Leidos Financial Model
Aerospace and Defence Company Financials Example (Free Excel Download)
Leidos is a Fortune 500 science, engineering, and information technology company that provides services and solutions to the defense, intelligence, civil, and health markets.
professionals from Deloitte
Used by professionals from
About this model
This model evaluates the equity valuation and free cash flow generation of Leidos Holdings, Inc. to help an equity research analyst determine if the company's NorthStar 2030 strategy and shift towards higher-margin technology integration justify its current market premium.
Leidos is a Fortune 500 science, engineering, and information technology company that provides services and solutions to the defense, intelligence, civil, and health markets. The company primarily acts as a prime contractor for the US government, delivering digital modernisation, cyber security, mission software, and managed health services.
- Business segments: National Security & Digital (~44%), Health & Civil (~25%), Defense Systems (~18%), and Commercial & International (~13%).
- Key geographies: Approximately 87% of revenue is derived from the US government, with 8% from international markets (notably Australia and the UK) and 5% from commercial clients.
- Business model type: Asset-light IT services, systems integration, and managed services, heavily reliant on human capital and long-term government contracts.
- Competitive position: Leidos is the largest IT contractor to the US federal government, competing directly with Booz Allen Hamilton, CACI International, and SAIC.
- Recent major events: The company realigned its business into four new segments at the start of FY2024 to support its NorthStar 2030 strategy. In early 2026, Leidos announced the pending acquisition of Entrust to broaden its utility and commercial energy client base.
The downloadable Leidos financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsLeidos financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $13.62B | $14.29B | $15.34B | $16.58B | $17.11B |
| Gross profit | $1.89B | $1.98B | $2.15B | $2.71B | $3.03B |
| Operating income | $1.15B | $1.09B | $621.0M | $1.83B | $2.11B |
| Net income | $753.0M | $685.0M | $199.0M | $1.25B | $1.45B |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
See 8 moreSee less
How to build a detailed financial model for Leidos
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
National Security & Digital
- Segment name: National Security & Digital
- Revenue driver formula: Funded Backlog x Burn Rate + In-Period Bookings Conversion
- Historical growth rate: 3-5% CAGR
- Key growth levers and headwinds: Driven by US Department of Defense cloud migration (e.g., Cloud One) and intelligence community cyber upgrades. Headwinds include continuing resolutions that delay new contract awards.
- Pricing dynamics: A mix of cost-plus-award-fee, time-and-materials, and firm-fixed-price contracts.
- Revenue recognition notes: Recognised over time using the percentage-of-completion method based on costs incurred.
- Seasonality: Q3 and Q4 are historically strongest due to the US federal government fiscal year end (September 30) driving a surge in contract awards.
Health & Civil
- Segment name: Health & Civil
- Revenue driver formula: Contract Value x Task Order Volume
- Historical growth rate: 6-8% CAGR
- Key growth levers and headwinds: Growth is driven by managed health services for veterans and IT modernisation for civil agencies (e.g., FAA, NASA). Headwinds include budget constraints in non-defense agencies.
- Pricing dynamics: Highly competitive bidding environment; increasing shift towards fixed-price managed services.
- Revenue recognition notes: Over time as services are rendered; includes equity earnings from non-consolidated joint ventures (e.g., Hanford).
- Seasonality: Relatively stable throughout the year, with slight upticks in Q3.
Commercial & International
- Segment name: Commercial & International
- Revenue driver formula: Product Volume x Unit Price + IT Service Contracts
- Historical growth rate: 6-12% CAGR
- Key growth levers and headwinds: Driven by security enterprise solutions (airport scanners), commercial energy infrastructure, and Australian IT contracts. Headwinds include foreign exchange volatility.
- Pricing dynamics: Commercial pricing power with spot sales for security products and long-term contracts for IT.
- Revenue recognition notes: Security products are often recognised at a point in time upon delivery and acceptance.
- Seasonality: Security product deliveries often skew towards the second half of the calendar year.
Defense Systems
- Segment name: Defense Systems
- Revenue driver formula: Program Milestones Achieved x Contract Value
- Historical growth rate: 3-5% CAGR
- Key growth levers and headwinds: Driven by demand for hypersonics, space-based sensing, and integrated air defense systems (e.g., ABADS-MD). Headwinds include supply chain delays for hardware components.
