Leidos Q3 Earnings Soar on Revenue Growth, Strong EPS

Ticker: LDOS · Form: 10-Q · Filed: 2025-11-04T00:00:00.000Z

Sentiment: bullish

Topics: Government Contracting, Defense Sector, IT Services, Earnings Growth, Share Repurchases, Cash Flow, Acquisitions

Related Tickers: LDOS, GD, LMT, RTX, BA

TL;DR

**Leidos is crushing it, buy the dip if you see one, because these numbers scream continued growth and shareholder returns.**

AI Summary

Leidos Holdings, Inc. (LDOS) reported robust financial performance for the nine months ended October 3, 2025, with revenues increasing to $12,967 million, up from $12,297 million in the prior year, representing a 5.4% growth. Net income attributable to Leidos common stockholders surged to $1,121 million, a significant 15.6% increase from $970 million in the same period last year. Diluted EPS also saw a substantial rise to $8.62, compared to $7.13 previously. The company's cash and cash equivalents stood at $974 million as of October 3, 2025, a decrease from $1,097 million at September 27, 2024, primarily due to a $292 million acquisition and $639 million in stock repurchases. Operating income for the nine months ended October 3, 2025, was $1,636 million, up from $1,406 million in the prior year. The company also noted a net favorable impact of $58 million to income before income taxes from changes in estimates on contracts for the nine months ended October 3, 2025, contributing $0.34 to diluted EPS. A key business change included the dissolution of its controlling interest in Mission Support Alliance, LLC during the quarter ended July 4, 2025, while maintaining a controlling interest in Hanford Mission Integration Solutions, LLC. Strategic outlook includes evaluating new accounting standards like ASU 2024-03 and ASU 2025-06, with no material impact expected from ASU 2023-09.

Why It Matters

Leidos' strong financial performance, marked by a 15.6% increase in net income and a 20.9% jump in diluted EPS year-over-year, signals robust operational efficiency and effective contract management, which is crucial for investors in the competitive government contracting space. The company's ability to generate significant cash from operations, $1,255 million for the nine months ended October 3, 2025, despite a $292 million acquisition and substantial share repurchases, demonstrates financial health. This performance could attract more institutional investors, potentially driving up LDOS's stock value. For employees, continued growth and profitability suggest job security and potential for expansion. Customers, primarily U.S. government agencies, benefit from a stable and capable contractor, ensuring continuity and quality of service in critical defense and IT sectors.

Risk Assessment

Risk Level: medium — While Leidos shows strong financial performance, the company engaged in significant share repurchases totaling $639 million for the nine months ended October 3, 2025, and undertook a $292 million acquisition, which could strain liquidity if future cash flows diminish. Additionally, the current portion of long-term debt decreased substantially from $618 million to $19 million, but long-term debt increased from $4,052 million to $4,632 million, indicating a shift in debt structure that warrants monitoring.

Analyst Insight

Investors should consider Leidos' consistent earnings growth and strong cash flow from operations as indicators of a healthy business. The substantial share repurchases and dividend payments ($156 million for the nine months ended October 3, 2025) demonstrate a commitment to returning capital to shareholders. Given the positive financial trajectory, investors might consider holding or initiating a position, especially if the stock experiences a minor pullback.

Financial Highlights

debt To Equity
1.75
revenue
$12,967M
operating Margin
12.6%
total Assets
$13,542M
total Debt
$4,651M
net Income
$1,121M
eps
$8.62
gross Margin
21.0%
cash Position
$974M
revenue Growth
+5.4%

Revenue Breakdown

SegmentRevenueGrowth
Total Revenues$12,967M+5.4%

Key Numbers

Key Players & Entities

FAQ

What were Leidos Holdings, Inc.'s revenues for the nine months ended October 3, 2025?

Leidos Holdings, Inc. reported revenues of $12,967 million for the nine months ended October 3, 2025, an increase from $12,297 million in the corresponding period of 2024.

How did Leidos' net income attributable to common stockholders change year-over-year?

Net income attributable to Leidos common stockholders increased to $1,121 million for the nine months ended October 3, 2025, up from $970 million for the nine months ended September 27, 2024, representing a 15.6% increase.

What was Leidos' diluted earnings per share for the nine months ended October 3, 2025?

Leidos' diluted earnings per share (EPS) was $8.62 for the nine months ended October 3, 2025, compared to $7.13 for the nine months ended September 27, 2024.

What was the impact of changes in estimates on contracts for Leidos?

