Science Applications International Corporation (SAIC) Earnings Call Transcript & Summary

Again, thanks for joining us. I'm Jason Gursky, Citi's aerospace and defense analyst. I have the pleasure today of having Toni with me from SAIC, the CEO. We're going to go through a series of questions. I want to just drill this down. I'd like to start bigger picture strategic nature that we kind of drill down and then I went up to the floor for a few hard questions.

Sounded good. Sound okay.

Really, just talking a little bit about the soft stage, the Trump transition. Can you talk a little bit about how, from your perspective, this 1 has been different than things we've seen in the past and how the company is reacting to that?

Yes. So I was saying to you, Jason, of stage that if you've been in the government sector for more than a couple of decades, you've seen something akin to sort of the commercial push into government, what we saw commercial ready for government, probably 20-plus years ago, I remember this when OMB had a circular A76, which was most efficient organization and the government and private sector would literally compete over different functions across government, you'd have to determine what was inherently governmental and what the private sector could do. So having a commercial push into commercial tech efficiency is not necessarily new, but I think we all have to acknowledge the last 3, 4 weeks have been almost a day-to-day sort of compounding of different initiatives, different executive orders, different messaging around our government, the size of government, the shape of government, the priority of government and the role that the private sector can and should play. And so I do think this is unique in terms of the comprehensive nature of what's coming at the various agencies. And as a company that is distributed across all sectors of defense, intel and civilian, we are tracking as all agents, those all companies are, we are tracking. And some of these, quite frankly, we see both as risk and opportunity, and that's the conversation we have across our organization. We identify and manage the risk, but we also see opportunity because we see some transitions and pivots that we wanted to have happen as a sort of a tech we're introducing more commercial tech into what we do, we wanted to see some of these changes for a while. So where there's a downside, obviously, relative to the effect on our customers. I think our customers are feeling challenged. Our government customers are feeling sometimes almost targeted, some of them. There's a sense of their workforce, their legacy, their culture, sort of just their raise on data that, that feels a bit challenging and but there's a bit of baby with bathwater, like there's not a structured way that is happening where you can see some coherence and what constitutes sufficient, what constitutes inefficient. So we have that occurring, and that's also affecting all the folks who support those customers. We are also making sure that we're compliant with all of the executive orders that we understand the direction, but we're in some areas, just prepping to bring more and more tech and new sort of acquisition models and new business models to the forefront. So a little bit of both, tailor 2 cities that I would argue.

Yes. So you've been starting to see that... [Audio Gap]

To a different sort of contract for acquisition set-up. But we've seen sort of nominal impact at this point. If you moved on contract by contract, program by program, we have about just sub-20%, about 19% of our business sitting in civilian. We did a heavy look at the civilian business. If you look at where we're situated our footprint sits at state department at Treasury, at DHS, these are sort of durable, I would argue, fairly durable federal agencies that what we're doing there is not really be disrupted. And then we look across our DoD and intel business, and we've seen nominal disruption at this point. We are leaning in heavily with our customers to understand how we're feeling relative to budget and funding. They're obviously concerned about a shutdown. If that was to occur, they're concerned about a year-long CR. We all know what that means for new program starts, but to date, it's phenomenal in terms of actual impact on existing programs and/or -- and if you look at our -- we have -- as I said to the team, thank goodness, we built our strategy a year or 2 before. Like if -- when we plan them and started pivoting our portfolio towards more mission and enterprise IT, that pivot was based on what we knew would be sticky revenue, what would be super accretive and what would be purposeful and meaningful for the company. It just so happens that, that type of portfolio also plays well in this environment. So I'm pleased that we did the strategy last year and that we're actually just executing against it now.

Right. And you mentioned risks and opportunities in this environment. Opportunities sounds like moving a little bit more towards Trump fixed price on some of your construct. So that from your perspective, I'm guessing it's the potential for better margins, okay? Maybe talk a little bit about some of the risk because is it just program-by-program risk? Is that what you are referring to?

