SAIC Fiscal Year 2026 Fourth Quarter Earnings Conference Call

Contractor's Revenue Reset

Science Applications International Corp ranks among the largest integrators of mission-critical technology for America's defence, intelligence and civilian agencies, with roughly 24,000 employees and annual revenue hovering near $7.3 billion. Its preliminary fourth-quarter and full-year fiscal 2026 figures, released on February 11, signal the first sustained contraction in years. Full-year revenue is now seen at about $7.26 billion, a shade under the earlier $7.275-7.325 billion range, chiefly because of a late-2025 government shutdown, winter-storm disruptions and procurement bottlenecks that delayed new starts and on-contract growth.

The outlook for fiscal 2027 is starker still: revenue guidance has been cut to $7.0-7.2 billion, implying an organic decline of 2-4 per cent versus prior projections of flat to low-single-digit growth. Two recent recompete losses—one on an Army programme and another on an Air Force cloud-services contract awarded to Leidos—account for much of the gap, alongside persistent market conditions that have slowed the federal buying cycle.

Yet SAIC is not merely weathering the storm. Adjusted EBITDA for 2026 is forecast at $705 million, beating the old target, and next year's margin is expected to widen to 9.9-10.1 per cent as the firm sheds lower-value commoditised IT work and concentrates on opportunities offering greater technology-transformation upside. Free cash flow remains strong, above $570 million this year and targeted above $600 million next, preserving firepower for dividends, buybacks and tuck-in acquisitions.

The deeper tension, often missed in coverage of individual contract wins, is structural. Washington talks incessantly of speeding innovation to counter China and Russia, yet the machinery of procurement—protests, funding lapses, risk-averse officials—has slowed to a crawl. For SAIC, whose platforms underpin naval propulsion testing, joint all-domain command systems and space-intelligence missions, these delays do not just dent the top line; they risk hollowing out the engineering bench and eroding the very execution edge the Pentagon now prizes. The full earnings release on March 16 will test whether management's enterprise-wide transformation plan can translate efficiency gains into renewed growth before the next budget cycle tightens further.