- Pricing dynamics: Heavily reliant on cost-plus contracts for R&D phases, transitioning to fixed-price for production.
- Revenue recognition notes: Over time based on cost-to-cost measures.
- Seasonality: Tied to specific program milestones rather than calendar seasonality.
Cost Structure
Variable Costs / COGS
- Line-by-line breakdown: Direct labour (engineers, cleared personnel), subcontractor costs, hardware and software materials, and overhead directly attributable to contracts.
- Gross margin range: 14.0% to 16.0% historically.
- Key input costs and commodity exposures: Highly sensitive to wage inflation for cleared IT professionals and software engineers.
- How COGS scales with revenue: Highly linear due to the cost-plus nature of many government contracts, limiting gross margin expansion.
Operating Expenses
- R&D: Very low as a % of revenue (typically <1%) because the majority of research and development is funded directly by the customer and sits in COGS.
- SG&A: Typically 6.0% to 7.0% of revenue. Includes bid and proposal (B&P) costs, corporate overhead, and indirect sales/marketing.
- Depreciation & Amortisation: D&A is significant due to serial acquisitions. Amortisation of acquired intangibles is a major non-cash expense.
- Stock-Based Compensation: Runs at approximately 0.5% to 1.0% of revenue.
- Restructuring / one-time charges: Occasional real estate rationalisation and severance charges, notably during the FY2024 segment realignment.
Margin Profile
- Gross margin: 14.0% - 16.0%
- EBITDA margin (Adjusted): 13.0% - 14.1% (expanding recently due to NorthStar 2030 efficiencies).
- Operating margin (GAAP): 7.0% - 9.0% (heavily burdened by intangible amortisation).
- Net margin: 7.5% - 8.5%
- Margin trend: Expanding. The shift towards fixed-price contracts and high-value cyber/AI work is driving Adjusted EBITDA margins above 14%.
Balance Sheet Structure
- Total assets: Approximately $13.5 billion.
- Key asset categories: Goodwill and intangible assets dominate the balance sheet due to historical M&A (e.g., Lockheed Martin IS&GS merger, Dynetics acquisition).
- Goodwill & intangibles as % of total assets: Roughly 50% to 55%.
- Working capital profile:
- Days Sales Outstanding (DSO): 60 to 70 days.
- Days Inventory Outstanding (DIO): 10 to 15 days (inventory is minimal, mostly related to Defense Systems and Security products).
- Days Payable Outstanding (DPO): 45 to 55 days.
- Net working capital as % of revenue: Typically neutral to slightly positive.
- Is working capital positive or negative? Positive, but tightly managed. The company uses factoring facilities occasionally to accelerate receivables.
- PP&E: Relatively light (~$1 billion). Consists of IT equipment, leasehold improvements, and specialized manufacturing facilities for Defense Systems.
- Right-of-use assets / operating leases: Material, typically around $500 million, reflecting leased office space and secure facilities.
Capital Expenditure & Investment
- Capex as % of revenue: 1.5% to 2.0%.
- Maintenance capex vs. growth capex: Historically 70% maintenance / 30% growth, but shifting towards growth as Leidos triples capex to ~$350 million for AI and cloud infrastructure.
- Major capex programmes underway or planned: Investments in proprietary AI ontologies, secure cloud environments, and facility upgrades for hypersonics.
- Capitalised software / development costs: Moderate, primarily related to internal IT systems and mission software platforms.
- M&A pattern: Serial bolt-on acquirer (e.g., Entrust in 2026) with occasional transformational deals.
- Typical acquisition multiple paid: 10x to 14x EV/EBITDA.
Debt & Capital Structure
- Total debt: Approximately $4.7 billion.
- Debt/EBITDA ratio: Currently around 2.0x, with a target to remain below 3.0x to maintain investment-grade status.
- Credit rating: Investment grade (typically BBB- / Baa3).
- Key debt instruments: Senior unsecured notes of varying maturities, a revolving credit facility, and term loans.