Yes, look, I think there's a couple of natures of risk that we would love to add. We'll always look at the programmatic areas where government is being reduced. Employees are being -- federal employees are being let go and whether we have a contractual fundamental contracts that either go away or that are consolidated. And so we look at that type of contract list. We look at programmatic risk that says we're not going to build new into areas that we are positioned. So where are we positioned where perhaps the priorities are shifting? And so we would look at that as a programmatic risk versus a specific contract risk. And then strategically, we want to make sure we don't get into a binary conversation around new tech, old tech, new DIB, old DIB, when I say DIB, it's the defense industrial base. We kind of sit right here at the end of the section. We're not in time. We're not necessarily a manufacturer or asset light. We're an integrator in many ways, while, of course, we have competitors, we partner with almost everybody we compete with as well. And we've been integrating tech from new players. We sit with the Plantaris and already in the way that we go to market on mission IT. So one of the risks would be if we start to create sort of a new set aside type new set that says we're only going for new tech and all the real tech, it doesn't really make sense for the overall vision. We can't build enough new tech to address the adverse areas we have. We've got to modernize some existing. And we're probably positioned pretty well on both sides of the equation. So the idea of having [indiscernible] as broad as possible with legislation executive orders with the DOJ's reviews that we can constantly look at how do we introduce new, how does it integrate with existing and/or legacy and by the way, how does it speak to our allied partners, which is probably the major challenge that we have right now in National Security.

In your conversations with the new administration and leaders inside the building because we were just talking about stage that we're probably more towards the readiness focus at this point, and yet we've got all of this kind of going on in the background. Is it your sense that the new administration understands that readiness?

I think there's -- when we talk about readiness, we're talking about inspecific regions like the Indo-Pacific where we're within a 24-month readiness window of what is at least has been filling the great power competition or a real sense of conflict in the island chain areas of the Indo-Pacific region. And when you engage with INDOPACOM and Admiral Paparo and those leaders, something happens when the military gets within about 24 months. You start to get into trainings and exercises that are actually now starting to simulate and model what we think to be the tactical worldwide arena. And I think there is a sense of concern and acknowledgment of a very unique adversary. I don't think anyone is questioned, I think even President Trump has come out to talk about that adversary. So I think that's important. We've been consistent same -- with same adversary for the last 4 administrations. So I think that's been consistent and durable. I think there is an understanding with the new sec depth and some of these initial statements are the important of the Combatant -- the importance of the Combatant Commands and those that are doing tactical world fighting and making sure they are funded. I think there's even an appreciation of bringing the very best tech, not only on the defense industrial base, the entire U.S. industrial base through the fight. All of those are great signals from our perspective because as an integrator, our goal is to ensure that commercial providers, whether they're new tech, defense tech entrants or little part of our industrial base that they are building in a manner that we can integrate quickly. Because at the end of the day, it isn't just about bringing great tech, it almost doesn't matter how good the tech is. If it doesn't integrate a mission environment, if it doesn't connect with coalition or allied partners, none of our fights are solo fights at this point. If it doesn't operate at a data layer, if it doesn't operate at a network layer, this is the work that we do. It's sort of a maybe behind the scenes work of mission integration, which has gone beyond sort of system integration or system of system integration. We're at a new level of how to integrate with global conflict. And I think there is an appreciation that something is needed. I don't know if we always have taxonomy for what it is, but there's a sense that we want great commercial tech. We need to work that the other side will say, we love great commercial tech. It actually has to work in this environment after integrate with some legacy, some allied partners, and quite frankly, it even has to integrate across itself, whether it's a start-up or a hyperscaler, it's all got to integrate. So we see that as trade space for a company like SAIC.

Right. You mentioned partners and allies, a lot of news out over the weekend. The last 4 days have been pretty remarkable. The United States seems to be -- I don't want to say stepping away from here, but maybe putting more onus on our European allies in heading in prior to the Ukranian conflict, Europeans were importing roughly 60% of their kit. And during the last few years, it's been closer to 80%. And again, we focused, of course, on building out an industrial base in that region of the world. But maybe you can just talk a little bit about what, if any, exposure the company has today in Europe and whether you think that has an opportunity to grow in the future. Are there any roadblocks today that you'd like to see cleared out of the way that would enable you to more ultimately address that market?

