Q3 2025 Booz Allen Hamilton Holding Corp Earnings Call
As a result.
At this time all participants are in a listen only mode.
Later, there will be an opportunity for questions.
Now I'd like to turn the call over to the head of Investor Relations Dusting Darensbourg.
Speaker Change: Thank you good morning, and thank you for joining us for Booz Allen's third quarter fiscal year 2025 earnings call.
Speaker Change: We hope you've had an opportunity to read the press release, we issued earlier this morning.
Speaker Change: We have also provided presentation slides on our website and are now on slide two.
Speaker Change: Good morning and thank you for standing by. Welcome to Booth Allen Hamilton's earnings call covering third quarter fiscal year 2025 results. At this time all participants are in a listen-only mode. Later there will be an opportunity for questions. I'd now like to turn the call over to the head of investor relations Dustin D'Arensberg.
Speaker Change: With me today to talk about our business and financial results are Horacio Rozanski, our chairman Chief Executive Officer, and President and.
Speaker Change: And that Calderon, executive Vice President and Chief Financial Officer.
Speaker Change: 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 our future financial performance and involve known and unknown risk uncertainties and other factors that may cause our actual results to differ materially from forecasted.
Speaker Change: <unk> discussed in our SEC filings and on this call.
Speaker Change: All forward looking statements are expressly qualified in their entirety by the foregoing cautionary statements and speak only as of the date made 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.
Speaker Change: During today's call. We will also discuss some non-GAAP financial measures and other metrics, which we believe provide useful information for investors with.
Speaker Change: We include an explanation of adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our third quarter fiscal year 2025 earnings release and slides.
Speaker Change: All forward looking statements are expressly qualified in their entirety by this will go on cautionary statements and speak only as of the date made 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.
Speaker Change: Numbers presented maybe rounded NSS may vary slightly from those in our public disclosure.
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.
Speaker Change: During today's call. We will also discuss some non-GAAP financial measures and other metrics, which we believe provide useful information for investors.
Dustin: Thank you Dustin.
Dustin: Welcome to the team we're glad to have you on board.
Dustin: And good morning, everyone. Thank you for joining the call.
Speaker Change: This morning, Matt and I are excited to share excellent financial results for the third quarter of fiscal year 2025.
Speaker Change: An explanation of adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our third quarter fiscal year 2025 earnings release and slides.
Speaker Change: Including double digit growth at both the top and bottom lines.
Speaker Change: <unk> presented maybe round it NSX may vary slightly from those in our public disclosure.
Speaker Change: Booz Allen continues to achieve the strategic and operational momentum we aim for this fiscal year.
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.
Speaker Change: This performance is particularly important in the current industry environment consistent with many other presidential transitions.
Dustin D'Arensberg: Thank you Dustin.
Speaker Change: Some agencies, taking time to assess and align priorities with their new agenda.
Speaker Change: Welcome to the team we're glad to have you on board.
Speaker Change: Good morning, everyone. Thank you for joining the call.
Speaker Change: This creates some slowing and uncertainty in the procurement environment as funding shifts in line with those priorities.
Speaker Change: This morning, Matt and I are excited to share excellent financial results for the third quarter of fiscal year 2025 <unk>.
Speaker Change: We anticipated this adjustment period and have managed our business accordingly.
Speaker Change: Including double digit growth at both the top and bottom lines.
Speaker Change: We are running our operations tightly.
Speaker Change: Booz Allen continues to achieve the strategic and operational momentum we aim for this fiscal year.
Speaker Change: This is reflected in the strong results we are discussing today.
Speaker Change: And because of our unique business model, we are able to accelerate investments in priority growth areas.
Speaker Change: This performance is particularly important in the current industry environment.
Speaker Change: Much of the new administration's agenda rely as soon the ability to apply advanced technologies to move faster to disrupt outdated processes and protect our nation's technological supremacy.
Speaker Change: <unk> with many other presidential transitions, we see some agency has taken time to SaaS and align priorities with their new agenda.
Speaker Change: This creates some slowing and uncertainty in the procurement environment as funding shifts in line with those priorities.
Speaker Change: We believe vault, which stands for velocity leadership and technology has positioned us to capture this moment.
Speaker Change: We anticipated this adjustment period and have managed our business accordingly.
Speaker Change: In a few minutes, Matt will take you through the full details of the quarter on our outlook for the rest of the fiscal year.
Speaker Change: We are running our operations tightly.
Speaker Change: This is reflected in the strong results we are discussing today.
Speaker Change: I would like to put our optimism for the future into some additional context.
Speaker Change: And because of our unique business model, we are able to accelerate investments in priority growth areas.
Speaker Change: For more than a century Booz Allen has continuously anticipated and catalyzed changed for our clients and our business.
Speaker Change: Much of the new administration's agenda rely soon the ability to apply advanced technologies to move faster to disrupt outdated processes and protect our nation's technological supremacy.
Speaker Change: Our institutions journey aligns with some of the most significant moment in our nation's history.
Speaker Change: These include winning World War, two and the space race and the successive waves of change driven by the dawn of the digital age.
Speaker Change: We believe vault, which stands for velocity leadership and technology has positioned us to capture this moment.
Speaker Change: Booz Allen has always been prepared for the technological societal and geopolitical changes that shape the times.
Speaker Change: In a few minutes.
Matt: Matt will take you through the full details of the quarter and our outlook for the rest of the fiscal year <unk>.
Matt: First I would like to put our optimism for the future into some additional context.
Speaker Change: We anticipate the trends that define our future and move our business to the center of that change.
Matt: For more than a century Booz Allen has continuously anticipated and catalyze change for our clients and our business.
Speaker Change: Today.
Speaker Change: Hey, Booz Allen's 20th Precedential transition.
Speaker Change: We believe we are on the precipice of another transformative era.
Matt: Our institutions journey aligns with some of the most significant moment in our nation's history.
Speaker Change: We know from experience that large scale change always include superior of uncertainty and disruption. We also know that these times create major opportunities.
Matt: These include winning World War, II and the space race and the successive waves of change driven by the dawn of the digital age.
Speaker Change: The word Booz Allen has done over the last decade and accelerated through volt.
Matt: Booz Allen has always been prepared for the technological societal and geopolitical changes that shape the times.
Speaker Change: Hospitalizations us as the advanced technology company delivering outcomes at the center of our nation's most important missions.
Matt: We anticipate the trends that define our future and move our business to the center of that change.
Speaker Change: We have a truly unique vantage point for understanding and driving the changes that will bring better faster innovation into government.
Matt: Today.
Speaker Change: Hey, Booz Allen's 20th Precedential transition.
Speaker Change: We believe we are on the precipice of another transformative era.
Speaker Change: Our text counting function has been key to identify the technologies that shape the future.
Speaker Change: We know from experience that large scale change.
Speaker Change: <unk> includes a period of uncertainty and disruption. We also know that these times create major opportunities.
Speaker Change: We accelerated the journey from breakthrough outcome.
Speaker Change: In areas like advanced manufacturing.
Speaker Change: Onto cryptography and autonomy.
Speaker Change: The work Booz Allen has done over the last decade and accelerated through volt has positioned us as the advanced technology company delivering outcomes at the center of our nation's most important missions.
Speaker Change: For decades, we have invested in disruptive technologies that are changing the world.
Speaker Change: We made early bets in cloud cyber security space and AI that are now core to essential missions.
Speaker Change: We have a truly unique vantage point for understanding and driving the changes that will bring better faster innovation into government.
Speaker Change: And our venture fund and commercial partnerships he'll bring leaving do I'll use technologies into civil defense and National security missions.
Speaker Change: Our fixed accounting function has been key to identifying the technologies that shape the future.
Speaker Change: To achieve faster more effective outcomes.
Speaker Change: Let me share a few examples that further highlight how booz Allen is well positioned for this moment.
Speaker Change: We accelerate the journey from breakthrough to outcome.
Speaker Change: Areas like advanced manufacturing quantum cryptography and autonomy.
Speaker Change: We now have the largest AI business in the federal government.
Speaker Change: For decades, we have invested in disruptive technologies that are changing the world.
Speaker Change: And one of the largest cyber businesses in the world.
Speaker Change: We made early bets in cloud cyber security space in AI that are now core to essential missions.
Speaker Change: We are developing and delivering trusted secure and responsible AI across missions.
Speaker Change: In closing for the defense Department's largest data platform.
Speaker Change: And our venture fund than commercial partnerships he'll bring leaving dual use technologies into civil defense and National security missions.
Speaker Change: And with Thunder Dome, we have also built and deployed the largest integrated zero trust solution at scale.
Speaker Change: Faster more effective outcomes.
Speaker Change: We are developing and operating premier space systems built with scalable secure AI powered data solutions to support National security missions.
Speaker Change: Let me share a few examples that further highlight how booz Allen is well positioned for this moment.
Speaker Change: We now have the largest AI business in the federal government.
Over the past two decades, we have driven massive modernization of technology at the VA.
Speaker Change: And one of the largest cyber businesses in the world.
Speaker Change: This has accelerated outcomes for our veterans, including faster claims processing and benefits delivery.
Speaker Change: We are developing and delivering trusted secure and responsible AI across missions.
Speaker Change: And reduce fraud waste and abuse.
Speaker Change: Clothing for the defense Department's largest data platform.
Speaker Change: Using an outcomes based acquisition model, we designed built and continue to operate recreation Dot Gov.
Speaker Change: And with Thunder Dome, we have also built and deployed the largest integrated zero trust solution at scale.
Speaker Change: We are developing and operating premier space systems built with scalable secure AI powered data solutions to support National security missions.
Speaker Change: It's advanced technical infrastructure delivers a customer experience on par with the most successful commercial platforms.
Speaker Change: And we are delivering digital battlespace technologies to significantly improve real time situational awareness for warfighters, even in the most disrupted environments.
Speaker Change: Over the past two decades, we have driven massive modernization of technology at the VA.
Speaker Change: This has accelerated outcomes for our veterans, including faster claims processing and benefits delivery and.
Speaker Change: This is the power of vault.
Speaker Change: This is the power of Booz Allen.
Speaker Change: And reduce fraud waste and abuse.
Speaker Change: We also recognize the importance of partnerships to generate speed to outcomes.
Speaker Change: Using an outcomes based acquisition model, we designed built and continue to operate recreation Dot Gov.
Speaker Change: Booz Allen's ability to collaborate with a network of innovative commercial technology partners helps feed the impact of emerging and dwell use technologies.
Speaker Change: It's advanced technical infrastructure delivers the customer experience on par with the most successful commercial platforms.
Speaker Change: For example.
Speaker Change: We know that in the most challenging national security environment in half a century, we need to move faster.
Speaker Change: And we are delivering digital battlespace technologies to significantly improve real time situational awareness for warfighters, even in the most disrupted environments.
Speaker Change: We must push boundaries and disrupt longstanding barriers to innovation.
Speaker Change: We recently announced an expanded partnership with volunteer technologies to co create solutions to help the U S maintain superiority against these adversaries.
Speaker Change: This is the power of volt.
Speaker Change: This is the power of Booz Allen.
Speaker Change: We also recognize the importance of partnerships to generate speed to outcomes.
Speaker Change: In only 45 days our teams created a prototype with the capacity to rapidly accelerate integrated Warfighting operations.
Speaker Change: Booz Allen's ability to collaborate with a network of innovative commercial technology partners helps speed the impact of emerging and do all use technologies.
Speaker Change: This solution is already being tested large scale exercises.
Speaker Change: For example, we.
Speaker Change: It will improve collaboration and combined mission planning for the U S and our allies and partners.
Speaker Change: Know that in the most challenging national security environment in half a century, we need to move faster.
Speaker Change: Last week, we also announced an expanded partnership with Amazon Web services.
Speaker Change: We must push boundaries and disrupt longstanding barriers to innovation.
Speaker Change: To jointly invest create and collaborate to accelerate outcomes across U S federal emissions.
Speaker Change: We recently announced an expanded partnership with volunteer technologies to co create solutions to help the U S maintain superiority against these adversaries.
We will jointly develop and deliver enterprise solutions at scale in areas like cloud migration cyber security and generative AI.
Speaker Change: In only 45 days our teams created a prototype with the capacity to rapidly accelerate integrated Warfighting operations.
Speaker Change: This partnership is a force multiplier.
Speaker Change: We are co investing to build on top of our technology platforms and create new solutions to existing problems and capability gaps.
Speaker Change: This solution is already being tested large scale exercises.
Speaker Change: It will improve collaboration and combined mission planning for the U S and our allies and partners.
Speaker Change: I'm tremendously excited about the potential of our ongoing collaboration with both of these companies.
Speaker Change: Last week, we also announced an expanded partnership with Amazon Web services.
Speaker Change: And with others, we are not ready to announce quite yet.
Speaker Change: To jointly invest create and collaborate to accelerate outcomes across U S federal emissions.
Speaker Change: As we put it altogether.
Speaker Change: We find ourselves in an excellent position to support the priorities of the new administration.
Speaker Change: We will jointly develop and deliver enterprise solutions at scale in areas like cloud migration cyber security and generative AI.
Speaker Change: First.
