Leidos Holdings, Inc. (LDOS): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed view of Leidos Holdings, Inc.'s (LDOS) portfolio, and the BCG Matrix is defintely the right tool to map their strategic focus and capital allocation needs. Honestly, looking at their late 2025 positioning, we see major bets in high-growth areas like Hypersonics and AI that need fuel, balanced by the steady, massive revenue from core DoD IT and the MHS GENESIS contract acting as reliable Cash Cows. The real question is how management navigates the emerging space tech Question Marks while trimming those legacy Dogs-that mix tells us exactly where the next few years of capital will flow for Leidos Holdings, Inc.

Background of Leidos Holdings, Inc. (LDOS)

You're looking at Leidos Holdings, Inc. (LDOS), a major player in the defense, aviation, information technology, and biomedical research spaces. Headquartered in Reston, Virginia, Leidos Holdings, Inc. employs about 47,000 people globally, serving primarily government and commercial clients. To give you a sense of scale, the company reported annual revenues of approximately $16.7 billion for the fiscal year that ended in January 2025.

Let's look at the most recent numbers we have, which come from their third quarter of fiscal year 2025 results, reported in early November 2025. Leidos Holdings, Inc. posted record revenues of $4.5 billion for that quarter, marking a 7% increase year-over-year, with 6% of that growth coming organically. Net income for the quarter hit $369 million, translating to $2.82 per diluted share. Honestly, the operational discipline is showing; the Adjusted EBITDA margin for Q3 2025 was 13.8%.

So far in 2025, up through Q3, Leidos Holdings, Inc. has grown revenue by 5%, EBITDA by 13%, and Earnings Per Share (EPS) by 18%. This strong execution allowed management to raise their full-year 2025 guidance for the second time, now projecting revenues between $17.00 billion and $17.25 billion and an Adjusted EBITDA Margin in the high 13% range. That's a solid signal of confidence from the top.

The company's future work is heavily supported by its backlog, which stood at $47.7 billion at the end of Q3 2025, with $9.1 billion of that being funded-that funded portion was up 27% sequentially. Furthermore, the book-to-bill ratio for the quarter was 1.3, meaning they booked more new business than they delivered in revenue. This momentum is tied to their NorthStar 2030 strategy, which focuses on five key growth pillars: Space and Maritime, Energy Infrastructure, Digital Modernization and Cyber, Mission Software, and Managed Health Services.

When we break down the Q3 2025 revenue growth by segment, we see strong performance across the board: Defense Systems revenues rose 11%, National Security & Digital was up 8%, and Health & Civil grew by 6%. Key areas driving this include air traffic control modernization, border security, and maritime autonomy solutions, plus their proprietary AI-powered Skywire platform in the energy segment, which is reportedly cutting project costs by 30% for major utilities.

Leidos Holdings, Inc. (LDOS) - BCG Matrix: Stars

You're looking at the areas where Leidos Holdings, Inc. is putting its capital to work, the segments that are growing fast and commanding significant market presence. These are the Stars of the portfolio, demanding investment to maintain their leadership as the market expands.

The overall company performance in the third quarter of fiscal year 2025 shows this momentum clearly. Total revenue hit $4.5 billion, marking a 7% year-over-year increase, and the total backlog stood at $47.7 billion, which is up 5% compared to the prior year. The book-to-bill ratio for Q3 2025 was 1.3, showing strong forward momentum from new awards totaling $5.9 billion.

Here's a quick look at how the key growth areas are performing based on recent segment results and notable contract activity:

The growth in these specific areas is what fuels the overall strength. For instance, the Defense Systems segment saw its revenues climb 7% in Q1 2025, directly citing increased volumes in hypersonics and space sensing programs. This suggests that investment in these high-priority defense technologies is translating directly to the top line.

