Science Applications International Earnings Call Transcripts
Fiscal Year 2027
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Fiscal Q1 2027 delivered record margins, strong cash flow, and 0.5% organic growth, driven by disciplined execution and portfolio realignment. Guidance was raised for EBITDA margin and EPS, with continued focus on high-value mission areas and operational efficiency.
Fiscal Year 2026
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The meeting covered board updates, a review of resilient financial performance despite revenue decline, and approval of all five shareholder proposals. Fiscal 2027 targets include double-digit EBITDA margin and over 10% free cash flow per share growth.
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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 book-to-bill of 1.3. Guidance for FY26 is reiterated, targeting $7.6–$7.75B revenue, 9.4–9.6% EBITDA margin, and $9.10–$9.30 EPS. Civilian segment margins expanded, and backlog remains strong at ~$20B.
Fiscal Year 2025
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Q4 and FY25 saw strong revenue and margin growth, with robust bookings and a major $1.8B contract win post-quarter. FY26 guidance calls for continued organic growth, margin expansion, and significant free cash flow, supported by a strong backlog and focus on mission-critical programs.
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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 FY25 saw 4.3% organic revenue growth, $197M in adjusted EBITDA, and $2.61 EPS, with free cash flow softer due to timing. FY25 revenue guidance was raised to 3% growth, and a $1.2B share repurchase was authorized. Civilian margins are expected to trough at 12% and improve.
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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 business development. Guidance for revenue, EBITDA, and free cash flow was reaffirmed, while EPS guidance was raised. Book-to-bill is expected to reach 1.2 by H1 FY26.
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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.