Leidos Delivers Strong Third Quarter and Enhances Full-Year Guidance
u Adjusted EBITDA (non-GAAP) of $644 million and Adjusted EBITDA margin (non- GAAP) of 13.9%
u Cash Flows from Operations of $523 million; Non-GAAP Free Cash Flow of $476 million
RESTON, Va., November 3, 2026 – Leidos Holdings, Inc. (NYSE: LDOS) today reported financial results for the third quarter of fiscal year 2026, highlighted by robust revenue growth and free cash flow generation.
“Leidos delivered another quarter of strong financial performance, allowing us to enhance our 2026 guidance for the third consecutive quarter,” said Chief Executive Officer Tom Bell. “Our sustained momentum reflects the strength of our focused team, united behind our NorthStar 2030 strategy and committed to delivering on our customers’ most critical missions. Looking ahead, we’ll continue to execute our strategy with confidence, invest in differentiated capabilities, and deploy capital strategically to accelerate growth and create enduring value.”
(in millions, except margin and per Three Months October 2, October 3, share data) Ended 2026 2025 ────────────────────────────────────────────────────────────────────────────── Revenues $ 4,630 $ 4,469 Net income $ 413 $ 369 Net income 8.9 % 8.3 % margin Diluted earnings per $ 3.28 $ 2.82 share (EPS) Non-GAAP Measures*: Adjusted $ 644 $ 616 EBITDA Adjusted EBITDA 13.9 % 13.8 % margin Non-GAAP $ 3.62 $ 3.05 diluted EPS * Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Management believes that these non-GAAP measures provide another representat… of Leidos' results of operations and financial condition, including its ability to comply with financial covenants. See Non-GAAP Financial Measures at the end of this press release for more information and a reconciliat… of our selected reported results to these non-GAAP measures.
Revenues for the quarter were $4.63 billion, up 4% compared to the third quarter of 2025. Revenue grew year-over-year due to increased customer demand for defense tech products, air traffic management solutions, and intelligence mission support as well as the acquisition of ENTRUST Solutions, which offset declines in some managed health and federal civilian IT programs.
For the third quarter, net income was $413 million, or $3.28 per diluted share. Net income and diluted EPS were up 12% and 16%, respectively, year-over-year; net income margin was 8.9% compared to 8.3% in the third quarter of 2025. Net income and diluted EPS for the quarter reflect $12 million in costs associated with recent strategic corporate transactions. Adjusting for these and certain other items, non-GAAP net income increased 14% year-over-year, to $455 million for the third quarter, and non-GAAP diluted EPS increased 19% to $3.62. GAAP and non-GAAP earnings measures reflect a lower effective tax rate, primarily due to an increase in the federal research tax credit and a decrease in unrecognized tax benefits.
In addition, adjusted EBITDA was $644 million for the third quarter, up 5% year- over-year. Adjusted EBITDA margin of 13.9% increased from 13.8% in the third quarter of 2025. Profitability in the quarter was driven by improved program performance and disciplined cost management across the portfolio.
Net cash provided by operating activities for the quarter was $523 million for an operating cash flow conversion ratio of 128%. After adjusting for property, equipment, and software payments, quarterly free cash was $476 million for a free cash flow conversion ratio of 105%.
For the quarter, Leidos used $48 million in investing activities, including $47 million in property, equipment and software payments. Leidos used $549 million in financing activities, consisting primarily of $556 million returned to shareholders, including $504 million in share repurchases and $52 million as part of a regular quarterly cash dividend program. As of October 2, 2026, Leidos had $630 million in cash and cash equivalents and $6.0 billion of debt.
On October 30, 2026, the Leidos Board of Directors declared a cash dividend of $0.45 per share, which represents an increase of 4.7% over the prior quarter's dividend amount. The dividend will be payable on December 31, 2026, to stockholders of record at the close of business on December 15, 2026.
Net bookings totaled $5.5 billion in the quarter, representing a book-to-bill ratio of 1.2. As a result, backlog at the end of the quarter was $49.6 billion, of which $11.1 billion was funded. Trailing-twelve-month book-to-bill of 1.1 resulted in year-over-year growth in total and funded backlog of 4% and 22%, respectively. Quarterly bookings included several key awards:
u U.S. Air Force Air Combat Command (ACC) Intelligence Directorate (A2) Intelligence, Surveillance, Reconnaissance (ISR). Leidos secured a $717 million contract to continue providing critical threat mitigation and ISR operations support for the Air Force's ACC A2. Leidos is executing at 35 global locations, delivering embedded advanced data fusion across ACC headquarters, numbered Air Forces, and wings to ensure that the joint force maintains a decisive information advantage.
u Transportation Security Administration (TSA) Security Equipment Deployment Services (SEDS). TSA awarded Leidos a $672 million contract to continue to deploy, relocate, and manage critical security screening equipment across all federalized U.S. airports and major domestic special events. This award builds upon more than a decade of Leidos supporting TSA infrastructure, leveraging their deep logistics and integration expertise to protect the nation's transportation systems and adapt swiftly to emerging security threats.
u Defense Health Agency (DHA) Military Health System (MHS) GENESIS Bridge. Leidos secured a 12-month, $318 million sole-source bridge contract to sustain and enhance MHS GENESIS, including system maintenance, cybersecurity, performance monitoring, technology updates, and end-user support. The award ensures continuity of critical operations while reinforcing Leidos' expertise in modernizing complex federal health systems and delivering technology that supports healthcare for service members and their families.
u U.S. Army Defensive Cyber Solutions Branch (DCSB) Defensive Cyber Operations (DCO) 2.0. Leidos was awarded a $301 million follow-on contract to provide 24/7/365 defensive cyber operations for the Department of War Information Network (DoDIN). To support the agency's migration toward continuous, automated outcome delivery, Leidos is deploying its UpHold Effect Agentic SOC Automation platform. The platform utilizes autonomous AI agents that dramatically compresses threat response windows and eliminates analyst alert fatigue to ensure a hardened, reliable global network capable of defending against growing and evolving threats.
u Space Development Agency (SDA) Accelerated Missile Defense Tranche 3 (AMDT3). Leidos secured a $272 million award from Sierra Space to provide infrared sensing payloads, onboard signal-processing capabilities, and mission support for the AMDT3 Tracking Layer. The payloads will fly on 18 missile-tracking satellites, which are designed to detect hypersonic and other advanced threats from Low Earth Orbit. This award expands Leidos' position in space sensing and onboard digital processing, and builds on its execution record on Tranches 0, 1, and 2.
u United Kingdom (UK) National Air Traffic Services (NATS) Flight Data Processing (FDP) Evolution. Leidos received a $170 million contract to upgrade the core flight data processing software under the UK NATS FDP Evolutions program, replacing legacy systems with a modern architecture that automatically delivers real-time flight data to air traffic controllers. This award strengthens Leidos' global position in next-generation air traffic management and reinforces its pedigree for upcoming modernization projects.
u U.S. Cyber Command (CYBERCOM) Cyberspace Operations Support Services (COSS). Leidos secured a five-year, $160 million contract to support USCYBERCOM's J3, Cyber National Mission Force, and Joint Task Force Area with planning, training, strategy, doctrine development, and campaign assessment. This award marks Leidos' first cyber operations award
with USCYBERCOM and establishes a prime foothold with a strategically important customer in a high-growth national security mission area.
u U.S. Navy Nuclear-Armed Sea-Launched Cruise Missile (SLCM-N). The Navy awarded Leidos a $155 million contract to continue to advance flight systems integration and flight vehicle subsystem development for a sea-based theater nuclear deterrent.
u Customer & Border Patrol (CBP) and Immigration & Customs Enforcement (ICE) Shared Electronic Health Record (EHR) Platform and Support Services. Leidos secured a five-year, $129 million single-award blanket purchase agreement (BPA) to implement and sustain a modern EHR system for U.S. CBP and ICE. Under the initial call order, Leidos will deploy an integrated EHR system for ICE, consolidating core healthcare capabilities, enabling secure information exchange, and improving continuity of care. Building on the company's MHS GENESIS success, the award establishes and foundation for expansion across Department of Homeland Security (DHS) components.
u U.S. Army Long-Range Persistent Surveillance—Mobile (ALPS-M) and U.S. Marine Corps Multi-Role Air Defense Radar (MRADR). The Army awarded Leidos a $95 million contract to deliver 10 prototypes of its current ALPS capability, which is being deployed globally through the U.S. Air Force's Air Base Air Defense System - Missile Defense (ABADS-MD) program. Separately, Leidos secured a $41 million contract to build 14 additional MRADR systems for the Marine Corps. Together, these awards demonstrate sustained customer demand for Leidos' family of persistent surveillance sensing technologies.
T he U.S. Special Operations Command awarded Leidos a $27 million contract for the Low-Rate Initial Production (LRIP) of the AGM-190A Havoc Spear SCM. Under this award, Leidos will deliver an initial quantity of 45 All Up Rounds for operational fielding in Air Force Special Operations Command (AFSOC). Havoc Spear has the potential to be broadly deployed across special operations and conventional military platforms for low-cost precision strike mass capability in contested environments.