Speaker Change: Our multiyear effort to become faster in everything.
Speaker Change: Allows us to match the velocity of change underway.
Speaker Change: This partnership is a force multiplier.
Speaker Change: Second.
Speaker Change: We are co investing to build on top of our technology platforms and create new solutions to existing problems and capability gaps.
Speaker Change: We are one of the few technology companies able to both innovate and deliver at scale.
Speaker Change: I'm tremendously excited about the potential of our ongoing collaboration with both of these companies.
Speaker Change: We have long been advocates of maximizing do all used commercial technologies and increasing the use of AI to generate efficiencies.
Speaker Change: And with others, we are not ready to announce quite yet.
Speaker Change: The combination of our own technology.
Speaker Change: As we put it altogether.
Speaker Change: Our highly productive partnerships across tech.
Speaker Change: We find ourselves in an excellent position to support the priorities of the new administration.
Speaker Change: And our extraordinary people give us the edge on speed to outcome.
Speaker Change: First.
Speaker Change: And third speaking of outcomes for.
Speaker Change: Our multiyear effort to become faster at everything.
Speaker Change: For quite some time now we have prepared and advocated for a move towards outcome based contracting are.
Speaker Change: Allows us to match the velocity of change underway.
Speaker Change: Second.
Speaker Change: As a model to create both efficiency and faster impact across emissions report.
Speaker Change: We are one of the few technology companies able to both innovate and deliver at scale.
Speaker Change: We expect this trend to accelerate in the current environment.
Speaker Change: We have long been advocates of maximizing do all used commercial technologies and increasing the use of AI to generate efficiencies.
Speaker Change: For all these reasons and more I am excited about what's ahead.
Speaker Change: Booz Allen is the advanced technology company known for speed to outcomes.
Speaker Change: The combination of our own technology.
Speaker Change: Our highly productive partnerships across tech.
Speaker Change: From the Pacific to orbit and here at home, we are investing in the technologies and the talent necessary to succeed in the coming years and decades.
Speaker Change: And our extraordinary people give us the edge on speed to outcome.
Speaker Change: And third speaking of outcomes for.
Speaker Change: For quite some time now we have prepared and advocated for a move towards outcome based contracting as a model to create both efficiency and faster impact across emissions we support.
Speaker Change: As the new administration's priorities and team continue to take shape, we look forward to the opportunity to work with them to help enhance our national security and how our government service our citizens.
Speaker Change: We expect this trend to accelerate in the current environment.
Speaker Change: And with that Matt I'll turn the call over to you.
Speaker Change: For all these reasons and more I am excited about what's ahead.
Matt: Thank you Rocco and good morning, everyone.
Matt: I'm really pleased with our third quarter performance, we had a number of objectives for the quarter and we delivered on all of them.
Booz Allen is the advanced technology company known for speed to outcomes.
Matt: Our leaders simultaneously delivered very strong results.
Speaker Change: From the Pacific to orbit and here at home, we are investing in the technologies and the talent necessary to succeed in the coming years and decades.
Matt: Improve the efficiency of our business.
Matt: Maintain momentum into the future and.
Matt: <unk> continued to accelerate the core element of our volt strategy that are squarely in line with the change agenda of the new administration.
Speaker Change: And as the new administration's priorities and team continue to take shape, we look forward to the opportunity to work with them to help enhance our national security and how our government service our citizens.
Matt: Innovation.
Matt: Efficiency.
Matt: AI tool.
Matt: We'll use technology and generating speed to outcome.
Speaker Change: And with that Matt I'll turn the call over to you.
Matt: Here are the headlines for the quarter.
Matt: Thank you Rocco and good morning, everyone.
Matt: We delivered about 14% topline growth.
Speaker Change: I'm really pleased with our third quarter performance.
Matt: Roughly 13% organic with solid performance across all three sectors.
Matt: We had a number of objectives for the quarter and we delivered on all of them.
Matt: We ran the business efficiently.
Matt: Our leaders simultaneously delivered very strong results.
Matt: Generating $332 million and adjusted EBITDA at an 11, 4% adjusted EBITDA margin.
Matt: Improve the efficiency of our business.
Matt: Maintain momentum into the future.
Matt: We maintained a 1.41 times trailing 12 month book to Bill.
Matt: And continued to accelerate the core elements of our vault strategy that are squarely in line with the change agenda of the new administration.
Matt: This is our highest at calendar year end in the last six years.
Matt: Innovation.
Matt: And we continued to deploy capital to generate long term value for shareholders, including almost $150 million in share repurchases.
Matt: Efficiency.
Matt: Hi.
Matt: Dual use technology and.
And generating speeds outcome.
Matt: Here are the headlines for the quarter.
Matt: Based on this performance we are tightening towards the upper end of our guidance ranges for this fiscal year.
Matt: We delivered about 14% topline growth.
Matt: A 13% organic with solid performance across all three sectors.
Matt: We are poised to deliver another year of double digit growth in.
Matt: We ran the business efficiently generating $332 million and adjusted EBITDA at an 11, 4% adjusted EBITDA margin.
Matt: In revenue and adjusted EBITDA.
Matt: And as we approach our final quarter of our three year investment thesis, we are positioned to exceed our target of one two to $1 3 billion of adjusted EBITDA almost entirely through organic performance.
Matt: We maintained at 141 times trailing 12 month book to Bill.
Matt: This is our highest at calendar year end in the last six years.
Matt: Booz Allen remains the premier compound and continues to deliver outstanding performance year after year.
Matt: And we continue to deploy capital to generate long term value for shareholders, including almost $150 million in share repurchases.
Matt: I am exceptionally proud of what our Booz Allen team has accomplished and excited about the potential we see for the future.
Matt: Based on this performance we are tightening towards the upper end of our guidance ranges for this fiscal year.
Matt: I'll now cover our quarterly results in more detail.
Matt: We are poised to deliver another year of double digit growth in revenue and adjusted EBITDA.
Matt: Please turn to slide six.
Matt: In the third quarter revenue increased roughly 14% year over year to $2 9 billion.
Matt: And as we approach our final quarter of our three year investment thesis, we are positioned to exceed our target of one two to $1 3 billion of adjusted EBITDA almost entirely through organic performance.
Matt: Organic revenue grew about 13% year over year and.
Matt: And revenue, excluding billable expenses was up 12%.
We continue to see solid growth across all of our government and commercial markets.
Matt: As Alan remains a premier compound and continues to deliver outstanding performance year after year.
Matt: Our defense business had another stellar quarter with 19% year over year revenue growth.
Matt: Im exceptionally proud of what our <unk> team has accomplished and excited about the potential we see for the future.
Matt: Our intelligence business continued to accelerate posting 11% growth over the prior year period.
Matt: I'll now cover our quarterly results in more detail.
Matt: And our civil business grew at a healthy 8% rate.
Matt: Please turn to slide six.
Matt: In the third quarter revenue increased roughly 14% year over year to $2 9 billion.
Matt: Year over year.
Matt: Pivoting now to demand please turn to slide seven.
Matt: Organic revenue grew about 13% year over year.
Matt: Net bookings for the third quarter totaled $1 1 billion.
Matt: And revenue, excluding billable expenses was up 12%.
Matt: Our quarterly book to Bill was 0.37 times right in line with our five year average of 0.4 times for the third quarter.
Matt: We continue to see solid growth across all of our government and commercial markets.
Matt: We maintain a trailing 12 month book to Bill of 141 times, our highest third quarter trailing 12 month book to Bill in six years.
Matt: Our defense business had another stellar quarter with 19% year over year revenue growth.
Matt: Our intelligence business continued to accelerate posting 11% growth over the prior year period.
Matt: Our current backlog of $39 billion is our highest ever at this point in the year.
Matt: And our civil business grew at a healthy 8% rate.
Matt: Our total backlog is up 15% year over year.
Matt: Year over year.
Matt: Pivoting now to demand please turn to slide seven.
Matt: Looking forward as Horacio noted, we expect the industry will see a short term slowdown of funding and award activity as the New administration and Congress establish our agenda and as federal government agencies pivot to enacted.
Matt: Net bookings for the third quarter totaled $1 1 billion.
Matt: Our quarterly book to Bill was 0.3 dollars seven times right in line with our five year average of 0.4 times for the third quarter.
Matt: This occurs with all presidential transitions and the incoming team clearly is working at a brisk pace.
Matt: We maintained a trailing 12 month book to Bill of 141 times, our highest third quarter trailing 12 month book to Bill in six years.
Matt: Typically the short term effect on procurement and contract is more pronounced for civilian agencies.
Matt: Our current backlog of 39 billion.
Matt: We are prepared for this by building momentum flexibility and resilience into our business model.
Matt: Is our highest ever at this point in the year.
Matt: Our total backlog is up 15% year over year.
Matt: And looking past. This we are bullish about how our strategy aligns with the change agenda of the incoming administration.
Matt: Looking forward as Horacio noted, we expect the industry will see a short term slowdown of funding and award activity as the New administration and Congress establish our agenda and as federal government agencies pivot to enacted.
Matt: We are aggressively leaning into this opportunity.
Matt: We believe we have the backlog proposal pipeline for next fiscal year and most important the technology the commercial.
Matt: This occurs with all presidential transitions and the incoming team clearly is working at a brisk pace.
Matt: Relationships and the innovative ideas for change.
Needed to remain on a strong growth sector.
Matt: Typically the short term effect on procurement and contracts is more pronounced for civilian agencies.
Matt: Transitioning now to head count.
Matt: In the third quarter, we placed a heavy focus on improving productivity of existing staff.
Matt: We are prepared for this by building momentum flexibility and resilience into our business model.
Matt: To provide a more robust employee experience and to give us more operating flexibility going forward.
Matt: And looking past. This we are bullish about how our strategy aligns with the change agenda of the incoming administration.
Matt: This focus worked but.
Matt: But it did result in us maintaining a roughly flat client staff head count for the quarter.
Matt: We are aggressively leaning into this opportunity.
Matt: <unk> finished the third quarter with total client staff head count of over 32000.
Matt: We believe we have the backlog proposal pipeline for next fiscal year and most important the technology the commercial relationships and the innovative ideas for change.
Matt: A 6% increase from a year ago.
Matt: Since the start of the fiscal year total client staff head count has grown four 4%.
Matt: I needed to remain on a strong growth sector.
Matt: This puts us in good shape relative to our full year target of 3% to 5% client facing head count growth.
Matt: Transitioning now to head count.
Matt: In the third quarter, we placed a heavy focus on improving productivity of existing staff.
Matt: Going forward, we aim to increase head count at a consistent pace to support the ramp up of recent wins and to meet our growth aspirations.
Matt: Both to provide a more robust employee experience and to give us more operating flexibility going forward.
Matt: This focus worked.
Matt: But it did result in us maintaining a roughly flat client staff head count for the quarter.
Matt: On the bottom line, we delivered $332 million and adjusted EBITDA in the third quarter, a 14% improvement over the prior year quarter.
Matt: <unk> finished the third quarter with total client staff head count of over 32000.
Matt: Our third quarter adjusted EBITDA margin was 11, 4% up 10 basis points year over year.
Matt: A 6% increase from a year ago.
Matt: Since the start of the fiscal year total client staff head count has grown four 4%.
Matt: For our fiscal year to date adjusted EBITDA margin was 11, 1%.
Matt: Puts us in good shape relative to our full year target of 3% to 5% client facing head count growth.
Matt: I'm really pleased with how we're operating the business, which affords us the flexibility to react to this evolving environment.
Matt: Going forward, we aim to increase head count at a consistent pace to support the ramp up of recent wins and to meet our growth aspirations.
Matt: Working down the P&L, our net income was $187 million, 28% higher year over year.
Matt: On the bottom line, we delivered $332 million and adjusted EBITDA in the third quarter, a 14% improvement over the prior year quarter.
Matt: Adjusted net income grew 7% year over year to $198 million.
Matt: Diluted earnings per share increased to $1 45 per share.
Matt: Our third quarter adjusted EBITDA margin was 11, 4% up 10 basis points year over year.
Matt: Up about 31% year over year.
Matt: Adjusted diluted earnings per share grew to $1 55 per share up approximately 10% year over year.
Matt: For our fiscal year to date adjusted EBITDA margin was 11, 1%.
Matt: This increase in <unk> was driven by our overall profitability as well as a reduction in share count, which was partially offset by a higher tax rate compared to the prior year.
Matt: I'm really pleased with how we're operating the business, which affords us the flexibility to react to this evolving environment.
Matt: Working down the P&L, our net income was 187 million, 28% higher year over year.
Turning now to the balance sheet, we ended the third quarter with $454 million of cash on hand, net debt of approximately $2 9 billion.
Matt: Adjusted net income grew 7% year over year to $198 million.
Matt: And a net leverage ratio of two three times adjusted EBITDA for the trailing 12 months.
Matt: Diluted earnings per share increased to $1 45 per share up.
Free cash flow for the quarter was $134 million. The result of $151 million of cash from operations was $17 million of Capex.
Matt: Up about 31% year over year.
Matt: Adjusted diluted earnings per share grew to $1 55 per share up approximately 10% year over year.
Matt: Moving now to capital deployment on slide eight.
