Financial Data and Key Metrics Changes - For the first quarter of fiscal year 2026, the company reported revenue of $1.35 billion, representing a 4.1% decline compared to the prior year period, with approximately 1.5% of this decline attributed to the divestiture of the outside the U.S. segment [22][24] - Adjusted EBITDA margin was 12.7% and adjusted EPS was $1.85 for the quarter, compared to 11.2% and $1.61, respectively, for the prior year period [23] - The company raised earnings guidance and narrowed revenue guidance for the full fiscal year 2026 [4][32] Business Line Data and Key Metrics Changes - Revenue for the U.S. Federal Services segment increased by 0.8% to $787 million, all growth being organic, with an operating income margin of 16.5% [24] - The U.S. Services segment revenue decreased to $415 million from $452 million, with an operating income margin of 7.1% compared to 9.0% in the prior year period [25] - The outside the U.S. segment revenue decreased to $143 million from $170 million, with an operating loss of $1.4 million compared to an operating profit of $8.1 million in the prior period [28] Market Data and Key Metrics Changes - The company reported a pipeline of sales opportunities totaling $59.1 billion, up from $51.3 billion reported at the end of the previous quarter [8] - The share of new work in the total pipeline is 59%, with the U.S. Federal Services segment's share at 61% [8] - Proposals pending or submitted, and proposals currently being prepared total a combined $6.2 billion, a 55% increase from the previous year [9] Company Strategy and Development Direction - The company is focusing on expanding its use of automation and AI to enhance service delivery and improve financial performance [5][16] - The strategic evolution includes becoming a trusted provider of technology-driven solutions to government customers, with a focus on Medicaid and SNAP programs [5][12] - The company anticipates that award activity will pick up across the remaining quarters of fiscal year 2026, with a focus on organic growth opportunities [8][34] Management's Comments on Operating Environment and Future Outlook - Management noted that the company operates in a resilient sector of government spending, largely unaffected by temporary shutdowns [4] - The company expects to see increased demand for tech-enabled services as states prepare for new Medicaid and SNAP requirements [34] - Management expressed confidence in the guidance for fiscal year 2026, highlighting the durability of essential services provided to government [34] Other Important Information - The company completed the divestiture of its child support business, which comprised approximately $25 million of annual revenue, recognizing a gain of approximately $9 million [21] - The company was selected as the single awardee of the U.S. General Services Administration Blanket Purchase Agreement for government experience contact center services [19] Q&A Session Summary Question: How much of the revenue guidance is in hand versus new work? - Management indicated that there is virtually no new work remaining in the forecast, with initial guidance having about 3% of not yet new work [37] Question: Can you provide more color on segment revenue guidance and potential drivers? - Management expressed confidence in the guidance range, noting that U.S. Services revenue was down more than expected but anticipates year-over-year comparisons to improve [39] Question: What is the receptivity towards the new SNAP offering? - Management reported positive receptivity to the Accuracy Assistant tool, which helps states reduce SNAP payment error rates [48] Question: Any updates on the VA contract timing? - Management confirmed that current contracts have a performance period through December 31, 2026, and they are confident in their performance under the current contract [56] Question: What are the drivers for lower volumes in U.S. Services? - Management noted that there was no single driver for the revenue change, and the lower volumes are expected to improve as the year progresses [68]