Science Applications International Corp (SAIC) Q3 2026 Earnings Call Highlights: Navigating …

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Revenue: $1.87 billion, declined 5.6% year-over-year.
Adjusted EBITDA: $185 million, with a margin of 9.9%.
Adjusted Diluted EPS: $2.58.
Free Cash Flow: $135 million.
Net Bookings: $2.2 billion, with a book-to-bill ratio of 1.2x.
FY26 Revenue Guidance: Increased to reflect the acquisition of Silveredge.
FY26 Adjusted EBITDA Margin Guidance: Increased by 10 basis points.
FY26 Adjusted EPS Guidance: Increased by $0.40.
FY26 Free Cash Flow Guidance: Greater than $550 million.
FY27 Revenue Guidance: Increased by approximately 1 point.
FY27 Margin Guidance: Increased by 20 basis points at the midpoint.
FY27 Adjusted EPS Guidance: Increased by $0.50.
FY27 Free Cash Flow Guidance: Greater than $600 million.
Share Repurchase Program: $500 million expected in each of FY26 and FY27.

Release Date: December 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

SAIC’s acquisition of Silveredge is expected to enhance AI capabilities and contribute to revenue and EPS growth.
The company reported strong adjusted EBITDA of $185 million with a margin of 9.9%, driven by strong program execution.
SAIC’s book-to-bill ratio was 1.2x, indicating a healthy pipeline of future business.
The company plans to reinvest $100 million in annual savings into higher ROI areas to drive growth and improve margins.
SAIC increased its FY26 adjusted EPS guidance by $0.40 due to strong earnings and a lower tax rate.

Third-quarter revenue declined by 5.6% year-over-year, partly due to the government shutdown.
The company faces challenges in converting its legacy of innovation into revenue and EBITDA growth.
SAIC’s Civil segment experienced a 7% year-over-year decline in the quarter.
The government shutdown slowed the pace of proposal submissions, impacting business development activities.
There is ongoing pressure on civilian agency budgets, which could impact future growth opportunities.

Q: Can you describe the current procurement environment post-government shutdown and the pace of incoming RFPs? A: Prabu Natarajan, CFO, explained that there was a slowdown in RFP submissions due to the shutdown, but it is expected to normalize in the fourth quarter. The pace of adjudication remains slightly delayed, but overall RFP activity is stable compared to the previous quarter.

Q: How is the integration of Silveredge expected to impact SAIC’s portfolio and performance? A: James Reagan, Interim CEO, expressed enthusiasm about Silveredge’s integration, highlighting its potential to enhance SAIC’s differentiation in bids, particularly in the intelligence community. Silveredge is expected to be accretive to margins and EPS next year, offering growth opportunities across SAIC’s portfolio.

Q: What is the outlook for the Civil segment, given its recent decline? A: Prabu Natarajan noted that while the Civil segment was down 7% year-over-year in the quarter, the nine-month performance shows it as roughly flat with improved margins. The decline is attributed to seasonality and not specific program issues. The segment is expected to grow again next year with margins returning to around 14%.

Q: How is SAIC addressing the Department of War’s procurement reforms and the dynamic environment? A: James Reagan stated that SAIC is prepared to support the Department of War’s procurement changes, emphasizing speed and efficiency. The company is focusing on innovative contracting vehicles and aligning investments with customer needs to enhance growth and execution.

Q: How will the $100 million in identified savings be utilized, and how does it affect EBITDA expectations? A: James Reagan explained that a substantial portion of the savings will be reinvested into business development and proposal processes to drive growth and improve margins. The current fiscal year’s guidance reflects the savings, with further efficiency efforts planned for the next year.

Q: What are SAIC’s core competencies that drive value, and how can they be improved? A: James Reagan highlighted SAIC’s deep understanding of customer missions, strong scientific and application capabilities, and a history of innovation. The focus will be on aligning R&D investments with customer opportunities and improving proposal processes to enhance growth.

Q: How does SAIC view the pressure on federal civil spending and its impact on growth objectives? A: James Reagan acknowledged ongoing pressure on civilian agency budgets but expressed confidence in SAIC’s positioning within high-growth areas like CBP and FAA. The company is focused on maintaining execution excellence and exploring portfolio shaping opportunities to align with growth objectives.

Q: What is SAIC’s approach to managing leverage in light of market conditions? A: Prabu Natarajan stated that SAIC is comfortable with a leverage target of 3.0, balancing share repurchases and potential deleveraging based on market conditions. The company remains disciplined in capital allocation to maximize shareholder value.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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