Q2 2025 Booz Allen Hamilton Holding Corp Earnings Call

Matthew Calderone: Business and Financial Results are Horacio Rozanski, our Chairman, Chief Executive Officer and President, and Matt Calderone, Executive Vice President and Chief Financial Officer. As shown in the disclaimer on slide 3, please keep in mind that some of the items we will discuss this morning are forward looking and may relate to future events or future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from forecasted results discussed in our SEC filings and on this call. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements and speak only as of the date made.

Silver Dansky, our chairman Chief Executive Officer and President.

And Matt Calderon, Executive Vice President and Chief Financial Officer.

As shown on the disclaimer on slide three please keep in mind that some of the items. We will discuss this morning are forward looking and may relate to future events or future financial performance and involve known and unknown risks uncertainties and other factors that may cause our actual results to differ materially from forecasted results discuss in our.

Our SEC filings and on this call.

All forward looking statements are expressly qualified in their entirety by the foregoing cautionary statements and speak only as of the date made.

Matthew Calderone: Accept as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Except as required by law, we undertake no obligation to update or revise publicly any forward looking statements, whether as a result of new information future events or otherwise.

Matthew Calderone: During today's call, we will also discuss some non-GAAP financial measures and other metrics, which we believe provide useful information for investors. We include an explanation of adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our second quarter fiscal year 2025 earnings release and slides. Numbers presented may be rounded, and as such, they may vary slightly from those in our public disclosure.

During today's call. We will also discuss some non-GAAP financial measures and other metrics, which we believe provide useful information for investors. We include an explanation of adjustments and other reconciliations of our non-GAAP measures.

To the most comparable GAAP measures in our second quarter fiscal year 2025 earnings release and slides.

Numbers presented maybe rounded and as such they may vary slightly from those in our public disclosure.

Horacio Rozanski: It is now my pleasure to turn the call over to our Chairman, CEO, and President, Horacio Rozanski. We are now on slide. Thank you, Lindsay. And good morning, everyone. Thank you for joining the call. This morning, Matt and I will discuss the company's excellent second quarter results.

Speaker Change: It is now my pleasure to turn the call over to our chairman CEO and President Horacio Rozanski, we are now on slide four.

Horacio Rozanski: Thank you Lindsay.

Horacio Rozanski: Hey, good morning, everyone. Thank you for joining our call.

Horacio Rozanski: This morning, I will discuss the company's excellent second quarter results.

Horacio Rozanski: Okay.

Horacio Rozanski: But before we do, allow me to take a moment to acknowledge that the people of Booz Allen continue to excel under circumstances that are far from ordinary. Every day we see a headline. They highlight conflict and human loss around the world. Divisive politics here at home. and more recently, the impact of two devastating hurricanes. Denise's Heartbreak. I'm deeply concerned. Get through it all. The people of Booz Allen remain focused on serving our clients. on Living Our Values. and I'm taking care of each other.

Horacio Rozanski: But before we do allow me to take a moment to acknowledge that the people of Booz Allen continue to excel under circumstances that are far from ordinary.

Horacio Rozanski: Every day, we see the headlines.

Horacio Rozanski: They highlight conflict in human loss around the world.

Horacio Rozanski: Divisive politics here at home.

Horacio Rozanski: And more recently the impact of two devastating hurricanes.

And he is just heartbreaking.

Horacio Rozanski: I'm deeply concerning.

Horacio Rozanski: Through it all.

Horacio Rozanski: The people of Booz Allen remain focused.

Horacio Rozanski: Focus on serving our clients well.

Living our values.

Horacio Rozanski: I don't think in care of each other.

Horacio Rozanski: Let's focus on this commitment, have been the core of our company for 110 years. We believe that supporting missions of national importance is more urgent today than ever. Bringing leading-edge technology to national missions at speed and scale is essential. For it is how we best serve American citizens. Protect the U.S. and our allies. Secure a Peaceful and Prosperous Future. Booz Allen's exceptional people make this a reality every single day. I am grateful to every one of my colleagues. Grateful for their dedication. for their talent. for their passion.

Horacio Rozanski: This focus on this commitment have been the core of our company for 110 years.

We believe that supporting missions of national importance is more urgent today than ever.

Bringing leading edge technology to national emissions at speed and scale is essential.

Horacio Rozanski: Or it is how we best serve American citizens.

Horacio Rozanski: Protect the U S and our allies and secure a peaceful and prosperous future.

Horacio Rozanski: Whose allen's exceptional people make this a reality every single day.

Horacio Rozanski: I am grateful to every one of my colleagues grateful for their dedication.

Horacio Rozanski: For their talent.

Horacio Rozanski: And for their passion.

Horacio Rozanski: Thank you.

Horacio Rozanski: Thank you.

Horacio Rozanski: With that as backdrop, let's discuss the quarter. and Q2, our operational momentum accelerator. driving excellent top-line performance and cash generation. Strong profitability and headcount growth and record back.

Horacio Rozanski: With that as backdrop, let's discuss the quarter.

Horacio Rozanski: In Q2, our operational momentum accelerated driving excellent top line performance and cash generation.

Strong profitability and head count growth and record backlog.

Horacio Rozanski: In addition to strong business performance, we also realized some discrete items this quarter that further enhance our results and which Matt will discuss in a few minutes. Despite the challenges and uncertainties in the environment, we believe we are well positioned operationally and strategically. to deliver on this fiscal year and beyond. Our growth strategy, bold. stands for Velocity, Leadership, and Technology, continues to fuel our performance, and positions us for the.

Horacio Rozanski: In addition to strong business performance, we also realized some discrete items this quarter that further enhance our results and which Matt will discuss in a few minutes.

Horacio Rozanski: Despite the challenges and uncertainties in the environment.

Horacio Rozanski: We believe we are well positioned operationally and strategically to deliver on this fiscal year and beyond.

Horacio Rozanski: Our growth strategy.

Horacio Rozanski: <unk>.

Horacio Rozanski: Which stands for velocity leadership and technology continues to fuel our performance and positions us for the future.

Horacio Rozanski: We now expect to deliver above our original expectations for fiscal year 2025 and are pleased to raise and narrow our top and bottom line guidance. The revised range also positions us to exceed the top end of our multi-year investment Which concludes at the end of this fiscal year. I am tremendously proud. that our people have driven performance above the ambitious expectations we set in 2021. Booz Allen has delivered. Outstanding organic revenue growth. Disciplined Capital Deployment. and a robust increase in EBITDA dollars.

Horacio Rozanski: We now expect to deliver above our original expectations for fiscal year 2025, and are pleased to raise and narrow our top and bottom line guidance.

Horacio Rozanski: This revised range also positions us to exceed the top end of our multiyear investment theses, which concludes at the end of this fiscal year.

Horacio Rozanski: I am tremendously proud.

Horacio Rozanski: But our people have driven performance above the ambitious expectations, we set in 2021.

Horacio Rozanski: Who's Alan has delivered outstanding organic revenue growth.

Horacio Rozanski: Disciplined capital deployment and a robust increase in EBITDA dollars.

Horacio Rozanski: This is the ultimate proof point that Volt is working.

This is the ultimate proof point that volt is working.

Horacio Rozanski: Before Matt takes you through our performance and guidance in depth, I would like to spend a few minutes talking about the evolving dynamics within each of our markets. As you well know, our clients are operating in highly complex environments. They are increasingly pressured by geopolitical instability. rapidly advancing technology cycles, and a growing threat landscape. all in a fraught political and economic Within this context, Booz Allen strives to use innovation to help our clients navigate these expanding and durable challenges, and to drive our own financial. And just as we have transformed to gain speed and scale in bringing technology to missions, we feel we are prepared to adapt to these conditions.

Horacio Rozanski: Before Matt takes you through our performance and guidance in depth I would like to spend a few minutes talking about the evolving dynamics within each of our markets.

Horacio Rozanski: As you well know our clients are operating in highly complex environments.

Horacio Rozanski: They are increasingly pressured by geopolitical instability.

Horacio Rozanski: Rapidly advancing technology cycles, and a growing threat landscape.

Horacio Rozanski: All in our for our political and economic environment.

Horacio Rozanski: Within this context, Booz Allen's strives to use innovation to help our clients navigate visa expanding and durable challenges and to drive our own financial performance.

Horacio Rozanski: And just as we have transformed to gain speed and scale and bringing technology to missions. We feel we are prepared to adapt to these conditions and achieve our growth goals.

Horacio Rozanski: and Achieve Our Goal.

Horacio Rozanski: I'll start with our civil. which continues to be strong and viable. Civil revenues rose approximately 12% from the prior year quarter.

Horacio Rozanski: I'll start with our civil portfolio, which continues to be strong and vibrant.

Horacio Rozanski: Civil revenues rose approximately 12% from the prior year quarter exclusive of the discrete items, Matt will cover in more detail.

Horacio Rozanski: This is an exclusive of the discrete items Matt will cover in more detail. Technology has fundamentally altered the relationship between the federal government and its employees. It has also changed the means, methods, and pace of collaboration between government agencies. Across a range of missions, we are helping our clients support citizens, their well-being, and the resilience of the national economy. When put together, this has driven double-digit growth in this business for the past 13 quarters, along with strong margins and high demand. And so today, building on two decades supporting civil clients with IT modernization and transformation, we're able to capitalize on technology advancements and leverage data to deliver scaled outcomes at the mission.

Speaker Change: Technology has fundamentally altered the relationship between the federal government and its citizens.

Speaker Change: It has also changed the means methods and pace of collaboration between government agencies.

Speaker Change: Across a range of missions, we are helping our clients report citizens their wellbeing and the resilience of the national economy.

Speaker Change: When we put together this has driven double digit growth in this business for the past 13 quarters, along with strong margins and high demand.

Speaker Change: And so today building on two decade, supporting civil clients with ITG modernization and transformation, we're able to capitalize on technology advancements and leverage data to deliver scaled outcomes at the mission level.

