Leidos Holdings, Inc. (LDOS) Business Profile

What it does

Leidos Holdings is a technology and engineering company serving government agencies and commercial customers. Its work ranges from managing computer networks and analyzing intelligence to providing medical examinations, building defense systems and modernizing electricity infrastructure. Founded in 1969, it is headquartered in Reston, Virginia. Thomas A. Bell is its chief executive officer.

For national security customers, Leidos designs and maintains IT systems, develops mission software, conducts cyber operations and provides intelligence and logistics support. Its health and civil business arranges medical disability and behavioral health examinations, supports healthcare systems, develops air traffic control systems and operates research and energy infrastructure.

The company also helps utilities plan and modernize power networks and supplies services to government customers outside the United States. In defense, it develops and integrates hardware and software for use on land, at sea, in the air and in space. These offerings include sensors, autonomous maritime systems and components for hypersonic vehicles.

Leidos typically works under contracts tailored to a customer’s requirements, either directly or as a subcontractor. In 2026, it combined its security enterprise solutions business with Analogic in a joint venture and retained a 41.5% equity interest. Leidos is the holding company for its principal operating subsidiary, Leidos, Inc.

How it makes money

Leidos earns revenue by delivering services, software, products and integrated systems under contracts. Fiscal 2025 revenue increased $0.5 billion from fiscal 2024; revenue was $4.63 billion in the third quarter of 2026.

In fiscal 2025, National Security & Digital generated $7.6 billion of revenue, or 44.2% of the total. Its work includes operating and modernizing IT environments, cyber operations and mission support. Health & Civil generated $5.1 billion from activities including medical examinations, healthcare technology and transportation systems. Commercial & International served utilities, security and overseas markets, while Defense Systems supplied military hardware, software and integrated systems.

Contract terms determine how Leidos is paid and how much cost risk it bears. Cost-reimbursement contracts repay allowable direct and indirect costs and add a fee; some fees depend on performance. Time-and-materials contracts generally pay negotiated hourly labor rates plus reimbursement of other direct costs. Firm-fixed-price contracts set a price for specified work: Leidos can earn more if it completes the work below its planned costs, but bears greater exposure to overruns. Some incentive contracts share cost outcomes with the customer or adjust fees against agreed targets.

Work can continue over several years through contracts, options and task orders. An indefinite-delivery, indefinite-quantity award sets terms for potential work, but does not necessarily commit the customer to buy a specified amount; task orders are issued separately. Leidos usually recognizes revenue over time on complex work as it progresses. In fiscal 2025, its net bookings were $17.5 billion, including funded and unfunded awards and certain expected task orders; bookings are not the same as revenue already earned.

Customers and how it sells

The U.S. government is Leidos’s principal customer. Government contracts accounted for 87% of fiscal 2025 revenue, whether Leidos served as the prime contractor or as a subcontractor to another company. Contracts for the Department of War and U.S. Intelligence Community, including subcontracts where they were the ultimate purchasers, represented approximately 49% of total fiscal 2025 revenue.

Customers span multiple agencies and purchasing offices. They include the Federal Aviation Administration, Department of Veterans Affairs, Department of Homeland Security, military services, Department of Energy and research agencies. Leidos also serves state and local agencies, utilities, airports and commercial businesses. Government agencies may buy through a single contract award or through contract vehicles under which eligible suppliers compete for individual task orders.

The United States accounted for $15.7 billion, or 91.8%, of fiscal 2025 revenue. International revenue was $1.4 billion. Overseas customers include government agencies in the United Kingdom and Australia, as well as NATO. Leidos also supplies air navigation and security customers internationally. The company works with other contractors on some bids and can act as either prime contractor or subcontractor, depending on the opportunity.

Suppliers and costs

Leidos’s work uses employees, subcontractors, materials and equipment. It designs and manufactures defense components, including sensors, missile structures and thermal protection systems, while also integrating products and software into customer systems. Its contract cost estimates include materials, labor, subcontractors, overhead and a share of general and administrative expenses.

Leidos had approximately 47,000 full- and part-time employees at the end of fiscal 2025. It also teams with other companies when bidding for large contracts. Supply-chain disruption and inflation have increased prices for goods and services; higher tariffs may increase the cost of IT hardware used on contracts and internally. Leidos expects to recover portions of higher tariff costs through cost-plus contracts.

