10-Q · May 5, 2026
Leidos reported Q1 2026 revenues of $4.4 billion, representing a 3.7% increase from $4.25 billion in the prior year. However, diluted EPS was $2.56, missing the analyst expectation of $2.90, showing a decline from the…
Earnings analysis · 10-Q
LDOS earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
Leidos delivered 7.2% year-over-year Q2 revenue growth to $4.558 billion, led by a 32.0% Homeland increase and continued Intelligence & Digital and Defense growth, with bookings rising to $4.9 billion and backlog…
Read full summary
Leidos delivered 7.2% year-over-year Q2 revenue growth to $4.558 billion, led by a 32.0% Homeland increase and continued Intelligence & Digital and Defense growth, with bookings rising to $4.9 billion and backlog reaching $48.711 billion. However, operating margin declined to 11.3% from 13.4%, GAAP EPS was $2.81 versus $3.01 a year earlier, and Health weakened on lower volumes. Cash generation was a major offset, with $793 million of operating cash flow and $761 million of free cash flow, although acquisition financing lifted debt to $6.0 billion.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $2.81
- Operating margin
- 11.3%
What stood out
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Revenue and bookings accelerated
Q2 revenue rose 7.2% year over year to $4.558 billion from $4.253 billion, and increased 3.6% sequentially from $4.400 billion in Q1 2026. Net bookings were $4.9 billion versus $3.9 billion a year earlier.
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Homeland posted outsized growth
Homeland was the principal growth engine: revenue increased 32.0% to $1.018 billion and operating income increased 43.8% to $92 million. Growth included $141 million of Entrust acquisition revenue and a $14 million favorable FX effect.
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Operating cash flow rose sharply
Operating cash flow was $793 million, up $307 million from $486 million a year ago, driven by favorable working-capital changes, prior-year excess tax payments and payroll/benefit payment timing. Quarterly free cash flow was $761 million.
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Backlog expanded, led by funded work
Total backlog reached $48.711 billion, up $2.501 billion from $46.210 billion a year earlier. Funded backlog increased to $10.223 billion from $7.122 billion, while Defense backlog grew to $13.756 billion from $10.598 billion.
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Core government segments grew
Intelligence & Digital revenue increased 6.5% to $1.499 billion and Defense revenue increased 6.2% to $955 million, primarily reflecting program wins and increased contract volumes. Intelligence & Digital operating income rose 5.2% to $142 million.
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Lower tax rate partly cushioned earnings
The effective tax rate fell to 21.1% from 24.1% a year ago, helping offset the decline in income before taxes to $451 million from $518 million.
What to watch
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Margins and GAAP earnings declined
Operating margin contracted 210 basis points year over year to 11.3% from 13.4%, while net income attributable to common stockholders fell 9.5% to $354 million from $391 million. Corporate operating loss widened to $58 million from $9 million, including higher acquisition and integration costs.
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Health volumes pressured profit
Health revenue declined 7.6% to $1.086 billion and segment operating income fell 16.2% to $254 million; management attributed both declines to lower volumes. Health operating margin fell to 23.4% from 25.8%.
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Entrust financing increased leverage
Debt increased to $6.0 billion at July 3, 2026 from $4.6 billion at January 2, 2026 after issuance of $600 million of 4.10% notes and $800 million of 5.00% notes to help fund Entrust. Quarterly non-operating expense increased to $63 million from $53 million, principally on higher interest expense.
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Federal funding concentration remains
Approximately 83% of Q2 revenue came from U.S. government contracts, and management said a short-term continuing resolution is increasingly expected beyond the September 30, 2026 funding deadline; failure to enact appropriations or a CR could cause a full or partial shutdown.
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No material risk-factor updates
There were 0 material changes to risk factors from the January 2, 2026 Form 10-K, according to Item 1A. The filing nevertheless flags tariff, foreign-exchange and geopolitical exposure, with international sales representing 9% of Q2 revenue.
Management's outlook
The 10-Q contains no explicit quantitative earnings or revenue outlook. Management stated it anticipates meeting liquidity needs over the next 12 months through operating cash flow, available cash, commercial paper, potential receivables sales and, if needed, revolver borrowings.
Earlier filings 4
10-K · February 17, 2026
Leidos emphasizes mission-critical, technology-enabled services across five strategic pillars (space & maritime; energy infrastructure; digital modernization & cyber; mission software; managed health services) and…
10-Q · August 5, 2025
Leidos reported Q2 revenues of $4,253 million, up $121 million (+2.9%) versus the prior-year quarter, with operating income of $571 million and diluted EPS of $3.01 (vs $2.37 a year ago). Cash generation improved (net…
10-Q · May 6, 2025
Leidos reported quarterly revenue of $4,245.0 million (up $270.0 million, +6.8% vs. the prior-year quarter) and diluted EPS of $2.77 (up $0.70 vs. $2.07 a year ago). Gross margin expanded to ~17.8% and operating margin…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.