Maximus' Q3 Earnings Beat Estimates, Stock Rallies 4%

Core Insights - Maximus, Inc. (MMS) reported strong third-quarter fiscal 2025 results, with both earnings and revenues exceeding the Zacks Consensus Estimate, leading to a 4% stock rally post-earnings release [1][3]. Financial Performance - Adjusted earnings per share (EPS) reached $2.16, surpassing the Zacks Consensus Estimate by 55.4% and increasing 24.1% year over year [3][7]. - Revenues totaled $1.35 billion, exceeding the consensus mark by 4.5% and rising 2.6% from the previous year [3][7]. - Operating income was $165.7 million, reflecting a 16.9% year-over-year increase, with an adjusted operating income margin of 12.3%, up 151 basis points year over year [8]. Guidance Update - Maximus raised its fiscal year 2025 revenue guidance to a range of $5.38 billion to $5.48 billion, up from the previous expectation of $5.25 billion to $5.34 billion [4]. - Adjusted EPS guidance was also increased to a range of $7.35 to $7.55, compared to the prior range of $6.30 to $6.60 [4][10]. - The company anticipates an adjusted EBITDA margin of approximately 13%, an increase from the earlier expectation of 11.7% [10]. Segment Performance - The U.S. Federal Services segment reported revenues of $761.2 million, an 11.4% increase year over year, exceeding estimates [5][7]. - Revenues from the Outside the U.S. segment decreased by 6.9% year over year to $147.4 million, missing expectations [5]. - The U.S. Services segment's revenues fell 6.9% year over year to $439.8 million, slightly below estimates [5]. Sales and Pipeline - Year-to-date signed contract awards totaled $3.37 billion, with pending contracts amounting to $1.44 billion [6]. - The sales pipeline stood at $44.7 billion, including $3.05 billion in pending proposals and $1.20 billion in proposals in preparation [6]. Balance Sheet and Cash Flow - Maximus ended the quarter with cash and cash equivalents of $59.8 million, down from $73 million in the previous quarter [9]. - The company generated $182.7 million in cash from operations, with a free cash outflow of $198.2 million [9].