Q2 2026 Everforth Inc Earnings Call

Speaker #1: Mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad.

Speaker #1: Please note: this conference is being recorded. I will now turn the conference over to Kimberly Esterkin, Head of Investor Relations. Thank you, Kimberly. You may begin.

Speaker #2: Good afternoon. Thank you for joining us today for Everforth's second quarter 2026 conference call. With me are Ted Hanson, Chief Executive Officer; Shiv Iyer, President; and Marie Perry, Chief Financial Officer.

Speaker #1: Great. Welcome to the Everforth second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Speaker #2: Before we get started, I would like to remind everyone that our commentary contains forward-looking statements. Although we believe these statements are reasonable, they are subject to risks and uncertainties, and as such, our actual results could differ materially from those statements.

Speaker #1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to Kimberly Esterkin, Head of Investor Relations.

Speaker #2: Certain of these risks and uncertainties are described in today's press release and in our SEC filings. We do not assume any obligation to update these statements made on this call.

Speaker #1: Thank you, Kimberly. You may begin.

Speaker #2: Good afternoon. Thank you for joining us today for Everforth's second quarter 2026 conference call. With me are Ted Hanson, Chief Executive Officer; Shiv Iyer, President; and Marie Perry, Chief Financial Officer.

Speaker #2: For your convenience, our prepared remarks and supplemental materials can be found in the Investor Relations section of our website, at investors.everforth.com. Please also note that on this call, we will be referencing certain non-GAAP measures, such as adjusted EBITDA, adjusted net income, and free cash flow.

Speaker #2: Before we get started, I would like to remind everyone that our commentary contains forward-looking statements. Although we believe these statements

Speaker #2: are

Speaker #2: reasonable,

Speaker #2: And as such, our actual results could differ materially from those statements. Certain of these risks and uncertainties are described in today's press release and in our SEC filings.

Speaker #2: These non-GAAP measures are intended to supplement the comparable GAAP measures. Reconciliations between GAAP and non-GAAP measures are included in today's press release. I will now turn the call over to Ted Hanson, Chief Executive Officer.

Speaker #2: We do not assume any obligation to update these statements made on this call. For your convenience, our prepared remarks and supplemental materials can be found in the Investor Relations section of our website at investors.everforth.com.

Speaker #3: Thank you, Kim. And thank you for joining our second quarter 2026 earnings call, our first earnings call as Everforth. Everforth reported solid results for the second quarter.

Speaker #2: Please also note that on this call, we will be referencing certain non-GAAP measures, such as adjusted EBITDA, adjusted net income, and free cash flow.

Speaker #3: Revenues exceeded $1 billion, and we're above the high end of our guidance range, while adjusted EBITDA margin of 9.6% also surpassed the high end of our guidance range.

Speaker #2: These non-GAAP measures are intended to supplement the comparable GAAP measures.

Speaker #3: Commercial segment revenues were driven by demand and application and engineering, cloud and infrastructure, and data and AI solutions. In terms of bookings, commercial consulting bookings grew double digits year over year, with our enterprise platform business continuing its expected ramp upward and contributing meaningfully to the top line.

Speaker #2: Reconciliations between GAAP and

Speaker #2: non-GAAP measures are included in

Speaker #2: I will now turn the call over to Ted Hanson, Chief Executive Officer.

Speaker #3: Thank you,

Speaker #3: Kim. And thank you for joining our second quarter 2026 earnings call, our first earnings call as

Speaker #3: Workday bookings, in particular, exceeded our expectations and helped drive book-to-bill up to $1.2 times on a trailing 12-month basis. The integration of Quinox into our commercial segment is progressing well, in a matter of a few short months we've aligned our go-to-market approach with early momentum in application modernization, data and AI, and cloud services.

Speaker #1: Percent. Also surpassed the high end of our guidance range. Commercial segment revenues were driven by demand in application and engineering, cloud and infrastructure, and data and AI solutions.

Speaker #1: In terms of bookings, commercial consulting bookings grew double digits year over year, with our enterprise platform business continuing its expected ramp upward and contributing meaningfully to the top line.

Speaker #3: The Everforth commercial teams bring longstanding client relationships and industry expertise while Quinox adds enterprise platform and complex engineering expertise global delivery at scale and proprietary accelerators that help generate transformational outcomes.

Speaker #1: Workday bookings, in particular, exceeded our expectations and helped drive book-to-bill up to $1.2 times on a trailing 12-month basis. The integration of Quinox into our commercial segment is progressing well, in a matter of a few short months we've aligned our go-to-market approach with early momentum in application modernization, data and AI, and cloud services.

Speaker #3: In our federal segment, new contracts awards totaled $169.3 million for the second quarter, where book-to-bill of $0.8 times on a trailing 12-month basis. Federal contract backlog was approximately $2.7 billion at quarter-end.

Speaker #1: The ever-fourth commercial teams bring longstanding client relationships and industry expertise while Quinox adds enterprise platform and complex engineering expertise global delivery at scale, and proprietary accelerators that help generate transformational outcomes.

Speaker #3: For coverage ratio of 2.3 times, the segments trailing 12-month revenues. Sequential revenue growth in the quarter was supported by continued momentum across several government programs, including cybersecurity work for the Department of Homeland Security, and data and AI contracts with the Navy.

Speaker #1: In our federal segment, new contracts awarded totaled $169.3 million for the second quarter, or a book-to-bill of $0.8 times on a trailing 12-month basis.

Speaker #3: Shiv will provide additional details on these contracts later in today's call. Importantly, each of these programs reflects a broader trend we are seeing across both the commercial and federal markets, a growing demand for organizations that can help clients operationalize AI at scale.

Speaker #1: Federal contract backlog was approximately $2.7 billion at quarter-end. For coverage ratio of 2.3 times, the segments trailing 12-month revenues. Sequential revenue growth in the quarter was supported by continued momentum across several government programs, including cybersecurity work for the Department of Homeland Security, and data and AI contracts with the Navy.

Speaker #3: As AI adoption accelerates, organizations are moving beyond experimentation and focusing on how to deploy these technologies securely, efficiently, and in ways that generate measurable outcomes.

Speaker #3: In many cases, the bottleneck to enterprise adoption is no longer access to technology. The real bottlenecks are more practical and, as a result, harder to solve.

Speaker #1: Shivville provide additional details on these contracts later in today's call. Importantly, each of these programs reflects a broader trend we are seeing across both the commercial and federal markets, a growing demand for organizations that can help clients operationalize AI at scale.

Speaker #3: AI cannot simply be bolted onto legacy processes and be expected to generate meaningful returns. Enterprises need to redesign how work gets done. Companies also need the right talent to move AI from pilot to production.

Speaker #1: As AI adoption knowledge of industry-specific workflows, technology stacks, and operating environments. That context allows us to help customers move beyond experimentation to implement AI in ways that are practical, scalable, and tied to business outcomes.

Speaker #3: We believe Everforth is uniquely positioned to help clients navigate this key phase of AI adoption, supported by four strategic advantages that differentiate us in the market.

