Leidos Holdings, Inc.

U.S. GOVERNMENT MARKETS

During both the three and nine months ended October 3, 2025, and September 27, 2024, we generated approximately 87%, of total revenues from contracts with the U.S. government. Accordingly, our business performance is affected by the overall level of U.S. government spending, especially national security, homeland security and intelligence spending, and the alignment of our service and product offerings and capabilities with current and future budget priorities of the U.S. government.

On October 1, 2025, the federal government shutdown following the expiration of a continuing resolution. Congress is currently working to reopen the federal government and is engaged in ongoing negotiations. As a result of the government shutdown, we may experience reduced or delayed work on existing contracts and there may be delays in other government contracting actions and payments. Once the government reopens, Congress will resume consideration of the Fiscal Year 2026 appropriations bills, with the goal of completing them by the end of the current calendar year.

INTERNATIONAL MARKETS

Sales to customers in international markets represented approximately 8% of total revenues for both the three and nine months ended October 3, 2025, and September 27, 2024. Our international customers include foreign governments and their agencies. Our international business increases our exposure to international markets and the associated international regulatory, foreign currency exchange rate and geopolitical risks.

Changes in international trade policies, including higher tariffs on imported goods and materials, may increase the cost of certain goods necessary to fulfill our contractual requirements and for internal purposes. We expect to recover certain portions of the increase to the cost of goods through contractual measures. While we continue to evaluate the tariff environment and potential impacts of higher tariffs, we currently do not expect them to have a significant effect on our business.