Science Applications International 2026 Q1 Earnings Net Income Declines 12%

Science Applications International (SAIC) reported its fiscal 2026 Q1 earnings on June 2, 2025. While the company achieved a 2% increase in revenue to $1.88 billion, net income fell short of expectations, dropping by 12% to $68 million. The company's guidance for fiscal year 2026 remains unchanged, projecting revenue between $7.6 billion and $7.75 billion, with adjusted diluted earnings per share expected to range from $9.10 to $9.30. Despite procurement delays, SAIC maintains a positive outlook for growth due to new business opportunities and on-contract growth.

Revenue

Science Applications International reported an increase in total revenue to $1.88 billion for Q1 2026, marking a 1.6% growth from the previous year. Revenue from the Department of Defense led at $985 million, followed by intelligence and other federal government agencies at $853 million. The commercial, state, local, and international segments contributed $39 million. This growth reflects a ramp-up in volume from both existing and new contracts, although it was partially offset by completed contracts.

Earnings/Net Income

SAIC's earnings per share decreased by 4% to $1.42 in Q1 2026. Net income also experienced a decline, falling to $68 million, an 11.7% decrease from $77 million in the previous year. The decline in earnings per share indicates ongoing challenges in maintaining profitability.

Price Action

The stock price of Science Applications International saw a significant decline, dropping 4.74% during the latest trading day, falling 14.55% in the past week, and plummeting 17.19% month-to-date.

Post-Earnings Price Action Review

Following the announcement of increased revenue, a strategy involving purchasing SAIC shares on the financial report release date and holding them for 30 days yielded moderate returns. However, the approach was marked by significant volatility and risk. The strategy achieved a compound annual growth rate (CAGR) of 12.14%, with a total return of 14.93%, outperforming the benchmark by 3.76%. Despite this, the strategy faced a maximum drawdown of -34.76% and a Sharpe ratio of 0.37, underscoring the inherent risks involved in this investment tactic.

CEO Commentary

Toni Townes-Whitley, CEO of SAIC, emphasized a stable operating environment, yet acknowledged ongoing challenges, particularly with customer turnover causing procurement delays. She highlighted the fiscal 2026 budget as supportive of growth, especially in defense spending. Townes-Whitley reiterated the company's strategic pivot towards mission and enterprise IT, expressing optimism about overcoming uncertainties and achieving sustained, profitable growth.

Guidance

SAIC has maintained its fiscal year 2026 guidance, expecting revenue between $7.6 billion and $7.75 billion, representing approximately 2.5% organic growth at the midpoint. Adjusted diluted earnings per share are projected between $9.10 and $9.30, while free cash flow is anticipated to be $510 million to $530 million, equating to roughly $11 per share.

Additional News

In recent weeks, Science Applications International has seen notable developments outside of earnings metrics. On May 1, 2025, SAIC secured a new $55 million mission integration contract from the Space Development Agency, enhancing its role in space-related projects. Additionally, on April 30, 2025, SAIC announced a strategic partnership with Bluescape to deliver a secure, mission-critical operations platform, aimed at improving collaboration solutions for government clients. Furthermore, Kathleen McCarthy was appointed as the new Executive Vice President and Chief Human Resources Officer on April 9, 2025, reflecting a strategic shift in leadership to drive organizational growth and efficiency.