Horacio Rozanski: As our civil clients' missions become more complex and interconnected, Booz Allen is in a unique position to help them, and in doing so, continue robust growth over the medium.

Speaker Change: As our civil clients' missions become more complex and interconnected.

Speaker Change: Alan This is in a unique position to help them and in doing so continue robust growth over the medium term.

Horacio Rozanski: In the immediate term, our civil clients are facing greater uncertainty inherent in the current political season and limited visibility into the next administration's domestic agenda. This is manifesting in some turbulence in the demand and acquisition process. and an increase in price competition. Our near-term prospects remain strong. But we are seeing more disruption in the procurement environment than in the past.

In the immediate term our civil clients are facing greater uncertainty inherent in the current political season.

Speaker Change: And limited visibility into the next administration is domestic agenda.

Speaker Change: This is manifesting in some turbulence in the demand in acquisition processes.

Speaker Change: And an increase in price competition.

Speaker Change: Our near term prospects remained strong.

Speaker Change: But we are seeing more disruption in the procurement environment than in the past few years.

Horacio Rozanski: Let's turn now to the intelligent. We are thrilled to see a return to growth this quarter. Revenue increased 8% year-over-year in this market, exclusive of the discrete items. We have completed our transition of this business from primarily analyst. is one that is truly technology-enabled. It is optimized to leverage advanced technologies to support intelligence missions across. are approached to cyber as one battle. This is a great example. We organize our cyber business to meet adversaries where they are. across defense, intel, civil, and commercial. enabling us to bring the full scale and expertise of Booz Allen. Anywhere in the world.

Speaker Change: Let's turn now to the intelligence market.

Speaker Change: We are thrilled to see a return to growth this quarter.

As anticipated.

Speaker Change: Revenue increased 8% year over a year in this market exclusive of the discrete items.

Speaker Change: We have completed our transition of this business from primarily analysts focused to one that is truly technology enabled.

Speaker Change: It is optimized to leverage advanced technologies to support intelligence missions across domains.

Speaker Change: Our approach to cyber as one battle space is a great example.

Speaker Change: We organized our cyber business to meet adversaries, where they are.

Speaker Change: Across defense, Intel civil and commercial infrastructures, enabling us to bring the full scale and expertise of Booz Allen.

Speaker Change: Anywhere in this mission.

Horacio Rozanski: Those of you who had a chance to attend our cyber event last month, our Helix Center for Innovation, saw how the evolution of this business over three decades has positioned Booz Allen at the center of nearly all major cyber missions across public and private We expect our total cyber revenue to reach between 2.5 and 2.8 billion dollars by the end of this fiscal year. and we aim to double that revenue in the next five. Without a doubt, Booz Allen is. one of the most impactful cyber security firms. given the accelerated pace and scope over others.

Speaker Change: Those of you who have a chance to attend our cyber event last month, our helix center for innovation.

Speaker Change: How the evolution of this business over three decades has positioned booz Allen at the center of nearly all major cyber missions across public and private sectors.

Speaker Change: We expect our total cyber revenue to reach between two five and $2 $8 billion by the end of this fiscal year.

Speaker Change: And we aim to double that revenue in the next five years.

Speaker Change: Without a doubt Booz Allen is one of the most impactful cyber security firms.

Speaker Change: Today.

Speaker Change: Given the accelerated pace and scope over other series and the relative budget stability in this market. We believe we are well positioned to capture future opportunities.

Horacio Rozanski: and the relative budget stability in this market, we believe we are well-positioned to capture future opportunities.

Horacio Rozanski: We expect to see significant growth in our intelligence. both in the near and in the medium term.

Speaker Change: We expect to see significant growth in our intelligence business, both in the near and in the medium term.

Speaker Change: Finally.

Horacio Rozanski: Finally, and exciting. Our defense... which has delivered double-digit growth for the past six quarters, continues to accelerate. Revenue increasing 17% year-over-year, exclusive of discrete items. This is driven by two primary causes. One, the strategic support we are providing to clients around the world on existing geopolitical conflicts and two, The increasingly important role that Booz Allen plays in modernizing existing systems and building the warfighting capability of the future. aligned with strategic defense missions in Europe, the Pacific, and elsewhere. We have won several awards exceeding $500 million each just in the first half of FY25. This critical work is delivered by a growing defense talent base and augmented by technology investments in key areas.

Speaker Change: And Excitingly.

Speaker Change: Our defense business, which has delivered double digit growth for the past six quarters continues to accelerate.

Speaker Change: With revenue, increasing 17% year over year exclusive of discrete items.

Speaker Change: This is driven by two primary components.

Speaker Change: One the strategic support we are providing to clients around the world on existing geopolitical conflicts.

Speaker Change: And to the increasingly important role that Booz Allen plays in modernizing existing systems and building the war fighting capability of the future.

Speaker Change: Aligned with strategic defense missions in Europe, the Pacific and elsewhere.

Speaker Change: We have won several awards exceeding $500 million each just in the first half of FY 'twenty five.

Speaker Change: This critical work is delivered by a growing defense Talon base and augmented by technology investments in key areas, including space.

Horacio Rozanski: including Space, AI. The Digital Battle. to gather these components. exceptional talent and cutting-edge technology. drive growth across our defense. and they are producing new opportunities.

Speaker Change: And the digital Battle space.

Speaker Change: Together these components.

Speaker Change: Exceptional talent and cutting edge technology.

Speaker Change: Drive growth across our defense business.

Speaker Change: And they are producing new opportunities such as our recent five year 2.6 billion dollar Task Order Award.

Horacio Rozanski: such as a recent five-year $2.6 billion task order award. called Service Solutions for Modernization, Analysis, Readiness Capability, Threat, and Training. or SMART. Smart includes a full spectrum of innovative enterprise services and solutions. This work supports the modernization of current force structure capabilities across the Army and its strategic mission partners. S.M.A.R.T. is but one of a number of contracts that focuses on the acceleration of technology into defense. This is well aligned to Booz Allen's focus on delivering innovation at speed, including through dual-use technology.

Speaker Change: Called service solutions for modernization analyses readiness capability threat and training or smart.

Speaker Change: Smart includes a full spectrum of innovative enterprise services and solutions.

This work supports the modernization of current for structural capabilities across the army and its strategic mission partners.

Speaker Change: Martin is about one of a number of contracts that focuses on the acceleration of technology into defense missions.

Speaker Change: This is well aligned to booz allens focus on delivering innovation at speed, including through do I'll use technologies.

Horacio Rozanski: We continue to build. partner, and invest in you way. to help maintain U.S. technological superiority in our national security policy. amid geopolitical conflict and tension.

Speaker Change: We continue to build.

Speaker Change: Partner and invest in new ways to.

Speaker Change: To help maintain U S technological superiority in our national security posture.

Speaker Change: Amid geopolitical conflict intention.

Horacio Rozanski: Urgency for Accelerating Defense. With strong demand for emerging technology, we remain confident about the continued expansion of our defense business and of its impact. Across our business, we are staying close to our clients and mapping a path of growth that responds to their evolving needs. Bolt has positioned us to accelerate the virtuous cycle across client work, talent, and investment.

Urgency for accelerating defense missions.

Speaker Change: Strong demand for emerging technology, we remain confident about the continued expansion of our defense business.

Speaker Change: I know its impact.

Speaker Change: To summarize.

Speaker Change: Across our business, we are staying close to our clients and mapping a path of growth that responds to their evolving needs.

Speaker Change: Bolt has positioned us to accelerate the virtuous cycle across client work talent and investments.

Horacio Rozanski: And as you well know... Booz Allen always looks to outpace. Especially so in rapidly evolving markets.

And as you well know.

Booz Allen always looks to outpace and especially so and rapidly evolving markets.

Horacio Rozanski: Thus, I am extremely. with the progress we have made.

Speaker Change: Thus I am extremely pleased with the progress we have made strategically and financially at the midpoint of this fiscal year and as we approach the end of our investment thesis period.

Horacio Rozanski: Strategically and Financially at the midpoint of this fiscal year, and as we approach the end of our investment season. working alongside our clients, Booz Allen is making a tangible difference. across the most critical and most enduring missions of our time.

Speaker Change: Working alongside our clients.

Speaker Change: Ellen is making a tangible difference across the most critical and most enduring missions of our time.

Matthew Calderone: And with that, Matt, the floor is yours. Thank you, Horacio, and good morning, everybody. As Horacio said, we had a strong second quarter, both operationally and financially. to continue to generate significant momentum. And as a result, Booz Allen remains well-positioned to deliver compounding growth and financial returns into the future.

Speaker Change: And without that the floor is yours.

Ellen: Thank you Raphael and good morning, everybody.

Ellen: As Ralph said, we had a strong second quarter, both operationally and financially.

Ellen: We continue to generate significant momentum in the quarter and as a result, we down remains well positioned to deliver compounding growth and financial returns into the future.

Matthew Calderone: I have a lot of good news to report, but I recognize that our results this quarter may require more explanation than usual. To aid in that, we have provided a detailed crosswalk of our fiscal year guidance in our earnings presentation. I have six takeaways from our performance in the quarter that should frame how you interpret our results. First, we had a strong operating At the top line, organic revenue growth was in the solid double digits, even when excluding some discrete items in the quarter. Adjusted EBITDA margins increased significantly. due to improved operational performance. Cost Discipline Taking Hold Faster Than Anticipated and reversal of some of the non-operational and timing-related factors discussed on our last call.

Ellen: I have a lot of good news to report, but I recognize that our results. This quarter may require more explanation than usual.

Ellen: To aid in that we have provided a detailed crosswalk of our fiscal year guidance and our earnings presentation.

Ellen: I have six takeaways from our performance in the quarter that should frame how you interpret our results.

Ellen: First we had a strong operating quarter.

At the top line organic revenue growth was in the solid double digits, even when excluding some discrete items in the quarter.

