second quarter of fiscal 2027
Filed Oct 23, 2026Profitability above expectations driven by strong operational execution; Adjusted Diluted EPS guidance raised above prior range.
Adjusted Net Income and Adjusted Diluted EPS increased despite lower revenue, National Security revenue increased, and fiscal 2027 Adjusted Diluted EPS guidance was raised.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenue, three months ended September 30, 2026GAAP | $2.78B | – | (3.9)% |
| Revenue, six months ended September 30, 2026GAAP | $5.58B | – | (4.1)% |
| Revenue, Excluding Billable Expenses, three months ended September 30, 2026non-GAAP | $1.96B | – | (0.8)% |
| Revenue, Excluding Billable Expenses, six months ended September 30, 2026non-GAAP | $3.92B | – | (2.3)% |
| Operating income, three months ended September 30, 2026GAAP | $245M | – | – |
| Operating income, six months ended September 30, 2026GAAP | $524M | – | – |
| Net income, three months ended September 30, 2026GAAP | $181M | – | 3.4% |
| Net income, six months ended September 30, 2026GAAP | $379M | – | (15.0)% |
| Adjusted Net Income, three months ended September 30, 2026non-GAAP | $211M | – | 15.3% |
| Adjusted Net Income, six months ended September 30, 2026non-GAAP | $428M | – | 16.6% |
| Diluted earnings per share, three months ended September 30, 2026GAAP | $1.50 | – | 5.6% |
| Diluted earnings per share, six months ended September 30, 2026GAAP | $3.13 | – | (12.6)% |
| Adjusted Diluted EPS, three months ended September 30, 2026non-GAAP | $1.76 | – | 18.1% |
| Adjusted Diluted EPS, six months ended September 30, 2026non-GAAP | $3.57 | – | 20.2% |
| EBITDA, three months ended September 30, 2026non-GAAP | $296M | – | (8.6)% |
| EBITDA, six months ended September 30, 2026non-GAAP | $620M | – | (0.2)% |
| Adjusted EBITDA, three months ended September 30, 2026non-GAAP | $313M | – | (3.4)% |
| Adjusted EBITDA, six months ended September 30, 2026non-GAAP | $647M | – | 1.9% |
| Adjusted EBITDA Margin on Revenue, three months ended September 30, 2026non-GAAP | 11.3% | – | +10 bps |
| Adjusted EBITDA Margin on Revenue, six months ended September 30, 2026non-GAAP | 11.6% | – | +70 bps |
| Net cash provided by operating activities, three months ended September 30, 2026GAAP | $294M | – | (30.2)% |
| Net cash provided by operating activities, six months ended September 30, 2026GAAP | $575M | – | 6.5% |
| Free Cash Flow, three months ended September 30, 2026non-GAAP | $263M | – | (33.4)% |
| Free Cash Flow, six months ended September 30, 2026non-GAAP | $524M | – | 6.7% |
| Total backlog as of September 30, 2026other | $40.93B | – | 1.9% |
| Funded backlog as of September 30, 2026other | $5.71B | – | – |
| Unfunded backlog as of September 30, 2026other | $10.41B | – | – |
| Priced options as of September 30, 2026other | $24.81B | – | – |
| Quarterly book-to-bill, three months ended September 30, 2026other | 1.5x | – | – |
| Trailing twelve months book-to-bill, trailing twelve months ended September 30, 2026other | 1.1x | – | – |
| Total Headcount as of September 30, 2026other | 31,000 | – | – |
| Customer Staff Headcount as of September 30, 2026other | 28,200 | – | – |
| Cash and cash equivalents as of September 30, 2026GAAP | $334M | – | – |
| Long-term debt, net of current portion as of September 30, 2026GAAP | $4.39B | – | – |
| Net Debt as of September 30, 2026non-GAAP | $4.08B | – | – |
| Net Leverage Ratio as of September 30, 2026non-GAAP | 3.3 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| National Security, three months ended September 30, 2026Includes revenues from Defense and Intelligence customers, which were previously separately reported. | $2.08B | – | – |
| Civil and Commercial, three months ended September 30, 2026Civil business performing in line with expectations. | $702M | – | – |
| National Security, six months ended September 30, 2026Includes revenues from Defense and Intelligence customers, which were previously separately reported. | $4.10B | – | – |
| Civil and Commercial, six months ended September 30, 2026Civil business performing in line with expectations. | $1.47B | – | – |
fiscal year 2027 outlook
- Revenue$11.3 - $11.6 billion
- Tax rate16-19%
- NoteRevenue Growth: 1.0 - 3.0%
- NoteAdjusted EBITDA: $1,260 - $1,290 million
- NoteAdjusted EBITDA Margin on Revenue: ~11%
- NoteAdjusted Diluted EPS: $6.50 - $6.70
- NoteFree Cash Flow: $850 - $925 million
- NoteAverage diluted shares outstanding: 118–120 million
- NoteCapital expenditures: approximately $200 million
Capital returns
- $965 million in total capital deployment
- Repurchases of common stock: $(170) million for the six months ended September 30, 2026
- Cash dividends paid: $(145) million for the six months ended September 30, 2026
- A regular quarterly dividend of $0.59 per share will be payable on December 4, 2026, to stockholders of record on November 12, 2026.
What drove it
- Management cited strong operational execution as the driver of profitability above expectations.
- National Security revenue was $2,076 million for the three months ended September 30, 2026, compared with $2,063 million in the prior-year period.
- The Company cited momentum across its National Security portfolio and stated that its Civil business was performing in line with expectations.
- Adjusted EBITDA Margin on Revenue increased by 10 basis points to 11.3% for the quarter.