- Maturity profile: Well-laddered with average maturities in the 5-7 year range.
- Interest rate profile: Predominantly fixed-rate bonds with a weighted average cost of debt around 4.5% to 5.5%.
- Covenants: Standard leverage and interest coverage ratios; currently operating with significant headroom.
- Share repurchase programme: Active. The company uses excess free cash flow to offset dilution and opportunistically retire shares.
- Dividend policy: Consistent dividend payer. Currently paying $0.40 per quarter ($1.60 annualised), representing a payout ratio of roughly 15%.
Cash Flow Characteristics
- Operating cash flow conversion: Very strong, typically 1.0x to 1.2x of Net Income.
- Free cash flow margin: 7.0% to 8.0% of revenue (roughly $1.2 billion to $1.4 billion annually).
- Major non-cash items: Depreciation, massive amortisation of acquired intangibles, and stock-based compensation.
- Working capital cash flow impact: Can be lumpy quarter-to-quarter based on the timing of government payments, but generally a minor use of cash annually as the business grows.
- Capex intensity: Low, reflecting the asset-light services model.
- Cash tax rate vs. GAAP effective tax rate: Cash taxes are often slightly lower than GAAP taxes due to accelerated depreciation and R&D tax credits.
Sheet Structure
- Assumptions: Macro drivers, segment growth rates, margin targets, tax rates, WACC, and share count inputs.
- Backlog & Bookings: Roll-forward of funded and unfunded backlog. Requires inputs for beginning backlog, book-to-bill ratio, and revenue burn by segment.
- Revenue Build: Revenue forecasted by the four reporting segments (National Security & Digital, Health & Civil, Commercial & International, Defense Systems).
- Income Statement: Total Revenues, Cost of revenues, SG&A, Amortisation of acquired intangible assets, Restructuring costs, Equity earnings of non-consolidated subsidiaries, Operating income, Interest expense, Income tax expense, Net income.
- Balance Sheet: Cash and cash equivalents, Receivables, Inventory, Other current assets, PP&E, Goodwill, Intangible assets, Operating lease ROU assets, Accounts payable, Accrued liabilities, Current portion of long-term debt, Long-term debt, Operating lease liabilities, Deferred tax liabilities, Stockholders' equity.
- Cash Flow Statement: Net income, D&A, Amortisation of intangibles, Stock-based compensation, Changes in working capital (Receivables, Inventory, Payables), Operating cash flow, Capital expenditures, Free cash flow, Dividends paid, Share repurchases, Debt issuance/repayment.
- Debt Schedule: Beginning debt, issuances, repayments, ending debt, and interest expense calculation based on weighted average interest rates.
- DCF Valuation: Unlevered free cash flow calculation, discount period, WACC application, terminal value (perpetuity growth), enterprise value to equity value bridge.
Key Financial Relationships
- `Segment Revenue = Prior Year Segment Revenue * (1 + Segment Growth Rate)`
- `Total Revenue = National Security & Digital Revenue + Health & Civil Revenue + Commercial & International Revenue + Defense Systems Revenue`
- `Cost of Revenues = Total Revenue * (1 - Gross Margin %)`
- `Bookings = Total Revenue * Book-to-Bill Ratio`
- `Ending Backlog = Beginning Backlog + Bookings - Total Revenue`
- `Adjusted EBITDA = Operating Income + Depreciation Expense + Amortisation of Internally Developed Intangible Assets + Amortisation of Acquired Intangible Assets + Restructuring Costs`
- `Interest Expense = Average Debt Balance * Weighted Average Interest Rate`
- `Free Cash Flow = Net Cash Provided by Operating Activities - Capital Expenditures`
- `Days Sales Outstanding = (Receivables / Total Revenue) * 365`
- `Earnings Per Share = Net Income Attributable to Leidos Common Stockholders / Diluted Shares Outstanding`
Cross-Sheet Dependencies
- The Assumptions sheet drives the growth rates in the Revenue Build and Backlog sheets.
- Revenue Build feeds the top line of the Income Statement and drives Receivables on the Balance Sheet via DSO.
- Income Statement generates Net Income, which is the starting point for the Cash Flow Statement.
