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Introduction & Market Context
Leidos Holdings , Inc. (NYSE:LDOS) delivered its first quarter fiscal year 2025 earnings presentation on May 6, 2025, showcasing continued momentum from its strong 2024 performance. The defense and technology solutions provider reported robust growth across key financial metrics, maintaining the positive trajectory seen in previous quarters.
The company’s stock closed at $147.94 on May 5, trading within its 52-week range of $123.62 to $202.90, with a slight uptick in premarket trading ahead of the earnings call. This presentation comes after Leidos delivered six consecutive quarters of growth through the end of 2024, positioning the company to maintain its strong market position in the government technology and services sector.
Quarterly Performance Highlights
Leidos reported exceptional first-quarter results, building on the momentum established in 2024. The company achieved 7% organic revenue growth, with total revenue reaching $4.25 billion, up 6.8% from $3.98 billion in the same period last year. Particularly impressive was the adjusted EBITDA margin of 14.2%, representing a significant improvement from 12.3% in Q1 FY24.
As shown in the following income statement summary:
Non-GAAP diluted earnings per share increased by 29.7% year-over-year to $2.97, compared to $2.29 in Q1 FY24. This substantial growth in profitability reflects the company’s successful execution of operational efficiency initiatives and strategic focus on high-margin business areas.
The CEO’s assessment highlighted that these results build on the momentum from 2024, with the company implementing targeted cost controls while maintaining alignment with customer needs:
Segment Performance
Leidos reported growth across all four of its business segments, with particularly strong performance in the Health & Civil division. The segment breakdown reveals varying levels of revenue growth and margin improvement:
The Health & Civil segment was the standout performer, with revenue increasing from $1.20 billion to $1.29 billion and non-GAAP operating income margin expanding significantly from 19.0% to 23.6%. This continues the strong performance noted in previous quarters, particularly in managed health services.
The National Security & Digital segment saw modest revenue growth from $1.79 billion to $1.88 billion, while maintaining a steady operating margin of 10.1%. Commercial & International revenue grew from $509 million to $568 million with a slight margin improvement to 8.5%. Defense Systems revenue increased from $474 million to $508 million, with operating margin expanding from 8.0% to 9.1%.
Strategic Initiatives
Leidos continues to execute on its NorthStar 2030 strategic plan, which positions the company as a leader in digital, mission, and solutions capabilities across key market segments:
The company emphasized its focus on cybersecurity as a core growth pillar, noting that Leidos operates the largest cyber operation across the federal government. Management highlighted a pending acquisition in the cybersecurity space, reinforcing the company’s commitment to this strategic area.
As illustrated in the execution strategy:
Capital allocation decisions underscore the company’s confidence in its strategy, including a $500 million accelerated share repurchase program. Leidos is also actively pursuing "Big Ideas" initiatives, including next-generation air traffic control systems and missile defense capabilities.
Financial Position & Capital Allocation
The company reported solid cash flow and balance sheet metrics for the quarter, maintaining strong liquidity while returning significant value to shareholders:
Operating cash flow was $58 million for the quarter, with non-GAAP free cash flow of $36 million. Days Sales Outstanding (DSO) remained stable at 62 days, in line with the prior year. The company returned $581 million to shareholders during the quarter, with net share repurchases accounting for $513 million of that total.
Leidos maintained a strong balance sheet with liquidity exceeding $1.5 billion. Total (EPA:TTEF) debt stood at $5.1 billion, resulting in a gross leverage ratio of 2.3x and a net leverage ratio of 1.9x, indicating a manageable debt position that supports the company’s strategic initiatives while maintaining financial flexibility.
Forward Guidance
Leidos reaffirmed its fiscal year 2025 guidance across all metrics, demonstrating confidence in its business outlook despite potential market volatility:
The company projects full-year revenues between $16.90 billion and $17.30 billion, with adjusted EBITDA margin in the mid-to-high 12% range. Non-GAAP diluted EPS is expected to be between $10.35 and $10.75, while cash flows from operating activities are forecast at approximately $1.45 billion.
Management cited the strong first-quarter performance as a factor that "de-risks" the company’s outlook in what they described as a potentially volatile environment. They also expressed confidence in a robust opportunity pipeline that supports the maintained guidance.
This outlook aligns with the trajectory established in late 2024, when Leidos raised its guidance following strong third-quarter results. The consistent performance suggests the company’s strategic initiatives and operational improvements are delivering sustainable results across multiple quarters.
Full presentation:
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