On October 5, 2026, Leidos closed the Contribution and Equity Purchase Agreement with Altaris, contributing the Security Enterprise Solutions and Industrial Automation (SES) businesses to a newly formed joint venture. After adjusting for the Joint Venture and incorporating its year-to-date performance and current outlook, Leidos is adjusting its fiscal year 2026 guidance as follows:
FY26 Guidance Measure Current Prior Revenues (B) $18.00 - $18.20 $18.20 - $18.40 Adjusted EBITDA Margin Mid 13% Mid 13% Non-GAAP Diluted EPS $12.50 - $12.70 $12.20 - $12.50 Cash Flows Provided by Operating Approximately $1.90 Approximately $1.85 Activities (B)
For information regarding adjusted EBITDA margin and non-GAAP diluted EPS, see the related explanations and reconciliations to GAAP measures included elsewhere in this release.
Leidos does not provide a reconciliation of forward-looking adjusted EBITDA margins or non-GAAP diluted EPS to net income margin or diluted EPS due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because certain deductions for non-GAAP exclusions used to calculate projected net income margin or diluted EPS may vary significantly based on actual events, Leidos is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income at this time. The amounts of these deductions may be material and, therefore, could result in projected net income margin and diluted EPS being materially less than what may be implied by projected adjusted EBITDA margins and non-GAAP diluted EPS.
Leidos management will discuss operations and financial results in an earnings conference call beginning at 8 A.M. eastern time on November 3, 2026. A live audio broadcast of the conference call along with a supplemental presentation will be available to the public through links on the Leidos Investor Relations website (
). An archived version of the webcast will be available on the Leidos Investor Relations website until November 3, 2027.
Leidos is an industry and technology leader serving government and commercial customers with smarter, more efficient digital and mission innovations. Headquartered in Reston, Virginia, with 50,000 global employees, Leidos reported annual revenues of approximately $17.2 billion for the fiscal year ended January 2, 2026. For more information, visit
Certain statements in this release contain or are based on "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "expects," "intends," "plans," "anticipates," "believes," "estimates," "guidance" and similar words or phrases. Forward-looking statements in this release include, among others, estimates of our future growth, strategy and financial and operating performance, including future revenues, adjusted EBITDA margins, diluted EPS (including on a non-GAAP basis) and cash flows provided by operating activities, as well as statements about our business contingency plans, government budgets and spending, uncertainties in tax due to new tax legislation or other regulatory developments, strategy, planned investments including the pending joint venture, sustainability goals and our future dividends, share repurchases, capital expenditures, debt repayments, acquisitions, dispositions and cash flow conversion. These statements reflect our belief and assumptions as to future events that may not prove to be accurate.
Actual performance and results may differ materially from those results anticipated by our guidance and other forward-looking statements made in this release depending on a variety of factors, including, but not limited to: developments in the U.S. government defense and non-defense budgets, including budget reductions, sequestration, implementation of spending limits or changes in budgetary priorities, potential future U.S. government shutdown and other or future delays in the U.S. government budget process, or the U.S. government’s failure to raise the debt ceiling, which increases the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession; uncertainties in tax due to new tax legislation or other regulatory developments; deterioration of economic conditions or weakening in credit or capital markets; uncertainty in the consequences of current and future geopolitical events; inflationary pressures and fluctuations in interest rates; delays in the U.S. government contract procurement process or the award of contracts and delays or loss of contracts as a result of competitor protests; changes in U.S. government procurement rules, regulations and practices; our compliance with various U.S. government and other government procurement rules and regulations; governmental reviews, audits and investigations of our company; our ability to effectively compete and win contracts with the U.S. government and other customers; our ability to respond rapidly to emerging technology trends, including the use of artificial intelligence; our reliance on information technology spending by hospitals/healthcare organizations; our reliance on infrastructure investments by industrial and natural resources organizations; energy efficiency and alternative energy sourcing investments; investments by U.S. government and commercial organizations in environmental impact and remediation projects; the effects of an epidemic, pandemic or similar outbreak may have on our business, financial position, results of operations and/or cash flows; our ability to attract, train and retain skilled employees, including our management team, and to obtain security clearances for our employees; our ability to accurately estimate costs, including cost increases due to inflation, associated with our firm-fixed-price contracts and other contracts; resolution of legal and other disputes with our customers and others or legal or regulatory compliance issues; cybersecurity, data security or other security threats, system failures or other disruptions of our business; our compliance with international, federal, state and local laws and regulations regarding privacy, data security, protection, storage, retention, transfer, disposal and other processing, technology protection and personal information; the damage and disruption to our business resulting from natural disasters and the effects of climate change; our ability to effectively acquire businesses and make investments; our ability to maintain relationships with prime contractors, subcontractors and joint venture partners; our ability to manage performance and other risks related to customer contracts; the failure of our inspection or detection systems to detect threats; the adequacy of our insurance programs, customer indemnifications or other liability protections designed to protect us from significant product or other liability claims, including cybersecurity attacks; our ability to manage risks associated with our international business; our ability to comply with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and similar worldwide anti- corruption and anti-bribery laws and regulations; our ability to protect our intellectual property and other proprietary rights by third parties of infringement, misappropriation or other violations by us of their intellectual property rights; our ability to prevail in litigation brought by third parties of infringement, misappropriation or other violations by us of their intellectual property rights; our
ability to declare or increase future dividends based on our earnings, financial condition, capital requirements and other factors, including compliance with applicable law and our agreements; our ability to grow our commercial health and infrastructure businesses, which could be negatively affected by budgetary constraints faced by hospitals and by developers of energy and infrastructure projects; our ability to successfully integrate acquired businesses; and our ability to execute our business plan and long-term management initiatives effectively and to overcome these and other known and unknown risks that we face.
These are only some of the factors that may affect the forward-looking statements contained in this release. For further information concerning risks and uncertainties associated with our business, please refer to the filings we make from time to time with the U.S. Securities and Exchange Commission (SEC), including the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Legal Proceedings" sections of our latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, all of which may be viewed or obtained through the Investor Relations section of our website at
All information in this release is as of November 3, 2026 . Leidos expressly disclaims any duty to update the guidance or any other forward-looking statement provided in this release to reflect subsequent events, actual results or changes in Leidos' expectations. Leidos also disclaims any duty to comment upon or correct information that may be contained in reports published by investment analysts or others.
CONTACTS: Investor Relations: Media Relations: Stuart Davis Brandon Ver Velde 571.526.6124 571.526.6257 ir@leidos.com brandon.p.vervelde@leidos.com
(in millions, except share and per share October 2, January 2, data) 2026 2026 ────────────────────────────────────────────────────────────────────────────── Assets: Cash and cash equivalents $ 630 $ 1,108 Receivables, net 2,944 2,708 Inventory, net 90 342 Other current assets 512 656 Assets held for sale 904 — Total current assets 5,080 4,814 Property, plant and 913 961 equipment, net Intangible assets, net 879 458 Goodwill 7,725 6,342 Operating lease 475 526 right-of-use assets, net Other long-term assets 394 392 Total assets $ 15,466 $ 13,493 Liabilities: Accounts payable and $ 2,175 $ 1,988 accrued liabilities Accrued payroll and 813 819 employee benefits Current portion of 18 20 long-term debt Liabilities held for sale 171 — Total current liabilities 3,177 2,827 Long-term debt, net of 6,009 4,628 current portion Operating lease 537 587 liabilities Other long-term 518 489 liabilities Total liabilities 10,241 8,531 Stockholders’ equity: Common stock, $0.0001 par value, 500,000,000 shares authorized, 121,996,926 and — — 126,380,657 shares issued and outstanding at October 2, 2026, and January 2, 2026, respectively Additional paid-in capital — 319 Retained earnings 5,197 4,647 Accumulated other -25 -50 comprehensive loss Total Leidos stockholders’ 5,172 4,916 equity Non-controlling interest 53 46 Total stockholders' equity 5,225 4,962 Total liabilities and stockholders' $ 15,466 $ 13,493 equity
Beginning fiscal 2026, we completed a realignment of our reporting structure, which resulted in the identification of four reportable segments: Intelligence & Digital, Health, Homeland and Defense. Additionally, we separately present the unallocable costs associated with corporate functions as Corporate. We commenced operating and reporting under the new organizational structure effective the first day of fiscal 2026. As a result of this change, prior year segment results have been recast to reflect the current reportable segment structure.
Intelligence & Digital revenues grew 1% year-over-year to $1.55 billion driven by recent contract awards and higher volumes and expanded scope across key Intelligence Community programs offset by reductions in certain federal civilian IT programs. Operating income margin was 11.1% compared to 9.2% in the prior year quarter, and non-GAAP operating income margin was 11.5%, up from the prior year quarter. Profitability enhancements were driven by a mix of better program execution, including strong award fee scores and disciplined cost management across the segment.