Matt: This increase in <unk> was driven by our overall profitability as well as a reduction in share count, which was partially offset by a higher tax rate compared to the prior year.
Matt: In the third quarter, we deployed a total of $228 million to generate value for shareholders.
Matt: This included $149 million in share repurchases at an average price of $157 74 per share.
Matt: Turning now to the balance sheet, we ended the third quarter with $454 million of cash on hand net debt of approximately.
Matt: This brings our total repurchase activity to two 3% of outstanding shares since the beginning of the fiscal year.
Matt: Proximately $2 9 billion.
Matt: And a net leverage ratio of two three times adjusted EBITDA for the trailing 12 months.
Matt: In addition, we have.
Matt: Free cash flow for the quarter was $134 million the.
Matt: <unk> $65 million and quarterly dividend $9 million in strategic investments through our corporate venture capital fund and $4 million related to the par government acquisition.
Matt: The result of $151 million of cash from operations less $17 million of Capex.
Matt: Moving now to capital deployment on slide eight.
Matt: Today, we are pleased to announce that our board of directors has approved a <unk> <unk> increase to our quarterly dividend.
Matt: In the third quarter, we deployed a total of $228 million to generate value for shareholders.
Matt: This dividend of <unk> 55 per share will be payable on March 4th to stockholders of record as of February 14.
Matt: This included $149 million in share repurchases at an average price of $157 74 per share.
Matt: Our board has also approved an increase of $500 million.
Matt: This brings our total repurchase activity to two 3% of outstanding shares since the beginning of the fiscal year.
Matt: To our share repurchase authorization.
Matt: Our available capacity to approximately $1 billion.
Matt: Our balance sheet remains strong.
Matt: In addition, we have.
Matt: Regarding us the capacity and the flexibility to opportunistically deploy capital to create shareholder value.
Matt: $65 million quarterly dividend $9 million in strategic investments through our corporate venture capital fund and $4 million related to the par government acquisition.
Matt: Now for a look ahead.
Matt: Please turn to slide nine for our updated guidance.
Matt: Today, we are pleased to announce that our board of directors has approved a <unk> <unk> increase to our quarterly dividend.
Matt: We are tightening towards the upper end of our guided ranges across all principal metrics for fiscal year 2025.
Matt: This dividend of <unk> 55 per share will be payable on March 4th to stockholders of record as of February 14.
Matt: At the top line, we now expect revenue growth of 12% to 13%.
Matt: Our board has also approved an increase of $500 million.
Matt: Almost all of which is organic.
Matt: To our share repurchase authorization.
Matt: We are narrowing our adjusted EBITDA guidance to a range of 1.31 to $1 $33 billion.
Matt: Our available capacity to approximately $1 billion.
Matt: Our balance sheet remains strong.
Matt: The impact of our recently announced $15 9 million settlement with the department of Justice net of insurance reimbursements will be immaterial to the year.
Matt: <unk> has the capacity and the flexibility to opportunistically deploy capital to create shareholder value.
Matt: Now for a look ahead.
Matt: This implies an adjusted EBITDA margin of about 11%.
Matt: Please turn to slide nine for our updated guidance.
Matt: Additionally, we are raising our <unk> guidance to a range of $6 25 to.
Matt: We are tightening towards the upper end of our guided ranges across all principal metrics for fiscal year 2025.
Matt: $6 40 per share.
Matt: This includes an anticipated $15 million gain from the expected close of the sale of snap attack and which we are a minority investment in the fourth quarter.
Matt: At the top line, we now expect revenue growth of 12% to 13%.
Matt: Almost all of which is organic.
Matt: We are narrowing our adjusted EBITDA guidance to a range of $1 three one to $1 33 billion.
Matt: Lastly, we now expect operating cash flow of between $950 million and $1.0 billion to $5 billion.
Matt: The impact of our recently announced $15 9 million settlement with the department of Justice net of insurance reimbursements will be immaterial to the year.
Matt: And free cash flow in the range of $850 million to $925 million.
Matt: In closing I am bullish about the state of our business.
Matt: This implies an adjusted EBITDA margin of about 11%.
Matt: Booz Allen has maintained its momentum in both the flexibility to rapidly adapt and thrive in an evolving environment.
Matt: Additionally, we are raising our <unk> guidance to a range of $6 25 to.
Matt: To $6 40 per share.
Matt: As Rocco said, we've navigated 20 presidential administration transitions.
Matt: This includes an anticipated $15 million gain from the expected close of the sale of snap attack, which we have a minority investment.
Rocco: And we are approaching this one with both ideas and optimism.
Matt: In the fourth quarter.
Rocco: While the transition phase for a new presidential administration always creates a period of Recalibration. We view this transition as a unique opportunity.
Matt: Lastly, we now expect operating cash flow of between $950 million and $1.0 billion to $5 billion.
Matt: And free cash flow in the range of $850 million to $925 million.
Rocco: Booz Allen is always on the side of change and we look forward to continuing to bring change to government.
Matt: In closing I am bullish about the state of our business.
Rocco: We are the clear leader in advanced technology for the federal government driving speed to outcome better than anyone else.
Matt: Booz Allen has maintained its momentum in both the flexibility to rapidly adapt and thrive in an evolving environment.
Rocco: I will now turn the call back over to the chairman CEO and President.
Matt: As Rocco said, we have navigated 20 presidential administration transitions.
Chairman: Thanks Keay.
Speaker Change: Thank you Carmen before we begin Q&A. This morning, I Hope you allow me to take a moment to acknowledge the tragic air coalition.
Matt: And we are approaching this one with with ideas and optimism.
Matt: While the transition phase for a new presidential administration always creates a period of Recalibration. We view this transition as a unique opportunity.
Speaker Change: Look the lives of 67 people yesterday in our nation's capital.
Speaker Change: We grieve for the victims and for their families.
Matt: Booz Allen is always on the side of change and we look forward to continuing to bring change to government.
Speaker Change: For those of US who live in the D C area.
Speaker Change: D. C is both a big C D and a small town and we all know someone who's personally affected by the tragedy. So I wanted to take a moment to again acknowledge loss.
Matt: We are the clear leader in advanced technology for the federal government driving speed to outcome better than anyone else.
Speaker Change: I will now turn the call back over to the chairman CEO and President who are asking of us.
Speaker Change: All the victims memories before a blessing.
Keay: Thanks Keay.
Speaker Change: Thank you Carmen before we begin Q&A. This morning, I Hope you allow me to take a moment to acknowledge the tragic air coalition.
Carmen: Thank you for listening and for allowing me to do this Carmen let's begin Q&A. Please.
Speaker Change: Of course, and as a reminder to our audience to ask a question simply press star one on your telephone and wait for your name to be announced.
Speaker Change: Took the lives of 67 people yesterday in our nation's capital.
Speaker Change: We grieve for the victims and their families.
Speaker Change: If you remove yourself simply press star one again.
Speaker Change: For those of US who live in the DC area.
Speaker Change: For our first question.
Speaker Change: Do you see as both a big city and a small town and we all know someone who.
Speaker Change: It comes from that line of main pass with Bank of America.
Speaker Change: Who is personally affected by the tragedy. So I wanted to take a moment to again acknowledge loss.
Speaker Change: Good morning, everyone.
Speaker Change: Although Montana.
So my first question is going to be about hiring them.
Speaker Change: All the victims memories before a blessing.
Speaker Change: Thank you for listening and for allowing me to do this Carmen let's begin Q&A. Please.
Speaker Change: I understand that you are preparing for this uncertainty I stay government and agencies all saw just to what they're going to do what they have to do in awarding but do you guys have been preparing for this change towards technology towards outcomes for a long time you launched your votes.
Speaker Change: And as a reminder to our audience to ask a question simply press star one on your telephone and wait for your name to be announced to remove.
Speaker Change: Yourself simply press Star one again.
Speaker Change: For our first question.
Speaker Change: The G four years ago.
Speaker Change: It comes from the line of <unk> with Bank of America.
Speaker Change: And the way I'm going to oversimplify, it but the way I think about Deutsche and efficiencies is just putting that on full speed.
Speaker Change: Good morning, everyone.
Speaker Change: Although Montana.
Speaker Change: So my first question is going to be about hiring.
Speaker Change: So how do you think about investing towards being prepared to absorb most of that opportunity on head count hiring and how much you prepared to be just like I don't know brace for impact and how the government absorptions this impact near term uncertainty type of thing.
Speaker Change: I understand that you're preparing for this uncertainty our state government and agencies also adjust to what theyre going to do what they have to do in awarding but do you guys have been preparing for this change towards technology towards outcomes for a long time.
Speaker Change: You know us too well so let me let me take a minute to unpack what you say you said, because I really agree with ever.
Speaker Change: Your bolt strategy four years ago.
Speaker Change: The way I'm going to oversimplify, it but the way I think about Deutsche and efficiencies is just putting that on full speed.
Speaker Change: Everything you pointed out you know, let's start with the short term.
Speaker Change:
Speaker Change: As we expected and we talked about it on the last call.
Speaker Change: So how do you think about investing towards being prepared to absorb most of that opportunity on head count hiring and how much you prepare to be just like I don't know brace for impact and how the government of Sharps This impact near term uncertainty type of thing.
Speaker Change: We are seeing some of the short term disruption that is not atypical of a presidential transition and especially with the fast moving agenda again, we expected it and we're seeing it some agencies are already full speed ahead. Some agencies are taking a little time for the new team to come in and reevaluate at.
Speaker Change: You know us too well so so let me let me take a minute to unpack what you say you said because I really agree with.
Speaker Change: This point, we have not seen a material impact on our business.
Speaker Change: But you know we because we anticipated. This we are managing the business accordingly financially operationally and strategically at the financial level, we have a really strong balance sheet. It gives us a lot of opportunity to invest in different ways.
Speaker Change: Everything you pointed out let's start with the short term.
Speaker Change: As we expected and we talked about it on the last call.
Speaker Change: We are seeing some of the short term disruption that is not atypical of a presidential transition and especially with the fast moving agenda.
Speaker Change: And be prepared to take advantage of our of the potential churn in the industry at the operational level. As you pointed out. This is a time to run the business tightly so that we can actually create investment capacity as the priorities begin to.
Speaker Change: We expected it and we're seeing it some agencies are already full speed ahead. Some agencies are taking a little time for the new team to come in and reevaluate at this point, we have not seen a material impact on our business.
Speaker Change: To clarify.
Speaker Change: And accelerate and then strategically.
Speaker Change: Because we anticipated this.
Speaker Change: As you pointed out a volt has prepared us for this we're fast we're flexible and we are in the middle of driving technology to outcome and create change. So we're uniquely positioned I will tell you we have already a dozen big ideas.
Speaker Change: We are managing the business accordingly financially operationally and strategically at the financial level, we have a really strong balance sheet. It gives us a lot of opportunity to invest in different ways.
Speaker Change: And be prepared to take advantage of our of the.
Speaker Change: We are shaping that are very much in line with what we believe is the administration's intent on priorities and we've even begun some of these discussions with some client so while we're managing the business I think prudently to create investment capacity.
Speaker Change: Turning to industry.
Speaker Change: The operational level as you pointed out this is a time to run the business tightly so that we can actually create investment capacity as the priorities begin to.
To clarify.
Speaker Change: And accelerate and then strategically.
Speaker Change: Very excited about the future.
Speaker Change: As you pointed out volt has prepared us for this we're fast we're flexible and we are in the middle of driving technology to outcome and create change. So we're uniquely positioned I will tell you we have already a dozen big ideas.
Speaker Change: And then I'm curious if you could discuss on the other side of the Verizon not the customers on the contracting officer Sandy agencies, but like how the commercial companies also prepared to a government that's expected to be willing to work with that have you seen those companies reach out to you. It's also.
Speaker Change: We are shaping that are very much in line with what we believe is the administration's intent on priorities and we've even begun some of these discussions with some client so while we're managing the business I think prudently to create investment capacity, we're very excited about the future.
Have these type of partnerships to also be able to offer their commercial technologies to alarm and that is not that the Acs gossamer to deal with.
Speaker Change: Absolutely no I think you're right on that too you know we've been talking about this and we've been doing it for quite some time you know we have an active partnership program. We've talked on the prepared remarks about a couple of the most recent.
Speaker Change: And then I'm curious if you could discuss on the other side of the Verizon not the customers on the contracting officer Sandy agencies, but like how the commercial company has also prepared to government that's expected to be willing to work with that have you seen those companies reach out to you. It's also.
Speaker Change: But our our CVC our venture fund was.
Speaker Change: Our aimed at bringing all of these through the scouting process, we have broad probably hundreds of companies.
Speaker Change: Have these type of partnerships to also be able to offer their commercial technologies to alarm and that is not that the easiest customer to deal with.
Speaker Change: To our clients so that they can get faster on the mission. It is hard for the commercial sector to operate here and in some ways. It probably will continue to be.
Speaker Change: Absolutely no I think you're right on that too we've been talking about this and we've been doing it for quite some time you know we have an active partnership program we've talked.
Speaker Change: The value that we bring is twofold. One is we do understand this environment, which is why they want to work with US we understand the clients we understand the process, but really importantly, we have unique technology that they need because when you put it all together like we did with volunteer in the Pacific like we're doing with AWS on autonomy when.
