[First Quarter Fiscal 2026 Results Overview](index=1&type=section&id=First%20Quarter%20Fiscal%202026%20Results%20Overview) [First Quarter Fiscal 2026 Highlights](index=1&type=section&id=Q1%20Highlights) The company reported strong Q1 FY26 results in line with expectations, driven by growth in key defense and intel markets [Financial Performance Summary](index=1&type=section&id=FINANCIAL%20SUMMARY) | FINANCIAL SUMMARY | | Three Months Ended | | | --- | --- | --- | --- | | | | March 31, | | | | 2025 | 2024 | % Change | | | | (unaudited) | | | Revenue | $2,924 | $2,942 | (0.6)% | | Revenue Ex. Billable Expenses | $2,043 | $1,997 | 2.3% | | Net Income | $271 | $165 | 64.2% | | Diluted EPS | $2.16 | $1.27 | 70.1% | | EBITDA | $297 | $296 | 0.3% | | Adjusted EBITDA | $311 | $302 | 3.0% | | Adjusted EBITDA Margin on Revenue | 10.6% | 10.3% | +30 bps | | Net Cash Provided by Operating Activities | $119 | $52 | 128.8% | | Free Cash Flow | $96 | $20 | 380.0% | | Adjusted Net Income | $184 | $180 | 2.2% | | Adjusted Diluted EPS | $1.48 | $1.38 | 7.2% | - Revenue declined **0.6 percent** year-over-year to **$2.9 billion**[5](index=5&type=chunk) - Adjusted Net Income of **$184 million**, a **2.2 percent** increase[5](index=5&type=chunk) - Adjusted EBITDA of **$311 million**, a **3.0 percent** increase, with Adjusted EBITDA Margin on Revenue increasing by **30 basis points** to **10.6 percent**[5](index=5&type=chunk) - Adjusted Diluted EPS of **$1.48**, a **7.2 percent** increase[5](index=5&type=chunk) - Free cash flow of **$96 million**, compared to $20 million in the prior year, representing a **380.0% increase**[5](index=5&type=chunk) [Operational Achievements](index=1&type=section&id=Operational%20Achievements) - Record Q1 backlog of **$38 billion**, a **10.7 percent** increase[5](index=5&type=chunk) - Quarterly book-to-bill ratio of **1.42x**[5](index=5&type=chunk) - Repurchase of **1.1 percent** of outstanding shares[5](index=5&type=chunk) - **$200 million** anticipated FY26 federal cash tax benefit from new S174 rules[5](index=5&type=chunk) - Continued strategic investments to accelerate technology transformation[5](index=5&type=chunk) [Dividend Declaration](index=1&type=section&id=Dividend%20Declaration) - A regular quarterly dividend of **$0.55 per share** will be payable on August 29, 2025, to stockholders of record on August 14, 2025[3](index=3&type=chunk) [Fiscal Year 2026 Outlook](index=2&type=section&id=OUTLOOK2) The company anticipates fiscal year 2026 revenue between $12.0 and $12.5 billion and Adjusted Diluted EPS of $6.20 to $6.55 | OPERATING PERFORMANCE | FISCAL YEAR 2026 GUIDANCE | | --- | --- | | Revenue | $12.0 - $12.5 billion | | Revenue Growth | 0 - 4.0% | | Adjusted EBITDA | $1,315 - $1,370 million | | Adjusted EBITDA Margin on Revenue | ~11% | | Adjusted Diluted EPS3 | $6.20 - $6.55 | | Free Cash Flow4 | $900 - $1,000 million | [Company Overview](index=2&type=section&id=ABOUT%20BOOZ%20ALLEN%20HAMILTON) Booz Allen Hamilton is an advanced technology firm serving U.S. defense, civil, and national security priorities with global operations - Booz Allen is an advanced technology company delivering outcomes with speed for America's most critical defense, civil, and national security priorities, building technology solutions using AI, cyber, and other cutting-edge technologies[9](index=9&type=chunk) - The firm employs approximately **33,400 people** globally as of June 30, 2025[10](index=10&type=chunk) - Had revenue of **$12.0 billion** for the 12 months ended March 31, 2025[10](index=10&type=chunk) [Earnings Webcast Information](index=2&type=section&id=EARNINGS%20WEBCAST) The company hosted a conference call on July 25, 2025, to discuss Q1 FY26 results, with a replay available online - A live conference call was hosted at 8 a.m. EDT on Friday, July 25, 2025, to discuss the financial results for the first quarter of fiscal year 2026[7](index=7&type=chunk) - The conference call was webcast simultaneously and a replay will be available on investors.boozallen.com[8](index=8&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=NON-GAAP%20FINANCIAL%20INFORMATION) [Definitions of Non-GAAP Measures](index=3&type=section&id=Definitions%20of%20Non-GAAP%20Measures) The company utilizes various non-GAAP measures to provide supplemental information for evaluating financial performance and liquidity - **Revenue, Excluding Billable