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Science Applications International Reports Strong Q2 FY27 Revenue, Raises Guidance Amid Procurement Headwinds
On August 31 2026, Science Applications International Corp. (NASDAQ:SAIC) posted its fiscal‑second‑quarter 2027 results, reporting revenue of $1.9 billion—a 5 % organic rise—and adjusted EBITDA of $193 million, translating into a 10.3 % margin. Executives attributed the uptick to robust performance across defense, intelligence and civil markets, and to a higher conversion rate of its existing contract backlog.
Guidance for the full fiscal year was nudged higher: management lifted revenue expectations by 2 % to a midpoint of $7.25 billion and boosted adjusted EBITDA guidance by 4 % at the same midpoint. Earnings‑per‑share guidance was reaffirmed. The outlook reflects a modest organic growth range of –2 % to flat, driven by the RITS contract roll‑off and a slower submission environment.
A centerpiece of the call was Project ORBIT, a transformation effort slated to deliver roughly $150 million in annual run‑rate savings by FY30. CEO Jim Reagan called ORBIT a "fundamental re‑engineering of business processes," while CFO Prabu Natarajan highlighted that the initiative drew on about 3,500 employee‑generated ideas. Two‑thirds of the projected savings are earmarked for reinvestment in growth, with the balance directed toward margin expansion.
Margin expectations for the second half were tempered. CFO Natarajan said second‑half adjusted EBITDA margins will dip to the high‑9 % range from the 11 % achieved in the first half, as the company invests in high‑priority areas. He added that core business performance, excluding corporate allocations, remains healthy at low‑to‑mid‑10 % margins.
Procurement conditions remain uneven. Book‑to‑bill for the quarter stood at 0.6×, below the 0.8× trailing‑12‑month average, and the company projects a fiscal‑year close to 1.0×. Delays in large recompete awards and a slower RFP cycle have weakened the pipeline. Submission volume is $24 billion for the year, with expectations of $25 billion to $28 billion next year.
Fixed‑price contracting is gaining traction. CFO Natarajan noted that fixed‑price work currently accounts for 15 % to 18 % of sales, but the pipeline is shifting toward about one‑third fixed‑price. The Civil business group, largely fixed‑price, reports EBITDA margins north of 15 %, indicating upside potential if the trend persists.
Win rates stay strong. CEO Reagan said recompete win rates are expected to stay at or above 90 %, while new‑business win rates are projected at or above 30 %. He noted that past recompete headwinds of 5 % to 8 % of annual revenues have constrained growth, but the high win rates provide a floor for future revenue.
Financially, free cash flow reached $131 million, and net leverage fell to 3.0×, giving the company flexibility for portfolio shaping and potential M&A. The firm also highlighted a robust backlog and a high on‑contract growth (OCG) rate, roughly double the level seen a year earlier.
Management emphasized that a portfolio and strategy review is underway to pinpoint the intersection of SAIC’s strongest right‑to‑win capabilities and greatest growth potential. No dramatic shift in the company’s identity is anticipated; the review will sharpen focus on critical mission areas and surface M&A opportunities.
Additional details will surface on the December earnings call, where the company will discuss the portfolio review, growth investments, and the impact of the continuing resolution on the next fiscal year.
In sum, SAIC posted a solid Q2 with 5 % organic revenue growth and a 10.3 % adjusted EBITDA margin, raised FY27 guidance, and outlined a $150 million savings plan under Project ORBIT. Procurement headwinds could temper near‑term profitability, but high win rates and a strong cash position leave room for future growth and strategic acquisitions.
Guidance for the full fiscal year was nudged higher: management lifted revenue expectations by 2 % to a midpoint of $7.25 billion and boosted adjusted EBITDA guidance by 4 % at the same midpoint. Earnings‑per‑share guidance was reaffirmed. The outlook reflects a modest organic growth range of –2 % to flat, driven by the RITS contract roll‑off and a slower submission environment.
A centerpiece of the call was Project ORBIT, a transformation effort slated to deliver roughly $150 million in annual run‑rate savings by FY30. CEO Jim Reagan called ORBIT a "fundamental re‑engineering of business processes," while CFO Prabu Natarajan highlighted that the initiative drew on about 3,500 employee‑generated ideas. Two‑thirds of the projected savings are earmarked for reinvestment in growth, with the balance directed toward margin expansion.
Margin expectations for the second half were tempered. CFO Natarajan said second‑half adjusted EBITDA margins will dip to the high‑9 % range from the 11 % achieved in the first half, as the company invests in high‑priority areas. He added that core business performance, excluding corporate allocations, remains healthy at low‑to‑mid‑10 % margins.
Procurement conditions remain uneven. Book‑to‑bill for the quarter stood at 0.6×, below the 0.8× trailing‑12‑month average, and the company projects a fiscal‑year close to 1.0×. Delays in large recompete awards and a slower RFP cycle have weakened the pipeline. Submission volume is $24 billion for the year, with expectations of $25 billion to $28 billion next year.
Fixed‑price contracting is gaining traction. CFO Natarajan noted that fixed‑price work currently accounts for 15 % to 18 % of sales, but the pipeline is shifting toward about one‑third fixed‑price. The Civil business group, largely fixed‑price, reports EBITDA margins north of 15 %, indicating upside potential if the trend persists.
Win rates stay strong. CEO Reagan said recompete win rates are expected to stay at or above 90 %, while new‑business win rates are projected at or above 30 %. He noted that past recompete headwinds of 5 % to 8 % of annual revenues have constrained growth, but the high win rates provide a floor for future revenue.
Financially, free cash flow reached $131 million, and net leverage fell to 3.0×, giving the company flexibility for portfolio shaping and potential M&A. The firm also highlighted a robust backlog and a high on‑contract growth (OCG) rate, roughly double the level seen a year earlier.
Management emphasized that a portfolio and strategy review is underway to pinpoint the intersection of SAIC’s strongest right‑to‑win capabilities and greatest growth potential. No dramatic shift in the company’s identity is anticipated; the review will sharpen focus on critical mission areas and surface M&A opportunities.
Additional details will surface on the December earnings call, where the company will discuss the portfolio review, growth investments, and the impact of the continuing resolution on the next fiscal year.
In sum, SAIC posted a solid Q2 with 5 % organic revenue growth and a 10.3 % adjusted EBITDA margin, raised FY27 guidance, and outlined a $150 million savings plan under Project ORBIT. Procurement headwinds could temper near‑term profitability, but high win rates and a strong cash position leave room for future growth and strategic acquisitions.
