Booz Allen Hamilton’s second quarter results were met with a negative market reaction, reflecting investor concerns about flat revenue and ongoing funding delays in the government procurement cycle. Management attributed the quarter’s performance to continued disruption from the presidential transition, slow-moving federal contract funding, and a reset in the company’s Civil business segment. CEO Horacio Rozanski acknowledged the impact of these factors, stating, “We see overall demand strengthening, but near-term funding continues to move slowly through the procurement environment.” The company’s focus on advanced technology solutions and strategic cost management helped maintain profitability, but softness in the Civil segment weighed on top-line growth.
Is now the time to buy BAH? Find out in our full research report (it’s free).
Booz Allen Hamilton (BAH) Q2 CY2025 Highlights:
- Revenue: $2.92 billion vs analyst estimates of $2.94 billion (flat year on year, 0.6% miss)
- Adjusted EPS: $1.48 vs analyst estimates of $1.45 (2.1% beat)
- Adjusted EBITDA: $311 million vs analyst estimates of $308.5 million (10.6% margin, 0.8% beat)
- The company reconfirmed its revenue guidance for the full year of $12.25 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $6.38 at the midpoint
- EBITDA guidance for the full year is $1.34 billion at the midpoint, below analyst estimates of $1.35 billion
- Operating Margin: 8.8%, in line with the same quarter last year
- Organic Revenue fell 1.2% year on year vs analyst estimates of flat growth (21.9 basis point miss)
- Market Capitalization: $13.44 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Booz Allen Hamilton’s Q2 Earnings Call
- Michael Louie D DiPalma (William Blair) asked about the improved procurement environment and Booz Allen’s ability to deliver advanced technology for defense missions. CEO Horacio Rozanski said the environment is “more positive,” but speed is still below historic levels, and Booz Allen’s tech is valued for real-world deployment.
- Gautam J. Khanna (TD Cowen) sought clarity on the funded backlog decline and the potential for a catch-up in government awards. CFO Matt Calderone explained the trend as a timing issue, not a demand concern, emphasizing confidence in medium-term recovery.
- Mariana Perez Mora (Bank of America) questioned the company’s role and visibility in the $25 billion Golden Dome missile defense program. Rozanski described Booz Allen’s positioning on multiple fronts, including cyber and data platforms, and highlighted unique contributions like the Brilliant Swarms approach.
- Colin Michael Canfield (Cantor) asked about recurring benefits from recent tax changes and the outlook for venture investment windfalls. Calderone indicated positive cash flow impacts from tax legislation and said venture fund gains could provide future tailwinds, though timing is uncertain.
- Sheila Karin Kahyaoglu (Jefferies) probed headcount strategy and the impact of outcome-based contracts on productivity. Calderone said headcount growth will track with funding normalization, while technology and new contracting models should drive higher revenue per employee over time.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will monitor (1) the pace at which delayed federal contract funding is released and converted into revenue, (2) the continued ramp-up and productivity gains from AI and technology investments, and (3) the stabilization and potential growth of the Civil business segment following restructuring. Execution on large new contracts and further adoption of outcome-based contracting will also be important indicators of future momentum.
Booz Allen Hamilton currently trades at $109.28, down from $115.03 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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