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Leidos' Q3 adjusted EPS rose 18.7% to $3.62, beating estimates, while $4.63B revenues missed forecasts.
Homeland revenues jumped 32.1% on air traffic and power engineering demand, while Health sales fell 11.7%.
Leidos raised 2026 EPS guidance to $12.50-$12.70 and cash flow to nearly $1.9B but cut its revenue outlook.
Leidos Holdings, Inc. (LDOS - Free Report) reported third-quarter 2026 non-GAAP earnings of $3.62 per share, beating the Zacks Consensus Estimate of $3.04 by 19.1%. Earnings increased 18.7% from $3.05 in the year-ago quarter.
On a GAAP basis, earnings were $3.28 per share, up from $2.82 a year ago.
LDOS' Total Revenues
Total revenues were $4.63 billion, up 3.6% year over year but below the Zacks Consensus Estimate of $4.71 billion by 1.6%. Organic revenues increased 0.6% to $4.49 billion.
Revenue growth was driven by increased customer demand for defense technology products, air traffic management solutions and intelligence mission support, along with contributions from the ENTRUST Solutions acquisition.
Leidos Holdings, Inc. Price, Consensus and EPS Surprise
Backlog totaled $49.55 billion, including $11.06 billion funded and $38.49 billion unfunded. Total backlog increased 4% year over year, while funded backlog climbed 22%. The trailing 12-month book-to-bill ratio was 1.1.
Backlog in the Intelligence & Digital segment totaled $18.17 billion, while the Health, Homeland and Defense segments reported backlogs of $6.32 billion, $10.41 billion and $14.65 billion, respectively.
Major quarterly awards included a $717 million U.S. Air Force intelligence support contract, a $672 million Transportation Security Administration security equipment deployment contract and a $318 million Defense Health Agency contract to sustain and enhance the MHS GENESIS platform.
LDOS' Operational Statistics
Cost of revenues increased to $3.81 billion from $3.65 billion in the prior-year quarter. Selling, general and administrative expenses declined to $262 million from $290 million, while acquisition, integration and restructuring costs increased to $12 million from $4 million.
Operating income increased 3.4% to $553 million from $535 million. The operating margin was 11.9% compared with 12% a year ago. Net interest expense increased to $67 million from $51 million.
Adjusted EBITDA increased 4.5% to $644 million from $616 million. The adjusted EBITDA margin improved to 13.9% from 13.8%, supported by better program execution and cost management.
Leidos’ Segmental Performance
Intelligence & Digital revenues increased 1.4% to $1.55 billion from $1.53 billion, supported by recent contract awards and higher Intelligence Community program volumes. Non-GAAP operating margin improved to 11.5% from 9.9%.
Health revenues declined 11.7% to $1.07 billion from $1.21 billion, reflecting expected program shifts and reduced managed health services volumes. Non-GAAP operating margin decreased to 22.8% from 27.3%.
Homeland revenues increased 32.1% to $1.02 billion from $0.78 billion, driven by air traffic management and electric power distribution engineering demand. Results included $142 million from ENTRUST Solutions. Non-GAAP operating margin improved to 11.3% from 7.5%.
Defense revenues rose 3.4% to $992 million from $959 million, reflecting stronger demand for air defense, sensing and C5ISR systems. Non-GAAP operating margin was 9.7% compared with 9.8% a year earlier.
LDOS’ Financials
Cash and cash equivalents totaled $630 million as of Oct. 2, 2026, compared with $1.11 billion as of Jan. 2, 2026. Long-term debt, excluding the current portion, increased to $6.01 billion from $4.63 billion.
Net cash provided by operating activities during the third quarter totaled $523 million compared with $711 million in the prior-year period. Non-GAAP free cash flow was $476 million compared with $680 million.
Leidos returned $556 million to shareholders during the quarter, including $504 million in share repurchases and $52 million in dividends.
LDOS’ 2026 Guidance
Leidos revised its 2026 revenue outlook to $18.00-$18.20 billion from the prior guidance of $18.20-$18.40 billion. The Zacks Consensus Estimate for revenues is pegged at $18.32 billion, which is higher than the company’s newly guided range.
Non-GAAP earnings are now projected to be in the band of $12.50-$12.70 per share compared with the previous estimation of $12.20-$12.50. The Zacks Consensus Estimate for earnings is pegged at $12.38 per share, which is below the company’s newly guided range.
The company has maintained its adjusted EBITDA margin outlook in the mid-13% range and raised its operating cash flow guidance to nearly $1.9 billion from $1.85 billion.
EPAM Systems (EPAM - Free Report) is slated to report third-quarter 2026 results on Nov. 5, before market open.
The Zacks Consensus Estimate for sales is pegged at $1.42 billion, which implies a 1.7% increase from the year-ago quarter’s figure. The consensus estimate for earnings is pegged at $3.41 per share, indicating a year-over-year surge of 10.7%.
Telos Corporation (TLS - Free Report) is slated to report third-quarter 2026 results on Nov. 9, before market open.
The Zacks Consensus Estimate for sales is pegged at $50 million. The consensus estimate for earnings is pinned at 4 cents per share.
Analog Devices, Inc. (ADI - Free Report) is expected to report fourth-quarter fiscal 2026 results on Nov. 24, before market open.
The Zacks Consensus Estimate for sales is pegged at $4.32 billion, which implies a 40.6% increase from the year-ago quarter’s figure. The consensus estimate for earnings is pegged at $3.89 per share, indicating a year-over-year surge of 72.1%.