As AI adoption accelerates, organizations are moving beyond experimentation and focusing on how to deploy these technologies securely and efficiently, and in ways that generate measurable outcomes.

Speaker #3: First is our deep industry domain and enterprise integration expertise. Our longstanding customer relationships provide us with a deep knowledge of industry-specific workflows, technology stacks, and operating environments.

In many cases, the bottleneck to enterprise adoption is no longer access to technology. The real bottlenecks are more practical and, as a result, harder to solve.

Speaker #3: That context allows us to help customers move beyond experimentation to implement AI in ways that are practical, scalable, and tied to business outcomes. Second is the depth of our alliance partnerships.

AI cannot simply be bolted onto legacy processes and be expected to generate meaningful returns. Enterprises need to redesign how work gets done.

Speaker #3: Through which we are not just helping our customers build AI solutions, but we are also helping them guide their AI strategies. This guidance is informed by our own customer zero strategies, that allow us to build, test, deploy, and scale within Everforth.

Speaker #3: Our partnerships with Salesforce, ServiceNow, and Workday are increasingly important as AI agents become embedded into ERP, CRM, and HCM platforms. Deploying those capabilities successfully requires platform expertise, integration across legacy and cloud environments, and strong governance from day one.

Speaker #1: Second is the depth of our alliance partnerships. Through which we are not just helping our customers build AI solutions, but we are also helping them guide their AI strategies.

Speaker #3: Speaking of governance, our third differentiator is our extensive governance and cybersecurity qualifications. Governance is no longer a compliance exercise; it's a competitive differentiator, and as AI moves into mission-critical processes, customers need confidence that their systems are secure, accountable, and auditable.

Speaker #3: Everforth brings governance, risk, and compliance capabilities, supported by defense-grade security expertise and cleared and certified professionals. We combine AI, data analytics, and automation to deliver outcomes in highly secure environments.

Our partnerships with Salesforce, ServiceNow, and Workday are increasingly important. As AI agents become embedded into ERP, CRM, and HCM platforms, deploying those capabilities successfully requires platform expertise, cloud environments, and strong governance from day one.

Speaker #3: In the quarter, we advanced our proprietary AI-enabled alert triage capability for cybersecurity and IT operations. Using machine learning models to learn each customer's unique operating environment, we've been able to substantially reduce false positive alerts to enable our security experts to focus on cyber events with the greatest potential risk.

Speaking of governance, our third differentiator is our extensive governance and cyber security qualifications. Governance is no longer a compliance exercise. It's a competitive differentiator and as AI moves into Mission critical processes customers need confidence that their systems are secure accountable and auditable.

Speaker #3: This proprietary tool shows how we are applying AI not simply as a standalone technology, but as a practical means to optimize, complex operations, and improve outcomes for our customers.

Everforth brings governance, risk, and compliance capabilities, supported by defense-grade security, expertise, and cleared and certified professionals. We combine AI, data analytics, and automation to deliver outcomes in highly secure environments.

Speaker #3: Last but not least is our speed at identifying specialized talent when technology change has intensified. Our core capability is always been finding the right talent quickly and efficiently, and that capability is even more valuable as AI adoption accelerates.

Speaker #3: We bring senior experienced professionals to client environments without the burden of large fixed workforces that are hard to adapt as technology shifts. This allows us to move at the pace of a specialized boutique, with the scale and established provider.

Using machine learning models to learn each customer's unique operating environment, we've been able to substantially reduce false positive alerts and enable our Security Experts to focus on cyber events with the greatest potential risk.

Speaker #3: Internally, we are fostering a culture of innovation that empowers our teams to develop new AI-enabled solutions at scale. In June, we held our first-ever Everforth AI hackathon, which produced 11 new accelerators that enhance our customer delivery capabilities.

Last but not least is our speed at identifying specialized talent, which has intensified as technology change accelerates.

Speaker #3: Two accelerators stand out in particular: one an AI-enabled platform that bridges real-time factory operations with virtual simulations, helping manufacturers improve productivity, reduce downtime, and accelerate innovation.

Our core capability has always been finding the right talent quickly and efficiently, and that capability is even more valuable as AI adoption accelerates.

We bring senior, experienced professionals to client environments without the burden of large fixed workforces that are hard to adapt as technology shifts.

Speaker #3: And two, an agentic platform that acts as a hub for digital employees across onshore and nearshore and offshore teams. Unlike a human collaborator, this agent is immediately accessible to assist with development questions regardless of time zone, calendar, or workload.

This allows us to move at the pace of a specialized boutique, with the scale and established provider.

Speaker #3: Thereby reducing wasted development time by nearly 20%. Our view is clear: the last mile of enterprise AI adoption will be execution through IT services.

Internally, we are fostering a culture of innovation that empowers our teams to develop new AI-enabled solutions at scale. In June, we held our first-ever Everforth AI hackathon, which produced 11 new accelerators that enhance our customer delivery capabilities.

Speaker #3: As enterprise AI deployment is still in its early stages, the opportunity remains significant. The demand environment is now shifting towards partners that can combine strategy, talent, integration, governance, and speed, and that is exactly where Everforth's unique model creates a competitive advantage.

Two accelerators stand out in particular: 1. An AI-enabled platform that bridges real-time factory operations with virtual simulations, helping manufacturers improve productivity, reduce downtime, and accelerate innovation; and 2. A Genic platform that acts as a hub for digital employees across onshore, nearshore, and offshore teams.

Speaker #3: With that, I'll turn the call over to Shiv Iyer, our president, to discuss our industry performance and share examples of how we are applying our differentiated capabilities across our commercial and government customer base.

Unlike a human collaborator, this agent is immediately accessible to assist with development questions—regardless of time zone, calendar, or workload—thereby reducing wasted development time by nearly 20%.

Speaker #2: Thanks, Ted, and good afternoon, everyone. It's been another productive quarter, and I look forward to sharing our progress. Let's begin with our industry performance.

Our view is clear: the last mile of enterprise AI adoption will be execution through IT services.

Speaker #2: On a sequential basis, all five commercial industry verticals were up from the first quarter of 2026. Within TMT, media, entertainment, and software accounts, all improved high single digits from the first quarter, with cloud and infrastructure work contributing strongly to this improvement.

Speaker #2: In financial services, banking and insurance accounts increased mid single digits, while diversified financials improved low single digits. Within this industry, sequential growth was led by application engineering, cloud and infrastructure, and data and AI solutions.

As enterprise AI deployment is still in its early stages, the opportunity remains significant. The demand environment is now shifting towards partners that can combine strategy, talent integration, governance, and speed. And that is exactly where Everforth's unique model creates a competitive advantage. With that, I'll turn the call over to Ship Iyer, President, to discuss our industry performance and share examples of how we are applying our differentiated capabilities across our commercial and government customer base.

Speaker #2: Healthcare account growth was led by mid-teens improvement in life sciences, where the work was concentrated in application engineering. Within business services, cloud and infrastructure solutions for our state and local customers drove the sequential uptick.

Speaker #2: On a year-over-year basis, we saw growth in the TMT industry in which software and interactive was our strongest performing sub-vertical, followed by media and entertainment.