Expenses** represents revenue less billable expenses, providing useful information about operating performance by excluding the impact of costs like subcontractor and travel expenses[12](index=12&type=chunk) - **EBITDA** represents net income before income taxes, interest expense, net and other income (expense), net, and depreciation and amortization[13](index=13&type=chunk) - **Adjusted EBITDA** represents net income before income tax expense, interest expense, net and other income (expense), net, depreciation and amortization, and certain other items to eliminate the impact of unusual, extraordinary, or non-recurring items[14](index=14&type=chunk) - **Adjusted Net Income** represents net income before other corporate expenses, acquisition amortization, and amortization or write-off of debt issuance costs and debt discount, net of tax effect, to eliminate items not considered indicative of ongoing operating performance[15](index=15&type=chunk) - **Adjusted Diluted EPS** represents diluted EPS calculated using Adjusted Net Income[16](index=16&type=chunk) - **Free Cash Flow** represents the net cash generated from operating activities less the impact of purchases of property, equipment and software[16](index=16&type=chunk) - **Adjusted Effective Tax Rate** represents income tax expense (benefit) excluding the income tax effects of adjustments to net income, divided by adjusted earnings before income tax expense[17](index=17&type=chunk) - **Net Leverage Ratio** is calculated as net debt (total debt less cash) divided by Adjusted EBITDA over the prior twelve months[17](index=17&type=chunk) - These non-GAAP financial measures are considered supplemental and not a substitute for financial information prepared in accordance with GAAP[11](index=11&type=chunk)[18](index=18&type=chunk) [Reconciliation Exceptions](index=3&type=section&id=Reconciliation%20Exceptions) Forward-looking reconciliations for certain non-GAAP measures are excluded due to the inability to predict certain variables without unreasonable effort - A reconciliation of Adjusted Diluted EPS guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the inability to predict stock price, equity grants, and dividend declarations[20](index=20&type=chunk) - A reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin on Revenue guidance to the closest corresponding GAAP measure is not available without unreasonable efforts due to the inability to predict specific quantification of the amounts required for reconciliation[21](index=21&type=chunk) - Any attempt to disclose such reconciliations would imply a degree of precision that could be confusing or misleading to investors, and the variability of these charges is expected to have an unpredictable and potentially significant impact on future GAAP financial results[20](index=20&type=chunk)[21](index=21&type=chunk) [Forward-Looking Statements & Risk Factors](index=4&type=section&id=FORWARD%20LOOKING%20STATEMENTS) [Forward-Looking Statements Disclaimer](index=4&type=section&id=Forward-Looking%20Statements%20Disclaimer) This release contains forward-looking statements about future performance, which are subject to risks and uncertainties - Statements concerning preliminary financial results, financial outlook and guidance, future quarterly dividends, and future improvements in operating margins are considered "forward-looking statements"[22](index=22&type=chunk) - Forward-looking statements can be identified by terminology such as "may," "will," "could," "should," "forecasts," "expects," "plans," "anticipates," "projects," "outlook," "believes," "estimates," "predicts," "potential," and "contemplates"[22](index=22&type=chunk) - While expectations are believed to be reasonable, there is no assurance they will prove correct, as actual results may differ materially due to known and unknown risks, uncertainties, and other factors[22](index=22&type=chunk) - The company undertakes no obligation to update or revise publicly any forward-looking statements, except as required by law[23](index=23&type=chunk) [Key Risk Factors](index=4&type=section&id=Key%20Risk%20Factors) The company faces risks related to government relationships, spending changes, competition, and internal and economic factors - Risks include any issue compromising relationships with the U.S. government or damaging professional reputation[24](index=24&type=chunk) - Changes in U.S. government