Parsons Corporation's Q2 2025: Key Contradictions in Contract Performance, Revenue Outlook, and Growth Expectations
Generated by AI AgentAinvest Earnings Call Digest
Wednesday, Aug 13, 2025 3:56 am ET1min read
PSN--
Aime Summary
Aime SummaryContract performance and backlog dynamics, win rates and revenue outlook, confidential contract and revenue recognition, pipeline and book-to-bill ratios, and Federal Solutions organic growth expectations are the key contradictions discussed in ParsonsPSN-- Corporation's latest 2025Q2 earnings call.
Strong Financial Performance:
- Parsons CorporationPSN-- reported cash flow from operations of $160 million and a free cash flow conversion rate of 151% for the quarter, with a trailing 12-month rate of 125%.
- The growth was driven by better collections in both segments and lower tax payments.
Revenue Growth and Margin Expansion:
- Excluding a confidential contract, Parsons' total and organic revenue growth rates were 13% and 8%, respectively, with a 40 basis points margin expansion to 9.4%.
- This expansion was due to strong hiring and retention, alignment with priority spending areas, and improved program performance.
Infrastructure Growth in North America and Middle East:
- Total infrastructure revenue grew 14% and 8% organically in North America, with significant wins such as Georgia State Route 400 and Newark AirTrain.
- The growth was fueled by large new programs, strong execution on existing contracts, and increased infrastructure spending from the IIJA.
Federal Solutions Expansion:
- Federal Solutions revenue increased by 8% and 8% organically, excluding a confidential contract, driven by growth in cyber and intelligence and aviation markets.
- The growth is attributed to the passage of the reconciliation bill, which provides additional investment accounts for fiscal year '26, aligning with major budget line items.
Strategic Acquisitions and Partnerships:
- Parsons acquired Chesapeake Technology International, enhancing its portfolio in electronic warfare, cyber, and autonomous systems.
- The acquisition aligns with Parsons' strategic business positioning and strengthens relationships with key research and development customers.
Strong Financial Performance:
- Parsons CorporationPSN-- reported cash flow from operations of $160 million and a free cash flow conversion rate of 151% for the quarter, with a trailing 12-month rate of 125%.
- The growth was driven by better collections in both segments and lower tax payments.
Revenue Growth and Margin Expansion:
- Excluding a confidential contract, Parsons' total and organic revenue growth rates were 13% and 8%, respectively, with a 40 basis points margin expansion to 9.4%.
- This expansion was due to strong hiring and retention, alignment with priority spending areas, and improved program performance.
Infrastructure Growth in North America and Middle East:
- Total infrastructure revenue grew 14% and 8% organically in North America, with significant wins such as Georgia State Route 400 and Newark AirTrain.
- The growth was fueled by large new programs, strong execution on existing contracts, and increased infrastructure spending from the IIJA.
Federal Solutions Expansion:
- Federal Solutions revenue increased by 8% and 8% organically, excluding a confidential contract, driven by growth in cyber and intelligence and aviation markets.
- The growth is attributed to the passage of the reconciliation bill, which provides additional investment accounts for fiscal year '26, aligning with major budget line items.
Strategic Acquisitions and Partnerships:
- Parsons acquired Chesapeake Technology International, enhancing its portfolio in electronic warfare, cyber, and autonomous systems.
- The acquisition aligns with Parsons' strategic business positioning and strengthens relationships with key research and development customers.
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