Ellen: Adjusted EBITDA margins increased significantly due to improved operational performance.

Ellen: Cost discipline, taking hold faster than anticipated.

And a reversal of some of the nonoperational and timing related factors discussed on our last call.

Matthew Calderone: Second, we continued to build significant momentum. We booked $8.2 billion of awards in the second. not including work under pro Our backlog now stands at a record $41 billion.

Second we continued to build significant momentum.

Ellen: We booked $8.2 billion of awards in the second quarter, not including work under protest.

Ellen: Our backlog now stands at a record $41 billion.

Ellen: We continue to hire aggressively.

Matthew Calderone: Continue to Hire Aggressives! Through the first half of this fiscal year, we have increased client staff by 4.3 percent. Third, three discrete items occurred in the quarter that will collectively provide immediate and long-term financial benefit. I will cover these in detail in a moment. Fourth, we deployed a significant amount of capital to generate value for shareholders. In the quarter, we repurchased about 1.2% of our share. $232 million at an average price of $146.63. Fifth, as a result, we are pleased to raise guidance across all full fiscal year 2025. And finally, as Horacio said, we are now guiding to exceed the top end of our investment portfolio.

Ellen: Through the first half of this fiscal year, we've increased client staff by four 3%.

Ellen: Third three discrete items occurred in the quarter that will collectively provide immediate and long term financial benefits.

Ellen: I will cover these in detail in a moment.

Ellen: Fourth we deployed a significant amount of capital to generate value for shareholders.

Ellen: In the quarter, we repurchased about one 2% of our shares.

Ellen: Or $232 million worth.

Ellen: At an average price of $146 63 per share.

Ellen: Fifth as a result, we are pleased to raise guidance across all metrics for full fiscal year 2025.

Speaker Change: And finally as Horacio said, we are now guiding to exceed the top end of our investment thesis almost entirely through organic performance.

Matthew Calderone: almost entirely through organic performance.

Matthew Calderone: As I mentioned, our headline numbers were positively impacted by three discrete items in the quarter. Let me walk you through these items before I dive into our second quarter numbers in more detail. Please turn to slide. First, we collected a $115 million recovery from our insurers related to the Department of Justice settlement last fiscal year. This was not contemplated in our original fiscal year guidance. is additive to operating cash flow for the quarter and is excluded from adjusted EBIT Second, we received a roughly $200 million tailwind operating cash. related to the modernization of our payroll in July.

Speaker Change: As I mentioned, our headline numbers were positively impacted by three discrete items in the quarter.

Speaker Change: Let me walk you through these items before I dive into our second quarter numbers in more detail.

Speaker Change: Please turn to slide 10.

Speaker Change: First we collected a $115 million recovery from our insurers related to the department of Justice settlement last fiscal year.

Speaker Change: This was not contemplated in our original fiscal year guidance is additive to operating cash flow for the quarter and is excluded from adjusted EBITDA.

Second we received a roughly $200 million tailwind operating cash this quarter related to the modernization of our payroll in July.

Matthew Calderone: This was reflected in our original fiscal year guide. And finally, we received results of incurred cost submission audits for three historical rate. This resulted in a change in estimate for our provision for claim costs for all rate years subsequent to fiscal year 2011. As we have disclosed, Guizon did not have normal course government cost accounting audits for more than a decade. As a result, by the end of last quarter, we had accumulated a reserve of about $375 million for estimated adjustments to historical claimed costs. This provision for claim costs covers all rate years subsequent to our fiscal year 2011, none of which have been fully resolved.

Speaker Change: This was reflected in our original fiscal year guidance.

Speaker Change: And finally, we receive results of incurred cost emission audits for three years to Oracle rate years.

Speaker Change: This resulted in a change in estimate for our provision for claim costs for all right years subsequent to fiscal year 2011.

As we have disclosed <unk> did not have normal course government cost accounting audits for more than a decade.

Speaker Change: As a result by the end of last quarter, we had accumulated a reserve of about $375 million for estimated adjustments to historical claim costs.

Speaker Change: This provision for claim costs covers all right years subsequent to our fiscal year 2011, none of which have been fully resolved.

Matthew Calderone: Since our settlement last July, a wide range of activity has resumed, including incurred cost submission audits for a total of four historical rates. Teams from Booz Allen, along with our government counterparts at DCMA and DCAA, have worked tirelessly to address this backlog of audits. And thanks to their efforts, we are also now back on a normal course annual review cycle. This work has been hard. But the collective focus on collaboration, mutual respect, and transparency has yielded real progress. I very much appreciate the efforts of everyone to date. while recognizing that significant work remains to be done.

Speaker Change: Since our settlement last July a wide range of activity has resumed including incurred cost emission audits for a total of four historical rate years.

Speaker Change: Teams from Booz Allen, along with our government counterparts of D. C. M. A N D. C. E have worked tirelessly to address this backlog of audits.

Speaker Change: And thanks to their efforts. We are also now back on a normal course annual review cycle.

This work has been hard.

Speaker Change: But our collective focus on collaboration mutual respect and transparency has yielded real progress.

Speaker Change: I very much appreciate the efforts of everyone to date.

Speaker Change: While recognizing that significant work remains to be done.

Matthew Calderone: The impact of this effort will occur over three times. First, we changed our estimate of the provision for claimed costs for all open rate years back to fiscal year 2011. Our total provision for claim costs as of September 30th was reduced to $246 million. This reduction increased revenue by $122 million in the second quarter, or $4.6 million. of this $122 million, about $113 million were related to reserves for historical. and thus have been excluded from adjusted... Second, we reduced the provision for claimed costs for the first half of this. and revise our forecast for the second.

Speaker Change: The impact of this effort will occur over three time frames.

Speaker Change: First we changed our estimate of the provision for claim costs for all open rate years back to fiscal year 2011.

Speaker Change: Our total provision for claim cost as of September 30th was reduced to $246 million.

This reduction increased revenue by $122 million in the second quarter or four 6%.

Speaker Change: Of this $122 million about $113 million related to reserves for historical years, and thus have been excluded from adjusted EBITDA.

Speaker Change: Second we reduced the provision for claim costs for the first half of this fiscal year and revised our forecast for the second half.

Matthew Calderone: We anticipate about a $30 million positive impact to adjusted EBITDA for this fiscal year relative to our original guidance. Third, we anticipate an approximately 20 basis point increase in our profit margins going forward. This will better reflect the underlying profitability of our business. and is consistent with industry practice.

We anticipate a about a $30 million positive impact to adjusted EBITDA for this fiscal year relative to our original guidance assumptions.

Speaker Change: Third we anticipate an approximately 20 basis point increase in our profit margins going forward.

Speaker Change: This will better reflect the underlying profitability of our business.

And is consistent with industry practice.

Matthew Calderone: Please note that while we continue to make progress with our regulators, there have not been any final resolutions nor any cash settlements related to our open rating.

Please note that while we continue to make progress with our regulators there have not been any final resolutions, nor any cash settlements related to our open rate years.

Matthew Calderone: I'll now cover our quarterly results in more detail. Please turn to slide. Total revenue for the quarter grew 18% year-over-year to $3.1 billion. Organic revenue increased 17% year-over-year, and revenue excluding billable expenses grew about 18%. The change in provision for claimed cost I just described increased quarterly revenue growth by 4.6%. This increase was felt proportionally across all markets.

Speaker Change: I'll now cover our quarterly results in more detail.

Speaker Change: Please turn to slide six.

Speaker Change: Total revenue for the quarter grew 18% year over year to $3.1 billion.

Speaker Change: Organic revenue increased 17% year over year and revenue excluding billable expenses grew about 18%.

Speaker Change: The change in provision for claim cost I, just described increased quarterly revenue growth by four 6%.

Speaker Change: This increase was felt proportionally across all markets.

Matthew Calderone: Pivoting now to demand, please turn to slide seven. Net bookings for the quarter were $8.2 billion. and our quarterly book-to-bill was 2.6 times. This translated to a trailing 12-month book-to-bill of $1.5 billion. This is our highest. Total backlog as of September 30th was a record $41 billion, up about 18% from a year ago. This exceptional bookings performance, particularly strong in defense and intel, provides us ample fuel for continued above-market... Our performance in the supply side was just as strong. In the first half, we grew client staff by 1,300 members. 4.3% increase in client staff in our first half alone.

Pivoting now to demand please turn to slide seven.

Speaker Change: Net bookings for the quarter were $8 $2 billion.

Speaker Change: And our quarterly book to Bill was 2.6 times.

This translated to a trailing 12 month book to Bill of one five times.

Speaker Change: This is our highest in six years.

Speaker Change: Total backlog as of September 30th was a record $41 billion.

Speaker Change: Up about 18% from a year ago.

Speaker Change: This exceptional bookings performance, particularly strong in defense and Intel provides us ample fuel for continued above market growth.

Speaker Change: Our performance in the supply side was just as strong.

Speaker Change: In the first half we grew client staff by 1364, 3% increase in client staff in our first half alone.

Matthew Calderone: This puts us on pace to exceed our fiscal year target of 3-5% growth. and sets us up well for this year and beyond. Our total client-staff headcount is now nearly 33,000 employees. This is 8.1% higher than a year ago. in a competitive labor market.

Speaker Change: This puts us on pace to exceed our fiscal year target of 3% to 5% growth.

Speaker Change: And sets us up well for this year and beyond.

Speaker Change: Our total client staff head count is now nearly 33000 employees.

Speaker Change: This is eight 1% higher than a year ago.

Speaker Change: In a competitive labor market.

Matthew Calderone: Booz Allen Value Property. continues to resonate.

Speaker Change: Booz Allen value proposition continues to resonate.

