SAIC Q1 Earnings Call: Revenue Miss and Margin Pressures Shape 2025 Outlook
Is now the time to buy SAIC? Find out in our full research report (it's free).
Revenue: $1.88 billion (1.6% year-on-year growth)
Adjusted EPS: $1.92 vs analyst expectations of $2.12 (9.3% miss)
Adjusted Operating Income: $158 million vs analyst estimates of $138.4 million (8.4% margin, 14.2% beat)
Management reiterated its full-year Adjusted EPS guidance of $9.20 at the midpoint
EBITDA guidance for the full year is $725 million at the midpoint, below analyst estimates of $729.2 million
Operating Margin: 6.4%, in line with the same quarter last year
Backlog: $22.34 billion at quarter end
Market Capitalization: $5.45 billion
Science Applications International Corporation's (SAIC) first quarter performance was shaped by persistent procurement delays and customer personnel turnover, which management said contributed to the slower pace of contract awards. CEO Toni Townes-Whitley highlighted that while some areas within the Department of Defense (DoD) received more robust budget requests, significant agency staff changes have affected procurement timelines. The company's decision to move away from lower-margin programs, like CloudOne, also weighed on recent results. Townes-Whitley noted, 'We have been amping up our submissions and being very selective in terms of being on strategy with the bids that we've been making,' indicating a continued focus on higher-value, mission-critical IT and integration work.
Looking forward, SAIC's guidance is anchored on ramping up new business and achieving higher on-contract growth, despite ongoing headwinds in budget negotiations and potential delays in contract awards. CFO Prabu Natarajan explained that full-year margin improvement relies on a transition from development-heavy to sustainment phases in certain fixed price programs, as well as continued discipline in cost management. Management reiterated its commitment to achieving margin targets, with Townes-Whitley stating, 'We remain focused on executing and delivering on our full year margin guidance…our flexible cost structure permits us to calibrate our spend in line with the macro environment.' However, the company acknowledged that achieving booking targets may be impacted if procurement delays persist.
Management attributed the quarter's performance to slower contract awards, portfolio shifts toward higher-value IT work, and cost overruns on select programs. Several civilian agency contracts and a new space integration win provided areas of relative strength.
Procurement delays impact awards: SAIC faced continued delays in federal contract awards due to customer turnover and new agency processes, particularly in acquisition functions. This led to a slower realization of new business, with management emphasizing that award timing rather than program performance drove the softness.
Portfolio shift to mission IT: The company continued its pivot away from lower-margin, legacy programs—such as the CloudOne contract, which SAIC intentionally did not rebid—toward higher-margin mission and enterprise IT. This transition is designed to align with evolving government priorities and to position SAIC for more sustainable, profitable growth.
Fixed price space program overruns: A unique fixed price development program in the space segment incurred higher costs during its technical development phase. Management stated that the transition into the sustainment phase and recent option period extensions should relieve some cost pressures in future quarters.
Civilian business momentum: SAIC's civilian segment showed growth and margin improvement, benefiting from its focus on key agencies like the Department of Homeland Security, State, Transportation, and Treasury, where funding and IT modernization remained supportive.
Bookings and backlog visibility: While net bookings and backlog remained solid, management cautioned that achieving their targeted book-to-bill ratio may be delayed by up to two quarters if procurement headwinds persist. Recent post-quarter wins, including a major State Department extension and Air Force contract, bolstered confidence in near-term visibility.
Management expects future performance to rest on the pace of new business ramp-up, margin recovery in challenged programs, and the company's ability to adjust to shifting federal priorities.
On-contract growth and booking targets: The company is relying on continued growth within existing contracts ('on-contract growth') if new business awards are further delayed. Sustained mid-single-digit on-contract growth is seen as necessary to support its revenue guidance if external headwinds persist.
Margin normalization in key programs: Margin improvement is expected as SAIC transitions fixed price programs in the space segment from development to sustainment phases, and as civilian business margins trend higher. Management pointed to enhanced cost controls and standardized delivery frameworks as tools to mitigate margin risk.
