Booz Allen (BAH) Q3 2026 earnings summary

Executive summary

• Third-quarter revenue declined 10–10.2% year-over-year to $2.6 billion, mainly due to a prolonged government shutdown and a slowed procurement environment, but results aligned with revised fiscal 2026 guidance and reflected strong execution and cost management.

• Net income rose 7% year-over-year to $200 million, with adjusted net income up 8.6% to $215 million, benefiting from significant tax advantages.

• Cost reduction initiatives were completed, reducing annual run rate spend by $150 million, with full profitability impact expected next fiscal year.

• Strategic investments and partnerships, notably with Andreessen Horowitz (a16z), position the company for growth in national security, cyber, and AI.

• CFO Matt Calderone is departing, with Kristine Martin Anderson serving as interim CFO.

Financial highlights

• Q3 revenue was $2.62 billion (down 10–10.2% YoY); revenue ex-billables declined 6.7–7%.

• Adjusted EBITDA was $285 million (down 14.2% YoY), with a margin of 10.9%.

• Net income for Q3 was $200 million (up 7% YoY); adjusted net income was $215 million (up 8.6–9% YoY).

• Diluted EPS grew 12–12.4% to $1.63; adjusted diluted EPS up 14–14.2% to $1.77.

• Free cash flow for Q3 was $248 million (up 85.1% YoY); cash on hand at quarter-end was $882 million.

Outlook and guidance

• Fiscal 2026 revenue guidance is $11.3–$11.4 billion, representing a 5–6% decline.

• Adjusted EBITDA guidance narrowed to $1.195–$1.215 billion.

• Adjusted diluted EPS guidance raised to $5.95–$6.15, aided by a $235 million cash tax benefit from new S174 rules.

• Free cash flow expected between $825 million and $900 million.

• Guidance reflects impacts from the government shutdown and slower funding, partially offset by tax benefits.