Second Quarter of Fiscal Year 2027
Filed Aug 31, 2026SAIC 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.