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- **Topline Struggle**: FY26 revenue guidance cut to $11.3-11.5B (-10% YoY) due to 20%+ civil decline offset by defense growth.
- **Margin Pressure**: EBITDA margin drops to mid-10% (vs. 12-13% prior) from civil mix shift; $150M cost cuts to stabilize margins by FY27.
- **Defense Momentum**: $7.2B Q2 bookings (90% defense) include $1.2B Shadow Raptor win; cyber and AI growth vectors gaining traction.
- **Shutdown Impact**: $30M revenue/$15M profit loss if shutdown extends; government funding delays weigh on near-term execution.

**【CEO Summary Section】**
- **Market Bifurcation**: Civil business faces funding delays and a 20%+ revenue decline, while national security portfolio grows mid-single digits with $7.2B in Q2 bookings (90% in defense/intel). Key wins include $1.2B Shadow Raptor task order and 3 other >$800M contracts.
- **Strategic Actions**: 
  - $150M annualized cost reduction via AI adoption, workforce simplification, and senior layer reductions.
  - Investment focus on cyber (Thunderdome Zero Trust), AI/ML, edge tech, and partnerships with NVIDIA, AWS.
  - Shift to outcome-based contracting to improve margins and customer alignment.
- **Challenges**: Government shutdown and procurement delays weigh on near-term growth; civil business stabilization expected but no recovery until funding normalizes.

**【CFO Financial Commentary】**
- **Q2 Results**: 
  - Revenue: $2.9B (-8% YoY), with civil down 22% vs. defense/intel up 5%.
  - EBITDA: $324M (-11% YoY), margin 11.2% (-40bps YoY) due to civil mix shift.
  - EPS: $1.42 (-53% YoY) driven by lower profitability and higher interest costs.
- **Guidance Update**: 
  - FY26 Revenue: $11.3-11.5B (-10% YoY vs. prior $12.5B target).
  - EBITDA Margin: Mid-10% range (vs. prior 12-13%).
  - Free Cash Flow: $850-950M.
  - Impact of Shutdown: $30M revenue/$15M profit loss if extended through Nov.
- **Liquidity**: $1.16B cash, $3.1B net debt, 2.5x leverage ratio.

**【Q&A Highlights】**
- **Funding Environment**: Defense/intel awards picking up but slower ramp due to funding friction; civil procurement "stuck in neutral" with no new major contracts.
- **Margin Outlook**: Civil business (13%+ margins) decline drags overall margin; defense/intel at 8-10% but improving with fixed-price conversions.
- **Cyber Growth**: Thunderdome adoption accelerating; cyber revenue expected to grow in both gov and commercial markets.
- **Long-Term Strategy**: Focus on tech convergence (AI/quantum/6G), outcome-based sales, and partnerships to drive margin expansion beyond 2027.

Booz Allen Hamilton Holding Corporation (BAH) Q2 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

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Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

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Operating Income

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Net Income

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Total Comprehensive Income Attributable to Owners of the Company

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Diluted EPS

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Diluted EPS from Discontinued Operations

BAH

BAH fundamentals

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