Executive Summary
SAIC reported a solid start to QQ1 2026 (calendar year 2026) with revenue of $1.877 billion, up 3.25% year-over-year and 2.12% quarter-over-quarter, underscoring a resilient demand environment for US government IT services. Despite top-line progress, profitability traces a modest trajectory: gross margin was 11.13%, operating margin 6.45%, and net margin 3.62%, yielding net income of $68 million and EPS of $1.43 (diluted $1.42). EBITDA stood at $152 million with an EBITDA margin of 8.10%, illustrating a still-meaningful but constrained profitability profile against the backdrop of large intangible assets and ongoing modernization spend.
Cash flow remained constructive, with $100 million in net cash from operating activities and free cash flow of $100 million. However, liquidity metrics are tight: cash and cash equivalents at period end were $47 million (cash at end of period $55 million per closing balance), while total debt totaled $2.441 billion (net debt $2.394 billion), contributing to a current ratio of 0.78 and a debt-to-equity ratio of 1.62. The company allocated capital toward shareholder value via $142 million in share repurchases and $19 million in dividends, with debt repayments of $61 million during the period.
Looking ahead, the absence of explicit quarterly guidance in the provided materials necessitates a cautious stance. Growth is likely to hinge on continued DoD modernization programs, cloud migration initiatives, and efficiency improvements that could bolster margins. Investors should monitor backlog development, program awards, and cadence of government funding, as well as ongoing leverage management and cash flow generation. Overall, SAIC remains a large-scale incumbent in a defensible but capital-intensive market, with a balanced but selectively favorable risk-reward profile given its government-centric revenue base.
Key Performance Indicators
QoQ: -12.32% | YoY:-9.70%
QoQ: -30.61% | YoY:-16.05%
QoQ: -29.21% | YoY:-10.06%
Key Insights
Revenue: $1,877.0M; YoY +3.25%; QoQ +2.12%
Gross Profit: $209.0M; Gross Margin 11.13%
Operating Income: $121.0M; Operating Margin 6.45%
Net Income: $68.0M; Net Margin 3.62%
EPS (GAAP): $1.43; EPS (Diluted): $1.42; Weighted Avg Shares: 47.6M
EBITDA: $152.0M; EBITDA Margin 8.10%
Cash from Operations: $100.0M; Free Cash Flow: $100.0M
Balance Sheet: Total Assets $5,211.0M; Total Liabilities $3,706.0M; Total Equity $1,505.0M
Cash & Equivalents: $47.0M; Debt: $2,441.0M; Net Debt: $2,394.0M
Liquidi...
Financial Highlights
Revenue: $1,877.0M; YoY +3.25%; QoQ +2.12%
Gross Profit: $209.0M; Gross Margin 11.13%
Operating Income: $121.0M; Operating Margin 6.45%
Net Income: $68.0M; Net Margin 3.62%
EPS (GAAP): $1.43; EPS (Diluted): $1.42; Weighted Avg Shares: 47.6M
EBITDA: $152.0M; EBITDA Margin 8.10%
Cash from Operations: $100.0M; Free Cash Flow: $100.0M
Balance Sheet: Total Assets $5,211.0M; Total Liabilities $3,706.0M; Total Equity $1,505.0M
Cash & Equivalents: $47.0M; Debt: $2,441.0M; Net Debt: $2,394.0M
Liquidity: Current Ratio 0.779; Debt/Equity 1.62; Interest Coverage 4.03
Returns: ROA 1.30%; ROE 4.52%; ROCE ~3.24%
Capital Allocation: Share repurchases $142.0M; Dividends $19.0M; Debt repayments $61.0M; Cash at end of period $55.0M
Valuation Metrics (as of QQ1 2026): P/E ~ 20.65; P/B ~ 3.73; P/S ~ 2.99; Dividend Yield ~ 0.34% (USD)
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.88B |
3.25% |
2.12% |
| Gross Profit |
209.00M |
-0.48% |
-9.91% |
| Operating Income |
121.00M |
-9.70% |
-12.32% |
| Net Income |
68.00M |
-16.05% |
-30.61% |
| EPS |
1.43 |
-10.06% |
-29.21% |
Key Financial Ratios
operatingProfitMargin
6.45%
operatingCashFlowPerShare
$2.1
freeCashFlowPerShare
$2.1
dividendPayoutRatio
27.9%
Management Commentary
No earnings call transcript data were provided in the materials. As a result, there are no management quotes to quote directly. Based on the reported results, anticipated themes from an earnings call would likely include:
- Strategy: Emphasis on sustaining DoD and federal program execution, with ongoing modernization and cloud migration efforts.
- Operations: Focus on cost discipline, margin stabilization, and improving operating cash flow amid a heavy asset base and goodwill.
- Market conditions: Commentary on defense budget outlook and government IT priorities, including cybersecurity and enterprise IT services.
Note: Actual quotes from management are unavailable in the supplied data.
Forward Guidance
There is no explicit forward guidance in the provided materials for QQ1 2026. Given the revenue trajectory and profitability profile, the implicit outlook hinges on continued demand from DoD and federal agencies, effective cost controls, and progress in modernization programs. Potential catalysts include: (1) additional DoD program awards and cloud-migration contracts, (2) efficiency improvements that could lift operating margins, (3) favorable working-capital management and continued free cash flow generation. Key risks include government budget volatility, project mix shifting toward lower-margin work, talent retention, and competitive pressure from peer systems integrators. Investors should monitor program backlog, cadence of new awards, and any updates to management guidance on profitability and cash flow.