Leidos delivers strong Q3, enhances 2026 outlook for third straight quarter

Leidos today reported another quarter of strong performance and enhanced its 2026 financial guidance for the third consecutive quarter.

Q3 at a glance:

• Revenue grew 4% year-over-year to $4.6 billion.

• Net income margin was 8.9%, up from the same quarter last year.

• Adjusted EBITDA margin improved to 13.9%, up from both the previous quarter and the same quarter last year.

• Non-GAAP diluted earnings per share (EPS) rose 19% year-over-year to $3.62.

• Non-GAAP free cash flow was $476 million, bringing the year-to-date total to $1.5 billion and already surpassing the company’s original full-year target.

• Net awards totaled $5.5 billion, for a book-to-bill ratio of 1.2. Book-to-bill was considerably higher in Defense and Homeland, two key growth drivers.

“Our sustained momentum in 2026 reflects the strength of our focused team, united behind our NorthStar 2030 strategy, and committed to delivering on our customers’ most critical missions,” said CEO Tom Bell.

Leidos raised the midpoint of its 2026 guidance by $0.25 in EPS, and $50 million in operating cash flow. The company now expects EPS of $12.50 - $12.70 for this year and operating cash flow of approximately $1.90 billion.

NorthStar 2030 in action

During Q3, Leidos closed its joint venture (JV), combining its Security Enterprise Solutions business with Analogic. Bell said the new JV is now a scaled market leader, well positioned to grow in the $5 billion global security products market. Leidos retains a significant equity stake, sharing in the new company’s long-term growth, while allowing Leidos to focus its people and investments where it can create the most value under NorthStar 2030.

In Health, Bell said Leidos is applying its unparalleled customer knowledge to proactively build technology solutions for emerging customer needs. During Q3, the company launched its My Service Treatment Record (MySTR) pilot ahead of President Trump’s executive order on veterans’ benefits and employment. MySTR automates medical record transfers from the Department of War to the Department of Veterans Affairs. It’s now in operational beta testing and is designed to run in the customer’s own cloud environment. Reusable technology and provider networks also allowed Leidos to stand up a global Military OneSource support operation in just 75 days that now serves nearly five million people.

In Intelligence, Bell said Leidos is building a portfolio of commercial cyber and AI products. Parcata, unveiled in July, is the furthest along. It’s an automated cybersecurity platform that finds and fixes software vulnerabilities across enterprise networks and fixes them without manual work. It’s focused on Intelligence Community needs today, with commercial availability expected later this year. 

Reaching further, Bell said CTO Ted Tanner has kicked off an effort to build a robust unified technology foundation for everything Leidos develops, connecting hardware, software, products and services to serve customers in ways few competitors can match. It builds on work demonstrated for the DoW in Operation Jailbreak and Operation Reveille Forge.

Growth in Defense and Energy

In defense tech, Bell said Leidos is truly in a unique space, pairing differentiated technology with the company’s scale, mission expertise, software strength and delivery track record. Leidos Defense booked awards of 1.9 times revenue in the quarter and 2.0 times year-to-date, a strong foundation for revenue and margin growth. Wins included another major contract on the Space Development Agency’s Accelerated Missile Defense Tranche 3 (AMDT3) program for infrared space-sensing payloads, and new munitions awards, including an Air Force Special Operations Command production award for the Havoc Spear cruise missile and follow-on work for the Navy’s nuclear-armed sea-launched cruise missile program. Leidos also secured a large agreement to begin production on a new Army sensor program of record, building on the company’s already unrivaled passive-sensing solutions.

“We’re seen as a mature disruptor,” Bell said. “And we’re winning because customers want it all — fast innovation and a partner they know can integrate, produce, and deliver at scale.”

In Energy, Bell said Leidos is rapidly integrating and scaling the business into a market leader. SkyWire™, an AI-powered tool first built to make electric power distribution engineering more efficient, now extends to gas and power generation projects. Leidos is also pursuing opportunities in power generation for data centers and in strengthening grid cybersecurity. The company sees a clear path to robust double-digit revenue growth and high-teens margins in Energy.

With that foundation in place, the company is focused on carrying its momentum into Q4 and the year ahead. “We’ll keep executing on our NorthStar 2030 strategy,” Bell said. “And as such, you can expect us to continue to invest in our differentiated capabilities and deploy capital strategically to accelerate growth and create lasting value.”

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_{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, continuation of the 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 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.} 

_{This release includes financial information prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). This presentation also includes non-GAAP financial information, including adjusted EBITDA margin which should be considered supplemental to, not a substitute for, or superior to, the financial measure calculated in accordance with GAAP. The Company believes that these non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of our performance across periods. There are a number of limitations related to the use of these non-GAAP financial measures and their nearest GAAP equivalents. For example, the Company’s definitions of non-GAAP financial measures may differ from non-GAAP financial measures used by other companies. For a description of the non-GAAP financial information included herein, and reconciliations to the most directly comparable GAAP measure, see our earnings release.}