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

Leidos has announced a **3% increase** in its revenues for the second quarter of **2025**, reaching **$4.25 billion** compared to the same period last year. This growth is largely driven by heightened demand across all customer segments, particularly within the defence systems sector, which recorded a substantial **10% rise** in revenue, amounting to **$543 million**.

The notable surge in the defence systems segment is attributed to increased activity in **space sensing** and **integrated air defence systems**, particularly surrounding the **Indirect Fires Protection Capability Increment 2** system. Operating income for this segment also showed a significant improvement, rising **20%** from **$34 million** to **$41 million** year-over-year. The operating income margin increased to **7.6%**, up from **6.9%** in the previous year’s quarter, although there was a slight decline in the non-GAAP operating margin, which fell from **10.3%** to **9.8%**.

In addition to the defence systems segment, Leidos’ national security and digital segment reported a **3% increase** in revenue, reaching **$1.87 billion**. This growth resulted from new contract awards, higher volumes on the **Sentinel program**, and contributions from **Kudu Dynamics**. Despite the overall revenue growth, this segment’s operating income margin saw a small decrease, slipping to **10.0%** from **10.1%** in the prior year, while the non-GAAP operating income margin remained steady at **10.4%**.

Leidos secured **net bookings** of **$3.9 billion** during the quarter, resulting in a **book-to-bill ratio** of **0.9**. The company’s backlog reached **$46.2 billion**, with **$7.1 billion** of that amount funded, underscoring a solid foundation for ongoing projects and future growth.

Tom Bell, Leidos CEO, stated, “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.” He emphasized the company’s commitment to financial performance, noting that the defence systems segment’s total revenue for the year to date has climbed to **$1.05 billion**, up from **$969 million** last year, with an operating margin increase to **7.1%** from **5.7%**.

Bell also highlighted the company’s impressive margins and cash conversion, asserting, “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 a significant move in **October 2024**, Leidos secured a contract valued at up to **$249 million** aimed at enhancing biometric applications across **U.S. Army** installations and select joint-service access points globally. This contract is expected to further bolster the company’s capabilities in advanced defence technologies.