Leidos Holdings Inc. reported fiscal 2025 fourth‑quarter revenue of $4.21 billion, a 4% year‑over‑year decline, and diluted earnings per share of $2.76, beating the consensus estimate of $2.66 by $0.10 or 3.8%. Adjusted EBITDA rose to $556 million, giving the company a 13.2% margin that is 9% higher than the same quarter a year earlier.
The revenue decline is largely attributable to a six‑week federal government shutdown that cut contract work and an extra work week in the prior year that inflated the previous quarter’s revenue. When adjusted for these timing effects, management indicated that revenue would have grown roughly 4% year‑over‑year, aligning with the company’s own guidance for the year.
The EPS beat reflects disciplined cost management and margin expansion. Adjusted EBITDA margin grew to 13.2%, a 160‑basis‑point improvement from the prior year, driven by higher‑margin contracts and operational efficiencies that offset the revenue shortfall. The company’s backlog of $49.03 billion provides a cushion for future earnings stability.
Leidos reiterated its fiscal 2026 outlook, projecting revenue of $17.5 billion to $17.9 billion and adjusted EPS of $12.05 to $12.45. The guidance range is consistent with the company’s prior forecast, indicating confidence in continued growth despite the Q4 revenue miss. The company’s backlog and ongoing acquisitions, such as the purchase of Entrust, support the outlook for sustained demand.
In early trading, the stock fell between 3% and 5%, a reaction that investors attributed to the revenue miss and the cautious forward guidance. The market’s focus on top‑line performance outweighed the positive earnings beat, underscoring the importance of revenue growth to investors.
Management emphasized resilience and confidence in the company’s strategy. CEO Tom Bell highlighted the team’s ability to navigate challenges, while CFO Stuart Davis noted that the company is guiding to mid‑13% adjusted EBITDA margin in 2026, reflecting a normalization of one‑time benefits and a commitment to cost discipline.
The results illustrate a mixed picture: strong profitability and margin expansion on one hand, and a headline revenue decline on the other. The company’s ability to maintain earnings while facing headwinds suggests operational resilience, but the revenue miss signals potential pressure on future growth. Investors will likely monitor how Leidos balances cost control with revenue expansion as it moves into 2026.
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