Jacobs Solutions (J) Q1 2026 earnings summary

Executive summary

• Q1 FY2026 delivered strong results with gross revenue up 12.3% to $3.3 billion, adjusted net revenue up 8.2% to $2.3 billion, and adjusted EPS rising 15% to $1.53, with GAAP net income of $125 million reversing a prior year loss.

• Backlog reached a record $26.3 billion, up over 20% year-over-year, and book-to-bill ratio for Q1 was 2.0x (1.4x TTM).

• Announced agreement to acquire the remaining stake in PA Consulting for £1.216 billion, expected to close in Q2 FY2026, enhancing digital, innovation, and AI capabilities.

• Completed the spin-off of Critical Mission Solutions and Cyber & Intelligence businesses (SpinCo) in September 2024, now reported as discontinued operations.

• Raised FY 2026 outlook for net revenue, adjusted EPS, and free cash flow margin, reflecting robust demand in key markets.

Financial highlights

• Q1 adjusted EBITDA was $303 million, up 7.3% year-over-year, with a margin of 13.4%.

• Free cash flow was $365 million, with net cash from operations at $381 million, aided by strong working capital.

• Quarterly dividend increased 12.5% to $0.36 per share; $252 million in shares repurchased during Q1.

• Net leverage ratio improved to 0.8x, below the 1.0-1.5x target range.

• Operating profit increased to $232.6 million from $208.4 million year-over-year.

Outlook and guidance

• FY 2026 adjusted net revenue growth guidance raised to 6.5%-10.0% year-over-year.

• Adjusted EPS guidance increased to $6.95-$7.30; free cash flow margin outlook raised to 7%-8.5%.

• Adjusted EBITDA margin expected at 14.4%-14.7%.

• Guidance excludes the PA Consulting acquisition, which is expected to be accretive to EPS within 12 months of closing.

• Management expects continued impact from non-deductible incentive compensation on the effective tax rate for the remainder of the fiscal year.