Federal budget and procurement environment: The outlook depends on stable or moderately growing federal budgets, especially for defense and civilian agencies. Management acknowledged that further disruptions in government funding or policy priorities could impact the timing and mix of awarded contracts, introducing risk to the growth trajectory.
In upcoming quarters, the StockStory team will watch (1) whether SAIC can accelerate new business awards and reach its targeted book-to-bill ratio, (2) the pace of margin recovery in fixed price and space programs as they enter sustainment phases, and (3) continued expansion and profitability in the civilian segment, especially as federal funding priorities evolve. Execution on disciplined contract transitions and cost control will also be closely monitored.
SAIC currently trades at a forward P/E ratio of 12×. Should you double down or take your chips? Find out in our full research report (it's free).
Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CBS News
2 days ago
- CBS News
Autonomous planes being developed by Boston company aiming to fix pilot shortage
Most people have heard of autonomous cars. But what about autonomous planes? A Boston company is now working to put the pilotless planes in the sky. "The air is still quite dangerous, so if we can get humans out of harm's way, particularly for our [Department of Defense] customers, that's a really important mission for us," Merlin CEO & founder Matt George said. The Boston-based company develops cost-effective takeoff-to-touchdown airplanes. "Merlin is the leading developer of autonomy for very large airplanes like this! The best way to think about what we're building is a pilot, just not a human one, to enable our customers and partners to go fly their airplanes in pretty new and interesting ways including some, eventually, uncrewed stuff in the future," George said. Inside the Merlin Pilots lab on South Street in Boston, folks are busy developing new state-of-the-art technology that takes the skills of a human pilot and translates them into AI software. George said the goal is to help tackle the pilot shortage in America. "The Air Force is our largest customer, they're short about 2,000 pilots a year of seats that they wish they can fill but can't fill. And now we're transitioning in the age where autonomy and AI is going to play a really important part in aviation and in aviation safety and allowing folks to use the sky in some new and novel ways," George said. They have 170 employees working at the frontier of aviation and are proud to be here in Boston. "Historically Boston was the tech hub. So, I'm really proud of the fact that we're starting to bring some of these frontiers, really hard technologies both in biotech, in aerospace and nuclear with Commonwealth Fusion back to Boston," George said. So with all this high tech does not mean you will go to Logan and see any autonomous planes anytime soon. In fact, George said there's no telling when folks will come to the airport and board a plane without a pilot. "I wouldn't put a number on it. I am certainly not betting on showing up to my Delta or American Airlines flight and seeing nobody aboard the flight deck. Human pilots are still a really important part of that future. We're just bringing autonomy in to augment those folks," said George.
Business Wire
2 days ago
- Business Wire
Tivic Health Advances Discussions on Use of Entolimod as a Radiation Countermeasure at Military Health System Research Symposium 2025
FREMONT, Calif.--(BUSINESS WIRE)--Tivic Health® Systems, Inc. (Nasdaq: TIVC), a diversified therapeutics company, is proud to announce it advanced discussions with key US Government agencies through its participation in the 2025 Military Health System Research Symposium (MHSRS), held August 4-7, 2025, in Kissimmee, Florida. The MHSRS is the Department of Defense's premier scientific meeting that brings together military, academic, and industry experts to discuss medical research and innovation in support of warfighter health and readiness. Direct Access to DoD Decision-Makers and Researchers MHSRS provides direct access to organizations seeking military partnerships and connects companies with key funding organizations. Tivic's President of Biopharma and Chief Operating Officer, Michael Handley, met with key members of the Biomedical Advanced Research and Development Authority (BARDA), the Armed Forces Radiobiology Research Institute (AFRRI) and the Medical CBRN Defense Consortium (MCDC) to discuss potential pathways to deploy Entolimod as a military countermeasure. BARDA's mission is to develop medical countermeasures that address the public health and medical consequences of chemical, biological, radiological, and nuclear (CBRN) accidents, incidents and attacks, pandemic influenza, and emerging infectious diseases. AFRRI's mission is to defend the Nation from nuclear and radiological threats through research, leadership, training, and education. The MCDC was formed in response to the US Government's expressed interest to engage and fund advanced development efforts to support the Department of Defense's (DoD) medical pharmaceutical and diagnostic requirements as related to enhancing the mission effectiveness of military personnel. 