Booz Allen Hamilton Q4 2025 Earnings: Strong Growth, AI Momentum & Market Caution Explained

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Booz Allen Hamilton Holding Corporation Q4 2025 Earnings Call Summary

Booz Allen Hamilton Holding Corporation (BAH) held its Q4 2025 earnings call on May 23, 2025. The call, led by CEO Horacio Rozanski and CFO Matt Calderon, highlighted strong financial results for fiscal year 2025 and discussed the company's outlook for fiscal year 2026, considering a dynamic and evolving market environment.

FY25 Performance Highlights

Booz Allen reported a strong fiscal year 2025, exceeding its ambitious targets set in 2021.

Revenue Growth: Over 12%, nearly all organic.
Adjusted EBITDA: $1.315 billion, up 12% year-over-year, exceeding the high end of the target range.
Adjusted EBITDA Margin: 11%.
Adjusted Diluted Earnings Per Share (ADEPS): Grew over 15%.
Free Cash Flow: $911 million.
Capital Deployment: $1.2 billion, including share repurchases (approximately 4.3% of shares outstanding).
Net Debt to Adjusted EBITDA Ratio: 2.4 times.

Q4 2025 Performance

Revenue: $3 billion, up 7% year-over-year (almost entirely organic). Revenue excluding billable expenses was up 6%.
- Defense and Intel businesses drove growth, with revenue up 14% and 5%, respectively.
- Civil business revenue was flat.
Net Bookings: $2.1 billion, a quarterly book-to-bill ratio of 0.71.
Trailing 12-Month Book-to-Bill: 1.39 times, above the 5-year average.
Year-End Backlog: Record $37 billion, up 15% year-over-year.
Qualified Pipeline (FY26): $53.4 billion, lower than the previous year but higher than FY24.
Employee Count: Nearly 36,000 at year-end, with customer-facing staff up 4.2% year-over-year. A 7% staff reduction is anticipated in Q1 FY26, concentrated in the civil business.
Adjusted EBITDA: $316 million, up 10.5% year-over-year.
Adjusted EBITDA Margin: 10.6%, up 30 basis points year-over-year.
Diluted Earnings Per Share (EPS): $1.52, up 55% year-over-year.
Adjusted Diluted Earnings Per Share (ADEPS): $1.61, up 21% year-over-year.
Cash on Hand: $885 million.
Net Debt: $3.1 billion.
Net Leverage Ratio: 2.4 times adjusted EBITDA.
Capital Deployment: $403 million, including share repurchases, strategic investments (including Shield AI), and dividends.
Dividend: A quarterly dividend of $0.55 per share was approved.

FY26 Outlook

Booz Allen anticipates a dynamic environment with near-term disruption followed by growth opportunities.

Revenue: $12 billion to $12.5 billion.
Adjusted EBITDA: $1.315 billion to $1.37 billion, maintaining an approximate 11% margin.
ADEPS: $6.20 to $6.55.
Free Cash Flow: $700 million to $800 million.
Growth Cadence: Lower revenue and profit growth in the first half, with a reacceleration in the second half.

Key Strategic Points

Market Dynamics: The federal government is rethinking agency missions, focusing on efficiency and cost reduction. This is impacting the pace of awards, particularly in civil agencies.
Civil Business Reset: Booz Allen is restructuring its civil business, anticipating a low double-digit revenue decline in FY26, followed by a rebound.
Defense and Intel Strength: Continued strong organic growth is expected in the defense and intel businesses.
Technology Focus: Booz Allen is focused on advanced technologies, especially AI, and strengthening private sector partnerships.
Outcome-Based Opportunities: The company is positioning itself to capture major outcome-based opportunities.
Investment in Growth Areas: Resources are being directed to areas like Indo-PACOM, space, agentic AI, quantum, and software-defined communications.
Commercial Technology Adoption: Booz Allen is building partnerships to accelerate the adoption of commercial technologies for mission outcomes.

Strategic Priorities for FY26

Restructuring the civil business for rapid growth recovery.
Leading in outcome-based opportunities.
Directing resources to high-growth areas.
Advancing partnerships with technology firms.
Creating internal efficiencies to drive faster movement, increased investment, and greater shareholder value.

About this video

Booz Allen Hamilton Holding Corporation (NYSE: BAH) reported solid Q4 and full-year fiscal 2025 results on May 23, 2025, underscoring strong growth in advanced technology and AI-driven solutions despite mixed sector performance and a cautious outlook for the coming year. Fourth quarter revenue rose 7.3% year-over-year to $3.0 billion, with organic revenue up 6.2%. Adjusted net income for the quarter grew 17.3% to $203 million, and adjusted diluted earnings per share (EPS) increased 21% to $1.61, in line with analyst expectations. Net income for Q4 jumped 51% to $193 million, reflecting effective cost management and profitability improvements. For the full fiscal year, Booz Allen delivered 12.4% revenue growth to $12.0 billion, driven largely by organic expansion. Adjusted EBITDA reached $1.315 billion, up 12%, with a margin of 11%. Free cash flow for the year was $911 million, supporting $1.2 billion in capital deployment, including share repurchases totaling 4.3% of outstanding shares. The company ended the year with a record backlog of $37 billion, up 15% year-over-year, and a trailing 12-month book-to-bill ratio of 1.39x—highlighting robust demand and future revenue visibility. AI and advanced technology remain core growth drivers, with the AI segment expanding over 30% year-over-year to approximately $800 million. However, the Civil business remained flat in Q4 and is expected to decline in FY2026 due to government spending cuts and slower procurement, resulting in a projected 7% headcount reduction in the first quarter of FY2026. Management anticipates lower revenue and profit growth in the first half of FY2026, with a rebound expected in the second half as recent contract wins ramp up. CEO Horacio Rozanski emphasized Booz Allen’s leadership in AI and its alignment with government modernization priorities, noting strong partnerships and a strategic focus on outcome-based, technology-driven solutions for defense, intelligence, and civil clients. Outlook: FY2026 revenue guidance: $12.0–$12.5 billion Adjusted EBITDA: $1.315–$1.37 billion (margin ~11%) Adjusted EPS: $6.20–$6.55 Free cash flow: $700–$800 million Continued investment in AI, technology, and talent, with cautious optimism amid macro and sector-specific headwinds About Inside Ticker: For more expert analysis and real-time updates on Booz Allen Hamilton Holding Corporation (NYSE: BAH) and other market movers, follow Inside Ticker and visit InsideTicker.com for in-depth reports, financial insights, and the latest news on leading companies. #BoozAllen #BAH #EarningsCall #Q42025 #Fiscal2025 #AI #GovernmentTech #Defense #FinancialResults #StockMarket #InsideTicker

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