Health revenues of $1.07 billion decreased by 12% compared to the prior year quarter. Health operating income margin for the quarter was 22.5%, compared to 26.8% in the prior year quarter, and non-GAAP operating income margin was 22.8%, compared to 27.3% in the prior year quarter. The declines in revenues and margins were driven by expected program shifts and reduced volumes on managed health services programs.
Homeland revenues of $1.02 billion increased by 32% compared to the prior year quarter. Revenue growth was driven by strong demand for air traffic management and electric power distribution engineering solutions as well as $142 million from the acquisition of ENTRUST Solutions. Operating income margin for the quarter was 7.9%, compared to 6.5% in the prior year quarter, and non-GAAP operating margin increased to 11.3% from 7.5% in the prior year quarter. Profitability enhancements reflect an increased mix of higher-margin commercial work and disciplined cost management across the segment.
Defense revenues of $992 million were up 3% compared to the prior year quarter led by increased demand for several defense technology areas including air defense, sensing, and C5ISR systems. Defense operating income margin for the quarter was 8.7%, compared to 8.2% in the prior year quarter, and non-GAAP operating margin was 9.7%, compared to 9.8% in the prior year quarter.
Backlog represents the revenues we expect to recognize under negotiated contracts and unissued task orders on sole source IDIQ contracts, to the extent we believe their execution and funding to be probable. Backlog does not include potential task orders expected to be awarded under multiple award IDIQ contracts.
Backlog value is based on management’s estimates about volume of services, availability of customer funding and other factors, and excludes contracts that are under protest. Estimated backlog comprises both funded and negotiated unfunded backlog. Backlog estimates are subject to change and may be affected by several factors, including modifications of contracts, non-exercise of options and foreign currency movements.
Funded backlog for contracts with the U.S. government represents the value on contracts for which funding is appropriated less revenues previously recognized on these contracts. Funded backlog for contracts with non-U.S. government entities and commercial customers represents the estimated value on contracts, which may cover multiple future years, under which Leidos is obligated to perform, less revenue previously recognized on the contracts. Unfunded backlog represents all remaining value on task orders that is not funded, including options, that we expect to recognize as well as expected future task orders under sole source IDIQ contracts.
Backlog at October 2, 2026, includes amounts acquired as part of the Entrust transaction. As of March 27, 2026, the acquisition date, Entrust had $371 million of backlog that was included within the Homeland reportable segment.
Leidos uses and refers to non-GAAP operating income, non-GAAP operating margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP diluted EPS, non-GAAP free cash flow and non-GAAP free cash flow conversion, which are not measures of financial performance under generally accepted accounting principles in the U.S. and, accordingly, these measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be read in conjunction with Leidos's consolidated financial statements prepared in accordance with GAAP.
Management believes that these non-GAAP measures provide another representation of the results of operations and financial condition, including its ability to comply with financial covenants. These non-GAAP measures are frequently used by financial analysts covering Leidos and its peers. The computation of non-GAAP measures may not be comparable to similarly titled measures reported by other companies, thus limiting their use for comparability.
capture the revenue that is inherent in the underlying business excluding the impact of acquisitions and divestitures made within the prior year; it is computed as current revenues excluding revenues from acquisitions within the last 12 months and divestitures within the current and year-ago periods.
u Acquisition, integration and restructuring costs – Represents acquisition, integration, lease termination, severance and retention costs and asset markdowns related to acquisitions and restructuring activities.
u Amortization of acquired intangible assets – Represents the amortization of the fair value of the acquired intangible assets. We do not exclude the revenue associated with these acquired intangible assets from non-GAAP operating income.
u Asset impairment charges – Represents impairments of long-lived intangible assets and other assets.
is computed by excluding the discrete items from operating income and the following discrete items from non operating income.
u Settlement loss on pension plan buy-out – Represents the settlement loss in connection with the buy-out of our UK defined benefit pension plan.
u Acquisition related financing costs – Represents the cost associated with the termination of the bridge loan facility in connection with the acquisition of Entrust.
is computed by excluding the following items from income before income taxes: (i) discrete items as identified above; (ii) interest expense; (iii) interest income; (iv) depreciation expense; and (v) amortization of internally developed intangible assets.
is computed by excluding the discrete items listed under non-GAAP operating income and non-GAAP non operating income and their related tax impacts.
is computed by dividing net income attributable to Leidos common stockholders, adjusted for the discrete items as identified above and the related tax impacts, by the diluted weighted average number of common shares outstanding.
is computed by deducting expenditures for property, equipment and software from net cash provided by (used in) operating activities.
is computed by dividing non-GAAP free cash flow by non-GAAP net income attributable to Leidos common stockholders; operating cash flow conversion is computed by dividing net cash provided by operating activities by net income attributable to Leidos common stockholders.
The following table presents the reconciliation of revenues to organic revenues by reportable segment and total operations:
(1) Current period acquisition revenues reflects revenues in the current as reported figures for 12 months from closing of each acquisition. Acquisition revenues for the three months ended October 2, 2026, for the Homeland segment includes Entrust (acquired March 27, 2026).
(2) Prior period divestiture revenues reflect revenues from assets subsequently divested. Divestiture revenues for the three months ended October 3, 2025, for the Homeland segment include an immaterial business not aligned to the Company's long term strategy (divested October 31, 2025).
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the three months ended October 2, 2026:
(2) Earnings per share is computed independently for each of the non-GAAP adjustments presented and therefore may not sum to the total non-GAAP earnings per share due to rounding.
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the three months ended October 3, 2025:
(2) Earnings per share is computed independently for each of the non-GAAP adjustments presented and therefore may not sum to the total non-GAAP earnings per share due to rounding.
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the nine months ended October 2, 2026:
(1) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations.
(3) Earnings per share is computed independently for each of the non-GAAP adjustments presented and therefore may not sum to the total non-GAAP earnings per share due to rounding.
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the nine months ended October 3, 2025:
(1) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations.
(3) Earnings per share is computed independently for each of the non-GAAP adjustments presented and therefore may not sum to the total non-GAAP earnings per share due to rounding.
The following tables present the reconciliation of non-GAAP operating income by reportable segment and Corporate to operating income:
(1) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations
(1) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations.
The following tables present the reconciliation of non-GAAP operating income by reportable segment and Corporate to operating income:
(1) Asset markdowns associated with restructuring activities were recorded to "Cost of revenues" in the condensed consolidated statements of operations.
The following table presents the reconciliation of free cash flow to net cash provided by operating activities as well as the calculation of operating cash flow and free cash flow conversion ratios:
Three Months October 2, October 3, Ended 2026 2025 ────────────────────────────────────────────────────────────────────────────── Net cash provided by $ 523 $ 711 operating activities Payments for property, equipment -47 -31 and software Non-GAAP free cash $ 476 $ 680 flow Net income attributable to Leidos $ 410 $ 367 common stockholders Acquisition, integration and 11 3 restructuri… costs(1) Amortization of acquired 26 25 intangibles… Asset impairment 5 2 charges(1) Non-GAAP net income attributable to $ 452 $ 397 Leidos common stockholders Operating cash flow 128 % 194 % conversion ratio Non-GAAP free cash flow 105 % 171 % conversion ratio
Full text with the tables
EXHIBIT 99.1
Leidos Delivers Strong Third Quarter and Enhances Full-Year Guidance
u Revenues of $4.6 billion, up 4% year-over-year
u Net income of $413 million or $3.28 per diluted share
u Adjusted EBITDA (non-GAAP) of $644 million and Adjusted EBITDA margin (non-
GAAP) of 13.9%
u Non-GAAP Diluted Earnings per Share of $3.62, up 19% year-over-year
u Cash Flows from Operations of $523 million; Non-GAAP Free Cash Flow of $476
million
RESTON, Va., November 3, 2026 – Leidos Holdings, Inc. (NYSE: LDOS) today
reported financial results for the third quarter of fiscal year 2026,
highlighted by robust revenue growth and free cash flow generation.
“Leidos delivered another quarter of strong financial performance, allowing us
to enhance our 2026 guidance for the third consecutive quarter,” said Chief
Executive Officer Tom Bell. “Our sustained momentum reflects the strength of our
focused team, united behind our NorthStar 2030 strategy and committed to
delivering on our customers’ most critical missions. Looking ahead, we’ll
continue to execute our strategy with confidence, invest in differentiated
capabilities, and deploy capital strategically to accelerate growth and create
enduring value.”
