Financial Data and Key Metrics Changes - The company reported gross revenue of $2.9 billion, an 8% decline year-over-year, and a 9% decline on a revenue ex-billable basis [25] - Adjusted EBITDA for the quarter was $324 million, down 11% from the prior year, resulting in an adjusted EBITDA margin of 11.2%, which is 40 basis points lower than the same period last year [30] - Net income was $175 million, down 55% year-over-year, with diluted earnings per share decreasing 53% to $1.42 [31] Business Line Data and Key Metrics Changes - The national security portfolio grew by 5% year-over-year, while the civil business revenue declined by 22% year-over-year [25] - The company anticipates civil business revenue to decline in the low 20% range for the full fiscal year [20][25] - Gross bookings totaled $7.2 billion in the quarter, with significant awards in the national security portfolio [26] Market Data and Key Metrics Changes - The funded backlog grew about 34% sequentially to roughly $5 billion but was down 6% year-over-year [27] - The total backlog at the end of the quarter reached $40 billion, up 3% year-over-year [27] - The company noted a bifurcated market environment, with civil agencies facing significant challenges while national security markets showed stronger dynamics [7][12] Company Strategy and Development Direction - The company is focusing on three strategic areas: reducing costs through AI, doubling down on strengths in key growth areas, and leading the transition to outcome-based contracting [14][16] - Investments will be directed towards cyber, AI, warfighting technology, and critical national security programs [16] - The company aims to maintain agility and responsiveness to market changes while preparing for long-term growth [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in the current quarter's results and acknowledged that the re-acceleration of business will take longer than expected [5][12] - The procurement environment remains challenging, particularly in the civil sector, with expectations for a delayed return to growth [8][22] - Despite near-term headwinds, management remains optimistic about medium-term growth prospects, particularly in national security [5][12] Other Important Information - The company has approved a quarterly dividend of $0.55 per share, payable on December 2nd [32] - A $500 million increase to the share purchase authorization was also approved, bringing the total available capacity to approximately $880 million [33] Q&A Session Summary Question: Is the funding environment for defense and intel business improving? - Management indicated that while the national security business environment is stronger, there are still frictions due to the government shutdown and procurement delays [42][43] Question: What assumptions are baked into the civilian guidance? - Management stated that they do not anticipate further cuts but expect a competitive procurement environment with pricing pressures [46][47] Question: How does the company view its long-term business model? - Management emphasized the importance of flexibility in responding to market shifts and the ongoing investment in technology partnerships [60][62] Question: How is the backlog coverage and pipeline strength? - Management noted that the current guidance is based on existing trends and that they are actively pursuing new opportunities [76][78] Question: What is the outlook for the cyber business? - Management expressed strong confidence in the growth of the cyber business, highlighting its unique position in the national security space [82]

Financial Data and Key Metrics Changes - For the second quarter, gross revenue was $2.9 billion, an 8% decline year-over-year, and approximately a 9% decline on a revenue ex-billable basis [25] - Adjusted net income was $183 million, down 21% year-over-year, with diluted earnings per share decreasing 53% to $1.42 per share [31] - The funded backlog was down 6% year-over-year, while total backlog reached $40 billion, up 3% year-over-year [27][32] Business Line Data and Key Metrics Changes - The national security portfolio grew by 5% year-over-year, while revenue in the civil business declined by 22% year-over-year [25] - The company anticipates civil business revenue to decline in the low 20% range for the fiscal year, while the national security portfolio is expected to grow in the mid-single-digit range [18][25] Market Data and Key Metrics Changes - The procurement environment remains challenging, with no major procurement actions observed in the civil sector during the second quarter [8] - Gross bookings totaled $7.2 billion in the quarter, with 90% attributed to national security [9][26] Company Strategy and Development Direction - The company is focusing on three strategic areas: reducing costs through AI, doubling down on strengths in key growth areas, and leading the transition to outcome-based contracting [14][16] - The emphasis is on cyber, AI, warfighting technology, and critical national security programs, with a commitment to leveraging partnerships with tech companies [16][61] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in the current quarter's results and the need to lower guidance due to a lack of normalization in the funding environment [12][22] - The company remains optimistic about medium-term growth, particularly in national security, despite near-term headwinds [5][18] Other Important Information - The company is taking significant actions to restructure and reduce costs by $150 million annually, which will support margins returning closer to historical levels by fiscal year 2027 [23][24] - The board approved a quarterly dividend of $0.55 per share and increased the share purchase authorization by $500 million [32][34] Q&A Session Summary Question: Is the funding environment for defense and intel business improving? - Management noted that while the national security business is stronger, there is still friction in the funding process, and ramp-up on new wins is expected to be slower than historical levels [42][43] Question: What assumptions are baked into the civilian guidance? - Management indicated that they do not anticipate further cuts but expect a competitive procurement environment with pricing pressures [46][47] Question: How strong is the backlog coverage? - Management stated that the current guidance does not rely on significant new wins, and they are anticipating that current trends persist [76][77] Question: How does the company balance growth investment with profitability? - Management emphasized that they are managing for the medium and long term, making investments that are prudent for short-term profitability while focusing on long-term growth [94][96]

