Science Applications International Corporation (NASDAQ: SAIC) reported fiscal‑year 2026 results that included full‑year revenue of $7.26 billion, a 3% decline from the prior year, and a fourth‑quarter revenue of $1.75 billion, down 6% YoY. The drop was driven by contract completions, a $26 million impact from a government shutdown, a $60 million headwind from a no‑bid Cloud One contract, and a $45 million loss from a prior‑year nonrecurring software license sale.
The company posted diluted earnings per share of $1.87 and adjusted diluted EPS of $2.62. The adjusted EPS beat consensus estimates of $2.31 (or $1.98) by $0.31 (or $0.64), a 13% (or 32%) beat. The strong performance was largely due to disciplined cost control, a favorable mix shift toward higher‑margin civilian work, and an improved tax rate, which together offset the revenue decline.
Operating income margin rose to 7.6% of revenue from 7.5% in the prior year, while adjusted EBITDA margin climbed to 10.3% from 9.6%. The margin expansion was driven by lower selling, general and administrative expenses and a mix shift toward higher‑margin civilian contracts, reflecting the company’s ongoing portfolio transformation.
Defense and Intelligence revenue totaled $1.335 billion in Q4, the largest segment, while civilian revenue grew in higher‑margin categories, supporting the overall margin improvement. The mix shift toward civilian work is a key element of SAIC’s strategy to increase profitability.
Management reaffirmed fiscal‑2027 guidance, maintaining adjusted EPS of $9.50–$9.70 and sales of $7.00–$7.20 billion. The company highlighted a backlog of $22.6 billion, of which $3.6 billion is already funded, and emphasized its focus on higher‑margin mission and enterprise IT services as part of a broader commercial portfolio transformation.
CEO Jim Reagan noted that the company is making progress and sees opportunities, and that the plan to focus on elements within its control will drive consistent growth. He also highlighted the company’s disciplined capital deployment and strong cash‑flow generation as a solid floor for shareholders.
The results underscore SAIC’s ability to maintain profitability amid revenue headwinds, with margin expansion and a robust backlog signaling resilience and a clear path to future growth.
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