Leidos Holdings, Inc.
LDOS · NYSE
Next quarter
Reports Nov 3, 2026, before the open.
Consensus is $3.04 EPS for Sep 2026 across 5 estimates, ranging $2.97 to $3.11.
LDOS Jun 2026
- 12.41%
- -2.87%
- $2.90
- $3.26
- —
- $4.55B
Reported results
- $4.55B
- $514.00M
- $354.00M
- $2.81
Highlights
- Adjusted earnings: Non-GAAP diluted EPS was $3.26, up 2% year over year and 12.4% above the supplied $2.90 consensus; GAAP diluted EPS was $2.81, down from $3.01 a year ago.
- Revenue growth: Revenue rose 7.2% year over year to $4.56 billion, including 3.9% organic growth; it increased from $4.38 billion in Q1.
- Margin pressure: Operating income fell 10% year over year to $514 million and operating margin declined to 11.3% from 13.4%; adjusted EBITDA was $631 million, down 2%, with a 13.8% margin versus 15.2%.
- Bookings and backlog: Net bookings were $4.9 billion, a 1.1 book-to-bill ratio; backlog reached $48.7 billion, including $10.2 billion funded, with total backlog up 5% and funded backlog up 44% year over year.
- Cash generation: Operating cash flow was $793 million and free cash flow was $761 million, compared with $486 million and $457 million, respectively, a year ago; management cited working-capital and payment timing.
- Raised outlook: FY2026 revenue guidance is now $18.20–$18.40 billion, non-GAAP EPS $12.20–$12.50, and operating cash flow about $1.85 billion; the prior low ends were $18.00 billion, $12.10, and $1.80 billion.
- Segment divergence: Homeland revenue grew 32% to $1.02 billion, including $141 million from Entrust; Health revenue fell 8% to $1.09 billion, primarily on lower medical disability exam volumes.
- Portfolio changes: Leidos completed its $2.4 billion Entrust acquisition in March and expects to contribute its Security Enterprise Solutions business to a pending joint venture, retaining a 41.5% interest.
Analysis
Leidos delivered a revenue-led quarter and raised its full-year outlook, although GAAP profitability remained below the year-ago level. Revenue increased 7.2% year over year to $4.56 billion, with 3.9% organic growth, and rose from $4.38 billion in Q1. Non-GAAP diluted EPS of $3.26 was 12.4% above the supplied $2.90 consensus and 2% above last year’s $3.21. GAAP diluted EPS was $2.81, down from $3.01 a year ago but above Q1’s $2.56.
The key tension was growth alongside lower reported margins: operating income fell 10% year over year to $514 million, and operating margin dropped to 11.3% from 13.4%. Adjusted EBITDA margin also declined, to 13.8% from 15.2%; the comparison benefited last year from one-time gains, including a $25 million insurance reimbursement. Homeland and Defense growth reflected demand in energy, air traffic and defense technology, while Health contracted on lower exam volumes. Bookings of $4.9 billion kept book-to-bill at 1.1, and backlog reached $48.7 billion. Strong quarterly cash generation and that demand visibility supported higher revenue, earnings and cash-flow guidance, even as acquisition-related costs and added debt from Entrust shaped the results.
Revenue and margins
Revenue growth was broad enough to lift the top line, but it did not translate into higher reported operating income. Revenue of $4.56 billion was up 7.2% year over year, or 3.9% organically, while operating income declined to $514 million from $571 million. The 11.3% operating margin compared with 13.4% a year earlier. Adjusted EBITDA was $631 million, down 2%, and its margin fell to 13.8% from 15.2%. The prior-year quarter included several non-operational gains, among them a $25 million insurance reimbursement for legal costs. Current GAAP results also included acquisition, integration and restructuring costs; the company reported $3.26 non-GAAP EPS versus $2.81 GAAP EPS.
Segment performance
- Intelligence & Digital: Revenue rose 6.5% to $1.50 billion, driven by program wins and higher Intelligence Community mission-support volumes; operating margin was 9.5%, near 9.6% a year ago.
- Health: Revenue declined 7.6% to $1.09 billion as medical disability exam volumes fell. Operating income decreased to $254 million from $303 million and margin to 23.4% from 25.8%.
- Homeland: Revenue increased 32% to $1.02 billion, including $141 million from Entrust; organic revenue grew 15.1%. Operating margin rose to 9.0% from 8.3%, with the company citing improved program performance, product mix and lower indirect costs.
- Defense: Revenue grew 6.2% to $955 million on increased demand for defense technology products. Operating margin was 8.8%, versus 8.7% a year earlier.
Bookings and backlog
Leidos booked $4.9 billion during the quarter, producing a 1.1 book-to-bill ratio. Total backlog was $48.7 billion at July 3, including $10.2 billion funded; trailing-twelve-month book-to-bill was also 1.1. Year over year, total backlog grew 5% and funded backlog 44%. The company highlighted awards and modifications including a $475 million Air Force F-16 support contract, a $456 million Military OneSource contract and a $350 million electronic-warfare mission-support modification. Backlog includes $371 million acquired with Entrust.
Cash and guidance
Operating cash flow of $793 million and free cash flow of $761 million compared with $486 million and $457 million, respectively, a year earlier. Cash conversion was strong, though management attributed the improvement primarily to working-capital movements and the timing of tax, payroll and benefit payments. Leidos used $300 million to repay commercial paper and returned $127 million to shareholders through $72 million of repurchases and $55 million of dividends. Cash was $748 million and debt $6.0 billion at quarter-end. FY2026 guidance increased at the low end: revenue to $18.20–$18.40 billion, non-GAAP EPS to $12.20–$12.50 and operating cash flow to approximately $1.85 billion; the adjusted EBITDA margin outlook remained in the mid-13% range.
Entrust and joint venture
The March 27 closing of the $2.4 billion Entrust acquisition added $141 million of Homeland revenue this quarter and $371 million to backlog at acquisition. Separately, Leidos plans to contribute its Security Enterprise Solutions and Industrial Automation businesses to a joint venture with Analogic, with closing expected in the second half of FY2026. Leidos expects to retain a 41.5% non-controlling interest; the related business was classified as held for sale, with $935 million of assets and $163 million of liabilities reported at quarter-end.