SUMMARY OPERATING RESULTS
(in
millions,
except
margin and
per Three Months October 2, October 3,
share data) Ended 2026 2025
──────────────────────────────────────────────────────────────────────────────
Revenues $ 4,630 $ 4,469
Net income $ 413 $ 369
Net income 8.9 % 8.3 %
margin
Diluted
earnings per $ 3.28 $ 2.82
share (EPS)
Non-GAAP
Measures*:
Adjusted $ 644 $ 616
EBITDA
Adjusted
EBITDA 13.9 % 13.8 %
margin
Non-GAAP $ 3.62 $ 3.05
diluted EPS
* Non-GAAP
financial
measures
should be
considered
in addition
to, but not
as a
substitute
for, the
information
provided
in
accordance
with GAAP.
Management
believes
that these
non-GAAP
measures
provide
another
representat…
of
Leidos'
results of
operations
and
financial
condition,
including
its
ability to
comply with
financial
covenants.
See Non-GAAP
Financial
Measures at
the end of
this press
release for
more
information
and a
reconciliat…
of our
selected
reported
results to
these
non-GAAP
measures.
Revenues for the quarter were $4.63 billion, up 4% compared to the third quarter
of 2025. Revenue grew year-over-year due to increased customer demand for
defense tech products, air traffic management solutions, and intelligence
mission support as well as the acquisition of ENTRUST Solutions, which offset
declines in some managed health and federal civilian IT programs.
For the third quarter, net income was $413 million, or $3.28 per diluted share.
Net income and diluted EPS were up 12% and 16%, respectively, year-over-year;
net income margin was 8.9% compared to 8.3% in the third quarter of 2025. Net
income and diluted EPS for the quarter reflect $12 million in costs associated
with recent strategic corporate transactions. Adjusting for these and certain
other items, non-GAAP net income increased 14% year-over-year, to $455 million
for the third quarter, and non-GAAP diluted EPS increased 19% to $3.62. GAAP and
non-GAAP earnings measures reflect a lower effective tax rate, primarily due to
an increase in the federal research tax credit and a decrease in unrecognized
tax benefits.
In addition, adjusted EBITDA was $644 million for the third quarter, up 5% year-
over-year. Adjusted EBITDA margin of 13.9% increased from 13.8% in the third
quarter of 2025. Profitability in the quarter was driven by improved program
performance and disciplined cost management across the portfolio.
1 Leidos Holdings, Inc. Exhibit 99.1
CASH FLOW SUMMARY
Net cash provided by operating activities for the quarter was $523 million for
an operating cash flow conversion ratio of 128%. After adjusting for property,
equipment, and software payments, quarterly free cash was $476 million for a
free cash flow conversion ratio of 105%.
For the quarter, Leidos used $48 million in investing activities, including $47
million in property, equipment and software payments. Leidos used $549 million
in financing activities, consisting primarily of $556 million returned to
shareholders, including $504 million in share repurchases and $52 million as
part of a regular quarterly cash dividend program. As of October 2, 2026, Leidos
had $630 million in cash and cash equivalents and $6.0 billion of debt.
On October 30, 2026, the Leidos Board of Directors declared a cash dividend of
$0.45 per share, which represents an increase of 4.7% over the prior quarter's
dividend amount. The dividend will be payable on December 31, 2026, to
stockholders of record at the close of business on December 15, 2026.
NEW BUSINESS AWARDS
Net bookings totaled $5.5 billion in the quarter, representing a book-to-bill
ratio of 1.2. As a result, backlog at the end of the quarter was $49.6 billion,
of which $11.1 billion was funded. Trailing-twelve-month book-to-bill of 1.1
resulted in year-over-year growth in total and funded backlog of 4% and 22%,
respectively. Quarterly bookings included several key awards:
u U.S. Air Force Air Combat Command (ACC) Intelligence Directorate (A2)
Intelligence, Surveillance, Reconnaissance (ISR). Leidos secured a $717 million
contract to continue providing critical threat mitigation and ISR operations
support for the Air Force's ACC A2. Leidos is executing at 35 global locations,
delivering embedded advanced data fusion across ACC headquarters, numbered Air
Forces, and wings to ensure that the joint force maintains a decisive
information advantage.
u Transportation Security Administration (TSA) Security Equipment Deployment
Services (SEDS). TSA awarded Leidos a $672 million contract to continue to
deploy, relocate, and manage critical security screening equipment across all
federalized U.S. airports and major domestic special events. This award builds
upon more than a decade of Leidos supporting TSA infrastructure, leveraging
their deep logistics and integration expertise to protect the nation's
transportation systems and adapt swiftly to emerging security threats.
u Defense Health Agency (DHA) Military Health System (MHS) GENESIS Bridge.
Leidos secured a 12-month, $318 million sole-source bridge contract to sustain
and enhance MHS GENESIS, including system maintenance, cybersecurity,
performance monitoring, technology updates, and end-user support. The award
ensures continuity of critical operations while reinforcing Leidos' expertise in
modernizing complex federal health systems and delivering technology that
supports healthcare for service members and their families.
u U.S. Army Defensive Cyber Solutions Branch (DCSB) Defensive Cyber Operations
(DCO) 2.0. Leidos was awarded a $301 million follow-on contract to provide
24/7/365 defensive cyber operations for the Department of War Information
Network (DoDIN). To support the agency's migration toward continuous, automated
outcome delivery, Leidos is deploying its UpHold Effect Agentic SOC Automation
platform. The platform utilizes autonomous AI agents that dramatically
compresses threat response windows and eliminates analyst alert fatigue to
ensure a hardened, reliable global network capable of defending against growing
and evolving threats.
u Space Development Agency (SDA) Accelerated Missile Defense Tranche 3 (AMDT3).
Leidos secured a $272 million award from Sierra Space to provide infrared
sensing payloads, onboard signal-processing capabilities, and mission support
for the AMDT3 Tracking Layer. The payloads will fly on 18 missile-tracking
satellites, which are designed to detect hypersonic and other advanced threats
from Low Earth Orbit. This award expands Leidos' position in space sensing and
onboard digital processing, and builds on its execution record on Tranches 0, 1,
and 2.
u United Kingdom (UK) National Air Traffic Services (NATS) Flight Data
Processing (FDP) Evolution. Leidos received a $170 million contract to upgrade
the core flight data processing software under the UK NATS FDP Evolutions
program, replacing legacy systems with a modern architecture that automatically
delivers real-time flight data to air traffic controllers. This award
strengthens Leidos' global position in next-generation air traffic management
and reinforces its pedigree for upcoming modernization projects.
u U.S. Cyber Command (CYBERCOM) Cyberspace Operations Support Services (COSS).
Leidos secured a five-year, $160 million contract to support USCYBERCOM's J3,
Cyber National Mission Force, and Joint Task Force Area with planning, training,
strategy, doctrine development, and campaign assessment. This award marks
Leidos' first cyber operations award
Leidos Holdings, Inc. Exhibit 99.1 2
with USCYBERCOM and establishes a prime foothold with a strategically important
customer in a high-growth national security mission area.
u U.S. Navy Nuclear-Armed Sea-Launched Cruise Missile (SLCM-N). The Navy awarded
Leidos a $155 million contract to continue to advance flight systems integration
and flight vehicle subsystem development for a sea-based theater nuclear
deterrent.
u Customer & Border Patrol (CBP) and Immigration & Customs Enforcement (ICE)
Shared Electronic Health Record (EHR) Platform and Support Services. Leidos
secured a five-year, $129 million single-award blanket purchase agreement (BPA)
to implement and sustain a modern EHR system for U.S. CBP and ICE. Under the
initial call order, Leidos will deploy an integrated EHR system for ICE,
consolidating core healthcare capabilities, enabling secure information
exchange, and improving continuity of care. Building on the company's MHS
GENESIS success, the award establishes and foundation for expansion across
Department of Homeland Security (DHS) components.
u U.S. Army Long-Range Persistent Surveillance—Mobile (ALPS-M) and U.S. Marine
Corps Multi-Role Air Defense Radar (MRADR). The Army awarded Leidos a $95
million contract to deliver 10 prototypes of its current ALPS capability, which
is being deployed globally through the U.S. Air Force's Air Base Air Defense
System - Missile Defense (ABADS-MD) program. Separately, Leidos secured a $41
million contract to build 14 additional MRADR systems for the Marine Corps.
Together, these awards demonstrate sustained customer demand for Leidos' family
of persistent surveillance sensing technologies.
u
AGM-190A Small Cruise Missile (SCM) Program.
T he U.S. Special Operations Command awarded Leidos a $27 million contract for
the Low-Rate Initial Production (LRIP) of the AGM-190A Havoc Spear SCM. Under
this award, Leidos will deliver an initial quantity of 45 All Up Rounds for
operational fielding in Air Force Special Operations Command (AFSOC). Havoc
Spear has the potential to be broadly deployed across special operations and
conventional military platforms for low-cost precision strike mass capability in
contested environments.
