Q3 FY2026
Filed Oct 28, 2026Parsons Reports Third Quarter 2026 Results
Third-quarter revenue increased 2%, adjusted EBITDA increased 6% to a record $168 million, adjusted EBITDA margin reached a record 10.2%, and record backlog was supported by a 1.1x book-to-bill ratio. GAAP operating income and net income declined, primarily due to higher transaction-related expenses, while revenue guidance was narrowed and reiterated at the mid-point.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 revenueGAAP | $1.65B | – | 2% |
| Q3 2026 revenue organic changeother | down 1% | – | down 1% on an organic basis |
| Q3 2026 revenue excluding confidential contractother | increased 5% | – | increased 5% |
| Q3 2026 organic revenue excluding confidential contractother | increased 2% | – | increased 2% on an organic basis |
| Q3 2026 direct cost of contractsGAAP | 1.27B | – | – |
| Q3 2026 equity in earnings of unconsolidated joint venturesGAAP | 7.24M | – | – |
| Q3 2026 selling, general and administrative expensesGAAP | 285.5M | – | – |
| Q3 2026 operating incomeGAAP | $103.8M | – | decreased 4% |
| Q3 2026 income before income tax expenseGAAP | 87.86M | – | – |
| Q3 2026 income tax expenseGAAP | 20.45M | – | – |
| Q3 2026 net income including noncontrolling interestsGAAP | 67.41M | – | – |
| Q3 2026 net income attributable to Parsons CorporationGAAP | $54.15M | – | decreased 16% |
| Q3 2026 diluted earnings per shareGAAP | $ 0.51 | – | – |
| Q3 2026 basic earnings per shareGAAP | $ 0.51 | – | – |
| Q3 2026 adjusted EBITDA including noncontrolling interestsnon-GAAP | $167.8M | – | 6% increase |
| Q3 2026 adjusted EBITDA marginnon-GAAP | 10.2 % | – | expanded 40 basis points |
| Q3 2026 adjusted net income attributable to Parsons Corporationnon-GAAP | $94.92M | – | – |
| Q3 2026 adjusted diluted earnings per sharenon-GAAP | $ 0.89 | – | – |
| Q3 2026 adjusted basic earnings per sharenon-GAAP | $ 0.90 | – | – |
| Nine months 2026 revenueGAAP | $4.72B | – | – |
| Nine months 2026 operating incomeGAAP | 200.8M | – | – |
| Nine months 2026 net income attributable to Parsons CorporationGAAP | $91.86M | – | – |
| Nine months 2026 diluted earnings per shareGAAP | $ 0.85 | – | – |
| Nine months 2026 adjusted EBITDA including noncontrolling interestsnon-GAAP | $361.0M | – | – |
| Nine months 2026 adjusted EBITDA marginnon-GAAP | 7.7 % | – | – |
| Nine months 2026 adjusted net income attributable to Parsons Corporationnon-GAAP | $173.7M | – | – |
| Nine months 2026 adjusted diluted earnings per sharenon-GAAP | $ 1.62 | – | – |
| Q3 2026 cash flow from operating activitiesGAAP | $269M | – | – |
| Nine months 2026 net cash provided by operating activitiesGAAP | $322.6M | – | – |
| Q3 2026 net bookingsother | $1.8B | – | – |
| Q3 2026 overall book-to-bill ratioother | 1.1x | – | – |
| Q3 2026 total backlogother | $9.4B | – | up $530 million, or 6% |
| Q3 2026 funded backlogother | $6.8B | – | increased 7% year-over-year |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Critical InfrastructureOrganic growth of 1% and inorganic revenue contributions from the company's Applied Sciences acquisition. Organic growth was primarily driven by the Transportation market. | $846M | – | 2% |
| Federal SolutionsRevenue decreased 3% on an organic basis. Excluding the company's confidential contract, revenue increased 9% and 3% on an organic basis, driven by Cyber and Electronic Warfare and Transportation market growth and contributions from the Altamira acquisition. | $805M | – | 2% |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Fiscal Year 2026 outlook
- Revenue$6.25 billion - $6.45 billion
- NoteAdjusted EBITDA including non-controlling interest: $510 million - $550 million
- NoteCash Flow from Operating Activities: $430 million - $490 million
Capital returns
- Repurchases of common stock: $ 109,987 (in thousands) for the nine months ended September 30, 2026.
