Leidos posted $4.2 billion in fiscal year 2025 first-quarter revenue, reflecting a 7 percent year-over-year increase, and attributed the revenue growth to increased demand across all customer segments.
Q1 2025 Financial Highlights
In an earnings release published Tuesday, the defense and IT services contractor said it ended the quarter with a total backlog of $46.3 billion, with $7.3 billion of that funded.
Q1 net bookings totaled $2.1 billion, reflecting a book-to-bill ratio of 0.5.
Leidos reported $365 million in Q1 net income and diluted earnings per share of $2.77.
Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, for the quarter was $601 million, up 23 percent from the prior-year period. Adjusted EBITDA margin rose from 12.3 percent to 14.2 percent in the first quarter of 2025.
Cash flows from operations reached $58 million for the quarter. The company reported $36 million in quarterly free cash flow.
Leidos reaffirmed its FY 2025 guidance, projecting revenues of $16.9 billion to $17.3 billion with adjusted EBITDA margin in the mid-to-high 12 percent range.
CEO on NorthStar 2030 Strategy
At an earnings call Tuesday, Leidos CEO Thomas Bell discussed the company’s new growth strategy, called NorthStar 2030, and the five pillars underpinning the strategy: space and maritime; energy infrastructure; digital modernization and cyber; highly customized critical mission software; and managed health services.
“These growth pillars have been carefully chosen as our analysis shows clearly that they are areas where customer needs and spending will continue to grow robustly,” Bell told investors and analysts.
“Our growth pillars are also squarely aligned with the priorities of our new administration, and we are sure they will remain national priorities well into the future. Our confidence is evidenced by recent executive orders and announcements, like the EOs on the electrical grid and maritime dominance, as well as orders calling for the modernization of federal technology and software,” he added.
Pending Acquisition in the Cyber Domain
During the quarter, Leidos agreed to acquire a company that builds offensive and defensive cyber platforms for the U.S. government for approximately $300 million. The defense contractor expects to close the transaction in the second quarter of 2025.
Bell touched on the pending acquisition, which he said would enable Leidos to accelerate the cyber pillar in the NorthStar 2030 strategy.
“Our pending acquisition brings additional exquisite cyber capabilities to strengthen our cyber growth pillar. Their expertise in vulnerability research, reverse engineering, exploit development, and the converging cyber electronic warfare markets are squarely in line with our cyber strategy. Our acquisition is focused on the DOD and the intelligence communities with deep roots in DARPA as well,” the 2025 Wash100 awardee noted.
“This delivers to us a unique, additional, active, value-added role in the cutting-edge future of cybersecurity technologies for national security. Leidos will leverage this acquisition both directly for our customers and in support of enhanced, informed and resilient defensive solutions across our own corporation. The acquisition will add to our deep pool of cyber talent and strengthen our competitive position in the $15 billion worth of pure cyber opportunities in our pipeline and even more across the related network and cloud pursuits,” the chief executive explained.
Quarterly Results of 4 Business Segments
Leidos’ national security and digital business posted $1.88 billion in first-quarter revenues, up 5 percent from the prior-year period. The company attributed the revenue increase to recent contract awards and increased volumes on Sentinel and certain IT and intelligence programs.
The health and civil business segment’s Q1 revenues rose 8 percent to $1.29 billion, driven by increased volumes within the managed health services business and net writeups on certain programs.
The company’s defense systems business saw its revenues climb 7 percent to $508 million, attributing the revenue growth to increased volumes in hypersonics and space sensing programs.
The commercial and international business of Leidos generated $568 million in revenues, reflecting a 12 percent increase from the same period last year. The company associated the growth with increased deliveries of security products and volumes on certain programs in the U.K.