The push into advanced technology is evident through strategic spending and contract wins:

• The Defense Systems segment revenue growth in Q3 2025 was 11% year-over-year.
• Leidos secured a $540 million contract in Q3 2025 for AI-enabled counterterrorism software.
• The company accelerated its AI-enabled cyber capabilities with the May 2025 acquisition of Kudu Dynamics for $291 million (net of cash acquired).
• A January 2025 prime contract was awarded for Key Management Architecture & Engineering and Cyber Security Engineering Support Services valued up to $120 million.
• The company is using its Trusted Mission AI expertise on an $8.8 million DARPA contract awarded in March 2025.

Sustaining success here means continuing to invest heavily; these Stars consume cash to maintain their leading positions in markets that are expanding rapidly, like the defense and intelligence spending environment you're tracking. If Leidos Holdings, Inc. maintains this market share as the growth rate naturally slows, these will transition into the Cash Cows you'll analyze next.

Leidos Holdings, Inc. (LDOS) - BCG Matrix: Cash Cows

You're looking at the bedrock of Leidos Holdings, Inc.'s financial stability, the business units that generate more cash than they consume, allowing the company to fund riskier ventures. These Cash Cows operate in mature markets where Leidos has already secured a dominant position, meaning the heavy investment phase is over.

The overall financial performance in fiscal year 2024 demonstrated this strength, with total revenues reaching $16.7 billion and cash flows from operations hitting $1.4 billion for the year. For fiscal year 2025, Leidos Holdings, Inc. projects revenues between $16.9 billion and $17.3 billion, with operating cash flows expected around $1.45 billion, showing a consistent, predictable cash-generating engine.

The primary Cash Cow candidates are those segments delivering high profitability from established, long-term government contracts.

Core Defense IT and logistics support contracts with long-term, stable funding from the DoD form a significant portion of this stable base. The National Security & Digital segment, for instance, generated $7.37 billion in fiscal year 2024 revenue, representing 2% growth year-over-year, while maintaining a non-GAAP operating margin of 10.2% for the full year.

Established, large-scale Health segment programs, such as the Military Health System (MHS) GENESIS contract work, are clear cash generators. The Health & Civil segment posted $5.02 billion in fiscal year 2024 revenue, an 18% climb, and achieved a non-GAAP operating margin of 22.5% for the year. This high margin on a large revenue base is the hallmark of a successful Cash Cow.

Civil segment work, including air traffic management systems requiring mandatory, recurring maintenance and upgrades, contributes to this stability. While reported under Health & Civil, the nature of these long-term, recurring government service contracts ensures steady revenue streams, even if growth is modest compared to new business wins.

This stability translates into tangible shareholder returns. Leidos Holdings, Inc. declared a cash dividend of $0.40 per share in February 2025, payable in March 2025, demonstrating the commitment to returning cash from these reliable operations.

Here's a quick look at the financial scale supporting these Cash Cow activities as of the end of fiscal year 2024:

Steady, high-margin revenue from legacy, mission-critical systems integration and maintenance services underpins the entire quadrant. These units require minimal new market development spending, allowing Leidos Holdings, Inc. to focus investment dollars elsewhere, like on Question Marks. The company's total backlog at the end of fiscal year 2024 stood at $43.6 billion, providing excellent visibility into future cash flows.

The key characteristics of these Cash Cow units are:

• Core Defense IT and logistics support contracts provide long-term, stable funding.
• Health & Civil segment delivered $5.02 billion in FY 2024 revenue.
• High non-GAAP operating margin of 22.5% in Health & Civil for FY 2024.
• National Security & Digital revenue was $7.37 billion in FY 2024.
• The business generates substantial cash to cover corporate overhead and debt service.
• Dividend payments are supported by this reliable cash generation, with a recent declaration of $0.40 per share.

You want to maintain productivity here, not necessarily chase aggressive growth. Finance: draft 13-week cash view by Friday.

Leidos Holdings, Inc. (LDOS) - BCG Matrix: Dogs

Dogs are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

The identification of Dogs within Leidos Holdings, Inc. centers on assets or contracts that management has actively pruned or those vulnerable to external efficiency mandates, signaling low strategic priority or insufficient market share within Leidos's core growth narrative.

Certain legacy, non-strategic IT infrastructure management contracts with low renewal growth potential are represented by specific contract reviews impacting the business.

