Maximus (MMS) Q1 2026 earnings summary

Executive summary

• Q1 FY26 revenue was $1.35 billion, down 4.1% year-over-year, with net income rising to $93.9 million from $41.2 million and adjusted diluted EPS up to $1.85 from $1.61.

• Adjusted EBITDA margin improved to 12.7% from 11.2%, driven by strong U.S. Federal Services performance and technology adoption.

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

• Strategic focus remains on technology-driven solutions, especially AI and automation, to enhance service delivery and financial performance.

• Execution was resilient despite the government shutdown, with a strong pipeline and ongoing tech transformation.

Financial highlights

• Q1 revenue was $1.35 billion, down 4.1% year-over-year, mainly due to divestitures and lower volumes.

• Adjusted EBITDA was $170.4 million, up from $156.6 million; adjusted EBITDA margin rose to 12.7% from 11.2%.

• Net income increased to $93.9 million, with diluted EPS of $1.70, up from $0.69.

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

• Total debt at quarter-end was $1.58 billion; net leverage ratio at 1.8x, below the 2–3x target range.

Outlook and guidance

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

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

• Free cash flow guidance maintained at $450–$500 million.

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

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