• Revenue Growth: Approximately 14% year-over-year increase to $2.9 billion.
• Organic Revenue Growth: About 13% year-over-year.
• Adjusted EBITDA: $332 million with an 11.4% margin.
• Net Income: $187 million, a 28% increase year-over-year.
• Adjusted Net Income: $198 million, a 7% increase year-over-year.
• Diluted EPS: $1.45, up 31% year-over-year.
• Adjusted Diluted EPS: $1.55, up 10% year-over-year.
• Free Cash Flow: $134 million.
• Share Repurchases: $149 million at an average price of $157.74 per share.
• Dividend Increase: Quarterly dividend increased to $0.55 per share.
• Book-to-Bill Ratio: 1.41 times trailing 12-month, highest in six years.
• Backlog: $39 billion, up 15% year-over-year.
• Headcount Growth: 6% increase from a year ago, with over 32,000 client staff.

• Warning! GuruFocus has detected 2 Warning Signs with BAH.

Release Date: January 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Booz Allen Hamilton Holding Corp (NYSE:BAH) reported double-digit growth in both revenue and adjusted EBITDA for the third quarter of fiscal year 2025.
• The company achieved approximately 14% top-line growth, with 13% being organic, and maintained a strong adjusted EBITDA margin of 11.4%.
• Booz Allen Hamilton Holding Corp (NYSE:BAH) has the largest AI business in the federal government and one of the largest cyber businesses globally.
• The company has expanded partnerships with Palantir Technologies and Amazon Web Services to accelerate outcomes across US federal missions.
• Booz Allen Hamilton Holding Corp (NYSE:BAH) increased its quarterly dividend and expanded its share repurchase authorization, reflecting strong capital deployment strategies.

Negative Points

• The company anticipates a short-term slowdown in funding and award activity due to the new presidential administration's transition.
• There is some uncertainty in the procurement environment, particularly affecting civilian agencies, which could impact future contract awards.
• Booz Allen Hamilton Holding Corp (NYSE:BAH) experienced a flat client staff headcount for the quarter, indicating potential challenges in scaling operations.
• The company is facing a higher tax rate compared to the prior year, which partially offsets its profitability gains.
• There is a potential risk of disruption in the procurement environment due to executive orders and shifting government priorities.

Q & A Highlights

Q: How is Booz Allen Hamilton preparing for potential disruptions due to the presidential transition and its impact on hiring and headcount? A: Horacio Rozanski, CEO, explained that Booz Allen anticipated short-term disruptions typical of a presidential transition. The company is managing its business tightly to create investment capacity and is strategically positioned with its VoLT strategy to drive technology to outcomes. They have a dozen big ideas aligned with the new administration's priorities and are already in discussions with clients.

Q: How are commercial companies preparing to work with the government, and what role does Booz Allen play in facilitating these partnerships? A: Rozanski noted that Booz Allen has an active partnership program and a venture fund aimed at bringing commercial technologies to government clients. The company understands the government environment and has unique technology that commercial partners need, allowing them to co-create solutions that drive outcomes.

Q: What are Booz Allen's expectations for book-to-bill in the fourth quarter given the current uncertainty? A: CFO Matthew Calderone stated that while there is some slowdown in the procurement environment, Booz Allen has a strong pipeline for the quarter. The company is bullish about the next year, with a strong backlog and pipeline, and expects to thrive in the current market.

Q: How does Booz Allen plan to manage headcount growth in the coming quarters? A: Calderone mentioned that the company plans to ramp up hiring, particularly around large wins, and has built momentum on both the supply and demand sides. The company has improved its recruiting process, using AI to match resumes with opportunities quickly, allowing for faster ramp-up and ramp-down.

Q: How is Booz Allen's intelligence business expected to progress, particularly with the Thunderdome program? A: Rozanski highlighted that the intelligence business is pivoting towards more technology-driven solutions, including AI and data platforms. The Thunderdome program is growing as expected, with more clients adopting the solution, and the company is well-positioned for growth in cyber and space sectors.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.