Executive Summary

Primary Q1 2026 earnings documents were not yet available as of November 20, 2025; we reviewed Q1–Q4 2025 press releases and Q2/Q3 2025 call transcripts and use Wall Street (S&P Global) consensus to frame Q1 2026 expectations .
Leidos raised FY25 guidance twice: in Q2 (revenues to $17.00–$17.25B, EPS to $11.15–$11.45, OCF to ~$1.65B) and in Q3 (EPS to $11.45–$11.75, EBITDA margin to “high 13%”), reaffirming revenue and cash outlook .
Q3 2025 delivered robust execution: revenue $4.47B (+7% YoY), non-GAAP EPS $3.05, adjusted EBITDA $616M (13.8%), OCF $711M, net bookings $5.9B and total backlog $47.7B; dividend increased 7.5% to $0.43 .
Against estimates, LDOS posted consecutive quarterly beats: Q1–Q3 2025 beat revenue and EPS consensus; Q1 2026 consensus stands at ~$4.38B revenue and ~$2.99 EPS (S&P Global) with no actuals yet available [GetEstimates]* .

What Went Well and What Went Wrong

What Went Well

Consistent guidance upgrades and strong profitability: Q2 raised FY25 EPS/EBITDA margin and OCF; Q3 further raised EPS/EBITDA margin (“high 13%”) while reaffirming revenue and cash .
Segment strength and franchise momentum: Defense Systems up 11% in Q3 on air defense and radar volumes (IFPC and radar surveillance) and sustained margins; Health & Civil posted record non-GAAP margins driven by managed health services and incentive timing .
Management tone: “Leidos continues to deliver exceptional results…raising our 2025 earnings and margin guidance” (CEO Tom Bell); confident alignment to administration priorities and “customers will move out aggressively” .

What Went Wrong

Margin pressure pockets: Commercial & International margin softness in Q3 due to product mix; Defense Systems non-GAAP margin down YoY on higher materials mix early in production phases .
Government efficiency/shutdown headwinds: Management cited “DOGE” and shutdown impacts requiring agile cost controls; still mitigated through portfolio diversity and on-contract growth .
Legal/investment items: Q3 noted a $24M increase to legal reserves; Commercial & International shifting deliveries into Q4 moderated revenue/fee .

Financial Results

Note: Q1 2026 actuals not yet reported; Q1–Q4 2025 are actuals from press releases. Q1 2026 consensus estimates from S&P Global indicated by asterisk.

Metric	Q1 2025	Q2 2025	Q3 2025	Q4 2025	Q1 2026E*
Revenue ($USD Billions)	$4.245	$4.253	$4.469	$4.365	$4.375*
GAAP Diluted EPS ($)	$2.77	$3.01	$2.82	$2.12	$2.99*
Non-GAAP Diluted EPS ($)	$2.97	$3.21	$3.05	$2.37	N/A
Adjusted EBITDA ($USD Millions)	$601	$647	$616	$508	N/A
Adjusted EBITDA Margin (%)	14.2%	15.2%	13.8%	11.6%	N/A
Net Income Margin (%)	8.6%	9.2%	8.3%	6.5%	N/A

Segment revenues per quarter:

Segment Revenue ($USD Millions)	Q1 2025	Q2 2025	Q3 2025	Q4 2025
National Security & Digital	$1,878	$1,872	$2,015	$1,894
Health & Civil	$1,291	$1,272	$1,301	$1,328
Commercial & International	$568	$566	$571	$604
Defense Systems	$508	$543	$582	$539
Total	$4,245	$4,253	$4,469	$4,365

KPIs

KPI	Q1 2025	Q2 2025	Q3 2025	Q4 2024 (reported Feb 2025)
Net Bookings ($B)	$2.1	$3.9	$5.9	$7.6
Total Backlog ($B)	$46.3	$46.2	$47.7	$43.6
Funded Backlog ($B)	$7.3	$7.1	$9.1	$8.4
Days Sales Outstanding (days)	62	N/A	60	59
Operating Cash Flow ($M)	$58	$486	$711	$299
Free Cash Flow ($M, non-GAAP)	$36	$457	$680	$213
Dividend per share ($)	$0.40	$0.40	$0.43 (declared)	$0.40

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenues ($B)	FY25	$16.9–$17.3	$17.0–$17.25	Raised low-end
Adjusted EBITDA Margin	FY25	Mid–High 12%	Mid 13% (Q2) → High 13% (Q3)	Raised twice
Non-GAAP Diluted EPS ($)	FY25	$10.35–$10.75	$11.15–$11.45 (Q2) → $11.45–$11.75 (Q3)	Raised twice
Operating Cash Flow ($B)	FY25	≈$1.45	≈$1.65	Raised and reaffirmed

