Science Applications International Corp (SAIC): Results of Operations and Financial Condition
Science Applications International Corp (SAIC) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 SAIC Announces Second Quarter of Fiscal Year 2027 Results • Revenues of $1.88 billion, approximately 6.3% growth; 5.3% organic growth (1) • Net income of $102 million; Adjusted EBITDA (1) of $193 million or 10.3% of revenues • Diluted earnings per share of $2.38; Adj
How this was made
The 30-second read
Why it matters
The earnings beat and raised guidance improve SAIC's growth outlook, likely supporting the stock price in the short term.
Market read
Earnings beat and guidance raise make SAIC a near‑term buying candidate; sector peers may benefit from positive sentiment.
What to watch
Potential headwinds from federal budget constraints could affect future contract awards.
SAIC reported second-quarter fiscal year 2027 revenues of $1.88 billion, net income of $102 million, adjusted EBITDA of $193 million, and raised fiscal year 2027 revenue, adjusted EBITDA, adjusted EBITDA margin, and adjusted diluted EPS guidance while reiterating free cash flow guidance.
Revenue grew 6%, operating income rose 9%, operating cash flow increased 20%, and the company raised several fiscal year 2027 targets. Offsets were lower net income, diluted EPS, adjusted diluted EPS, adjusted EBITDA margin, free cash flow, and a quarterly book-to-bill ratio of 0.6.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenuesGAAP | $1,880 million | – | 6 % |
| Organic growthnon-GAAP | approximately 5.3% | – | – |
| Cost of revenuesGAAP | $1,641 million | – | – |
| Selling, general and administrative expensesGAAP | $87 million | – | – |
| Operating incomeGAAP | $152 million | – | 9 % |
| Operating income as a percentage of revenuesGAAP | 8.1 % | – | 20bps |
| Adjusted operating incomenon-GAAP | $191 million | – | 5 % |
| Adjusted operating income as a percentage of revenuesnon-GAAP | 10.2 % | – | -10bps |
| Interest expense, netGAAP | $33 million | – | – |
| Income before income taxesGAAP | $119 million | – | – |
| Income tax (expense) benefitGAAP | $(17) million | – | – |
| Net incomeGAAP | $102 million | – | (20) % |
| EBITDAnon-GAAP | $193 million | – | 9 % |
| EBITDA as a percentage of revenuesnon-GAAP | 10.3 % | – | 30bps |
| Adjusted EBITDAnon-GAAP | $193 million | – | 4 % |
| Adjusted EBITDA as a percentage of revenuesnon-GAAP | 10.3 % | – | -20bps |
| Diluted earnings per shareGAAP | $2.38 | – | (12) % |
| Adjusted diluted earnings per sharenon-GAAP | $3.01 | – | (17) % |
| Weighted-average diluted shares outstandingGAAP | 42.8 million | – | – |
| Net cash provided by operating activitiesGAAP | $146 million | – | 20 % |
| Free cash flownon-GAAP | $131 million | – | (13) % |
| Expenditures for property, plant, and equipmentGAAP | $(15) million | – | – |
| Net bookingsother | approximately $1.2 billion | – | – |
| Quarterly book-to-bill ratioother | 0.6 | – | – |
| Trailing twelve months book-to-bill ratioother | 0.8 | – | – |
| Total backlogother | $22,136 million | – | – |
| Funded backlogother | $3,818 million | – | – |
| Negotiated unfunded backlogother | $18,318 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Defense and IntelligenceRevenue increased primarily due to ramp up in volume on existing and new contracts and from the acquisition of SilverEdge of $20 million, partially offset by contract completions. Adjusted operating income as a percentage of revenues increased primarily due to improved profitability across the contract portfolio. | $1,449 million | – | 5% |
| CivilianRevenue increased primarily due to ramp up in volume on existing and new contracts, partially offset by contract completions. Adjusted operating income as a percentage of revenues decreased primarily due to timing and volume mix in the contract portfolio. | $431 million | – | 9% |
Fiscal Year 2027 outlook
- Revenue$7.2B - $7.3B
- NoteOrganic Growth (1): (2%) - (0%)
- NoteAdjusted EBITDA (1): $750M - $755M
- NoteAdjusted EBITDA Margin % (1): 10.3% - 10.5%
- NoteAdjusted Diluted EPS (1): $10.65 - $10.75
- NoteFree Cash Flow (1): >$600M
- NoteNet cash provided by operating activities: >$635M
- NoteExpenditures for property, plant, and equipment: Approximately $35M
Capital returns
- During the quarter, SAIC deployed $106 million of capital, consisting of $90 million of plan share repurchases and $16 million in cash dividends.