Speaker Change: On the prepared remarks about a couple of the most recent.
Speaker Change: Things, but our CVC our venture fund was.
Speaker Change: Aimed at bringing all of these through the scouting.
Speaker Change: We have brought probably hundreds of companies.
Speaker Change: You put it all together there are massive technology investments and what we have done you can actually create things that actually drive outcomes.
Speaker Change: Companies.
Speaker Change: To our clients so that they can get faster on the mission. It is hard for the commercial sector to operate here and in some ways. It probably will continue to be.
Speaker Change: I've talked for example in the past about the fact that most cloud providers assume that everybody is sitting on fiverr and they're gonna be connected 24, seven and then when you enter the world in which we live.
Speaker Change: The value that we bring is twofold. One is we do understand this environment, which is why they want to work with US we understand the clients we understand the process, but really importantly, we have unique technology that they need because when you put it all together like we did with volunteer in the Pacific like we're doing with AWS on autonomy when.
Speaker Change: It's anything but are you now disconnect the impair communications, where an adversary is actually trying to get you disconnected is a very different operating environment. We have already built technology around for example software defined radio networks AI define radio that actually allows you to travel the spectrum differently, either keep connected or man.
Speaker Change: You put it all together there are massive technology investments and what we have done you can actually create things that actually drive outcomes.
Speaker Change: <unk> the disconnection back to connection back to the disconnection and those are the kinds of things that allow us to co create.
Speaker Change: I've talked for example in the past about the fact that most cloud providers assume that everybody is sitting on fiber and theyre going to be connected 24, seven and then when you enter the world in which we live.
Speaker Change: With with the commercial sector extraordinarily well and it leverages their investments that they've already made.
Speaker Change: Our investments that we've already made and our clients are excited that the number of clients that really believe in this value proposition.
Speaker Change: It's anything but.
Speaker Change: Disconnected impair communications, where an adversary is actually trying to get you disconnected you said very different operating environment, we have already built technology.
Speaker Change: Already is great and as you point out the system is not prepare for it and the new administration is going to hopefully accelerate some of the changes that are necessary for this to really operate at speed.
Speaker Change: Around for example software defined radio networks AI define radio that actually allows you to travel the spectrum differently, either keep connected or manage the disconnection back to connection back to the disconnection and those are the kinds of things that allow us to co create.
Speaker Change: Thank you and last one short land that at near term.
Speaker Change: Our array like I don't know <unk> 32, a quarter and we have seen like a lot of like.
With with the commercial sector extraordinarily well and it leverages their investments that they've already made.
Speaker Change: Uncertainty around contracting with executive orders popping sound like contracts end and everyone reviewing what they have in and out.
Speaker Change: Our investments that we've already made and our clients are excited the number of clients that really believe in this value proposition.
Speaker Change: What are your expectations for a book to Bill in the fourth quarter.
Speaker Change: Already is great and as you pointed out the system is not prepare for it and the new administration is going to hopefully accelerate some of the changes that are necessary for this to really operate at speed.
Speaker Change: Yeah, Matt I'll take that it's Matt.
Speaker Change: As Ross has said we've seen essentially no impact on our contracts to date because of the executive orders, even the one that was rescinded related to.
Thank you and last one short one.
Grant and loan programs.
Speaker Change: Our term.
Speaker Change: Our array like I don't know, if starting third quarter and we have seen like a lot of like.
Speaker Change: We are seeing.
Speaker Change: Some slowdown in the procurement environment, we had a good pipeline for the quarter. So how those two things net out I think remains to be seen but as you can imagine there's rossiya referenced eight.
Speaker Change: Uncertainty around contracting with executive orders popping sound like contracts and everyone reviewing what they have in and out.
Speaker Change: Agencies are taking some time to adjust to the new administration priorities and quite frankly.
Speaker Change: What are your expectations for a book to Bill in the fourth quarter.
Speaker Change: The government workforce is adjusting to the new environment that they're in.
Matt: Yes, Matt I'll take that Matt.
Speaker Change: And so we're seeing some slowdown or a potential disruption there and I think that that's going to be true industry wide. So.
Speaker Change: As Rocco said, we've seen essentially no impact on our contracts to date because of the executive orders, even the one that was rescinded related too.
Speaker Change: This quarter.
Speaker Change: It remains to be seen we're really bullish about next year.
Matt: And loan programs.
Matt: We are seeing.
Speaker Change: And even absent all of the big ideas that Horacio mentioned our pipeline for next year is there isn't a really good spot.
Matt: Some slowdown in the procurement environment, we had a good pipeline for the quarter. So how those two.
Matt: Things net out I think remains to be seen.
Speaker Change: Yeah, I would only add Mariano you know we're sitting on a lot of backlog and then a lot of opportunity that that is playing out.
Matt: But as you can imagine there's rossiya referenced.
Matt: Agencies are taking some time to adjust to the new administration priorities and quite frankly.
Speaker Change: Right now and as Matt pointed out the pilot pipeline is strong and the funding environment is probably going to be strong I think the administration needs to budget.
Matt: The government workforce is adjusting to the new environment that theyre in.
Matt: And so we're seeing some slowdown or a potential disruption there and I think that that's going to be true industry wide. So.
Speaker Change: Especially in the announced you know security side to move these priorities.
Speaker Change: And so our expectation is regardless of what happens over the next whatever 60 days.
Matt: This quarter.
Matt: It remains to be seen we're really bullish about next year.
Matt: Even absent all of the big ideas that Horacio mentioned our pipeline for next year is there isn't a really good spot.
Speaker Change: That that this is going to be a market in which was Allen in particular can really thrive.
Speaker Change: Thank you so much congrats yes.
Matt: Yes, I would only add Mariana, we're sitting on a lot of backlog and then a lot of opportunity that is playing out.
Speaker Change: Thank you one moment for our next question.
Speaker Change: And he is from the line of Gautam Khanna with TV Cowen. Please proceed.
Matt: Right now and as Matt pointed out the pilot pipeline is strong and the funding environment is probably going to be strong I think the administration needs to budget.
Gautam Khanna: Yes, good morning, guys.
Speaker Change: Good morning.
Speaker Change: I was wondering if you could expand upon your comments on head count additions and the planning there are you.
Matt: Especially in the downstream on the security side to move these priorities fall.
Matt: And so our expectation is regardless of what happens over the next whatever 60 days.
Speaker Change: Expecting to ramp up.
Speaker Change: Head count.
Speaker Change: More so than what happened in the December quarter in the March and June quarters.
That this is going to be a marketing, which was allen in particular can really thrive.
Speaker Change: Just given the environment you described.
Speaker Change: Thank you so much congrats yes.
Speaker Change: That's the plan I think it's a dynamic environment, we'll see how it plays out I mean just to give.
Speaker Change: Thank you one moment for our next question.
To give you some parameters are bill ability in the third quarter was about 1% higher than it was in the first quarter.
Gautam Khanna: And he is from the line of Gautam Khanna with TV Cowen. Please proceed.
Speaker Change: So that's equivalent to what 330 ftes.
Gautam Khanna: Yes, good morning, guys good morning.
Speaker Change: Our visibility in December was the highest it's been on record honestly.
Gautam Khanna: I was wondering if you could expand upon your comments on head count additions and the planning there are you.
Speaker Change: Too high from for my liking, we probably cleared the bench, perhaps too aggressively so.
Gautam Khanna: Starting to ramp up.
Gautam Khanna: Head count.
Speaker Change: Yeah, we're ramping up the hiring engine, particularly around a bunch of the large wins.
Gautam Khanna: More so than what happened in the December quarter in the March and June quarters.
Gautam Khanna: Just given the environment you described.
Speaker Change: That we've enjoyed this year and we'll see how it plays out and I don't think youre going to see the kind of head count growth you saw in Q4 last year.
Gautam Khanna: That's the plan.
Gautam Khanna: And so dynamic environment, we'll see how it plays out I mean, just to give you some parameters or visibility in the third quarter was about 1% higher than it was in the first quarter.
Speaker Change: But we're bullish both about the supply and demand side, we built a lot of momentum.
Gautam Khanna: So that's equivalent to what 330 ftes.
Speaker Change: I would also say this I mean, and this is going to make your guys' lives a little bit harder there and I apologize for that but it is actually good for their business.
Gautam Khanna: And in fact, our scalability in December was the highest it's been on record honestly.
Speaker Change: We have gotten a lot faster in the way, we can recruit and deploy.
Gautam Khanna: Hi from for my liking.
Gautam Khanna: Probably cleared the bench, perhaps too.
Speaker Change: And so we can really compressed the acceleration deceleration process of our recruiting by a lot.
Gautam Khanna: To aggressively so.
Gautam Khanna: We're ramping up the hiring engine, particularly around a bunch of the large wins.
Speaker Change: For example, we're using artificial intelligence in different ways.
Gautam Khanna: That we've enjoyed this year.
Speaker Change: So now we get.
Gautam Khanna: And we'll see how it plays out and I don't think youre going to see the kind of head count growth you saw in Q4 of last year.
Speaker Change: Call It a thousand.
Speaker Change: Loss.
Speaker Change: Resumes they they have read the same night and which the resumes come in at.
Gautam Khanna: But we're bullish both about the supply and demand side, we built a lot of momentum.
Speaker Change: And deployed against our the potential opportunities out there we didn't have that capability two years ago, and so the ramp up on the ramp down of our recruiting pipeline.
Gautam Khanna: I would also say this I mean, and this is going to make your guys' lives a little bit harder, there and I apologize for that but it's actually good for the business.
Gautam Khanna: We have gotten a lot faster in the way, we can recruit and deploy.
Speaker Change: Operating differently and so again this isn't getting faster being flexible like Matt said. This is a very dynamic environment and so I think week by week, we're gonna be matching supply and demand.
Gautam Khanna: And so we can really compressed the acceleration deceleration process of our recruiting.
Gautam Khanna: By a lot.
Gautam Khanna: For example, we're using artificial intelligence in different ways.
Speaker Change: Tightly as we see things.
Speaker Change: If all the the good news is as the opportunities that we see in the horizon really begin to mature and crystallize, we can ramp into them at a different speed that we could have a couple of years ago.
Gautam Khanna: So now we get.
Speaker Change: Call It a 1000.
Gautam Khanna: Ross.
Gautam Khanna: Resumes a day they read the same night and which the resumes come in.
Gautam Khanna: And deployed against the potential opportunities out there we didn't have that capability two years ago, and so the ramp up on the ramp down of our recruiting pipeline.
Speaker Change: Yes, that's helpful commentary and I was wondering also just.
Speaker Change: Expand on the prior questioners question.
Gautam Khanna: <unk> differently and so again this isn't getting faster being flexible like Matt said. This is a very dynamic environment and so I think week by week, we're gonna be matching supply and demand tightens.
Are you actually seeing a slowdown started since the new administration has taken but any specific customers.
Speaker Change: Back to the pace of.
Speaker Change: Awarding task orders or.
Gautam Khanna: <unk> as we see things.
Speaker Change: Contract Award adjudication until you actually seen any.
Gautam Khanna: All the good news is as the opportunities that we see in the horizon really begin to mature and crystallize weekend ramping to them at a different speed that we could have a couple of years ago.
Speaker Change: Firm evidence of slowing or is this more.
Speaker Change: Uh huh.
Speaker Change: Okay, well, let me offer it in two pieces first of all that there is clearly a slowdown in some agencies. The good news for US is we are very very small exposure to those agencies.
Speaker Change: Yes, that's helpful commentary and I was wondering also just.
Gautam Khanna: Expand on the prior questioners question.
Speaker Change: So we're you know we are acknowledging what's out there without seeing any material impact on our business.
Speaker Change: Are you actually seeing a slowdown started since the new administration has taken any specific customers with respect to the pace of <unk>.
Speaker Change: And then some of the other agencies I think I mentioned that even in October in anticipation of things some of the timelines for award had lengthened in some of the civil agencies.
Gautam Khanna: Awarding task orders or.
Gautam Khanna: Contract Award adjudication have you actually seen any.
Speaker Change: That pattern continues he has not compressed he has not length and he just.
Gautam Khanna: Some evidence of slowing or is this more.
Speaker Change: Was it a little bit of a wait and see attitude that begun even in you know.
Gautam Khanna: On the Con let me offer it in two pieces first of all there is clearly a slowdown in some agencies. The good news for US is we are very very small exposure to those agencies.
Speaker Change: In the last administration.
So you said this was going to be an administration transition after the election, regardless and so.
Speaker Change: That's that has continued but overall I like Matt said you know.
Gautam Khanna: So we're you know well.
Gautam Khanna: We are acknowledging what's out there without seeing any material impact on our business.
Speaker Change: Look our trailing book to Bill is one four which for US is extremely high.
Gautam Khanna: And then some of the other agencies I think I mentioned that even in October in anticipation of things some of the timelines for award had lengthened in some of the civil agencies.
Speaker Change: Backlog is strong the demand condition right now is solid on the supply side, we really good the business is running well.
Gautam Khanna: That pattern continues it has not compressed it has not lengthened he just.