Earnings Call Themes & Trends

Topic	Q2 2025 (Prior-2)	Q3 2025 (Prior-1)	Q1 2026 (Current)	Trend
AI/technology initiatives	Emphasized “Trusted Mission AI”, internal productivity (coding, proposals), cost reductions; record adj. EBITDA margin 15.2%	Continued AI-enabled efficiencies; “customers desire outcome-based contracting”	Not yet reported	AI adoption broadening; sustained margin lift
Supply chain / procurement	Procurement slow earlier, snapback in Q2; on-contract growth offsets headwinds	Shutdown impact modest; risks to cash timing if prolonged	Not yet reported	Improving awards pace
Tariffs/macro/government efficiency	“DOGE” efficiency and new admin actions; mitigated via portfolio agility	Shutdown modest; wider guidance ranges to hedge uncertainty	Not yet reported	Macro headwinds managed
Product performance (Defense)	IFPC Enduring Shield accelerating; hypersonics; margins tracking to double digits	11% revenue growth; margins affected by materials mix in early production	Not yet reported	Scaling production; margin normalization targeted
Health (Managed services)	High throughput (~5k cases/day in June); rural/mobile clinic strength	Record non-GAAP margins; incentive timing benefits	Not yet reported	Durable volume and margin
Backlog/funding/book-to-bill	Pipeline ~$70B; funded backlog dynamics improving	Net bookings $5.9B; backlog $47.7B; funded backlog +27% seq	Not yet reported	Momentum building
Border security/airport	Material near-term opportunity in non-intrusive inspection and TSA modernization	CBP ordering 24 mobile VACUS; airport pilot programs	Not yet reported	Demand tailwinds

Management Commentary

“Leidos continues to deliver exceptional results…raising our 2025 earnings and margin guidance” — CEO Tom Bell .
“Operating cash flow of $711 million…free cash flow conversion of 171%” — CFO Chris Cage on Q3 .
“We’re accelerating investments in our growth pillars…maritime autonomy, energy infrastructure, digital modernization and cyber, mission software, and managed health services” — CEO .
“Shutdown impact so far has been modest…we remain confident” — CFO .

Q&A Highlights

Capital deployment/M&A: Balanced approach with defined growth pillars (North Star 2030); prudent hurdle rates; share repurchases continued .
Defense Systems: Trajectory toward sustainable double-digit margins; franchise programs in air/base defense, counter-UAS, hypersonics; LRIP to programs of record .
Health & Civil sustainability: Robust demand, innovation/automation to maintain quality and timeliness; positioning for VBA follow-ons .
Shutdown assumptions/guidance bands: Wider ranges to hedge uncertainty; cash timing risk if shutdown extends .
Fixed-price/outcome-based contracts: Appetite to expand beyond Health & Civil; leverage technology to drive customer outcomes .

Estimates Context

Consensus vs actuals show repeated beats in 2025; Q1 2026 carries consensus only as of date.

Metric	Q1 2025	Q2 2025	Q3 2025	Q4 2025	Q1 2026
Revenue Consensus Mean ($USD Billions)	4.094*	4.231*	4.280*	4.308*	4.375*
Actual Revenue ($USD Billions)	4.245	4.253	4.469	4.365	N/A
Primary EPS Consensus Mean ($)	2.50*	2.66*	2.72*	2.58*	2.99*
Actual Non-GAAP EPS ($)	2.97	3.21	3.05	2.37	N/A

Values with asterisk (*) retrieved from S&P Global.

Notable beats/misses:

Q1 2025: Revenue and non-GAAP EPS beat consensus; $4.245B vs $4.094B, $2.97 vs $2.50 [GetEstimates]*.
Q2 2025: Revenue and non-GAAP EPS beat; $4.253B vs $4.231B, $3.21 vs $2.66 [GetEstimates]*.
Q3 2025: Revenue and non-GAAP EPS beat; $4.469B vs $4.280B, $3.05 vs $2.72 [GetEstimates]*.

Key Takeaways for Investors

FY25 outlook resets higher (twice) with revenue reaffirmed and EBITDA margin now “high 13%” and EPS $11.45–$11.75; cash flow guidance held at ~$1.65B — supportive of multiple expansion and capital returns .
Segment trajectory: Defense Systems growing at high-single to low-double digits; Health & Civil margins remain structurally strong on managed services; NS&D steady growth with integration of Kudu Dynamics .
Backlog/bookings momentum (Q3 book-to-bill 1.3, backlog $47.7B, funded backlog up 27% seq) underpins 2026 revenue visibility despite government timing noise .
Cash generation and balance sheet flexibility: OCF $711M in Q3, term loan repayment $450M, dividend raised to $0.43; leverage ~2x — enables continued repurchases/inorganic actions .
Near-term trading: Expect focus on Q1 2026 print vs S&P consensus ($4.38B revenue, $2.99 EPS); repeated past beats set a high bar; shutdown/efficiency dynamics primarily affect cash timing [GetEstimates] .
Medium-term thesis: Exposure to mission-critical areas (Golden Dome, border security, TSA/FAA modernization, energy infrastructure) with demonstrated AI-enabled execution supports durable growth and margin profile .
Watch items: Defense Systems margin normalization as programs move beyond initial production mix; Commercial & International product mix; continued on-contract growth to offset macro procurement variability .

Search execution notes:

No Q1 2026 8‑K 2.02, earnings call transcript, or additional press releases were available in the document catalog; we read Q1–Q3 2025 press releases and Q2/Q3 2025 transcripts in full, plus Q4 2024/2025 materials [ListDocuments outputs; ReadDocument content: 11, 10, 9, 4, 1, 7, 12].
Consensus figures for Q1 2026 and prior quarters sourced from S&P Global via GetEstimates (asterisked above).

Leidos Holdings, Inc. (LDOS)·Q1 2026 Earnings Summary