Leidos Holdings, Inc. (LDOS) Q1 2026 Earnings Call Transcript – Image for illustrative purposes only (Image credits: Unsplash)
Reston, Virginia – Leidos Holdings Inc. began fiscal year 2026 on a high note, reporting first-quarter results that surpassed analyst forecasts and prompted an upward revision to its annual outlook. The defense and technology contractor saw revenue climb amid heightened demand for intelligence solutions and air traffic systems, bolstering a backlog that now stands at $48.4 billion. This performance reassures stakeholders from government clients to shareholders, signaling sustained execution on major contracts even as federal budgets face scrutiny.[1][2]
Revenue and Earnings Exceed Projections
Leidos recorded $4.4 billion in revenue for the quarter ended April 3, 2026, marking a 4 percent increase from the prior year and a 3 percent rise on an organic basis. The figure topped Wall Street estimates, reflecting stronger-than-expected customer spending in key areas like intelligence products and commercial energy infrastructure.[1]
Net income came in at $335 million, or $2.56 per diluted share, though both metrics dipped 8 percent year over year due to acquisition-related costs. Adjusted for one-time items, non-GAAP diluted earnings per share reached $3.13, a 5 percent improvement that beat consensus forecasts. Adjusted EBITDA rose 2 percent to $614 million, holding a 14.0 percent margin.
| Metric | Q1 2026 | Q1 2025 | Change |
|---|---|---|---|
| Revenue | $4.4B | $4.25B | +4% |
| Non-GAAP EPS | $3.13 | $2.98 | +5% |
| Adj. EBITDA Margin | 14.0% | 14.2% | -0.2 pts |
Segments Show Varied Strengths
The Intelligence and Digital segment led growth with $1.51 billion in revenue, up 7 percent, fueled by demand for advanced systems. Operating margins held steady around 9.6 percent, with non-GAAP figures improving slightly to 10.2 percent. Health revenues remained flat at $1.19 billion, maintaining high margins near 24 percent, while Homeland posted 6 percent growth to $816 million, incorporating the recent Entrust acquisition into its backlog.[1]
Defense revenues edged higher to $883 million, though margins contracted to 7.0 percent amid program shifts. Overall, these results highlight Leidos’ diversified portfolio, where intelligence and homeland security offset softer areas.
- Intelligence & Digital: +7% revenue growth
- Homeland: +6%, bolstered by $371M Entrust backlog
- Health: Stable high-margin performance
- Defense: Modest top-line gains
Backlog Expansion and Key Contract Wins
Funded backlog surged 31 percent to $9.6 billion, contributing to a total backlog of $48.4 billion, up from $46.3 billion a year earlier. Net bookings totaled $3.3 billion for the quarter, yielding a book-to-bill ratio of 0.8, with the trailing 12-month figure at 1.1. Major awards included an $869 million U.S. Army MACRO II task order for AI-enabled systems, $461 million in cyber task orders for the Defense Information Systems Agency, a $335 million NSA modernization contract, and a $284 million IT deal with the Securities and Exchange Commission.[2]
These wins underscore Leidos’ position in national security priorities, from cyber defense to intelligence analytics. The company also closed its acquisition of ENTRUST Solutions Group and advanced a joint venture combining security detection businesses with Analogic Corporation, moves aimed at accelerating its NorthStar 2030 strategy.
Raised Guidance Signals Confidence
Executives lifted full-year 2026 guidance, now projecting revenue between $18 billion and $18.4 billion, up from the prior $17.5 billion to $17.9 billion range. Non-GAAP diluted EPS expectations shifted to $12.10 to $12.50, with adjusted EBITDA margins in the mid-13 percent zone and operating cash flows around $1.8 billion. CEO Tom Bell noted, “Leidos delivered strong first quarter performance… we’re pleased to raise our revenue, earnings, and cash guidance for the year.”[2]
The board declared a quarterly dividend of $0.43 per share, payable June 30, 2026. Free cash flow generation remained solid at $270 million, supporting $298 million returned to shareholders via repurchases and dividends, even after $2.36 billion in investing outflows tied to Entrust.
For employees and partners executing these programs, the results affirm job stability and growth potential in a sector tied to enduring government needs. As Leidos eyes the second half of 2026 as a multiyear acceleration point, investors will track backlog conversion and award momentum amid evolving fiscal landscapes.[1]