Matthew Calderone: Moving now to the bottom. We delivered $364 million in adjusted EBITDA, approximately 25% higher than the prior year. Our adjusted EBITDA margin was 11.6%, up 70 basis points compared to the prior year quarter. This exceeded our expectations. and was ahead of the moderately ascending margin profile we projected on our first quarter. For the first half, our adjusted EBITDA margin was 10.9%, roughly on par with our expectations for the full fiscal year. Moving down the P&L, net income for the quarter was $390 million, 129% higher year over year. In addition to the items I noted previously.

Moving now to the bottom line.

Speaker Change: We delivered $364 million and adjusted EBITDA, approximately 25% higher than the prior year period.

Speaker Change: Our adjusted EBITDA margin was 11, 6% up 70 basis points compared to the prior year quarter.

Speaker Change: This exceeded our expectations and was ahead of the moderately ascending margin profile, we projected on our first quarter earnings call.

Speaker Change: For the first half our adjusted EBITDA margin was 10, 9% roughly on par with our expectations for the full fiscal year.

Moving down the P&L net income for the quarter was $390 million, 129% higher year over year.

Speaker Change: In addition to the items I noted previously this included an $11 million fair value increase to two strategic investments in our corporate venture capital Fund.

Matthew Calderone: This included an $11 million dollar fair value in. Two strategic investments in our corporate venture capital. Adjusted net income increased 38% year-over-year to $233 million. diluted earnings per share increased 133% year over year to $3.01 per share. adjusted diluted earnings per share increased 40% year over year to $1.81. Transitioning to the balance sheet, we ended the second quarter with $559 million of cash. Net debt of $3 billion and a net leverage ratio of 2.3 times adjusted EBITDA for the trailing 12 million. Free cash flow for the quarter was $563 million. The result, the $587 million of cash from operations, less $24 million of cap.

Speaker Change: Adjusted net income increased 38% year over year to $233 million.

Speaker Change: Diluted earnings per share increased 133% year over year to $3.01 per share.

Adjusted diluted earnings per share increased 40% year over year to $1 81.

Speaker Change: Transitioning to the balance sheet, we ended the second quarter with $559 million of cash on hand.

Net debt of $3 billion and our net leverage ratio of 2.3 times adjusted EBITDA for the trailing 12 months.

Speaker Change: Free cash flow for the quarter was $563 million.

Speaker Change: The result of $587 million of cash from operations was $24 million of Capex.

Matthew Calderone: in addition to the impact of discrete items I noted earlier. We had a strong collection. evidenced by a four-day DSO improvement over the prior year.

Speaker Change: In addition to the impact of discrete items I noted earlier we.

Speaker Change: We had a strong collection quarter.

Speaker Change: Evidenced by a four day DSO improvement over the prior year quarter.

Matthew Calderone: Turning now to capital deployment on slide 8. In the second quarter, we deployed a total of $300 million. This included $232 million in share purchases. $66 million in quarterly dividends. $2 million of strategic investments through our corporate venture capital. In addition, I'll note that our board has approved a quarterly dividend of 51 cents per share, which will be payable on December 4th to stockholders of record as of November 15th. The strength of our balance sheet gives us operating flexibility and the ability to deploy capital in a disciplined manner to generate value for sure. It remains a source of strategic advantage.

Speaker Change: Turning now to capital deployment on slide eight.

Speaker Change: In the second quarter, we deployed a total of $300 million.

Speaker Change: This included $232 million in share repurchases.

Speaker Change: $66 million in quarterly dividends.

Speaker Change: And $2 million of strategic investments through our corporate venture capital Fund.

Speaker Change: In addition, I'll note that our board has approved a quarterly dividend of 51 per share, which will be payable on December 4th to stockholders of record as of November 15th.

Speaker Change: The strength of our balance sheet gives us operating flexibility and the ability to deploy capital in a disciplined manner to generate value for shareholders.

Speaker Change: It remains a source of strategic advantage.

Matthew Calderone: Our strong first half performance sets us up well for potential volatility and uncertainty in the second half.

Speaker Change: Our strong first half performance sets us up well for potential volatility and uncertainty in the second half.

Matthew Calderone: We are on track for an excellent fiscal year overall.

Speaker Change: We are on track for an excellent fiscal year overall.

Matthew Calderone: Let me now walk you through our updated guidance for fiscal year 2025. Please turn the slide. At the top line, we now expect revenue growth of 11 to 13 percent. We are raising our adjusted EBITDA guidance to a range of $1.3 billion to $1.33 billion. This implies an adjusted EBITDA margin of about 11%. We now anticipate operating cash flow of between $925 million and $1.025 billion. and free cash flow of between $825 and $925 million. Lastly, we are raising our aide- to a range of $6.10 to $6.36.

Speaker Change: Let me now walk you through our updated guidance for fiscal year 2025.

Speaker Change: Please turn to slide nine.

Speaker Change: At the top line, we now expect revenue growth of 11% to 13%.

We are raising our adjusted EBITDA guidance to a range of $1 3 billion to $1 three $3 billion.

Speaker Change: This implies an adjusted EBITDA margin of about 11%.

Speaker Change: We now anticipate operating cash flow of between $925 million and $1.0 billion to $5 billion in.

Speaker Change: And free cash flow of between 825 and $925 million.

Speaker Change: Lastly, we are raising our <unk> guidance to a range of $6 10 to $6 30 per share.

Matthew Calderone: In closing, we are extremely proud of our second quarter. Let me share again my six quartets. First, we had a strong operating Second, we continue to build significant momentum. Third, three discrete items occurred that collectively provide immediate and long-term financial benefit. This includes an anticipated roughly 20 basis point lasting increase. Eva Dahmar Fourth, we deployed a significant amount of capital to generate value for Sherwin-Williams. Fifth, we are pleased to raise guidance across all metrics for full fiscal year 2025. And finally, we are now getting to exceed the top end of our investment thesis almost entirely through organic performance.

Speaker Change: In closing we are extremely proud of our second quarter performance.

Speaker Change: Let me share again, my six core takeaways.

Speaker Change: First we had a strong operating quarter.

Speaker Change: Second we continued to build significant momentum.

Third three discrete items occurred that collectively provide immediate and long term financial benefits.

Speaker Change: This includes an anticipated roughly 20 basis point lasting increase to EBITDA margins.

Fourth we reported significant amount of capital to generate value for shareholders.

Speaker Change: Fifth we are pleased to raise guidance across all metrics for full fiscal year 2025.

Speaker Change: And finally, we are now getting to exceed the top end of our investment thesis almost entirely through organic performance a truly exceptional feat.

Matthew Calderone: Truly exceptional. As always, Booz Allen continued to build in this. Positioning us well to deliver compounding growth and financial returns well into the future.

Speaker Change: As always Booz Allen and continued to build in this quarter.

Speaker Change: Positioning us well to deliver compounding growth and financial returns well into the future.

Operator: With that, Operator, let's open the line. Thank you so much. And ladies and gentlemen, to ask a question, simply press star 1 1 to get in the queue and wait for your name to be announced. To withdraw your question, simply press star 1 again.

Speaker Change: With that.

Speaker Change: Operator, let's open the line for questions.

Thank you so much and ladies and gentlemen to ask a question simply press star one one to get in the queue and wait for your name to be announced to withdraw your question simply press Star one again.

Ellen Page: Our first question comes from Ellen Page with Jeffreys.

Speaker Change: Our first question comes from L. M page with Jefferies. Please proceed.

Ellen Page: Please proceed. Hi guys, thanks for the question.

Speaker Change: Hi, guys. Thanks for the question.

Ellen Page: Morning, Alan. Morning.

Speaker Change: Good morning, Alan Good morning Al.

Speaker Change: Morning.

Speaker Change:

Ellen Page: Guidance implies deceleration. I guess there's one-time items in Q2, but 9% organic in H2, I think.

Speaker Change: Guidance implies deceleration I guess theres, one time items in Q2.

Speaker Change: At 9% organic in H, two I think how do we think about the drivers of growth in the back half and what are you contemplating in terms of.

Horacio Rozanski: How do we think about the drivers of growth in the back half, and what are you contemplating in terms of election risk and the risk from a change in administration? Sure, Ellen, why don't I start? First of all, as you said, you know, this is a turbulent environment with some uncertainty in it. It's inevitable to know that we're 11 days from a very significant election that will not just affect who's in the White House but also could affect who controls each chamber of Congress. And that does create some potential for reduced visibility and a change of priorities and agendas in the near term.

Speaker Change: Election risk and the rest from a change in administration.

Speaker Change: Sure Alan why don't I start.

Speaker Change: First of all I as you said you know this is a.

Speaker Change: Turbulent environment with some uncertainty in it or it's inevitable to know that our 11 days.

Speaker Change: From a very significant election that will not just affect who's.

It was in the White house, but also could affect who controls.

Speaker Change: Each chamber of Congress.

And that does create some potential for reduced visibility and it change your priorities and agenda in the near term.

Horacio Rozanski: as we said, particularly in our civil market. We are also geopolitically, you know, there are two ongoing wars in the Middle East and Eastern Europe and increasing tensions in the Indo-Pacific, which also affects the entirety of our markets. And, you know, so taken together, this is a more volatile external environment. that we've seen in a while.

Speaker Change: As we said, particularly in our civil market.

Speaker Change: We are also geopolitically you know there are two ongoing wars in the middle East and Eastern Europe.

Speaker Change: An increasing tensions in the Asia Pacific, which also.

Speaker Change: Effects are the entirety of our markets and anyhow. So taken together this is a more volatile external environment.

Speaker Change: That we've seen in a while so against that backdrop. The the performance in the first half.

Horacio Rozanski: So against that backdrop, the performance in the first half is something that we're very proud of. The team did an exceptional job managing through all of that and doing two things. First of all, delivering excellent results, but importantly, driving momentum. And so when you look at hiring, when you look at backlog, when you look at all of the leading indicators of the business, they're all extremely positive and to some degree ahead of pace. So we feel very good about where we are.

Speaker Change: It is something that we're very proud of the team did an exceptional job managing through all of that and doing two things first of all delivering excellent results, but importantly, driving momentum.

