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SAIC’s Defense Spending Tailwinds vs Procurement Delays—A Story of Timing Risk and Opportunity!

Science Applications International Corporation reported a quarter characterized by continued pressure on revenue alongside improving profitability and strong cash generation, reflecting a mix of structural portfolio changes and execution initiatives. Revenue declined due to procurement delays, customer disruptions, and the deliberate decision to exit lower-margin work, including a significant reduction tied to the Cloud One program and the absence of a prior-year software license sale. Organic contraction persisted through the full year and is expected to continue into the next fiscal period, driven primarily by recompete losses and slower-than-expected ramp-up of recently awarded contracts . Despite top-line challenges, margin performance showed improvement, supported by cost efficiency measures, disciplined program execution, and a shift toward higher-margin work. Adjusted EBITDA margins exceeded prior expectations and are guided to reach approximately 10% at the midpoint in the coming year, reflecting ongoing cost reduction efforts and portfolio optimization.