Government IT services provider Science Applications International Corporation (NASDAQ: SAIC) missed Wall Street’s revenue expectations in Q4 CY2025, with sales falling 4.8% year on year to $1.75 billion. The company’s full-year revenue guidance of $7.1 billion at the midpoint came in 2.8% below analysts’ estimates. Its non-GAAP profit of $2.62 per share was 30% above analysts’ consensus estimates.

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Company Overview

With over five decades of experience supporting national security missions, Science Applications International Corporation (NASDAQ: SAIC) provides technical, engineering, and enterprise IT services primarily to U.S. government agencies and military branches.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.

With $7.26 billion in revenue over the past 12 months, SAIC is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because finding new avenues for growth becomes difficult when you already have a substantial market presence. For SAIC to boost its sales, it likely needs to adjust its prices, launch new offerings, or lean into foreign markets.

As you can see below, SAIC struggled to increase demand as its $7.26 billion of sales for the trailing 12 months was close to its revenue five years ago. This shows demand was soft, a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. SAIC’s recent performance shows its demand remained suppressed as its revenue has declined by 1.2% annually over the last two years.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. SAIC’s backlog reached $22.62 billion in the latest quarter and averaged 3.5% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for SAIC’s products and services but raises concerns about capacity constraints.

This quarter, SAIC missed Wall Street’s estimates and reported a rather uninspiring 4.8% year-on-year revenue decline, generating $1.75 billion of revenue.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection suggests its newer products and services will fuel better top-line performance, it is still below average for the sector.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

SAIC’s operating margin has more or less stayed the same over the last 12 months , averaging 7.5% over the last five years. This profitability was paltry for a business services business and caused by its suboptimal cost structure.

Analyzing the trend in its profitability, SAIC’s operating margin might fluctuated slightly but has generally stayed the same over the last five years, meaning it will take a fundamental shift in the business model to change.

This quarter, SAIC generated an operating margin profit margin of 7.6%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

SAIC’s EPS grew at 11.3% compounded annual growth rate over the last five years, higher than its flat revenue. This tells us management responded to softer demand by adapting its cost structure.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For SAIC, its two-year annual EPS growth of 16.7% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q4, SAIC reported adjusted EPS of $2.62, up from $2.57 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects SAIC’s full-year EPS of $10.75 to shrink by 10.3%.

Key Takeaways from SAIC’s Q4 Results

It was good to see SAIC beat analysts’ EPS expectations this quarter. On the other hand, its revenue missed. Looking ahead, full-year revenue guidance fell short of Wall Street’s estimates, but EBITDA and EPS guidance were in line. Overall, this was a mixed quarter. The stock traded up 1.4% to $93.18 immediately following the results.

Is SAIC an attractive investment opportunity at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).