Quarterly Results
Performance varied across segments, with National Security & Digital revenues declining 3% to $1.85 billion and Health & Civil falling 9% to $1.21 billion. Conversely, Commercial & International revenues grew 1% to $610 million, and Defense Systems increased 1% to $546 million. Profitability improved significantly, with the net income margin expanding 150 basis points to 8.0% and adjusted EBITDA margin reaching 13.2%.
Annual Performance Context
For the full fiscal year 2025, Leidos reported revenues of $17.17 billion, a 3% increase over fiscal 2024. This growth reflects strong demand in integrated air defense, Intelligence Community support, and cyber operations. Net income for the year reached $1.46 billion, a 17% increase, while diluted EPS rose 21% to $11.14.
Fiscal year margins demonstrated operational efficiency, with the adjusted EBITDA margin improving to 14.1% from 12.9% in the prior year. Cash flow generation remained a highlight; net cash provided by operating activities totaled $1.75 billion. Free cash flow for the year increased 26% to $1.63 billion, representing a conversion rate of 104%.
Business and Operations Update
Net bookings for the quarter were $5.6 billion, resulting in a book-to-bill ratio of 1.3 and a total backlog of $49.0 billion. Significant contract awards included $2.2 billion for the Air Base Air Defense – Missile Defense program and a spot on the $151 billion ceiling SHIELD IDIQ. Leidos also announced a definitive agreement to acquire Entrust for $2.4 billion, a transaction expected to close in the first half of fiscal 2026.
The Board of Directors declared a quarterly cash dividend of $0.43 per share, payable on March 31, 2026. Regarding the results, Leidos Chief Executive Officer Tom Bell stated, “Our performance this quarter and throughout the year underscores the incredible resilience of our team and the power of our strategy in action.”
Forward Outlook
Leidos has initiated financial guidance for fiscal year 2026, projecting total revenues between $17.5 billion and $17.9 billion. The company forecasts an adjusted EBITDA margin in the mid-13% range and non-GAAP diluted earnings per share between $12.05 and $12.45. Additionally, management expects cash flows provided by operating activities to reach approximately $1.75 billion. This outlook assumes a 24% effective tax rate and a weighted average diluted share count of 129 million, while excluding the pending acquisition of Entrust.
Performance Summary
Leidos closed fiscal 2025 with year-over-year revenue and earnings growth, mitigating fourth-quarter revenue pressures through improved margins and program execution. The company secured substantial new business awards, maintaining a backlog of nearly $50 billion while executing capital deployment strategies including dividends and acquisitions. Management has established a financial outlook for fiscal 2026 that projects continued top-line and bottom-line expansion.