Speaker #2: Though down low single digits year over year, the consumer and industrial vertical saw double digit growth in industrials, automotive, and transportation accounts, while utilities improved high teens as compared to the second quarter of 2025.

Thanks, Ted, and good afternoon everyone. It's been another productive quarter, and I look forward to sharing our progress. Let's begin with our industry performance on a sequential basis. All five commercial industry verticals were up from the first quarter of 2026. Within TMT, media, entertainment, and software accounts all improved, with high single digits from the first quarter, with cloud and infrastructure work contributing strongly to this improvement. In financial services, banking and insurance accounts increased mid-single digits, while diversified financials improved low single digits within this industry. Sequential growth was led by application engineering, cloud and infrastructure, and data and AI solutions.

Speaker #2: Within financial services, insurance accounts were the standout performer year over year. Turning to our federal segment, national security customers again delivered the strongest growth and were up mid single digits year over year, and low double digits sequentially.

Healthcare account growth was led by mid teens Improvement, in life sciences, where the work was concentrated, in an application engineering within Business, Services cloud and infrastructure, solutions for our state and local, customers drove the sequential uptake.

Speaker #2: This was primarily driven by the cybersecurity work for DHS that Ted noted, we also saw a mid single digit growth in our other clients year over year, led by the USPS, where we are helping deploy a purpose-built AI application designed to improve the agency's operational efficiency.

On a year-over-year basis, we saw growth in the TMT industry, in which Software and Interactive was our strongest-performing sub-vertical, followed by Media and Entertainment.

Speaker #2: Building on the industry discussion, I'd like to transition to our solutions performance, which provides a clear view of where the client demand is strongest today.

Note down low single digits year-over-year. The Consumer and Industrial vertical saw double-digit growth in Industrials, Automotive, and Transportation accounts, while Utilities improved high teens as compared to the second quarter of 2025. Within Financial Services, Insurance accounts were the standout performance.

Speaker #2: As Ted highlighted, AI and data remain a significant driver of demand across our portfolio. In the TMT industry, during the second quarter, we expanded our work with a leading frontier AI organization, scaling specialized operations that support advanced AI and robotics development.

Speaker #3: Everforth. Everforth reported solid results for the second quarter. Revenues exceeded $1. you?

Speaker #2: Our teams are providing critical support for large-scale data acquisition, testing, and lab execution activities that help train, validate, and operationalize our customers' next-generation AI systems and robotics initiatives.

From a year-over-year turning to our federal segment National Security customers. Again delivered, the strongest growth and were up mid, single digits, year-over-year and low double digit sequentially. This was primarily driven by the cyber security work for DHS that Ted noted. We also saw a mid single-digit growth in our other clients year-over-year led by the USPS where we are helping deploy a purpose-built AI application designed to improve the agency's operational efficiency.

Building on the industry. Discuss.

Speaker #2: Also, within the data and AI space, we are working with technology partners to build innovative assets and accelerators that will enable our joint customers to leverage AI capabilities enterprise-wide.

AI and data remain a significant driver of demand across our portfolio.

Speaker #2: Our relationship with Snowflake continues to strengthen, expanding beyond services delivery into purpose-built solution development on their platform. Together, we are building differentiated capabilities across AI cost optimization, a telecommunications engineering center of excellence aligned to Snowflake's TMT practice, and I'm multi-modal accelerator that unlocks intelligence from unstructured content for the media and entertainment industry.

In the TMT industry, during the second quarter, we expanded our work with the leading frontier AI organization, scaling specialized operations that support advanced AI and robotics development.

Our teams are providing critical support for a large scale data acquisition testing and lab execution activities that help train validate and operationalize. Our customers Next Generation AI systems and Robotics initiatives.

Speaker #2: Each of these efforts represents a high-value platform-native offering we are developing for our customers. In our federal business, we are supporting the Navy's Harbinger program by training and optimizing AI-enabled sonar models for undersea detection indications and warnings.

May I space. We are working with technology Partners to build Innovative assets and accelerators that will enable our joint customers to leverage AI capabilities Enterprise wide.

Our relationship with Snowflake continues to strengthen, expanding beyond services delivery into purpose-built solution development on their platform.

Speaker #2: Our team of data and AI experts are designing and building mission partner environments that enable multinational collaboration across networks and support experimentation cloud-hosted development and operational exercises that demonstrate our differentiated expertise in secure mission systems and data engineering.

Together, we are building differentiated capabilities across AI cost optimization, a telecommunications engineering center of excellence aligned with the Snowflake TMT practice, and a multimodal accelerator that unlocks intelligence from unstructured content for the media and entertainment industry.

Speaker #2: Also, during the second quarter, our federal government segment secured a research and engineering contract with the Army Nautilus program, which we announced in yesterday's press release.

Speaker #2: Through the Nautilus program, we will accelerate the Department of War's development, testing, and operational integration of advanced AI capabilities. As the prime contractor on the Nautilus program, Everforth professionals will apply expertise in AI development, software engineering, cybersecurity, and AI field testing and evaluation to identify scalable approaches for the government's transition from AI experimentation to mission use.

Each of these efforts represents a high-value platform. In our native offering, we are developing for our customers in our federal business. We are supporting the Navy's Harbinger program by training and optimizing AI-enabled sonar models for undersea detection, indications, and warnings. Our team of data and AI experts are designing and building mission partner environments that enable multinational collaboration across networks and support experimentation, cloud-hosted development, and operational exercises that demonstrate our differentiated expertise in secure mission systems and data engineering.

Speaker #2: Building on our momentum in data and AI, our cloud and infrastructure practice continues to expand as we support the nationwide build-out of next-generation data centers.

Quarter of federal government segments.

Secured a research and engineering contract with the Army Nautilus program, which we announced in yesterday's press release.

Speaker #2: Everforth has contracts in place with the top four global hyperscalers, and in the second quarter, we were awarded a contract by a global hyperscaler to provide network services for a new AI data center currently under construction.

Speaker #2: This positions us early in the facility's lifecycle with the expectation of expanding into ongoing operational support once the data center is live. Having the maturity and rigor of operations to win these longer data center consulting contracts, not only deepens our ongoing customer relationships, but it also shows that the hyperscaler community trusts Everforth with their most significant investments.

Through the Nautilus program, we will accelerate the Department of War’s development, testing, and operational integration of advanced AI capabilities as the prime contractor on the Nautilus program. Everforth professionals will apply expertise in AI development, software engineering, cybersecurity, and AI field testing and evaluation to identify scalable approaches for the government's transition from AI experimentation to mission use.

Building on our momentum in data and AI, our cloud and infrastructure practice continues to expand as we support the nationwide build-out of next-generation data centers.

Speaker #2: As Ted discussed at the start of the call, cyber resilience is of heightened importance in today's AI-driven environment. In the cybersecurity space, Everforth is both a delivery partner and a strategic advisor, helping customers strengthen their security posture while preparing for emerging threats.

Speaker #2: In the quarter, we won a new award under our flagship cybersecurity program with the Army, the Army Endpoint Security Solution Program, to ready the Army and the Department of War for post-quantum cryptography or the next-generation of encryption designed to protect data from future quantum threats.