Speaker Change: But you know we have acknowledged.
Speaker Change: Probably more than anybody else.
Gautam Khanna: Is it a little bit of a wait and see attitude that begun even.
Speaker Change: The immediate.
Speaker Change: The challenge.
Gautam Khanna: In the last administration.
Speaker Change: Challenge associated with the presidential transition and those are playing out.
Gautam Khanna: It seems that this was going to be an administration transition after the election, regardless and so.
Speaker Change: Thank you guys sure.
Gautam Khanna: That's that has continued but overall like Matt said.
Speaker Change: Thank you <unk>.
Speaker Change: Question is from Sheila <unk> with Jefferies.
Gautam Khanna: Look our.
Harald: Good morning, Harald for Mt.
Speaker Change: Trailing book to Bill is one four which for US is extremely high backlog is strong the demand condition right now is solid on the supply side, we really good the business is running well.
Speaker Change: For the time.
Speaker Change: Maybe just a little bit more specific on just your growth trajectory when we think about Intel it outperformed.
Speaker Change: Several for the first time in a while obviously easier comps.
Speaker Change: But we have acknowledged I think probably more than anybody else the immediate.
Speaker Change: Ramping up as the largest program in the federal government. So maybe if you could just talk about how you expect and how to progress from here and how that ramp.
Speaker Change: Challenges associated with the presidential transition and those are playing out.
Speaker Change: Ramp is going.
Speaker Change: Thank you guys sure.
Speaker Change: Well I'll start and then I need to let Matt Feroli complete the thought I think it would help me really excited about our Intel business is.
Speaker Change: Thank you.
Speaker Change: Next question is from Sheila <unk> with Jefferies.
Speaker Change: Is undertone five first leadership, we have really pivoted our business in two directions. One is we're bringing a lot more technology to the actual inter.
Sheila: Good morning, Thank you Carlos.
Speaker Change: Hello.
Speaker Change: Maybe just a little bit more specific on just your growth trajectory when we think about Intel it outperformed.
Speaker Change: Intelligence function.
Speaker Change: A lot more AI a lot more use of data platforms in a different way, but secondly, and I think this is going to be the most important driver of our growth over time.
Speaker Change: Several for the first time in a while obviously easier comps.
Speaker Change: Ramping up at the largest program in the federal government. So maybe if you could just talk about how you expect and how to progress from here and how that ramp.
Speaker Change: Is this is now very much a cyber and space focused business cyber will continue to be a significant investment area for our clients. We believe but space is I think where we're going to see a lot of our important acceleration and I think again as you think about the administration's agenda.
Speaker Change: Ramp is going.
Matt: Well I'll start, but then I need to let Matt fully complete.
Matt: The thought I think what helps me really excited about our Intel business.
Matt: <unk> is under 25 first leadership, we have really pivoted that business in two directions. One is we're bringing a lot more technology to the actual.
Speaker Change: We are really well positioned on the space fronting waste, we wouldn't have been a couple of years ago to continue to see.
Matt: Intelligence function.
Matt: A lot more AI a lot more use of data platforms in a different way, but secondly, and I think this is going to be the most important driver of our growth over time.
Speaker Change: The growth over the medium and long term.
Speaker Change: Yeah.
Speaker Change: Yes, Sheila it's playing out the way we anticipated.
Speaker Change: And for shadowed that silver business is still going to grow.
Matt: Is.
Matt: This is now very much a cyber and space focused business cyber will continue to be a significant investment area for our clients we believe.
Speaker Change: Perhaps in the short run not to the extent that the other markets will grow or civil has grown in the past what's interesting is.
Matt: But space is I think where we're going to see a lot of our important acceleration and I think again as you think about the administration's agenda, we are really well positioned on the space fronting waste, we wouldn't have been a couple of years ago to continue to see.
Speaker Change: Behind that you know Horacio talked about these dozen or so big ideas in that list keeps growing.
Speaker Change: I was thinking about that list.
Speaker Change: There are a lot of in civil.
Speaker Change: A lot of them that involve one or more commercial partnerships and increasingly we're finding we're pulling.
Matt: The growth over the medium and long term.
Speaker Change: Technology and capabilities in Tech and solutions from our defense and Intel clients in the civil.
Matt: Yeah.
Matt: Yes, Sheila it's playing out the way we anticipated.
Matt: And for shadowed that civil business is still going to grow but perhaps in the short run not to the extent that the other markets will grow or civil has grown in the past what's interesting is behind that Horacio talked about these dozen or so big ideas in that list keeps growing what's fascinating about that lift.
Speaker Change: Both for opportunities around efficiency wherever you think even about the E O that.
Speaker Change: Aimed drug cartels.
Speaker Change: Forest organizations, you know a lot of the technology and capabilities, we built up over years.
Speaker Change: In the Intel and defense communities, how they can port over to civil so.
Speaker Change: It's a dynamic time in our civil business, but it's a really exciting time and I think.
Matt: There are a lot of in civil.
Matt: A lot of them that involve one or more commercial partnerships and increasingly we're finding we're pulling.
Speaker Change: As I look across the list of bigger deals you probably have more there than anywhere else.
Speaker Change: And where.
Speaker Change: <unk> prepared to and are engaging in administration about ideas for change.
Matt: Technology and capabilities in Tech and solutions from our defense and Intel clients into civil.
Speaker Change: Maybe if I could just follow up there.
Matt: Both for opportunities around efficiency or do you think even about the ear that name.
Speaker Change: But all in all that but all of them contribute on an annualized basis.
Matt: Named drug cartels.
Speaker Change: How long it will take that run rate or.
Matt: Terrorist organizations, a lot of the technology and capabilities, we built up over years.
Speaker Change: How do we think about how do either of you think about the revenue growth rate under this administration versus the prior does it change at all.
Matt: In the Intel and defense communities, how they can port over to civil so.
Matt: It's a dynamic time in our civil business, but it's a really exciting time and I think.
Speaker Change: Yes, I'll take the turnaround question, it's growing at the pace we anticipated.
Matt: As I look across the list of bigger deals you probably have more there than anywhere else.
Speaker Change: We're having a lot of success, most importantly, driving impact for clients and that's translating into more people more clients adopting.
Matt: And we are.
Matt: We're prepared to.
Matt: And are engaging in administration about ideas for change.
Speaker Change: <unk> solution.
Speaker Change: In terms of civil and our house here you want to take that okay. Okay.
Speaker Change: Maybe if I could just follow up there.
Speaker Change: And following on that but under them contribute on an annualized basis.
Speaker Change: Yeah, I think as I said we.
Speaker Change: We are excited about the opportunities for change the vast majority of our portfolio in civil is an area as a real mission importance as Horacio mentioned we've seen.
Speaker Change: How long it will take that run rate or.
Speaker Change: How do we think about how do either of you think about the revenue growth rate under this administration versus the prior.
Speaker Change: All of the agencies, we're seeing the most that are seeing the most churn.
Speaker Change: Changed at all.
Speaker Change: Yes, I'll take the turnaround question, it's growing at the pace we anticipated.
Speaker Change: Related to the new year's and direction. The administration, we don't have large positions there.
Speaker Change: We're having a lot of success, most importantly, driving impact for clients and that's translating into more people more clients adopting.
Speaker Change: So we're excited about.
Speaker Change: The medium to long term and in the civil business I think.
Speaker Change: <unk> solution.
Speaker Change: Growth may look more different there's a lot of opportunity for outcome based work there we've been talking about that Sheila as you know for 12 to 18 months and positioning for that you're.
As a civil and our house here you want to take that.
Speaker Change: I think as I said we.
Speaker Change: We are excited about the opportunities for change the vast majority of our portfolio in civil is an area as a real mission importance. So as you mentioned we've seen.
Speaker Change: Do you think about ways to make the VA more efficient or the IRS more efficient to.
Speaker Change: To bring AI to bear.
Speaker Change: So you know.
Speaker Change: We may continue to see some short term disruption we've talked about that in the civil business, but the team is leaning into opportunities aggressively.
Speaker Change: The agencies, we're seeing the most that are seeing the most churn.
Speaker Change: Related to the new year's and direction. The administration, we don't have large positions there.
Speaker Change: Okay got it thank you.
Speaker Change: So we're excited about the medium to long term in the civil business I think.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Tobey Sommer with two risks. Please proceed.
Speaker Change: Growth may look more different there is a lot of opportunity for outcome based work there we've been talking about that Sheila as you know for 12 months to 18 months and positioning for that.
Speaker Change: Thank you.
Speaker Change: I was wondering if you could drill down into the the civil.
Speaker Change: When you think about ways to make the VA more efficient or the IRS more efficient.
Speaker Change: Science and.
Speaker Change: Maybe describe.
To bring AI to bear.
Speaker Change: What areas of civil or agencies that youre seeing.
Speaker Change: So.
We may continue to see some short term disruption we've talked about that in the civil business, but the team is leaning into opportunities aggressively.
Speaker Change: A change in behavior.
Speaker Change: I know the.
Speaker Change: Second quarters have come Josh I was kind of curious.
Speaker Change: Okay got it thank you.
Speaker Change: This month, but.
Speaker Change: Thank you.
Speaker Change: Any sort of contours, you could give us would be helpful. Thank you.
Our next question comes from the line of Tobey Sommer with two risks. Please proceed.
Speaker Change: Sure Tobey I mean, as you know are the core of our civil business Russ on the healthcare side with a very strong emphasis on the V. A.
Speaker Change: Thank you.
Speaker Change: I was wondering if you could drill down into the the SIB.
Speaker Change: Treasury and with the modernization of systems across Russia, and especially the IRS and then broadly across the HSN, especially law enforcement.
Speaker Change: Civil.
Speaker Change: Clients.
Speaker Change: Maybe describe.
Speaker Change: What areas of civil or agencies that youre seeing.
Speaker Change: And again, if you look at those areas and you read the same things that I read probably and you talked to probably some of the same people that I talked to those are areas that I think are right for both opportunity transformation investment and acceleration.
Speaker Change: A change in behavior.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Sure Yes.
Speaker Change: This month, but.
Speaker Change: Any sort of contours, you could give us would be helpful. Thank you.
Speaker Change: And so that's what our our team is really for.
Tobey: Sure Tobey I mean as you know.
Tobey: The core of our civil business Russ on the healthcare side with a very strong emphasis on the VA.
Speaker Change: Focused on we moved away from a civil business that allowed the 1000 flowers bloom across all of the smaller agencies quite a while back.
Tobey: Treasury.
Tobey: And with the modernization of systems across Russia, and especially the IRS and then broadly across the HSN, especially law enforcement.
Speaker Change: And I'm glad we did because those are the agencies that I think are seeing right now the most near term.
Tobey: And again, if you look at those areas and you read the same things that I read probably and you talked to probably some of the same people that I talked to those are areas that I think are right for both opportunity transformation investment and acceleration and so that's what our team is really.
Speaker Change: Disruption now again, even in the larger agencies when there is a change in philosophy, when there's a change in strategy.
Speaker Change: There is theres, a immediate impact where people come in and say wait let's let's pause.
Speaker Change: Take a look as you saw there there was a significant.
Tobey: Focused on we moved away from a civil business that allowed 1000 flowers bloom across all of the smaller agencies quite a while back.
Speaker Change: Pause that then was partially reversed on grants and funding of grants and things like that where it was that one has no almost zero or zero.
Tobey: And I'm glad we did because those are the agencies that I think are seeing right now the most near term.
Speaker Change: <unk> business and so.
Speaker Change: He had no impact on us, but I can see how that house has a greater impact so.
Tobey: Disruption now again, even in the larger agencies when there is a change in philosophy, when there's a change in strategy.
Speaker Change: You know like it like we said before we are are we going to see some.
Tobey: There is there is a immediate impact where people come in and say wait let's let's pause.
Speaker Change: Awards that maybe are under consideration now taken a little longer to get awarded it while we have already begun to see that and I don't expect that will shorten in the immediate term could we see some things get counseled on some things get started.
Tobey: Take a look.
Tobey: As you saw there was a significant.
Tobey: Pause then was partially reversed on grants and funding O'brien and things like that where it was that one has no.
Speaker Change: You know this is probably what my six.
Speaker Change: Presidential transition since I joined Booz Allen.
Speaker Change: The answer to that is almost certainly yes, because we've seen that in every other one of those.
Tobey: Almost zero or zero.
Tobey: The business and so had.
Speaker Change: But at the end of the day that that is a very short term phenomenon and we're not focused on that we will manage that we'll navigate that we are doing well already there. Our real focus is once things get going in earnest and continue to accelerate we are able to match that acceleration phase.
Tobey: It had no impact on us, but I can see how that house has a greater impact so.
Tobey: Like we said before we are we going to see some.
Tobey: Awards that maybe are under consideration now taken a little longer to get awarded it while we have already begun to see that and I don't expect that will shorten in the immediate term.
Speaker Change: The history of Booz Allen is we actually do better in every administration transition because we can match better than anybody else the opportunity set.
Tobey: We see some things get counseled on some things get started.
Tobey: This is probably what may six.
Tobey: Our essential transition since I joined Booz Allen.
