Science Applications International Corporation (SAIC) Q3 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights mixed signals: a decline in revenue and lowered guidance for FY '26, but optimistic EPS and free cash flow guidance. The Q&A reveals concerns about procurement delays and budget pressures, yet also potential growth in defense and strategic areas. The share repurchase plan and SilverEdge integration are positive, but the lack of specific guidance details tempers optimism. Overall, the sentiment balances out to neutral.
Key Financial Performance
Revenue $1.87 billion, declined 5.6% year-over-year. The decline included a roughly 1 point headwind related to the government shutdown. Adjusting for this impact, revenue results were modestly ahead of prior guidance due to signs of stability across the market.
Adjusted EBITDA $185 million, with a margin of 9.9%. This was driven by strong program execution. There are meaningful opportunities to further improve margins in the coming years.
Adjusted Diluted EPS $2.58, reflecting strong margin performance and a favorable tax rate in the quarter.
Free Cash Flow $135 million, strong despite being impacted by the government shutdown, which resulted in certain collections moving into the fourth fiscal quarter.
Net Bookings $2.2 billion, resulting in a book-to-bill ratio of 1.2x for the quarter and on a trailing 12-month basis.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
SilverEdge Acquisition: SAIC acquired SilverEdge, a company known for its AI capabilities for the intelligence community. This acquisition is expected to enhance SAIC's portfolio and drive growth by leveraging SilverEdge's technology and commercial go-to-market approach.
Revenue Performance: Third quarter revenue was $1.87 billion, a 5.6% decline year-over-year, partly due to a government shutdown. Adjusted for this, revenue was slightly ahead of prior guidance.
Business Development: SAIC achieved net bookings of $2.2 billion in Q3, with a book-to-bill ratio of 1.2x. Key awards included a $1.4 billion Air Force recompete and a $413 million U.S. Army contract for the OSINT program.
Operational Efficiencies: SAIC identified over $100 million in annual spending to reinvest in higher ROI areas, aiming to improve margins to 10% in the near term and further in FY '27.
Cost Efficiency Measures: Efforts include organizational restructuring and redeploying savings to drive growth and profitability.
Focus on Execution: The interim CEO emphasized a shift towards near-term execution and improving business development quality to align with markets where SAIC has a strong competitive position.
Shareholder Value Creation: SAIC plans to repurchase $1 billion in shares over FY '26 and FY '27, representing 25% of its market value, supported by strong free cash flow.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Revenue Decline: Third quarter revenue of $1.87 billion declined 5.6% year-over-year, including a roughly 1 point headwind related to the government shutdown.
Government Shutdown Impact: The government shutdown caused delays in collections and slowed the pace of proposal submissions, impacting revenue and business development activities.
Business Development Challenges: SAIC has struggled with below-average business development and capture performance, which has hindered revenue and EBITDA growth.
Recompete Headwinds: SAIC faces recompete headwinds, including one of its largest programs representing over 3% of annual revenue, with uncertainty around the outcome of the recompete.
Operational Efficiency: Efforts to implement efficiencies across indirect functions and redeploy savings to higher ROI areas are ongoing, but these changes involve risks and challenges in execution.
Leadership Transition: The company is undergoing a leadership transition, including the search for a permanent CEO, which could create uncertainty and impact strategic execution.
Market Uncertainty: Uncertainty in the government contracting market, including potential future shutdowns, could impact SAIC's operations and financial performance.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Revenue Guidance FY '26 and FY '27: FY '26 total revenue guidance increased to reflect the acquisition of SilverEdge. Organic revenue growth guidance reaffirmed despite a 1-point impact from the government shutdown. FY '27 revenue guidance increased by approximately 1 point due to the SilverEdge acquisition, with organic revenue growth guidance of 0% to 3%.
Adjusted EBITDA Margin Guidance: FY '26 adjusted EBITDA margin guidance increased by 10 basis points due to strong program performance. FY '27 margin guidance increased by 20 basis points at the midpoint to a range of 9.7% to 9.9%, with potential upside beyond FY '27 due to efficiency improvements.
Adjusted EPS Guidance: FY '26 adjusted diluted EPS guidance increased by $0.40 due to increased earnings and a lower tax rate. FY '27 adjusted EPS guidance increased by $0.50, reflecting the addition of SilverEdge, increased operating margins, and a lower share count.
Free Cash Flow Guidance: FY '26 free cash flow guidance maintained at greater than $550 million. FY '27 free cash flow guidance maintained at greater than $600 million, benefiting from minimal cash taxes due to Section 174 changes.
Share Repurchase Program: SAIC plans to repurchase approximately $500 million in shares in each of FY '26 and FY '27, totaling $1 billion, representing about 25% of the company's market value.
Business Development and Market Focus: Proposal submissions targeted at over $30 billion in FY '27. Focus on improving bid quality and alignment with markets where SAIC has the strongest right to win. Incremental investments from cost efficiency efforts to strengthen solutions and bid quality.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Share Repurchase Program: SAIC plans to repurchase approximately $500 million in each of FY '26 and FY '27, totaling $1 billion. This represents approximately 25% of the company's market value. The repurchase program is supported by strong free cash flow and is seen as a compelling investment to return cash to shareholders.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:What is the current state of the procurement environment post-shutdown and the pace of incoming RFPs?