- Stock repurchased and retired or withheld for taxes on equity awards was $(98) million for the three months ended July 31, 2026, compared with $(110) million for the three months ended August 1, 2025.
- Dividend payments to stockholders were $(16) million for the three months ended July 31, 2026, compared with $(17) million for the three months ended August 1, 2025.
- On August 27, 2026, the Board declared a cash dividend of $0.37 per share payable on October 23, 2026 to stockholders of record on October 9, 2026.
What drove it
- Consolidated revenue growth was primarily driven by ramp up in volume on existing and new contracts and $20 million from the SilverEdge acquisition, partially offset by contract completions.
- GAAP operating income margin increased primarily due to improved profitability across the contract portfolio and costs related to the settlement of federal tax audits in the prior year.
- Adjusted EBITDA margin declined primarily due to higher selling, general and administrative expenses, including recovery of costs from the settlement of a patent infringement matter in the prior year, partially offset by improved profitability across the contract portfolio.
- Operating cash flow increased primarily due to lower cash outflows from usage of the MARPA Facility, lower cash incentive-based compensation payments, and other working-capital changes, partially offset by timing of customer collections.
- The company received a subsequent-to-period-end recompete contract of approximately $740 million with the U.S. Department of Homeland Security, which was not included in current-quarter bookings.
Concerns
- Net income was $102 million versus $127 million, while diluted EPS was $2.38 versus $2.71 and adjusted diluted EPS was $3.01 versus $3.63.
- Adjusted EBITDA margin was 10.3 % versus 10.5 %, and adjusted operating margin was 10.2 % versus 10.3 %.
- Free cash flow was $131 million versus $150 million.
- Quarterly net bookings were approximately $1.2 billion, with a book-to-bill ratio of 0.6 and trailing twelve months book-to-bill ratio of 0.8.
- Total backlog was $22,136 million at July 31, 2026, versus $22,622 million at January 30, 2026.
What to watch
- Execution on ramp-ups of existing and new contracts and the contribution from the SilverEdge acquisition.
- Whether the quarterly book-to-bill ratio of 0.6 and trailing twelve months ratio of 0.8 improve through new awards and task orders.
- Margin effects from selling, general and administrative expenses, contract profitability, and Civilian timing and volume mix.
- Conversion of the fiscal year 2027 guidance for revenue of $7.2B - $7.3B, adjusted EBITDA of $750M - $755M, adjusted diluted EPS of $10.65 - $10.75, and free cash flow of >$600M.
- Bookings impact from the approximately $740 million Department of Homeland Security award, which was not included in current-quarter bookings.
Balance sheet and cash flow
- Cash and cash equivalents were $126 million as of July 31, 2026, compared with $182 million as of January 30, 2026.
- Debt, current portion was $33 million as of July 31, 2026, compared with $19 million as of January 30, 2026.
- Debt, net of current portion was $2,452 million as of July 31, 2026, compared with $2,468 million as of January 30, 2026.
- Receivables, net were $996 million as of July 31, 2026, compared with $853 million as of January 30, 2026.
- Net cash provided by operating activities was $146 million for the three months ended July 31, 2026, compared with $122 million for the three months ended August 1, 2025.
