SAIC Stock Plummets 13% Despite Smashing Q1 Revenue—Wall Street Punishes Beaters Anyway

Defense contractor Science Applications International Corp (SAIC) just delivered a revenue beat—and got rewarded with a double-digit bloodbath. Markets remain as rational as a crypto bull run.

Numbers Don’t Lie (But Traders Do)

SAIC posted Q1 revenues soaring past estimates, yet shares cratered 13% in afterhours. Another case of ‘buy the rumor, sell the news’—or just Wall Street’s allergy to profitability?

Tech Sector Contagion

The selloff mirrors broader tech weakness, proving even old-school govt contractors aren’t immune to market tantrums. Meanwhile, Bitcoin hodlers laugh from their diamond hands.

Another earnings season, another reminder: fundamentals are just suggestions when algorithms run the show.

TLDR

• SAIC stock dropped over 13% to $100 despite beating Q1 revenue estimates.

• Q1 revenue reached $1.88 billion, a 1.6% annual increase.

• Adjusted EPS missed estimates at $1.92 vs the expected $2.12.

• Full-year guidance reaffirmed for revenue and EPS.

• Free cash flow turned negative at -$44 million.

Science Applications International Corporation (NASDAQ: SAIC) stock tumbled over 13% to $100 as of midday despite reporting first-quarter fiscal 2026 results that slightly exceeded revenue expectations.

Science Applications International Corp (SAIC) 

The company, which provides IT and engineering services primarily to U.S. government agencies, announced its earnings for the quarter ending May 2, 2025, on June 2, 2025.

The company generated revenues of $1.88 billion, marking a modest 1.6% year-over-year growth and narrowly surpassing analyst estimates of $1.87 billion. However, its adjusted earnings per share (EPS) came in at $1.92, missing Wall Street’s expected $2.12 by 9.3%. Net income for the quarter stood at $68 million, with adjusted EBITDA at $157 million, or 8.4% of revenues.

Key Takeaways from $SAIC’s Earnings Call

Key Financial Results:
– Q1 FY2026 Revenue: $1.877 billion, representing ~2% growth

– Adjusted EBITDA: $157 million with 8.4% margin

– Adjusted EPS: $1.92, flat year-over-year

– Free Cash Flow: Negative $44 million, impacted by timing… pic.twitter.com/BbwbpSaV40

— AlphaSense (@AlphaSenseInc) June 2, 2025

Revenue Growth and Bookings

Despite the small revenue beat, SAIC’s growth remains relatively sluggish. Over the past five years, its compounded annual growth rate was just 2.9%. In fact, revenue declined by 1.5% annually over the past two years. This quarter’s slight rebound signals some stabilization, but the company still faces challenges in driving significant top-line expansion.

SAIC reported net bookings of $2.4 billion, achieving a book-to-bill ratio of 1.3, and ended the quarter with a hefty $22.34 billion backlog. Management maintained full-year revenue guidance at $7.68 billion, in line with analyst projections, suggesting steady performance but limited acceleration.

Profitability and Cash Flow Challenges

While SAIC has maintained a consistent operating margin, reporting 6.4% this quarter (flat compared to last year), profitability remains under pressure. Over the past five years, the company improved its operating margin by 1.2 percentage points, yet rising costs seem to be capping further gains.

Earnings per share have historically shown stronger growth, rising at a 9.9% compounded rate over five years, driven partly by share buybacks, which reduced the share count by 18.3%. However, this quarter’s EPS stagnated compared to the same period last year and missed analyst expectations. For fiscal 2026, SAIC reaffirmed its adjusted EPS guidance of $9.20 at the midpoint, implying a moderate 4.7% annual increase.

One concerning area is cash flow. SAIC reported negative free cash FLOW of -$44 million, a sharp decline from $21 million in the same quarter last year, which could limit its financial flexibility if the trend continues.

Final Thoughts

While SAIC’s Q1 results showed some bright spots, such as beating revenue forecasts and maintaining solid bookings, the market reacted negatively to its profit miss and cash Flow challenges. Investors appear cautious as the company faces a dynamic environment where steady government contracts offer stability but limited growth. With management reaffirming full-year guidance, attention will now turn to whether SAIC can meet its profitability targets in the quarters ahead.