Booz Allen Hamilton reported Q3 FY2026 results that align with revised October guidance despite macro volatility and the longest government shutdown in history. Revenue declined about 10% year over year to $2.62 billion, while adjusted EBITDA reached $285 million for a 10.9% margin, consistent with year-to-date profitability. Net income rose 7% YoY to $200 million, aided by a lower tax rate and a smaller share count; diluted EPS = $1.63, with ADEPS at $1.77.
The company continues to execute on its three strategic priorities: (1) cost reduction to create capacity for growth, (2) transition to outcome-based contracting and fixed-price models (including Thunderdome and DARPA portfolio optimization), and (3) doubling down on growth vectors—cyber, national security, AI, and strategic partnerships. A notable near-term development is Velox Reverser, an AI-native malware reverse-engineering product, launching in GA for federal and commercial customers, signaling Booz Allen’s push to productize IP for scale.
Management also highlighted a robust pipeline and backlog recovery: nearly $53 billion in qualified pipeline for FY2027 (up ~12% YoY) and a year-end funded backlog above $38 billion (a record level), underscoring resilience and long-cycle revenue opportunities. The firm tightened FY2026 guidance and expects Q4 funding to improve but still lag typical seasonality. Looking ahead, Booz Allen sees meaningful upside from increased defense/AI deployments, civil market stabilization, and enhanced partnerships (including a16z, with up to $400 million deployed). The execution is contingent on government funding dynamics, execution of fixed-price/outcome-based work, and the ability to scale high-growth platforms like Velox Reverser and Thunderdome in the broader market.