Core Insights - Leidos Holdings, Inc. reported strong financial results for Q3 2025, with revenue growth of 7% year-over-year, reaching $4.47 billion, driven by increased customer demand in national security and defense sectors [3][9][24] - The company raised its fiscal year 2025 earnings and margin guidance, reflecting confidence in future performance despite challenges such as the government shutdown [2][10] - Net income for the quarter was $369 million, or $2.82 per diluted share, marking increases of 2% and 5% year-over-year, respectively [4][9] Financial Performance - Revenues for Q3 2025 were $4.47 billion, up from $4.19 billion in Q3 2024, with a year-over-year growth attributed to innovative products and solutions [3][9] - Net income was $369 million, with a net income margin of 8.3%, slightly down from 8.6% in the previous year [4][9] - Adjusted EBITDA was $616 million, reflecting a 3% increase year-over-year, with an adjusted EBITDA margin of 13.8%, down from 14.2% [5][9] Cash Flow and Dividends - Leidos generated $711 million in net cash from operating activities, with free cash flow of $680 million for the quarter [6][9] - The company declared a cash dividend of $0.43 per share, a 7.5% increase from the previous quarter [8] New Business Awards and Backlog - Net bookings totaled $5.9 billion in the quarter, resulting in a backlog of $47.7 billion, with a funded backlog increase of 27% sequentially [10][32] - Significant contract awards included a $2.2 billion contract in the intelligence community and a $760 million subcontract with NASA [15][10] Segment Performance - National Security & Digital revenues increased by 8% to $2.02 billion, driven by contract awards and increased volumes [24] - Health & Civil revenues rose by 6% to $1.30 billion, with an operating income margin improvement to 25.2% [25] - Defense Systems revenues grew by 11% to $582 million, although operating income margin decreased to 6.4% due to a higher mix of materials [27]

Financial Performance - Revenues for Q3 2025 were $4.47 billion, a 7% increase year-over-year, driven by increased customer demand for national security and defense solutions[6] - Net income for the quarter was $369 million, or $2.82 per diluted share, representing a 2% increase in net income and a 5% increase in diluted EPS year-over-year[6] - Adjusted EBITDA was $616 million, up 3% year-over-year, with an adjusted EBITDA margin of 13.8%, down from 14.2% in Q3 2024[7] - Revenues for the third quarter of 2025 were $4.469 billion, an increase of 6.7% compared to $4.190 billion in the same quarter of 2024[25] - Operating income for the third quarter of 2025 was $535 million, up from $516 million in the prior year, reflecting a margin of 12.0%[28] - Net income attributable to Leidos common stockholders for the third quarter of 2025 was $367 million, compared to $364 million in the same quarter of 2024[25] - The organic revenues for the three months ended October 3, 2025, increased by 6.0% year-over-year, totaling $4,443 million compared to $4,190 million in the prior year[45] - The total operating income for the three months ended October 3, 2025, was reported at $575 million, after accounting for acquisition and restructuring costs[46] - For the nine months ended October 3, 2025, Leidos reported an operating income of $1,636 million, which adjusted for acquisition, integration, and restructuring costs, resulted in a non-GAAP operating income of $1,745 million[50] Segment Performance - National Security & Digital segment revenues increased by 8% to $2.015 billion, driven by contract awards and increased volumes[29] - Health & Civil segment revenues rose by 6% to $1.301 billion, with an operating income margin of 25.2%, up from 23.4% in the prior year[30] - Defense Systems segment revenues increased by 11% to $582 million, with an operating income margin of 6.4%, down from 7.1% in the prior year[32] - The National Security & Digital segment reported revenues of $2,015 million for the three months ended October 3, 2025, reflecting an 8.0% increase from $1,865 million in the same period last year[45] - The Health & Civil segment's revenues increased by 6.2% to $1,301 million for the three months ended October 3, 2025, compared to $1,225 million in the prior year[45] - The Defense Systems segment reported a significant revenue increase of 11.5%, reaching $582 million for the three months ended October 3, 2025[45] Cash Flow and Dividends - Cash flows from operations were $711 million, with non-GAAP free cash flow of $680 million for the quarter[9] - The company declared a cash dividend of $0.43 per share, a 7.5% increase over the prior quarter's dividend[11] - The company declared cash dividends of $0.40 per share for the third quarter of 2025, up from $0.38 in the same quarter of 2024[25] - Cash and cash equivalents at the end of the third quarter of 2025 were $974 million, a decrease from $1.097 billion at the end of the prior quarter[27] Backlog and Contracts - Net bookings totaled $5.9 billion in the quarter, resulting in a backlog of $47.7 billion, a 5% increase year-over-year[13] - As of October 3, 2025, the total backlog for Leidos Holdings, Inc. is estimated at $47,656 million, comprising $9,064 million funded and $38,592 million unfunded[36] - The funded backlog for contracts with the U.S. government is valued at $3,203 million, while the unfunded backlog is $23,246 million[36] - Notable new contracts included a $2.2 billion award for classified mission support and a $760 million subcontract with NASA[13] Assets and Liabilities - Total assets as of October 3, 2025, were $13.542 billion, compared to $13.010 billion as of January 3, 2025[26] - Total liabilities as of October 3, 2025, were $8.588 billion, slightly up from $8.550 billion as of January 3, 2025[26] Non-GAAP Measures - The net income attributable to Leidos common stockholders for the same period was $1,121 million, increasing to $1,203 million after adjustments[50] - Diluted EPS attributable to Leidos common stockholders rose from $8.62 to $9.25 after accounting for non-GAAP adjustments[50] - Adjusted EBITDA for the nine months ended October 3, 2025, was $1,850 million, with an adjusted EBITDA margin of 14.3%[50] - The National Security & Digital segment reported a non-GAAP operating income of $201 million for the three months ended October 3, 2025, with a margin of 10.0%[52] - The Health & Civil segment achieved a non-GAAP operating income of $334 million for the same period, with a margin of 25.7%[52] - Total non-GAAP operating income for the nine months ended September 27, 2024, was $1,542 million, with an operating margin of 12.5%[53]