3 Leidos Holdings, Inc. Exhibit 99.1
FORWARD GUIDANCE
On October 5, 2026, Leidos closed the Contribution and Equity Purchase Agreement
with Altaris, contributing the Security Enterprise Solutions and Industrial
Automation (SES) businesses to a newly formed joint venture. After adjusting for
the Joint Venture and incorporating its year-to-date performance and current
outlook, Leidos is adjusting its fiscal year 2026 guidance as follows:
FY26 Guidance
Measure Current Prior
Revenues (B) $18.00 - $18.20 $18.20 - $18.40
Adjusted EBITDA Margin Mid 13% Mid 13%
Non-GAAP Diluted EPS $12.50 - $12.70 $12.20 - $12.50
Cash Flows Provided by
Operating Approximately $1.90 Approximately $1.85
Activities (B)
For information regarding adjusted EBITDA margin and non-GAAP diluted EPS, see
the related explanations and reconciliations to GAAP measures included elsewhere
in this release.
Leidos does not provide a reconciliation of forward-looking adjusted EBITDA
margins or non-GAAP diluted EPS to net income margin or diluted EPS due to the
inherent difficulty in forecasting and quantifying certain amounts that are
necessary for such reconciliation. Because certain deductions for non-GAAP
exclusions used to calculate projected net income margin or diluted EPS may vary
significantly based on actual events, Leidos is not able to forecast on a GAAP
basis with reasonable certainty all deductions needed in order to provide a GAAP
calculation of projected net income at this time. The amounts of these
deductions may be material and, therefore, could result in projected net income
margin and diluted EPS being materially less than what may be implied by
projected adjusted EBITDA margins and non-GAAP diluted EPS.
Leidos Holdings, Inc. Exhibit 99.1 4
CONFERENCE CALL INFORMATION
Leidos management will discuss operations and financial results in an earnings
conference call beginning at 8 A.M. eastern time on November 3, 2026. A live
audio broadcast of the conference call along with a supplemental presentation
will be available to the public through links on the Leidos Investor Relations
website (
http://ir.leidos.com
). An archived version of the webcast will be available on the Leidos Investor
Relations website until November 3, 2027.
ABOUT LEIDOS
Leidos is an industry and technology leader serving government and commercial
customers with smarter, more efficient digital and mission innovations.
Headquartered in Reston, Virginia, with 50,000 global employees, Leidos reported
annual revenues of approximately $17.2 billion for the fiscal year ended January
2, 2026. For more information, visit
www.leidos.com
.
FORWARD-LOOKING STATEMENTS
Certain statements in this release contain or are based on "forward-looking"
information within the meaning of the Private Securities Litigation Reform Act
of 1995. In some cases, you can identify forward-looking statements by words
such as "expects," "intends," "plans," "anticipates," "believes," "estimates,"
"guidance" and similar words or phrases. Forward-looking statements in this
release include, among others, estimates of our future growth, strategy and
financial and operating performance, including future revenues, adjusted EBITDA
margins, diluted EPS (including on a non-GAAP basis) and cash flows provided by
operating activities, as well as statements about our business contingency
plans, government budgets and spending, uncertainties in tax due to new tax
legislation or other regulatory developments, strategy, planned investments
including the pending joint venture, sustainability goals and our future
dividends, share repurchases, capital expenditures, debt repayments,
acquisitions, dispositions and cash flow conversion. These statements reflect
our belief and assumptions as to future events that may not prove to be
accurate.
Actual performance and results may differ materially from those results
anticipated by our guidance and other forward-looking statements made in this
release depending on a variety of factors, including, but not limited to:
developments in the U.S. government defense and non-defense budgets, including
budget reductions, sequestration, implementation of spending limits or changes
in budgetary priorities, potential future U.S. government shutdown and other or
future delays in the U.S. government budget process, or the U.S. government’s
failure to raise the debt ceiling, which increases the possibility of a default
by the U.S. government on its debt obligations, related credit-rating
downgrades, or an economic recession; uncertainties in tax due to new tax
legislation or other regulatory developments; deterioration of economic
conditions or weakening in credit or capital markets; uncertainty in the
consequences of current and future geopolitical events; inflationary pressures
and fluctuations in interest rates; delays in the U.S. government contract
procurement process or the award of contracts and delays or loss of contracts as
a result of competitor protests; changes in U.S. government procurement rules,
regulations and practices; our compliance with various U.S. government and other
government procurement rules and regulations; governmental reviews, audits and
investigations of our company; our ability to effectively compete and win
contracts with the U.S. government and other customers; our ability to respond
rapidly to emerging technology trends, including the use of artificial
intelligence; our reliance on information technology spending by
hospitals/healthcare organizations; our reliance on infrastructure investments
by industrial and natural resources organizations; energy efficiency and
alternative energy sourcing investments; investments by U.S. government and
commercial organizations in environmental impact and remediation projects; the
effects of an epidemic, pandemic or similar outbreak may have on our business,
financial position, results of operations and/or cash flows; our ability to
attract, train and retain skilled employees, including our management team, and
to obtain security clearances for our employees; our ability to accurately
estimate costs, including cost increases due to inflation, associated with our
firm-fixed-price contracts and other contracts; resolution of legal and other
disputes with our customers and others or legal or regulatory compliance issues;
cybersecurity, data security or other security threats, system failures or other
disruptions of our business; our compliance with international, federal, state
and local laws and regulations regarding privacy, data security, protection,
storage, retention, transfer, disposal and other processing, technology
protection and personal information; the damage and disruption to our business
resulting from natural disasters and the effects of climate change; our ability
to effectively acquire businesses and make investments; our ability to maintain
relationships with prime contractors, subcontractors and joint venture partners;
our ability to manage performance and other risks related to customer contracts;
the failure of our inspection or detection systems to detect threats; the
adequacy of our insurance programs, customer indemnifications or other liability
protections designed to protect us from significant product or other liability
claims, including cybersecurity attacks; our ability to manage risks associated
with our international business; our ability to comply with the U.S. Foreign
Corrupt Practices Act, the U.K. Bribery Act of 2010 and similar worldwide anti-
corruption and anti-bribery laws and regulations; our ability to protect our
intellectual property and other proprietary rights by third parties of
infringement, misappropriation or other violations by us of their intellectual
property rights; our ability to prevail in litigation brought by third parties
of infringement, misappropriation or other violations by us of their
intellectual property rights; our
5 Leidos Holdings, Inc. Exhibit 99.1
ability to declare or increase future dividends based on our earnings, financial
condition, capital requirements and other factors, including compliance with
applicable law and our agreements; our ability to grow our commercial health and
infrastructure businesses, which could be negatively affected by budgetary
constraints faced by hospitals and by developers of energy and infrastructure
projects; our ability to successfully integrate acquired businesses; and our
ability to execute our business plan and long-term management initiatives
effectively and to overcome these and other known and unknown risks that we
face.
These are only some of the factors that may affect the forward-looking
statements contained in this release. For further information concerning risks
and uncertainties associated with our business, please refer to the filings we
make from time to time with the U.S. Securities and Exchange Commission (SEC),
including the "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Legal Proceedings" sections of our
latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, all of
which may be viewed or obtained through the Investor Relations section of our
website at
www.leidos.com
.
All information in this release is as of November 3, 2026 . Leidos expressly
disclaims any duty to update the guidance or any other forward-looking statement
provided in this release to reflect subsequent events, actual results or changes
in Leidos' expectations. Leidos also disclaims any duty to comment upon or
correct information that may be contained in reports published by investment
analysts or others.
