QinetiQ Group plc (QQ.) has reported solid first-half results for the period ended 30 September 2026, with underlying operating profit rising 14% to £110 million and underlying operating margin expanding by 120 basis points to 11.9%. Alongside the financial results, the defence and security group announced the agreed sale of its US business to Serco plc for $292 million, sharpening the company's strategic focus on the UK, European NATO and key allied markets. Full-year guidance has been confirmed, and an interim dividend of 4.0 pence per share — a 33% increase on the prior period — has been declared, payable on 5 February 2027.

Key Points

  • QinetiQ Group plc (QQ.) — a leading provider of mission-critical defence and security solutions employing approximately 7,500 people
  • Underlying operating profit up 14% to £110m; revenue up 3% to £923m; order intake up 9% to £771m in H1 FY27
  • US business sale agreed to Serco plc for $292m; transaction subject to regulatory approval and expected to complete in Q1 2027; majority of proceeds to be returned to shareholders via an additional £100m per annum buyback over two years
  • Investors will be watching for regulatory clearance of the US sale and delivery against confirmed FY27 guidance of 3–5% revenue growth and 11.0–11.5% operating margin

QinetiQ H1 FY27 Financial Performance: Underlying EPS Up 18% and ROCE Doubles to 41%

QinetiQ delivered underlying earnings per share of 16.8 pence, up 18% from 14.2 pence in H1 FY26, while return on capital employed improved sharply to 41% from 21%, a 20 percentage point increase. The statutory position was materially different, with the company recording a statutory operating loss reflecting a £175 million non-cash impairment charge related to the US business. Net debt increased to £274 million from £181 million, with leverage remaining within the company's target range at 0.8 times. The funded order backlog stood at £4,124 million, with approximately 84% of FY27 expected revenue already under contract as at 30 September 2026.

$292m Sale of US Business to Serco Refocuses QinetiQ on UK, European NATO and Allied Markets

QinetiQ announced the agreed sale of its US business to Serco plc for $292 million, concluding a strategic review of its US operations. The announcement states that the US market has changed and the business lacks the scale to meet QinetiQ's growth and returns expectations relative to the rest of its portfolio. Following completion, approximately 70% of group revenue will derive from sole-source and long-term contracts, supported by a £4 billion backlog and a five-year pipeline valued at £12 billion. The majority of sale proceeds will fund an additional £200 million in shareholder returns, with the existing FY28 and FY29 buyback programmes each increased by £100 million per annum.

QinetiQ's Test, Training and Laser Technology Investments Drive Growth Pipeline

Excluding the US business, group revenue grew approximately 5% in the first half, with trials revenue up 50% driven by higher utilisation from UK and allied customers at the company's sovereign test and evaluation facilities. Through Project SAFARI, QinetiQ is expanding access to these facilities for allies, major primes and SMEs. The company is also investing £20 million in its Helena family of laser sources for counter-drone and air-defence applications, targeting UK and international allied markets including maritime and land platforms. Existing mission support programmes, including the TacSys Resource Partner contract, already generate more than £100 million of revenue per annum, the announcement states.

FY27 Guidance Confirmed: Revenue Growth 3–5% and Free Cash Flow Target Above £550m to FY29

QinetiQ confirmed unchanged full-year guidance for FY27, targeting revenue growth of 3% to 5%, an underlying operating margin of 11.0% to 11.5%, EPS growth of 8% to 10%, and cash conversion above 90%. Over the three-year period from FY27 to FY29, the company is targeting free cash flow in excess of £550 million. The company identified near-term customer budgetary pressures across its markets as a continued risk to the timing of contract awards, even as the broader trend of rising UK and European defence budgets supports medium-term demand for QinetiQ's engineering, test and mission support capabilities.