Booz Allen (BAH) Q3 2023 earnings summary

Executive summary

• Q3 delivered 12.1% revenue growth, 11.2% growth excluding billable expenses, and 9.8% Adjusted EBITDA growth; midpoint of FY23 revenue and Adjusted EPS guidance increased.

• Organic growth momentum was supported by double-digit revenue growth across federal markets and 7.5% YoY client staff headcount growth.

Financial highlights

• Q3 revenue was $2.277B, up 12.1% YoY; revenue excluding billable expenses was $1.567B, up 11.2%.

• GAAP net income fell 76.2% to $30.7M and diluted EPS fell to $0.23 from $0.96; results included a $124M DOJ investigation reserve.

• Adjusted net income rose 4.0% to $142.5M; Adjusted operating income increased 11.0% to $215.8M and Adjusted EBITDA rose 9.8% to $244.1M.

• Nine-month revenue was $6.826B, up 11.4%; Adjusted net income increased 4.0% to $471.1M and Adjusted EBITDA rose 7.2% to $782.6M.

Outlook and guidance

• FY23 revenue growth guidance raised to 9.5%–10.5% from 8.0%–10.0%; Adjusted diluted EPS guidance increased to $4.35–$4.50 from $4.25–$4.50.

• Adjusted EBITDA guidance is $995M–$1.015B, versus prior guidance of $975M–$1.015B; Adjusted EBITDA margin guidance remains high 10% to low 11%.

• Net cash provided by operating activities guidance remains $875M–$950M; including expected net cash taxes of ~$315M, FY23 operating cash flow is projected at $560M–$635M.

• Revenue guidance includes ~2% targeted growth from Liberty, Tracepoint, and EverWatch, partly offset by MENA and MTS divestitures.