Speaker Change: And especially now as an advanced technology company.
The answer to that is almost certainly yes, because we've seen that in every other one of those but at the end of the day that that is a very short term phenomenon.
Speaker Change: With the largest AI business the largest cyber business is strong space presence largest quantum or I don't know if it's the largest but the leading quantum business.
Tobey: Not focused on that we will manage that we'll navigate that we are doing well already there. Our real focus is once things get going in earnest and continue to accelerate we are able to match that acceleration phase.
Speaker Change: You put all of that together and you say, we are really well positioned to take advantage of opportunities.
Speaker Change: We as things get underway and then we move past the immediate transition.
Tobey: The history of Booz Allen is we actually do better in every administration transition because we can match better than anybody else the opportunity set.
Speaker Change: Thank you for that Russia, as a follow up if I could.
Speaker Change: With respect to the offer.
Speaker Change: For internal government employees to resign is there a.
Tobey: And especially now as an advanced technology company.
Tobey: With.
Speaker Change: Rush home.
Tobey: The largest AI business the largest cyber business is strong space presence.
Speaker Change: The percentage decline in internal government staff at your agency customers.
Tobey: Just quantum.
Tobey: Or I don't know, if it's the largest but the leading quantum business.
Speaker Change: Whereby if it's large enough it could signal increased outsourcing.
Tobey: You put all of that together and you say, we are really well positioned to take advantage of opportunities.
Tobey: As things get underway and that we move past the immediate transition.
Speaker Change: On to you and others in the marketplace, just curious how youre thinking about that because I guess, we will have some sense for what the results are in about a week sure I mean as you know we're not in the outsourcing business.
Speaker Change: Thank you for that Russia, as a follow up if I could.
Speaker Change: With respect to the offer.
Speaker Change: For internal government employees to resign is there a.
Speaker Change: And in the staff augmentation business, we're in the business of bringing technology to bear and that's what we're focused on is those types.
Rich Hall: Rich Hall.
Speaker Change: Although opportunities that's.
Speaker Change: Percentage decline.
Speaker Change: That's where we think both in the near and in the medium term the growth is going to be the investment is going to come the efficiencies are going to be realized and so we are a full speed ahead on generating those types of opportunities and positioning them for them.
Speaker Change: The internal government staff at your agency customers.
Speaker Change: Whereby its large enough it could signal increased outsourcing.
Speaker Change: To you and others in the marketplace, just curious how youre thinking about that because I guess, we will have some sense for what the results are in about a week sure I mean as you know we're not in the outsourcing business.
Speaker Change: Thank you one moment for our next question.
Speaker Change: And he comes from the line of Louis Dipalma with William Blair. Please proceed.
Speaker Change: And the staff augmentation business, we're in the business of bringing technology to bear and that's what we're focused on is those types.
Louis Dipalma: Good morning Laurie.
Speaker Change: Yeah on that investment and also good morning.
Speaker Change: The opportunities are.
Louis Dipalma: For us yeah.
Speaker Change: That's where we think both in the near and in the medium term the growth is going to be the investment is going to come the efficiencies are going to be realized and so we are a full speed ahead on generating those types of opportunities and positioning them for them.
Speaker Change: Matt your previous long term revenue guidance that you still mentioned in your in your slide deck was 5% to 8% and I know.
Speaker Change: You aren't going to give them a fiscal 2026 guidance, but should that range be considered.
Speaker Change: Thank you one moment for our next question.
Speaker Change: A reasonable benchmark in this new era of a slower procurement.
Speaker Change: And he comes from the line of Lady Palmer with William Blair. Please proceed.
Speaker Change: Good morning Laurie.
Speaker Change: Yes, I'll take that one.
Speaker Change: Yeah on that investment and also good morning.
Speaker Change: Yeah, Historically, we've said that if our book to Bill was above one point too in our head count isn't that.
Ross: Sure Ross.
Matt your previous long term revenue guidance that you still mentioned in your slide deck was 5% to 8% and I know.
Speaker Change: 3% to 5% range.
Speaker Change: We're looking at mid to upper single digit organic growth and if not.
Speaker Change: Probably bias towards the high end of that so.
Ross: You aren't going to give.
Speaker Change: We've got a lot of momentum in the business I think your question is hard to parse right. Because you were talking about a short term recalibration for the procurement environment.
Ross: Fiscal 2026 guidance, but should that range be considered.
Ross: Reasonable benchmark in this new era of a slower procurement.
Speaker Change: Over the medium to long term and that you know.
Speaker Change: That will start with when the administration really lands and they've got a new budget passed and we begin to see areas that they're going to invest in here. We haven't talked about iron Dome. For example, which is an area. We're really excited about.
Ross: Okay.
Speaker Change: Yes, I'll take that one.
Speaker Change: Historically, we've said that for a book to Bill was above one two in our head count isn't that.
Speaker Change: The money is going to start to flow and so I wouldn't read much into this quarter or next I think it's going to be a period of recalibration and the answer to your long term question is we're really bullish about where we're headed we see a lot of opportunity as Raphael said, we've been preparing.
Speaker Change: 3% to 5% range.
Speaker Change: We're looking at mid to upper single digit organic growth and if not.
Speaker Change: Probably bias towards the high end of that so.
Speaker Change: We've got a lot of momentum in the business I think your question is hard to parse right because we're talking about a short term recalibration for the procurement environment.
Speaker Change: For this moment.
Speaker Change: We've been talking about volt for the past three years and the tenants of volt are squarely in line with what the administration wants to do AI speed dual use technology driving efficiency. So this.
Speaker Change: Over the medium to long term in that.
Speaker Change: That will start with when the administration really lands and they've got a new budget passed and we begin to see areas that theyre going to invest and we haven't talked about iron Dome. For example, which is an area. We're really excited about.
Speaker Change: This is an opportunity and I and <unk>.
Speaker Change: You heard in our prepared remarks, but I'll just say.
Speaker Change: The money is going to start to flow and so I wouldn't read much into this quarter or next I think it is going to be a period of recalibration and the answer to your long term question is we're really bullish about where we're headed we see a lot of opportunity as Raphael said, we've been preparing.
Speaker Change: My experience is booz Allen's always better when we're on offense and our team is on offense and I think thats what.
Speaker Change: You and our investors would expect is we're going to we're going to create the future of Theres. A reason why our mission statement says, we're empowering people to change the world and and we're embracing this change and going for it.
Speaker Change: For this moment.
Speaker Change: We've been talking about volt for the past three years and the tenants of volt are squarely in line with what the administration wants to do AI speed dual use technology driving efficiencies. So.
Speaker Change: Great.
Speaker Change: And.
Speaker Change: I guess for them for either of you do you like in General review this period of Deutsche.
Speaker Change: This is an opportunity.
Speaker Change: Cost cutting is different from the 20th 11 era of sequestration.
Speaker Change: You heard in our prepared remarks, but I'll just say.
Speaker Change: My experience is booz Allen's always better when we're on offense and our team is on offense and I think thats what.
Speaker Change: And.
Speaker Change: That's one would probably be from that do you expect certain unpriced options that are in your backlog to go away or perhaps just be replaced with.
Speaker Change: You and our investors would expect is we're going to we're going to create the future. There is a reason why our mission statement says we're empowering people to change the world.
Speaker Change: And we're embracing this change and in going forward.
Speaker Change: Other work as priority shift.
Speaker Change: Well, let me why don't I take the first part of it the I actually think this is.
Speaker Change: Great.
Speaker Change: Thanks and.
Speaker Change: I guess for them.
Speaker Change: For either of you do you like in General review this period of coach.
Speaker Change: Qualitatively different from the sequestration.
Speaker Change: Cost cutting is different from the 2011 era of sequestration.
Speaker Change: Time period in that the.
Speaker Change: There they started with a lower first of all it came up all of a sudden because they had created the BCA caps as a way to force themselves.
Speaker Change: And.
Speaker Change: This one would probably be for Matt can you expect certain unpriced options that are in your backlog to go away or perhaps.
Speaker Change: To agree and then when they Couldnt agree it's almost a pud they're gone through the proverbial head and then their gun went off.
Speaker Change: <unk> replaced with.
Speaker Change: Other work as priority shift.
Speaker Change: And as a result of that this was this unprecedented takedown of.
Speaker Change: Let me why don't I take the first part of it.
Speaker Change: Across the board funding that was irrespective of priority investment areas of need.
I actually think this is <unk>.
Speaker Change: Qualitatively different from.
Speaker Change: The sequestration.
Speaker Change: This to me reads completely differently, if I listen.
Speaker Change: Time period in that the.
Speaker Change: So the conversation that is happening all around dose this is about creating efficiencies.
Speaker Change: They are they started with a lower first of all it came up all of a sudden because they had created the BCA caps as a way to force themselves.
And then deciding how that is going to be invested for the American people.
Speaker Change: I agree and then when they Couldnt agree it's almost they put their gone through the proverbial head and then the gun went off.
Speaker Change: And in that sense.
Speaker Change: Our expectation is that a lot of what is going to be created in the form of efficiencies will be reinvested as investments in technology that will drive.
Speaker Change: And as a result of that this was just unprecedented takedown of.
Speaker Change: Across the board funding that was irrespective of priority investment areas of need.
Speaker Change: Future outcomes, you know we are in a geopolitically very difficult environment, where.
Speaker Change: This to me reads completely differently, if I listen to.
Speaker Change: You heard me say, it's not we're just not moving fast enough I think theres a possibility to accelerate that there's a real desire.
Speaker Change: To the conversation that is happening.
<unk> this is about creating efficiencies.
Speaker Change: And then deciding how that is going to be invested for the American people.
Speaker Change: In the department, both by the incoming team headed by the existing professionals there to accelerate.
Speaker Change: And in that sense.
Speaker Change: Things and this should enable that are both from a funding any process.
Speaker Change: Our expectation is that a lot of what is going to be created in the form of efficiencies will be reinvested as investments in technology that will drive.
Speaker Change: Perspective, there's a real need.
Speaker Change: Need to think about immigration differently. There is a real need to think about space differently.
Speaker Change: And.
Speaker Change: Future outcomes, you know we are in a geopolitically very difficult environment, where.
Speaker Change: Or any success of creating efficiencies I think will unlock the possibility of really creating that faster which for us.
Speaker Change: You heard me say not we're just not moving fast enough I think theres a possibility to accelerate that there is a real desire.
Speaker Change: Both impact and opportunity and so that's why we came into 2011.
Speaker Change: In the department, both by the incoming team headed by the existing professionals there to accelerate.
Speaker Change: Recognizing that this was going to be a multi year period of difficulty or I'll remind you that even then we decided to double down and invest as opposed to retrench, but we knew that was going to be a multiyear period. We think this is a you know a much shorter period of adjustment followed by a real clear set of opportunities and priorities.
Speaker Change: Things and this should enable that both from a funding and a process.
Speaker Change: Perspective, there is a real.
Speaker Change: Need to think about immigration differently. There is a real need to think about space differently and.
Speaker Change: Any success at creating efficiencies I think will unlock the possibility of really creating that faster which for us spell.
Speaker Change: We can pursue.
Speaker Change: If I can just add.
Speaker Change: Yes, the dominant.
Speaker Change: Spells both impact and opportunity and so that's why we came into 2011.
Speaker Change: Contracting force in that period was low price technically acceptable now, it's all about outcome base and innovation and speed it could not be more different.
Speaker Change: Recognizing that this was going to be a multiyear period of difficulty I'll remind you that even then we decided to double down and invest as opposed to retrench, but we knew that was going to be a multi year period.
Speaker Change: In terms of what the changes are trying to affect and how we expected and it's going to play out.
Speaker Change: Back then it was all about who can get as low as possible to supply. The same amount of service. This is the antithesis of that.
Speaker Change: We think this is a you know a much shorter period of adjustment followed by a real clear set of opportunities and priorities we can pursue.
Speaker Change: Great and.
Speaker Change: Like recently, when they have been shifting priorities or our contract losses like.
Speaker Change: If I can just add to that Larry.
Speaker Change: Focus Fox or the recent VA contract you have been able to shift your talent to other short staffed high growth programs.
Speaker Change: The dominant.
Speaker Change: Contracting force in that period was low priced technically acceptable now, it's all about outcome base and innovation and speed it could not be more different.
Speaker Change: Programs and you know in terms of.
Speaker Change: In terms of what the changes are trying to affect and how we expected and it's going to play out.
Speaker Change: Horacio is answer and your answer Matt you seem to suggest the Doe just more of a shift of priority is rather than just across the board sequestration type cost cutting do you expect like with.
Speaker Change: Back then it was all about who can get as low as possible to supply. The same amount of service. This is the antithesis of that.
Speaker Change: Great.
Speaker Change: Vote that youre going to be able to have the same type of versatility and being able to shift.
Speaker Change: And.
Speaker Change: Like recently, when they have been shifting priorities or contract losses like focus Fox or the recent VA contract you have been able to shift your talent to other short staffed high growth.
Speaker Change: I used to align to the new priorities quickly.
Speaker Change: Absolutely and I think we may be able to do even more I think first of all we have of our overall business model based on the single P&L has always been an asset at times like this and it is going to be a fundamental asset.
