Science Applications International Corporation’s second quarter showed a mixed picture, as revenue fell short of Wall Street’s expectations and the market reacted negatively. CEO Toni Townes-Whitley attributed weaker sales to slower on-contract growth, program disruptions, and delays in new business awards. Management described the environment as more challenging than anticipated, emphasizing that funding uncertainty and increased scrutiny on government spending weighed on near-term growth. Townes-Whitley acknowledged, “Our revenue performance in the quarter and our updated outlook reflect a more challenging environment than we had previously forecasted.”
Is now the time to buy SAIC? Find out in our full research report (it’s free).
SAIC (SAIC) Q2 CY2025 Highlights:
- Revenue: $1.77 billion vs analyst estimates of $1.86 billion (2.7% year-on-year decline, 5.1% miss)
- Adjusted EPS: $3.63 vs analyst estimates of $2.24 (62.3% beat)
- Adjusted EBITDA: $185 million vs analyst estimates of $178 million (10.5% margin, 3.9% beat)
- The company dropped its revenue guidance for the full year to $7.29 billion at the midpoint from $7.68 billion, a 5% decrease
- Management raised its full-year Adjusted EPS guidance to $9.50 at the midpoint, a 3.3% increase
- EBITDA guidance for the full year is $685 million at the midpoint, below analyst estimates of $716.4 million
- Operating Margin: 7.9%, in line with the same quarter last year
- Backlog: $23.17 billion at quarter end
- Market Capitalization: $4.75 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From SAIC’s Q2 Earnings Call
- Seth Seifman (JPMorgan) asked whether recent changes in government procurement are structural or temporary; CEO Townes-Whitley answered that delays are likely temporary but market normalization may take several quarters.
- Tobey Sommer (Truist) questioned the balance between cost efficiency actions and maintaining bid volume; CFO Natarajan emphasized that efficiency efforts will not come at the expense of business development and submission rates.
- Colin Canfield (Character Fitzgerald) inquired about the bridge to 2027 growth; Natarajan detailed that growth will rely primarily on backlog conversion and modest on-contract growth, with new business wins ramping slowly.
- Gautam Khanna (Cowen) asked about exposure to a potential government shutdown; management indicated that while revenue could be marginally affected, cash flow typically recovers quickly after such events.
- Noah Poponak (Goldman Sachs) pressed on whether the current environment signals a structural shift or a temporary downturn; Townes-Whitley responded that the strategy remains intact and the company is accelerating its shift to differentiated tech-driven offerings.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace at which delayed contract awards are adjudicated and begin ramping, (2) the effectiveness of cost efficiency and AI adoption initiatives in sustaining or improving margins, and (3) stabilization in government funding cycles that could signal a return to more predictable growth. Progress in transitioning to integrated, value-added offerings will also be a key marker of execution.
SAIC currently trades at $103.11, down from $113.91 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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