Maximus (MMS) Q1 2026 earnings summary

Executive summary

• Q1 FY26 revenue was $1.35 billion, down 4.1% year-over-year, aligning with expectations and reflecting divestitures and organic declines; net income more than doubled to $93.9 million from $41.2 million.

• Adjusted EBITDA margin improved to 12.7% from 11.2% year-over-year, driven by U.S. Federal Services and technology initiatives.

• Adjusted diluted EPS rose to $1.85 from $1.61 year-over-year; diluted EPS increased to $1.70 from $0.69.

• Divestiture of the U.S. child support business generated a $9 million gain; prior year included $38 million in divestiture-related charges.

• Strategic focus on technology-driven solutions, including automation and AI, to enhance efficiency and customer outcomes.

Financial highlights

• Net income increased to $93.9 million, with gross profit margin improving to 23.7% from 21.5% and operating margin rising to 10.9% from 6.2%.

• Adjusted EBITDA was $170.4 million, up from $156.6 million year-over-year.

• Free cash flow outflow was $251 million, reflecting seasonality and delayed collections.

• Quarterly cash dividend of $0.33 per share declared, payable March 2, 2026.

Outlook and guidance

• FY26 revenue guidance narrowed to $5.2–$5.35 billion, reflecting divestiture and delayed new work.

• Adjusted EBITDA margin guidance raised to ~14%; adjusted EPS guidance increased to $8.05–$8.35.

• Free cash flow guidance unchanged at $450–$500 million; leverage ratio expected to finish FY26 at or below 1.0x.

• Segment margin guidance: U.S. Federal Services 16.5–17%, U.S. Services 10.5–11%, Outside U.S. 1–3%.

• Effective tax rate for FY26 expected between 24.5% and 25.5%.