- Repurchases of common stock: $ 64,994 (in thousands) for the nine months ended September 30, 2025.
What drove it
- Critical Infrastructure adjusted EBITDA including noncontrolling interests increased by $8 million, or 9%, to $94 million, and adjusted EBITDA margin expanded 80 basis points to a record 11.1%, driven by ramp up of recent awards, contributions from accretive acquisitions, and stronger program execution.
- Federal Solutions adjusted EBITDA including noncontrolling interests increased by $2 million, or 2%, to $74 million. Margin remained unchanged at 9.2%, primarily driven by contributions from acquisitions and growth on accretive contracts.
- Federal Solutions contract awards were $ 994,280 (in thousands) in Q3 2026, compared to $ 649,692 (in thousands) in Q3 2025.
- Critical Infrastructure contract awards were $ 826,916 (in thousands) in Q3 2026, compared to $ 943,317 (in thousands) in Q3 2025.
- Total contract awards were $ 1,821,196 (in thousands) in Q3 2026, compared to $ 1,593,009 (in thousands) in Q3 2025.
- Federal Solutions total backlog was $ 4,643,189 (in thousands) as of September 30, 2026, compared to $ 4,306,187 (in thousands) as of September 30, 2025.
- Critical Infrastructure total backlog was $ 4,719,277 (in thousands) as of September 30, 2026, compared to $ 4,526,260 (in thousands) as of September 30, 2025.
Concerns
- GAAP operating income decreased 4% to $104 million, primarily due to higher transaction-related expenses.
- Net income attributable to Parsons Corporation decreased 16% to $54 million because of the same factors.
- Federal Solutions revenue decreased 3% on an organic basis, including the company's confidential contract.
- Nine-month adjusted EBITDA including noncontrolling interests was $ 360,992 (in thousands), compared to $ 456,044 (in thousands) in the prior-year period.
- Matt Ofilos will resign as Chief Financial Officer effective November 6, 2026, to pursue another professional opportunity. George Ball was appointed interim Chief Financial Officer effective November 6, 2026.
What to watch
- Conversion of record total backlog of $9.4 billion and record funded backlog of $6.8 billion into revenue.
- Execution on the remote-location contracts divestiture, for which the company signed a definitive purchase agreement and is finalizing novation.
- Progress on the Critical Infrastructure joint venture program.
- Federal Solutions organic revenue performance and the effect of the confidential contract.
- Procurement timing and geopolitical uncertainty cited by management.
- Delivery against fiscal year 2026 revenue guidance of $6.25 billion - $6.45 billion, adjusted EBITDA guidance of $510 million - $550 million, and operating cash flow guidance of $430 million - $490 million.
Balance sheet and cash flow
- Cash and cash equivalents: $ 296,954 (in thousands) as of September 30, 2026, compared to $ 466,388 (in thousands) as of December 31, 2025.
- Long-term debt: $ 1,357,164 (in thousands) as of September 30, 2026, compared to $ 1,237,816 (in thousands) as of December 31, 2025.
- Capital expenditures: $ 48,961 (in thousands) for the nine months ended September 30, 2026, compared to $ 36,030 (in thousands) for the nine months ended September 30, 2025.
- Payments for acquisitions, net of cash acquired: $ 330,123 (in thousands) for the nine months ended September 30, 2026, compared to $ 118,294 (in thousands) for the nine months ended September 30, 2025.
- Net cash used in investing activities: $ 426,757 (in thousands) for the nine months ended September 30, 2026, compared to $ 188,314 (in thousands) for the nine months ended September 30, 2025.
- Net increase (decrease) in cash, cash equivalents, and restricted cash: $ 169,434 (in thousands) for the nine months ended September 30, 2026, compared to $ 30,994 (in thousands) for the nine months ended September 30, 2025.
