Science Applications International Corporation

Second quarter revenue was $1.9 billion, representing organic growth of approximately 5%. Adjusted EBITDA was $193 million, with margins of 10.3%, and adjusted diluted EPS was $3.01. Free cash flow was $131 million, and net leverage fell to 3.0x. Management raised FY27 revenue guidance by 2% to a midpoint of $7.25 billion, raised adjusted EBITDA guidance by 4% at the midpoint to 10.3% to 10.5% margins, and kept free cash flow guidance at at least $600 million, or $14 per share. They said second-half margins should step down to the high-9% range, with the RITS contract rolling off creating an approximately 350-basis-point headwind in the second half.

James Reagan framed the quarter as evidence that SAIC is outperforming its expectations through better execution, operational efficiency, and disciplined bidding. He emphasized strong recompete performance, saying win rates were over 90% this quarter, and highlighted $1.6 billion of intel space awards in the first half plus recent recompete wins in the Army and border security. His tone was upbeat but controlled, with a clear focus on transformation through Project Orbit and a portfolio review aimed at sharpening where the company invests and grows.

Prabu Natarajan led with the hard numbers: $1.9 billion of revenue, $193 million of adjusted EBITDA, 10.3% margin, $3.01 adjusted EPS, and $131 million of free cash flow. He said organic growth was helped by roughly 1% of unplanned material purchases that should not repeat, and noted on-contract growth of 9% was above plan. He also detailed the updated outlook: revenue midpoint of $7.25 billion, EBITDA margin of 10.3% to 10.5%, free cash flow of at least $600 million, CapEx of about $25 million in the first half, and expected annual Orbit savings of about $150 million, with roughly two-thirds reinvested in the business and the rest supporting margin expansion.

Analysts focused on why on-contract growth accelerated, how sustainable the second-half trajectory is, and whether Orbit and the shift toward fixed-price work can support margin expansion. Management said on-contract growth was broad-based, about double last year’s level, and that they are assuming about 5% OCG in the second half; they also said some large opportunities moved right, hurting book-to-bill near term. On Orbit, management said it is a structural, company-wide effort driven by crowdsourced ideas and process redesign, not a simple cost-cutting program, and that the 150 million savings target is intentionally conservative. On fixed-price contracting, Prabu said FFP is currently about 15% to 18% of sales, the pipeline is trending toward about one-third fixed price, and the shift should be a longer-term margin tailwind rather than an immediate boost.