Speaker Change: And so when you look at hiring when you look at backlog when you look at all of the leading indicators of the business are all extremely positive and to some degree ahead of pace.

Speaker Change: So we feel very good about where we are you know there is always the possibility of a black Swan by.

Horacio Rozanski: You know, there's always the possibility of a Black Swan-type event. We have not contemplated that into anything by definition because you can't know what that could be. But, you know, this is my third change of administration. This will be my third change of administration in the almost decade that I've been in this job and then many more in my time at Booz Allen. And I will tell you this. Our operating model becomes a unique asset when there's a change in priorities because we tend to be able to adapt. changing priorities to figure out how to support clients against new demands really faster than anybody else and while You know, past is not necessarily an indication of future and all of that.

Speaker Change: Type event, we have not contemplated that into anything by definition because you can't.

Speaker Change: No would that could be.

But you know this is my third changeover administration. This will be my third changeover administration in the almost decade that I've been in this job and then many more in my time at Booz Allen.

Speaker Change: And I will tell you. These are operating more becomes a unique asset when a when there's a change even priorities because we tend to be able to adapt.

Speaker Change: Two changing priorities to figure out how to support <unk>.

Speaker Change: <unk> against a new demands really faster than anybody else and and and while.

Speaker Change: You know past is not necessarily indication of future and all of that you know what we we look to outpace when when there's a change like this and so as I look at the business and again absent something totally unforeseen I feel very bullish about where we are both for the top line and the bottom line as I look not just us.

Horacio Rozanski: You know, we look to outpace when there's a change like this.

Ellen Page: And so as I look at the business, and again, absent something totally unforeseen, I feel very bullish about where we are, both at the top line and at the bottom line, as I look not just at this year, but coming into next year. Thanks. Helpful.

This year.

Speaker Change: But coming into next year.

Speaker Change: Thanks helpful.

Matthew Calderone: And maybe one for Matt. You mentioned that you haven't seen a cash impact from the change in audit adjustments. What's the range of outcomes there? Can you help us understand that? Yeah, thanks, Alan. We have not seen a cash impact. And reminder, we haven't fully settled these rate years, although we do have four audits, which gave us comfort in changing the estimates for the impact of the backlog.

Speaker Change: And maybe one for Matt you mentioned that you haven't seen a cash impact from the change in audit adjustments, what what's the range of outcomes there.

Speaker Change: Can you help us understand that.

Speaker Change: Yeah. Thanks, Alan we have not seen.

Speaker Change: Cash impacting reminder, we haven't fully settled these rate years, although we do have four audits, which gave us comfort in changing the estimates for the impact of the backlog but.

Matthew Calderone: But I would not build any expectation of cash into your models. Right now, we think we're appropriately reserved. And that should be your expectation.

Speaker Change: I would not build any expectation of cash into your models.

Speaker Change: Right now, we think we're appropriately reserved and that should be your expectation.

Speaker Change: Leave it there.

Cai Rumohr: Thank you one moment for our next question. And it comes from the line of Kavan Rumohr with T. D. Cowan. Please proceed. Yes, thank you very much. Good morning. Good results. So, Matt, you know, you basically mentioned, you know, the benefits of the payroll modernization and Ellen's point regarding the claims. You know, you've got good improvement in your DSOs, about, what, 64 days, and still well above many of your competitors.

Speaker Change: Thank you one moment for our next question.

Speaker Change: He comes from the line of Kazan, Roma with TD <unk>. Please proceed.

Speaker Change: Yeah, Hi, Thank you very much good morning. Good good results. So Matt you know you basically mentioned you know the benefits of the payroll modernization to Alan's point regarding the claims you know you've got good improvement in near D. S.

Speaker Change: We're at 64 days.

Speaker Change: It's still well above many of your competitors, where do you think that number can go and how long would it take to get there.

Matthew Calderone: Where do you think that number can go and how long would it take to get there? Thanks, Cai. And as I mentioned, I think at your conference, you know, embedded in our DSO numbers is about, you know, five days of DSOs that are tied up in the resolution of these backlogged audits, you know, look, we aspire to generate 100% or more free cash flow. relative to net income. And we're close to there, Cai. We've improved DSO performance this year, as you said, four days in the quarter, two days for the full year. We think that two days will persist, and we're going to continue to work on it to bring us closer to where we want to be.

Speaker Change: Thanks Cai.

Speaker Change: As I mentioned I think at your conference you know embedded in our DSO numbers is about <unk>.

Speaker Change: Five days of Dsos that are tied up.

Speaker Change: And the resolution of these these backlog audits you look we aspire to generate 100% or more free cash flow.

Speaker Change: Relative to net income and where we're close to there Cai we improved DSO performance this year or as you said.

Speaker Change: Four days in the quarter two days for the full year, we think that two days will persist and we're going to continue to work on it.

Speaker Change: To bring us.

Speaker Change: Closer to where.

Speaker Change: To where we want to be but very happy with our cash performance overall, obviously the.

Matthew Calderone: But very happy with our cash performance overall. Obviously, the one-time good guy of the net insurance recovery was excellent in this quarter. And we continue to improve our cash performance. We're going to continue to improve operation.

Speaker Change: The one time good guy of the net insurance recovery was.

Speaker Change: Was excellent in this quarter and.

Speaker Change: And we continue to improve operationally.

Cai Rumohr: Terrific. And then, obviously, you know, the bookings were great. All of that's fabulous.

Speaker Change: Terrific and then obviously you know the bookings were great all of that Fabulous.

Matthew Calderone: In prior quarters, you've given some useful metrics in terms of gauging your potential going forward. That would be qualified pipelines, submitted proposals, and proposals in process. Where were they at the end of the quarter? Yeah, thanks. We had so much news, Cai, to report. Absolutely. It was a busy quarter. But our qualified pipeline is roughly in line with where it was at this point last year. It's about $20 billion or more in qualified pipeline. But we had a strong finish to last year as well. So we're really pleased with our book to build. As you know, this excludes Ward under protest, but we're in as good a place as we've been, really, in the last half a decade from a demand perspective.

Speaker Change: In prior quarters, you've given some useful metrics in terms of gauging your potential going forward that would be qualified pipeline submitted proposals and proposals in process where were they at the end of the quarter.

Speaker Change: Yeah.

Speaker Change: Thanks, We had so much news sky to report that our absolute.

Speaker Change: From a it was a busy quarter.

Speaker Change: Qualified pipeline is roughly in line with where it was at.

At this point last year.

Yes.

Speaker Change: Above 22 about $20 billion or more in qualified pipeline.

Speaker Change: But you know we had a strong finish to last year as well.

Speaker Change: Really pleased with our book to Bill as you know this excludes a water under protest, but you weren't as good at places we've been really in the last.

Speaker Change: Half a decade from a demand perspective, yeah, that's absolutely right I think it's worth sort of coming back to that point that we really are not demand constrained I mean, if you look at the last a.

Horacio Rozanski: Yeah, that's absolutely right. I think it's worth sort of coming back to that point that we really are not demand constrained. I mean, if you look at the last 12 months, The trailing book to Bill is 1.5, which is, we haven't seen something along those numbers in five or six years. And what makes me excited is when I look at the work we're doing in the Pacific, when I look at the work we are doing against key domestic priorities. like public health, we see demand increasing. And we see what we're bringing, which is, you know, the top AI business, the top cyber business.

Speaker Change: 12 months.

Speaker Change: The trailing book to Bill is 1.5, which is.

Speaker Change: We haven't seen something along those numbers in in five or six years.

And what makes me excited is when I look at the work we're doing in the Pacific when I look at the work we are doing against key domestic priorities.

Speaker Change: Like public health or we see demand, increasing and we see what we're bringing which is you know the top AI business the top cyber business.

Horacio Rozanski: leading business in digital transformation, and then new ideas around using AI for software-defined networks, using quantum, as really things our clients are more and more interested in, more and more asking for, and more and more getting included in some of this very large procurement.

Speaker Change: Leading business and digital transformation.

Speaker Change: And then new ideas around using AI for a software defined networks using a quantum.

Speaker Change: S really thinks our clients are more and more interested in more and more asking for and more and more getting including how will this very large procurements.

Cai Rumohr: Excellent. Thank you very much. Thank you.

Speaker Change: Excellent. Thank you very much thank you.

Speaker Change: Thank you.

Louis Dipalma: Our next question comes from the line of Louis DiPalma with William Blair. Please proceed. Horacio, Matt, and Lindsay, good morning. Good morning, Louie. Um, can you discuss, um... You know, just how strong the demand environment is relative to how, you know, there seems to potentially be a headwind from the Advana contract next year. And I think, Matt, at a recent conference, you alluded to a churn incident related a Department of Veterans Affairs contract that was awarded to Deloitte is demand so strong that any one particular contract or two contracts, you know, isn't enough to really sway the overall organic revenue trajectory of the company.

Speaker Change: Our next question comes from the line of Louis Dipalma with William Blair. Please proceed.

Speaker Change: Yeah, Matt and Lindsay and good morning.

Speaker Change: Good morning Laurie.

Louis Dipalma: Can you discuss.

Louis Dipalma: Just how strong the demand environment is relative to how they're seem to potentially be a headwind from the advanced contract next year and I think Matt at in recent conference you alluded to a.

Louis Dipalma: Sharon and today.

Louis Dipalma: Related to <unk>.

Louis Dipalma: Hey.

Louis Dipalma: Department of Veterans Affairs contract that was.

Louis Dipalma: Awarded to Deloitte.

Louis Dipalma: Is demand so strong that.

Any one particular contract or two contracts and a isn't enough to really sway the overall organic revenue trajectory of the company.

Horacio Rozanski: Luis, that's a great question. I think the two of us are potentially going to want to comment on it.

Louis Dipalma: Oh, that's a great question and I think the two of us are potentially going to want to comment.