- Trailing-12-month operating cash flow: $490 million, an increase of 12% over the prior 12-month period.
Analysis
Parsons reported Q3 2026 revenue of $1.7 billion, up 2% year-over-year, while organic revenue was down 1%. Excluding the confidential contract, total revenue increased 5% and organic revenue increased 2%, with growth attributed to Cyber and Electronic Warfare and Transportation. Critical Infrastructure reached an all-time-high $846 million of revenue, while Federal Solutions reported $805 million and a 3% organic revenue decline including the confidential contract.
Profitability was stronger on an adjusted basis but weaker under GAAP. Adjusted EBITDA increased 6% to a record $168 million and adjusted EBITDA margin expanded 40 basis points to a record 10.2%. Critical Infrastructure adjusted EBITDA rose 9% and its margin expanded to 11.1%, while Federal Solutions adjusted EBITDA increased 2% and held a 9.2% margin. GAAP operating income decreased 4% to $104 million and net income decreased 16% to $54 million, primarily due to higher transaction-related expenses.
Bookings and backlog support the reported demand backdrop. The company recorded a 1.1x Q3 book-to-bill ratio on $1.8 billion of net bookings, with Federal Solutions at 1.2 and Critical Infrastructure at 1.0. Total backlog reached a record $9.4 billion, up $530 million, or 6%, from Q3 2025, and funded backlog reached a record $6.8 billion. Federal Solutions contract awards increased to $994,280 thousand from $649,692 thousand, while Critical Infrastructure awards declined to $826,916 thousand from $943,317 thousand.
Cash generation was a notable strength. Q3 cash flow from operating activities was $269 million compared to $16 3 million in the third quarter of 2025, and trailing-12-month operating cash flow was $490 million, an increase of 12%. For the first nine months, operating cash flow was $322,619 thousand, while the company spent $330,123 thousand on acquisitions, $48,961 thousand on capital expenditures, and $109,987 thousand on share repurchases. Cash and cash equivalents were $296,954 thousand at September 30, 2026, and long-term debt was $1,357,164 thousand.
The company narrowed its fiscal year 2026 revenue range to $6.25 billion - $6.45 billion and its adjusted EBITDA range to $510 million - $550 million, while reiterating operating cash flow guidance of $430 million - $490 million. Management cited strong awards, record backlog and a robust pipeline, but also identified procurement timing and geopolitical uncertainty. The CFO transition effective November 6, 2026 and the pending remote-location contracts divestiture are additional items for investors to monitor.
Management, verbatim
We delivered a strong third quarter, exceeding our commitments with record adjusted EBITDA and adjusted EBITDA margin, and robust operating cash flow and bookings across both Federal Solutions and Critical Infrastructure. This performance highlights the resilience of our diversified portfolio and the strength of our differentiated solutions and products. Strong awards, record total and funded backlog, and a robust pipeline provide a solid foundation for continued organic growth.
Carey Smith, chair, president, and chief executive officer
While we continue to navigate procurement timing and geopolitical uncertainty, the alignment of our differentiated capabilities with our customers’ most critical national security and infrastructure needs reinforces our confidence in Parsons’ outlook. We remain focused on disciplined execution, converting our strong pipeline and recent awards into profitable growth, and delivering long-term value for our customers, employees, and shareholders.
Carey Smith, chair, president, and chief executive officer
Not in the filing
stated, not guessed- GAAP gross profit and GAAP gross margin were not reported.
- Non-GAAP free cash flow was not reported.
- Q3 capital expenditures were not reported.
- Dividend amount and dividend guidance were not reported.
- Effective tax rate was not reported.
- Prior-quarter comparisons for reported metrics were not reported.
- A prior earnings release outlook was not provided separately; therefore, no actual-versus-prior-guidance comparison is included.
- Q3 2026 funded backlog prior-year dollar amount was not reported on the funded-backlog line.
- Q3 2026 operating cash flow prior-year figure appears in the filing text as "$16 3 million"; no normalized or reconstructed figure has been used.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.