- The Cash Flow Statement calculates the change in cash, which links to the Cash line on the Balance Sheet.
- The Debt Schedule calculates Interest Expense, which feeds back into the Income Statement (creating a potential circularity if interest expense impacts net income, which impacts cash available for debt paydown, which impacts debt balances).
Sign Convention
- Revenues and Assets: Positive.
- Expenses (COGS, SG&A, Interest, Taxes): Positive on their supporting schedules, but subtracted (or entered as negative) when calculating subtotals like Operating Income and Net Income.
- Liabilities and Equity: Positive on the Balance Sheet.
- Cash Flow Statement: Cash inflows are positive; cash outflows (capex, dividends, debt repayment) are negative.
Things Most Likely to Go Wrong
- The company realigned into four new segments in FY2024; historical segment data prior to FY2023 is not directly comparable unless using management's recast figures.
- Amortisation of acquired intangibles is a massive non-cash charge that heavily distorts GAAP operating margins; the model must clearly bridge Operating Income to Adjusted EBITDA.
- Equity earnings from non-consolidated subsidiaries (like the Hanford joint venture) are included within operating income for the Health & Civil and Defense Systems segments, which can confuse standard EBIT calculations.
- The company experiences seasonality with the US federal government fiscal year end (September 30), making Q3 and Q4 bookings historically stronger than Q1 and Q2.
- A significant portion of revenue is derived from cost-plus contracts, meaning gross margins are structurally capped compared to commercial IT peers.
- The pending acquisition of Entrust in 1H 2026 will require pro-forma adjustments to the Commercial & International segment and an increase in debt or cash usage.
- Government shutdowns or continuing resolutions can temporarily halt revenue recognition and push bookings to the right, creating quarterly lumpiness.
- Unfunded backlog is large but subject to congressional appropriation; modelling revenue solely on total backlog rather than funded backlog can overstate near-term growth.
Validation Checks
- Adjusted EBITDA margin should remain in the 13.0% to 14.5% range based on the NorthStar 2030 strategy targets.
- US Government revenue should account for approximately 87% of total consolidated revenue.
- Book-to-bill ratio should be 1.0x or greater to support positive forward revenue growth.
- Capital expenditures should be modelled at approximately $350 million annually to reflect the recent tripling of investment for AI projects.
- Net income margin should be between 7.5% and 8.5%.
- Free cash flow conversion (FCF / Net Income) should be roughly 85% to 100%.
- Total debt to Adjusted EBITDA should not exceed 3.0x to maintain investment-grade credit ratings.
- Balance sheet must balance: Total Assets = Total Liabilities + Stockholders' Equity in every forecasted period.
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| National Security & Digital Revenue Growth | 4.5 | % | Blended rate based on recent demand for cyber and IT modernisation |
| Health & Civil Revenue Growth | 6.0 | % | Driven by managed health services and civil agency upgrades |
| Commercial & International Revenue Growth | 8.0 | % | Higher growth driven by commercial energy and Australian IT |
| Defense Systems Revenue Growth | 4.0 | % | Supported by hypersonics and space-based sensing demand |
| Consolidated Gross Margin | 15.0 | % | Historical average reflecting cost-plus and fixed-price contract mix |
| SG&A as % of Revenue | 6.5 | % | Reflects corporate overhead and bid/proposal costs |
| Adjusted EBITDA Margin | 14.1 | % | Actual reported margin for FY2025 |
| Effective Tax Rate | 23.0 | % | Standard US corporate rate plus state taxes |
| Capital Expenditures | 350 | $M | Management guidance for accelerated AI and internal investments |
| Dividend per Share (Annualised) | 1.60 | $ | Based on recent $0.40 quarterly dividend declaration |
| Diluted Share Count | 126.4 | Millions | Actual outstanding shares as of early 2026 |
| Weighted Average Cost of Capital (WACC) | 7.5 | % | Standard discount rate for prime defense/IT contractors |
| Terminal Growth Rate | 2.0 | % | Aligns with long-term US GDP and defense budget growth |
Data Sources & Benchmarks
- Filings: SEC EDGAR for Leidos Holdings, Inc. (LDOS) 10-K and 10-Q filings.
