Leidos Raises 2026 Forecast on Strong Demand for Defense Work

Leidos raised its 2026 profit and revenue forecast after a first quarter powered by defense information technology and military intelligence work, underscoring how federal procurement continues to favor national-security spending even as broader economic uncertainty lingers.

The Reston, Virginia, contractor said revenue in the quarter reached $4.4 billion, up 4% from a year earlier, while adjusted diluted earnings per share rose to $3.13 from $2.97. Net income was $335 million and adjusted EBITDA came to $614 million, with cash from operations of $301 million and non-GAAP free cash flow of $270 million.

The company’s outlook improved across the board. Leidos now expects adjusted 2026 earnings of $12.10 to $12.50 per share, up from a prior range of $12.05 to $12.45, and lifted its revenue forecast to $18 billion to $18.4 billion from $17.5 billion to $17.9 billion. Management said the second half of 2026 is the launchpad for multiyear growth acceleration.

Backlog remained a central strength. Leidos ended the quarter with $48.4 billion in backlog, including $9.6 billion funded, after reporting $3.3 billion in net bookings. The quarterly book-to-bill ratio was 0.8, but the trailing-twelve-month reading was 1.1, suggesting that new work is still keeping pace with revenue over a longer stretch.

A big part of that demand is coming from Washington. Leidos said its intelligence and digital business delivered 7% sales growth to $1.51 billion, helped by government demand for military software, intelligence analysis and logistics services. The company also completed its acquisition of Entrust during the quarter, adding another layer to its technology footprint.

The clearest example of that shift came with an $869 million, five-year MACRO II contract from the U.S. Army, awarded April 30. Leidos said the work will use artificial intelligence, advanced networking and modular open architecture to build secure systems that help warfighters make faster, better decisions across land, sea, air, space, cyber and electromagnetic domains. The contract shows how AI is moving deeper into defense procurement, where software and data integration now matter as much as hardware.

The broader backdrop is a Pentagon trying to replenish stockpiles strained by the Russia-Ukraine war and operations linked to Iran. That pressure has favored contractors that sell the software, analytics and logistics systems increasingly embedded in modern warfare, not just traditional weapons makers. Leidos said its board declared a quarterly cash dividend of $0.43 per share, payable in mid-June, while management continued to frame the company’s NorthStar 2030 strategy as a path to sustained expansion. For defense investors, the message is clear: the sectors tied to intelligence, battlefield software and mission support remain insulated by Washington’s procurement priorities.