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Leidos' Q3 Earnings Beat Estimates, Revenues Miss, '26 EPS View Raised
Key Takeaways
Leidos Holdings, Inc. (LDOS - Free Report) reported third-quarter 2026 non-GAAP earnings of $3.62 per share, beating the Zacks Consensus Estimate of $3.04 by 19.1%. Earnings increased 18.7% from $3.05 in the year-ago quarter.
On a GAAP basis, earnings were $3.28 per share, up from $2.82 a year ago.
LDOS' Total Revenues
Total revenues were $4.63 billion, up 3.6% year over year but below the Zacks Consensus Estimate of $4.71 billion by 1.6%. Organic revenues increased 0.6% to $4.49 billion.
Revenue growth was driven by increased customer demand for defense technology products, air traffic management solutions and intelligence mission support, along with contributions from the ENTRUST Solutions acquisition.
Leidos Holdings, Inc. Price, Consensus and EPS Surprise
Leidos Holdings, Inc. price-consensus-eps-surprise-chart | Leidos Holdings, Inc. Quote
Leidos' Backlog and Contract Awards
Backlog totaled $49.55 billion, including $11.06 billion funded and $38.49 billion unfunded. Total backlog increased 4% year over year, while funded backlog climbed 22%. The trailing 12-month book-to-bill ratio was 1.1.
Backlog in the Intelligence & Digital segment totaled $18.17 billion, while the Health, Homeland and Defense segments reported backlogs of $6.32 billion, $10.41 billion and $14.65 billion, respectively.
Major quarterly awards included a $717 million U.S. Air Force intelligence support contract, a $672 million Transportation Security Administration security equipment deployment contract and a $318 million Defense Health Agency contract to sustain and enhance the MHS GENESIS platform.
LDOS' Operational Statistics
Cost of revenues increased to $3.81 billion from $3.65 billion in the prior-year quarter. Selling, general and administrative expenses declined to $262 million from $290 million, while acquisition, integration and restructuring costs increased to $12 million from $4 million.
Operating income increased 3.4% to $553 million from $535 million. The operating margin was 11.9% compared with 12% a year ago. Net interest expense increased to $67 million from $51 million.
Adjusted EBITDA increased 4.5% to $644 million from $616 million. The adjusted EBITDA margin improved to 13.9% from 13.8%, supported by better program execution and cost management.
Leidos’ Segmental Performance
Intelligence & Digital revenues increased 1.4% to $1.55 billion from $1.53 billion, supported by recent contract awards and higher Intelligence Community program volumes. Non-GAAP operating margin improved to 11.5% from 9.9%.
Health revenues declined 11.7% to $1.07 billion from $1.21 billion, reflecting expected program shifts and reduced managed health services volumes. Non-GAAP operating margin decreased to 22.8% from 27.3%.
Homeland revenues increased 32.1% to $1.02 billion from $0.78 billion, driven by air traffic management and electric power distribution engineering demand. Results included $142 million from ENTRUST Solutions. Non-GAAP operating margin improved to 11.3% from 7.5%.
Defense revenues rose 3.4% to $992 million from $959 million, reflecting stronger demand for air defense, sensing and C5ISR systems. Non-GAAP operating margin was 9.7% compared with 9.8% a year earlier.
LDOS’ Financials
Cash and cash equivalents totaled $630 million as of Oct. 2, 2026, compared with $1.11 billion as of Jan. 2, 2026. Long-term debt, excluding the current portion, increased to $6.01 billion from $4.63 billion.
Net cash provided by operating activities during the third quarter totaled $523 million compared with $711 million in the prior-year period. Non-GAAP free cash flow was $476 million compared with $680 million.
Leidos returned $556 million to shareholders during the quarter, including $504 million in share repurchases and $52 million in dividends.
LDOS’ 2026 Guidance
Leidos revised its 2026 revenue outlook to $18.00-$18.20 billion from the prior guidance of $18.20-$18.40 billion. The Zacks Consensus Estimate for revenues is pegged at $18.32 billion, which is higher than the company’s newly guided range.
Non-GAAP earnings are now projected to be in the band of $12.50-$12.70 per share compared with the previous estimation of $12.20-$12.50. The Zacks Consensus Estimate for earnings is pegged at $12.38 per share, which is below the company’s newly guided range.
The company has maintained its adjusted EBITDA margin outlook in the mid-13% range and raised its operating cash flow guidance to nearly $1.9 billion from $1.85 billion.
LDOS’ Zacks Rank
Leidos Holdings currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
EPAM Systems (EPAM - Free Report) is slated to report third-quarter 2026 results on Nov. 5, before market open.
The Zacks Consensus Estimate for sales is pegged at $1.42 billion, which implies a 1.7% increase from the year-ago quarter’s figure. The consensus estimate for earnings is pegged at $3.41 per share, indicating a year-over-year surge of 10.7%.
Telos Corporation (TLS - Free Report) is slated to report third-quarter 2026 results on Nov. 9, before market open.
The Zacks Consensus Estimate for sales is pegged at $50 million. The consensus estimate for earnings is pinned at 4 cents per share.
Analog Devices, Inc. (ADI - Free Report) is expected to report fourth-quarter fiscal 2026 results on Nov. 24, before market open.
The Zacks Consensus Estimate for sales is pegged at $4.32 billion, which implies a 40.6% increase from the year-ago quarter’s figure. The consensus estimate for earnings is pegged at $3.89 per share, indicating a year-over-year surge of 72.1%.