Well, look, first it's, again, our footprint and the European region is nominal relative to the rest of the work that we have. And we had already started to pivot towards the Indo-Pacific region as a function of high demand signal for what we call C5ISR or certain types of counter -- sorry, a command and control -- modernized command and control capability. In fact, we learned a lot in our support for some of the conflict that happened. In fact, what's interesting and what I think is a great signal is the desire to take the learnings from the Ukraine and the Gaza sort of interactions and apply to this other region. And so one of the learnings as we speak to sort of the integration story back to that so at the Ukraine war, one of the roles that we played in support of that was to take basically off-the-shelf handheld devices, integrate with drones that were being created by federal -- large sort of traditional federal contract that take commercial telco system take, a missile system created by another integrate that and get that in support of the Ukrainians in less than 3 weeks. And I say that as an example because that's what's fueling this integration conversation that's happening in the Indo-Pacific. And so, for us, it -- we will follow our customer type. We don't have a global expansion or go-to-market strategy at this point. It is primarily outside of FMS, or Foreign Military Sales work. It is follow our customer. But what we're learning from the European example, particularly from what's heard in Ukraine, that's actually being applied in battle management in the Air Force, in the Combatant Commands. And now we're starting to see that in the space for us. So we're kind of pleased to see that there's some lessons learned that are being applied.

Okay. So you have nicely segued into the next part of the region of the world, into the Indo-Pacific. So we're deemphasizing Europe, more emphasis in the Indo-Pacific, follow your customer. It sounds like readiness as part of that. Is that going to be the biggest growth area because we've got deemphasizing Europe, INDOPACOM and protecting the homeland? So maybe talk a little bit about how you see the emphasis at SAIC over the next few years, but what will you all do to protect the homeland, what are you all going to do to help us in the INDOPACOM?

Yes. So on the INDOPACOM side, we are driving on more of the, I would say, the data integration layer and support battle management systems for the Air Force or the Combatant Commands and moving into Space Force that battle management system. And all of that is coming to 4 quick programs, so I don't want to get too acronym-heavy here. But with programs where we are positioned with what's called a joint fires network with Palantir positioned with Cloud Based C2, which is the integration of the -- with NORAD, the integration of all centers and data in protecting our air traffic with our Canadian neighbors. And so we've got this sort of interesting mission-critical support. We're doing all the training exercises in INDOPACOM that's SAIC is behind that. So when I talk about we're in training mode, I'm saying that with a point of being in the inner circle there, and immersive training for that part of the world. So most of our mission IT, we divide our portfolio in 4 areas. We have engineering. We had sort of our professional services. We've been slightly deemphasizing those as we drive towards mission IT and enterprise IT. Enterprise IT being the IT for the CIO of the back-office. Mission IT, being IT solutions directly for the mission or program, which you think about INDOPAC, we're in mission IT, heavily into the actual mission IT. When we talk about securing sort of from an Iron Dome perspective, I'm just going to build there for a minute because I know it's topical. Iron Dome by definition, is an integration project. At the end of the day, it is the integration of we've been collecting space sensor data around sensor data, our allied partners collect data. We've got data from every sort of center sensor spot around the United States and our partners and yet, without the integration of that day, Iron Dome doesn't happen without. It's a fundamental science project for integration and integration of not just data, but secure data at every level of security across multiple countries. So it's the ultimate multi-varied equation that has to be solved with a sort of a regression analysis, and that's where we feel like we're positioned to support because of the work we do in Space Force, the work that we do with the Air Force and Combatant Commands. If I flip the script and talk about we also are the provider, the integration provider at the southern border with meaning we define ourselves in terms of our durable position in 5 national imperatives, one being all domain war fighting, which shows up in the Indo-Pacific. All of the investments, the ecosystem, we have hundreds of partners that we use in different technologies from garage startup to hyperscalers like Microsoft, Google and AWS, but we do that by sort of a national imperative. So all the main war fighting, we've got an ecosystem. We're building there, and we see dominance because we build Mark 48 torpedoes and we are investing in our venture business into more and more undersea autonomous capability for the navy. We have a border security national imperative, which is about how do we integrate across all of the sensor points and assist the operators and agents at the border. And then we have one relative to next generation space, which is how to modernize ground-based space systems and are we bringing back to the tactical war fight that we believe will happen in 2027. And then we've got on, frankly, around just the citizen experience and getting more digital into -- that's where our IRS work and our tax work and -- I'm sorry, and our treasury work and our work with state departments, all around that citizen experience. And so, when you think about where we're focused, we're focused on building sort of innovation ecosystems for each of those, where we're growing fastest probably right now is in the areas where we're bringing more mission IT and the enterprise IT is getting super-efficient. The cloud that we do is where we're getting our greatest efficiency.