Everforce has contracts in place with the top four global hyperscalers. In the second quarter, we were awarded a contract by a global hyperscaler to provide network services for a new AI data center, which is currently under construction. This positions us early in the facility’s lifecycle, with the expectation of expanding into ongoing operational support once the data center is live.

Speaker #2: This award builds on Everforth's work, enabling the Army to become the first and the only military service to fully automate and report cybersecurity compliance.

Speaker #2: The need to prepare for a post-quantum future is not limited to government agencies. Across the commercial sector, organizations are increasingly evaluating how emerging quantum technologies could impact the security of their systems and operations.

Speaker #2: One of the largest retail brokerage platforms in the US, our commercial team is delivering a unified end-to-end cybersecurity transformation centered on modernizing our customers' security operations while preparing the brokerage for PQC.

Having the maturity and rigor of operations to win these longer data center Consulting contracts. Not only deepen, their ongoing customer relationships, but it also shows that the hyperscaler community trusts ever forth with their most significant Investments, as Ted discussed at the start of the call cyber resilience is of heightened importance. In today's AI driven environment in the cyber security space ever forth is both a delivery partner and a strategic advisor helping customers strengthen their security posture. While preparing for emerging threats. In the quarter, we want a new award under our Flagship cyber security program with the Army. The Army endpoint security solution program to ready the Army and the department of War for post-quantum cryptography or the next generation of encryption designed to protect data from future.

Quantum threats.

Speaker #2: What began as an initial assessment of the customers' encryption capabilities has grown into a broader transformation focused on automating and centralizing how the company manages encryption and digital security across its systems.

This award builds on Everforth's work, enabling the Army to become the first and only military service to fully automate and report cybersecurity compliance.

The need to prepare for a post-quantum future is not limited to government agencies.

Speaker #2: This shift replaces manual fragmented processes with scalable automated operations, which are enhanced by agentic AI to streamline efforts, improve reliability, and increase efficiency.

Commercial sector organizations are increasingly evaluating how emerging quantum technologies could impact the security of their systems and operations.

Speaker #1: Before turning the call over to Marie, to discuss our second quarter 2026 financial results and further detail, I'd like to provide an update on our enterprise platform performance for the quarter.

1 of the largest retail brokerage Platforms in the US. Our commercial team is delivering a unified end-to-end, cyber security transformation. Centered on modernizing our customers security operations. While preparing The Brokerage for pqc

Speaker #1: Across our enterprise platform portfolio, we're seeing improved consistency in both pipeline build and conversion of bookings to revenue, with trends moving back to historical norms.

Focused on automating and centralizing how the company manages encryption and digital security across its systems.

Speaker #1: As Ted noted, Workday quarterly bookings were especially strong, indicative of our pipeline conversion strength and margin improvement in the quarter. We are also actively integrating AI within our delivery of enterprise software solutions and developing assets that complement our existing capabilities.

This shift replaces manual, fragmented processes with scalable, automated operations, which are enhanced by agentic AI to streamline efforts, improve reliability, and increase efficiency.

Speaker #1: In the second quarter, we launched Agent Block, a common platform for Workday-specific skills, tools, and governance to drive AI-powered capabilities into our proprietary smart loader data conversion and delivery automation platform to reduce build time and test cycles.

Speaker #1: In other words, we're not just enabling AI capabilities within our customers' Workday platforms; we're running it on our own delivery. With automation comes margin expansion, and reduced workloads for both Everforth and our customers.

Before turning the call over to Murray to discuss our second quarter 2026 financial results in further detail, I'd like to provide an update on our Enterprise platform performance for the quarter. Across our Enterprise platform portfolio, we're seeing improved consistency in both pipeline build and conversion of bookings to revenue, with trends moving back to historical norms. As Ted noted, Workday quarterly bookings were especially strong, indicative of our pipeline conversion strength and margin improvement in the quarter.

Speaker #1: We pivot these customer savings into enhanced client satisfaction enabling us to continue to grow our market share. Despite continued improvements in automation, enterprise platform journeys still need human to provide context, judgment, and accountability.

Speaker #1: We're constantly upskilling and developing our team's AI expertise to ensure they're ready to take on any customer challenge. With that, I'll turn the call over to our CFO, Marie Perry, to discuss our second quarter 2026 performance and third quarter guidance.

We are also actively integrating AI within our delivery of enterprise software solutions and developing assets that complement our existing capabilities. In the second quarter, we launched Agent Blocks, a common platform for Workday-specific skills, tools, and governance to drive AI-powered capabilities into our proprietary Smart Loader data conversion and delivery automation platform to reduce build time and test cycles. In other words, we're not just enabling AI capabilities within our customers' Workday platforms—we're running it on our own delivery. With automation comes margin expansion.

Speaker #2: Thanks, Jeff. For the second quarter, revenues exceeded $1 billion, and we're above the top end of our guidance range. Revenues for our commercial segment were $701.7 million, a slight decrease of 0.9% year over year.

And reduced workloads for both ever fourth and our customers. We pivot these customer savings into enhanced client satisfaction. Enabling us to continue to grow our market share.

Speaker #2: Revenues for our federal government segment were $305.3 million, a decrease of 2.3% year over year. Turning to margins, gross margins for the second quarter of '26 were $28.3%, including commercial segment gross margins of $32.1% and federal government segment gross margins of $19.6%.

Despite continued improvements in automation, Enterprise platform, Journeys, still need humans to provide context, judgment and accountability. We're constantly upskilling and developing our team's AI expertise to ensure, they're ready to take on any customer challenge with that. I'll turn the call over to our CFO Murray, Perry to discuss our second quarter 2026 performance and third quarter guidance.

Speaker #2: SG&A for the quarter was $226.2 million, compared to $216.8 million in the second quarter of 2025. For the second quarter, net income was $14.2 million, adjusted EBITDA was $96.7 million, and adjusted EBITDA margin was $9.6%.

Speaker #2: Adjusted EBITDA margin was above our guidance range as Ted noted. In the quarter, we deployed $11.5 million in cash and repurchased $0.4 million shares at an average share price of $30.07.

Thanks Jeff for the second quarter revenues, exceeded 1 billion and we're above the top end of our guidance range revenues for our commercial segment, where 701.7 million a slight decrease of 0.9% year-over-year revenues for our federal government. Segments were 305.33% year-over-year,

To margins—gross margins for the second quarter of '26.

Speaker #2: At quarter end, we had approximately $923 million remaining under our $1 billion share repurchase authorization. Cash and cash equivalents were $152.9 million at quarter end.

Or 28.3% including commercial segment growth, margins of 32.1%, and Federal Government segment gross margins of 19.6%. SG&A for the quarter was $226.2 million, compared to $216.8 million in the second quarter of 2025.

Speaker #2: We had approximately $180 million available on our $500 million senior secured revolver. Having repaid $23.9 million in debt during the second quarter, and our net leverage ratio was 3.1 times at the end of the quarter.