Speaker Change: Programs and in terms of.
Horacio is answer and your answer Matt you seem to suggest the Doe just more of a shift of priority is rather than just across the board sequestration type cost cutting do you expect.
Speaker Change: Now second.
Speaker Change: As I mentioned before you know we are using new tools and new technologies to do everything faster, it's either Booz Allen and we can understand for example, if somebody is coming off of contract.
Speaker Change: Vote that youre going to be able to have the same type of versatility and.
Speaker Change: We now use AI to understand why.
Speaker Change: Where would their skill set the best match and we can make that transition happen.
Speaker Change: And be able to shift.
Speaker Change: Well I used to align to the new priorities quickly.
Not quite of milliseconds, yet, but certainly infinitely faster than we could have in the past, but but maybe third and most importantly.
Speaker Change: Absolutely and I think we may be able to do even more.
Speaker Change: I think first of all we have of our overall business model based on the single P&L has always been an asset at times like this and it is going to be a fundamental asset.
Speaker Change: We are really leaning in.
Speaker Change: And like I said, we are looking for opportunities we're talking about opportunities. We are focusing on those and we are beginning to invest as we speak on the in the areas that we believe will turn into opportunities we're not standing.
Speaker Change: Now second.
Speaker Change: As I mentioned before we are using new tools and new technologies to do everything faster inside of that Booz Allen and we can understand for example, if somebody is coming off of contract.
Speaker Change: Still and so you know if there are contract shifts.
We now use AI to understand where would their skill set the best match and we can make that transition happen.
Speaker Change: I am really proud of this workforce and their versatility and their value and I'm really bullish about our ability to redeploy them to where it makes the most sense.
Speaker Change: Not quite of milliseconds, yet but.
Certainly infinitely faster than we could have in the past, but maybe third and most importantly.
Great. Thanks, everyone.
Speaker Change: We are really leaning in.
Speaker Change: Sure.
Speaker Change: And like I said, we are looking for opportunities we're talking about opportunities. We are focusing on those and we are beginning to invest as we speak on the in the areas that we believe will turn into opportunities we're not standing.
Speaker Change: Thank you.
Speaker Change: Our next question is from Matt Akers with Wells Fargo. Please proceed.
Speaker Change: Hey, good morning, guys. Thanks for the question.
Speaker Change: Maybe one for Horacio I mean, so I guess the news last week out of China on AI with deep Sea just curious if you've heard.
Speaker Change: Still and.
Speaker Change: So if there are contract shifts.
Speaker Change: Any kind of reaction from your clients that maybe.
Speaker Change: I am really proud of this workforce and their versatility and their value and I'm really bullish about our ability to redeploy them to where it makes the most sense.
Speaker Change: More urgency to kind of accelerate investment in AI and just curious.
Where we stand.
Speaker Change: The AI kind of arms race with China.
Yes, you know I think I I I spent a fair amount with our AI team on on this topic and it won't surprise you that we have been tracking.
Speaker Change: Great. Thanks, everyone.
Speaker Change: Sure.
Speaker Change: Thank you.
Speaker Change: Our next question is from Matt Akers with Wells Fargo. Please proceed.
Speaker Change: This development for the last year, so while the sort of the announcement had some element of surprise it was.
Speaker Change: Hey, good morning, guys. Thanks for the question.
Speaker Change: Maybe one for Horacio I mean, so I guess the news last week out of China on AI with deep Sea just curious if you've heard.
Speaker Change: Not totally out of the blue.
Speaker Change: The.
Speaker Change: Any kind of reaction from your clients that may be.
Speaker Change: Here's what I would say.
Speaker Change: First of all there's a real opportunity here to rethink at least some elements of how.
More urgency to kind of accelerate investment in AI and just curious.
Speaker Change: Where we stand.
Speaker Change: AI is deployed.
Speaker Change: The AI kind of arms race with China.
Speaker Change: And there are some capabilities that the deep sea <unk>.
Yes, I think.
Speaker Change: So that that actually demonstrate that by distilling and doing a number of things you can actually really lower the cost of deployment and use of.
Speaker Change: I spent a fair amount with our AI team.
On this topic.
Speaker Change: And it won't surprise you that we have been tracking.
Speaker Change: Well. They are you can put it in is much smaller.
Speaker Change: This development for the last year, so while the sort of the announcement had some element of surprise it was.
Speaker Change: <unk> footprint and end and again as you think about edge in all of the things we worry about there's a lot of things to think about there. The second point is it demonstrates how dynamic this field is and how.
Speaker Change: Not totally out of the blue.
Speaker Change: The here's.
Speaker Change: Here's what I would say.
Speaker Change: First of all there's a real opportunity here to rethink at least some elements of how.
Speaker Change: If you will a female leadership could be in an area like this and I think he's going to keep everybody on our toes to ensure that we continue to stay on top of it which is again I'd take you back to the V. Involved. This is why we focused on speed because this is how fast.
Speaker Change: AI is deployed.
Speaker Change: And there are some capabilities that deep sea <unk>.
Speaker Change: So that that actually demonstrate that.
Speaker Change: Distilling and doing a number of things you can actually really lower the cost of deployment and use of.
Speaker Change: Things are changing and then third I will say this I mean again when when when China does something.
Speaker Change: <unk> you can put it in is much smaller.
Speaker Change: Like this it's a it's a moment of pause not just for our clients, but really for all of us for a couple of reasons.
Speaker Change: <unk> footprint and again as you think about edge in all of the things we worry about there's a lot of things to think about there. The second point is it demonstrates how dynamic this field and how.
Speaker Change: First of all you know I think it's when he I'll need to take some time to examine some of the claims.
Speaker Change: If you will a female leadership could be in an area like this and I think he is going to keep everybody on our toes.
Speaker Change: Because of Osama opacity in in <unk>.
Speaker Change: Some of the claims that I think we still need to shred it the ground truth.
Speaker Change: Ensure that we continue to stay on top of it which is again I'd take you back to the V. Involved. This is why we focused on speed because this is how fast.
Speaker Change: But secondly, you know I did it's already being reported in the press that if you ask certain questions.
Speaker Change: Things are changing and then third I will say this I mean again when when when China does something.
Speaker Change: You get some funny answers coming out of deep seek we don't know in these malls are what is also behind them underneath that and so the deployment of malls, where we don't have complete understanding of their provenance.
Speaker Change: Like this.
Speaker Change: It's a it's a moment of pause not just for our clients, but really for all of us for a couple of reasons.
Speaker Change: <unk>.
Speaker Change: First of all I think it's when he I'll need to take some time to examine some of the claims.
Speaker Change: And what maybe in there is something that again creates an intersection between AI and cyber also something we've been talking about for a couple of years that we really need to be very thoughtful about these are the kinds of things we're talking to our clients about these are the kinds of areas, where I think booz Allen's leadership, if anything will expand and accelerate.
Speaker Change: Because there are some opacity in some of the claims that I think we still need to shred it to ground truth.
Speaker Change: But secondly.
Speaker Change: It's already been reported in the press that if you ask certain questions.
Speaker Change: You get some funny answers.
Speaker Change: So.
Speaker Change: Out of deep seek.
Speaker Change: You and I could geek out on this probably for the next.
Speaker Change: We don't know in these malls are what is also behind them underneath that and so the deployment of malls, where we don't have complete understanding of their provenance.
Speaker Change: Half an hour, but I'll I'll park it there.
Speaker Change: No that's great. Thanks, and then I guess I wanted to ask about capital deployment.
Speaker Change: You guys have sort of laid out what the strategy kind of the priorities are but.
Speaker Change: And what maybe in there is something that again creates an intersection between AI and cyber also something we've been talking about for a couple of years that we really need to be very thoughtful about these are the kinds of things we're talking to our clients about these are the kinds of areas, where I think booz Allen's leadership.
Speaker Change: Your stock is like 30% off of where it was pre election.
Speaker Change: I think you've talked about being comfortable up to a little bit higher leverage level than where you are now just curious if at some point it makes sense to maybe do something more aggressive with buybacks just given that opportunity.
Speaker Change: Anything will expand and accelerate.
Speaker Change: So.
Speaker Change: Yeah. Thanks, Matt I think if you look we bought back.
Speaker Change: You and I could geek out on this probably for the next.
Speaker Change: About $500 million in shares over the first nine months. So you know.
Speaker Change: Half an hour, but I'll I'll park it there.
Speaker Change: No that's great. Thanks. Thanks.
Speaker Change: As is often true, we're doing things sort of our own way and quietly but we've retired.
Speaker Change: And then I guess I wanted to ask about capital deployment you guys.
Speaker Change: That's sort of laid out what the strategy.
Speaker Change: Two 3% of our share count over the first three quarters.
Speaker Change: The priorities are but your stock is like 30% off of where it was pre election.
Speaker Change: You're right I mean, our balance sheet is strong right. Our net leverage is two three times. So we've deployed almost a $1 billion worth of capital over the last 12 months, while still delevering and that gives us a lot of flexibility to generate value.
Speaker Change: I think you've talked about being comfortable up to a little bit higher leverage level than where you are now just curious if at some point it makes sense to maybe.
Speaker Change: In different ways and as Ross here, when I've said, we're really bullish about.
Speaker Change: Do something more aggressive with buybacks just given that opportunity.
Speaker Change: Yes, Thanks, Matt I think if you look we bought back.
Speaker Change: <unk> prospects in the new environment. So we will continue to deploy capital.
Speaker Change: About $500 million in shares over the first nine months so.
Speaker Change: Aggressively and flexibly to create shareholder value in lots of ways.
Speaker Change: As is often true, we're doing things sort of our own way and quietly but we've retired.
That's great. Thank you.
Speaker Change: Two 3% of our share count over the first three quarters.
Speaker Change: Thank you and now we can they called back to Horacio Rozanski for final remarks.
Speaker Change: You're right I mean, our balance sheet is strong right. Our net leverage is two three times. So we've deployed almost a $1 billion worth of capital over the last 12 months, while still delevering and that gives us a lot of flexibility to generate value.
Horacio Rozanski: Thank you Carmen and thank you all for your questions and for taking time with US. This morning, before we close I want to take a minute to once again. This is my favorite thing to brag about the amazing people of Booz Allen there at the heart of the work that we do and the outcomes that we deliver for our clients each and every day.
Speaker Change: In different ways and as Ross here, when I've said, we're really bullish about.
Speaker Change: <unk> prospects in the new environment.
Speaker Change: We will continue to deploy capital.
Speaker Change: Hey.
Speaker Change: So we closed out our 110th anniversary in December.
Speaker Change: Aggressively and flexibly to create shareholder value in lots of ways.
Speaker Change: Our people delivered yet one more achievement that that makes me prouder than it's worth highlighting in.
Speaker Change: That's great. Thank you.
Horacio Rozanski: Thank you and now we'll turn the call back to Horacio Rozanski for final remarks.
Speaker Change: In 2020 for our employee giving campaign raised a record $2.6 million in support of nearly 2500 nonprofits. This is the highest level of employee participation ever.
Speaker Change: Thank you Carmen and thank you all for your questions and for taking time with US This morning.
Speaker Change: Before we close I want to take a minute to once again. This is my favorite thing to brag about the amazing people of Booz Allen there at the heart of the work that we do and the outcomes that we deliver for our clients each and every day.
Speaker Change: And it demonstrates the care that the people at Booz Allen thank for each other and for one of our communities and it is really one of the contactless reasons why I'm still here. After a 30 some years why I'm. So proud to be here every day and work with these amazing people who truly.
Speaker Change: So we closed out our 110th anniversary in December.
Speaker Change: Our people delivered yet one more achievement that that makes me proud of and it's worth highlighting.
Speaker Change: Are empowered to change the world.
Speaker Change: And on that note.
Speaker Change: In 2020 for our employee giving campaign raised a record $2 $6 million in support of nearly 2500 nonprofits. This is the highest level of employee participation ever.
Speaker Change: Again, all of you for joining us and have a great day.
Speaker Change: This concludes today's conference call. Thank you all for participating and you may now disconnect.
Speaker Change: And it demonstrates the care the people at Booz Allen think for each other and for one of the communities and it is really one of the client list reasons why I'm still here. After 30 some years why I'm. So proud to be here every day and work with these amazing people who truly are.
Speaker Change: Our empowered to change the world.
Speaker Change: And on that note. Thank.
Speaker Change: Again, all of you for joining us and have a great day.
Speaker Change: And this concludes today's conference call. Thank you all for participating and you may now disconnect.
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Speaker Change: Good morning, and thank you for standing by and welcome to Booz Allen Hamilton's earnings call covering third quarter fiscal year 2025 results.
Speaker Change: At this time all participants are in a listen only mode. Later, there will be an opportunity for questions.
Dan: I'd now like to turn the call over to Dan.
Speaker Change: Head of Investor Relations Dustin Darren snack.
Speaker Change: Thank you good morning, and thank you for joining us for Booz Allen's third quarter fiscal year 2025 earnings call with.
Speaker Change: We hope you've had an opportunity to read the press release, we issued earlier this morning.
Speaker Change: We have also provided presentation slides on our website and are now on slide two.
