Leidos lifts FY25 earnings outlook after record Q3 revenue of $4.47bn

RESTON, Va., November 6, 2025 – Leidos raised its fiscal 2025 earnings and margin guidance after reporting a 7% year-over-year revenue increase in the third quarter to a record $4.47bn. The results, for the quarter ended October 3, 2025, were driven by heightened demand across national security and defense programs.

Q3 results at a glance

Leidos said the growth was propelled by stronger volumes in key defense programs and continued momentum in its National Security & Digital operations. The company’s prior quarter revenue was $4.25bn, a 3% year-over-year increase.

Segment performance

Defense Systems: Revenue rose 11% to $582m, supported by increased volumes in integrated air defense systems, including the Indirect Fires Protection Capability Increment 2 system and radar surveillance solutions. Operating income margin was 6.4%, down from 7.1% in the prior-year quarter. On a non-GAAP basis, the margin was 8.9%, compared to 10.2% in Q3 FY24, reflecting a higher mix of materials typical of early production phases across several programs.

National Security & Digital: Revenue increased 8% to $2.02bn, driven by new contract wins, higher volumes in Defense IT and Intelligence Community support, and a $26m contribution from the acquisition of Kudu Dynamics. Segment operating income margin edged down to 9.5% from 10.0% a year earlier.

Backlog strengthens

As of October 3, 2025, Leidos reported a total backlog of $47.7bn, including $9.1bn funded and $38.6bn unfunded. The National Security & Digital segment accounted for $26.4bn, while Defense Systems contributed $5.35bn.

Executive commentary

Leidos CEO Tom Bell said: “Leidos continues to deliver exceptional results through the strength of our portfolio of mission-critical work as well as the innovation, agility, and discipline of our talented workforce.”

Addressing the company’s outlook, Bell added: “Despite the government shutdown, we are raising our 2025 earnings and margin guidance and holding firm on our 2025 revenue and cash guidance. Moreover, we are optimistic about our future given our alignment with the priorities of the administration and confidence that our customers will move out aggressively in search of smarter and more efficient outcomes for the nation,” Tom Bell added.

FY25 guidance updated

Following the Q3 performance, Leidos tightened and raised parts of its full-year guidance while maintaining its revenue outlook:

• Adjusted EBITDA margin: increased to the high 13% range (from the mid 13% range)
• Non-GAAP diluted EPS: updated to $11.45-$11.75 (from $11.15-$11.45)
• Revenue: reaffirmed at $17.00bn-$17.25bn

What’s driving the numbers

Leidos cited sustained demand for innovative products and solutions supporting national security and defense missions as a principal growth driver. The company also noted that the decline in margins within the Defense Systems segment reflected the increased material mix typical of early production phases across several programs, a dynamic that can compress profitability in the near term even as volume ramps.

Outlook

With a record quarterly revenue base, solid segment performance, and a $47.7bn backlog, Leidos enters the final quarter of FY25 with increased earnings confidence and stable revenue expectations. The company’s updated guidance underscores continued momentum in defense IT, intelligence support, and integrated air and missile defense programs, alongside integration benefits from the Kudu Dynamics acquisition.

Conclusion: Leidos’ Q3 FY25 results reinforce its positioning in defense and national security markets, with raised earnings and margin targets and a robust backlog supporting visibility into the year-end. The company maintains its full-year revenue outlook while signaling improved profitability for FY25.