Everforth (EFOR) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenues were $968.3 million, down 7.7% year-over-year, with declines in both Commercial and Federal Government segments, but in line with guidance.

• Net income was $20.9 million, a decrease from $38.1 million in Q1 2024, with diluted EPS at $0.48 and adjusted EPS at $0.92.

• Adjusted EBITDA was $93.6 million (9.7% margin), down from $108.3 million (10.3%) a year ago.

• IT consulting revenues grew to 61% of total revenues, up from 56.7% a year ago.

• The TopBloc acquisition closed in March for $340 million and is exceeding expectations for bookings, revenue, and adjusted EBITDA.

Financial highlights

• Commercial Segment revenues were $672.2 million, down 8.1% year-over-year; consulting revenues within this segment rose 4.7%.

• Federal Government Segment revenues were $296.1 million, down 6.7% year-over-year.

• Gross margin improved to 28.4%, up 20 basis points year-over-year.

• Free cash flow was $6.6 million, down sharply from $62.5 million in Q1 2024, impacted by higher DSO.

• Operating income was $46.6 million, down from $70.9 million in Q1 2024.

Outlook and guidance

• Q2 2025 revenue guidance is $985 million–$1.015 billion.

• Q2 net income expected between $29.3 million and $34.3 million; adjusted EBITDA $101 million–$108 million (margin 10.3%–10.6%).

• Gross margin projected at 29.0%–29.3% for Q2.

• Guidance assumes less than 2% DoD impact and no further market deterioration; revenue range widened due to macro uncertainty.

• Management expects cash, operating cash flows, and credit facility availability to be sufficient for obligations and capital needs for the next 12 months and beyond.