Science Applications International (SAIC) Q3 2025 earnings summary

Executive summary

• Q3 FY25 revenues reached $1.98B, up 4.3% year-over-year, with net income of $106M and adjusted EBITDA of $197M (10.0% margin); adjusted diluted EPS was $2.61, aided by a lower tax rate.

• Free cash flow for Q3 was $9M, softer than typical due to timing factors, while net cash from operating activities for the nine months was $379M.

• Submitted $22B in bids YTD, with backlog rising to $22.4B and net bookings of $1.5B for the quarter.

• Board authorized a new $1.2B share repurchase program in December 2024, representing 20% of market value.

• Management raised FY25 revenue and adjusted EPS guidance, reaffirming multi-year targets for steady organic growth and margin improvement.

Financial highlights

• Adjusted EBITDA for Q3 FY25 was $197M (10.0% margin), up from $178M year-over-year; adjusted diluted EPS was $2.61.

• Net income for the quarter was $106M, up 14% year-over-year; operating income margin improved to 8.1%.

• Free cash flow for Q3 was $9M, impacted by timing and working capital; cash flows from operating activities were $143M.

• Effective tax rate for the quarter was 15.6%, benefiting from release of certain state tax liabilities.

• AAV contract resolution contributed $13–$14M, less than 1% of quarterly revenue.

Outlook and guidance

• FY25 revenue guidance raised to $7.425B–$7.475B, with adjusted EBITDA guidance of $685M–$695M and adjusted EPS of $8.50–$8.65.

• Free cash flow guidance for FY25 is $490M–$510M; FY27 target is ~$12 per share.

• Management expects increased business development submissions to drive improved book-to-bill and growth in FY26.

• Approximately $5.7B in remaining performance obligations as of November 1, 2024, with 81% expected to be recognized as revenue in the next 12 months.

• Multi-year plan targets FY27 revenue of $7.95B–$8.10B and adjusted EBITDA margin of 9.4%–9.6%.