- Investor Relations: Leidos IR website for earnings presentations, backlog metrics, and NorthStar 2030 strategy decks.
- Peers for benchmarking: Booz Allen Hamilton (BAH), CACI International (CACI), Science Applications International Corp (SAIC), General Dynamics (GD).
- Industry Data: US Department of Defense (DoD) budget request documents for macro defense spending trends.
- Proprietary Data: Federal Procurement Data System (FPDS) for tracking prime contract awards and funding obligations.
Sources
Do more with the Leidos model
Frequently asked
What does Leidos do?+
Leidos is a Fortune 500 science, engineering, and information technology company that provides services and solutions to the defense, intelligence, civil, and health markets. It primarily acts as a prime contractor for the US government, delivering digital modernisation, cyber security, mission software, and managed health services.
What are Leidos's main sources of revenue?+
Approximately 87% of Leidos's revenue is derived from the US government, with additional contributions from international markets like Australia and the UK, and commercial clients. The company's business is heavily reliant on human capital and long-term government contracts across its National Security & Digital, Health & Civil, and Defense Systems segments.
What is Leidos's capital expenditure strategy?+
Leidos's capital expenditure as a percentage of revenue is typically 1.5% to 2.0%, historically focused on maintenance. However, the company is shifting towards growth capex, tripling investments to approximately $350 million for AI, cloud infrastructure, and facility upgrades for hypersonics.
Why is a financial model important for valuing Leidos?+
A financial model for Leidos evaluates its equity valuation and free cash flow generation to help determine if its NorthStar 2030 strategy and shift towards higher-margin technology integration justify its current market premium. It provides a structured way to analyze the company's future performance and intrinsic value.
Where can I find a financial model for Leidos (LDOS)?+
A downloadable Excel financial model for Leidos (LDOS) is available, forecasting the company's performance from FY2026 to FY2030. This general corporate model allows users to analyze key assumptions like revenue growth, margins, and capital expenditure.
What is Leidos's competitive position in the market?+
Leidos is recognized as the largest IT contractor to the US federal government, competing directly with companies like Booz Allen Hamilton, CACI International, and SAIC. Its asset-light business model focuses on IT services, systems integration, and managed services.
Have more financial modelling questions? Contact us
Created by ex-finance professionals
Hey, I’m Alex and I created Finamodel.
Over my years in the finance industry I kept building the same models over and over again. Same structure, same assumptions, different logo. So I started building frameworks to turn them into clean, reusable templates.
Every model here is one I’d actually use for a client, and I personally vet each one before it goes up.
I’m not an expert in every industry, but I’ve built enough models to know what belongs in one. And when something is completely foreign to me, I reach out to my network for experts to work on our models with us.
Having a template library on hand cuts a first build from hours to minutes.
Need help finding your model? You’ll find me in the Finamodel app!
Other Aerospace and Defence Company Financial Models
Browse another company in the same sector.
Boeing
The Boeing Company is a leading global aerospace firm that designs, manufactures, and services commercial airplanes, defence products, and space systems.
General Dynamics
General Dynamics is a global aerospace and defence company that provides business aviation, ship construction and repair, land combat vehicles, weapons systems, and technology products.
GE Aerospace
GE Aerospace is a global leader in the design, production, and maintenance of commercial and military aircraft engines and integrated systems.
Huntington Ingalls Industries
Huntington Ingalls Industries (HII) is the largest military shipbuilding company in the United States and a provider of professional services to government and industry partners.
Howmet Aerospace
Howmet Aerospace manufactures engineered metal products for the aerospace and commercial transportation industries.
L3Harris
L3Harris Technologies is an aerospace and defence technology innovator that provides mission-critical solutions across space, air, land, sea, and cyber domains.
Lockheed Martin
Lockheed Martin is a global security and aerospace company principally engaged in the research, design, development, manufacture, integration, and sustainment of advanced technology systems.
Northrop Grumman
Northrop Grumman is a top-tier global aerospace and defence technology company that provides advanced systems, products, and solutions to the US Department of Defense (DoD) and allied nations.
Explore more Manufacturing financial model templates.
