Leidos raises 2026 non-GAAP EPS and cash forecasts, trims revenue

Leidos raised its fiscal 2026 forecasts for non-GAAP diluted earnings per share and operating cash flow, while lowering its revenue range, as it reported higher revenue and net income for the third quarter ended Oct. 2. The company announced the changes Nov. 3.

Revenue for the quarter was $4.630 billion, up 4% from $4.469 billion a year earlier. Net income increased 12%, to $413 million from $369 million. The stronger quarter and lower full-year revenue forecast are different measures: the quarterly results are reported figures, while the revised full-year numbers are company guidance.

Leidos said it updated its outlook after contributing its Security Enterprise Solutions and Industrial Automation businesses to a newly formed joint venture with Altaris on Oct. 5. The revised guidance also reflects year-to-date performance and the company’s current outlook.

Revenue and non-GAAP EPS forecasts moved in opposite directions i

The company’s adjusted EBITDA-margin outlook remained in the mid-13% range. The EPS guidance is non-GAAP, not a forecast of GAAP diluted earnings per share. Leidos said it could not reliably reconcile its forward-looking non-GAAP EPS and adjusted EBITDA-margin guidance to GAAP because it could not forecast certain deductions with reasonable certainty; those deductions could be material.

Homeland gains offset a Health decline i

Business-line revenue changes were uneven. Homeland’s $249 million increase more than offset a $142 million decline in Health. Defense and Intelligence & Digital also grew; together, the four segments’ changes add up to the company’s $161 million total revenue increase.

Leidos attributed overall revenue growth to demand for defense technology, air-traffic-management solutions and intelligence support, as well as its ENTRUST Solutions acquisition. The company said those gains offset declines in some managed-health and federal-civilian IT programs.

Net income margin rose to 8.9% from 8.3%. GAAP diluted EPS was $3.28, compared with $2.82 a year earlier; non-GAAP diluted EPS was $3.62, up 19% from $3.05. Adjusted EBITDA, a non-GAAP measure, increased to $644 million from $616 million, and its margin was 13.9%, compared with 13.8%.

Leidos reported $523 million in quarterly operating cash flow and $476 million in non-GAAP free cash flow. It returned $556 million to shareholders: $504 million through share repurchases and $52 million in dividends. At Oct. 2, the company had $630 million in cash and cash equivalents and $6.0 billion in debt.

Quarterly net bookings were $5.5 billion, with a book-to-bill ratio of 1.2. Backlog stood at $49.6 billion, including $11.1 billion funded. On a trailing-12-month basis, Leidos reported year-over-year growth of 4% in total backlog and 22% in funded backlog, with a book-to-bill ratio of 1.1.

The company declared a quarterly dividend of $0.45 per share on Oct. 30, a 4.7% increase from the prior quarter. It is payable Dec. 31 to shareholders of record on Dec. 15.