Science Applications International (SAIC) Q2 2025 earnings summary

Executive summary

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

• Adjusted EBITDA was $170 million (9.4% margin), and adjusted diluted EPS was $2.05, flat year-over-year, aided by a lower tax rate and reduced share count.

• Free cash flow for Q2 was $241 million, up 67% year-over-year, with over 50% of full-year guidance achieved in the first half.

• Net income for the quarter was $81 million, down 67% year-over-year due to the prior year's divestiture gain.

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

Financial highlights

• Q2 FY25 revenue: $1.82B, up 2% year-over-year; adjusted EBITDA: $170M (9.4% margin); adjusted diluted EPS: $2.05.

• Free cash flow: $241M in Q2, $262M for the first half; cash and cash equivalents at quarter-end were $48M.

• Bookings for the quarter were $1.2B, with a book-to-bill ratio of 0.6 for the quarter and 1.1 trailing twelve months; backlog stood at $22.9B.

• Operating income margin decreased to 7.4% from 20.3% due to a prior-year divestiture gain.

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

Outlook and guidance

• FY25 revenue guidance reaffirmed at $7.35B–$7.50B, with pro-forma organic growth of 1.5%–3.5%.

• Adjusted EBITDA guidance: $680M–$700M (9.2%–9.4% margin); free cash flow: $490M–$510M.

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

• FY27 targets: revenue $7.95B–$8.10B, adjusted EBITDA margin 9.4%–9.6%, FCF per share ~$12.

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