Leidos (LDOS) Q4 2025 earnings summary

Executive summary

• FY2025 revenues reached $17.2B, up 3.1% YoY, with Q4 revenue at $4.2B, down 3.6% YoY due to calendar and shutdown effects; non-GAAP EPS grew 17%, and free cash flow increased 26%.

• Q4 book-to-bill ratio was 1.3, with net bookings of $5.6B, driving a 15% YoY increase in funded backlog and robust business development pipeline.

• Strategic execution of the NorthStar 2030 strategy included acquisitions (Kudu Dynamics, Entrust), divestitures (Varec), and increased investment in growth pillars.

• Organizational transformation included realignment into four reporting segments, a new CTO, and an Enterprise Transformation Office.

• Delivered strong cash flow from operations ($1.75B) and free cash flow ($1.63B, 104% conversion), with robust backlog and major contract wins.

Financial highlights

• FY2025 revenue: $17.2B, up 3.1% YoY; Q4 revenue: $4.2B, down 3.6% YoY due to calendar/shutdown effects.

• Adjusted EBITDA margin: 14.1% for the year (up 120 bps YoY); Q4 margin: 13.2% (up 160 bps YoY).

• Non-GAAP diluted EPS: $11.99 for the year (up 17% YoY), $2.76 in Q4.

• Free cash flow: $1.63B for the year (104% conversion), $452M in Q4 (127% of non-GAAP net income).

• Share repurchases totaled $944M for the year, retiring 4.4% of diluted share count and contributing ~$0.50 to EPS.

Outlook and guidance

• FY2026 revenue guidance: $17.5B–$17.9B (up to 4% growth), with mid-13% adjusted EBITDA margin and non-GAAP EPS of $12.05–$12.45.

• Revenue growth expected to accelerate in the second half of FY2026, with guidance excluding the impact of the Entrust acquisition.

• Operating cash flow expected at $1.75B; free cash flow to dip due to tripled CapEx ($350M).

• Assumptions: $200M interest expense, 24% tax rate, 129M shares.