You mentioned joint all domain operations a few times here, and then you also mentioned ABMS, I'm guessing is what you're referring to, the Air Force Battle Management System. And there was project overmatch and there was others, right? So I might be a little bit dated and maybe some others in the room are as well. How are we on the evolution of these things. Is one of these systems kind of won out and is going to be the system for all the joint operations?

I would say within the next few months, you'll hear some announcements about programs of record. I'm not in a position to share that at this point, but I would say that there is a clear understanding and signal from both the Combatant Commands side and the services that we need integrated capability as programs of record. And I think you will start to see not only that how ABMS works within the Air Force, lots how Space Force is looking at the Air Force for battle management systems even in the Space Force arena, which we feel like we're very well positioned for as well. The program of record is all of our -- and our competitors, we're all trying to provide, I would argue some kind of common operating picture. We're starting to move some on an operating picture, which there are too many of them right now for the military to action manage to what we'll call a user-defined operating picture, will you get to gray out the sort of the larger picture and the user gets to define their path and that's important for war fighters that they are coming into true tactical environments. That move is actually lined up with a lot of the investments that we're making in our innovation factory. So I think we'll see the sort of evolution of what we've been talking about the last few months over the next -- for the last few years over the next few months and announcements.

Okay. So we talked a little bit about not all that much exposure in Europe, more mission-focused in the INDOPACOM. You mentioned Iron, just talk a little bit more about the Finland, if you don't mind. You mentioned the border, which is interesting. But from your perspective, mean maybe educate all of us, why do we need an Iron Dome in the United States? And how is it your company is going to play in that if it actually goes forward?

So I'll take the latter and not maybe jump on that former question. Why do we need an Iron Dome. Look, I mean, I want to see the ability for missile detection, tracking defense of our aerospace. I think there's an intuitive answer that says obviously, for the protection of the footprint of the United States, there is some desire and possible expectation that the same way we look at border security, we might look at air space and sort of the space frontier in terms of and tested environments over the United States. And so there's always been a conversation about having secure U.S. airspace. That's not a new thing. I think after 9/11, we all had kind of an Iron Dome like big conversation about what that looks like. The technology has evolved to a level of now that we are not only with exquisite satellite capability, but also production satellite, no earth orbiting, near earth orbiting. We have the ability to bring sort of space, some of the work we do in our intelligence world through NRO and other organizations. We have the ability to integrate that and see and understand what securing that space looks like. So is it a possibility now given some of the tech? Absolutely. Should we do it? I leave that to the political advisers as to -- and let's not get to. We're -- we don't want to sound by that just says Iron Dome does some kind of unique silver bullet to protect the United States. I mean that's -- that would be a reckless statement if you look at how regional conflict occurs and how the U.S. deploys this military. But if we are going to leverage that technology, we happen to be sitting in ground-based modernization with our DTAMM folks, some of the programs that you've heard that we won over the last couple of years within Space Force, we happen to be sitting with one of the fully integrated, one of the first fully interoperable battle management systems within the Air Force and a Cloud Based C2 battle management system. We happen to sit with the Joint Fires Network, which is commercially one of the most state-of-the-art fires network that has proven in a mission environment. So when you start to integrate where we're sitting and at the border, we're in the room having the conversations about what that would look like. And that's where I will leave it at this point is that you want integrators in that room. You still want the best tech, you want those who build, but you definitely want an integration because at the end of the day, we can have a lot of shiny objects. But calling themselves Iron Dome. It won't drive an outcome unless all of this is integrated. Again, it's one of the most sophisticated algorithms I've seen in my professional career to get this to work.

