Science Applications International SAIC delivered better-than-expected fourth-quarter fiscal 2025 results. The company reported non-GAAP earnings of $2.57 per share for the fiscal fourth quarter, surpassing the Zacks Consensus Estimate of $2 by 28.5%. Furthermore, the bottom line increased 79.7% year over year, driven by higher revenues and effective cost management.

Science Applications’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, with an average surprise of 14.62%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Science Applications' fiscal fourth-quarter revenues rose 5.8% year over year to $1.838 billion, which marginally surpassed the Zacks Consensus Estimate of $1.804 billion by 1.88%. The top-line growth was primarily driven by ramp up in volume on new and existing contracts, partially offset by contract completions.

Strong fiscal fourth-quarter performance, along with upbeat fiscal 2026 guidance boosted investor confidence, driving the share price up by 7% on Monday. While SAIC shares have plunged 11.7% over the past year, underperforming the Computers - IT Services industry’s decline of 5.4%, the recent performance could pave the way for a recovery.

SAIC’s Q4 in Detail

Segment-wise, revenues from Defense and Intelligence, which accounted for 74% of revenues, amounted to $1.36 billion and increased 0.6% year over year. Civilian revenues, which constitute 26% of revenues, totaled $478 million and rose 24.2% year over year.

Net bookings for the quarter were approximately $1.3 billion, which reflected a book-to-bill ratio of 0.7. The company’s trailing 12-month book-to-bill ratio was 0.9 at the end of the fiscal fourth quarter. SAIC’s estimated backlog at the end of the quarter was approximately $21.9 billion. Of the total backlog amount, approximately $3.4 billion was funded.

Selling, general and administrative (SG&A) expenses decreased 17.5% to $94 million. SG&A expenses, as a percentage of revenues, declined to 1.4% from 6.6% in the year-ago quarter.

SAIC’s Q4 Operating Details

Non-GAAP operating income increased year over year to $176 million from the year-ago quarter’s operating income of $124 million. The non-GAAP operating margin expanded 250 basis points (bps) year over year to 9.6%. 

Adjusted EBITDA advanced 39.4% to $177 million. Adjusted EBITDA margin for the quarter was 9.6% compared with 7.3% for the prior-year quarter due to improved profitability across the company’s contract portfolio, lower incentive-based compensation expense, and lower stock-based compensation related to restructuring and executive transition.

Balance Sheet & Cash Flow Details of SAIC

Science Applications ended the fiscal fourth quarter with cash and cash equivalents of $56 million, up from the previous quarter’s $46 million.

As of Jan. 31, 2025, Science Applications’ long-term debt (net of the current portion) was $1.907 billion compared with $1.939 billion as of Nov. 1, 2024.

The company generated operating and free cash flows of $115 million and $236 million, respectively, in the fiscal fourth quarter. In fiscal 2025, it generated operating cash flow and free cash flow of $494 million and $499 million, respectively.

During the fiscal fourth quarter, Science Applications repurchased shares worth $130 million and paid $18 million in dividends.

SAIC Offers Guidance for FY26

Science Applications projects its fiscal 2026 revenues in the range of $7.60-$7.75 billion and adjusted earnings in the $9.10-$9.30 band. The Zacks Consensus Estimate for fiscal 2026 revenues and non-GAAP earnings is pegged at $7.65 billion and $9.05 per share, respectively.

The company projects its adjusted EBITDA in the band of $715-$735 million and the adjusted EBITDA margin to be approximately 9.4-9.6%. SAIC expects its free cash flow in the band of $510-$530 million.

Zacks Rank & Other Stocks to Consider

Currently, SAIC carries a Zacks Rank #2 (Buy).

ACM Research ACMR, Fabrinet FN and Marvell Technology MRVL are some other top-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. ACMR, FN and MRVL sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus mark for ACMR’s 2025 earnings has been revised upward by 19.4% to $2.15 per share over the past 30 days, indicating a 4.87% year-over-year decrease. ACMR’s shares have risen 8.8% in the past year.

The consensus mark for FN’s 2025 earnings has been revised downward by four cents to $10.31 per share over the past 30 days, indicating a 16.10% year-over-year increase. FN’s shares have gained 14.9% in the past year.

The consensus mark for MRVL’s 2025 earnings has been revised upward by four cents to $2.75 per share over the past 30 days, indicating a 75.16% year-over-year growth. MRVL’s shares have gained 8.2% in the past year.

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