Financial Data and Key Metrics Changes - For Q2 FY 2026, gross revenue was $2.9 billion, an 8% decline year-over-year, with a 9% decline on a revenue ex-billable basis [31] - Adjusted EBITDA was $324 million, down 11% from the prior year, translating to an adjusted EBITDA margin of 11.2%, which is 40 basis points lower than the same period last year [37] - Net income was $175 million, down 55% year-over-year, with diluted earnings per share decreasing 53% to $1.42 [38] Business Line Data and Key Metrics Changes - The National Security portfolio grew by 5% year-over-year, while the Civil business revenue declined by 22% year-over-year [31][32] - The company anticipates that the National Security portfolio will grow revenue in the mid-single-digit range for the full fiscal year, while the Civil business revenue is expected to decline in the low 20% range [22][25] Market Data and Key Metrics Changes - The funded backlog was down 6% year-over-year, while total backlog reached $40 billion, up 3% year-over-year [34] - Gross bookings totaled $7.2 billion in the quarter, with a book-to-bill ratio of 1.7 times [34] Company Strategy and Development Direction - The company is focusing on three strategic areas: reducing costs through AI, doubling down on strengths in key growth areas, and leading the transition to outcome-based contracting [16][19][20] - The company aims to maximize AI capabilities and commercial technology partnerships to drive growth in the Civil business [10] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in the current results and lowered guidance across all key metrics due to a challenging procurement environment [5][14] - The company remains optimistic about medium-term growth vectors, particularly in national security, cyber, and AI [6][12][20] Other Important Information - The company announced a quarterly dividend of $0.55 per share and increased its share repurchase authorization by $500 million [41] - The company is taking significant actions to adjust its cost structure and prepare for future growth [45] Q&A Session Summary Question: What is the outlook for funding in the defense and intelligence business? - Management indicated that while there is friction in the funding process, the national security business environment remains stronger, with significant wins expected to ramp up more slowly than historical levels [51][52] Question: What assumptions are baked into the guidance for the federal civilian business? - Management stated that they do not anticipate further cuts and expect a competitive procurement environment with pricing pressures [58][60] Question: How does the company view the profitability profile of the Civil and National Security portfolios? - Management confirmed that the Civil portfolio has higher margins due to a larger share of fixed-price contracts, while the National Security portfolio operates at lower margins [69] Question: What is the company's long-term business model outlook? - Management emphasized the importance of flexibility in operations and the need to adapt to changing market conditions, particularly in technology integration and outcome-based models [72][73]

Financial Data and Key Metrics Changes - Gross revenue for the first quarter decreased by approximately 1% year over year to $2.9 billion, while revenue excluding billable expenses grew by 2% year over year [26] - Adjusted EBITDA for the first quarter was $311 million, up 3% from the prior year, resulting in an adjusted EBITDA margin of 10.6%, an increase of 30 basis points year over year [30] - Net income for the first quarter was $271 million, a year-over-year increase of 64%, primarily due to a favorable agreement with the IRS [31] - Diluted earnings per share grew 70% year over year to $2.16, while adjusted diluted earnings per share increased 7% year over year to $1.48 [32] Business Line Data and Key Metrics Changes - Revenue in the Defense sector increased by 7% year over year, while revenue in the Intelligence sector rose by 6% compared to the prior year [26] - Civil business revenue decreased by 13% year over year, reflecting the challenges faced in that segment [26] Market Data and Key Metrics Changes - The total backlog reached an all-time Q1 record of $38 billion, up 11% year over year, with a book-to-bill ratio of 1.42 times for the quarter [28] - The proposal pipeline at the end of the first quarter was nearly $43 billion, which is 3% higher than the same point in fiscal year 2024 [28] Company Strategy and Development Direction - The company is focusing on a strategy termed "Vault," which emphasizes velocity, leadership, and technology, aiming to leverage technology investments to drive mission effectiveness [9] - The company is restructuring its civil business to align with current demand and is focusing on modernization opportunities, such as a $51 million task order with Customs and Border Protection [12] - The company is also advancing partnerships across the technology ecosystem to maintain global technological supremacy [18] Management's Comments on Operating Environment and Future Outlook - Management noted that while the procurement environment is improving, it is still operating below historical speeds, and they expect to see a return to growth in the second half of the fiscal year [8][21] - The management expressed optimism about the medium to long-term outlook, particularly in technology investments related to AI, cyber, and quantum [9][21] Other Important Information - The company repurchased just over 1% of its outstanding shares during the quarter and increased its commitment to Booz Allen Ventures by $200 million [24][34] - The company expects free cash flow for the fiscal year to be between $900 million and $1 billion, reflecting anticipated federal tax impacts [35] Q&A Session Summary Question: Is there a greater appreciation for Booz Allen's technology in the current procurement environment? - Management acknowledged that the business has stabilized and that their technology is recognized for its effectiveness in mission-critical conditions, leading to optimism about future opportunities [44][45] Question: What is the interest from Silicon Valley tech providers to partner with Booz Allen? - Management confirmed that partnerships with commercial tech companies are a significant part of their strategy, and they are seen as a valuable partner by these companies [48] Question: Can you comment on funded backlog trends? - Management indicated that while they are winning work, the funding environment is slow, leading to a relative decline in funded backlog [56] Question: What are the challenges in hiring talent? - Management stated that they are comfortable with their hiring pace and are effectively matching supply and demand, with no significant challenges in attracting talent [63][64] Question: How does the current administration's focus on transformational contracts affect Booz Allen? - Management believes that the current administration's focus on new priorities presents both challenges and opportunities, and they are well-positioned to adapt [101][102]

Financial Data and Key Metrics Changes - Gross revenue decreased by approximately 1% year over year to $2.9 billion, while revenue excluding billable expenses grew by 2% year over year [27] - Adjusted EBITDA for the first quarter was $311 million, up 3% from the prior year, resulting in an adjusted EBITDA margin of 10.6%, an increase of 30 basis points year over year [31] - Net income for the first quarter was $271 million, a year-over-year increase of 64%, primarily due to a favorable IRS agreement [31] - Diluted earnings per share increased by 70% year over year to $2.16, while adjusted diluted earnings per share rose by 7% year over year to $1.48 [32] Business Line Data and Key Metrics Changes - Revenue in the Defense sector increased by 7% year over year, while Intel revenue rose by 6% compared to the prior year [27] - Civil business revenue decreased by 13% year over year, reflecting ongoing challenges in that segment [27] - The company achieved a book-to-bill ratio of 1.42 times for the quarter, with total backlog reaching an all-time Q1 record of $38 billion, an 11% increase year over year [28] Market Data and Key Metrics Changes - The proposal pipeline at the end of the first quarter was nearly $43 billion, which is 3% higher than the same point in fiscal year 2024 [28] - The company noted variability in converting bookings to revenue compared to previous years, indicating a dynamic procurement environment [29] Company Strategy and Development Direction - The company is focusing on five strategic priorities to drive transformation, including restructuring the civil business, reimagining service delivery, directing resources to growth areas, advancing partnerships in the tech ecosystem, and creating efficiencies within the business [10][18] - The company is leveraging its technology-based approach to align with government priorities, particularly in areas like AI, cyber, and quantum technology [9] - Booz Allen Ventures received an additional $200 million commitment to invest in startups, emphasizing the company's focus on maintaining technological superiority [35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about medium to long-term opportunities despite short-term disruptions and slow funding in the procurement environment [22][26] - The company anticipates a return to growth in the civil sector in the latter half of the fiscal year as funding solidifies [7][26] - Management highlighted the importance of adapting to the changing landscape and the potential for increased funding from the "One Big Beautiful Bill" [59] Other Important Information - The company repurchased just over 1% of its outstanding shares during the quarter [24] - Free cash flow for the quarter was $96 million, resulting from $119 million in cash from operations [34] - The company plans to pay a quarterly dividend of $0.55 per share on August 29 [34] Q&A Session Summary Question: Is there a greater appreciation for Booz Allen's technology in the current procurement environment? - Management confirmed that the business has stabilized and that the technology is performing well, with strong mission impact recognized by customers [42][44] Question: What is the interest from Silicon Valley tech providers to partner with Booz Allen? - Management stated that partnerships with commercial tech companies are a key strategy, and Booz Allen is seen as a valuable partner in making technology work in mission-critical environments [46][47] Question: How does the funded backlog trend relate to the overall book-to-bill ratio? - Management explained that while they are winning work, the slow funding environment has led to a relative decline in funded backlog [55] Question: What are the challenges in hiring and matching talent to demand? - Management indicated that they are comfortable with hiring and are focused on matching talent to demand, particularly in technical roles requiring security clearances [62][80] Question: How disruptive are the changes in software acquisition and contracting? - Management expressed that changes in the FAR and a shift towards outcome-based contracting are positive for the company and the government, allowing for more efficient operations [115][118]