Defense contractor Leidos Holdings announced fourth-quarter earnings that failed to meet Wall Street revenue projections on February 17, attributing the shortfall to disruptions caused by last year’s extended federal government shutdown.
The historic six-week government closure, which concluded in November and marked the nation’s longest shutdown on record, significantly disrupted federal operations and negatively affected contractors like Leidos that deliver information technology, weapons systems, and various services to government agencies.
Following the earnings announcement, Leidos stock declined 1.6% during premarket trading sessions. The company provides air traffic control technology to the Federal Aviation Administration among its government contracts.
The shutdown’s ripple effects extended beyond Leidos, with defense contractor L3Harris Technologies reporting similar negative impacts last month, particularly affecting its space systems division.
For the fourth quarter, Leidos recorded $4.21 billion in revenue, representing a 3.6% decrease compared to the previous year and falling below analyst projections of $4.31 billion, based on LSEG data compilation.
The company’s performance was further hampered by a significant 9.3% decline in its health and civil division sales, which manages electronic health record systems for Department of Defense facilities and Veterans Affairs medical centers.
Despite revenue challenges, the Reston, Virginia-headquartered corporation exceeded profit expectations on an adjusted basis, reporting $2.76 per share compared to analyst estimates of $2.61. This earnings beat resulted from improved cost management and a 160-basis point improvement in adjusted core profit margins.
Looking ahead to 2026, Leidos projected adjusted earnings between $12.05 and $12.45 per share, with the midpoint falling 4 cents below analyst expectations of $12.29.