spending, including reduction efforts, increased insourcing, and shifts in expenditures, as well as government shutdowns and delayed funding[24](index=24&type=chunk) - Failure to comply with new and existing U.S. and international laws and regulations[24](index=24&type=chunk) - Ability to compete effectively in the competitive bidding process and delays or losses of contract awards[24](index=24&type=chunk) - Internal system or service failures and security breaches, including cyber attacks, and misconduct or improper activities from employees, subcontractors, or suppliers[24](index=24&type=chunk) - Inherent uncertainties and potential adverse developments in legal or regulatory proceedings, including litigation, audits, reviews, and investigations[24](index=24&type=chunk) - Risks related to a possible recession, volatility or instability of the global financial system, deterioration of economic conditions, or weakening in credit or capital markets[24](index=24&type=chunk) - Risks related to pending, completed, and future acquisitions and dispositions, and risks related to indebtedness and credit facilities[25](index=25&type=chunk) [Financial Exhibits](index=5&type=section&id=Financial%20Exhibits) [Condensed Consolidated Statements of Operations](index=5&type=section&id=EXHIBIT%201) The company reported revenue of $2,924 million and a significant increase in net income to $271 million for the quarter | (Amounts in millions, except per share data) | | Three Months Ended June 30, (unaudited) | | | --- | --- | --- | --- | | | | 2025 | 2024 | | Revenue | | $2,924 | $2,942 | | **Operating costs and expenses:** | | | | | Cost of revenue | | 1,423 | 1,372 | | Billable expenses | | 881 | 945 | | General and administrative expenses | | 323 | 329 | | Depreciation and amortization | | 40 | 41 | | Total operating costs and expenses | | 2,667 | 2,687 | | **Operating income** | | **257** | **255** | | Interest expense, net | | (44) | (38) | | Other income (expense), net | | 3 | (3) | | **Income before income taxes** | | **216** | **214** | | Income tax (benefit) expense | | (25) | 49 | | **Net income** | | **$271** | **$165** | | **Earnings per common share:** | | | | | Basic | | $2.17 | $1.27 | | Diluted | | $2.16 | $1.27 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=EXHIBIT%202) Total assets were $7,170 million and total stockholders' equity was $1,065 million as of June 30, 2025 | (Amounts in millions, except share and per share data) | June 30, 2025 (unaudited) | March 31, 2025 | | --- | --- | --- | | **Assets** | | | | **Current assets:** | | | | Cash and cash equivalents | $711 | $885 | | Accounts receivable, net | 2,286 | 2,271 | | Prepaid expenses and other current assets | 138 | 157 | | **Total current assets** | **3,135** | **3,313** | | Property and equipment, net of accumulated depreciation | 171 | 177 | | Operating lease right-of-use assets | 165 | 178 | | Intangible assets, net of accumulated amortization | 549 | 563 | | Goodwill | 2,405 | 2,405 | | Deferred tax assets | 334 | 332 | | Other long-term assets | 411 | 344 | | **Total assets** | **$7,170** | **$7,312** | | **Liabilities and stockholders' equity** | | | | **Current liabilities:** | | | | Current portion of long-term debt | $83 | $83 | | Accounts payable and other accrued expenses | 949 | 987 | | Accrued compensation and benefits | 656 | 702 | | Operating lease liabilities | 42 | 41 | | Other current liabilities | 30 | 33 | | **Total current liabilities** | **1,760** | **1,846** | | Long-term debt, net of current portion | 3,896 | 3,915 | | Operating lease liabilities, net of current portion | 164 | 180 | | Other long-term liabilities | 285 | 368 | | **Total liabilities** | **6,105** | **6,309** | | **Stockholders' equity:** | | | | Common stock | 2 | 2 | | Treasury stock, at cost | (3,249) | (3,082) | | Additional paid-in capital | 1,071 | 1,042 | | Retained earnings | 3,271 | 3,070 | | Accumulated other comprehensive (loss) income | (30) | (29) | | **Total stockholders' equity** | **1,065** | **1,003** | | **Total liabilities and stockholders' equity** | **$7,170** | **$7,312** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=EXHIBIT%203) Net cash from operating activities increased to $119 million, while financing activities used $261 million in cash | (Amounts in millions) | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | **Cash flows from operating