CONTACTS:
Investor Relations: Media Relations:
Stuart Davis Brandon Ver Velde
571.526.6124 571.526.6257
ir@leidos.com brandon.p.vervelde@leidos.com
Leidos Holdings, Inc. Exhibit 99.1 6
LEIDOS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in
mi…
ex…
per Thr… Oct… Oct… Nine Oct… Oct…
sh… Mon… 2, 3, Mon… 2, 3,
da… End… 2026 2025 End… 2026 2025
──────────────────────────────────────────────────────────────────────────────
Re… $ 4,6… $ 4,4… $ 13,… $ 12…
Co…
of 3,8… 3,6… 11,… 10…
re…
Se…
ge…
and 262 290 768 737
ad…
ex…
Ac…
in…
and 12 4 74 10
re…
co…
Eq…
ea…
of -7 -8 -19 -23
no…
su…
Op… 553 535 1,5… 1,…
in…
No…
ex…
In…
ex… -67 -51 -191 -1…
net
Ot…
ex… -4 — -22 -1
net
In…
be… 482 484 1,3… 1,…
in…
ta…
In…
tax -69 -115 -258 -3…
ex…
Net 413 369 1,1… 1,…
in…
Le…
net
in…
at… 3 2 12 6
to
no…
in…
Net
in…
at…
to $ 410 $ 367 $ 1,0… $ 1,…
Le…
co…
st…
Ea…
per
sh…
Ba… $ 3.31 $ 2.87 $ 8.74 $ 8.…
Di… 3.28 2.82 8.67 8.…
We…
av…
nu…
of
co…
sh…
ou…
Ba… 124 128 125 129
Di… 125 130 126 130
Ca…
di…
de… $ 0.43 $ 0.40 $ 1.29 $ 1.…
per
sh…
7 Leidos Holdings, Inc. Exhibit 99.1
LEIDOS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share
and per share October 2, January 2,
data) 2026 2026
──────────────────────────────────────────────────────────────────────────────
Assets:
Cash and cash equivalents $ 630 $ 1,108
Receivables, net 2,944 2,708
Inventory, net 90 342
Other current assets 512 656
Assets held for sale 904 —
Total current assets 5,080 4,814
Property, plant and 913 961
equipment, net
Intangible assets, net 879 458
Goodwill 7,725 6,342
Operating lease 475 526
right-of-use assets, net
Other long-term assets 394 392
Total assets $ 15,466 $ 13,493
Liabilities:
Accounts payable and $ 2,175 $ 1,988
accrued liabilities
Accrued payroll and 813 819
employee benefits
Current portion of 18 20
long-term debt
Liabilities held for sale 171 —
Total current liabilities 3,177 2,827
Long-term debt, net of 6,009 4,628
current portion
Operating lease 537 587
liabilities
Other long-term 518 489
liabilities
Total liabilities 10,241 8,531
Stockholders’ equity:
Common stock, $0.0001 par
value,
500,000,000 shares
authorized,
121,996,926 and — —
126,380,657 shares
issued and outstanding at
October 2,
2026, and January 2, 2026,
respectively
Additional paid-in capital — 319
Retained earnings 5,197 4,647
Accumulated other -25 -50
comprehensive loss
Total Leidos stockholders’ 5,172 4,916
equity
Non-controlling interest 53 46
Total stockholders' equity 5,225 4,962
Total liabilities and
stockholders' $ 15,466 $ 13,493
equity
Leidos Holdings, Inc. Exhibit 99.1 8
LEIDOS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Thr… Oct… Oct… Nine Oct… Oc…
(in Mon… 2, 3, Mon… 2, 3,
mi… End… 2026 2025 End… 2026 20…
──────────────────────────────────────────────────────────────────────────────
Ca…
fl…
fr…
op…
Net $ 413 $ 369 $ 1,1… $ 1,1…
in…
Ad…
to
re…
net
in…
to
net
ca…
pr…
by
op…
De…
and 76 74 229 215
am…
St… 28 26 79 72
co…
De…
in… 15 88 13 288
ta…
Net
lo…
on — — 20 —
pe…
pl…
se…
Ot… 13 7 27 7
Ch…
in
as…
and
li…
net
of
ef…
of
ac…
and
di…
Re… 35 -61 -158 -297
Ot…
cu…
as…
and 20 60 58 26
ot…
lo…
as…
Ac…
pa…
and
ac…
li… -79 152 18 -108
and
ot…
lo…
li…
Ac…
pa…
and -46 -17 -12 -10
em…
be…
In…
ta… 48 13 239 -65
re…
Net
ca…
pr… 523 711 1,6… 1,2…
by
op…
ac…
Ca…
fl…
fr…
in…
ac…
Ac…
of
a
bu… — -7 -2,… -292
net
of
ca…
ac…
Pa…
for
pr… -47 -31 -110 -82
eq…
and
so…
Di…
of — — 4 —
a
bu…
Net
pr…
fr… — — 4 —
sa…
of
as…
Ot… -1 2 -5 2
Net
ca…
us… -48 -36 -2,… -372
in
in…
ac…
Ca…
fl…
fr…
fi…
ac…
Pr…
fr… — — 1,3… 997
de…
is…
Re…
of -5 -455 -15 -1,…
bo…
Pa…
for
de… — — -15 -7
is…
co…
Di… -52 -51 -162 -156
pa…
Re…
of
st… -504 -102 -819 -639
and
ot…
Pr…
fr…
is… 14 16 47 47
of
st…
Net
ca…
di… -2 -2 -5 -9
to
no…
in…
Ot… — -1 -7 -7
Net
ca…
(u…
in) -549 -595 421 -788
pr…
by
fi…
ac…
Ef…
of
fo…
ex…
ra…
ch…
on — -3 — 11
ca…
ca…
eq…
and
re…
ca…
9 Leidos Holdings, Inc. Exhibit 99.1
LEIDOS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS [CONTINUED]
Thr… Oct… Oct… Nine Oct… Oct…
(in Mon… 2, 3, Mon… 2, 3,
mi… End… 2026 2025 End… 2026 2025
──────────────────────────────────────────────────────────────────────────────
Net
(d…
in…
in
ca…
ca…
eq…
and
re…
ca… -74 77 -407 106
in…
ca…
cl…
in
cu…
as…
he…
for
sa…
Le…
ch…
in
ca…
ba…
cl… -18 — 23 —
as
as…
he…
for
sa…
Net
(d…
in…
in
ca… -56 77 -430 106
ca…
eq…
and
re…
ca…
Ca…
ca…
eq…
and
re… 830 1,0… 1,2… 991
ca…
at
be…
of
pe…
Ca…
ca…
eq…
and
re… 774 1,0… 774 1,0…
ca…
at
end
of
pe…
Le…
re…
ca…
at 144 123 144 123
end
of
pe…
Ca…
and
ca…
eq… $ 630 $ 974 $ 630 $ 974
at
end
of
pe…
Leidos Holdings, Inc. Exhibit 99.1 10
LEIDOS HOLDINGS, INC.
UNAUDITED SEGMENT OPERATING RESULTS
Thr… Oct… Oct… Nine Oct… Oct…
(in Mon… 2, 3, Mon… 2, 3,
mi… End… 2026 2025 End… 2026 2025
──────────────────────────────────────────────────────────────────────────────
Re…
In…
& $ 1,5… $ 1,5… $ 4,5… $ 4,…
Di…
He… 1,0… 1,2… 3,3… 3,…
Ho… 1,0… 775 2,8… 2,…
De… 992 959 2,8… 2,…
To… $ 4,6… $ 4,4… $ 13,… $ 12…
Op…
in…
(l…
In…
& $ 171 $ 141 $ 459 $ 408
Di…
He… 240 324 778 915
Ho… 81 50 206 175
De… 86 79 232 231
Co… -25 -59 -100 -93
To… $ 553 $ 535 $ 1,5… $ 1,…
Op…
in…
ma…
In…
& 11.1 % 9.2 % 10.1 % 9.4 %
Di…
He… 22.5 % 26.8 % 23.3 % 25… %
Ho… 7.9 % 6.5 % 7.2 % 7.6 %
De… 8.7 % 8.2 % 8.2 % 8.4 %
To… 11.9 % 12.0 % 11.6 % 12… %
Beginning fiscal 2026, we completed a realignment of our reporting structure,
which resulted in the identification of four reportable segments: Intelligence &
Digital, Health, Homeland and Defense. Additionally, we separately present the
unallocable costs associated with corporate functions as Corporate. We commenced
operating and reporting under the new organizational structure effective the
first day of fiscal 2026. As a result of this change, prior year segment results
have been recast to reflect the current reportable segment structure.
Intelligence & Digital
Intelligence & Digital revenues grew 1% year-over-year to $1.55 billion driven
by recent contract awards and higher volumes and expanded scope across key
Intelligence Community programs offset by reductions in certain federal civilian
IT programs. Operating income margin was 11.1% compared to 9.2% in the prior
year quarter, and non-GAAP operating income margin was 11.5%, up from the prior
year quarter. Profitability enhancements were driven by a mix of better program
execution, including strong award fee scores and disciplined cost management
across the segment.
Health
Health revenues of $1.07 billion decreased by 12% compared to the prior year
quarter. Health operating income margin for the quarter was 22.5%, compared to
26.8% in the prior year quarter, and non-GAAP operating income margin was 22.8%,
compared to 27.3% in the prior year quarter. The declines in revenues and
margins were driven by expected program shifts and reduced volumes on managed
health services programs.
Homeland
Homeland revenues of $1.02 billion increased by 32% compared to the prior year
quarter. Revenue growth was driven by strong demand for air traffic management
and electric power distribution engineering solutions as well as $142 million
from the acquisition of ENTRUST Solutions. Operating income margin for the
quarter was 7.9%, compared to 6.5% in the prior year quarter, and non-GAAP
operating margin increased to 11.3% from 7.5% in the prior year quarter.
Profitability enhancements reflect an increased mix of higher-margin commercial
work and disciplined cost management across the segment.
11 Leidos Holdings, Inc. Exhibit 99.1
LEIDOS HOLDINGS, INC.
UNAUDITED SEGMENT OPERATING RESULTS
Defense
Defense revenues of $992 million were up 3% compared to the prior year quarter
led by increased demand for several defense technology areas including air
defense, sensing, and C5ISR systems. Defense operating income margin for the
quarter was 8.7%, compared to 8.2% in the prior year quarter, and non-GAAP
operating margin was 9.7%, compared to 9.8% in the prior year quarter.
Leidos Holdings, Inc. Exhibit 99.1 12
LEIDOS HOLDINGS, INC.
