Booz Allen Hamilton saw its stock soar by almost 15% on Friday following a strong earnings report that exceeded Wall Street’s expectations on earnings per share despite a dip in revenue. The company reported an adjusted EPS of $1.81 for Q1, significantly beating the consensus estimate of $1.48.

Mixed Financial Results Highlight Margin Improvements

Net income slid to $198 million, or $1.63 per share, down from $271 million, or $2.16 per share, a year earlier. Revenue decreased by 4.2% year-over-year, reaching $2.8 billion, slightly below estimates of $2.81 billion. However, adjusted EBITDA grew 7.4% year-over-year to $334 million, lifting the adjusted EBITDA margin from 10.6% last year to 11.9%. This improvement indicates the company’s focus on operational efficiency amid a challenging top line.

Business Segments and Strategic Shifts Impact Results

The civil segment continues to drag on overall performance due to contract reductions that forced Booz Allen to cut thousands of jobs last year. These layoffs were part of a $150 million restructuring plan introduced in response to pressures from the previous administration demanding cost savings and accountability from federal consultants. As of June 30, the company’s workforce dropped 7.5% year-over-year to about 30,900 employees.

Conversely, the national security segment is gaining momentum, with increasing demand driven by investments in cutting-edge cyber operations, defense technology, and AI-focused initiatives. The company's backlog rose 3.2% year-over-year to nearly $39.5 billion, signaling a solid pipeline despite civil sector headwinds. Since roughly 98% of Booz Allen's $12 billion annual revenue is government-related, the distinction between national security and civil government contracts is becoming a key factor for investors.

Outlook Remains Steady

CEO Horacio Rozanski reaffirmed the full-year forecast, expecting adjusted EPS in the range of $6.00 to $6.35, revenues between $11.2 billion and $11.7 billion, and adjusted EBITDA of $1.24 billion to $1.29 billion. These targets are in line with consensus estimates, maintaining investor confidence in the company’s trajectory.