Leidos Q3 2026 Beats on Profit and Cash Flow But Cuts Full-Year Revenue Outlook

Leidos Holdings reported third-quarter 2026 results on November 3 that showed a mixed picture: revenue of $4.63 billion rose 4% year over year but fell short of the $4.71 billion Wall Street consensus, while earnings and cash generation came in well ahead of expectations. Adjusted EPS of $3.62 beat estimates of $3.03 by 19%, adjusted EBITDA of $644 million topped the $614 million estimate, and free cash flow of $476 million nearly doubled the $251 million consensus. Net income for the quarter was $413 million, or $3.28 per diluted share.

Among the four business segments, Homeland was the standout, posting revenue of $1.02 billion, up 32% year over year. Intelligence and Digital contributed $1.55 billion, up 1%, and Defense added $992 million, up 3%. Health was the lone drag, declining 12% to $1.07 billion. Order momentum was strong, with net bookings of $5.5 billion, a book-to-bill ratio of 1.2, and total backlog expanding to $49.6 billion, including $11.1 billion in funded backlog. Notable awards in the quarter included a $717 million ACC ISR contract, a $672 million TSA SEDS contract, and a $318 million DHA MHS GENESIS bridge contract.

For the full fiscal year 2026, Leidos raised its adjusted EPS guidance to $12.50-$12.70, above both the prior range of $12.20-$12.50 and the $12.40 consensus. Operating cash flow guidance was lifted to approximately $1.90 billion from $1.85 billion, with adjusted EBITDA margin expected in the mid-13% range. However, the company trimmed its revenue outlook to $18.00-$18.20 billion, down from its prior guide of $18.20-$18.40 billion and below the $18.32 billion consensus. Despite the earnings and cash flow strength, shares underperformed peers on the day of the report.