On it let me start by saying as you know you know we're not defined by a single contract and it's the strength of the business overall that that has true Booz Allen.

Horacio Rozanski: Let me start by saying, as you know, we're not defined by a single contract, and it's the strength of the business overall that has proven Booz Allen. If I take you back to take you forward, we had a discussion last year about an Intel contract and what that was going to do, and we ended the year with extraordinary organic growth, and that momentum continues to drive into the business because we have the ability to in the rare occasion that we do lose a contract, the ability to retain the talent and reapply the talent to other things.

Louis Dipalma: If I take you back to take you for we had a discussion last year about an Intel contract on what that was going to do and we ended the year with extraordinary organic growth and that momentum has continued to drive into the business.

Louis Dipalma: Because we have the ability to.

Louis Dipalma: In the rare occasion that we do lose a contract the ability to.

Louis Dipalma: Retained the talent and reapply vitol into.

Horacio Rozanski: Intel is a great launching point for that conversation because If you look at the growth that they're experiencing now, and some of the things are winning now, they're also part driven by the fact that we were able to take some extraordinary cyber talent and apply them to new things. And that has driven new growth. And that's really the way, as you know, we operate. If you look at our civil business, as I mentioned, we are seeing a little more price competition. We are seeing more procurement disruption than we've seen in a little while. I think part of that is driven by the fact that the domestic agenda is most affected when there's a change in administration.

Louis Dipalma: Two other things Intel is a great launching point for that conversation because.

Louis Dipalma: If you look at they the growth other experiencing now and some of the things are winning now there are no. There are in and in also a part driven by the fact that we were able to take some extraordinary cyber talent then apply them to new things and that has driven new growth and that's really the way as you know we operate.

Louis Dipalma: Look at our civil business as I mentioned, we are seeing it a little more price competition, we are seeing.

Louis Dipalma: More procurement disruption than we've seen in a little while I think part of that is driven by the fact that the domestic agenda is most affected when there's a change in administration and regardless of the election turns out. This is a change of administration.

Horacio Rozanski: And regardless of how the election turns out, this is a change of administration. And so we're beginning to see that. Having said that, we feel really good about where we are. There's growth in some areas, accelerated growth in some areas. There's potentially some contract turning other areas. When you put it all together, we think our civil business is going to continue to grow nicely and we feel good about it.

Louis Dipalma: And so we're beginning to see that having said that we feel really good about where we are there is growth in some areas accelerated growth in some areas. There is potentially some contract churn in other areas. When you put it all together, we think our civil business.

Louis Dipalma: It's going to continue to grow nicely and are and.

Louis Dipalma: And we feel good about it and then ultimately to go back to you to do your original point about.

Horacio Rozanski: And then ultimately, to go back to the original point about Havana and the totality of our defense business, as you see, the defense business is really on fire in terms of capturing new demand. You know, we are very proud of the work that we've done in support of DOD on Havana, from its very inception as a relatively small program inside the controllership to what it's become, which is really the leading program to give warfighters at all levels complete visibility into the data set for DOD, something that had never been done before. And I think if you ask our clients, who deserve all the credit for doing this, they would recognize that Booz Allen has played a valuable role.

Louis Dipalma: Nevada, and the totality of our defense business as you see the defense business is is really on fire in terms of capturing new demand.

Louis Dipalma:

Louis Dipalma: We are very proud of the work that we've done in support of Vod on Nevada from its very inception.

Louis Dipalma: A relatively small program inside the controller ship to what it's become which is really the leading program to give oh.

Louis Dipalma: Warfighters are all levels.

Louis Dipalma: This ability into the dataset for the O D something that had never been done before and I think if you asked our clients.

Louis Dipalma: Who deserve all the credit for doing this they will recognize that Booz Allen is play a valuable role so.

Horacio Rozanski: So that's a good place to be going into a competition. But more broadly than that, I mean, if you look at our portfolio in defense. You have things obviously that get re-competed. You have completely new work, some of which we won in this quarter in the Pacific. And then you have programs like SMARTS. If I take you back, SMARTS started at the Global Threat Mitigation Program many years ago. It was actually the first billion dollar task order that Booz Allen ever won. And it's now at $2.6 billion. And this is one of these hybrid contracts where each re-compete is both a continuation of work and an expansion of scope and an expansion of need as new technology deployed around the world at the speed that war fighters need becomes a greater need.

That's a good place to be going into a a competition, but more broadly than that I mean, if you look at our portfolio.

In defence.

Louis Dipalma: You have things, obviously, they'll get recompete. It you have completely new work some of which we won.

Louis Dipalma: And in this quarter in the Pacific and then you have programs like Smarts, if I take you back smarts started at the global threat mitigation program. Many years ago was actually the first billion dollars task order there Booz Allen ever one and is now at $2 $6 billion and this is the one of these hybrid contracts where each.

Louis Dipalma: We compete is both a continuation of work and then expansion of scope and unexplained sheehan of need as new technology deployed around the world at the speed that warfighters need become say a greater.

Louis Dipalma: A greater need so you know defense.

Matthew Calderone: So, you know, defense. have a tremendous. Quarter 17% for the quarter is pretty extraordinary for a business that is half of our portfolio and we see potential for more. Yeah, we've been talking over the past few quarters about how we thought this year had slightly more re-compete risk, but also significantly more opportunity. If you look at the totality of our proposal pipeline and you saw that play out, I think we've won seven jobs in the first half, over half a billion dollars. Let's let that sink in for a minute. And it's really a testament to how well we are positioned strategically, to the resilience of our business model and the strength of our portfolio that even if we do lose a re-compete, we can post the kind of numbers we posted this quarter.

Have a tremendous.

Louis Dipalma: Quarter of 17% for the quarter is pretty extraordinary for a business that is half of our portfolio.

Louis Dipalma: And we see a potential for more.

Yeah, we've been we've been talking to the past few quarters about how we thought this year had slightly more recompete risk, but also significantly more opportunity. If you look at the totality of our proposal pipeline and you saw that play out.

Louis Dipalma: Yeah, I think we've won seven jobs in the first half over half a billion dollars, but let that sink in for a minute.

Louis Dipalma: And it's really a testament to how well we.

Louis Dipalma: Our position strategically to the resilience of our business model and the strength of our portfolio that even if we we do lose a recompete. We can post the kind of numbers. We posted this quarter. So we feel really good about where we are Ms. Rossi, who said mixed maybe shifting a little bit in the near term, but there's a real optimism in <unk>.

Matthew Calderone: So we feel really good about where we are. As Horacio said, MIX may be shifting a little bit in the near term, but there's real optimism and energy in the business. We're doing exactly the kind of work we want to be doing and we feel good about the future.

Energy in the business, we're doing exactly the kind of work we want to be doing.

Louis Dipalma: And we feel good about the future.

Louis Dipalma: Thanks, Matt and Horacio.

Speaker Change: Thanks, Matt and <unk> and on that subject.

Mariana Mora: And on that subject of scope expansions, I think at the recent Helix cybersecurity event, you talked about how an attach rate of how a very high percentage, I forget off the top of my head, of your overall contracts have a cybersecurity component. And then last year at the Helix, you talked about how a very high percentage of your overall contracts have an AI component now.

Speaker Change: Scope expansion I think the reason helix cyber security event, you talked about have an attach rate.

Speaker Change: Now at a very high percentage I forget off the top my head of your overall contracts have a cyber security component and then last year at the helix you talked about how a very high percentage of your overall contracts have an AI component now and does this like.

Horacio Rozanski: And does this lead for more scope expansion such that when you're renewing these contracts, there might be a plus 10% or plus 20% just because you're adding zero trust or language learning models to your existing contracts? You know, I think that that's exactly right. Look, each contract is different and they're all not going to have scope expansions and everything else. But overall, as I talked about at the cyber event. We believe that the notion of convergence of these technologies into missions in aggregate is here to stay. So this is not about delivering cyber in one place and delivering AI in another place and delivering digital in another place and delivering edge in a fourth place and space in a fifth place.

Speaker Change: The lead for like more scope expansion such that like when you're renewing these contracts that might be.

Speaker Change: Plus 10%.

Speaker Change: 20%, just because you're adding zero trust or in our language learning model to your existing contracts.

Speaker Change: You know I think that that's exactly right now look each contract is different and they're all not gonna have scope expansions and everything else, but overall.

Speaker Change: <unk> talked about at the cyber event.

Speaker Change: We believe that the notion of convergence of these technologies into missions in aggregate is here to stay. So this is not about delivering cyber in one place and delivering AI in another place and delivering digital or another place in delivering edge in our fourth place in space and if it plays is how all of these things come together to effect the mission.

Horacio Rozanski: It's how all of these things come together to affect the mission. where the answer is going to be, where the demand is going to be, and where Booz Allen is already playing. Again, I go back to our operating model, the fact that we have a very collaborative culture, the fact that we have a common incentive structure, the fact that people are taught from an early day at Booz Allen to work together and integrate. It's a huge asset as all of these technologies come together. Last year, as you know, we talked about AI and cyber. This year, we talked about cyber and AI.

Speaker Change: Where were they the answer is going to be where the demand is going to be on where booz Allen is already playing again I go back to our operating model.

Speaker Change: The fact that we are very collaborative culture or the fact that we have a common incentive structure of the fact that people are.

Speaker Change: From an early day at Booz Allen to work together and integrate it.

Speaker Change: It's a huge asset as all of these technologies come together last year as you know we talked about AI and cyber are this year, we talked about cyber and AI.

Speaker Change: At all of these things are coming together and and we believe that we're uniquely positioned to capture that opportunity.

Horacio Rozanski: All of these things are coming together, and we believe that we're uniquely positioned to capture that.

Horacio Rozanski: Excellent.

Speaker Change: Excellent thanks, everyone. Thanks for asking.

Horacio Rozanski: Thanks.

Horacio Rozanski: Thanks, everyone.