The company funds some research itself and performs other research under customer contracts. Company-funded research and development expense was $187 million in fiscal 2025, while research performed under customer contracts is charged directly to those contracts. Leidos said cost controls supported earnings margins in the third quarter of 2026 but put downward pressure on growth in cost-plus contracts.

Competitive position

Leidos competes for contracts against established technology and defense companies, smaller specialists, federal nonprofit research centers and the government’s own capabilities. Named competitors include Accenture Federal Services, Booz Allen Hamilton, CACI International, General Dynamics, Lockheed Martin, Northrop Grumman and SAIC. The competing businesses span systems integration, engineering, IT, logistics, homeland security and health solutions. Companies may team with Leidos on one bid and compete against it on another.

Government customers increasingly use multiple-award contract vehicles, under which approved contractors compete for task orders. Leidos expects most of the business it seeks in the foreseeable future to be awarded through competitive bidding. It identifies technical expertise, understanding of customer missions, qualified staff, pricing and execution among the factors on which it competes.

Our reading: Cleared personnel and experience with government missions are meaningful competitive resources, but they do not remove the need to win repeated competitions. At the end of fiscal 2025, 53% of employees possessed U.S. security clearances.

Our reading: Incumbent systems and customer relationships can help Leidos understand and serve a mission, but that advantage is limited by customers’ ability to rebid work and use their own capabilities. Its technology is not generally dependent on patents, and the government can have rights to disclose or license material developed under government-funded contracts.

Growth opportunities

Leidos’s growth strategy focuses on space and maritime, energy infrastructure, digital modernization and cyber, mission software, and managed health services. In fiscal 2025, revenue increased 3% from fiscal 2024, primarily because of program wins and increased volumes, partly offset by completed contracts.

In defense, Leidos has won work on space-sensing payloads and a production award for Havoc Spear. It said more than a dozen defense technology programs were moving from development into rate production. The company has a framework agreement for low-cost containerized munitions, but said it had not yet received a contract under that agreement. It is also investing in defense production capacity.

In digital and cyber, Leidos has developed an automated platform that finds and fixes software vulnerabilities. In energy, it has developed tools for electric distribution, gas and power-generation projects. Leidos said integration of its Entrust acquisition was complete and that its energy pipeline had grown approximately 230% since the acquisition.

In health, Leidos is testing MySTR, a service treatment record product, while working toward a contract award and customer rollout. Its Military OneSource operation supports service members and their families. Leidos expects its existing Veterans Benefits Administration medical disability examination contracts to be extended through the first half of 2027, while the request for proposals for replacement work remains in draft.

Structural risks

• Government dependence: Leidos’s performance is affected by federal spending and whether its offerings match government budget priorities. Harm to its relationships or reputation with government agencies could affect future revenue and growth.
• Contract awards and cancellation: The government can terminate a contract for convenience. Multiple-award vehicles require further competition for task orders, and Leidos may not realize all amounts in backlog as revenue.
• Contract execution: Fixed-price work exposes Leidos to cost overruns. Estimates of the cost and revenue needed to complete complex contracts can change, and an expected contract loss is recorded when identified.
• Health contract changes: Changes to the Veterans Benefits Administration disability examination contract materially affected third-quarter 2026 results. The replacement competition remained in draft, and future work share was not yet determined.
• Regulation and security: Government procurement, cybersecurity and privacy rules impose requirements on Leidos. Violations, misconduct by people or partners working on its behalf, or cyber incidents could disrupt operations, damage its reputation or cause it to lose contracts.
• Supply and costs: Supply-chain disruption and inflation have raised prices for goods and services, potentially increasing delivery costs and reducing customers’ buying power.

Bottom line

Our reading

Leidos is a contract-based technology and engineering business whose work spans government IT, health services and defense systems. Our reading: Its cleared workforce and mission experience support its ability to compete, but federal procurement decisions and contract execution remain central to results. Defense and energy offer routes to growth, while the disability-examination recompete and the conversion of prospective work into funded contracts remain important uncertainties.