activities** | | | | Net income | $271 | $165 | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | Depreciation and amortization | 40 | 41 | | Noncash lease expense | 12 | 12 | | Stock-based compensation expense | 19 | 20 | | Net (gains) losses on investments, dispositions, and other | (4) | 3 | | Changes in operating assets and liabilities: | | | | Accounts receivable, net | (15) | (217) | | Deferred income taxes and income taxes receivable / payable | 34 | 44 | | Prepaid expenses and other current and long-term assets | (69) | (27) | | Accrued compensation and benefits | (32) | (76) | | Accounts payable and other accrued expenses | (35) | 90 | | Other current and long-term liabilities | (102) | (3) | | **Net cash provided by operating activities** | **119** | **52** | | **Cash flows from investing activities** | | | | Purchases of property, equipment, and software | (23) | (32) | | Payments for business acquisitions and dispositions, net of cash acquired | - | (93) | | Payments for cost method investments | (9) | (2) | | **Net cash used in investing activities** | **(32)** | **(127)** | | **Cash flows from financing activities** | | | | Proceeds from issuance of common stock | 11 | 11 | | Repurchases of common stock | (181) | (116) | | Cash dividends paid | (70) | (66) | | Repayments on revolving credit facility, term loans, and Senior Notes | (21) | (10) | | **Net cash used in financing activities** | **(261)** | **(181)** | | **Net decrease in cash and cash equivalents** | **(174)** | **(256)** | | Cash and cash equivalents-beginning of period | 885 | 554 | | **Cash and cash equivalents-end of period** | **$711** | **$298** | [Non-GAAP Financial Reconciliations](index=8&type=section&id=EXHIBIT%204) This section provides detailed reconciliations of non-GAAP measures like Adjusted EBITDA and Free Cash Flow to their GAAP equivalents Revenue, Excluding Billable Expenses | (In millions) | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Revenue | $2,924 | $2,942 | | Less: Billable expenses | 881 | 945 | | **Revenue, Excluding Billable Expenses** | **$2,043** | **$1,997** | EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin on Revenue | (In millions) | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Net income | $271 | $165 | | Income tax (benefit) expense | (55) | 49 | | Interest expense, net and other income (expense), net | 41 | 41 | | Depreciation and amortization | 40 | 41 | | **EBITDA** | **$297** | **$296** | | Other corporate expenses (a) | 14 | 6 | | **Adjusted EBITDA** | **$311** | **$302** | | Net income margin | 9.3 % | 5.6 % | | Adjusted EBITDA Margin on Revenue | 10.6 % | 10.3 % | Adjusted Net Income | (In millions) | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Net income | $271 | $165 | | Other corporate expenses (a) | 14 | 6 | | Acquisition amortization (b) | 12 | 13 | | Amortization or write-off of debt issuance costs and debt discount | - | 1 | | Adjustments for tax effect (c) | (113) | (5) | | **Adjusted Net Income** | **$184** | **$180** | Adjusted Diluted Earnings Per Share | | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Weighted-average number of diluted shares outstanding | 124,475,670 | 129,917,263 | | Diluted earnings per share | $2.16 | $1.27 | | **Adjusted Net Income Per Diluted Share** | **$1.48** | **$1.38** | Free Cash Flow | (In millions) | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Net cash provided by operating activities | $119 | $52 | | Less: Purchases of property, equipment and software | (23) | (32) | | **Free Cash Flow** | **$96** | **$20** | Historical Adjusted EBITDA and Net Leverage Ratio | (In millions) | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | | --- | --- | --- | --- | --- | | Net income | $271 | $193 | $187 | $390 | | Income tax (benefit) expense | (55) | 49 | 61 | 123 | | Interest expense, net and other income (expense), net | 41 | 32 | 43 | 36 | | Depreciation and amortization | 40 | 42 | 40 | 42 | | **EBITDA** | **$297** | **$316** | **$331** | **$591** | | Change in provision for claimed costs (a) | 1 | 1 | 1 | (113) | | Insurance recoveries (b) | - | - | - | (115) | | Other corporate expenses (c) | 14 | - | 1 | 1 | | **Adjusted EBITDA** | **$311** | **$316** | **$332** | **$364** | | Last 12 months Adjusted EBITDA | $1,323 | | | | | Total Debt | $3,979 | | | | | Less: Cash | 711 | | | | | Net Debt | $3,268 | | | | | **Net Leverage Ratio (f)** | **2.5** | | | | | (In millions) | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | | --- | --- | --- | --- | --- | | Net income | $165 | $128 | $146 | $171 | | Income tax expense | 49 | 91 | 62 | 55 | | Interest expense, net and other income (expense), net | 41 | 45 | 40 | 41 | | Depreciation and amortization | 41 | 40 | 41 | 41 | | **EBITDA** | **$296** | **$304** | **$289** | **$308** | | Change in provision for claimed costs (a) | - | - | - | (18) | | Other corporate expenses (c) | 6 | 2 | 2 | - | | DC tax assessment adjustment (d) | - | (20) | - | - | | Financing transaction costs (e) | - | - | - | 1 | | **Adjusted EBITDA** | **$302** | **$286** | **$291** | **$291** | | Last 12 months Adjusted EBITDA | $1,170 | | | | | Total Debt | $3,403 | | | | | Less: Cash | 298 | | | | | Net Debt | $3,105 | | | | | **Net Leverage Ratio (f)** | **2.7** | | | | [Operating Data](index=10&type=section&id=EXHIBIT%205) Total backlog grew to $38,265 million with a quarterly book-to-bill ratio of 1.42x and a total headcount of 33,400 Backlog | (Amounts in millions) | As of June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Funded | $4,047 | $4,464 | | Unfunded | 10,441 | 9,185 | | Priced options | 23,777 | 20,923 | | **Total backlog** | **$38,265** | **$34,572** | Book-to-Bill | | Three Months Ended June 30, | Trailing Twelve Months Ended June 30, | | --- | --- | --- | | | 2025 | 2024 | 2025 | 2024 | | | 1.42x | 1.76x | 1.31x | 1.41x | Headcount | (Amounts are rounded) | As of June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Total Headcount | 33,400 | 35,100 | | Customer Staff Headcount | 30,400 | 32,000 | Revenue by Customer Type | (Amounts in millions) | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Defense | $1,517 | $1,421 | | Intelligence | 484 | 457 | | Civil | 923 | 1,064 | | **Total Revenue** | **$2,924** | **$2,942** | Percentage of Total Revenue by Contract Type | | Three Months Ended June 30, | | | --- | --- | --- | | | 2025 | 2024 | | Cost-Reimbursable | 60% | 56% | | Time-and-Materials | 22% | 23% | | Fixed-Price | 18% | 21% |

Core Insights - Analysts project Booz Allen Hamilton (BAH) will report quarterly earnings of $1.45 per share, a 5.1% increase year over year, with revenues expected to reach $2.94 billion, reflecting a slight decline of 0.1% from the same quarter last year [1] - The consensus EPS estimate has been revised upward by 0.3% over the past 30 days, indicating a collective reassessment by analysts [2] - Revisions to earnings estimates are significant indicators for predicting investor actions regarding the stock, with empirical research showing a strong correlation between earnings estimate trends and short-term stock price performance [3] Revenue Estimates - Revenue from U.S. Government Defense Clients is forecasted to reach $1.53 billion, representing an increase of 8.1% from the prior-year quarter [5] - Revenue from U.S. Government Civil Clients is estimated at $973.22 million, indicating a decrease of 8.5% from the prior-year quarter [5] - Revenue from U.S. Government Intelligence Clients is expected to be $483.07 million, reflecting a growth of 4.8% from the prior-year quarter [6] Backlog and Market Performance - Total Backlog is projected to be $40.23 billion, up from $36.18 billion a year ago [6] - Booz Allen shares have increased by 8.6% in the past month, outperforming the Zacks S&P 500 composite, which rose by 5.9% [6] - Despite recent performance, Booz Allen holds a Zacks Rank 5 (Strong Sell), suggesting expected underperformance in the near future [6]

Core Insights - Booz Allen Hamilton (BAH) is anticipated to report a year-over-year earnings increase of +5.1% with earnings per share (EPS) expected at $1.45, despite a slight revenue decline of -0.1% to $2.94 billion for the quarter ended June 2025 [3][12] - The upcoming earnings report is scheduled for July 25, and stock movement may depend on whether actual results exceed or fall short of expectations [2][3] Earnings Estimates and Revisions - The consensus EPS estimate has been revised 0.25% higher in the last 30 days, indicating a slight positive sentiment among analysts [4] - However, Booz Allen's Most Accurate Estimate is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -1.82%, suggesting a bearish outlook [12] Historical Performance - In the last reported quarter, Booz Allen exceeded EPS expectations by +1.26%, with three out of the last four quarters showing earnings beats [13][14] - Despite this history, the current Zacks Rank for Booz Allen is 5 (Strong Sell), complicating predictions for an earnings beat in the upcoming report [12][17] Comparison with Industry Peers - Equifax (EFX), another player in the consulting services industry, is expected to report a +5.5% year-over-year change in EPS at $1.92, with revenues projected to increase by +5.9% to $1.51 billion [18][19] - Equifax has a positive Earnings ESP of +1.46% and a Zacks Rank of 3 (Hold), indicating a higher likelihood of beating consensus EPS estimates [19]

