Government IT services provider Science Applications International Corporation (NASDAQ: SAIC) reported Q2 CY2026 results exceeding the market’s revenue expectations, with sales up 6.3% year on year to $1.88 billion. The company’s full-year revenue guidance of $7.25 billion at the midpoint came in 0.8% above analysts’ estimates. Its non-GAAP profit of $3.01 per share was 30.4% 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

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $7.40 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 it’s harder to find incremental growth when you’ve penetrated most of the market. To expand meaningfully, SAIC likely needs to tweak its prices, innovate with new offerings, or enter new markets.

As you can see below, SAIC struggled to increase demand as its $7.40 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.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Just like its five-year trend, SAIC’s revenue over the last two years was flat, suggesting it is in a slump.

This quarter, SAIC reported year-on-year revenue growth of 6.3%, and its $1.88 billion of revenue exceeded Wall Street’s estimates by 7.1%.

Looking ahead, sell-side analysts expect revenue to decline by 3% over the next 12 months, a deceleration versus the last two years. This projection doesn’t excite us and suggests its products and services will see some demand headwinds.

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Adjusted Operating Margin

Adjusted operating margin is a key measure of profitability. Think of it as net income (the bottom line) excluding the impact of non-recurring expenses, taxes, and interest on debt - metrics less connected to business fundamentals.

SAIC was profitable over the last five years but held back by its large cost base. Its average adjusted operating margin of 8.5% was weak for a business services business.

On the plus side, SAIC’s adjusted operating margin rose by 3.6 percentage points over the last five years.

This quarter, SAIC generated an adjusted operating margin profit margin of 8.9%, down 1.4 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

SAIC’s EPS grew at 9.7% 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.

We can take a deeper look into SAIC’s earnings to better understand the drivers of its performance. As we mentioned earlier, SAIC’s adjusted operating margin declined this quarter but expanded by 3.6 percentage points over the last five years. Its share count also shrank by 26.7%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

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 22.1% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q2, SAIC reported adjusted EPS of $3.01, down from $3.63 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects SAIC’s full-year EPS to shrink by 12.3% from $11.44 to $10.04.

Key Takeaways from SAIC’s Q2 Results

It was good to see SAIC beat analysts’ revenue and EPS expectations this quarter. We were also excited its full-year guidance generally outperformed Wall Street’s estimates as well. Zooming out, we think this was a very solid print. The stock traded up 3.9% to $130.83 immediately following the results.

SAIC had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. 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).