Leidos Holdings Inc.

LDOS ·Technology, Information Technology Services, United States

Leidos Holdings, Inc. (LDOS)

Overview

Leidos Holdings is one of the largest U.S. government-focused technology and engineering services companies, providing IT, cybersecurity, systems integration, and scientific/engineering services primarily to defense, intelligence, and civilian government agencies, plus select commercial customers. Headquartered in Reston, Virginia, Leidos traces its roots to Science Applications International Corporation (SAIC), founded in 1969, and took its current form in a 2013 corporate split; a landmark 2016 merger with Lockheed Martin's Information Systems & Global Solutions division made it the largest IT services provider in the defense industry. For fiscal 2025 (ended early January 2026), Leidos reported approximately $17.2 billion in revenue and employed roughly 47,000 people worldwide, with a market capitalization in the $16–17 billion range.

What They Do & How They Make Money

Leidos generates revenue almost entirely through contracts with government customers — chiefly the U.S. Department of Defense, the intelligence community, and civilian federal agencies (Department of Homeland Security, aviation/air-traffic authorities, health agencies) — supplemented by commercial and international work. Roughly half of revenue comes from Defense/Intelligence Community customers, with the remainder split between other U.S. government agencies and a smaller commercial/international book of business. The company wins and executes large, often multi-year contracts (including cost-plus, fixed-price, and time-and-materials arrangements) to build and operate mission-critical systems: cybersecurity and network defense platforms, AI/machine-learning-enabled decision and surveillance tools, air traffic control and aviation security systems, health IT and medical records infrastructure, geospatial and intelligence analysis capabilities, and hardware such as radar, sensors, and threat-detection systems (e.g., airport baggage-screening technology). Profitability depends on efficiently executing these long-duration contracts, maintaining security clearances and past-performance credentials needed to win new work, and continually recompeting for and expanding existing government relationships — a model that provides relatively stable, recession-resistant demand tied to government budget cycles rather than consumer spending.

Business Segments

Leidos currently reports through four segments:

National Security & Digital — national security software and digital transformation work, including AI/ML-enabled coordination systems for military operations across domains, cyber operations, and intelligence analysis services for defense and intelligence agencies.
Health & Civil — air traffic control systems, health-mission software, managed health services (including work for veterans' and federal health agencies), and IT infrastructure management/operations for civilian government customers.
Commercial & International — security-screening and detection technology (e.g., airport baggage and border inspection systems), and power-grid engineering, design, and modernization services for commercial and international clients.
Defense Systems — military hardware-adjacent capabilities including air and missile defense, maritime systems, aerospace, cyber and threat systems, and space-based surveillance and communications payloads.

Historically, Leidos also described its business in terms of DoD/Intelligence Community customers (~roughly half of revenue), other U.S. government agencies (~roughly 37%), and commercial/non-U.S. customers (the remainder) — reflecting the customer concentration underlying the four operating segments above. Revenue has grown steadily, from about $13.7 billion in 2021 to roughly $17.2 billion in fiscal 2025.

Competitors

Leidos competes in the crowded U.S. government services and defense-technology contracting market against several large, publicly traded and private peers, including:

Booz Allen Hamilton — a major competitor across defense, intelligence, and civilian IT consulting.
SAIC (Science Applications International Corporation) — Leidos's own corporate sibling/spin-off counterpart, competing directly for many of the same DoD and civilian contracts.
CACI International — competes heavily in intelligence, cyber, and IT modernization contracts.
General Dynamics Information Technology (GDIT) — a segment of General Dynamics that competes for large enterprise IT and mission-support contracts.
L3Harris Technologies and Parsons Corporation — compete in defense systems, intelligence, and engineering services.
Peraton and ManTech — privately held (Peraton) or recently taken private (ManTech, by Carlyle Group) competitors focused on intelligence-community and defense work.

Competition centers on technical differentiation, security clearances, past performance, cost competitiveness on large multi-year procurements, and increasingly on AI/machine-learning capabilities being layered into mission systems.

Competitive Position

Leidos's core competitive advantage is scale combined with deep incumbency across a broad portfolio of long-running government programs — a position reinforced by the 2016 Lockheed Martin IS&GS merger, which made it the largest dedicated IT services provider serving the defense sector. This scale gives Leidos cost advantages in competing for very large omnibus contracts, breadth to bid across defense, intelligence, health, aviation, and civilian agency needs simultaneously, and an entrenched base of recurring, multi-year revenue that is comparatively insulated from broader economic cycles since it is tied to government (not consumer) budgets. The company has also positioned itself around AI-enabled mission software and "decision advantage" capabilities (branded internally as its "NorthStar 2030" strategy) to stay ahead of newer entrants and address evolving defense-modernization priorities.

Key risks include: heavy reliance on U.S. government budgets and appropriations, making revenue vulnerable to continuing resolutions, government shutdowns, sequestration, or shifting administration spending priorities; contract concentration and recompete risk, as illustrated by real setbacks such as a terminated roughly $2.4 billion DHS cybersecurity contract in 2025; geopolitical and export-control exposure, including Chinese export-control actions affecting the company in 2025; ongoing legal/regulatory matters (including antitrust and foreign-bribery-related investigations, and past issues such as SAIC's $550 million settlement over New York City's CityTime payroll contract); and intensifying competition from both traditional defense contractors and newer, more nimble technology entrants pushing into government AI and cyber work. Because so much revenue flows through cost-plus and other government contract structures, margins are also structurally lower than typical commercial software or services businesses, requiring efficient execution at scale to generate strong returns.