Parsons (PSN) Q4 2025 earnings summary

Executive summary

• Achieved record adjusted EBITDA margin of 9.6% for FY25, with 12% total and 8% organic revenue growth excluding a confidential contract.

• Outperformed cash flow expectations, with 100% free cash flow conversion and record net income for Q4 and FY25.

• Completed three accretive acquisitions, including Altamira Technologies, and increased share repurchases.

• Secured 15 contracts over $100 million each, matching the previous year's record.

• Exceeded three-year investor day targets for revenue, adjusted EBITDA, and operating cash flow.

Financial highlights

• FY25 total revenue was $6.4B, down 6% year-over-year, but up 12% excluding the confidential contract; adjusted EBITDA reached $609M, up 1% with a 9.6% margin.

• Q4 2025 revenue was $1.6B, with net income of $56M and adjusted EBITDA of $153M; Q4 adjusted EBITDA margin expanded 110 bps to 9.6%.

• Cash flow from operations for FY25 was $478M, down 9% due to a one-time $33M 401-K payment; Q4 cash flow from operations was $168M, up 32%.

• SG&A expenses for Q4 decreased 2% year-over-year; full-year SG&A increased 6% due to acquisitions and investments.

• Backlog at Q4 end was $8.7B, with funded backlog at $6.4B, up 8% year-over-year.

Outlook and guidance

• FY26 revenue guidance: $6.5B–$6.8B; adjusted EBITDA: $615M–$675M; operating cash flow: $470M–$530M.

• At midpoint, expects 4.5% total revenue growth and 0.5% organic growth; excluding the confidential contract, 10.5% total and 6% organic growth.

• Adjusted EBITDA margin expected to reach ~9.7% at midpoint.

• Long-term targets: mid-single-digit or better organic growth and double-digit margins by 2028, with ≥100% free cash flow conversion.

• Guidance reflects domestic budget uncertainty, competitive labor market, and government procurement risks.