For the nine months ended October 3, 2025, changes in estimates on contracts had a net favorable impact of $58 million to income before income taxes, contributing $0.34 to diluted EPS.

How much cash did Leidos use for stock repurchases?

Leidos used $639 million for repurchases of stock and other activities during the nine months ended October 3, 2025.

Did Leidos make any significant acquisitions during the period?

Yes, Leidos made an acquisition of a business, net of cash acquired, totaling $292 million during the nine months ended October 3, 2025.

What was Leidos' cash and cash equivalents balance at October 3, 2025?

As of October 3, 2025, Leidos Holdings, Inc. reported cash and cash equivalents of $974 million.

What was Leidos' net cash provided by operating activities?

Leidos generated $1,255 million in net cash provided by operating activities for the nine months ended October 3, 2025, an increase from $1,141 million in the prior year period.

What changes did Leidos make to its accounting policies?

Effective as of the first quarter of fiscal 2025, Leidos changed its policy to exclude outstanding payments from "Cash and cash equivalents" on the condensed consolidated balance sheets, recasting prior year financial information to conform.

What is Leidos' strategic outlook regarding new accounting standards?

Leidos plans to adopt ASU 2023-09 prospectively in fiscal 2025 with no material impact, and is evaluating ASU 2024-03 and ASU 2025-06 for adoption in fiscal 2027/2028 and fiscal 2026 respectively, with no material impact expected from ASU 2025-06.

Risk Factors

Industry Context

Leidos operates in the technology and defense sectors, serving government and commercial clients. The industry is characterized by significant government spending, complex contract structures, and a need for advanced technological solutions. Competition is intense, with major players vying for large-scale contracts. Trends include digital transformation, cybersecurity, and advanced analytics, driving demand for specialized services.

Regulatory Implications

As a government contractor, Leidos is subject to stringent regulatory oversight, including compliance with defense procurement regulations and cybersecurity standards. Changes in government spending priorities or contract award processes can significantly impact revenue. The company's evaluation of new accounting standards also highlights the dynamic regulatory environment.

What Investors Should Do

  1. [object Object]
  2. [object Object]
  3. [object Object]
  4. [object Object]

Key Dates

Glossary

Non-controlling interest
The portion of equity in a subsidiary that is not attributable to the parent company. It represents the ownership stake of outside shareholders. (Leidos reported a non-controlling interest of $45M as of October 3, 2025, indicating partial ownership in some of its consolidated entities.)
Accumulated other comprehensive income (loss)
A component of equity that includes unrealized gains and losses on certain investments, foreign currency translations, and pension adjustments that have not been included in net income. (Leidos had an accumulated other comprehensive loss of $(54)M as of October 3, 2025, reflecting items like foreign currency translation adjustments.)
Goodwill
An intangible asset that arises when a company acquires another company for a price greater than the fair value of its net identifiable assets. (Leidos reported $6,342M in goodwill as of October 3, 2025, primarily resulting from past acquisitions.)
Operating lease right-of-use assets, net
Represents the right to use an asset for the lease term under an operating lease, recognized on the balance sheet. (Leidos has $512M in operating lease right-of-use assets as of October 3, 2025, reflecting its lease obligations.)
Variable interest entity (VIE)
A legal entity whose equity is not sufficient to support its activities or where the equity investors do not have the characteristics of a voting interest. The primary beneficiary consolidates the VIE. (Leidos consolidates VIEs where it is the primary beneficiary, though it notes these are not material to its financial statements.)

Year-Over-Year Comparison

Leidos Holdings, Inc. has demonstrated strong year-over-year performance. Revenues for the nine months ended October 3, 2025, increased by 5.4% to $12,967 million compared to $12,297 million in the prior year. Net income attributable to common stockholders saw a substantial rise of 15.6%, reaching $1,121 million from $970 million. Diluted EPS also grew significantly to $8.62 from $7.13. Operating income improved to $1,636 million from $1,406 million. However, cash and cash equivalents decreased due to strategic investments and share repurchases, while long-term debt increased, indicating a shift in capital structure.