Horacio Rozanski: Thanks for having us. Thank you.

Speaker Change: Thank you thank.

Speaker Change: Thank you.

Tobey Sommer: Our next question is from the line of Tobey Sommer with Trois Securities. Please proceed. Thank you. I was wondering if you could comment about the relatively strong increase in backlog and the slightly slower increase in funded backlog. What's the explanatory factor between the discrepancy between the two? There's really nothing I'd take away from that. I mean, our contracts are... It's slightly longer in duration, which means they're funded in different ways. A lot of the big jobs are winning, but I wouldn't read anything into it. And we're not seeing anything unusual in the funding environment at this time.

Speaker Change: Our next question is from the line of Tobey Sommer with Truth Securities. Please proceed.

Thank you.

Tobey Sommer: I was wondering if you could comment about the.

Relatively strong increase in.

Tobey Sommer: Backlog and.

Tobey Sommer: The slightly slower increase in funded backlog, what what's the explanatory factor between the discrepancy between the two.

Speaker Change: Theres really nothing I'd take away from that I mean, there are contracts are.

Speaker Change: Slightly longer in duration, which means they're funded in different ways a lot of the big jobs, we're winning but I wouldn't read anything into it.

And we're not seeing anything unusual in the funding environment at this point.

Tobey Sommer: Okay, and with respect to the conflict in the Middle East and Europe.

Speaker Change: Okay.

Speaker Change: With respect to the conflicts.

Speaker Change: In the Middle East and Europe.

Horacio Rozanski: Should they be resolved or come to some sort of conclusion? What, if any, impact do you think that might have on the company? You know, I hope that all of that happens. I think the world would be a better place and Booz Allen would be a happier place if all of this conflict... were resolved. You know, just to dimensionalize it, we have about 800 people working across the European theatres, so, you know, and some of that is certainly surge capacity over the immediate needs.

Speaker Change: Should they be resolved or come to some sort of conclusion.

Speaker Change: What if any impact do you think that might have on the company.

Speaker Change: You know I I hope that all of that happens I think of the world would be a better place and Booz Allen would be happier place if all of these conflicts.

Speaker Change: We're resolved you know just to Dimensionalize. It we have about 800 people working across the European Theater. So you know and some of that is certainly surge capacity over are they.

Speaker Change: The immediate needs.

Horacio Rozanski: But honestly, should those conflicts be resolved, and let's hope that they are, Call it a couple hundred people, give or take, that could be all of a sudden not needed for that, have unique skills, we would love to put them on some of this new work that we just want.

Speaker Change: But honestly should those conflicts be resolved and let's hope that they are.

Speaker Change: The call it couple of hundred people give or take that that could.

B all of a sudden not needed for that have unique skills would be we would love to put them on some of these new work that we just won.

Horacio Rozanski: And then, the recruiting environment and retention environment, I was just hoping you could comment on that. We're now, you know, several years into kind of easier recruiting and improvement in retention broadly. Do you see those trends continuing into calendar 25? In general, yes. I mean, I think part of it is the it is a call it less crazy environment, especially for tech talent now than it was three or four years ago. But importantly, every day we see Booz Allen as more of a destination for unique talent. I think this combination of leading edge technology and mission When I talk to candidates, to recent hires, to very senior people that have an interest in Booz Allen, that is...

And then.

Speaker Change: The recruiting environment and retention environment I was just hoping you could comment on that work we're now.

Speaker Change: Several years into kind of an easier recruiting and.

Speaker Change: <unk> and retention.

Speaker Change: Broadly.

Speaker Change: Do you see those trends continuing into calendar 'twenty five.

Speaker Change: In general, Yes, I mean, I think part of it is the it is a called Atlas Crazy environment, especially for Tech talent now than it was three or four years ago.

Speaker Change: But importantly, everyday we see are the Booz Allen is more of a destination for unique talent I think this combination of leading edge technology and mission.

Speaker Change: When I talk to Canada's two recent hires two very senior people that have an interesting booz Allen.

Speaker Change: That is.

Matthew Calderone: That is really resonated, and... And I think it's giving us not just numbers, but it's giving us a depth of talent. we wouldn't have been able to capture.

Speaker Change: That has really resonated and.

Speaker Change: And I think it is giving us not just numbers, but it is giving us a depth of talent.

Speaker Change: We wouldn't have been able to capture I'll I'll I'll share an anecdote just to give you a sense that we were talking about we have a senior open position in the first part of the search was done confidentially, meaning we couldnt.

Matthew Calderone: I'll share an anecdote just to give you a sense that we were talking about. We have a senior open position and the first part of the search was done confidentially, meaning we couldn't, our recruiters could not tell the market who they were recruiting from. And we saw some level of interest. And then when we were able to move to the phase where we could say that it was for Booz Allen, there was a huge spike in both the quantity and the quality of very senior level resumes that we got to see. And I think that's what's happened.

Speaker Change: Our recruiters could not tell the market, who they were recruiting from and we saw some level of interest and then when we were able to move to the phase, where we would we could say that.

Speaker Change: It was for Booz Allen the there was a huge spike in both the quantity and the quality a very senior level resumes that we got to see and I think that's what's happened I think in addition to being a little bit better market. Our brand is as strong as I've ever seen it and I've been you know in and around this topic for over 20 years now.

Matthew Calderone: I think in addition to being a little bit better market, our brand is as strong as I've ever seen it. And I've been in and around this topic for over 20 years now. Historically. Slightly more than a third of our employees come through employer referrals, that number's actually ticked up. And as Horacio said, there is an energy and an excitement in Booz Allen that is as strong as I've ever seen it. People view their work as important, impactful, interesting. It means they're staying and they're recommending us to their friends.

Yeah historically.

Slightly more than a third of our employees come through an employer for roles that number has actually ticked up and as Raphael said, yeah. There is an energy and excitement in Booz Allen that is as strong as I've ever seen it.

Speaker Change: View their work is important impactful interesting it means they're staying and they're recommending us to their friends just to give you one data point, we cross we had one month I think this quarter, but if not this quarter last quarter, we had over 100000 applicants to booz Allen and let that sink in for a minute.

Matthew Calderone: Just to give you one data point, we had one month, I think this quarter, but if not this quarter, last quarter, we had over 100,000 applicants to Booz Allen and let that sink in for a minute. We're a place where people want to come because they want to grow their careers. They want to do work that's deeply technical and work that has real mission. So we don't we don't foresee those trends.

Speaker Change: We're a place where people want to come because they want to grow their careers. They want to do work that's deeply technical.

Speaker Change: And work that has real mission impact.

Speaker Change: So we don't we don't foresee those trends changing.

Matthew Calderone: Thank you very much.

Speaker Change: Thank you very much.

Matthew Calderone: Thank you.

Speaker Change: Thank you.

Joshua Korn: Our next question comes from the line of David Strauss with Barclays. Please proceed. Hi, good morning. Thanks for taking the questions. Actually, Josh Korn on for David. So last quarter, you talked about margin impact from hiring and contract timing, things like that. And I think you suggested things would progress sort of a little more slowly throughout the year off of Q1.

Speaker Change: Our next question comes from the line of David Strauss with Barclays. Please proceed.

Speaker Change: Hi, good morning, Thanks for taking the questions actually Josh corn on for David.

Speaker Change: So last quarter, you talked about the margin impact from hiring some contract timing things like that.

Thank you suggested things would progress sort of a little more slowly throughout the year off with Q1.

Matthew Calderone: So I just wanted to ask about how those factors trended in the second quarter and how they improved, contributing to the big margin increase this time. Yeah. We saw the results. I think it snapped back in some ways faster than we thought. So good operating quarter cost discipline took hold. And a lot of the one time or timing relating items we highlighted in Q1 actually reverted in some cases quicker than we thought. So I'd really think about Q1 and Q2 as a whole. For the first half, we delivered margins of. 10.9%. We're guiding to 11% for the year overall.

Speaker Change: So I just wanted to ask about how those factors trended in the second quarter.

Speaker Change: Contributing to the margin increase this time.

Speaker Change: Yeah, Gary you saw the results and it gets sat back and in some ways faster than we thought so good operating quarter.

Speaker Change: Cost discipline took hold and a lot of the one time or timing related items, we highlighted in Q1 actually reverted in some cases quicker than we thought so I really think about Q1 and Q2 as a whole for the first half we delivered margins of 10.

Speaker Change: 10.9% regarding to 11% for the year overall.

Matthew Calderone: We're right where we want to be after six months. But I'll remind you again, we do focus on EBITDA dollars. We are incredibly proud of the fact that we ended last year at $1.175 billion in adjusted EBITDA. We're guiding to $1.3 to $1.33 billion this year. That's a great year. Great, thanks. I'll stick to one.

Speaker Change: We're right.

Speaker Change: Right, where we want to be after after six months, but I'll remind you again you know we do focus on EBITDA dollars.

Speaker Change: We are incredibly proud of the fact that we ended last year at 1.1 $75 billion in adjusted EBITDA, We're guiding to 1.3 to 1.33 billion this year.

Speaker Change: That's a that's a great year.

Speaker Change: Great. Thanks, I'll stick to one.

Mariana Mora: Thank you so much. The last question, one moment please. comes from the line of Mariana Perez Mora with Bank of America. Please proceed. Good morning, everyone. Hi, Mariana. So my question is going to be about, like, defense and Intel and a transition. So you mentioned in the prepared remarks that in the intelligence business, it's more like technology that analysts solutions are mentioned right now. I was surprised at USA to learn that you're going to open your third engineering facility focused on rapid prototyping for the tactical assault kit, the tac solutions that you acquire with part.

Speaker Change: Thank you so much and then last question one moment please.

Comes from the line of Mariana Perez Mora with Bank of America. Please proceed.

Good morning, everyone.

Speaker Change: And Mariana.