A:The procurement environment saw a slowdown in submit activity and RFPs due to the shutdown. However, it is expected to normalize over the fourth quarter. Award decisions are taking longer, but RFP activity has remained consistent compared to Q2.
Q:Is there any residual impact from DOGE and how is the pricing environment?
A:There are no material changes from previous disclosures about DOGE, which accounts for about 1% of full-year revenues. The broader DOGE effort has evolved into smaller reviews within agencies. Pricing pressure remains minimal, with healthy margins in Q3 and no significant trends in fixed pricing.
Q:What is the opportunity and integration plan for SilverEdge within SAIC?
A:SilverEdge is expected to enhance differentiation in bids across the portfolio, not just in the intelligence community but broadly. It will be accretive next year, improving margins and EPS, and provide growth opportunities for employees.
Q:Why did the civil segment decline by 7% year-on-year in the quarter, and what is the trajectory?
A:The decline is attributed to seasonality and lumpiness. Over the first nine months, the civil business has been flat with improved margins. There are no single program-related drivers, and the focus is on growing the portfolio and achieving 14% margins next year.
Q:What are the thoughts on the Department of War's announced reforms and the decision to change company direction?
A:The company is ready to support the Department of War's reforms, including faster procurement processes and innovative contracting vehicles. The decision to change direction focuses on execution, listening to customers, and aligning investments with opportunities to accelerate growth.
Q:How will the $100 million savings be allocated, and how does it impact EBITDA expectations?
A:The savings will be used to improve margins and reinvest in account management, business development, and proposal processes. The current EBITDA guidance reflects the lower cost run rate achieved this fiscal year, with additional savings initiatives planned for next year.
Q:What are the core competencies of SAIC and areas for improvement?
A:SAIC's strengths include deep understanding of customer missions, strong scientific and application development capabilities, and a history of innovation. Areas for improvement include aligning R&D investments with customer needs and listening to customers for future requirements.
Q:What is the outlook for federal civil spending and portfolio shaping?
A:Federal civil spending is expected to face continued pressure, but SAIC is well-positioned in high-growth areas like CBP and FAA. Portfolio shaping will focus on areas with growth potential and alignment with defense priorities, avoiding large-scale M&A for now.
Q:How does SAIC view defense budget growth and its impact on the business?
A:Defense budgets are expected to grow due to readiness priorities, providing opportunities for SAIC. The company is aligning its portfolio with priority areas and expects stable budgets next year.
Q:What is the outlook for civil budget growth and its impact on the savings plan?
A:Civil budgets are expected to remain pressured, with limited opportunities for growth. The savings plan assumes a challenging budget environment for the next 12-18 months, focusing on consistent performance and contract growth.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the magnitude of portfolio shaping, the exact allocation of the $100 million savings, and the long-term outlook for civil budget growth beyond general assumptions of pressure. Additionally, responses on defense and civil budget growth were broad and lacked precise numerical forecasts.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CEO leader
CEO moment
CEO potential
CEO priority
CEO process
DeNardi Vice
FY efficiency
Form report
IP customer
Interim CEO
Interim Chief
Officer future
Relations Today
SAIC change
SAIC dollar
SAIC investment
SAIC leader
SAIC legacy
SAIC portfolio
SAIC result
SAIC run
SAIC success
SAIC term
SilverEdge SAIC
action
attention
commitment
decision
detail
government shutdown
measure
nation
opportunity employee
progress
quality
release
resource
search
throughput
value creation
value opportunity
SAIC Transcript
Science Applications International Corporation (SAIC) Q1 2027 Earnings Call Transcript
Unknown6-1
The earnings call reflects a mixed sentiment. While there are positive elements like strong Q1 performance, improved margins, and strategic investments in high-demand areas, there are also concerns. The guidance indicates a revenue contraction, and management remains cautious due to uncertainties, especially in an election year. The Q&A highlights cautious optimism but also acknowledges volatility and uncertainties. Overall, the sentiment is balanced, leading to a neutral prediction for stock price movement.
Science Applications International Corporation (SAIC) Q4 2026 Earnings Call Transcript
Positive3-16
The earnings call summary and Q&A indicate a positive outlook. Despite lower revenues, strong margins and favorable tax rates improved EPS. The company exceeded cash flow guidance, demonstrating strong execution. The SilverEdge acquisition is expected to drive growth, and there are significant share repurchases planned. Guidance for FY '26 and '27 has been raised, reflecting confidence in future performance. The Q&A highlighted strategic focus and flexibility in business development, with management addressing analyst concerns effectively. Overall, these factors suggest a likely positive stock price movement.
Science Applications International Corporation (SAIC) Presents at 47th Annual TD Cowen Aerospace and Defense Conference Transcript
Neutral2-11
Science Applications International Corporation (SAIC) Q3 2026 Earnings Call Transcript
Unknown12-4
The earnings call highlights mixed signals: a decline in revenue and lowered guidance for FY '26, but optimistic EPS and free cash flow guidance. The Q&A reveals concerns about procurement delays and budget pressures, yet also potential growth in defense and strategic areas. The share repurchase plan and SilverEdge integration are positive, but the lack of specific guidance details tempers optimism. Overall, the sentiment balances out to neutral.
SAIC Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