Yes. Yes. Okay. Just let me segue into you my next line of question. And by the way, in about 5 minutes or so, I'll go to the floor to see if there aren't any questions. So get your brain and going there. The evolving, you mentioned, defense tech a number of times or kind of new players, right? The echo system, so I want to maybe just talk about that for a few minutes. Get your take on -- would it become dozens, it seems like at this point, right? VC-backed companies. You mentioned your venture arm as well in placing some investments there. How do you see this ecosystem evolving? Are these competitive threats? Are they partners? Are they potential acquisitions down the road for you? I'm just kind of curious like if you think about telecom going back in the day, a lot of the C-backed companies got started with the goal of getting sold to Cisco, right? We're going to see a bunch of consolidation in which investors consider that as a part of your R&D budget. I'm just kind of curious how...

I had the opportunity to sit with the Silicon Valley Group. It's a defense group down at the Reagan National Defense Forum dealer, where we were down there, maybe some of you all were part of that conversation. I found probably -- and I was -- look, I'm coming out of 7 years at Microsoft of pushing into this very industry. So in some ways, for me, this is a little bit of back to -- kind of back in the family reunions of connecting back with a lot of providers, whether they be hyperscalers or move defense tech entrants, a lot of the PE world trying to understand kind of bring more capital to this and not to be structurally rocked by government acquisition and the processes that exist. And I will say are we competitive? Or are we partnering? I would say, in most places, we're partnering. There are some competitive strengths. But generally, we're partnering and we partner best as an integrator when those providers bring when -- when they grow with open architectures like a modular -- modular open system architecture, that's what allows for the plug and play that is the speed that is needed right now in terms of speed emission and quite frankly, the cost reduction, so you're not really these exquisite things and then trying to glue them together. So building towards an open architecture is the conversation that we have with them, less about are we competing for the work was more how would we integrate you into the work. The other conversation that we talked about is, as we bring more and more commercial tech, we've got to be careful to not overload the smaller businesses, some of the startups that are very, very good at a unique capability. And sometimes by trying to introduce them into a larger part of the ecosystem, you talk of them over. And so we have to be a little bit careful there. We talked about it, if you think about even the Tesla model, I go back when I was at Microsoft Tesla, was one of my customers in the automotive side. And what we thought was -- what was so cool at that time back in the 2014, 2015 range was this building there about in an open source. Well, that the whole battery component being open source, we would suggest that the more commercial tech you bring, the more you've got to set requirements for open source because this has to be able to integrate in legacy environments and allied partner environments. And so, that's the conversation we're having on sort of setting standards, the recommendations when we're trying to lean into new legislation. As you know, this is coming around acquisition reform when we lean in with the DOJ operation, it isn't -- don't bring commercial tech. It is waiver to a standard, so it can integrate. That's almost the whole conversation we have. And that has not been received in a negative way because we've already been partnering with them. Now, look at the valuations, I'm not sure how anybody sees that in an M&A environment at this point. The valuations are somewhat mind boggling for some of us. But I will say that -- what I do see is venture activity picking up. We're picking up our velocity and there's a lot more venture activity. We've always been involved, but we just announced [indiscernible], which is undersea, autonomous, age, we've started Zero Trust capabilities even venturing on secured facilities, which are going to be needed more and more and new models are on building in sort of secure scripts, what we call them. So more venture, I don't see because of the gaps on the valuation major consolidations on the M&A front right now. I think there's everyone sort of watching to see who ends up what roles, how much more of the market or the TAM is introduced to these new defense entrants. What happens when they're there? Have we created new primes? Like are they vertically integrated and super proprietary? Are we open and operating across an ecosystem because can have an old prime, can they have a new prime, that technology is stack in some ways. And so what we're hoping for and leaning in on is less on the M&A side, we've got a pretty clear strategy on our M&A. But I would say, as I look at the market, you're going to see a broader, I think, a broader revenue opportunity for some of these defense -- new defense entrants, new defense tech entrants, and you're going to see integrators like ourself, pushing for standards, heavy standards on how they build. So they can integrate quickly.

Right. And so your venture investments to date have been focused on companies that you are partnering with? Is that a fair statement?

Yes.