Core Insights - Leidos has entered into a definitive agreement to sell its wholly owned subsidiary, Varec, as part of its portfolio optimization efforts under the NorthStar 2030 strategy [1][2] - The transaction aims to enhance the missions of both Leidos and Varec while maximizing long-term value, reflecting a strategic focus on growth pillars [2] - The deal is expected to close in the fourth quarter of 2025, pending customary closing conditions [3] Company Overview - Leidos is a leader in the industry and technology sector, serving government and commercial customers with innovative digital and mission solutions [4] - The company is headquartered in Reston, Virginia, and employs approximately 47,000 people globally [4] - For the fiscal year ending January 3, 2025, Leidos reported annual revenues of approximately $16.7 billion [4]

Core Insights - VAST Data Federal has announced a strategic partnership with Leidos to create a scalable model for cyber defense, leveraging AI technologies to enhance security operations for U.S. public sector agencies [1][3] - The collaboration aims to address the overwhelming volume of security events generated by global enterprises and federal agencies, which currently amount to trillions, by utilizing advanced AI and data processing capabilities [2][6] Company Overview - VAST Data Federal is a subsidiary of VAST Data, focused on delivering AI Operating Systems to defense, intelligence, and civilian agencies in the U.S. public sector [5][7] - The VAST AI Operating System integrates foundational data and compute services, enabling agencies to deploy intelligent systems and automate complex workflows [5][8] Technology and Solutions - The partnership will utilize NVIDIA AI Enterprise software, NVIDIA Morpheus, and BlueField Data Processing Units (DPUs) to enhance real-time inspection and inference capabilities [2][4] - Key features of the solution include immediate visibility across hot and historical data, agentic triage and response, and accelerated data analytics for cyber investigations [6] Operational Benefits - The collaboration aims to reduce alert fatigue and improve response times by automating security processes and enabling policy-driven actions [2][3] - The solution is designed to lower operational costs by eliminating data storage constraints and allowing for the retention of more telemetry data [6]

Core Viewpoint - The market anticipates a year-over-year decline in Leidos' earnings despite an increase in revenues for the quarter ending September 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - Leidos is expected to report earnings of $2.61 per share, reflecting a year-over-year decrease of 10.9%, while revenues are projected to be $4.27 billion, an increase of 1.8% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised 0.26% higher in the last 30 days, indicating a slight positive reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for Leidos is lower than the consensus estimate, resulting in an Earnings ESP of -2.30%, suggesting a bearish outlook from analysts [12]. Historical Performance - Leidos has consistently beaten consensus EPS estimates in the past four quarters, with a notable surprise of +22.05% in the last reported quarter [13][14]. Investment Considerations - Despite the historical performance, the current combination of a negative Earnings ESP and a Zacks Rank of 3 makes it challenging to predict an earnings beat for Leidos [12][17].

Core Viewpoint - Leidos (LDOS) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook driven by an upward trend in earnings estimates, which significantly influences stock prices [1][2]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of changing earnings estimates, which are closely correlated with near-term stock price movements, particularly due to institutional investors adjusting their valuations based on these estimates [3][5]. - An increase in earnings estimates typically leads to higher fair value for a stock, prompting institutional investors to buy or sell, thus affecting stock prices [3]. Business Improvement Indicators - Rising earnings estimates and the Zacks rating upgrade for Leidos suggest an improvement in the company's underlying business, which is expected to be reflected in higher stock prices [4][9]. Earnings Estimate Revisions for Leidos - Leidos is projected to earn $11.28 per share for the fiscal year ending December 2025, with no year-over-year change; however, the Zacks Consensus Estimate has increased by 5.9% over the past three months [7]. Zacks Rank System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988, indicating a strong performance potential [6][8]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, positioning Leidos among the best candidates for market-beating returns in the near term [9].

