Science Applications International Corporation

What they do

SAIC provides technical, engineering, and mission and enterprise IT services, primarily to U.S. government agencies, under approximately 1,700 active contracts and task orders. Offerings span IT modernization, digital engineering, artificial intelligence, mission systems support and advisory, training and simulation, and ground vehicles support. The company reports two segments: Defense and Intelligence, serving the Department of War and the Intelligence Community, and Civilian, serving federal, state, and local governments.

Revenue drivers

• Defense and Intelligence segment — Provides national security solutions to the Department of War and the Intelligence Community across land, sea, air, and space missions; one of two reportable segments.
• Civilian segment — Serves federal, state, and local civilian agencies in missions tied to travel, security, trade, health, and the economy; the other reportable segment.
• U.S. government contracts — The company generated 98% of total revenues in each of the last three fiscal years from U.S. government contracts, as prime contractor or subcontractor.
• Solutions and Technology Group (STG) — Supports the operating segments with enterprise-class solutions in AI, application development, network services, platforms and cloud, engineering, and cybersecurity, delivered standalone or integrated into offerings.

Recent performance

For the second quarter of fiscal 2027 ended July 31, 2026, revenues were $1.88 billion, up approximately 6% year over year, including 5.3% organic growth and $20 million from the SilverEdge acquisition. Net income was $102 million and diluted EPS was $2.38, down from $127 million and $2.71 a year earlier, while adjusted EBITDA was $193 million, or 10.3% of revenues. Operating cash flow was $146 million and free cash flow was $131 million. Net bookings were $1.2 billion, a quarterly book-to-bill ratio of 0.6 and a trailing-twelve-month ratio of 0.8.

Strategy

SAIC completed a reorganization effective January 31, 2026, consolidating five business groups into three to simplify structure and sharpen customer focus; the reorganization did not change the two reportable segments. The company invests in capabilities through its Solutions and Technology Group, including designated teams for AI, cloud, engineering, and cybersecurity. Management said it is transforming the enterprise to support critical missions and drive long-term growth and margin expansion. The company also raised fiscal year 2027 guidance for revenue, adjusted EBITDA, adjusted EBITDA margin, and adjusted diluted EPS while reiterating free cash flow guidance.

Risks

• U.S. government concentration — SAIC generated 98% of total revenues in each of the last three fiscal years from U.S. government contracts, so changes in agency relationships or reputational harm could directly affect results.
• Defense spending and budget timing — Reduced defense spending, changed acquisition priorities, delays in appropriations, and delays in contract awards or program starts could adversely affect revenues, cash flow, and financial results.
• Bookings softness — Second quarter fiscal 2027 net bookings of $1.2 billion produced a 0.6 quarterly book-to-bill ratio and a 0.8 trailing-twelve-month ratio, below 1.0.
• Margin pressure from SG&A — Adjusted EBITDA margin declined to 10.3% from 10.5% year over year primarily on higher selling, general and administrative expenses, including a prior-year benefit from a patent infringement settlement recovery.

Outlook

Management increased fiscal year 2027 guidance for revenue, adjusted EBITDA, adjusted EBITDA margin percentage, and adjusted diluted earnings per share, and reiterated free cash flow guidance. The company cited strong year-to-date performance and expects to continue investing in capabilities while transforming the enterprise to support long-term growth and margin expansion. Management also said it remains committed to the targets it set for the year.