- Quarterly book-to-bill was 1.5x and total backlog was $40,933 million as of September 30, 2026.
Concerns
- Quarterly revenue decreased (3.9)% year over year and Revenue, Excluding Billable Expenses decreased (0.8)%.
- Civil and Commercial revenue was $702 million for the quarter, compared with $827 million in the prior-year period.
- Adjusted EBITDA decreased (3.4)% to $313 million for the quarter.
- Quarterly Free Cash Flow decreased (33.4)% to $263 million.
- Cash and cash equivalents declined to $334 million as of September 30, 2026, from $728 million as of March 31, 2026.
- Net Leverage Ratio was 3.3 as of September 30, 2026, compared with 2.5 in the prior-year quarterly presentation.
What to watch
- Execution against fiscal 2027 revenue guidance of $11.3 - $11.6 billion and Revenue Growth guidance of 1.0 - 3.0%.
- National Security portfolio momentum and Civil and Commercial revenue performance.
- Adjusted EBITDA Margin on Revenue performance against ~11% fiscal 2027 guidance.
- Free Cash Flow performance against $850 - $925 million fiscal 2027 guidance.
- Backlog conversion, quarterly book-to-bill, and the impact of acquisition-related costs associated with Defy Security and Ultra I&C Mission Solutions.
Balance sheet and cash flow
- Cash and cash equivalents: $334 million as of September 30, 2026, compared with $728 million as of March 31, 2026.
- Current portion of long-term debt: $19 million as of September 30, 2026.
- Long-term debt, net of current portion: $4,391 million as of September 30, 2026, compared with $3,921 million as of March 31, 2026.
- Net Debt: $4,076 million; Net Leverage Ratio: 3.3.
- Purchases of property, equipment, and software: $(51) million for the six months ended September 30, 2026.
- Payments for business acquisitions and dispositions, net of cash acquired: $(934) million for the six months ended September 30, 2026.
- Payments for strategic investments: $(155) million for the six months ended September 30, 2026.
- Repayments on term loan: $(724) million for the six months ended September 30, 2026.
- Net proceeds from debt issuance: $1,190 million for the six months ended September 30, 2026.
Analysis
Booz Allen reported lower second-quarter revenue but improved adjusted earnings. Revenue decreased (3.9)% to $2,778 million, while Revenue, Excluding Billable Expenses decreased (0.8)% to $1,957 million. GAAP net income increased 3.4% to $181 million, Adjusted Net Income increased 15.3% to $211 million, and Adjusted Diluted EPS increased 18.1% to $1.76. The six-month comparison shows a similar distinction: revenue declined (4.1)%, while Adjusted Net Income increased 16.6% and Adjusted Diluted EPS increased 20.2%.
The revenue mix reflected growth in National Security and a decline in Civil and Commercial. National Security revenue was $2,076 million in the quarter versus $2,063 million in the prior-year period, while Civil and Commercial revenue was $702 million versus $827 million. Management described momentum across the National Security portfolio and stated that the Civil business was performing in line with expectations. The Company also combined previously separately reported Defense and Intelligence customer revenue into National Security, with prior periods recast to reflect that presentation.
Profitability was supported by margin improvement despite lower adjusted EBITDA dollars. Adjusted EBITDA decreased (3.4)% to $313 million, but Adjusted EBITDA Margin on Revenue increased 10 basis points to 11.3%. GAAP operating income was $245 million, compared with $283 million in the prior-year quarter. The non-GAAP reconciliation identifies $17 million of other corporate expenses and $22 million of acquisition amortization in the calculation of quarterly Adjusted Net Income. The Company stated that fiscal 2027 other corporate expenses consist primarily of acquisition-related costs associated with Defy Security in the first quarter and Ultra I&C Mission Solutions in the second quarter.
Cash generation was weaker in the quarter but higher for the first half. Quarterly Free Cash Flow was $263 million, compared with $395 million, while six-month Free Cash Flow was $524 million, compared with $491 million. The Company deployed $965 million of total capital, repurchased $170 million of common stock and paid $145 million of cash dividends during the six-month period. Investing activity included $(934) million of payments for business acquisitions and dispositions and $(155) million of payments for strategic investments. Cash and cash equivalents were $334 million at September 30, 2026, and Net Debt was $4,076 million, with a Net Leverage Ratio of 3.3.
The Company updated fiscal 2027 guidance, narrowing revenue to $11.3 - $11.6 billion and maintaining Adjusted EBITDA Margin on Revenue at ~11%. It raised Adjusted Diluted EPS guidance to $6.50 - $6.70 from the prior range shown in the release of $6.00 - $6.35, and increased the lower end of Free Cash Flow guidance to $850 million from $825 million. Backlog was $40,933 million, up 1.9%, while quarterly book-to-bill was 1.5x, below the prior-year 1.7x, and trailing twelve-month book-to-bill remained 1.1x.
Management, verbatim
Booz Allen is executing exceptionally well and investing in our next phase of growth.
Horacio Rozanski, Booz Allen Chairman and CEO
We are building and scaling our cyber and defense tech products and bringing super intelligence into our nation’s most critical missions to deliver greater value and impact.
Horacio Rozanski, Booz Allen Chairman and CEO
Not in the filing
stated, not guessed- Gross margin was not reported.
- GAAP operating margin was not reported.
- Quarterly cash flow statement line items other than net cash provided by operating activities and Free Cash Flow were not reported.
- Prior-quarter revenue, Revenue, Excluding Billable Expenses, operating income, diluted EPS, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow were not reported.
- A previous earnings release outlook was not provided for comparison with actual results.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.