Leidos Reports 3% Revenue Growth in Q2 2025 Driven by Defence Demand

Leidos has announced a revenue increase of 3% for the second quarter of 2025, reaching $4.25 billion. This growth is primarily driven by heightened demand across all customer segments, particularly within the defence systems sector, which saw substantial interest in advanced military products.

The defence systems segment experienced a remarkable 10% revenue rise in Q2 FY25, amounting to $543 million. This surge is largely attributed to increased activity in space sensing and integrated air defence systems, notably the Indirect Fires Protection Capability Increment 2 system. Operating income for this segment also saw a significant boost, rising by 20% from $34 million to $41 million year-over-year. The operating income margin improved to 7.6%, up from 6.9% in the same quarter last year, although there was a slight dip in the non-GAAP operating margin from 10.3% to 9.8%.

Leidos’ national security and digital segment contributed to the company’s overall growth, reporting a revenue increase of 3% to $1.87 billion. This rise was fueled by new contract awards and higher volumes on the Sentinel program, along with contributions from Kudu Dynamics. Despite this growth, the segment’s operating income margin declined marginally to 10.0%, down from 10.1% in the previous year, while the non-GAAP operating income margin remained steady at 10.4%.

The company’s net bookings for the quarter reached $3.9 billion, resulting in a book-to-bill ratio of 0.9. Consequently, Leidos’ backlog climbed to $46.2 billion at the end of the quarter, with $7.1 billion of that amount funded.

CEO Tom Bell commented on the results, stating, “Our second quarter results showcase the strength of our differentiated portfolio and the alignment of our NorthStar 2030 strategy with the priorities of the new Administration.”

Year-to-date, the defence systems segment has generated total revenue of $1.05 billion, up from $969 million last year, with the operating margin increasing to 7.1% from 5.7%. Bell emphasized the company’s strong performance by saying, “With record margins, continued double-digit EPS growth, and strong cash conversion, we are delivering on our financial commitments, and we are strategically deploying capital to grow shareholder value. We are pleased to improve our guidance outlook for 2025 given two quarters of exceptional performance and enhanced clarity on the macro environment.”

In October 2024, Leidos secured a contract valued at up to $249 million, aimed at enhancing biometric applications across US Army installations and select joint-service access points globally. This contract further solidifies Leidos’ commitment to advancing technology in the defence sector and underlines the growing demand for innovative military solutions.