Core Insights - Leidos and VML have launched Imperium, an AI-powered technology platform aimed at enhancing U.S. capabilities in information operations [1][2] - The platform is designed to improve information dominance through advanced tools for planning, implementation, analysis, and assessment, while adhering to compliance frameworks and ethical standards [2][3] Company Overview - Leidos is a national security leader with approximately 47,000 global employees and reported annual revenues of about $16.7 billion for the fiscal year ending January 3, 2025 [5] - VML is a global communications company recognized for its innovative work with major clients and has a workforce of 26,000 across 55 markets [6] Product Development - The development of Imperium involved a three-year investment from both Leidos and VML, integrating Leidos' Trusted Mission AI for enhanced data analysis and insights [3][4] - Initial tests of Imperium have shown significant improvements in mission planning efficiency, reducing certain tasks from days to hours [4] Strategic Importance - The development of strategic information operations capabilities is deemed critical for the safety of the U.S. and its allies, with Imperium expected to deliver faster and more agile operational capabilities [5]

Core Insights - Leidos (LDOS) stock closed at $194.05, down 2.11% from the previous trading session, underperforming the S&P 500, which fell 0.28% [1] - Over the last month, Leidos shares increased by 9.9%, outperforming the Computer and Technology sector's gain of 7.19% and the S&P 500's gain of 4.03% [1] Earnings Performance - Leidos is expected to release its earnings on November 4, 2025, with analysts projecting earnings of $2.62 per share, a year-over-year decline of 10.58% [2] - The consensus estimate for revenue is $4.28 billion, reflecting a 2.06% increase from the same quarter last year [2] Full Year Estimates - For the full year, analysts expect earnings of $11.22 per share and revenue of $17.15 billion, representing changes of +9.89% and +2.95% respectively from the previous year [3] Analyst Estimates - Recent changes to analyst estimates indicate evolving short-term business trends, with positive revisions suggesting analysts' confidence in Leidos' performance and profit potential [4] Zacks Rank and Valuation - Leidos currently holds a Zacks Rank of 2 (Buy), with the Zacks Rank system showing a strong track record of outperformance [6] - The Forward P/E ratio for Leidos is 17.66, compared to the industry average of 17.32, indicating that Leidos is trading at a premium [7] PEG Ratio - Leidos has a PEG ratio of 1.89, which is higher than the average PEG ratio of 1.81 for the Computers - IT Services industry [8] Industry Ranking - The Computers - IT Services industry, part of the Computer and Technology sector, ranks in the top 25% of all industries according to the Zacks Industry Rank [9]

Core Insights - Leidos Holdings, Inc. (LDOS) has signed a 19-year agreement with Kazaeronavigatsia to upgrade Kazakhstan's air traffic control system, anticipating significant growth in the country's aviation sector, with passenger traffic projected to increase from nearly 15 million to 26 million by 2030 [1][3] Group 1: Agreement Details - The agreement includes enhancements at four control centers and 21 towers nationwide, aimed at improving the safety and reliability of Kazakhstan's air traffic system [3] - Leidos will implement its SkyLine-X Air Traffic Management system, which provides comprehensive surveillance capabilities and advanced safety features [2][7] Group 2: Leidos' Expertise - Leidos has over 50 years of experience in air traffic management, ensuring the safe travel of more than four million passengers daily across four continents [4] - The company integrates advanced technologies such as AI and hybrid cloud architecture through its Common Automation Platform to enhance air traffic control operations [5] Group 3: Industry Growth Potential - A report by Airports Council International World predicts a global passenger traffic CAGR of 3.4% from 2024 to 2043, indicating a rising demand for modernized air traffic management solutions [6] - Other companies in the air traffic management sector include Boeing, RTX Corporation, and Leonardo DRS, each with their own growth rates and sales projections [6][8][10] Group 4: Stock Performance - Over the past six months, Leidos shares have increased by 41.9%, significantly outperforming the industry growth of 6.2% [11] - Leidos currently holds a Zacks Rank 2 (Buy), indicating positive market sentiment [12]

Now, let's get you set up for Delta results with our next guest, Jeffrey's aerospace and defense analyst, Sheila Kylo. Sheila, it's great to have you back on. Let's start right there.How does Delta set the stage for airline earnings and broader industrials. >> Sure. So, what we're looking for with Delta is flat price in the third quarter from down 2% in the first half.So, we're looking for an economic improvement on pricing and scheduled capacity cuts coming into the second half of this year and improving i ...