EPS of $1.45 increased by 31.5% from previous year
Gross margin of 55.2%
Net income of 186.95M
""Booz Allen has always been prepared for the technological, societal, and geopolitical changes that shape the times... Today, we believe we are on the precipice of another transformative era."" - Horacio Rozanski
Booz Allen Hamilton Holding Corporation (BAH) Q3 2025 Financial Results Analysis: Strong Growth Amid Transition Challenges
Executive Summary
Booz Allen Hamilton Holding Corporation (BAH) reported robust Q3 2025 results, achieving $2.917 billion in revenue, a year-over-year increase of 14%. The growth was driven by strong performance across government sectors, notably a 19% surge in defense revenues. Despite facing a transitional environment characterized by uncertainty in procurement due to an incoming administration, BAH's strategic focus on advanced technology and innovation positioned it well to capitalize on emerging opportunities. Adjusted EBITDA reached $332 million, indicating continued operational efficiency, while management expressed optimism for sustained growth driven by its VoLT strategy focused on speed, leadership, and technology.
### Comparisons
- Maintain a trailing twelve-month book-to-bill ratio of 1.41x, indicating robust backlog management.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
2.92B
13.52%
-7.28%
Gross Profit
1.61B
16.04%
-9.67%
Operating Income
291.26M
17.65%
-46.91%
Net Income
186.95M
28.36%
-52.08%
EPS
1.46
31.53%
-51.66%
Key Financial Ratios
currentRatio
1.57
grossProfitMargin
55.2%
operatingProfitMargin
9.98%
netProfitMargin
6.41%
returnOnAssets
2.74%
returnOnEquity
15.5%
debtEquityRatio
2.97
operatingCashFlowPerShare
$1.18
freeCashFlowPerShare
$1.05
dividendPayoutRatio
35%
priceToBookRatio
13.55
priceEarningsRatio
21.93
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Strategic Focus and Positioning
- Horacio Rozanski, CEO: "We believe VoLT has positioned us to capture this moment as we apply advanced technologies to move faster, disrupt outdated processes, and protect our nation’s technological supremacy."
Financial Performance
- Matt Calderone, CFO: "We are poised to deliver another year of double-digit growth in revenue and adjusted EBITDA, current guidance moves us towards the upper end of revenue growth expectations of 12-13%."
"Booz Allen has always been prepared for the technological, societal, and geopolitical changes that shape the times... Today, we believe we are on the precipice of another transformative era."
— Horacio Rozanski
"I’m exceptionally proud of what our Booz Allen’s team has accomplished, and excited about the potential we see for the future."
— Matt Calderone
Forward Guidance
Booz Allen anticipates a cautious approach in the near term due to the transitional phase of the new administration impacting federal spending priorities. However, management remains confident in achieving double-digit growth in both revenue and adjusted EBITDA based on a solid backlog and pipeline for future projects. The company updated its revenue guidance to a range of $1.31 billion to $1.33 billion in adjusted EBITDA, anticipating strong earnings momentum as the fiscal year progresses.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
BAH Focus
55.24%
9.98%
15.50%
21.93%
HURN
32.30%
11.20%
5.19%
17.77%
CRAI
31.30%
11.00%
5.59%
24.81%
FORR
54.60%
1.93%
-2.47%
-14.81%
EXPO
22.90%
19.00%
6.35%
56.63%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Booz Allen Hamilton presents a compelling investment opportunity despite near-term uncertainties linked to federal procurement transitions. Its strong focus on advanced technologies aligned with government needs, coupled with a robust financial position and a strategy aimed at driving long-term growth, positions it favorably against peers in the consulting sector. Investors should note the potential risks related to dependency on government contracts and the ongoing political environment but may find reassurance in the company’s historical resilience during administrative transitions.
Key Investment Factors
Growth Potential
Booz Allen's investment in advanced technologies like AI, cybersecurity, and innovative solutions is expected to drive substantial growth across government contracts, particularly in defense and intelligence sectors. Enhanced partnerships with tech leaders signal readiness to capture new business in emerging areas.
Profitability Risk
Operational risks linked to the transitional environment of federal government funding may lead to project delays or reassessments that could affect revenue continuity. Additionally, dependence on government contracts exposes the company to broader shifts in policy and funding priorities.
Financial Position
Booz Allen maintains a strong balance sheet with $454 million in cash and a net leverage ratio of 2.3x. This capacity allows for continued investments in growth areas while managing debt effectively, positioning the company favorably against competitors.
SWOT Analysis
Strengths
Strong market position in federal consulting with the largest AI and cyber business in the federal government.
Robust revenue growth propelled by strategic investments in technology and innovation, especially in defense and intelligence sectors.
Healthy cash flow generation enabling significant reinvestment into technology and shareholder value activities.
Weaknesses
High leverage ratio compared to industry norm, with net debt at $2.9 billion, which may affect financial flexibility in unfavorable market conditions.
Sensitivity to federal funding and budgetary approvals that can be affected by changing political landscapes.
Opportunities
Growing demand for advanced technology solutions in government operations, particularly following the transition in administration.
Opportunity to expand partnerships with commercial technology firms to drive innovation in federal procurement and operational effectiveness.
Threats
Potential short-term slowdown in federal procurement as the new administration reassesses priorities and aligns budgets.
Increased competition in the consulting sector as other firms also look to capitalize on technological advancements.