QinetiQ Group plc

For FY26, QinetiQ reported revenue of just over GBP 1.9 billion, operating profit of GBP 218 million, and margin of 11.3%. Revenue was flat in reported terms and up 1.3% organically; profit rose 18%, EPS increased 21% to 31.5p, and free cash flow increased 41% to GBP 159 million. Order intake was a record GBP 3.6 billion and backlog reached GBP 4.8 billion, up more than 40%. For FY27, management guided to revenue growth of 3% to 5%, margin of 11% to 11.5%, cash conversion above 90%, and EPS growth of 8% to 10%. The company also introduced a 3-year free cash flow target of more than GBP 550 million from FY27 to FY29.

Steve Wadey said the company delivered resilient performance in a difficult market and has now built a higher-quality platform with better contract mix, stronger cash generation, and improved earnings quality. He emphasized disciplined restructuring, including about 1,000 role reductions, removal of lower-quality revenue, and a tighter focus on areas where QinetiQ believes it has a right to win: U.K. defense, Europe, Australia as a prime contractor, and selected U.S. franchises. His tone was confident but pragmatic, with a clear message that growth will come from backlog conversion, operational leverage, and targeted investment rather than broad expansion.

Martin Cooper highlighted record orders of GBP 3.6 billion, backlog of GBP 4.8 billion, profit of GBP 218 million, margin of 11.3%, EPS of 31.5p, and free cash flow of GBP 159 million. He said cash conversion was 100%, capex was GBP 72 million, shareholder returns totaled GBP 183 million, and year-end net debt was GBP 159 million with leverage at 0.5x. He also set FY27 guidance at 3% to 5% revenue growth, 11% to 11.5% margin, cash conversion above 90%, and reiterated the 3-year free cash flow guide of more than GBP 550 million, supported by a 35% to 40% dividend payout ratio and an extended buyback program.

Analysts focused on three main issues: the value of the U.S. business, the impact of reporting changes tied to digital costs and RDEC, and whether the FY27 revenue guide is conservative if U.K. budget clarity remains limited. Management said the U.S. review is early, that the business is now smaller and better aligned but that all options are being assessed, including whether QinetiQ is the best owner. On reporting, Martin said digital spend will no longer sit in exceptional items after this year, with around GBP 20 million expected this year and RDEC income of around GBP 30 million moving to EBIT-level reporting going forward. On guidance, management said 3% to 5% is prudent given timing and budget uncertainty, but that the bottom end is achievable from backlog alone.