Filing Stats: 4,803 words · 19 min read · ~16 pages · Grade level 14.9 · Accepted 2025-11-04 11:11:35

Filing Documents

Page

Part I Page Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 1 Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Operations 2 Condensed Consolidated Statements of Comprehensive Income 3 Condensed Consolidated Statements of Equity 4 Condensed Consolidated Statements of Cash Flows 6 Notes to Condensed Consolidated Financial Statements 8 Note 1–Basis of Presentation and Summary of Significant Accounting Policies 8 Note 2–Revenues 10 Note 3–Acquisitions, Goodwill and Intangible Assets 13 Note 4–Fair Value Measurements 15 Note 5–Derivative Instruments 16 Note 6–Debt 17 Note 7–Accumulated Other Comprehensive Income (Loss) 18 Note 8–Earnings Per Share 18 Note 9–Income Taxes 19 Note 10–Business Segments 19 Note 11–Commitments and Contingencies 21 Note 12–Subsequent Event s 22 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Overview 23 Business Environment and Trends 23 Results of Operations 24 Bookings and Backlog 26 Liquidity and Capital Resources 27 Off-Balance Sheet Arrangements 29 Guarantor and Issuer of Guaranteed Securities 29 Contractual Obligations and Commitments 30 Critical Accounting Policies and Estimates 30 Recently Adopted and Issued Accounting Standards 30 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 31 Item 4.

Controls and Procedures

Controls and Procedures 31 Part II Item 1.

Legal Proceedings

Legal Proceedings 32 Item 1A.

Risk Factors

Risk Factors 32 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 32 Item 3. Defaults Upon Senior Securities 32 Item 4. Mine Safety Disclosures 32 Item 5. Other Information 33 Item 6. Exhibits 34

