SAIC Reports Third Quarter Fiscal 2026 Results

Science Applications International Corporation (NASDAQ: SAIC) announced its third-quarter results for fiscal year 2026, showing mixed performance against expectations. The company reported a decline in revenue but exceeded earnings per share (EPS) estimates, while also providing updated guidance for the fiscal year.

Section 1: Overview

In the third quarter of fiscal year 2026, SAIC reported revenues amounting to $1.87 billion, which aligns with the expectations set by analysts. However, this figure represents a decrease of 6% from the $1.98 billion reported in the same quarter of the previous year. The decline was primarily attributed to a reduction in volume on existing contracts and contract completions, although it was partially offset by new contracts. Despite this contraction, the company managed to achieve an EPS of $2.58, surpassing the expected $2.08. This EPS beat highlights the company’s ability to maintain profitability amidst revenue challenges.

Compared to the previous year, SAIC’s operating income for the quarter saw a 20% decline, dropping from $160 million to $128 million. The operating margin also decreased from 8.1% to 6.9%. Adjusted EBITDA, a key measure of profitability, decreased slightly from $197 million to $185 million, reflecting a modest decline in operational efficiency. Despite the lower revenue and operating income, SAIC’s net income for the quarter was $78 million, down from $106 million in the prior year. The adjusted diluted EPS of $2.58, however, remained relatively stable compared to $2.61 in the previous year, indicating effective cost management and strategic financial adjustments.

SAIC’s cash flow from operating activities totaled $129 million, a decrease from the $143 million recorded in the same quarter last year. The company continued its capital deployment strategy, repurchasing $94 million in shares and paying $17 million in cash dividends. This ongoing commitment to shareholder returns underscores SAIC’s focus on long-term value creation despite the current revenue challenges.

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Section 2: Details

Looking ahead, SAIC has updated its guidance for fiscal year 2026, reflecting a cautiously optimistic outlook. The company now expects revenue to range between $7.275 billion and $7.325 billion, a slight increase from the previous guidance of $7.250 billion to $7.325 billion. This adjustment indicates confidence in the company’s ability to secure and execute new contracts, despite the challenges faced in the current quarter.

SAIC has also revised its adjusted EBITDA guidance to approximately $695 million, up from the previous range of $680 million to $690 million. The adjusted EBITDA margin is expected to be around 9.5%, reflecting a focus on enhancing operational efficiency and profitability. Additionally, the company has raised its adjusted diluted EPS guidance to between $9.80 and $10.00, compared to the prior range of $9.40 to $9.60. This upward revision demonstrates SAIC’s commitment to delivering strong financial performance and shareholder value.

In terms of cash flow, SAIC expects free cash flow to exceed $550 million for the fiscal year, consistent with previous guidance. The company’s strategic focus on cash flow generation remains a key priority, enabling continued investment in growth initiatives and shareholder returns. As SAIC navigates the evolving market landscape, its updated guidance reflects a balanced approach to growth and profitability, positioning the company for sustained success in the coming quarters.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.