• Contracts terminated by the Department of Government Efficiency (DOGE) as of May 2025 totaled $56.5 million.
• Losses on service, mapping, integration, and transport services related to the NGEN program were less than $2 million.

Small, non-core commercial business lines that lack significant scale or competitive advantage are evidenced by portfolio refinement activities.

Outdated or non-differentiated software and hardware products facing commoditization and high competition are indicated by strategic decisions to exit certain contract pursuits.

• Decision made not to pursue the recompete of the Antarctica contract with the National Science Foundation.

Business units with minimal cross-segment synergy and declining government spending focus are those outside the NorthStar 2030 growth pillars. The overall FY2025 revenue guidance range is $16.9 billion to $17.3 billion. The Q3 2025 revenue was $4.5 billion.

Leidos Holdings, Inc. (LDOS) - BCG Matrix: Question Marks

Question Marks represent business units or offerings within Leidos Holdings, Inc. (LDOS) that operate in high-growth markets but currently hold a relatively low market share. These areas require significant cash investment to capture market position, with the potential to become Stars or, if investment fails, Dogs. You're looking at where the company is placing its bets for future growth outside its established government core.

The overall company performance in 2025 shows strong momentum, with Leidos Holdings, Inc. raising its full-year revenue guidance to between $17 billion and $17.25 billion. For the third quarter of fiscal year 2025, revenues hit $4.5 billion, a 7% increase year-over-year, and the funded backlog stood at $9.1 billion out of a total backlog of $47.7 billion. Still, specific, newer ventures consume cash while their revenue contribution remains small relative to the whole.

International Expansion Initiatives

While management expressed being 'very bullish about growing our Australia and the U.K. business,' the segment's current financial contribution suggests it is still in a nascent stage compared to the core U.S. defense business. The Commercial & International segment reported revenues of $566 million in the second quarter of 2025, representing only a 1% increase year-over-year for that period, though Q1 saw a stronger 12% increase to $568 million. These international efforts, especially outside the core US/UK/Australia defense sphere, are the cash-consuming, low-share plays that fit this quadrant.

• Commercial & International Q2 2025 Revenue: $566 million.
• Q2 Year-over-Year Revenue Growth: 1%.
• Q1 Year-over-Year Revenue Growth: 12%.

New Commercial Cybersecurity Offerings

Leidos Holdings, Inc. is actively investing to compete in the commercial cybersecurity space against specialized firms, evidenced by strategic acquisitions aimed at bolstering this growth pillar. The company agreed to acquire a firm building offensive and defensive cyber platforms for approximately $300 million in the first quarter of 2025, with an expected close in the second quarter of 2025. This investment targets a pipeline of pure cyber opportunities estimated at $15 billion, indicating the market is high-growth, but Leidos' current share within that specific commercial segment is likely low.

The company is clearly putting capital to work here, as seen in the investment activities. For instance, in Q2 2025, investing activities included the acquisition of Kudu Dynamics for a preliminary purchase consideration of $291 million, net of $29 million cash acquired, specifically to accelerate AI-enabled cyber capabilities.

Investments in Emerging Space Technologies

Space and Maritime is explicitly named as one of the five NorthStar 2030 growth pillars, signaling high expected growth. Leidos Holdings, Inc. is a key player in the Space Force's National Security Space Launch program, which promises multiyear contract opportunities. However, the revenue contribution from these newer, emerging space data processing and technology areas is not yet large enough to classify the entire pillar as a Star, making it a Question Mark requiring sustained investment to scale market penetration.

New, Unproven Technology Ventures

The strategy involves accelerating progress across growth pillars through differentiated investments in technology, which inherently includes ventures that are unproven in securing large-scale revenue yet. The Kudu Dynamics acquisition for $291 million in Q2 2025 is a prime example of investing heavily in a specific, advanced capability (AI-enabled cyber) before it translates into dominant market share. These ventures consume cash-for example, Q2 2025 saw $314 million used in investing activities-to mature the technology until it can secure major, revenue-generating government contracts, which is the path to becoming a Star.