UNAUDITED BACKLOG BY REPORTABLE SEGMENT
Backlog represents the revenues we expect to recognize under negotiated
contracts and unissued task orders on sole source IDIQ contracts, to the extent
we believe their execution and funding to be probable. Backlog does not include
potential task orders expected to be awarded under multiple award IDIQ
contracts.
Backlog value is based on management’s estimates about volume of services,
availability of customer funding and other factors, and excludes contracts that
are under protest. Estimated backlog comprises both funded and negotiated
unfunded backlog. Backlog estimates are subject to change and may be affected by
several factors, including modifications of contracts, non-exercise of options
and foreign currency movements.
Funded backlog for contracts with the U.S. government represents the value on
contracts for which funding is appropriated less revenues previously recognized
on these contracts. Funded backlog for contracts with non-U.S. government
entities and commercial customers represents the estimated value on contracts,
which may cover multiple future years, under which Leidos is obligated to
perform, less revenue previously recognized on the contracts. Unfunded backlog
represents all remaining value on task orders that is not funded, including
options, that we expect to recognize as well as expected future task orders
under sole source IDIQ contracts.
The estimated value of backlog as of the dates presented was as follows:
O… Oc…
2, 3,
2… 20…
──────────────────────────────────────────────────────────────────────────────
… Fu… Un… To… F… U… T…
…
…
& $ 2… $ 1… $ 1… $ 2,… $ 17… $ 19…
…
… 1… 5… 6… 1,… 6,… 8,…
… 3… 6… 1… 3,… 6,… 9,…
… 3… 1… 1… 2,… 8,… 10…
… $ 1… $ 3… $ 4… $ 9,… $ 38… $ 47…
Backlog at October 2, 2026, includes amounts acquired as part of the Entrust
transaction. As of March 27, 2026, the acquisition date, Entrust had $371
million of backlog that was included within the Homeland reportable segment.
13 Leidos Holdings, Inc. Exhibit 99.1
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES
Leidos uses and refers to non-GAAP operating income, non-GAAP operating margin,
adjusted EBITDA, adjusted EBITDA margin, non-GAAP diluted EPS, non-GAAP free
cash flow and non-GAAP free cash flow conversion, which are not measures of
financial performance under generally accepted accounting principles in the U.S.
and, accordingly, these measures should not be considered in isolation or as a
substitute for the comparable GAAP measures and should be read in conjunction
with Leidos's consolidated financial statements prepared in accordance with
GAAP.
Management believes that these non-GAAP measures provide another representation
of the results of operations and financial condition, including its ability to
comply with financial covenants. These non-GAAP measures are frequently used by
financial analysts covering Leidos and its peers. The computation of non-GAAP
measures may not be comparable to similarly titled measures reported by other
companies, thus limiting their use for comparability.
Organic revenues
capture the revenue that is inherent in the underlying business excluding the
impact of acquisitions and divestitures made within the prior year; it is
computed as current revenues excluding revenues from acquisitions within the
last 12 months and divestitures within the current and year-ago periods.
Non-GAAP operating income
is computed by excluding the following discrete items from operating income:
u Acquisition, integration and restructuring costs – Represents acquisition,
integration, lease termination, severance and retention costs and asset
markdowns related to acquisitions and restructuring activities.
u Amortization of acquired intangible assets – Represents the amortization of
the fair value of the acquired intangible assets. We do not exclude the revenue
associated with these acquired intangible assets from non-GAAP operating income.
u Asset impairment charges – Represents impairments of long-lived intangible
assets and other assets.
Non-GAAP non operating income
is computed by excluding the discrete items from operating income and the
following discrete items from non operating income.
u Settlement loss on pension plan buy-out – Represents the settlement loss in
connection with the buy-out of our UK defined benefit pension plan.
u Acquisition related financing costs – Represents the cost associated with the
termination of the bridge loan facility in connection with the acquisition of
Entrust.
Non-GAAP operating margin
is computed by dividing non-GAAP operating income by revenues.
Adjusted EBITDA
is computed by excluding the following items from income before income taxes:
(i) discrete items as identified above; (ii) interest expense; (iii) interest
income; (iv) depreciation expense; and (v) amortization of internally developed
intangible assets.
Adjusted EBITDA margin
is computed by dividing adjusted EBITDA by revenues.
Non-GAAP net income
is computed by excluding the discrete items listed under non-GAAP operating
income and non-GAAP non operating income and their related tax impacts.
Non-GAAP diluted EPS
is computed by dividing net income attributable to Leidos common stockholders,
adjusted for the discrete items as identified above and the related tax impacts,
by the diluted weighted average number of common shares outstanding.
Non-GAAP free cash flow
is computed by deducting expenditures for property, equipment and software from
net cash provided by (used in) operating activities.
Non-GAAP free cash flow conversion
is computed by dividing non-GAAP free cash flow by non-GAAP net income
attributable to Leidos common stockholders; operating cash flow conversion is
computed by dividing net cash provided by operating activities by net income
attributable to Leidos common stockholders.
Leidos Holdings, Inc. Exhibit 99.1 14
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except growth percentages)
The following table presents the reconciliation of revenues to organic revenues
by reportable segment and total operations:
Three
Months October October Percent
Ended 2, 2026 3, 2025 Change
──────────────────────────────────────────────────────────────────────────────
Intell…
&
Digital
Revenu…
as $ 1,546 $ 1,525 1.4 %
report…
Health
Revenu…
as 1,068 1,210 -11.7 %
report…
Homela…
Revenu…
as 1,024 775 32.1 %
report…
Acquis…
and 142 7
divest…
revenu…
Organic 882 768 14.8 %
revenu…
Defense
Revenu…
as 992 959 3.4 %
report…
Total
Operat…
Revenu…
as 4,630 4,469 3.6 %
report…
Acquis…
and 142 7
divest…
revenu…
Organic $ 4,488 $ 4,462 0.6 %
revenu…
(1) Current period acquisition revenues reflects revenues in the current as
reported figures for 12 months from closing of each acquisition. Acquisition
revenues for the three months ended October 2, 2026, for the Homeland segment
includes Entrust (acquired March 27, 2026).
(2) Prior period divestiture revenues reflect revenues from assets subsequently
divested. Divestiture revenues for the three months ended October 3, 2025, for
the Homeland segment include an immaterial business not aligned to the Company's
long term strategy (divested October 31, 2025).
15 Leidos Holdings, Inc. Exhibit 99.1
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except per share data and margin percentages)
The following tables present the reconciliation of non-GAAP operating income,
net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most
directly comparable GAAP measures for the three months ended October 2, 2026:
Th…
Mo…
En…
Oc…
2,
20…
──────────────────────────────────────────────────────────────────────────────
Ac… Am…
As in… of As… No…
re… and ac… im… re…
re… in… ch…
co…
O… $ 553 $ 12 $ 35 $ 7 $ 6…
i…
N…
e… -71 — — — -…
n…
I…
b… 482 12 35 7 5…
i…
t…
I…
t… -69 -1 -9 -2 -…
e…
N… 413 11 26 5 4…
i…
L…
n…
i…
a… 3 — — — 3
to
n…
i…
N…
i…
a…
to $ 410 $ 11 $ 26 $ 5 $ 4…
L…
c…
s…
D…
E…
a…
to $ 3.… $ 0.… $ 0… $ 0… $ 3…
L…
c…
s…
D… 125 125 1… 1… 1…
s…
Th…
Mo…
En…
Oc…
2,
20…
──────────────────────────────────────────────────────────────────────────────
Ac… Am…
As in… of As… No…
re… and ac… im… re…
re… in… ch…
co…
N… $ 413 $ 11 $ 26 $ 5 $ 455
i…
I…
t… 69 1 9 2 81
e…
I…
b… 482 12 35 7 536
i…
t…
D… 41 — — — 41
e…
A…
of 35 — -35 — —
i…
I…
e… 67 — — — 67
n…
A… $ 625 $ 12 $ — $ 7 $ 644
E…
A…
E… 13… % 13… %
m…
(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments.
(2) Earnings per share is computed independently for each of the non-GAAP
adjustments presented and therefore may not sum to the total non-GAAP earnings
per share due to rounding.
