Science Applications International Corporation’s (SAIC) first quarter results were well received, with management citing disciplined execution and operational efficiency as primary contributors to margin improvement. CEO James C. Reagan highlighted the company’s ability to deliver “double digit margins on a sustainable basis” and attributed the outperformance to a focus on mission-critical services, realignment of the business portfolio, and ongoing cost transformation initiatives. Management also noted the benefit of a venture investment gain, which further supported profitability this quarter.
Is now the time to buy SAIC? Find out in our full research report (it’s free for active Edge members).
SAIC (SAIC) Q1 CY2026 Highlights:
- Revenue: $1.91 billion vs analyst estimates of $1.83 billion (1.5% year-on-year growth, 4.1% beat)
- Adjusted EPS: $3.23 vs analyst estimates of $2.28 (41.8% beat)
- Adjusted EBITDA: $222 million vs analyst estimates of $175.1 million (11.6% margin, 26.8% beat)
- The company reconfirmed its revenue guidance for the full year of $7.1 billion at the midpoint
- Management raised its full-year Adjusted EPS guidance to $10 at the midpoint, a 4.2% increase
- EBITDA guidance for the full year is $725 million at the midpoint, above analyst estimates of $712.3 million
- Operating Margin: 9.4%, up from 6.4% in the same quarter last year
- Backlog: $22.9 billion at quarter end, up 2.5% year on year
- Market Capitalization: $4.83 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From SAIC’s Q1 Earnings Call
- Jason Gursky (Citi) asked about the conservatism in organic growth guidance and whether the strong Q1 momentum suggested upside. CFO Prabu Natarajan responded that guidance remained measured due to volatility in recent quarters and would be revisited next quarter.
- Jonathan Siegman (Stifel) questioned specific areas benefiting from appropriations and on-contract growth. Natarajan noted improved funding flows, particularly in the Navy and Army businesses, including next-generation command and control and radar modernization programs.
- Matt Akers (BNP) inquired about the future size and strategy for hardware-related business. CEO Reagan and Natarajan clarified that SAIC would increase hardware activity through rapid prototyping and upscaling production, while remaining disciplined about not becoming a hardware prime contractor.
- Seth Seifman (JPMorgan) sought details on the sustainability of strong margins and operational performance in civil and defense/Intel segments. Natarajan emphasized broad-based improvements and margin discipline, but cautioned against extrapolating one quarter’s results.
- Sheila Kahyaoglu (Jefferies) pressed on drivers of civil segment margin gains and the outlook for enterprise IT’s role in the pipeline. Natarajan highlighted a focus on outcome-based contracts and selective pursuit of enterprise IT, resulting in higher margins and more resilient business.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be watching (1) the execution of SAIC’s portfolio realignment and its impact on win rates and margins, (2) progress on key recompete events such as the RITS and Evolve contracts, and (3) the pace of new business submissions and awards as appropriations flow. Ongoing transformation initiatives and investments in mission-critical technology will also be critical signposts for sustainable growth.
SAIC currently trades at $110.30, up from $104.20 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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