Yes. Okay. Okay. Great. I'm going to open it up to the floor here in just a second, I want to ask one last chat question before doing so because we're asking the same question of every company there, and it's not just to any company, it's AMD company it's every company that's here this week. So it's a little generic in nature. But if you could talk about 2 or 3 innovations or structural changes that you think are affecting the company and the industry and how you think that for the next 5 years or so?

Yes. So we run an innovation factory, I've talked about it before where we sort of incubate capability, we do some of our longer-term Horizon 2, Horizon 3 investments into an innovation factory to support deploy out to the rest of the field teams. And in that innovation factor, we've been talking about sort of the rise of edge computing convergence of AI with digital engineering. We're starting to see convergence AI, not as a stand-alone, but AI converged. We looked at adversarial AI, AI used encounter adversarial solutions and capabilities. And we see those as kind of, obviously, natural language. I think everyone is probably speaking of natural language. But beyond that, we see the sort of AI convergence that's occurring in edge computing has a long arc for us all the way into, I would say, Horizon 3. We also see, and I think everyone wants to see some aspect of chip integration, which has to occur to underpin some of the infusion of tech into hardware is going to require more and more integration on that front. So we've got some Horizon 2, Horizon 3 technologies that we're tucking in. We talked about tuck-ins as our focus over the next couple of years of tucking in to our portfolio, things that harden our differentiation, but also set us up for Horizon 2, Horizon 3 and venturing is another way that we get there. Structurally, we're also preparing an almost program by program, the opportunities to change, I would say, into more commercial model. So where we do enterprise IT and we're doing everything from help desk network to cloud, can we flip that to an ITO or an IT outsourcing as we move more in a fixed price way, move more of the risk and opportunity to ourselves and look at a more commercial model, where we do advisory can we do or even sort of staff augmentation support? Could we do business process outsourcing, sort of more of a commercial model? So we're going through and looking at our entire portfolio to say, in a commercially friendly environment, where can we flip some of the work that we currently have into different contract structures, fixed price, ITO, BPO, these types of commercial models. And we feel good about that because majority of our commercial models, our fixed price model it and our civilian business. And it's doing very well. We do very well on that. And quite frankly, it's having a phenomenal year this year on the civilian side. So we feel comfortable that we go on -- we're not waiting for those review, we're proactively speaking to our customers about those opportunities. So I think what you're going to see -- and then the last piece I'll say, and the company is probably doing the same. In addition to highlighting differentiation in our portfolio and looking at contract opportunities to shift towards a more commercial model, the third piece of that will always be making sure that we deliver super well in this current environment. So we've tightened up that delivery in our enterprise operating model to ensure that we are watching the delivery because this is going to be a tough environment for our customers, as you know. And so I feel pretty good about where we are positioned. Like, I said, I'm glad, we built strategy 18 months ago and that we're already into execution phase. We're measuring, I'm looking at our -- I'm glad that we have the largest award -- pending award backlog that we've ever had, something I think we've talked to you about $19 billion, but as we look at even just for the first half of next year, more than half of that we see is in our first half of being awarded and adjudicated. And so we're not overly concerned that we can't reach sort of the growth expectations that we've shared with the Street based on what we have in place.

Okay. Great. Let's spend and open up to the floor to see if anybody has a question. Yes. Okay. You talk about pipeline adjudication, which brings me maybe to DOJ. And what kinds of recommendations would you make to DOJ, if you had their -- it's one of the things we've heard from some other CEOs. I'm sure, like the CEO, you only get a 3-week protest here something like, I'm just speaking because I know it's been a big issue here.

