Leidos Reports Impressive Q3 Financials and Increases Full-Year Outlook Amid Challenges
Leidos Holdings, Inc., a prominent player in the government and commercial sectors, has disclosed encouraging financial outcomes for the third quarter of fiscal 2025. Reporting a substantial revenue increase, the company has demonstrated resilience, especially amidst challenges such as the recent government shutdown. The reported revenue rose to $4.47 billion, representing a 7% increase compared to the same quarter last year, with organic growth contributing 6% to this figure.
CEO Tom Bell emphasized the strength of Leidos's portfolio and the agility of its workforce in achieving these results. Specifically, the net income for the quarter was recorded at $369 million, translating to earnings of $2.82 per diluted share; both figures indicate modest yet promising growth of 2% and 5%, respectively, year-over-year. However, the net income margin experienced a slight contraction, decreasing to 8.3% from 8.6% in the previous year.
In terms of profitability, Adjusted EBITDA stood at $616 million, marking a 3% increase year-over-year, although the Adjusted EBITDA margin slipped to 13.8%. The solid financial performance can be attributed to robust demand from customers, particularly in national security and defense-related services.
Financial operations saw an influx from cash flows, amounting to $711 million from operations and leading to a non-GAAP Free Cash Flow of $680 million. These efficiencies in cash flow underline how Leidos effectively manages its operations, even as it contends with increasing legal reserves totaling $24 million.
Looking ahead, the Board of Directors declared a cash dividend of $0.43 per share which reflects a notable increase of 7.5% from the prior quarter. This will be distributed on December 31, 2025, to shareholders listed by December 15, 2025. This proactive move aligns with their financial performance and strategy, ensuring shareholder value is prioritized even in turbulent periods.
One of the key highlights of the quarter was the impressive net bookings totaling $5.9 billion; translating to a book-to-bill ratio of 1.3. This increase in backlog signals robust future demand, amounting to $47.7 billion, with a notable $9.1 billion of this being funded. Significantly, recent major contracts capture the company's ability to secure high-value projects:
Classified Mission Support: A groundbreaking $2.2 billion, seven-year contract awarded by the intelligence community, underscoring Leidos's capabilities in critical mission support.
NASA Human Health and Performance Contract: A significant $760 million IDIQ subcontract that enhances NASA's astronaut health initiatives as part of preparations for future space missions.
Counter Terrorism Software Support: A seven-year contract worth $540 million focused on preserving and upgrading mission-critical AI software used in counter-terror operations.
Naval Technical Support Services: A five-year contract worth $188 million to provide engineering and technical support to undersea warfare systems, enhancing operational readiness.
Kazakhstan Air Traffic Management Modernization: A 19-year initiative to revamp and modernize air traffic control systems in Kazakhstan, highlighting the company's long-term vision and commitment.
DOD Healthcare Management System Support: A contract valued at $370 million to sustain operational stability for the Defense Health Agency, thereby securing a place as a trusted partner in government health services.
The increased FY25 guidance further exemplifies the company's confidence, projecting revenues between $17.00 billion and $17.25 billion with expected non-GAAP diluted earnings per share reaching $11.45 to $11.75.
Leidos's commitment to transparency and robust financial health is commendable, allowing it to navigate through external pressures while still prioritizing growth and innovation. Their strategic alignment with governmental priorities and agility in operations positions them favorably in a competitive landscape. As December approaches, industry watchers will keenly observe how Leidos intends to leverage its strengthened position in the market in 2025 and beyond.
CEO Tom Bell emphasized the strength of Leidos's portfolio and the agility of its workforce in achieving these results. Specifically, the net income for the quarter was recorded at $369 million, translating to earnings of $2.82 per diluted share; both figures indicate modest yet promising growth of 2% and 5%, respectively, year-over-year. However, the net income margin experienced a slight contraction, decreasing to 8.3% from 8.6% in the previous year.
In terms of profitability, Adjusted EBITDA stood at $616 million, marking a 3% increase year-over-year, although the Adjusted EBITDA margin slipped to 13.8%. The solid financial performance can be attributed to robust demand from customers, particularly in national security and defense-related services.
Financial operations saw an influx from cash flows, amounting to $711 million from operations and leading to a non-GAAP Free Cash Flow of $680 million. These efficiencies in cash flow underline how Leidos effectively manages its operations, even as it contends with increasing legal reserves totaling $24 million.
Looking ahead, the Board of Directors declared a cash dividend of $0.43 per share which reflects a notable increase of 7.5% from the prior quarter. This will be distributed on December 31, 2025, to shareholders listed by December 15, 2025. This proactive move aligns with their financial performance and strategy, ensuring shareholder value is prioritized even in turbulent periods.
One of the key highlights of the quarter was the impressive net bookings totaling $5.9 billion; translating to a book-to-bill ratio of 1.3. This increase in backlog signals robust future demand, amounting to $47.7 billion, with a notable $9.1 billion of this being funded. Significantly, recent major contracts capture the company's ability to secure high-value projects:
Classified Mission Support: A groundbreaking $2.2 billion, seven-year contract awarded by the intelligence community, underscoring Leidos's capabilities in critical mission support.
NASA Human Health and Performance Contract: A significant $760 million IDIQ subcontract that enhances NASA's astronaut health initiatives as part of preparations for future space missions.
Counter Terrorism Software Support: A seven-year contract worth $540 million focused on preserving and upgrading mission-critical AI software used in counter-terror operations.
Naval Technical Support Services: A five-year contract worth $188 million to provide engineering and technical support to undersea warfare systems, enhancing operational readiness.
Kazakhstan Air Traffic Management Modernization: A 19-year initiative to revamp and modernize air traffic control systems in Kazakhstan, highlighting the company's long-term vision and commitment.
DOD Healthcare Management System Support: A contract valued at $370 million to sustain operational stability for the Defense Health Agency, thereby securing a place as a trusted partner in government health services.
The increased FY25 guidance further exemplifies the company's confidence, projecting revenues between $17.00 billion and $17.25 billion with expected non-GAAP diluted earnings per share reaching $11.45 to $11.75.
Leidos's commitment to transparency and robust financial health is commendable, allowing it to navigate through external pressures while still prioritizing growth and innovation. Their strategic alignment with governmental priorities and agility in operations positions them favorably in a competitive landscape. As December approaches, industry watchers will keenly observe how Leidos intends to leverage its strengthened position in the market in 2025 and beyond.
Topics Business Technology）
【About Using Articles】
You can freely use the title and article content by linking to the page where the article is posted.
※ Images cannot be used.
【About Links】
Links are free to use.