For the second quarter, net income was 14.2 million. Adjusted Eva was 96.7 million and adjusted Eva down. Margin was 9.6% adjusted, but on margin was above our guidance range as Ted noted

Speaker #2: Subsequent to quarter end, we successfully completed the refinancing and upsizing of our existing revolver, replacing it and our $100 million term loan A with a new five-year $600 million facility extending its maturity date by three years.

In the quarter, we deployed $11.5 million in cash and repurchased 0.4 million shares at an average share price of $30.70. At quarter end, we had approximately $923 million remaining under our $1 billion share repurchase authorization.

Speaker #2: The new facility is leverage neutral at 3.1 times post-close, and we remain committed to bringing our net leverage closer to the 2.5 times or below.

Speaker #2: As we recently acquired Quinox, our focus from a capital allocation perspective would be on debt repayment followed by opportunistically repurchasing shares. Free cash flow for the second quarter was $46.3 million, or $48% of adjusted EBITDA.

And cash equivalents were $152.9 million at quarter end. We had approximately $180 million available on our $500 million senior secured revolver, having repaid $23.9 million in debt during the second quarter. And our net leverage ratio was 3.1 times at the end of the quarter.

Speaker #2: We continue to target $60 to $65% conversion rate of our free cash flow to adjusted EBITDA for the full year. Turning to guidance, our financial estimates for the third quarter of 2026 are set forth in our earnings release and supplemental materials.

Speaker #2: These estimates are based on current market conditions and assume no further deterioration in the markets that we serve. As we execute against our strategic plan, we expect some continued upfront investments.

Subsequent to quarter end, we successfully completed the refinancing and upsizing of our existing revolver, replacing it and our $100 million Term Loan A with a new 5-year, $600 million facility, extending its maturity date by 3 years. The new facility is leverage-neutral at 3.1 times post-close, and we remain committed to bringing our net leverage closer to 2.5 times or below.

As we recently acquired Quinnox, our focus from a capital allocation perspective would be on debt repayment, followed by opportunistically repurchasing shares.

Speaker #2: Our third quarter estimates include $7.5 million to $9.5 million in strategic planning expenses, related to the execution of our next wave growth strategy, which we expect will continue to decline over the coming quarters.

Speaker #2: As noted last quarter, along with these investments, we are implementing targeted initiatives that will generate meaningful structural cost savings for the business. These efforts are progressing as planned.

Free cash flow for the second quarter was $46.3 million, or 48% of adjusted EBITDA. We continue to target a 60% to 65% conversion rate of our free cash flow to adjusted EBITDA for the full year.

Turning to guidance.

Speaker #2: With that as background, for the third quarter of 2026, we are estimating revenues of $994 million to $1.024 billion, net income of $14.5 million to $23 million, adjusted EBITDA of $95 million to $105 million, and adjusted EBITDA margin of $9.6% to $10.3%.

That we serve.

As we execute against our strategic plan, we expect some continued up-front investments.

Our third quarter estimates include $7.5 million to $9.5 million in strategic planning expenses related to the execution of our Next Wave growth strategy, which we expect will continue to

Speaker #2: Thank you. I'll now turn the call back over to Ted.

come over the coming quarters.

Speaker #3: Thanks, Marie. As we begin the second half of the year, we remain confident in Everforth's ability to lead in an increasingly AI-driven marketplace. Our foundation has always been the ability to deliver specialized talent at scale and speed.

As noted last quarter, along with these investments.

We are implementing targeted initiatives that will generate meaningful, structural cost savings for the business. These efforts are progressing as planned.

But that is background.

on third quarter of

Speaker #3: This capability, combined with our expertise in integrating AI into complex enterprise environments, positions Everforth to expertly support our customers as they navigate their next phase of enterprise transformation.

Speaker #3: As noted at the start of today's call, enterprises are increasingly focused on how to implement AI securely and responsibly while enabling productive and efficient outcomes.

We are estimating revenues of $994 million to $1.024 billion, net income of $14.5 million to $23 million, adjusted EBITDA of $95 million to $105 million, and adjusted EBITDA margins of 9.6% to 10.3%. Thank you. I'll now turn the call back over to Ted.

Speaker #3: This shift is driving demand for Everforth's differentiated model. As you may recall, last November, we introduced our AI factory, a unified framework designed to help enterprises scale AI.

Thanks, Marie. As we begin the second half of the year, we remain confident in every force’s ability to lead an increasingly AI-driven marketplace.

Speaker #3: Over the past eight months, we've evolved that offering into what we now coined as TotalSight, an enterprise AI operating platform that provides customers with a secure, repeatable path from concept to production-ready AI.

Our foundation has always been the ability to deliver specialized talent at scale and speed. This capability, combined with our expertise in integrating AI into complex enterprise environments, positions Everforth to expertly support our customers as they navigate their next phase of enterprise transformation.

Speaker #3: TotalSight addresses one of the key issues we reviewed at the start of today's call, which is a few enterprises have the governance, security, and operating processes in place to deploy AI reliably at scale.

As noted at the start of today's call, enterprises are increasingly focused on how to implement AI securely and responsibly while enabling productive and efficient outcomes. This shift is driving demand for Everforth's differentiated model.

Speaker #3: By providing a modular platform for AI lifecycle management, TotalSight helps our customers accelerate AI deployment, reduce effort duplication, and manage their AI investments consistently across cloud, on-prem, and disconnected environments.

As you may recall, last November we introduced our AI Factory—a unified framework designed to help enterprises scale AI.

Speaker #3: We are actively using TotalSight to support current customers, and new business development, with the support of Quinox, for example, our TotalSight team has built a growing portfolio of AI-powered solutions and accelerators for the banking and insurance industries.

Over the past eight months, we've evolved that offering into what we have now coined as the Total Site and Enterprise AI Operating Platform. That provides customers with a secure, repeatable path from concept to production. Ready, AI?

Speaker #3: These solutions help our financial services customers, automate complex processes, improve customer experience, enhance productivity, and, importantly, unlock greater value from their massive datasets. Just as important, we believe the best way to help our clients realize the value of AI is to lead by example, embedding those capabilities throughout our own operations and delivering models.

Total site address is one of the key issues we reviewed at the start of today's call, which is that few enterprises have the governance, security, and operating processes in place to deploy AI reliably at scale.

By providing a modular platform for AI life. Cycle management, Turtle site helps. Our customers accelerate AI deployment reduce effort, duplication and manage their AI Investments consistently across cloud, on-prem and disconnected environments.

Speaker #3: In May, we launched our internal talent delivery agent, which has supported the publication of thousands of commercial job postings, improving the quality and consistency of our externally facing positions, while also helping accelerate growth in our applicant funnel.

Speaker #3: The agent has also assisted recruiters by generating comprehensive job fit profiles for more than 100,000 candidates, enabling faster and more effective alignment of qualified talent with client demand.

We are actively using Total Site to support current customers and new business development. With the supported Quinox, for example, our Total Site team has built a growing portfolio of AI-powered solutions and accelerators for the banking and insurance industries. These solutions help our financial services customers automate complex processes, improve customer experience, enhance productivity, and importantly, unlock greater value from their massive data sets.

