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SAIC reported Q2 FY2027 revenue of $1.9 billion, above the consensus estimate of $1.7 billion. Adjusted earnings per share were $3.01, compared with the consensus of $2.25.
Revenue rose from $1.8 billion a year earlier. In its filing, SAIC attributed the increase primarily to rising volumes on existing and new contracts and the SilverEdge acquisition, partly offset by completed contracts. Excluding acquisitions, the filing said revenue grew by approximately 5.3%.
SAIC reported diluted earnings per share of $2.38, down from $2.71 a year earlier. Gross margin rose to 12.7% from 12.2%, while operating margin increased to 8.09% from 7.86%. The filing attributed the operating-margin increase primarily to improved contract profitability and prior-year costs related to federal tax audit settlements, partly offset by higher selling, general and administrative expenses.
SAIC reported free cash flow of $131.0 million, compared with $115.0 million a year earlier.
| Q2 FY2027 | Q2 FY2026 | Change | |
|---|---|---|---|
| Revenue | $1.9 billion | $1.8 billion | 6.27% |
| Diluted EPS | $2.38 | $2.71 | −12.2% |
| Gross margin | 12.7% | 12.2% | 0.6 percentage points |
| Operating margin | 8.09% | 7.86% | 0.2 percentage points |
| Free cash flow | $131.0 million | $115.0 million | 13.9% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $3.01 | $2.25 | Beat by 33.8% |
| Revenue | $1.9 billion | $1.7 billion | Beat by 7.52% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
Chief Executive Jim Regan said customers were moving money faster onto existing contracts across government, supporting SAIC’s revised outlook. Chief Financial Officer Prabu Natarajan said Q2 on-contract growth was 9.00%, ahead of plan, while unplanned material purchases contributed to organic growth and were not expected to repeat.
Natarajan said procurement offices were implementing new guidelines, including fixed-price directives, and some large opportunities had been delayed. He said slower requests for proposals and awards led to contract extensions and greater use of existing contract ceilings. Regan said SAIC’s recompete win rate exceeded 90% in the quarter and linked the result to a more disciplined approach that concentrates bidding on fewer pursuits.
Asked about growth on existing contracts, Natarajan said SAIC assumed 5.00% on-contract growth in the second half of FY2027. He said previously won programs had generated $240.0 million in the first half and were expected to generate $500.0 million for the year.
On margins, Regan cited program execution and cost reductions made late in the prior year. Natarajan said SAIC expected adjusted EBITDA margins in the high 9% range in the second half as it invested in areas where customer demand and strategic relevance were accelerating.
Regan said Project Orbit was entering implementation and would change procurement, recruiting and mission delivery processes. Natarajan described procurement as a longer-term opportunity, saying, “Buy smarter is the largest and longest term opportunity.” He said some expected savings would be reinvested in new work, capacity and competitiveness, with the remainder supporting margin expansion.
Asked about fixed-price contracting, Natarajan said civilian customers had been more comfortable with those arrangements than defense and intelligence customers. He said SAIC was training program managers and contract teams for fixed-price and commercial delivery models, describing the transition as a longer-term change rather than a near-term fix.
Guidance
SAIC raised its FY2027 revenue guidance to $7.2 billion to $7.3 billion and expects organic revenue growth of −2.00% to flat. The company also raised its adjusted EBITDA outlook to $750.0 million to $755.0 million, with an adjusted EBITDA margin of 10.3% to 10.5%. SAIC raised its adjusted diluted earnings-per-share guidance to $10.65 to $10.75.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Free cash flow, non-GAAP | FY2027 | $600.0 million | — | New |
| EPS, non-GAAP | FY2027 | $10.65–$10.75 | — | New |
| EBITDA growth, Non Gaap Margin | FY2027 | 10.3%–10.5% | — | New |
| EBITDA, non-GAAP | FY2027 | $750.0 million–$755.0 million | — | New |
| Revenue growth, Non Gaap Organic Growth | FY2027 | −2.00% | — | New |
| Revenue | FY2027 | $7.2 billion–$7.3 billion | — | New |
| EBITDA growth, non-GAAP | FY2030 | 11.0% | — | New |
| Free cash flow | FY2027 | $600.0 million | — | New |
| Revenue growth, On Contract Growth Second Half | FY2027 | 5.00% | — | New |
| EBITDA, Non Gaap Second Half | FY2027 | SAIC expects adjusted EBITDA margin in the high 9% range in the second half of FY2027. | — | — |
| EBITDA growth, non-GAAP | FY2027 | 10.3%–10.5% | — | New |
| Revenue, Selected Programs | FY2027 | $500.0 million | — | New |
| Revenue growth, Organic Growth | FY2027 | −2.00% | — | New |