DOGE Federal IT Vendor Impact Series: SAIC

The Trump administration and its Department of Government Efficiency (DOGE) have generated massive upheaval across the board in federal operations, including in the federal IT segment. As of March 2025, thousands of contracts described by DOGE as “non-mission critical” have been canceled, including some across the federal IT and professional services landscape. TBR’s DOGE Federal IT Vendor Impact Series explores vendor-specific DOGE-related developments and impacts on earnings performance. Click here to receive upcoming series blogs in your inbox as soon as they’ve published.

SAIC outperforms expectations in 4Q24 despite federal IT uncertainty

SAIC released its CY4Q24 (FY4Q25) and CY24 (FY25) fiscal results on March 17. There were no indications that DOGE’s cuts impeded SAIC’s performance in 4Q24. The company’s quarterly revenue of $1.84 billion was up 5.8% year-to-year, exceeding TBR’s projections for sales of $1.82 billion, or 4.7% year-to-year growth. SAIC’s gross profit of $232 million (representing a gross margin of 12.6%) and operating income of $138 million (representing an operating margin of 7.5%) also surpassed TBR’s projections.
 
Company backlog of $21.9 billion was down 2.2% sequentially from $22.4 billion in 3Q24, but a sequential decline in backlog is typical during the first quarter of the federal government’s new fiscal year. Bookings of $1.3 billion in 4Q24 were essentially on par with the previous quarter ($1.5 billion in 3Q24) and with prior years ($1.4 billion in 4Q23 and $1.3 billion in 4Q22). The proportion of SAIC’s funded backlog to total backlog in 4Q24, 15.5%, was also unchanged from the year-ago quarter (4Q23), further illustrating that the movement in the company’s backlog was due primarily to seasonality.
 
TBR was surprised by SAIC’s FY26 (CY25) outlook, which was consistent with CEO Toni Townes-Whitley’s comment during the company’s 4Q24 earnings call that SAIC’s “current revenue with agencies under particular scrutiny by DOGE is immaterial.” In fact, SAIC elevated several elements of its FY26 guidance in 4Q24.
 
For context, SAIC tendered preliminary FY26 guidance with its 3Q24 (FY3Q25) earnings report in December 2024, predicting revenue of between $7.55 billion and $7.75 billion, implying growth of between 0.9% and 3.6% over FY25 revenue of $7.48 billion. SAIC’s initial guidance in 3Q24 also projected a FY26 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of between 9.3% and 9.5%, which would be flat to down from a FY24 EBITDA margin of 9.5%. Preliminary FY26 guidance also anticipated an adjusted diluted EPS (earnings per share) of between $8.90 and $9.10.
 
During its 4Q24 (FY4Q25) earnings call, SAIC raised the low end of its FY26 revenue guidance from $7.55 billion to $7.60 billion while maintaining the upper end of its sales guidance. SAIC also increased its adjusted EBITDA margin guidance by 10 basis points at each end of the previously tendered range and now expects a FY26 EBITDA margin of between 9.4% and 9.6%, implying the company’s FY26 EBITDA margin could surpass FY25. results SAIC also elevated its EPS guidance and now expects an adjusted diluted EPS of between $9.10 and $9.30 in FY26.
 
Despite tendering improved FY26 guidance, Townes-Whitley openly stated that the actions of DOGE have generated significant uncertainty in federal IT. SAIC’s expectations for DOGE-related impacts remain unchanged, and the company anticipates greater emphasis by the Trump administration on increasing government efficiency vis-à-vis deregulation and privatization of governmental functions while also emphasizing fixed and incentive-based contracts over cost-plus ones.
 
SAIC also expects that some programs on its books could be eliminated by DOGE, but neither Townes-Whitley nor other SAIC executives mentioned specific engagements. Reiterating her comments from SAIC’s 3Q24 earnings call, Townes-Whitley distinguished the current DOGE environment from the federal IT spending environment after the Fiscal Responsibility Act (FRA) was signed into law on June 3, 2023, and after the enactment of the Budget Control Act of 2011, which raised the debt ceiling and mandated spending cuts to curb the deficit, including automatic cuts (sequestration) if Congress failed to agree on deficit reduction measures.

 
 

TBR’s DOGE Federal IT Impact Series will include analysis of Accenture Federal Services, General Dynamics Technologies, CACI, IBM, CGI, Leidos, IFC International, Maximus, Booz Allen Hamilton and SAIC. Click here to receive upcoming series blogs in your inbox as soon as they’ve published.