Speaker #3: In June, we launched another agentic tool, a sales agent that is now supporting hundreds of sales professionals, teams are leveraging our sales agent for CRM automation, meeting preparation, account intelligence, and AI-driven recommendations that help accelerate new business development efforts.

Speaker #3: Both our sales and talent delivery agents are powered by a robust and evolving data foundation built on Salesforce Data 360, which enables us to curate rich, data-driven intelligence on the candidates and clients we serve, and then activate those insights in real time through Agentforce.

Just as important, we believe the best way to help our clients realize the value of AI is to lead by example—embedding those capabilities throughout our own operations and delivery models. In May, we launched our internal Talent Delivery Agent, which has supported the publication of thousands of commercial job postings, improving the quality and consistency of our externally facing positions while also helping accelerate growth in our applicant model.

Speaker #3: While these initiatives are still in the early stages, they are already helping us improve our speed, consistency, and productivity across key workflows. More importantly, they reinforce our conviction that meaningful AI transformation starts with operational execution.

Speaker #3: By applying these technologies within our own business, we are strengthening our expertise, accelerating innovation, and creating a better foundation to help our clients navigate their own AI journeys.

Speaker #3: That concludes our prepared remarks. Before we open the call for questions, I want to thank our team for their dedication, adaptability, and commitment to our customers.

The agent has also assisted recruiters by generating comprehensive job fit profiles for more than 100,000 candidates, enabling faster and more effective alignment of qualified talent with client demand. In June, we launched another agentic tool: a sales agent that is now supporting hundreds of sales professionals. Teams are leveraging our sales agent for CRM automation, meeting preparation, account intelligence, and AI-driven recommendations that help accelerate new business development efforts. Both our sales and talent delivery agents are powered by a robust and evolving data foundation built on Salesforce Data 360, which enables us to curate rich, data-driven intelligence on the candidates and clients we serve, and then activate those insights in real time through, hmm, Force.

Speaker #3: The progress we've discussed today is a direct reflection of your expertise, collaboration, and willingness to embrace innovation, and together these efforts drive our success.

Speaker #3: With that, let's open up the call to questions.

Speaker #1: Thank you. We will now be conducting a question-and-answer session. If you'd like to ask a question, please press star 1 on your telephone keypad.

Accelerating Innovation and creating a better Foundation to help our clients, navigate their own, AI Journeys.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.

Speaker #1: For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys. One moment, please, while we poll for questions.

That concludes our prepared remarks. Before we open the call for questions, I want to thank our team for their dedication, adaptability, and commitment to our customers. The progress we've discussed today is a direct reflection of your expertise, collaboration, and willingness to embrace innovation. Together, these efforts drive our success.

With that, let's open up the call to questions.

Speaker #1: Our first question is from Jeff Silber with BMO Capital Markets. Please proceed with your question.

Speaker #4: Thanks so much. Obviously, you sound a lot better than you did last quarter. Can you maybe at a high level, what's changed over the past three months and how sustainable are those changes?

Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2. If you'd like to remove your question from the queue.

for participants using speaker equipment, it may be necessary to pick up your headset handset before pressing the star Keys 1 moment, please while we pull for questions

Speaker #3: Hey, Jeff. Thanks for your question. I mean, look, I think that we saw meaningful acceleration in the business during the quarter that starts with bookings.

Speaker #3: You can see on the commercial side for sure that we've had a better-than-we-anticipated quarter in commercial bookings. That was we called it out for Workday, but that was really across the board in commercial.

Our first question is from Jeff Silver with BMO Capital Markets.

Please proceed with your question.

Speaker #3: Our staffing business is certainly found some stability here, and we saw a meaningful change in order flow from the first quarter coming into the second quarter.

Thanks so much. Um, you know, obviously, you sound a lot better than you did last quarter. Can you maybe, at a high level, talk about what's changed over the past three months, and how sustainable those changes are?

Speaker #3: So I really feel like it was a combination of those things. And on the federal side, they also exceeded our expectations. Not as much as commercial, but certainly contributed to the overperformance and we mentioned the higher-than-expected revenues on the DHS account, which really led the quarter on the federal side.

Speaker #4: Okay. That's really helpful. And then in looking at the guidance for the third quarter, it seems to be a pretty high end and the low end in the differences between those two?

Speaker #3: Yeah. I think it's just the momentum. If you will, Jeff, I think if momentum continues at a high level, it could drive us up above the midpoint.

Speaker #3: So I would say commercial momentum for sure. On the federal side, I think revenue acceleration there is going to come in the fourth quarter and really into 2027.

Speaker #3: So I think it's going to be commercial that would drive us into the high end of the range.

Hey, Jeff, thanks for your uh, question. I mean look, I think that we uh saw meaningful acceleration in the business during the quarter. Um, that starts with bookings, you can see on the commercial side for sure that we've had a, a better than we anticipated quarter and Commercial bookings. That was, you know, we called it out for work day, but that was really across the board in commercial. Um, you know, our our staffing business is certainly, uh, found some stability here. And, um, you know, we've saw a meaningful change in order flow from the first quarter coming into the second quarter. Uh, so I really feel like it was the combination of those things and on the federal side, they also exceeded our expectations. Um, not as much as commercial, but certainly contributed to the over-perform and we mentioned the the higher than expected revenues on the DHS account, which really led the quarter on the federal side.

Speaker #4: Okay. I'll jump back in the queue. Thanks so much.

Speaker #4: end in the differences between those two?

Speaker #1: Our next question is from Maggie Nolan with William Blair. Please proceed with your question.

Speaker #3: Yeah, I think it's just the momentum. If you will, Jeff, I think if momentum continues at a high level, it could drive us up above the midpoint.

Okay, that's really helpful. And then, in looking at the guidance for the third quarter, it seems to be a pretty wide range. Can you tell us what's driving maybe the high end and the low end, and the differences between those two?

Speaker #2: Hi. Thank you. Maybe to build on the previous questions, can you give some commentary about what you're seeing in terms of conversion cadence of the commercial bookings into revenue and help us sort of extrapolate what that means for your exit rate and growth trajectory into Q4 and 2027?

Speaker #3: So I would say commercial momentum for sure. On the federal side, I think revenue acceleration there is going to come in the fourth quarter and really into 2027.

Speaker #3: So I think it's going to be commercial that would drive us into the high end of the range.

Speaker #4: Okay, I'll jump back in the queue. Thanks so much.

Speaker #3: Yeah. So let's just take that one, but I'll kind of add on the back of Jeff's questions into yours. Is that we mentioned that while we didn't have great pace in our enterprise platform business in the first quarter, and it didn't perform quite to our expectations, it was a temporary blip, if you will, and it really accelerated through the second quarter, right, Shiv?

Speaker #1: Our next question is from Maggie Nolan with William Blair. Please proceed with your question.

Speaker #5: Hi, thank you. Maybe to build on the previous questions, can you give some commentary about what you're seeing in terms of conversion cadence of the commercial bookings into revenue and help us sort of extrapolate what that means for your exit rate and growth trajectory into Q4 in 2027?

