Leidos Holdings: Q2 EPS Beat & Revenue Guidance Raise

Snapshot: Q2 surprise, guidance lift and Leidos Holdings revenue forecast#

Leidos Holdings, Inc. (LDOS reported a surprise quarter with non‑GAAP EPS of $3.21 and management raised FY25 guidance to $11.15–$11.45 (adjusted EPS) while nudging the revenue forecast to $17.00–$17.25B — a combination that refocused markets on Leidos’ margin conversion and dividend sustainability amid active buybacks.

The beat on EPS was material: actual non‑GAAP EPS of $3.21 versus the Monexa AI-estimated $2.63 produced an outperformance of +22.09% (Monexa AI), and management cited stronger program execution and margin mix when raising guidance (Leidos Q2 Release.

Markets reacted positively to the print and guidance lift: pre-market commentary showed intraday strength and analysts highlighted the margin expansion as the key driver of the guidance change (Chartmill coverage. The Q2 dynamics — steady top-line, outsized margin improvement — form the primary narrative for investors assessing Leidos’ strategic pivot into higher‑value defense technology work.

Why did Leidos beat Q2 EPS expectations?#

Leidos beat primarily because of margin mix (shift toward higher‑margin Defense Systems and tech services), tighter cost execution, and demonstrated cash conversion on awarded work — a short list that explains the EPS outperformance and the raised FY25 guidance.

Supporting detail: management reported adjusted EBITDA margin expanding to 15.20% in the quarter (from 13.50% year‑ago), which materially lifted per‑share earnings even as revenue growth was modest at +2.90% YoY on a $4.25B quarter (Leidos Q2 Release; Monexa AI). The margin expansion is the proximate cause of the EPS upgrade.

Leidos’ contracted backlog remained large at $46.21B (end of quarter), effectively smoothing revenue visibility even though backlog ticked down -0.19% QoQ; that stability underpinned management’s willingness to raise FY25 adjusted EPS and revenue ranges (Leidos Q2 Release.

Financials & key operating metrics (selected)#

Leidos’ FY results show meaningful operating leverage versus the prior comparable period. On an FY basis Monexa AI reports revenue of $16.66B and net income of $1.25B for the most recent fiscal year, up from $15.44B revenue and $199MM net income in the earlier comparable year (Monexa AI). That reflects material margin recovery: operating income climbed to $1.83B (FY) and gross profit to $2.80B (Monexa AI).

Cash flow and capital allocation were active. Monexa AI shows net cash provided by operations of $1.39B and free cash flow of $1.24B for the latest fiscal year, with $906MM returned via share repurchases and dividends of $208MM (Monexa AI). Those flows financed buybacks while preserving liquidity.

Balance‑sheet metrics remain serviceable: total debt $5.41B, net debt $4.35B, and net debt to EBITDA (TTM) 2.05x — a leverage profile that is consistent with investment‑grade operating peers and leaves room for funded M&A or additional buybacks if cash generation persists (Monexa AI).

Source: Monexa AI (financial statements). Specific quarter figures and guidance: Leidos Q2 release.

Analyst estimates, guidance and valuation context#

Management’s FY25 raises were concrete: adjusted EPS $11.15–$11.45 and revenue $17.00–$17.25B (company release). Those ranges sit above prior guidance and drove consensus revisions; the company also emphasized continued margin capture across Defense Systems and cloud/cyber work (Leidos Q2 Release.

Monexa AI’s forward estimate set shows rising EPS and revenue expectations through 2028 (e.g., estimated EPS of $12.65 in 2028 and estimated revenue of $18.37B in 2028), and forward P/E compresses toward the mid‑teens (forward PE 2025 16.54x, 2026 14.68x per Monexa AI). These are consensus model numbers and reflect the market repricing tied to margin improvement (Monexa AI).

Strategic moves: AWS TSE, FBI NGI award and program mix#

Leidos’ strategic positioning has traction in three interlocking areas: secure cloud enclaves (AWS TSE), biometric and intelligence modernization (FBI NGI), and targeted capability M&A to accelerate automation.

Leidos announced Premier AWS Trusted Secure Enclave Vetted Partner status, enabling its Leidos Secure Environment on AWS for policy‑driven, cross‑border data collaboration — an accreditation management said materially improves bidability for allied modernization work (Leidos/AWS release) (Leidos AWS TSE.

Program wins reinforce the strategy: Leidos was selected on a $128M FBI task order to modernize the Next Generation Identification system — work that leverages biometrics, secure cloud and AI analytics and feeds both backlog and cross‑sell opportunities (Leidos investor release) (Leidos NGI.

Capital allocation, data conflicts and what to watch#

Leidos returned capital aggressively in the fiscal year: $906MM repurchased and $208MM in dividends while generating $1.24B free cash flow (Monexa AI). That mix of buybacks and a modest dividend (dividend per share $1.58) points to a shareholder‑friendly allocation, funded by operating cash.

Note a dataset inconsistency: Monexa AI’s detailed ratios show a dividend yield field rendered as 88.73%, which is a formatting anomaly. The company profile and dividend history indicate a dividend yield of 0.89% and a payout ratio of 14.91%; the latter is consistent with the FCF and EPS profile and is used above in preference to the anomalous figure (Monexa AI). We flag such anomalies where they appear in data extracts.

Balance and leverage metrics to monitor: net debt $4.35B, net debt / EBITDA 2.05x, cash at period end $1.08B — these figures set the boundary for additional buybacks, bolt‑on M&A or higher dividend payouts if operational performance sustains (Monexa AI).

Market reaction, competitive landscape and investor implications#

On the tape, LDOS traded near $178.02 with intraday moves (quote snapshot) and immediate market responses showed a positive re‑rating tied to margins and guidance (Monexa AI; Chartmill commentary). The strategic combination — AWS TSE accreditation, FBI NGI task order, and program execution — strengthens Leidos’ differentiation as a mission‑centric integrator versus prime platform builders.

Competitive context: Leidos competes with primes on systems integration and with specialist integrators on cloud/cyber modernization. Its relative advantage is concentrated expertise in AI, biometrics and secure enclaves, which aligns with NATO and AUKUS modernization priorities and creates high‑margin, repeatable service lines (Leidos investor communications; see NATO/cloud release).

For investors the key monitoring points are: backlog trajectory, adjusted EBITDA margin, free cash flow conversion, and net debt / EBITDA. Those KPIs will signal whether current margin expansion is sustainable and whether capital returns can continue without increasing financial risk.

Key takeaways#

Leidos’ Q2 performance shows a clear pivot from top‑line dependence to margin‑led earnings delivery: EPS beat +22.09%, adjusted EBITDA margin 15.20%, and guidance lifted to $11.15–$11.45 EPS and $17.00–$17.25B revenue (company release; Monexa AI).

• Margin expansion (15.20% adjusted EBITDA in Q2) drove the EPS beat and the guidance raise (Leidos Q2 release.
• Strategic accreditations and wins (Premier AWS TSE; $128M FBI NGI task order) deepen addressable market in allied modernization programs (Leidos AWS TSE; Leidos NGI.
• Cash flow supports buybacks and a modest dividend: FCF $1.24B, buybacks $906MM, dividends $208MM (Monexa AI).

Watch the company’s quarterly cadence for sustained margin delivery, backlog conversion, and any material change to leverage. All financial figures and estimates cited here are drawn from Monexa AI and Leidos’ public releases cited above (Monexa AI; Leidos Q2 release; Leidos AWS TSE; Leidos NGI.