Signatures

Signatures 35 Table of Contents

—Financial Information

Part I—Financial Information

Financial Statements

Item 1. Financial Statements LEIDOS HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited; in millions, except share and per share data) October 3, 2025 January 3, 2025 Assets: Cash and cash equivalents $ 974 $ 849 Receivables, net 2,970 2,645 Inventory, net 360 315 Other current assets 545 525 Total current assets 4,849 4,334 Property, plant and equipment, net 963 991 Intangible assets, net 496 517 Goodwill 6,342 6,084 Operating lease right-of-use assets, net 512 560 Deferred tax assets 32 203 Other long-term assets 348 321 Total assets $ 13,542 $ 13,010 Liabilities: Accounts payable and accrued liabilities $ 2,158 $ 2,131 Accrued payroll and employee benefits 809 811 Current portion of long-term debt 19 618 Total current liabilities 2,986 3,560 Long-term debt, net of current portion 4,632 4,052 Operating lease liabilities 578 621 Deferred tax liabilities 122 2 Other long-term liabilities 270 315 Total liabilities 8,588 8,550 Commitments and contingencies (Note 11) Stockholders' equity: Common stock, $ 0.0001 par value, 500,000,000 shares authorized, 127,854,145 and 131,163,899 shares issued and outstanding at October 3, 2025, and January 3, 2025, respectively — — Additional paid-in capital 588 1,112 Retained earnings 4,375 3,410 Accumulated other comprehensive loss ( 54 ) ( 110 ) Total Leidos stockholders' equity 4,909 4,412 Non-controlling interest 45 48 Total stockholders' equity 4,954 4,460 Total liabilities and stockholders' equity $ 13,542 $ 13,010 See accompanying notes to condensed consolidated financial statements. Leidos Holdings, Inc. 1 Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION LEIDOS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Nine Months Ended (unaudited; in millions, except per share data) October 3, 2025 September 27, 2024 October 3, 2025 September 27, 2024 Revenues $ 4,469 $ 4,190 $ 12,967 $ 12,297 Cost of revenues 3,648 3,428 10,607 10,192 Selling, general and administrative expenses 286 247 733 704 Acquisition, integration and restructuring costs 4 3 10 14 Asset impairment charges 4 6 4 6 Equity earnings of non-consolidated subsidiaries ( 8 ) ( 10 ) ( 23 ) ( 25 ) Operating income 535 516 1,636 1,406 Non-operating income (expense): Interest expense, net ( 51 ) ( 46 ) ( 155 ) ( 146 ) Other (expense) income, net — — ( 1 ) 4 Income before income taxes 484 470 1,480 1,264 Income tax expense ( 115 ) ( 108 ) ( 353 ) ( 295 ) Net income 369 362 1,127 969 Less: net income (loss) attributable to non-controlling interest 2 ( 2 ) 6 ( 1 ) Net income attributable to Leidos common stockholders $ 367 $ 364 $ 1,121 $ 970 Earnings per share: Basic $ 2.87 $ 2.72 $ 8.69 $ 7.19 Diluted 2.82 2.68 8.62 7.13 See accompanying notes to condensed consolidated financial statements. 2 Leidos Holdings, Inc. Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION LEIDOS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Three Months Ended Nine Months Ended (unaudited; in millions) October 3, 2025 September 27, 2024 October 3, 2025 September 27, 2024 Net income $ 369 $ 362 $ 1,127 $ 969 Foreign currency translation adjustments ( 4 ) 37 60 18 Unrecognized loss on derivative instruments ( 2 ) ( 5 ) ( 4 ) ( 4 ) Pension adjustments 1 ( 1 ) — — Total other comprehensive (loss) income, net of taxes ( 5 ) 31 56 14 Comprehensive income 364 393 1,183 983 Less: net income (loss) attributable to non-controlling interest 2 ( 2 ) 6 ( 1 ) Comprehensive income attributable to Leidos common stockholders $ 362 $ 395 $ 1,177 $ 984 See accompanying notes to condensed consolidated financial statements. Leidos Holdings, Inc. 3 Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION LEIDOS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited; in millions, except per share data) Shares of common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Leidos stockholders' equity Non-controlling interest Total stockholders' equity Balance at January 3, 2025 131 $ 1,112 $ 3,410 $ ( 110 ) $ 4,412 $ 48 $ 4,460 Net income — — 363 — 363 2 365 Other comprehensive income, net of taxes — — — 27 27 — 27 Issuances of stock 1 17 — — 17 — 17 Repurchases of stock and other ( 3 ) ( 531 ) — — ( 531 ) — ( 531 ) Dividends of $ 0.40 per share — — ( 52 ) — ( 52 ) — ( 52 ) Stock-based compensation — 21 — — 21 — 21 Net capital distributions to non-controlling interest — — — — — ( 5 ) ( 5 ) Balance at April 4, 2025 129 $ 619 $ 3,721 $ ( 83 ) $ 4,257 $ 45 $ 4,302 Net income — — 391 — 391 2 393 Other comprehensive income, net of taxes — — — 34 34 — 34 Issuances of stock — 16 — — 16 — 16 Repurchases of stock and other ( 1 ) ( 10 ) — — ( 10 ) — ( 10 ) Dividends of $ 0.40 per share — — ( 51 ) — ( 51 ) — ( 51 ) Stock-based compensation — 25 — — 25 — 25 Net capital distributions to non-controlling interest — — — — — ( 2 ) ( 2 ) Balance at July 4, 2025 128 $ 650 $ 4,061 $ ( 49 ) $ 4,662 $ 45 $ 4,707 Net income — — 367 — 367 2 369 Other comprehensive income, net of taxes — — — ( 5 ) ( 5 ) — ( 5 ) Issuances of stock — 15 — — 15 — 15 Repurchases of stock and other — ( 103 ) — — ( 103 ) — ( 103 ) Dividends of $ 0.40 per share — — ( 53 ) — ( 53 ) — ( 53 ) Stock-based compensation — 26 — — 26 — 26 Net capital distributions to non-controlling interest — — — — — ( 2 ) ( 2 ) Balance at October 3, 2025 128 $ 588 $ 4,375 $ ( 54 ) $ 4,909 $ 45 $ 4,954 See accompanying notes to condensed consolidated financial statements. 4 Leidos Holdings, Inc. Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION (unaudited; in millions, except per share data) Shares of common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Leidos stockholders' equity Non-controlling interest Total stockholders' equity Balance at December 29, 2023 136 $ 1,885 $ 2,364 $ ( 48 ) $ 4,201 $ 57 $ 4,258 Net income (loss) — — 284 — 284 ( 1 ) 283 Other comprehensive loss, net of taxes — — — ( 24 ) ( 24 ) — ( 24 ) Issuances of stock — 14 — — 14 — 14 Repurchases of stock and other ( 1 ) ( 184 ) — — ( 184 ) — ( 184 ) Dividends of $ 0.38 per share — — ( 53 ) — ( 53 ) — ( 53 ) Stock-based compensation — 20 — — 20 — 20 Net capital distributions to non-controlling interest — — — — — ( 1 ) ( 1 ) Balance at March 29, 2024 135 $ 1,735 $ 2,595 $ ( 72 ) $ 4,258 $ 55 $ 4,313 Net income — — 322 — 322 2 324 Other comprehensive income, net of taxes — — — 7 7 — 7 Issuances of stock 1 14 — — 14 — 14 Repurchases of stock and other ( 1 ) ( 115 ) — — ( 115 ) ( 115 ) Dividends of $ 0.38 per share — — ( 51 ) — ( 51 ) — ( 51 ) Stock-based compensation — 20 — — 20 — 20 Net capital distributions to non-controlling interest — — — — — ( 2 ) ( 2 ) Balance at June 28, 2024 135 $ 1,654 $ 2,866 $ ( 65 ) $ 4,455 $ 55 $ 4,510 Net income (loss) — — 364 — 364 ( 2 ) 362 Other comprehensive income, net of taxes — — — 31 31 — 31 Issuances of stock — 1 — — 1 — 1 Repurchases of stock and other ( 2 ) ( 205 ) — — ( 205 ) — ( 205 ) Dividends of $ 0.38 per share — — ( 51 ) — ( 51 ) — ( 51 ) Stock-based compensation — 19 — — 19 — 19 Balance at September 27, 2024 133 $ 1,469 $ 3,179 $ ( 34 ) $ 4,614 $ 53 $ 4,667 See accompanying notes to condensed consolidated financial statements. Leidos Holdings, Inc. 5 Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION LEIDOS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended (unaudited; in millions) October 3, 2025 September 27, 2024 Cash flows from operations: Net income $ 1,127 $ 969 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 215 211 Stock-based compensation 72 59 Deferred income taxes 288 ( 96 ) Asset impairment charges 4 6 Other 3 5 Change in assets and liabilities, net of effects of acquisition: Receivables ( 297 ) ( 260 ) Other current assets and other long-term assets 26 102 Accounts payable and accrued liabilities and other long-term liabilities ( 108 ) ( 101 ) Accrued payroll and employee benefits ( 10 ) 208 Income taxes receivable/payable ( 65 ) 38 Net cash provided by operating activities 1,255 1,141 Cash flows from investing activities: Acquisition of a business, net of cash acquired ( 292 ) — Payments for property, equipment and software ( 82 ) ( 63 ) Other 2 7 Net cash used in investing activities ( 372 ) ( 56 ) Cash flows from financing activities: Proceeds from debt issuance 997 — Repayments of borrowings ( 1,014 ) ( 14 ) Payments for debt issuance costs ( 7 ) — Dividend payments ( 156 ) ( 155 ) Repurchases of stock and other ( 639 ) ( 500 ) Proceeds from issuances of stock 47 28 Net capital distributions to non-controlling interests ( 9 ) ( 3 ) Other ( 7 ) — Net cash used in financing activities ( 788 ) ( 644 ) Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash 11 5 Net increase in cash, cash equivalents and restricted cash 106 446 Cash, cash equivalents and restricted cash at beginning of period 991 792 Cash, cash equivalents and restricted cash at end of period 1,097 1,238 Less: restricted cash at end of period 123 141 Cash and cash equivalents at end of period $ 974 $ 1,097 See accompanying notes to condensed consolidated financial statements. 6 Leidos Holdings

