Booz Allen Hamilton Q2 FY 2025 Earnings Report

Booz Allen Hamilton (NYSE: BAH), a leading consultancy firm, reported a strong second quarter for fiscal year 2025, with significant revenue increases across its civil, defense, and intelligence sectors. During the earnings call on [date], CEO Horacio Rozanski and CFO Matt Calderone presented an optimistic outlook, raising the company's guidance for the fiscal year. The firm's growth strategy, VOLT, and a record $41 billion backlog were key factors in its performance, alongside a notable $115 million insurance recovery and a $200 million boost from payroll modernization. Adjusted EBITDA and net income saw substantial year-over-year increases, and the company announced a quarterly dividend.

Key Takeaways

• Civil revenues increased by 12%, defense revenues by 17%, and intelligence revenues by 8% year-over-year.
• Fiscal year 2025 guidance raised due to a record backlog; client staff increased by 4.3%.
• Financial highlights include a $115 million insurance recovery, a $200 million payroll modernization boost, and a reduced provision for claimed costs leading to a $122 million revenue increase in Q2.
• Adjusted EBITDA reached $364 million, up 25% year-over-year; net income increased by 129% to $390 million.
• Booz Allen repurchased $232 million in shares and declared a quarterly dividend of $0.51 per share.

Company Outlook

• Revenue growth for FY 2025 is anticipated between 11% to 13%.
• Adjusted EBITDA is projected between $1.3 billion and $1.33 billion.
• Adjusted diluted EPS is expected between $6.10 and $6.30.

Bearish Highlights

• The company faces re-compete risks and contract churn, including the loss of the Advana contract and a Department of Veterans Affairs contract to Deloitte.

Bullish Highlights

• Strong demand environment with a qualified pipeline over $20 billion.
• Trailing book-to-bill ratio of 1.5, the highest in six years.
• Operating model allows quick adaptation to client needs.

Misses

• No significant misses were reported during the call.

Q&A Highlights

• Discussions included AI, cyber, and digital solutions, with an emphasis on data-enabled missions.
• Potential redeployment of approximately 800 employees in Europe, contingent on conflict resolutions.
• Strong recruitment and retention trends observed.

Booz Allen Hamilton showcased robust financial performance in Q2 FY 2025, with CEO Horacio Rozanski crediting the VOLT growth strategy for success. Despite challenges like geopolitical instability, Booz Allen's adaptability positions it favorably for future growth.

InvestingPro Insights

Booz Allen’s strong Q2 performance is backed by data showing 13.3% revenue growth year-over-year, with a moderate level of debt supporting its growth initiatives. The company has consistently raised dividends over the past 8 years with a current yield of 1.22%.

Full Transcript Highlights

Operator: Welcome to Booz Allen Hamilton’s Q2 FY 2025 earnings call.
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Horacio Rozanski: Our growth strategy, VOLT, fuels our performance and positions us for the future. We expect to deliver above original expectations for FY 2025.
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Matt Calderone: We booked $8.2 billion of awards in Q2, and our backlog now stands at a record $41 billion. We are pleased to raise guidance across all metrics for FY 2025.
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Conclusion

Booz Allen is well-positioned for continued financial growth and innovation amid external challenges, showcasing a commitment to both performance and values in a shifting landscape.

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