So my question is going to be about like defense I mean, Tal let me transition. So you mentioned in the prepared remarks that in the intelligence business is more like technology and analytics solutions are urban nations right now and I was surprised that a USA to learn that you're gonna open your third engineer.

Speaker Change: I mean facility pockets on rapid prototyping, Florida that they call us all kit the Tac solutions that you acquire with park.

Horacio Rozanski: You have been really successful navigating this balance between being the agnostic integrator of technologies, but also jumping into technology of solutions where the analyst or the engineer and the technology were inseparable to actually have an outcome on time. How are you thinking about the hardware? How are you thinking about these like software-driven hardware technologies and solutions in the future? How do you think Booz Allen could play a role and add value in that regard? You know, that's a great question. So for context, I think what we really did is we took work, prototyping work that was being done across our defense portfolio, and integrated it primarily into three facilities in order to be able to gain scale and expertise and accelerate.

Speaker Change: You have been really successful navigating this balance between being a gnostic integrator of technologies, but also jumping into technology solutions, where young all these hard to engineer and the technology. We're in separable chassis have an outcome on time.

Speaker Change: Are you thinking about the hardware, how you're thinking about these like software driven.

Speaker Change: <unk> technologies and solutions in the future and how do you think those could play a role and a body on that regard.

Speaker Change: Yeah, No. That's a great question. So so for context I think what we really did is we took a work prototyping work that was being done across our defense portfolio and integrated it primarily into three facilities in order to be able to gain scale and expertise and accelerate.

Horacio Rozanski: All of that, but this is not entirely new. It's just an accelerating area of focus. I think what we're seeing, especially when it comes to our defense business, is that so much of what's needed is going to happen at the edge. It needs to happen in environments where communications are degraded or non-existent. It needs to happen in a way that can respond to the unique needs. of a warfighter, which may be something that needs to get carried on a belt, or it needs to be able to withstand, you know, the... the acceleration of a fighter jet.

Speaker Change: All of that but this is not entirely new is just and accelerating area of focus I think what we're seeing especially when it comes to our defence business is that so much is of what's needed is going to happen at the edge.

Speaker Change: It needs to happen in environments, where communications are degraded or nonexistent needs to happen in a way that it.

Speaker Change: Can respond to the unique needs.

Speaker Change: A warfighter, where which you would maybe something that needs to get carried oh, and a belt or it needs to be able to withstand the you know the.

Speaker Change: The acceleration.

Speaker Change: Although fighter jet.

Horacio Rozanski: And so we think about ourselves as the people that can really integrate across the entirety of that. We don't expect we're going to be making a lot of these things. We expect that we can partner. We expect that we can bring dual-use technologies to play much faster. We can adapt things that are already out there, perhaps for commercial, even consumer use, into these missions. And we see Booz Allen as the people who can do it most reliably, fastest, and ultimately who can scale this.

Speaker Change: And so we think about ourselves as the people that can really integrate across the entirety of that solution.

Speaker Change: We don't expect.

Speaker Change: We're going to be making.

Speaker Change: A lot of these things we expect that we can partner, we expect that we can bring dwell use technologies to play much faster. We can adapt things that are already out there perhaps for commercial leaving consumer use.

Speaker Change: Into these missions and we see Booz Allen is that people, who can do it most reliably fastest and ultimately you can scale. These.

Horacio Rozanski: staying home, still working on many of this is not working and for our customers, it is not working爬 operate asynchronously when they won't be able to, to things we're doing in space. So this is an area, and it all fits into this notion that we believe our clients ultimately will be moving to a more outcome-based. view, we believe we have unique intellectual property and intellectual capital that will give us both the opportunity to play there, but also the opportunity to increase our EBITDA dollar acceleration, to increase our margins and so forth over the medium to longer term.

Speaker Change: The fastest we have work ongoing already that integrates things that are happening on the edge on our technology stacks that we are building from scratch with some of our partners to things that happen in the cloud and those two things need to communicate when they can in.

Speaker Change: Operate synchronously when they they won't be able to two things we're doing in space. So so this is an area.

Speaker Change: And it all fits into this notion that we are we believe our clients ultimately will be moving to a more outcome based.

Speaker Change: View, we believe we have unique intellectual property and intellectual capital that will give us both the opportunity to play there, but also the opportunity to increase our EBITDA dollar acceleration.

Speaker Change: Acceleration to increase our margins and so forth over the medium.

Speaker Change: Two longer term and we're very excited about everything that's happening there and it's all really happening again against these modality that says what are the missions of national priority, where are the new technologies in their totality they need to be brought in and how can we do that at scale and fast.

Horacio Rozanski: And we're very excited about everything that's happening there. And it's all really happening again against this modality that says, what are the missions of national priority? What are the new technologies in their totality that need to be brought in? And how can we do that at scale and fast?

Mariana Mora: Right, thank you.

Speaker Change: Great. Thank you and then my second question is around this 2 billion clients.

Mariana Mora: And then my second question is around the civilian clients. Despite this near term turbulence, how do you see the markets going forward? And where do you see most of the demand? Because I could see a case for like, protecting critical infrastructure, like from cybersecurity and things like that, like getting digitalization to actually be more cost effective in a budget pressure environment. Like, where do you see most of the opportunities going forward?

Speaker Change: Spy this near term triple and how you see the market going forward and what do you see most of that mountain because I could see a case for like protecting critical infrastructure like from cyber security and things like that like getting digitization to actually be more cost effective.

Speaker Change: The pressure environment like where do you see most of the opportunities going forward.

Horacio Rozanski: If I had to summarize our presence and our growth in the civilian market, I think the word would be data enablement. Where all the places we're bringing data in a different way will accelerate mission success. Public health is a clear area and I was just in Atlanta and at the CDC understanding for our clients what they need and working with them on it. A lot of our work at the VA in terms of modernizing and accelerating so that our veterans get better care and faster, our work in law enforcement, which connects deeply to our work in national security and across the board, and as you say, you know, climate, the defense of critical infrastructure, and so forth.

Speaker Change: You know if I had to summarize the R.

Speaker Change: Our presence and our growth in the civilian market I think the word would be data enabled missions.

Speaker Change: Where are all the places we're bringing data in a different way will accelerate our mission success public health is a clear area and I was just in Atlanta and at the C. D C understanding for our clients, what they need and working with them on it.

Speaker Change: Lot of our work with the VA in terms of modernizing and and are accelerating so that our veterans get better care and faster our work in law enforcement, which connects deeply to our work in national security.

Speaker Change: And and across the board.

Speaker Change: And then as you say you know climate the defense of critical infrastructure and so forth.

Horacio Rozanski: The common thread for us is in any place where bringing data to the mission fastest creates mission leverage. That's where Booz Allen is excelling. That's where Booz Allen is playing our best role. And that's where I think the real growth is going to be in the medium term. And I think this is a pretty robust set of opportunities that will respond to the next administration's priorities once we understand what those are.

Speaker Change: Common threat for US is seen any plays we're bringing data to the emission fastest creates mission leverage that's where booz Allen ecig selling that's where booz Allen is playing our best role and that's where I think they wrote their real growth is going to be in the medium term and I think this is a pretty robust set of.

Speaker Change: The opportunities that will respond to the next administrations priorities once we understand what those are.

Speaker Change: Okay.

Horacio Rozanski: Great, thank you very much for the caller. Thank you.

Speaker Change: Thank you very much for the color.

Horacio Rozanski: Thank you so much.

Speaker Change: Thank you so much and this concludes our Q&A session and I will turn the call back to Horacio rozanski for his concluding comments.

Horacio Rozanski: And this concludes our Q&A session. And I will turn the call back to Horacio Rozanski for his concluded comments. Thank you, Carmen, and thank you all for your questions and for being with us this morning. You know, at the start of the call, I touched on the recent hurricanes which have impacted millions of people, and that includes many of our colleagues. So before we conclude today, if you'll allow me, I'd like to take a moment to recognize The incredible people of Booz Allen and how they've come together in the wake of these storms. Our crisis management team.

Horacio Rozanski: Thank you Carmen and thank you all for your questions and for being with US This morning.

Horacio Rozanski: The start of the call I touched on the recent hurricanes are which have impacted millions of people and that includes many of our colleagues.

Horacio Rozanski: So before we conclude today I, if you'll allow me I'd like to take a moment to recognize.

The incredible people of Booz Allen and how they've come together in the wake of these storms or a crisis management teams worked literally around the clock to alcon for everybody to provide assistance to thousands of employees that were in the paths of these two storms I'll say it got across the southeast.

Horacio Rozanski: worked literally around the clock to account for everybody, to provide assistance to thousands of employees that were in the paths of these two storms as they got across the Southeast. Our client teams answered the call and worked on providing information that ultimately became life-saving information and support to first responders. And then volunteers in that area and far and wide across Booz Allen gave their time, donated money, donated things, and stood up to help all affected. And that's really the spirit of Booz Allen. It's awe-inspiring to watch my colleagues rise up at a time like this.

Horacio Rozanski: Our client teams and sort of the call and worked on providing information that ultimately.

Horacio Rozanski: Became lifesaving information and support to first responders and then volunteers in that area and far and wide across Booz Allen.

Horacio Rozanski: Gave their time donated money donated thing sense to that to help all affected.

Horacio Rozanski: And that's really the spirit of Booz Allen.

Horacio Rozanski: It's all inspiring to watch my colleagues rice up at a time like this and so I just want to finish by thanking everybody at Booz Allen.

Horacio Rozanski: And so I just want to finish by thanking everybody at Booz Allen. for always being there for one another and for once again showing the world who we are.

Horacio Rozanski: We're always being there for one another and for once again, showing the world who we are.

Horacio Rozanski: And with that, thank you again for being on the call and have a great day. Thank you, ladies and gentlemen.

And with that thank you again for being on the call and have a great day.

Speaker Change: Thank you ladies and gentlemen, this concludes our program and you may now disconnect.

Operator: This concludes our program and you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].