Booz Allen Hamilton NYSE: BAH executives said the government technology contractor exited what Chief Executive Horacio Rozanski called its “most challenging year” as a public company with stronger profitability than expected, even as revenue declined because of weakness in its civil business.
On the company’s fiscal fourth-quarter 2026 earnings call, Rozanski said Booz Allen faced “unprecedented headwinds” in civil work and significant changes across its markets, but responded through cost discipline, contract execution and continued investment in cyber, defense technology and artificial intelligence. He said the company is entering fiscal 2027 with “both momentum and focus,” while acknowledging continued uncertainty as federal customers adjust procurement approaches.
“Despite declining revenue, profitability exceeded our revised expectations,” Rozanski said. “What’s particularly notable is that we delivered this bottom-line performance while continuing to invest for future growth.”
Revenue Declines, But Profitability Tops Expectations
Chief Financial Officer Troy Lahr, who joined Booz Allen earlier this month, said fiscal 2026 gross revenue was $11.2 billion, with the year-over-year decline driven by the company’s civil business. Adjusted EBITDA was $1.2 billion, with an adjusted margin of 11%, and adjusted diluted earnings per share were $6.51. Free cash flow totaled $951 million.
For the fourth quarter, revenue declined 6.4% year over year to $2.8 billion. Revenue excluding billable expenses fell approximately 7% from the prior-year period. Lahr said the national security portfolio grew 1.6% year over year in the quarter, supported by demand for intelligence work and partially offset by lower billable expenses for defense customers. Civil revenue declined 23% year over year, which he attributed to the roll-off of the PTEMS contract and reductions on other contracts.
Adjusted EBITDA in the quarter was $309 million, with an adjusted EBITDA margin of 11.1%, up 50 basis points from a year earlier. Adjusted diluted EPS rose roughly 11% year over year to $1.78. Lahr said the increase reflected stronger profitability, a lower tax rate, a reduced share count and $12 million of pre-tax unrealized gains tied to Booz Allen’s ventures portfolio.
Net bookings in the quarter were $2.5 billion, producing a quarterly book-to-bill ratio of 0.9 times and a trailing 12-month book-to-bill ratio of 1.1 times. Backlog ended the fiscal year at $38 billion, up about 3% year over year. Funded backlog increased sequentially to $4.3 billion.
Fiscal 2027 Guidance Calls for Uneven Recovery
For fiscal 2027, Booz Allen guided for revenue of $11.2 billion to $11.7 billion. Lahr said recent divestitures and acquisitions are expected to roughly offset each other. The company expects its national security portfolio to grow in the mid-single digits, while civil revenue is projected to decline in the high single digits as the business works through difficult comparisons, particularly in the first half of the year.
Lahr said the first quarter is expected to be the “low point for growth,” with sequential improvement through the year. Adjusted EBITDA is expected to range from $1.24 billion to $1.29 billion, implying an adjusted EBITDA margin of about 11%. Adjusted EPS is expected to be between $6.00 and $6.35. Free cash flow is forecast at $825 million to $925 million, including estimated fiscal 2027 expenditures for the company’s new Reston headquarters. The guidance excludes a previously disclosed $170 million IRS refund, which Lahr said is now expected in fiscal 2028.
During the question-and-answer portion, Lahr said the guidance reflects what Booz Allen sees in the market today and does not assume “edge cases.” Rozanski added that the company is operating in a fluid environment, including potential budget uncertainty tied to an election year.
Civil Business Remains Under Pressure
President and Chief Operating Officer Kristine Martin Anderson said Booz Allen’s civil and national security markets remain “bifurcated,” with different near-term dynamics. Civil demand remains below historical levels, but she said the company is seeing acceleration, including a fourth-quarter civil book-to-bill of 1.2 times led by the health business.
Martin Anderson said the volume of civil awards is high, but many recompetes are coming with shorter periods of performance and smaller scopes. She said this means it will take time for improved demand to translate into growth. The business also faces difficult comparisons tied to last year’s contract cuts and reductions in work at Treasury.
In response to an analyst question, Martin Anderson said the company is seeing headwinds from prior-year contract reductions, Treasury-related reductions, smaller recompetes, fewer new starts because of last year’s weak award environment and budget challenges at the Department of Homeland Security. She also cited tailwinds including recent wins, an expanding customer base, a larger pipeline and strong recompete win rates.
Rozanski said Booz Allen is in “close contact” with customers and has had productive conversations following reputational issues raised by an analyst. “We are letting our work speak for itself,” he said, adding that even at Treasury the company is looking for opportunities to “turn the page.”
National Security, Cyber and Defense Tech Drive Optimism
Executives repeatedly pointed to national security, cyber and defense technology as the main growth drivers for fiscal 2027 and beyond. Martin Anderson said Booz Allen won $1.7 billion of national security work in the fourth quarter and is well positioned against priorities including cyber and defense tech.
She highlighted increasing demand for AI-enabled cyber solutions, saying Booz Allen supports important cyber missions in national security, defends federal agencies from cyberattacks, serves Fortune 500 companies across all 16 critical infrastructure areas and responds to more than 1,000 cyber incidents a year.
Rozanski said cyber demand is expected to accelerate across national security, civil and commercial markets. He said offensive cyber tools are becoming agentic faster than defensive tools, creating a need for Booz Allen’s cyber offerings, including its Vellox suite. The company is accelerating the release schedule for multiple Vellox products because “the demand is now,” he said.
Martin Anderson also cited Booz Allen’s award of an other transaction authority contract on Golden Dome for America’s Space-Based Interceptor program and the fourth-quarter award of Breakthrough Engineering and Advanced Technology Solutions, or BEATS, a $937 million single-award engineering and technology contract supporting Army modernization priorities.
Procurement Shift and Capital Deployment
Rozanski said Booz Allen is preparing for a market in which federal customers buy differently, with more emphasis on speed, commercial solutions and accountability for outcomes. He said the company drove a nearly 90% increase in OTA proposal submissions and about a 50% increase in OTA awards from the prior year.
He said Booz Allen expects productivity gains over time from delayering, “agentifying” its business, moving toward outcome-based and fixed-price work, and monetizing intellectual property. He said those trends should eventually cause revenue growth to outpace headcount growth, and profit growth to outpace revenue growth.
Lahr said Booz Allen deployed $366 million of capital in the fourth quarter, including $219 million in strategic investments through Booz Allen Ventures and venture partnerships, and $147 million in dividends and share repurchases. The company ended the quarter with $728 million in cash, total liquidity of $2.2 billion and a net leverage ratio of 2.6 times trailing 12-month adjusted EBITDA.
Rozanski closed the call by saying Booz Allen is focused on returning to growth while investing in cyber, defense technology, AI, quantum, 6G and related areas. “We’re moving faster, we’re investing with focus, and we’re building the technologies that make America safer and stronger,” he said.
About Booz Allen Hamilton NYSE: BAH
Booz Allen Hamilton Holding Corporation is a publicly traded management and technology consulting firm headquartered in McLean, Virginia. The company provides a wide range of professional services and solutions in strategy, analytics, digital transformation, engineering and cyber security. Its expertise spans from supporting federal civilian agencies to defense, intelligence and homeland security organizations, as well as select commercial industries.
Key offerings include data analytics and artificial intelligence applications, software development and modernization, systems integration, and cyber risk management.
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