Group 1: Company Overview - Assertio (ASRT) is a specialty pharmaceutical company focused on branded prescription medications for neurology, inflammation, and pain [1] - Bridgeline Digital (BLIN) operates as a digital engagement company, offering a platform that integrates Web Content Management, e-commerce, e-marketing, Social Media management, and Web Analytics [2] - Booz Allen Hamilton (BAH) provides management and technology consulting, analytics, engineering, digital solutions, mission operations, and cyber expertise to governments, corporations, and not-for-profit organizations [3] Group 2: Earnings Estimates - The Zacks Consensus Estimate for Assertio's current year earnings has been revised downward by 83.3% over the last 60 days [1] - Bridgeline Digital's current year earnings estimate has been revised downward by almost 47.1% over the last 60 days [2] - Booz Allen Hamilton's current year earnings estimate has been revised downward by 6.8% over the last 60 days [3]

Group 1 - The stock market is currently experiencing a strong upward trend, indicated by the CNN Business Fear & Greed index reaching "Greed" territory, one of the highest readings in the past 52 weeks [1] - This shift is notable as the index was previously at "Extreme Fear" just a few months ago, highlighting a significant change in market sentiment [1]

Group 1 - Booz Allen Hamilton Corp. has been named "Stock to Study" by BetterInvesting Magazine for September 2025, indicating potential interest from investors regarding its stock valuation [1] - The upcoming report will provide comprehensive fundamental data on Booz Allen, including sales, earnings, pre-tax profit, and return on equity, accessible through the National Association of Investors Corp. [2] - The same issue of BetterInvesting Magazine will also feature a fundamental review of Nike Inc., suggesting that it is considered undervalued and worthy of further study [3]

Company Overview - Booz Allen Hamilton, founded in 1914, had $10.7 billion in FY24 revenue[1] - The company has a significant presence in the technology sector, with 22,000 technologists, including 6,000 software engineers and 8,000 cyber professionals[15] - Booz Allen Hamilton has 2,500 AI practitioners and is a leading AI provider to the Federal Government with approximately $750 million in AI-related revenue[15,17] - The company has invested approximately $3 billion in advanced technology and innovation over the last decade[12,17] Financial Performance and Outlook - The company's FY25 forecast includes revenue growth of 12.0%-13.0%, with adjusted EBITDA between $1.31 billion and $1.33 billion, resulting in an approximate 11% adjusted EBITDA margin[53] - The company anticipates adjusted diluted EPS of $6.25-$6.40 and free cash flow between $850 million and $925 million for FY25[53] - Booz Allen Hamilton's backlog demonstrates continued momentum, with historical and LTM book-to-bill ratios indicating strong demand[44] Strategic Focus - The company's VoLT strategy focuses on Velocity, Technology, and Leadership to drive continued growth in a rapidly changing environment[18,20,21] - Booz Allen Hamilton is focused on scaling businesses in Defense Tech, Space, and Digital Transformation, and holds a leading position in Quantum technology[17,24] - The company is partnering across the technology ecosystem, evaluating 6,400 early-stage companies and recommending 450 tech companies to clients[26]