No, no, absolutely. Look, we're actually aligning on a lot of the acquisition reforms that have come forward. I mean other companies have spoken and these are not new for anybody who's been as interested. We've been talking about changing the way protest, the protocol around protest putting more onus on the protester. Absolutely. This protest has become a strategy for many companies. It's no longer what it was intended to be. We talk about the desire to get to a fixed price and more fixed price, the desire and where we lean in specifically is really in a couple of areas, and we are having these conversations and that is not only at the OMB or the DOJ, but also on the hill because the hill is still a player here. They've got some interesting pending legislation, as you know, that we're leaning into and trying to influence as well. We will talk about getting the outcome-based contracts. Those who've been in this industry know that this has been a perennial conversation by getting the better outcome-base contracts, where the outcome was defined and we have the opportunity to arrive at that outcome with a lot more flexibility as a commercial provider, particularly if we're taking on more risk and give us more flexibility on how to get to that out there. You'll hear us talking about mission integration as a directed procurement. So every time you have a mission-critical program being launched, whether it's new or you're modernizing through a sustainment contract, we are going -- we are pushing that there should be a direct procurement of scope on integration, that technology and missions that are being implemented without an integration scope are at risk. They're at risk for national security. They are at risk for global ability to deploy. And so we're going to be pushing for directed procurement on that. We're also pushing for standards, as I've mentioned, I'll call them sort of Tesla like open-source standards for those who are building and delivering capability, particularly commercial tech through the Department of Defense or any part of the government, you've got to have some part of that solution open source and able to be integrated. So we're writing those types of standards and pushing that into the acquisition conversation.

Okay. Great. We got one minute left. So I'm going to let you react to just a big picture, open-ended question, drop the mic we have the stage kind of question.

It's hard to talk about that and have a drop.

We've got -- and this is what I got. Can you just describe from your perspective? We're excited about -- why kind of give us the big picture investment thesis later the next 6 months, 12 months, 18 months, what's exciting for you?

Well, I've been in the seat for now 16, 17 months. And a lot of excitement I felt when I came into the seat, I feel like we built a strategy to pivot our portfolio. I came in about half of our portfolio was sitting in the enterprise mission IT space. When I look at our pipeline over the next few years, that's moving to about 2/3 of our portfolio. So we're excited about we'll pivot to enterprise and mission IT, not only because of what it means on the financial P&L side, but also what it means in SAIC sort of recovering its brand as a true mission integrator. I feel like we're, in some ways, creating a new category in this market that we have words that don't -- we don't find out the taxonomy yet for what all the things that we do. And if we bring that together, I'm excited about creating the category because I do believe it is the next -- it's the next wave of innovation that has not yet been clearly defined of what really occurs in terms of mission integration that requires expertise and experience and an ecosystem of partners. I'm actually excited about seeing more commercial tech entrants because when you're an integrator, the ability to have more, pull from more capability is actually fairly exciting on the supply-demand curve. And I would say the company, I have not worked for a company that -- and maybe it's a Noridian company, I don't know, but it came in and we laid out the strategy and maybe it's the number of veterans we have or those were clearances, but everyone really just snapped. I mean we're up tempo, we're shifting. We see -- again, we've had some first, if you will, as a company, obviously, we had some first in our stock price, and then there was a pretty heavy reaction to DOJ, but I do believe that will settle out, got to a stock high of 10-year stock high in the first year, and I felt like we were just humming. And I look at this pending award backlog, and I'm not just excited by the number. I'm excited that, that's a balance that we compete. And when I think I heard, we compete every other sentence when I joined, we came in with 12 points of headwind into this year. We're going into next year with half of that on headwind, still like that's starting to work itself out. And I'm excited about the kind of work that we're doing, not only this is sticky revenue and it's super accretive, but I'm excited about SAIC, quite frankly, being in the room where it happens, if I could use a Hamilton quote. So I -- look, it's -- there's a lot of disruption right now. You're probably seeing as a military brand and a former Microsoft person, I'm fairly intractable about all of this. I think this is going to go up and down. I'm not going to be reckless and say we're not recking it up. I had no hubris around, this isn't going to affect us, of course not. But we are actually positioned. And the note I said to everybody -- to everybody in the company at the year was, this is our time. And I know that's hard to believe with how there are some reactions, but the underpinning of this company, we're getting more -- we're getting solid on our top line. We see the accretive and the underlying, this base of the company is improving in almost every element. We're bidding more than we did. We're bidding more accretively. We're winning in new space. We're not losing on technical. When we win, we hear about our technical solution when we lose, we still hear about our technical solutions. So I feel pretty good about the portfolio and the things that we said we would do. And I think the future is pretty bright.

Awesome. Thank you very much. That was great.

Thank you, everybody, for hanging on.