Booz Allen (BAH) Q1 2027 earnings summary

Executive summary

• Delivered strong profitability and disciplined execution in Q1 FY27, with strategic investments in cyber, defense tech, quantum, and AI, despite a 4.2% year-over-year revenue decline to $2.8 billion, as national security growth offset civil segment headwinds.

• Announced and advanced acquisitions of Defy Security and Ultra I&C Mission Solutions to expand defense tech offerings, with Ultra expected to close in Q2.

• Maintained a disciplined capital allocation strategy, balancing M&A, venture investments, and shareholder returns, with $447 million deployed in Q1.

• Demand accelerated across the National Security portfolio, while Civil segment performance remained challenged.

Financial highlights

• Q1 FY27 revenue was $2.8 billion, down 4.2% year-over-year; revenue excluding billables was $2.0 billion, down 3.8%.

• Adjusted EBITDA rose 7.4% to $334 million, with margin improving 130 bps to 11.9%.

• Adjusted diluted EPS increased 22.3% to $1.81, aided by profit growth, lower tax rate, and a $19 million pre-tax unrealized gain on a venture investment.

• Free cash flow surged 171.9% to $261 million, with days sales outstanding up to 80 days.

• Book-to-bill was 1.5x for the quarter; total backlog exceeded $39 billion, up 3% year-over-year.

Outlook and guidance

• Reaffirmed full-year guidance across all metrics, with FY27 revenue expected between $11.2–$11.7 billion (0–4% growth), and growth expected to be back-half weighted.

• Adjusted EBITDA guidance is $1,240–$1,290 million (~11% margin); adjusted diluted EPS projected at $6.00–$6.35.

• Free cash flow projected at $825–$925 million, with capital expenditures of ~$220 million, including $105 million for new headquarters.

• National security expected to grow mid-single digits for the year, with stronger growth in the second half; civil revenue projected to decline high single digits.

• Margins expected to average approximately 11% for the year, with a step-down in Q2 due to program transitions and investment timing.