Speaker #5: Absolutely. So, Maggie, I think as we said in the script, we're starting to see conversion bump back up to what I would call historical norms in terms of bookings to revenue.

Speaker #3: Yeah, so let's just take that one, but I'll kind of add on the back of Jeff's questions into yours, is that we mentioned that while we didn't have great pace in our enterprise platform business in the first quarter, and it didn't perform quite to our expectations, it was a temporary blip, if you will, and it really accelerated through the second quarter, right, Shiv?

Speaker #5: Strong bookings quarter for enterprise platforms, which obviously convert. But we need to see continued bookings momentum into Q3. And Q4, that would allow us to exit at a pretty good rate.

Speaker #5: Going into 2027. So what I would say is, as we've said in our guide, we're seeing stability in our staffing business. We're seeing demand and bookings momentum.

Speaker #5: Absolutely. So Maggie, I think as we said in the script, we're starting to see conversion bump back up to what I would call historical norms in terms of bookings to revenue.

Speaker #5: And conversion returned to historical norms. So that sort of drives the guide. And we think the momentum continues. We should continue to see sequential growth in the business.

Speaker #5: Strong bookings quarter for enterprise platforms, which obviously convert. But we need to see continued bookings momentum into Q3. And Q4, that would allow us to exit at a pretty good rate going into 2027.

Speaker #2: Great. Thank you. And then on free cash flow, do you have confidence in a ramp-up in free cash flow in the second half and what are the key components there?

Speaker #5: So what I would say is, as we've said in our guide, we're seeing stability in our staffing business, we're seeing demand and bookings momentum, and conversion return to historical norms.

Speaker #5: We do. Again, if you even last quarter, we talked about kind of having that 60 to 65 conversion to EBITDA. And so as we look at the back half of the year, there's a couple of components.

Speaker #5: So that sort of drives the guide, and we think the momentum continues, we should continue to see sequential growth in the business. Great, thank you.

Speaker #5: Obviously, as we continue to drive revenue, drive EBITDA, and then just our continued focus on DSO.

Speaker #2: Got it. Thank you all.

Speaker #5: And then on free cash flow, do you have confidence in a ramp up in free cash flow in the second half and what are the key components there?

Speaker #1: Our next question is from Tobey Sommer with True Securities. Please proceed with your question.

Speaker #5: We do. Again, if you even last quarter, we talked about kind of having that 60 to 65 conversion to EBITDA. And so as we look at the back half of the year, there's a couple of components.

Speaker #6: Thank you. Within commercial consulting, what are the softwares that are in highest demand now? And maybe if you could speak to the trends more recently here in July if that bookings trend continues into the current quarter.

Speaker #5: Obviously, as we continue to drive revenue, drive EBITDA, and then just our continued focus on DSO. Got it. Thank you all.

Speaker #5: Yeah. I can so look, I think we alluded to it pretty clearly that we had a strong bookings quarter on platforms specifically Workday. We are definitely seeing momentum with Salesforce as well.

Speaker #1: Our next question is from Toby Sommer with True Securities. Please proceed with your question.

Speaker #6: Thank ank you. Within commercial consulting, what are the softwares that are in highest demand now? And maybe if you could speak to the trends more recently here in July, if that bookings trend continues into the current quarter.

Speaker #5: And we had a pretty decent quarter from a ServiceNow perspective from an enterprise platforms standpoint. In terms of the other work that we're seeing momentum on, we're seeing further acceleration and growth in the work that we're doing with Databricks and Snowflake.

Speaker #5: We're also seeing momentum with some of the hyperscalers on some of the cloud work we're doing with both AWS and Microsoft. So hopefully that gives you a flavor of all the different platform areas and partnerships and software platforms we're seeing momentum with, Tobey.

Speaker #5: Yeah, I can so look, I think we alluded to it pretty clearly that we had a strong bookings quarter on platforms specifically Workday, we are definitely seeing momentum with Salesforce as well, and we had a pretty decent quarter from a ServiceNow perspective, from an enterprise platforms standpoint.

Speaker #6: In the new business wins and pipeline in July?

Speaker #3: Yeah. Go ahead, Shiv.

Speaker #5: Sorry, Tobey. Just could you just repeat the question one more time for me, please?

Speaker #5: In terms of the other work that we're seeing momentum on, we're seeing further acceleration and growth in the work that we're doing with Databricks and Snowflake.

Speaker #6: Has the bookings momentum continued into July?

Speaker #5: We're also seeing momentum with some of the hyperscalers on some of the cloud work we're doing with both AWS and Microsoft. So hopefully that gives you a flavor of all the different platform areas and partnerships and software platforms we're seeing momentum with, Toby.

Speaker #5: Yeah. I think it's been steady throughout the quarter. July was it's been fairly consistent across the three months of the quarter, so to speak.

Speaker #5: So I wouldn't say July was an outlier. In any sense.

Speaker #6: In the new business wins and pipeline in July?

Speaker #6: Okay. In your recent recently kind of added Indian footprint offshore footprint, are you in the process of expanding capabilities there so that you've got resident in the country, resources that you can bring to bear on more than just the areas that you acquired so you can keep your TAM and abilities there?

Speaker #3: Yeah, go ahead, Shiv.

Speaker #5: Sorry, Toby, just could you just repeat the question one more time for me, please?

Speaker #6: Has the bookings momentum continued into July?

Speaker #5: Yeah, I think it's been steady throughout the quarter. July was it's been fairly consistent across the three months of the quarter, so to speak.

Speaker #5: So I wouldn't say July was an outlier. In any sense.

Speaker #5: No, absolutely. We are expanding our footprint with them on data and AI. We're expanding our footprints even on platforms. So we can support work around our enterprise platforms from India.

Speaker #6: Okay. In your recent recently kind of added Indian footprint offshore footprint, are you in the process of expanding capabilities there so that you've got resident in the country, resources able that you can bring to bear on more than just the areas that you acquired?

Speaker #5: So those are two areas which are heavily areas of focus for us. In addition, we're also in the process of combining our forces in terms of the assets and accelerators that we have.

Speaker #5: Because headcount is one part of the question, Tobey, but the other part of the question in today's day and age is can we get a multiplier out of the efforts that we've had in innovation and assets and accelerators?

Speaker #6: So you can extend your TAM and abilities there?

Speaker #5: And that's another thing we're pushing pretty hard.

Speaker #5: No, absolutely. We are expanding our footprint with them on data and AI. We're expanding our footprints even on platforms. So we can support work around our enterprise platforms from India.

Speaker #3: So Tobey, just to add to that, I think getting early here in combining Quinox and our go-to-market approach with our overall commercial business and then also having assets on the ground from a sales standpoint so we can approach the GCCs not only from our relationships here in the US, but also in India are going to accelerate us, we think, as we work towards building this business.

Speaker #5: So those are two areas which are heavily areas of focus for us. In addition, we're also in the process of combining our forces in terms of the assets and accelerators that we have.

Speaker #5: Because headcount is one part of the question, Toby, but the other part of the question in today's day and age is can we get a multiplier out of the efforts that we've had in innovation and assets and accelerators?

