Leidos delivered a first quarter that surpassed Wall Street’s expectations, driven by broad-based growth across its core government and commercial segments. Management attributed the solid performance to strong demand for digital modernization, increased activity in defense and intelligence programs, and continued progress in its managed health services business. CEO Tom Bell highlighted the company’s NorthStar 2030 strategy as a key framework for recent execution, stating that Leidos is “uniquely positioned” to address evolving customer needs across critical domains such as cyber, energy infrastructure, and space. The positive market response reflects confidence in Leidos’ ability to capitalize on these opportunities.
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Leidos (LDOS) Q1 CY2025 Highlights:
- Revenue: $4.25 billion vs analyst estimates of $4.10 billion (6.8% year-on-year growth, 3.6% beat)
- Adjusted EPS: $2.97 vs analyst estimates of $2.50 (18.9% beat)
- Adjusted EBITDA: $601 million vs analyst estimates of $521.5 million (14.2% margin, 15.2% beat)
- The company reconfirmed its revenue guidance for the full year of $17.1 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $10.55 at the midpoint
- Operating Margin: 12.5%, up from 10.4% in the same quarter last year
- Backlog: $46.3 billion at quarter end, up 11.1% year on year
- Market Capitalization: $20.93 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are 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 Leidos’s Q1 Earnings Call
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Peter Arment (Baird): Asked about the impact of contract cancellations in the current administration and the outlook for the Health & Civil segment. CEO Tom Bell described revenue impacts as “negligible,” and CFO Chris Cage explained that Health & Civil backlog was stable, with future opportunities pending.
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Sheila Kahyaoglu (Jefferies): Inquired about the VA EHR modernization program and long-term health segment growth. Bell emphasized demographic-driven demand and ongoing expansion, while Cage highlighted strong partnerships and potential for further EHR integration.
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Colin Canfield (Cantor Fitzgerald): Questioned the effects of supplemental defense funding on defense and maritime segments. Bell and Cage pointed to strong customer demand, especially in missile defense and unmanned maritime systems, and cited sustained interest from the Department of Homeland Security.
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Scott Mikus (Melius Research): Probed the rationale for maintaining conservative guidance despite a strong start to the year. Cage clarified that fundamentals remain solid, but guidance reflects prudent capacity for investment and the timing of new contract awards.
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Kenneth Herbert (RBC Capital Markets): Asked if contract terms are changing due to new executive orders. Bell noted that while no major changes have occurred yet, Leidos is preparing for an industry shift toward outcome-based contracting and is positioned to benefit from this trend.
Catalysts in Upcoming Quarters
In coming quarters, the StockStory team will closely monitor (1) the pace of new contract awards and backlog conversion, especially as federal procurement activity ramps up, (2) execution of the NorthStar 2030 strategy’s key growth pillars—particularly in cyber, energy, and defense programs, and (3) integration of the pending cyber acquisition and its contribution to Leidos’ digital modernization capabilities. Progress on managed health services growth and capital deployment decisions will also be important indicators of continued momentum.
Leidos currently trades at $163.19, up from $147.83 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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