Booz Allen Hamilton (BAH) delivered a mixed QQ2 2026 performance characterized by bifurcated demand across its portfolio. Revenue of 2.89 billion USD declined 8.15% year over year and 1.16% quarter over quarter, driven by a 22% year-over-year drop in the Civil segment (excluding discrete items) while the National Security portfolio expanded 5% YoY. Gross bookings reached 7.2 billion USD with net bookings of 4.8 billion USD, and total backlog climbed to 40.0 billion USD, up 3% YoY. Funded backlog rose 34% sequentially to about 5.0 billion USD but was down 6% YoY, signaling improved near-term visibility but continued mix-driven margin pressure given Civil’s higher fixed-price content.
Management acknowledged a historically bifurcated market where Civil funding cycles remain slow and uncertain, while National Security is more resilient though still subject to funding frictions and CR dynamics. As a result, Booz Allen revised FY26 guidance down across all key metrics: revenue of 11.3–11.5 billion USD, adjusted EBITDA margins in the mid-teens (stated as mid-10% range in the call materials), ADEPS of 5.45–5.65, and free cash flow of 850–950 million USD. The company plans to accelerate its VoLT framework, double down on growth vectors (cyber, AI including Agentic and edge AI, war-fighting tech, critical national security programs), and implement a net incremental ~150 million USD annualized cost reduction to protect near-term profitability and fund core technology investments. The near-term hurdle remains government shutdown risk and protracted procurement cycles, but management conveyed confidence in longer-term margin recovery and growth as these structural initiatives play out into FY2027 and beyond.