Science Applications International Earnings Call Transcripts
Fiscal Year 2026
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Leadership transition completed with a focus on operational excellence and portfolio alignment. FY26 revenue declined 3% organically, but margins and cash flow exceeded guidance. FY27 outlook anticipates continued revenue contraction due to recompete losses, but margin expansion and strong cash flow are expected.
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Guidance for FY 2027 was reduced by 5% due to contract losses and slower growth, with a focus shifting toward mission and engineering work. The company is prioritizing selective bidding, talent retention, and small M&A, while transformation efforts and a CEO search are underway.
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Q3 revenue declined 5.6% year-over-year but exceeded guidance after adjusting for shutdown impacts, with strong margins and free cash flow. The SilverEdge acquisition is expected to drive growth and margin expansion, while $1 billion in share repurchases is planned through FY27.
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Revenue declined 2.7% year-over-year amid program delays and government efficiency headwinds, but margins improved and book-to-bill remained strong. FY26 guidance was lowered, with cost efficiency measures underway and free cash flow outlook raised due to tax benefits.
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Q1 FY26 revenue grew 2% to $1.877B, with adjusted EBITDA margin at 8.4% and strong bookings momentum. FY26 guidance is reiterated, with revenue expected to reach $7.6B-$7.75B and margins to improve as key programs transition. Book-to-bill is targeted at 1.2 by year-end.
Fiscal Year 2025
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Q4 and FY25 saw strong revenue and margin growth, with robust bookings and a healthy backlog supporting FY26 guidance for continued organic growth and margin expansion. The business remains focused on mission-critical, technology-driven solutions amid a dynamic government environment.
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Recent government transitions have accelerated tech integration opportunities and risks, with a strategic pivot toward mission and enterprise IT driving growth. Focus areas include Indo-Pacific readiness, innovation in AI and edge computing, and advocacy for acquisition reform and open standards.
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Q3 saw 4.3% organic revenue growth, strong margins, and a raised FY25 revenue outlook. Bookings and backlog improved, with a focus on higher-margin IT work and robust scenario planning for government efficiency shifts. Share repurchases and margin expansion remain key priorities.
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Q2 saw 2% organic revenue growth, strong free cash flow, and margin improvement, with strategic focus on higher-value bids and market share gains in civilian and space sectors. Guidance for revenue, EBITDA, and free cash flow was reaffirmed, and EPS guidance was raised.
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Q1 saw modest organic growth and strong bookings, with margins pressured by investments and recompete headwinds. Guidance for FY25 is reiterated, expecting growth to accelerate in H2 as headwinds ease and new business ramps.