Leidos unveils 'small investment fund' to shape its vision

For whatever Leidos' new North Star will look like, artificial intelligence and what the company calls "trusted mission AI" solutions will be a cornerstone of that strategy and vision.

That becomes apparent when considering Leidos hosted a full-day session earlier this year for investors to talk all about trusted mission AI.

Chief executive Tom Bell often refers to trusted mission AI as one of Leidos' "Golden Bolts" in technology offerings that it can create repeatable solutions and business models out of.

He did so again during Leidos' second quarter earnings call with investors and also explained why the company hosted the earlier AI event, which was not webcast but still worth noting that it happened.

"We think it is a compelling technological unlock for the futures our customers are facing across all the markets that we serve," Bell told analysts. "We're going to continue to look for those areas of white space that are adjacent to the current businesses we're in for investment."

Reston, Virginia-headquartered Leidos leans into the search for opportunity as it reviews its overall portfolio of investments and businesses, not just in AI.

To aid in that process, Leidos has stood up what Bell called a "small investment fund" aimed at getting ideas from across the company. Those ideas and any successes or failures from them will feed into Leidos' next strategy and North Star vision.

"These are areas that we are going to be investing in, in the future," Bell said. "Although we're not going to articulate it, we're putting seed corn out there now in those areas, so that we're not waiting for the whole process to be done, to do the obvious compelling things we want to do to affect our future here."

However and whatever that looks like, Bell told analysts to not think of it as a 90-degree pivot or 180-degree pivot for Leidos. The idea is to be variations on the core of what Leidos already does.

"We're going to really be focused on repeatable business models, we're going to really focus on speed," Bell said. "We know that our customers are very concerned with speed, but they're concerned also that the people they hitch their wagons to have to have the scale to solve complex problems differentially."

With AI being a cornerstone for Leidos, the company also announced Tuesday its promotion of two-decade company veteran Ron Keesing to the role of chief artificial intelligence officer.

Keesing will oversee the development and deployment of what its trusted mission AI solutions. He will also help lead Leidos' partnerships with AI technology companies that see their creations as of promise for government adoption and usage.

Leidos touts Keesing as the founding director of its AI accelerator and most recently worked as its senior vice president of technology integration.

Second quarter revenue of $4.1 billion was 7.7% higher than the prior year period, while profit of $559 million represented a 33% year-over-year increase in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).

Leidos lifted the low end of its full-year revenue outlook to $16.1 billion with the top end unchanged at $16.4 billion. The company also lifted its adjusted EBITDA margin guidance to approximately 12% from the prior mid-to-high 11% range.