Booz Allen lifts FY27 profit outlook

Booz Allen Hamilton (BAH) raised its fiscal 2027 adjusted earnings guidance after reporting stronger-than-expected second-quarter profit alongside a modest revenue decline. The company now projects adjusted diluted earnings per share of $6.50 to $6.70 for the year. The full-year revenue outlook has been narrowed to a range of $11.3 billion to $11.6 billion, implying low single-digit growth. Adjusted EBITDA guidance has been increased to $1.26 billion to $1.29 billion, and free cash flow is forecast at $850 million to $925 million.

For the quarter ended September 30, adjusted diluted EPS rose 18.1% to $1.76 from $1.49 a year earlier, exceeding analyst expectations. Net income increased 3.4% to $181 million, or $1.50 per share. Adjusted net income rose 15.3% to $211 million. These results allowed the company to lift full-year profit targets despite top-line pressure.

Second-quarter revenue fell 3.9% year over year to $2.78 billion, while revenue excluding billable expenses slipped 0.8% to $1.96 billion. Adjusted EBITDA for the quarter was $313 million, down 3.4%, but the adjusted EBITDA margin on revenue improved by 10 basis points to 11.3%. The company generated free cash flow of $263 million, compared with $395 million in the prior-year period, and net cash from operating activities was $294 million versus $421 million.

Booz Allen’s updated full-year guidance assumes an adjusted EBITDA margin of around 11%, an adjusted effective tax rate of 16% to 19%, and an average diluted share count of 118 million to 120 million shares. Capital expenditures for the year are expected to be approximately $200 million. Management indicated that efficiency and execution on existing contracts are key drivers of the higher earnings outlook.

The company described its market environment as characterized by bifurcated dynamics. National security revenue excluding billable expenses grew 5.9% in the quarter, reflecting accelerating demand in core defense and intelligence work. In contrast, the civil business continued to face headwinds from procurement delays and slower program starts that began in the prior fiscal year, contributing to the overall revenue decline.

Despite these pressures, Booz Allen reported total backlog of about $41 billion, up 1.9% from a year earlier, and a quarterly book-to-bill ratio of 1.5 times. The company said its national security portfolio is gaining traction, while results in the civil unit are tracking internal expectations. Management is investing in the next phase of growth, including building and scaling cyber and defense technology products, with the expectation that funded backlog will support accelerating growth in the second half of the fiscal year.