Leidos is trading lower after releasing first-quarter FY2026 results (quarter ended April 3, 2026) and updated full-year guidance. While results highlighted solid revenue growth and higher non-GAAP profitability, the market reaction has focused on weaker year-over-year GAAP profitability and the quality of the guidance lift, with costs tied to major strategic moves weighing on reported results. (sec.gov)

Leidos reported Q1 revenue of $4.40 billion (up 4% year-over-year) and non-GAAP diluted EPS of $3.13 (up 5% year-over-year). On a GAAP basis, diluted EPS fell to $2.56 from $2.77 and net income declined to $335 million from $365 million, alongside a slightly lower adjusted EBITDA margin (14.0% vs. 14.2% a year ago). (sec.gov)

Leidos said GAAP profit comparisons were pressured by $39 million of costs related to the Entrust acquisition and a pending security products joint venture, which contributed to the GAAP year-over-year decline even as non-GAAP results improved. The quarter also included debt-financed activity to fund the Entrust deal, a mix that can amplify investor sensitivity to margin pressure and integration execution risk. (sec.gov)

Leidos raised FY2026 guidance to revenue of $18.00–$18.40 billion (from $17.50–$17.90 billion) and non-GAAP diluted EPS of $12.10–$12.50 (from $12.05–$12.45), with operating cash flow expected at approximately $1.80 billion (from approximately $1.75 billion). Despite the higher outlook and a $48.4 billion backlog, the stock’s drop suggests investors are prioritizing GAAP earnings trajectory and margin durability over headline beats and raised targets. (sec.gov)