- Net cash used in investing activities was $(15) million for the three months ended July 31, 2026, compared with $(7) million for the three months ended August 1, 2025.
- Net cash used in financing activities was $(114) million for the three months ended July 31, 2026, compared with $(114) million for the three months ended August 1, 2025.
- Subsequent to quarter end, on August 14, 2026, SAIC amended the MARPA to increase the aggregate facility limit from $300 million to $400 million.
Analysis
SAIC delivered second-quarter fiscal year 2027 revenue of $1,880 million, up 6 % from $1,769 million, with approximately 5.3% organic growth. Management attributed growth to ramp-up volume on existing and new contracts and $20 million of revenue from SilverEdge, partly offset by contract completions. Defense and Intelligence revenue was $1,449 million, up 5%, while Civilian revenue was $431 million, up 9%.
GAAP operating income increased to $152 million from $139 million and operating margin improved to 8.1 % from 7.9 %. Improved contract-portfolio profitability and prior-year federal tax-audit settlement costs supported the GAAP margin result. However, adjusted operating income margin fell to 10.2 % from 10.3 %, and adjusted EBITDA margin declined to 10.3 % from 10.5 %, reflecting higher selling, general and administrative expenses and the prior-year patent-infringement settlement cost recovery. Civilian adjusted operating margin was 13.0 % versus 13.7 %, with management citing timing and volume mix.
Net income fell to $102 million from $127 million. Diluted EPS was $2.38 versus $2.71, and adjusted diluted EPS was $3.01 versus $3.63, despite weighted-average diluted shares decreasing to 42.8 million from 46.8 million. Cash flows provided by operating activities rose to $146 million from $122 million, while free cash flow was $131 million versus $150 million. SAIC deployed $106 million during the quarter, consisting of $90 million of plan share repurchases and $16 million in cash dividends.
Demand visibility warrants attention. Net bookings were approximately $1.2 billion, producing a quarterly book-to-bill ratio of 0.6 and a trailing twelve months ratio of 0.8. Total backlog was $22,136 million, including $3,818 million of funded backlog. The company raised fiscal year 2027 revenue guidance to $7.2B - $7.3B, adjusted EBITDA guidance to $750M - $755M, adjusted EBITDA margin guidance to 10.3% - 10.5%, and adjusted diluted EPS guidance to $10.65 - $10.75. It reiterated free cash flow guidance of >$600M.
Management, verbatim
I am proud of our team’s performance this quarter, delivering solid organic growth and double-digit margins as we continue to execute with discipline.
Jim Reagan, SAIC Chief Executive Officer
Not in the filing
stated, not guessed- Gross margin was not reported.
- Quarter-over-quarter comparisons for income-statement, segment, cash-flow, EPS, and bookings metrics were not reported.
- GAAP operating-income, net-income, diluted-EPS, and operating-cash-flow forward guidance were not provided because the company did not provide reconciliations for certain forward-looking non-GAAP measures.
- A previous-release outlook document was not provided; therefore, no actual-versus-prior-guidance comparison is included.
- A consolidated total debt line item was not reported; debt was reported separately as debt, current portion and debt, net of current portion.
- Segment operating income on a GAAP basis was not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
SAIC is a leading integrator for U.S. defense, space, intelligence, and civilian markets, regularly reporting to SEC via 8‑K.
Ticker impact
SAIC filed an 8‑K reporting Q2 FY2027 results with revenue up 6.3% YoY and raised FY2027 guidance.
Potential price appreciation on earnings beat and guidance raise; support near current levels.
Strong organic growth, higher bookings and a new dividend indicate improved financial health and may attract both growth and income investors.
Market effects
Positive signal for defense and government services sector as SAIC's growth may lift peers.
U.S. defense contractors could see modest buying pressure.
Limited to investors focused on U.S. government‑contract space.
Counterpoint
Higher guidance may already be priced in; watch for execution risk on new contracts.
Key entities
- ExecutiveJim Reagan
CEO of SAIC who highlighted the results and guidance raise.
