Leidos delivered strong FY2025 results and provided a positive but cautious FY2026 outlook. Management is aggressively investing in defense tech, co-investing with the DoD, and executing a new strategy 'North Star 2030' with an emphasis on high-growth pillars. FY2025 revenue grew 3.1% to $17.2B, with Q4 revenue of $4.2B, and both earnings and cash flow above guidance.
Leidos delivered strong FY2025 results and provided a positive but cautious FY2026 outlook. Management is aggressively investing in defense tech, co-investing with the DoD, and executing a new strategy 'North Star 2030' with an emphasis on high-growth pillars. FY2025 revenue grew 3.1% to $17.2B, with Q4 revenue of $4.2B, and both earnings and cash flow above guidance.
Leidos delivered strong FY2025 results and provided a positive but cautious FY2026 outlook. Management is aggressively investing in defense tech, co-investing with the DoD, and executing a new strategy 'North Star 2030' with an emphasis on high-growth pillars.
The company plans to triple capital expenditure investments in 2026 to $350 million, funding production capacity expansion and classified facility upgrades for high-return national priority projects. This level is situation-dependent and not necessarily the new normal, with a…
Guidance · revenue to $17.7B
Adjusted EBITDA margin guide for FY2026 is mid-13s, normalizing for one-time benefits but implying margin decline.
Management sees AI as a force multiplier, not a threat, and is embedding an 'AI-first' philosophy across the company, using internal adoption to drive efficiency and prototype solutions for customers. They expect AI to help shift customer budgets from maintenance to high-value mission outcomes.
Golden Dome and FAA modernization catalysts for H2. Management expresses strong confidence in their strategy, citing robust bookings, a strong pipeline, and alignment with administration priorities, despite acknowledging challenges like the government shutdown.
The company plans to triple capital expenditure investments in 2026 to $350 million, funding production capacity expansion and classified facility upgrades for high-return national priority projects. This level is situation-dependent and not necessarily the new normal, with a focus on cash-on-cash returns.
Management expresses strong confidence in their strategy, citing robust bookings, a strong pipeline, and alignment with administration priorities, despite acknowledging challenges like the government shutdown.
“We are currently negotiating several important, exciting co-investment opportunities with this administration around critical war fighting and national needs, where we have unique capabilities... We will triple our capital expenditure inve…”
“We saw about $7 billion in awards slip from Q4 into this quarter. And we have now $20 billion of pending awards and a $49 billion of backlog.”
“In 2026, we expect modestly lower revenue and margin from the additional vendor on the VBA MDE work and continued transition on DIMSOM.”
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Capex | FY2026 | 350 | 350 | RAISED |
| EPS | FY2026 | $12.05–$12.45 | $12.25 | MAINTAINED |
| Free cash flow | FY2026 | $1.4B | $1.4B | LOWERED |
| Op margin | FY2026 | 13.5% | 13.5% | LOWERED |
| Revenue | FY2026 | $17.5B–$17.9B | $17.7B | MAINTAINED |
Leidos is a key supplier to Northrop's space programs (SDA Tranche 1), indicating a strong partnership but with no direct read on Northrop's trajectory.
“We've delivered two tranche one payloads to Northrop with the remaining ones coming this year.”
Thank you. sort of product and defense tech area. I was wondering if you could give us an update on the areas that you think have hit their stride with sort of programs of record and areas that are still developing that may demonstrate some progress here in 26 in that direction. Thank you.
… of the system as a whole. And as the lead systems integrator for that, we sit in service to our customer to make sure that that system is all that they want it to be. Hypersonics was mentioned earlier. Obviously, the Department of War is fast tracking some six tech priorities to include scaled hypersonics. So that shows you that they're serious about it. And our recent awards of Slicum N and Jehato OTAs, those mirror the Army's success of the Dark Eagle program. And so we're very happy with where that program is going from here. I mentioned in my prepared remarks the ABADS award, although we can't say much more about that. Again, Homeland Security and Base Defense are where those programs excel, and both of those things are very high priorities for the Department of War. Wide field of view in the space area, you know, we are... We are very bullish on our opportunities to serve the space forces needs there, they are, they have a budget climbing toward $40 billion and. We are a vital partner for the technical contributions across the space development agency and all their tranches to date. So we've been accelerating internal investment there the SDAs tranche. Zero mission has been successful and we are a key part of that. We've delivered two tranche one payloads to Northrop with the remaining ones coming this year. Following a successful critical design review, which we published in the press, we remain on track to deliver 18 satellites for the SDA for tranche two by the end of the year. And we're positioning for growth for tranche three and for tranche four to make sure that our payloads that are serving this nation now in space continue to do so into the future. What I'm not talking about is the two IDIQs I mentioned, the Shield IDIQ and the Microelectronics IDIQ. Again, these are areas where we've been investing in. Us being in those IDIQs gives us the opportunity to help the customers serve the nation through task orders therein, and we are very bullish about that. And so we're very excited about several of the framework agreements that we have in negotiation and conversation with the Department of War to, as I said earlier, continue to build programs of records for our defense business. So we're very bullish on being a defense tech company, and we're very excited about the opportunities for us to continue to grow that business under Cindy's leadership.
Leidos saw ~$7 billion in awards slip from Q4 into Q1 2026, and the company is on two key 10-year IDIQs: Missile Defense Agency's $151B SHIELD program (Golden Dome) and Defense Microelectronics Activity's $25B program, but these are not yet in backlog. — The slippage is temporary, but the massive size of the IDIQs and pending awards indicates a strong, broad-based demand environment for missile defense, which will compete with traditional prime contractors for task orders.
Great, great. And then maybe just as a quick follow-up, a little bit more model-oriented, you talked about growth accelerating through the year, exiting double-digit, or approaching a double digit. So strong exit rate, but I guess the implication is, you know, much softer growth in the beginning of the year. Kind of how should we think about the early part of the year and which of the segments is seeing that weakness?
We saw about $7 billion in awards slip from Q4 into this quarter. And we have now $20 billion of pending awards and a $49 billion of backlog. So we have high proposal activity. Yes, there is a lag, probably because of that long government shutdown we discussed in the fourth quarter. But we expect those awards to start coming in, and that'll feed growth through the end of the year as those programs get on to execution. Thanks, Seth. Great. Thank you.
Leidos is tripling capital expenditures to $350M in 2026 to co-invest with the Department of War (DoD) on key franchise programs, including expanding production capacity for IFPC, hypersonics, and maritime systems.