Leidos shares surge as defense firm beats earnings, raises outlook

Investing.com -- Defense and technology contractor Leidos Holdings Inc. reported strong second-quarter results that exceeded analyst expectations, prompting the company to raise its full-year guidance.

The stock jumped 5.6% premarket on Tuesday following the announcement.

Leidos posted adjusted earnings of $3.21 per share for the second quarter, significantly beating the analyst estimate of $2.64. Revenue came in at $4.25 billion, slightly above the consensus estimate of $4.24 billion and up 3% YoY on an organic basis.

The company’s performance was driven by increased demand across all customer segments, particularly in Defense Systems. Net income reached $393 million, up 21% from the same period last year, while adjusted EBITDA hit a record $647 million with a margin of 15.2%, up from 13.5% in the prior year.

"Our second quarter results showcase the strength of our differentiated portfolio and the alignment of our NorthStar 2030 strategy with the priorities of the new Administration," said Leidos Chief Executive Officer Tom Bell.

The defense contractor generated $486 million in operating cash flow and $457 million in free cash flow during the quarter. New business bookings totaled $3.9 billion, representing a book-to-bill ratio of 0.9, with total backlog standing at $46.2 billion.

Leidos raised its full-year 2025 guidance, now expecting revenue between $17 billion and $17.25 billion, compared to its previous forecast of $16.9 billion to $17.3 billion. The company also increased its adjusted earnings outlook to between $11.15 and $11.45 per share, up from the prior range of $10.35 to $10.75 and above the analyst consensus of $10.93.

The improved outlook reflects "two quarters of exceptional performance and enhanced clarity on the macro environment," according to Bell. The company also noted that improved profitability stemmed from prudent cost management, better program execution, and a $25 million insurance reimbursement for legal costs