Segment Realignment
Beginning fiscal 2026, Leidos reorganized into four reportable segments: Intelligence & Digital, Health, Homeland, and Defense, with prior periods recast for comparability.
Source: 10-Q Item 2 MD&A
Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Leidos' fiscal second quarter was shaped by the March 2026 acquisition of Entrust for $2.4 billion, which added energy infrastructure capabilities and drove homeland segment growth, while rising integration costs and higher SG&A spending compressed margins. Remaining performance obligations reached $20 billion, underscoring strong demand visibility. Operating cash flow more than doubled year-over-year, reflecting improved working capital, but the acquisition pushed net debt higher and cash reserves lower. The planned divestiture of the Security Enterprise Solutions business into a joint venture adds another layer of transformation.
Revenue
$4.56B
+7.17% YoY
EPS (Diluted)
$2.81
-6.64% YoY
Operating Income
$514M
-9.98% YoY
Source: SEC XBRL
Leidos Holdings (LDOS) reported Q2 FY2026 revenue of $4.56B, up 7.2% year over year. Operating margin was 11.3%, down 2.1 points from 13.4% a year earlier. LDOS's fiscal Q2 FY2026 corresponds to calendar Q3 2026.
Last 3 quarters: 3 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Mar 2026 | 3.13 | 2.96 | Beat +5.9% |
| Dec 2025 | 2.76 | 2.66 | Beat +3.8% |
| Sep 2025 | 3.05 | 2.77 | Beat +10.3% |
4 reported segments · SEC XBRL
Segment revenue totals $4.56B, which is the $4.56B of consolidated revenue on the income statement.
Compiled by AI from this SEC filing
Beginning fiscal 2026, Leidos reorganized into four reportable segments: Intelligence & Digital, Health, Homeland, and Defense, with prior periods recast for comparability.
Source: 10-Q Item 2 MD&A
On March 27, 2026, Leidos acquired Entrust for $2.4B, adding infrastructure design and grid modernization services; the deal contributed $141M in Q2 revenue and $1.65B in preliminary goodwill.
Source: 10-Q Note 3 Acquisitions and Divestitures
Remaining performance obligations stood at $20B as of July 3, 2026, with 63% expected to convert to revenue within 12 months, providing substantial forward revenue coverage.
Source: 10-Q Note 2 Revenues
SG&A expenses rose 30.4% to $283M, and acquisition, integration and restructuring costs jumped to $27M from $2M, causing operating margin to contract to 11.3% from 13.4% a year ago.
Source: 10-Q Income Statement (XBRL)
Compiled by AI from this SEC filing · 1 high, 4 medium, 0 low
The $2.4B Entrust acquisition significantly increased goodwill to $7.66B and intangible assets, and any failure to integrate effectively or achieve expected synergies could lead to asset impairments and operating disruptions.
Source: 10-Q Note 3 Acquisitions and Divestitures
Approximately 49% of Q2 revenue came from the Department of War and U.S. Intelligence Community, exposing Leidos to budget cuts, contract re-competition, and shifting federal procurement priorities.
Source: 10-Q Note 2 Revenues
Debt-to-equity ratio rose to 1.95 as total debt increased to $6.03B to fund the acquisition, while cash reserves fell 19.6% year-over-year to $748M, potentially limiting financial flexibility.
Source: 10-Q Balance Sheet (XBRL)
While Homeland revenue surged 32% due to Entrust, the Health segment declined 7.6%, suggesting uneven demand and potential headwinds in key markets.
Source: 10-Q Segment Data
The planned divestiture of the Security Enterprise Solutions business into a joint venture, with $935M in assets held for sale, carries risks of failure to close or unfavorable terms that could erode shareholder value.
Source: 10-Q Note 3 Acquisitions and Divestitures
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 4.56 $B | 4.25 $B | +7.17% |
Cost of Revenue $B | 3.74 $B | 3.47 $B | +7.78% |
Operating Income $M | 514.00 $M | 571.00 $M | -9.98% |
Net Income $M | 354.00 $M | 391.00 $M | -9.46% |
EPS (Basic) $ | 2.81 $ | 3.03 $ | -7.26% |
EPS (Diluted) $ | 2.81 $ | 3.01 $ | -6.64% |
SG&A Expense $M | 283.00 $M | 217.00 $M | +30.41% |
Answers draw on this SEC filing and the data on this page
Leidos (LDOS) reported Q2 2026 revenue of $4.4B (+3.7% YoY), but net income fell 9.6% to $328M as higher costs and a significant acquisition-driven balance sheet expansion weighed on margins and cash balances.
Leidos (LDOS) delivered strong FY2025 results with revenue growing 3.1% to $17.2B, while operating income surged 15.4% to $2.1B and net income rose 15.5% to $1.4B, reflecting meaningful margin expansion and robust cash generation.
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