Leidos Holdings, Inc. Exhibit 99.1 16
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except per share data and margin percentages)
The following tables present the reconciliation of non-GAAP operating income,
net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most
directly comparable GAAP measures for the three months ended October 3, 2025:
Th…
Mo…
En…
Oc…
3,
20…
──────────────────────────────────────────────────────────────────────────────
Ac… Am…
As in… of As… No…
re… and ac… im… re…
re… in… ch…
co…
O… $ 535 $ 4 $ 33 $ 3 $ 5…
i…
N…
e… -51 — — — -…
n…
I…
b… 484 4 33 3 5…
i…
t…
I…
t… -1… -1 -8 -1 -…
e…
N… 369 3 25 2 3…
i…
L…
n…
i…
a… 2 — — — 2
to
n…
i…
N…
i…
a…
to $ 367 $ 3 $ 25 $ 2 $ 3…
L…
c…
s…
D…
E…
a…
to $ 2.… $ 0.… $ 0… $ 0… $ 3…
L…
c…
s…
D… 130 130 1… 1… 1…
s…
Th…
Mo…
En…
Oc…
3,
20…
──────────────────────────────────────────────────────────────────────────────
Ac… Am…
As in… of As… No…
re… and ac… im… re…
re… in… ch…
co…
N… $ 369 $ 3 $ 25 $ 2 $ 399
i…
I…
t… 115 1 8 1 125
e…
I…
b… 484 4 33 3 524
i…
t…
D… 40 — — — 40
e…
A…
of 34 — -33 — 1
i…
I…
e… 51 — — — 51
n…
A… $ 609 $ 4 $ — $ 3 $ 616
E…
A…
E… 13… % 13.8 %
m…
(1) Calculation uses an estimated statutory tax rate on non-GAAP adjustments.
(2) Earnings per share is computed independently for each of the non-GAAP
adjustments presented and therefore may not sum to the total non-GAAP earnings
per share due to rounding.
17 Leidos Holdings, Inc. Exhibit 99.1
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except per share data and margin percentages)
The following tables present the reconciliation of non-GAAP operating income,
net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most
directly comparable GAAP measures for the nine months ended October 2, 2026:
…
…
…
…
…
…
──────────────────────────────────────────────────────────────────────────────
… …
… … … … …
… … … … … … …
… … … … … … …
… … … …
…
$ … $ … $ … $ 8 $ — $ — $ 1…
… — — — … 5 -…
… … … 8 … 5 1…
… … … … … -1 -…
… … … $ 6 $ … $ 4 1…
… — — — — — 12
$ … $ … $ … $ 6 $ … $ 4 $ 1…
$ … $ … $ … $ … $ … $ 0… $ 1…
… … … … … 1… 1…
…
…
…
…
…
…
──────────────────────────────────────────────────────────────────────────────
… …
… … … … …
… … … … … … …
… … … … … … …
… … … …
…
$ … $ … $ … $ 6 $ … $ 4 $ …
… … … 2 6 1 …
… … … 8 … 5 …
… — — — — — …
… — … — — — —
… — — — — -5 …
$ … $ … $ — $ 8 $ … $ — $ …
… % 1… %
(1) Asset markdowns associated with restructuring activities were recorded to
"Cost of revenues" in the condensed consolidated statements of operations.
(2) Calculation uses an estimated statutory tax rate on non-GAAP adjustments.
(3) Earnings per share is computed independently for each of the non-GAAP
adjustments presented and therefore may not sum to the total non-GAAP earnings
per share due to rounding.
Leidos Holdings, Inc. Exhibit 99.1 18
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except per share data and margin percentages)
The following tables present the reconciliation of non-GAAP operating income,
net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most
directly comparable GAAP measures for the nine months ended October 3, 2025:
Ni…
Mo…
En…
Oc…
3,
20…
──────────────────────────────────────────────────────────────────────────────
Ac… Am…
As in… of As… No…
re… and ac… im… re…
re… in… ch…
co…
O… $ 1,… $ 11 $ 95 $ 3 $ 1,…
i…
N…
e… -1… — — — -1…
n…
I…
b… 1,… 11 95 3 1,…
i…
t…
I…
t… -3… -2 -24 -1 -3…
e…
N… 1,… 9 71 2 1,…
i…
L…
n…
i…
a… 6 — — — 6
to
n…
i…
N…
i…
a…
to $ 1,… $ 9 $ 71 $ 2 $ 1,…
L…
c…
s…
D…
E…
a…
to $ 8.… $ 0.… $ 0.… $ 0.… $ 9.…
L…
c…
s…
D… 130 130 130 130 130
s…
Ni…
Mo…
En…
Oc…
3,
20…
──────────────────────────────────────────────────────────────────────────────
Acq… Am…
As int… of Ass… Non…
re… and ac… imp… res…
res… in… cha…
cos…
N… $ 1,… $ 9 $ 71 $ 2 $ 1,…
i…
I…
t… 353 2 24 1 380
e…
I…
b… 1,… 11 95 3 1,…
i…
t…
D… 119 — — — 119
e…
A…
of 96 — -95 — 1
i…
I…
e… 155 — — — 155
n…
A… $ 1,… $ 11 $ — $ 3 $ 1,…
E…
A…
E… 14… % 14… %
m…
(1) Asset markdowns associated with restructuring activities were recorded to
"Cost of revenues" in the condensed consolidated statements of operations.
(2) Calculation uses an estimated statutory tax rate on non-GAAP adjustments.
(3) Earnings per share is computed independently for each of the non-GAAP
adjustments presented and therefore may not sum to the total non-GAAP earnings
per share due to rounding.
19 Leidos Holdings, Inc. Exhibit 99.1
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except margin percentages)
The following tables present the reconciliation of non-GAAP operating income by
reportable segment and Corporate to operating income:
T…
M…
E…
O…
2,
2…
──────────────────────────────────────────────────────────────────────────────
A… Am… N…
O… i… of A… o… N…
i… a… ac… i… i… o…
(… r… in… c… (… m…
c…
…
& $ 1… $ 2 $ 5 $ — $ 178 11… %
…
… 2… -1 5 — 244 22… %
… 81 13 15 7 116 11… %
… 86 — 10 — 96 9.7 %
… -… -2 — — -27 NM
… $ 5… $ 12 $ 35 $ 7 $ 607 13… %
NM - Not Meaningful
(1) Asset markdowns associated with restructuring activities were recorded to
"Cost of revenues" in the condensed consolidated statements of operations
T…
M…
E…
O…
3,
2…
──────────────────────────────────────────────────────────────────────────────
A… A… N…
O… i… of A… o… N…
i… a… a… i… i… o…
(… r… i… c… (… m…
c…
…
& $ 1… $ 2 $ 8 $ — $ 1… 9.9 %
…
… 3… — 6 — 3… 27… %
… 50 1 7 — 58 7.5 %
… 79 — 12 3 94 9.8 %
… -… 1 — — -… NM
… $ 5… $ 4 $ 33 $ 3 $ 5… 12… %
N…
M…
E…
O…
2,
2…
──────────────────────────────────────────────────────────────────────────────
A… Am… N…
O… i… of A… o… N…
i… a… ac… i… i… o…
(… r… in… c… (… m…
c…
…
& $ 4… $ 4 $ 20 $ 1 $ 484 10… %
…
… 7… 1 12 — 791 23… %
… 2… 54 41 7 308 10… %
… 2… — 32 — 264 9.3 %
… -… 17 — — -83 NM
… $ 1… $ 76 $ 1… $ 8 $ 1,… 13… %
NM - Not Meaningful
(1) Asset markdowns associated with restructuring activities were recorded to
"Cost of revenues" in the condensed consolidated statements of operations.
Leidos Holdings, Inc. Exhibit 99.1 20
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except margin percentages)
The following tables present the reconciliation of non-GAAP operating income by
reportable segment and Corporate to operating income:
N…
M…
E…
O…
3,
2…
──────────────────────────────────────────────────────────────────────────────
A… A… No…
O… i… of As… op… No…
i… a… a… im… in… op…
(… r… i… ch… (l… ma…
c…
…
& $ 4… $ 2 $ 20 $ — $ 4… 9… %
…
… 9… — 18 — 9… 2… %
… 1… 6 21 — 2… 8… %
… 2… — 36 3 2… 9… %
… -… 3 — — -… NM
… $ 1… $ 11 $ 95 $ 3 $ 1… 1… %
NM - Not Meaningful
(1) Asset markdowns associated with restructuring activities were recorded to
"Cost of revenues" in the condensed consolidated statements of operations.
21 Leidos Holdings, Inc. Exhibit 99.1
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]
(in millions, except percentages)
The following table presents the reconciliation of free cash flow to net cash
provided by operating activities as well as the calculation of operating cash
flow and free cash flow conversion ratios:
Three Months October 2, October 3,
Ended 2026 2025
──────────────────────────────────────────────────────────────────────────────
Net cash
provided by $ 523 $ 711
operating
activities
Payments for
property,
equipment -47 -31
and
software
Non-GAAP
free cash $ 476 $ 680
flow
Net income
attributable
to Leidos $ 410 $ 367
common
stockholders
Acquisition,
integration
and 11 3
restructuri…
costs(1)
Amortization
of acquired 26 25
intangibles…
Asset
impairment 5 2
charges(1)
Non-GAAP net
income
attributable
to $ 452 $ 397
Leidos
common
stockholders
Operating
cash flow 128 % 194 %
conversion
ratio
Non-GAAP
free cash
flow 105 % 171 %
conversion
ratio
(1) After-tax expenses excluded from non-GAAP net income.
Leidos Holdings, Inc. Exhibit 99.1 22