Science Applications International (SAIC) Q2 2025 earnings summary

Executive summary

• Q2 FY25 revenue grew 2% year-over-year to $1.82 billion, driven by new and existing contract ramp-ups, partially offset by contract completions and transitions.

• Adjusted EBITDA was $170 million (9.4% margin), with adjusted diluted EPS at $2.05, flat year-over-year; free cash flow surged to $241 million.

• Net income was $81 million, down 67% due to the prior year's divestiture gain; operating income margin decreased to 7.4% from 20.3%.

• Strategic initiatives included organizational flattening, centralized business development, and a focus on portfolio, go-to-market, culture, and brand.

• The company reorganized into five business groups aggregated into two reportable segments: Defense and Intelligence, and Civilian.

Financial highlights

• Q2 FY25 revenue was $1.82 billion, up $34 million or 2% year-over-year; adjusted EBITDA margin was 9.4%, down from 9.8% last year.

• Free cash flow for Q2 was $241 million, up 67% year-over-year; cash flows from operations were $138 million.

• Diluted EPS was $1.58, compared to $4.60 in the prior year, reflecting the impact of the divestiture gain.

• Weighted-average diluted shares outstanding decreased to 51.2 million from 53.9 million.

• Backlog stood at $22.9 billion, with a trailing twelve-month book-to-bill ratio of 1.1.

Outlook and guidance

• FY25 revenue guidance is $7.35B–$7.50B, with pro-forma organic growth of ~2.5%; adjusted EBITDA guidance is $680M–$700M (9.2%–9.4% margin).

• Adjusted diluted EPS guidance was raised to $8.10–$8.30 due to lower tax rate and share count.

• Free cash flow guidance is $490M–$510M; management targets ~$12 FCF per share by FY27.

• Book-to-bill is expected to reach 1.2 by H1 FY26, with organic revenue growth aligning to 5% by end of FY26.

• Approximately $5.4 billion in remaining performance obligations, with 79% expected to be recognized as revenue in the next 12 months.