Speaker Change: With me today to talk about our business and financial results are Horacio Rozanski, our chairman Chief Executive Officer and President.
Speaker Change: And that Calderon, executive Vice President and Chief Financial Officer.
Speaker Change: 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 our future financial performance and involve known and unknown risk uncertainties and other factors that may cause our actual results to differ materially from forecasted.
Speaker Change: <unk> 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 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.
Speaker Change: During today's call. We will also discuss some non-GAAP financial measures and other metrics, which we believe provide useful information for investors.
Speaker Change: An explanation of adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our third quarter fiscal year 2025 earnings release and slides.
Speaker Change: <unk> presented maybe round it NSX may vary slightly from those in our public disclosure.
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.
Dustin D'Arensberg: Thank you Dustin.
Speaker Change: Welcome to the team we're glad to have you on board.
Speaker Change: And good morning, everyone. Thank you for joining the call.
This morning, Matt and I are excited to share excellent financial results for the third quarter of fiscal year 2025.
Speaker Change: Including double digit growth at both the top and bottom lines.
Speaker Change: Booz Allen continues to achieve the strategic and operational momentum we aim for this fiscal year.
Speaker Change: This performance is particularly important in the current industry environment consistent with many other presidential transitions.
Speaker Change: Some agencies, taking time to assess and align priorities with their new agenda.
Speaker Change: This creates some slowing and uncertainty in the procurement environment as funding shifts in line with those priorities.
Speaker Change: We anticipated this adjustment period and have managed our business accordingly.
Speaker Change: We are running our operations tightly.
Speaker Change: This is reflected in the strong results we are discussing today.
Speaker Change: And because of our unique business model, we are able to accelerate investments in priority growth areas.
Speaker Change: Much of the new administration's agenda rely as soon the ability to apply advanced technologies to move faster to disrupt outdated processes and protect our nation's technological supremacy.
Speaker Change: We believe vault, which stands for velocity leadership and technology has positioned us to capture this moment.
Speaker Change: In a few minutes, Matt will take you through the full details of the quarter on our outlook for the rest of the fiscal year.
Speaker Change: I would like to put our optimism for the future into some additional context.
Speaker Change: For more than a century Booz Allen has continuously anticipated and catalyzed changed for our clients and our business.
Speaker Change: Our institutions journey aligns with some of the most significant moment in our nation's history.
Speaker Change: These include winning World War, II and the space race and the successive waves of change driven by the dawn of the digital age.
Speaker Change: Booz Allen has always been prepared for the technological societal and geopolitical changes that shape the times.
Speaker Change: We anticipate the trends to define our future and move our business to the center of that change.
Speaker Change: Today.
Speaker Change: Hey, Booz Allen's 20th Precedential transition.
Speaker Change: We believe we are on the precipice of another transformative era.
Speaker Change: We know from experience that large scale change always includes a period of uncertainty and disruption.
Speaker Change: We also know that these times create major opportunities.
Speaker Change: The word Booz Allen has done over the last decade and accelerated through volt.
Speaker Change: <unk> US is the advanced technology company delivering outcomes at the center of our nation's most important missions.
Speaker Change: We have a truly unique vantage point for understanding and driving the changes that will bring better faster innovation into government.
Speaker Change: Our tax accounting function has been key to identifying the technologies that shape the future.
Speaker Change: We accelerated the journey from breakthrough to outcome.
Speaker Change: Like advanced manufacturing quantum cryptography and autonomy.
Speaker Change: For decades, we have invested in disruptive technologies that are changing the world.
Speaker Change: We made early bets in cloud cyber security space in AI that are now core to essential missions.
Speaker Change: And our venture fund and commercial partnerships he'll bring leaving do I'll use technologies into civil defense and National security missions to achieve faster more effective outcomes.
Speaker Change: Let me share a few examples that further highlight how booz Allen is well positioned for this moment.
Speaker Change: We now have the largest AI business in the federal government.
Speaker Change: And one of the largest cyber businesses in the world.
Speaker Change: We are developing and delivering trusted secure and responsible AI across missions.
Speaker Change: Including for the defense Department's largest data platform.
Speaker Change: And with Thunder Dome, we have also built and deployed the largest integrated zero trust solution at scale.
Speaker Change: We are developing and operating premier space systems built with scalable secure AI powered data solutions to support National security missions.
Speaker Change: Over the past two decades, we have driven massive modernization of technology at the VA.
Speaker Change: This has accelerated outcomes for our veterans, including faster claims processing and benefits delivery.
Speaker Change: And reduce fraud waste and abuse.
Speaker Change: Using an outcomes based acquisition model, we designed built and continue to operate recreation Gov.
Speaker Change: It's advanced technical infrastructure delivers the customer experience on par with the most successful commercial platforms.
Speaker Change: And we are delivering digital battlespace technologies to significantly improve real time situational awareness for warfighters, even in the most disrupted environments.
Speaker Change: This is the power of vault.
Speaker Change: This is the power of Booz Allen.
Speaker Change: We also recognize the importance of partnerships to generate speed to outcomes.
Speaker Change: <unk> ability to collaborate with a network of innovative commercial technology partners helps speed the impact of emerging and dwell use technologies.
Speaker Change: For example, we.
Speaker Change: We know that in the most challenging national security environment in half a century, we need to move faster.
Speaker Change: We must push boundaries and disrupt longstanding barriers to innovation.
Speaker Change: We recently announced an expanded partnership with volunteer technologies to co create solutions to help the U S maintain superiority against these adversaries.
Speaker Change: In only 45 days our team has created a prototype with the capacity to rapidly accelerate integrated Warfighting operations.
Speaker Change: This solution is already being tested large scale exercises.
Speaker Change: Improved collaboration and combined mission planning for the U S and our allies and partners.
Speaker Change: Last week, we also announced an expanded partnership with Amazon Web services.
Speaker Change: To jointly invest create and collaborate to accelerate outcomes across U S federal emissions.
Speaker Change: We will jointly develop and deliver enterprise solutions at scale in areas like cloud migration cybersecurity and generative AI.
Speaker Change: This partnership is force multiplier.
Speaker Change: We are co investing to build on top of our technology platforms and create new solutions to existing problems and capability gaps.
Speaker Change: I'm tremendously excited about the potential of our ongoing collaboration with both of these companies.
Speaker Change: And with others, we are not ready to announce quite yet.
Speaker Change: As we put it altogether.
Speaker Change: We find ourselves in an excellent position to support the priorities of the new administration.
Speaker Change: First.
Speaker Change: Our multiyear effort to become faster in everything.
Speaker Change: Allows us to match the velocity of change underway.
Speaker Change: Second.
Speaker Change: We are one of the few technology companies able to both innovate and deliver at scale.
Speaker Change: We have long been advocates of maximizing do all used commercial technologies and increasing the use of AI to generate efficiencies.
Speaker Change: The combination of our own technology.
Speaker Change: Our highly productive partnerships across tech.
Speaker Change: And our extraordinary people give us the edge on speed to outcome.
Speaker Change: And third speaking of outcomes for.
Speaker Change: For quite some time now we have prepared and advocated for a move towards outcome based contracting.
Speaker Change: As a model to create both efficiency and faster impact across emissions we support.
Speaker Change: We expect this trend to accelerate in the current environment.
Speaker Change: For all these reasons and more I am excited about what's ahead.
Speaker Change: Booz Allen is the advanced technology company known for speed to outcomes.
Speaker Change: From the Pacific to orbit and here at home, we are investing in the technologies and the talent necessary to succeed in the coming years and decades.
Speaker Change: And that's the new administration's priorities and team continue to take shape, we look forward to the opportunity to work with them to help enhance our national security and how our government service our citizens.
Speaker Change: And with that Matt I'll turn the call over to you.
Matt: Thank you Rocco and good morning, everyone.
Matt: I'm really pleased with our third quarter performance, we had a number of objectives for the quarter and we delivered on all of them.
Matt: Our leaders simultaneously delivered very strong results.
Matt: Improve the efficiency of our business.
Matt: Maintain momentum into the future.
Matt: And continued to accelerate the core elements of our volt strategy that are squarely in line with the change agenda of the new administration.
Matt: Innovation.
Matt: Efficiency.
Matt: Hi.
Matt: Dual use technology and.
Matt: And generating speed to outcome.
Matt: Here are the headlines for the quarter.
Matt: We delivered about 14% topline growth.
Matt: The 13% organic with solid performance across all three sectors.
Matt: We ran the business efficiently.
Matt: Generating $332 million and adjusted EBITDA at an 11, 4% adjusted EBITDA margin.
Matt: We maintained a 141 times trailing 12 month book to Bill.
Matt: This is our highest at calendar year end in the last six years.
Matt: And we continued to deploy capital to generate long term value for shareholders.
Matt: Including almost $150 million in share repurchases.
Matt: Based on this performance we are tightening towards the upper end of our guidance ranges for this fiscal year.
Matt: We are poised to deliver another year of double digit growth in.
Matt: In revenue and adjusted EBITDA.
Matt: And as we approach our final quarter of our three year investment thesis.
Matt: <unk> to exceed our target of one two to $1 3 billion of adjusted EBITDA almost entirely through organic performance.
Matt: Booz Allen remains a premier compound and continues to deliver outstanding performance year after year.
Matt: I am exceptionally proud of what our Booz Allen team has accomplished and excited about the potential we see for the future.
Matt: I'll now cover our quarterly results in more detail.
Matt: Please turn to slide six.
Matt: In the third quarter revenue increased roughly 14% year over year to $2 9 billion.
Matt: Organic revenue grew about 13% year over year and.
Matt: And revenue, excluding billable expenses was up 12%.
Matt: We continue to see solid growth across all of our government and commercial markets.
Matt: Our defense business had another stellar quarter with 19% year over year revenue growth.
Matt: Our intelligence business continued to accelerate posting 11% growth over the prior year period.
Matt: And our civil business grew at a healthy 8% rate.
Matt: Year over year.
Matt: Pivoting now to demand please turn to slide seven.
Matt: Net bookings for the third quarter totaled $1 1 billion.
Matt: Our quarterly book to Bill was 0.37 times right in line with our five year average of 0.4 times for the third quarter.
Matt: We maintained a trailing 12 month book to Bill of 141 times, our highest third quarter trailing 12 month book to Bill in six years.
Matt: Our current backlog of $39 billion is our highest ever at this point in the year.
Matt: Our total backlog is up 15% year over year.
Horacio Rozanski: Looking forward as Horacio noted, we expect the industry will see a short term slowdown of funding and award activity as the New administration and Congress establish our agenda and as federal government agencies pivot to enacted.
Horacio Rozanski: This occurs with all presidential transitions and the incoming team clearly is working at a brisk pace.
Horacio Rozanski: Typically the short term effect on procurement and contracts is more pronounced for civilian agencies.
Horacio Rozanski: We are prepared for this by building momentum flexibility and resilience into our business model.
Horacio Rozanski: And looking past. This we are bullish about how our strategy aligns with the change agenda of the incoming administration.
Horacio Rozanski: We are aggressively leaning into this opportunity.
Horacio Rozanski: We believe we have the backlog proposal pipeline for next fiscal year and most important the technology the commercial relationships and the innovative ideas for change.
Horacio Rozanski: To remain on a strong growth sector.
Speaker Change: Transitioning now to head count.
Speaker Change: In the third quarter, we placed a heavy focus on improving productivity of existing staff.
Speaker Change: Both to provide a more robust employee experience and to give us more operating flexibility going forward.
Speaker Change: This focus worked.
Speaker Change: But it did result in us maintaining a roughly flat client staff head count for the quarter.
Speaker Change: <unk> finished the third quarter with total client staff head count of over 32000.
Speaker Change: 6% increase from a year ago.
Speaker Change: Since the start of the fiscal year total client staff head count has grown four 4%.
Speaker Change: This puts us in good shape relative to our full year target of 3% to 5% client facing head count growth.
Speaker Change: Going forward, we aim to increase head count at a consistent pace to support the ramp up of recent wins and to meet our growth aspirations.
Speaker Change: On the bottom line, we delivered $332 million and adjusted EBITDA in the third quarter of.
Speaker Change: <unk>, 14% improvement over the prior year quarter.
Speaker Change: Our third quarter adjusted EBITDA margin was 11, 4% up 10 basis points year over year.
Speaker Change: For our fiscal year to date adjusted EBITDA margin was 11, 1%.
Speaker Change: I'm really pleased with how we're operating the business, which affords us the flexibility to react to this evolving environment.
Speaker Change: Working down the P&L, our net income was $187 million.
Speaker Change: 28% higher year over year.
Speaker Change: Adjusted net income grew 7% year over year to $198 million.
Speaker Change: Diluted earnings per share increased to $1 45 per share.
Speaker Change: Up about 31% year over year.
Speaker Change: Adjusted diluted earnings per share grew to $1 55 per share up approximately 10% year over year.
Speaker Change: This increase in <unk> was driven by our overall profitability as well as a reduction in share count.
Speaker Change: Which was partially offset by higher tax rate compared to the prior year.
Turning now to the balance sheet, we ended the third quarter with $454 million of cash on hand.
Speaker Change: Net debt of approximately $2 9 billion.