EPS of $3.01 increased by 134.1% from previous year
Gross margin of 56.7%
Net income of 390.11M
""Our growth strategy, VOLT, which stands for velocity, leadership and technology, continues to fuel our performance and positions us for the future."" - Horacio Rozanski
Booz Allen Hamilton Holding Corporation (BAH) Q2 FY2025 Results: Strong Growth and Profitability Amidst Uncertainty
Executive Summary
Booz Allen Hamilton Holding Corporation (BAH) reported a stellar performance in Q2 FY2025, achieving significant revenue growth of 18% year-over-year (YoY) to $3.146 billion. The company's net income skyrocketed by 129% YoY to $390 million, and it raised its full-year guidance across all metrics, indicating strong operational momentum. Despite geopolitical uncertainties and impending changes from a significant election cycle, management expressed confidence in their sustained growth trajectory driven by their innovative VOLT strategy focusing on velocity, leadership, and technology. The firm is well-positioned to meet the evolving demands of its clients, particularly in civil and defense markets, and aims to continue leveraging technology to enhance mission success.
Key Performance Indicators
Revenue
3.15B
QoQ: 6.95% | YoY:18.01%
Gross Profit
1.78B
56.70% margin
QoQ: 13.60% | YoY:24.45%
Operating Income
548.61M
QoQ: 115.00% | YoY:105.48%
Net Income
390.11M
QoQ: 136.10% | YoY:128.51%
EPS
3.02
QoQ: 137.80% | YoY:134.11%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** $3.146 billion, up 18% YoY, and a remarkable 7% increase QoQ
**Operating Income:** Rose to $549 million, a dramatic 105% increase YoY
**Net Income:** $390 million, a 129% YoY increase
**EBITDA:** $364 million, reflecting a 25% increase from the prior year, with an adjusted EBITDA margin of 11.6%.
**Cash and Equivalents:** $559 million
Financial Highlights
Financial Performance
- Revenue: $3.146 billion, up 18% YoY, and a remarkable 7% increase QoQ
- Operating Income: Rose to $549 million, a dramatic 105% increase YoY
- Net Income: $390 million, a 129% YoY increase
- EBITDA: $364 million, reflecting a 25% increase from the prior year, with an adjusted EBITDA margin of 11.6%.
Balance Sheet Highlights
- Cash and Equivalents: $559 million
- Total Debt: $3.609 billion, resulting in a debt-to-equity ratio of 3.01
- Net Debt: $3 billion, showcasing leverage management
Cash Flow Performance
- Free Cash Flow: $563 million, supported by significant operational cash generation of $587 million.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
3.15B
18.01%
6.95%
Gross Profit
1.78B
24.45%
13.60%
Operating Income
548.61M
105.48%
115.00%
Net Income
390.11M
128.51%
136.10%
EPS
3.02
134.11%
137.80%
Key Financial Ratios
currentRatio
1.56
grossProfitMargin
56.7%
operatingProfitMargin
17.4%
netProfitMargin
12.4%
returnOnAssets
5.67%
returnOnEquity
32.5%
debtEquityRatio
3.01
operatingCashFlowPerShare
$4.57
freeCashFlowPerShare
$4.39
dividendPayoutRatio
17.1%
priceToBookRatio
17.4
priceEarningsRatio
13.39
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Market Demand and Operational Confidence
- Horacio Rozanski, CEO: "Amid geopolitical conflict and tension, urgency for accelerating defense missions and strong demand for emerging technology, we remain confident about the continued expansion of our defense business and of its impact."
- Matt Calderone, EVP & CFO: "We booked $8.2 billion of awards in the second quarter... Our backlog now stands at a record $41 billion... We are pleased to raise guidance across all metrics for full fiscal year 2025."
Strategic Focus
- Rozanski emphasized the importance of technology integration in client missions, stating that Booz Allen is strategically positioned to adapt to shifting client demands faster than competitors.
- Mention of a significant increase in civil revenue driven by technology implementation underscores their growth potential.
"Our growth strategy, VOLT, which stands for velocity, leadership and technology, continues to fuel our performance and positions us for the future."
â Horacio Rozanski
"Booz Allen has delivered outstanding organic revenue growth, disciplined capital deployment, and a robust increase in EBITDA dollars. This is the ultimate proof point that VOLT is working."
â Matt Calderone
Forward Guidance
Management raised its full-year revenue growth expectation to between 11% and 13%, with adjusted EBITDA forecasted between $1.3 billion and $1.33 billion for FY 2025. The upward revisions reflect confidence in their operational strategy and robust demand despite external uncertainties. Additionally, the company anticipates a lasting increase in its margin profile, reinforcing its competitive edge in the market for the foreseeable future. Investors should monitor upcoming changes in the U.S. political landscape and geopolitical tensions, which could influence public sector spending.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
BAH Focus
56.70%
17.40%
32.50%
13.39%
HURN
30.70%
12.00%
7.49%
11.77%
CRAI
25.30%
6.58%
3.41%
45.00%
FORR
54.20%
9.35%
2.65%
13.03%
EXPO
29.70%
25.40%
7.43%
41.59%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Booz Allen represents a compelling investment opportunity with a solid growth trajectory, particularly in sectors requiring advanced technology solutions. The robust performance metrics, combined with guidance revisions upward, indicate confidence in their operational strategy. Investors should consider the balance of potential risks posed by political volatility against the strong fundamentals that the company has showcased in this quarter. Continued monitoring of both market trends and internal financial metrics will be critical for assessing investment value.
Key Investment Factors
Growth Potential
Booz Allen is poised for sustained growth due to strong demand in civil and defense sectors, backed by a significant increase in backlog and recent contract wins.
Profitability Risk
The main risks include political uncertainties surrounding the upcoming elections, potential procurement disruptions in the civil market, and competitive pressures in pricing.
Financial Position
Despite a high debt level relative to equity, the company maintains a healthy cash flow position, which is critical for managing debt obligations and facilitating strategic investments.
SWOT Analysis
Strengths
Strong brand recognition and reputation in consulting services
Impressive revenue growth driven by strategic focus on technology integration and client mission support
Record backlog indicative of robust market demand and operational capability
Weaknesses
High debt-to-equity ratio may raise concerns regarding financial stability
Dependence on federal government contracts can create vulnerability to budget cuts or political changes
Opportunities
Expansion of cybersecurity and AI solutions in government contracts
Growing demand for data-driven analytic solutions across various sectors
Potential to leverage new technologies to enhance service offerings
Threats
Geopolitical instability may impact government contracts
Potential volatility in government spending due to election outcomes or administrative changes
Intensifying competition in the consulting sector, particularly in technology services