'It was an honor to contribute to the vital conversations that were focused generally on radiation medical countermeasures, and specifically on our lead clinical product candidate, Entolimod, which has the potential to protect the warfighter in the instance that they are exposed to radiation,' said Handley. Representatives from Tivic joined global thought leaders, military leaders and researchers to share insights, explore collaborative opportunities, and present ongoing research intended to improve health outcomes for warfighters exposed to radiation in the field. About MHSRS MHSRS serves as a dynamic platform for the exchange of research findings across multiple disciplines, including combat casualty care, medical countermeasures, infectious disease, and mental health. The symposium fosters collaboration among business leaders, scientists, clinicians, and policymakers, ensuring innovations reach those who serve as quickly and effectively as possible. About Tivic Tivic's dual platform utilizes the body's biopharmaceutical and bioelectronic systems to treat unmet medical needs through targeting the immune system. Tivic's biologics compounds activate an innate immune pathway to prevent cell death in the bone marrow and epithelial tissues across systems impacted by radiation and age. The company's lead drug candidate, Entolimod™ for acute radiation syndrome, is a novel TLR5 agonist that has been granted Fast Track designation and is in late stage development. Tivic's bioelectronic program is developing a novel, non-invasive medical device designed to target the neural pathways implicated in many prevalent and debilitating diseases. Early trials show promising signals that Tivic's approach may regulate specific biologic responses, and the company believes its early-stage vagus nerve stimulation device has the potential to deliver clinical outcomes similar to or better than those of surgically implanted devices. To learn more about Tivic, visit: Forward-Looking Statements This press release may contain 'forward-looking statements' that are subject to substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this press release are forward-looking statements. Forward-looking statements contained in this press release may be identified by the use of words such as 'anticipate,' 'believe,' 'contemplate,' 'could,' 'estimate,' 'expect,' 'intend,' 'seek,' 'may,' 'might,' 'plan,' 'potential,' 'predict,' 'project,' 'target,' 'aim,' 'should,' 'will' 'would,' or the negative of these words or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements are based on Tivic Health Systems Inc.'s current expectations and are subject to inherent uncertainties, risks, and assumptions that are difficult to predict. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate, including as a result of interactions with and guidance from the FDA and other regulatory authorities, as well as interactions with governmental agencies, such as BARDA, the AFRRI and the MCDC; changes to the company's relationship with the its partners; the failure to obtain FDA or similar clearances or approvals and noncompliance with FDA or similar regulations; the company's future development of its ncVNS treatment, Entolimod and Entolasta; changes to the company's business strategy; timing and success of clinical trials and study results; regulatory requirements and pathways for approval; consummation of any strategic transactions; the company's need for, and ability to secure when needed, additional working capital; the company's ability to maintain its Nasdaq listing; and changes in tariffs, inflation, legal, regulatory, political and economic risks. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors. Accordingly, you are cautioned not to place undue reliance on such forward-looking statements. For a discussion of risks and uncertainties relevant to the company, and other important factors, see Tivic Health's filings with the SEC, including, its Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 21, 2025, under the heading 'Risk Factors," as well as the company's subsequent filings with the SEC. Forward-looking statements contained in this press release are made as of this date, and Tivic Health Systems, Inc. undertakes no duty to update such information except as required by applicable law.
Boston Globe
3 days ago
- Boston Globe
Aviation startup Merlin Labs valued at $800 million in deal to go public
Advertisement Last year, the company landed a $105 million contract with the Department of Defense to integrate Merlin Pilot software into the C-130J airlifter manufactured by Lockheed Martin. Inflection Point chief executive Mike Blitzer will join the Merlin board as a result of the upcoming deal; Inflection Point's recent successes include two other companies launched through similar SPAC deals, USA Rare Earth (current market cap of $1.7 billion) and Intuitive Machines (worth $1.6 billion today). Jon Chesto can be reached at