Investment Rating - The report downgrades Booz Allen Hamilton (BAH) to Sell from Neutral, indicating limited revenue and earnings growth potential in the medium term, with valuation still having downside risk [1][45]. Core Insights - Medium-term revenue growth is expected to be closer to flat due to pressure on federal civilian spending and shifting priorities within the Department of Defense (DoD) [1][2]. - Margin pressures are anticipated as the industry shifts towards more outcomes-based contracting and fixed-price contracts, which could increase risk for contractors [3][31]. - BAH's current trading multiples are 17X P/E and 12X EBITDA on CY26E, which are in line with historical averages but could decline further if earnings remain flat [4][41]. Revenue Outlook - Federal civilian agency budgets are under pressure, leading to expectations of organic revenue growth for BAH being closer to flat for the next several years [2][18]. - The company reported a book-to-bill ratio of 0.71X for the March 2025 quarter, indicating potential challenges in securing new contracts [17][25]. Margin Analysis - The industry is experiencing a shift towards more fixed-price contracts, which may lead to increased competition and pressure on margins [3][31]. - Historical trends show that during periods of revenue pressure, margins in the government services industry have declined due to increased price competition [31][34]. Valuation Metrics - BAH's valuation metrics indicate it trades at 17X CY26E P/E and 12X CY26E EBITDA, which are consistent with its 15-year historical average [4][41]. - The report suggests that if growth and margin pressures continue, BAH's valuation could decline further [4][41]. Financial Projections - The report provides revised financial forecasts for BAH, with expected revenues of $12,220 million for FY26 and $12,342 million for FY27, reflecting lower organic growth assumptions [40]. - Adjusted EBITDA is projected at $1,335 million for FY26 and $1,337 million for FY27, indicating a downward revision from previous estimates [40][45].

Core Viewpoint - Goldman Sachs analyst Noah Poponak downgraded Booz Allen Hamilton from Neutral to Sell, lowering the price forecast from $108 to $94, citing limited revenue and earnings growth in the medium term and ongoing valuation risks [1]. Group 1: Revenue and Earnings Outlook - Medium-term revenue growth is now expected to be closer to flat due to pressure on federal civilian spending and shifting priorities within the U.S. Department of Defense [2]. - Organic revenue growth for Booz Allen Hamilton is anticipated to be flat for the next few years, which may take time for the stock to absorb after its previous strong growth [4]. Group 2: Contracting and Margins - The analyst highlights a shift toward more outcomes-based and fixed-price contracting in the sector, raising concerns about increased risk for contractors and potential pressure on margins [4]. - Federal civilian agency budgets are under pressure, with other government spending areas taking priority, which may impact Booz Allen Hamilton's performance [3]. Group 3: Market Reaction - Booz Allen Hamilton shares closed down by 4.70% to $104.66 following the downgrade [5].

Core Viewpoint - Booz Allen Hamilton's shares have experienced significant volatility following a downgrade by Goldman Sachs, reflecting concerns over medium-term earnings growth and revenue projections [1][2][3] Group 1: Stock Performance - Shares of Booz Allen Hamilton fell by as much as 4.9% before recovering slightly to a 4% decline [1] - The stock had previously sold off by a double-digit percentage after the fiscal-fourth-quarter earnings release [1] Group 2: Analyst Downgrade - Goldman Sachs downgraded Booz Allen Hamilton from neutral to sell, lowering the price target from $108 to $94 [2] - The current stock price is noted at $104.75 [2] Group 3: Earnings Growth Outlook - Goldman Sachs analysts project medium-term earnings growth for Booz Allen as "flat," with revenue growth expected between 0% and 4% for fiscal 2026, down from 12.4% last year [3] - Adjusted earnings are projected to be in the range of $6.20 to $6.55, compared to $6.35 last year [3] Group 4: Long-term Growth Potential - Despite short-term challenges, there is a high likelihood that Booz Allen's growth will resume after this year, particularly if the civil business stabilizes [6][7] - The defense and intelligence sectors, which account for 65% of revenue, are expected to grow in double digits, supporting overall company growth [6] - Historically, Booz Allen has achieved an 11.7% organic growth rate over the past three years [6] - If growth resumes, the P/E multiple could return to the low-20s, which has been the average over the past decade [7]