"SAIC Rises on Profit Gains Despite Revenue Dip"

Science Applications International Corporation (NASDAQ: SAIC) reported mixed second-quarter fiscal year 2026 results, with revenues declining to $1.77 billion, a 3% drop from $1.818 billion in the same period last year. The decrease was attributed to contract completions and reduced volume on existing contracts, partially offset by new contracts. Operating income for the quarter rose to $139 million, with adjusted operating income increasing to $182 million, reflecting improved profitability across the contract portfolio. Adjusted EBITDA for the quarter reached $185 million, or 10.5% of revenues, up from 9.4% in the prior year period [4].

Despite the revenue contraction, diluted earnings per share (EPS) for the quarter came in at $2.71, a 72% increase compared to $1.58 in the prior year. Adjusted diluted EPS was reported at $3.63, up 77% from $2.05 the previous year. The weighted average diluted shares outstanding decreased to 46.8 million from 51.2 million during the prior year quarter [4].

Cash flows from operating activities for the second quarter totaled $122 million, a decline of $16 million from the prior year, primarily due to timing of customer collections and vendor payments. Free cash flow for the quarter was $150 million, down from $241 million in the prior year, although the company increased its free cash flow guidance for fiscal year 2026 to exceed $550 million. The company deployed $130 million of capital in the quarter, with $106 million used for share repurchases and $17 million paid out in dividends [4].

Management revised its guidance for fiscal year 2026, lowering revenue and adjusted EBITDA forecasts but increasing guidance for free cash flow and adjusted diluted EPS. The new revenue guidance is between $7.25 billion and $7.325 billion, compared to the prior guidance of $7.60 billion to $7.75 billion. Adjusted EBITDA guidance is now in the range of $680 million to $690 million, down from the previous $715 million to $735 million. Meanwhile, adjusted diluted EPS guidance was raised to $9.40 to $9.60, and free cash flow is now projected to exceed $550 million, up from $510 million to $530 million [4].

The company’s book-to-bill ratio for the quarter was 1.5, with net bookings of $2.6 billion, while the trailing twelve months book-to-bill ratio stood at 1.0. Year-to-date net bookings reached $5.0 billion, resulting in a book-to-bill ratio of 1.4. At quarter-end, SAIC’s estimated backlog was $23.2 billion, with $3.6 billion of that amount funded [4].

Notable contract awards during the quarter included a $928 million contract with the U.S. Air Force under the HOPE 2.0 initiative, a $728 million task order with the Department of Treasury for cloud services, and a $202 million contract with the U.S. Navy for training solutions. The company also secured a $547 million contract extension with the U.S. Department of State and a $360 million contract with a Navy customer for electronic warfare systems [4].

The company’s backlog, which represents the estimated value of future revenues to be recognized under negotiated contracts, stood at $23.172 billion as of August 1, 2025, with $3.594 billion in funded backlog and $19.578 billion in negotiated unfunded backlog. The backlog excludes any estimates for future potential task orders that have not yet been awarded [4].

In response to the more challenging revenue environment, SAIC CEO Toni Townes-Whitley stated the company is aligning its cost structure while maintaining key investments to drive long-term value. “We believe that this more cautious outlook is prudent, and we are confident in our ability to execute against it,” she added [4].

SAIC declared a quarterly dividend of $0.37 per share, payable on October 24, 2025, to shareholders of record on October 10, 2025. The company intends to continue paying dividends on a quarterly basis, though the declaration of future dividends will depend on earnings, financial condition, and other factors [4].

Source:

[1] SAIC Announces Second Quarter of Fiscal Year 2026 Results (https://www.globenewswire.com/news-release/2025/09/04/3144360/0/en/SAIC-Announces-Second-Quarter-of-Fiscal-Year-2026-Results.html)