Leidos Raises Fiscal 2026 Earnings Guidance for Third Straight Quarter

The Tip Desk · November 3, 2026 · 3 min read

Non-GAAP diluted earnings were $3.62 a share, up 19% year over year, as the company lifted its full-year EPS range to $12.50–$12.70.

Leidos Holdings (LDOS) reported third-quarter revenue of $4.63 billion, up 4% from a year earlier, and net income of $413 million, or $3.28 a share, reversing the year-over-year earnings decline recorded in the second quarter.

The Reston, Virginia, government technology and engineering firm said non-GAAP diluted earnings were $3.62 a share, up 19% from $3.05 a year earlier. Adjusted EBITDA was $644 million, up 5%, and the adjusted EBITDA margin was 13.9%.

GAAP net income and diluted EPS were up 12% and 16%, respectively, after a 9% and 7% year-over-year decline in the second quarter. The company said results included $12 million in costs associated with recent strategic corporate transactions. Adjusting for those and certain other items, non-GAAP net income rose 14% to $455 million. GAAP and non-GAAP earnings reflected a lower effective tax rate, primarily from an increase in the federal research tax credit and a decrease in unrecognized tax benefits.

Revenue growth, the company said, came from increased customer demand for defense technology 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.

Homeland was the largest revenue contributor to the year-over-year increase. Homeland revenue was $1.02 billion, up 32%, including $142 million from ENTRUST. Operating income margin was 7.9%. The company attributed the revenue increase to demand for air traffic management and electric power distribution engineering as well as the ENTRUST acquisition, and said profitability reflected a higher mix of commercial work and cost management.

Health revenue was $1.07 billion, down 12%, with operating income margin of 22.5%. The company said the declines were driven by expected program shifts and reduced volumes on managed health services. Intelligence & Digital revenue was $1.55 billion, up 1%, with operating income margin of 11.1%. Defense revenue was $992 million, up 3%, with operating income margin of 8.7%.

Net bookings totaled $5.5 billion in the quarter, a book-to-bill ratio of 1.2. Backlog ended the quarter at $49.6 billion, of which $11.1 billion was funded. Trailing-twelve-month book-to-bill of 1.1 produced year-over-year growth in total and funded backlog of 4% and 22%, respectively. Quarterly awards included a $717 million Air Force ISR contract, a $672 million TSA security equipment deployment contract, a $318 million MHS GENESIS bridge, and a $301 million Army defensive cyber operations follow-on.

Cash flows from operations were $523 million, and non-GAAP free cash flow was $476 million. The company used $549 million in financing activities, including $504 million in share repurchases and $52 million in dividends. Cash and cash equivalents were $630 million and debt was $6.0 billion as of October 2, 2026.

On October 5, 2026, Leidos closed a contribution and equity purchase agreement with Altaris, contributing the Security Enterprise Solutions and Industrial Automation businesses to a newly formed joint venture. After adjusting for the joint venture and incorporating year-to-date performance and the current outlook, the company raised fiscal 2026 non-GAAP diluted EPS guidance to $12.50–$12.70 from $12.20–$12.50 and cash flows from operations to approximately $1.90 billion from $1.85 billion. Revenue guidance was lowered to $18.00–$18.20 billion from $18.20–$18.40 billion. Adjusted EBITDA margin guidance remained mid-13%.

Chief Executive Officer Tom Bell said the company enhanced 2026 guidance for the third consecutive quarter. On October 30, the board declared a cash dividend of $0.45 a share, payable December 31, 2026.