Science Applications International (SAIC) Q1 2025 earnings summary

Executive summary

• Q1 FY25 revenue was $1.85B, down 9% year-over-year due to the prior-year divestiture of the Supply Chain Business, but organic growth was 0.4% pro-forma, driven by ramp-up on new and existing programs.

• Net income for Q1 FY25 was $77M, a 21% decrease from the prior year, with adjusted EBITDA of $166M (9.0% margin) and adjusted diluted EPS of $1.92.

• Net bookings reached $2.6B, resulting in a book-to-bill ratio of 1.4; total backlog at quarter-end was $23.6B, with $3.5B funded.

• Management reaffirmed FY25 guidance and highlighted early progress on a new enterprise growth strategy, expecting further acceleration in FY26 and FY27.

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

Financial highlights

• Adjusted EBITDA margin was 9.0%, down from 9.3% in the prior year; operating income was $131M, down 17% year-over-year.

• Adjusted operating income was $159M (8.6% margin), down from $181M (8.9%) in the prior year.

• Cash flows from operating activities were $98M, up 20% year-over-year; transaction-adjusted free cash flow was $21M, down 72%.

• Weighted-average diluted shares outstanding decreased to 52.1M from 54.8M.

• Quarterly dividend of $0.37 per share was declared and paid.

Outlook and guidance

• FY25 revenue guidance reaffirmed at $7.35B–$7.50B, with adjusted EBITDA expected at $680M–$700M (margin 9.2%–9.4%).

• Adjusted diluted EPS guidance is $8.00–$8.20; free cash flow expected at $490M–$510M.

• H2 revenue expected to grow mid-single digits, with Q4 seeing stronger growth as recompete headwinds ease.

• Recompete headwinds expected to normalize to 2% by Q4 and into FY26.

• FY27 targets: revenue $7.95B–$8.10B, adjusted EBITDA $750M–$780M, free cash flow ~$550M, and adjusted EBITDA margin 9.4%–9.6%.