline to over $30 billion of submits in fiscal year '27.
— Toni Townes-Whitley
03Detailed Report
SAIC
Company SAIC
Period
Q3 2025
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 23, 2026
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Executive Summary
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.
Cash flow and balance sheet:
- Net cash provided by operating activities: $143 million; free cash flow: $134 million; cash end of period: $54 million; cash beginning of period: $56 million; operating cash flow: $143 million.
- Total assets: $5.275 billion; total liabilities: $3.663 billion; total stockholders’ equity: $1.612 billion.
- Total debt: $2.349 billion; net debt: $2.303 billion; long-term debt: $2.129 billion; short-term debt: $0.22 billion.
- Current ratio: 0.87; gross margin: ~12.0%; operating margin: ~8.1%; net margin: ~5.4%.
Backlog and guidance:
- Trailing 12-month backlog of submitted bids was nearly $19 billion; bookings in the quarter: $1.5 billion; book-to-bill: 0.9x; target book-to-bill of 1.2x by 1H FY2026.
- Backlog/submitted bids quality improving and aligned with growth vectors (notably mission IT and enterprise IT).
- FY2025 guidance raised to $7.425–$7.475 billion; organic growth ~3% for the year.
- FY2026 guidance: 2–4% revenue growth; H1 softer, improving to ~5% by year-end as new business converts.
- Capital deployment: new $1.2B share-repurchase authorization; expected to repurchase ~$500M this year; leverage target around 3.0x; free cash flow per share target of $11–$12 in FY26–FY27.
Management commentary highlights:
- Focus on fixed-price and as-a-service solutions; two-thirds of the $25–$30B planned next-year bid submissions are enterprise/mission IT, which carry higher margins.
- Recompete headwinds ~2% next year; potential additional transition headwinds if Cloud One compute/storage is walked away (~2–3%).
- Protests on ~ $0.5B of work could contribute another ~1% run-rate revenue if adjudicated favorably.
- CBC2 and Joint Fires network cited as exemplars of a broader modernization and integration strategy with enduring demand.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.98B
4.27%
8.69%
Gross Profit
237.00M
3.49%
12.86%
Operating Income
160.00M
11.89%
19.40%
Net Income
106.00M
13.98%
30.86%
EPS
2.15
22.16%
35.22%
Key Financial Ratios
Gross Profit Margin
Weak
12.00%
Gross profit margin is below industry norms, profitability concerns
Operating Profit Margin
Fair
8.10%
Operating margin is moderate, room for improvement in cost management
Net Profit Margin
Fair
5.36%
Net profit margin is moderate, room for improvement in cost management
Return on Assets
Weak
2.01%
Return on assets suggests inefficient capital allocation
Return on Equity
Fair
6.58%
Return on equity is acceptable but below top-tier companies
Current Ratio
Concern
0.87
Current ratio below safe levels, potential liquidity risk
Debt to Equity
Conservative
0.25
Debt-to-equity shows conservative leverage and low financial risk
P/E Ratio
Fair Value
16.86x
P/E ratio in line with market averages
Price to Book
Premium
4.43x
Trading at premium to book value, reflects strong intangibles or growth
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