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION LEIDOS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS [CONTINUED] Nine Months Ended (unaudited; in millions) October 3, 2025 September 27, 2024 Supplementary cash flow information: Cash paid for income taxes, net of refunds $ 179 $ 276 Cash paid for interest 177 167 Non-cash investing activity: Property, plant and equipment additions $ 4 $ 72 See accompanying notes to condensed consolidated financial statements. Leidos Holdings, Inc. 7 Table of Contents LEIDOS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1–Basis of Presentation and Summary of Significant Accounting Policies NATURE OF OPERATIONS AND BASIS OF PRESENTATION Leidos Holdings, Inc. ("Leidos"), a Delaware corporation, is a holding company whose direct 100 %-owned subsidiary and principal operating company is Leidos, Inc. Leidos, is an industry and technology leader serving government and commercial customers with smarter, more efficient digital and mission innovations. Headquartered in Reston, Virginia, with 47,000 global employees, Leidos' customers include the U.S. Department of Defense ("DoD"), the U.S. Intelligence Community, the U.S. Department of Homeland Security, the Federal Aviation Administration, the Department of Veterans Affairs and many other U.S. civilian, state and local government agencies, foreign government agencies and commercial businesses. Unless indicated otherwise, references to "we," "us" and "our" refer collectively to Leidos Holdings, Inc. and its consolidated subsidiaries. We have a controlling interest in Hanford Mission Integration Solutions, LLC ("HMIS"), the legal entity for the follow-on contract to Mission Support Alliance, LLC's ("MSA") contract and a joint venture with Centerra Group, LLC and Parsons Government Services, Inc. During the quarter ended July 4, 2025, we dissolved our controlling interest in MSA. The financial results for HMIS are consolidated into o

View on Read The Filing