QinetiQ Group (QQ) H2 2025 earnings summary

Executive summary

• FY2025 was challenging, with tough market conditions and geopolitical uncertainty impacting revenue and profit, especially in the UK and US short-cycle work, but decisive actions included leadership changes, US restructuring, and portfolio adjustments.

• Record order intake of £1.95 billion (up 12%) and a record order backlog of £2.8 billion, including a £1.54 billion LTPA contract extension, provide strong revenue visibility and support confidence in medium to long-term growth.

• Statutory operating loss of £90.5m due to £305.9m in specific adjusting items, mainly US goodwill impairment and restructuring.

• Strategic focus remains on long-term value creation, leveraging core capabilities in defense innovation, multinational expansion, and sustainable organic growth.

• Strong cash conversion at 105% and net debt reduced to £133.2m.

Financial highlights

• Revenue rose 1% year-over-year to £1,931.6m (+2% organic); underlying profit fell 14% to £185.4m (margin 9.6%).

• Underlying EPS down 11.2% to 26.1p; statutory EPS loss of 33.0p due to exceptional charges.

• Cash conversion was strong at 105%, leverage improved to 0.4x, and ROCE at 22%.

• Shareholder returns increased: dividend up 7% to 8.85p per share, and buybacks extended by £200m.

• Order intake reached a record £1,954.8m (+12%), with a book-to-bill ratio of 1.2x and order backlog at £2.8bn.

Outlook and guidance

• FY2026 revenue expected to grow ~3% organically to c.£1.98bn, with margin recovery to ~11% and EPS growth of 15–20%.

• Cash conversion expected to remain at least 90%, with leverage around 0.5x.

• Guidance is cautious, treating short-cycle work as upside and not relying on Q4 volatility.

• Additional £200m share buyback over two years to commence in June.