Speaker #3: To your point, more than just the revenues and EBITDA that we bought, but the synergy revenue synergies that we're looking for.

Speaker #5: And that's another thing we're pushing pretty hard.

Speaker #3: So Toby, just to add to that, I think getting early here in combining Quinox and our go-to-market approach with our overall commercial business, and then also having assets on the ground from a sales standpoint so we can approach the GCCs not only from our relationships here in the US, but also in India are going to accelerate us, we think, as we work towards building this business.

Speaker #6: And the last question. In Everforce ESS in the federal business, could you speak to whatever kind of brute force metrics you might be doing to implementing to kind of drive a better book-to-bill and more predictable revenue growth, albeit some upside in the quarter from DHS performance?

Speaker #6: Maybe how much you're more in dollar value you're submitting in bids value of awards awaiting or of submittals awaiting award? Anything like that that you could give us in terms of breadcrumbs to understand how you might be on a track to more durably grow quickly?

Speaker #3: To your point, more than just the revenues and EBITDA that we bought, but the synergy, revenue synergies that we're looking for.

Speaker #6: And the last question, in Everforce ESS, in the federal business, could you speak to whatever kind of brute force metrics you might be doing to implementing to kind of drive a better book to bill and more predictable revenue growth, albeit some upside in the quarter from DHS performance?

Speaker #3: Sure. I'll start there, and Shiv can finish. So it's all the above, Tobey. I mean, as you know, we've reorganized the business, if you will, inside of federal.

Speaker #3: We've brought new leadership. We've enhanced leadership among our business units and also kind of strengthened our focus, if you will, at the account level.

Speaker #6: Maybe how much you're more in dollar value you're submitting in bids, value of awards, awaiting or of submittals, awaiting award, anything like that that you could give us in terms of breadcrumbs to understand how you might be on a track to more durably grow quickly?

Speaker #3: We're being more purposeful about the work we bid on and make sure that the customer relationship and our solution capabilities line up with a high opportunity to win our submitted waiting award numbers in the federal space are up materially.

Speaker #3: Sure. I'll start there, and Shiv can finish. So it's all the above, Toby. I mean, as you know, we've reorganized the business, if you will, inside of federal.

Speaker #3: And so I think it's a really shift of a combination of all those things give us some confidence that we're on the right path there.

Speaker #3: We've brought new leadership. We've enhanced leadership among our business units and also kind of strengthened our focus, if you will, at the account level.

Speaker #5: Oh, absolutely. Look, I think I'm just going to echo that. We do expect to see an uptick in award activity just based on sort of the submits that we have in terms of total and submitting waiting award, which is, as Ted said, has pretty healthy and ticked up.

Speaker #3: We're being more purposeful about the work we bid on and make sure that the customer relationship and our solution capabilities line up with a high opportunity to win.

Speaker #5: So the expectation is we will see improved book-to-bill on a trailing 12-month basis over the next couple of quarters.

Speaker #3: Our submitted waiting award numbers in the federal space are up materially. And so I think it's a really, Shiv, a combination of all those things, give us some confidence that we're on the right path there.

Speaker #5: Oh, absolutely. Look, I think I'm just going to echo that. We do expect to see an uptick in award activity just based on sort of the submits that we have in terms of total and submitting waiting award, which is, as Ted said, has pretty healthy and ticked up.

Speaker #6: Our next question is from Kevin McVeigh with UBS. Please proceed with your question.

Speaker #5: Great. Thanks so much. And congratulations on the execution. I don't know if this would be for Ted or Shiv, but maybe just kind of understand how would you characterize the recovery?

Speaker #5: So the expectation is we will see improved book to bill on a trailing 12-month basis over the next couple of quarters.

Speaker #5: Do you think it's broad-based and kind of strong enough to offset the typical Q4 seasonality? Just based on how the bookings are pacing, because obviously this is Q3 and we think about the seasonality.

Speaker #5: How are you thinking about that?

Speaker #6: Our next question is from Kevin McVeigh with UBS. Please proceed with your question.

Speaker #3: So I think last quarter, Kevin, I would have said it's not broad-based, right? We really saw it in the tech industry and a couple of the subverticals.

Speaker #5: Great. Thanks so much. And congratulations on the execution. I don't know if this would be for Ted or Shiv, but maybe just trying to understand, how would you characterize the recovery?

Speaker #3: But maybe not as broad-based as we're seeing it here and coming out of Q1 and into Q2. All of our five commercial industries showed sequential growth.

Speaker #5: Do you think it's broad-based and kind of strong enough to offset the typical Q4 seasonality? Just based on how the bookings are pacing, because obviously this is Q3 and we think about the seasonality.

Speaker #3: Our federal business showed sequential growth. And so it's to varying degrees, but I think that this is the most broad-based move forward that we've seen in a number of years.

Speaker #5: How are you thinking about that?

Speaker #3: So I think last quarter, Kevin, I would have said it's not broad-based, right? We really saw it in the tech industry and a couple of the subverticals.

Speaker #5: Got it. And then I guess I think you talked about some or maybe Marie, just the investments that you talked about, can you just dimensionalize how much was in Q1, Q2, Q3, and Q4?

Speaker #3: But maybe not as broad-based as we're seeing it here and coming out of Q1 and into Q2. All of our five commercial industries showed sequential growth.

Speaker #5: And just remind us what that is. If you're adding that back.

Speaker #3: Our federal business showed sequential growth. And so it's to varying degrees, but I think that this is the most broad-based move forward that we've seen in a number of years.

Speaker #2: Absolutely. So Kevin, those are planned investments that are going to generate our transformative savings that we talked about in the three-year plan. Right? And so those savings or those costs, they are declining.

Speaker #2: So if you think about the cost that we had in Q1 of 12.8 million, in Q2, right, 9.8 million, and we guided Q3 at 7.5 to 9.5 million.

Speaker #5: Got it. And then I guess I think you talked about some or maybe Marie, just the investments that you talked about, can you just dimensionalize how much was in Q1, Q2, Q3, and Q4?

Speaker #2: So you will see those costs continue to decline as we implement the various initiatives.

Speaker #5: And just remind us what that is. If you're adding that back.

Speaker #5: Got it. And you're adding them back, Marie. Is that right? So it's not in operation being head back?

Speaker #2: Absolutely. So Kevin, those are planned investments that are going to generate our transformative savings that we talked about in the three-year plan. Right? And so those savings or those costs, they are declining.

Speaker #2: I'm sorry. Say it again.

Speaker #5: Yeah. You're adding that back? Yep.

Speaker #2: That's correct.

Speaker #5: Okay. Thank you very much.

Speaker #2: Absolutely.

Speaker #2: So if you think about the cost that we had in Q1 of 12.8 million, in Q2, right, 9.8 million, and we guided Q3 at 7.5 to 9.5 million.

Speaker #6: Our next question is from Mark Marcin at Baird. Please proceed with your question.

Speaker #7: Hey, good afternoon. And thanks for taking my questions. First one, Shiv or Ted, I'm just wondering, IBM ended up getting a lot of attention in terms of hearing from some clients that they were delaying some of their investments with IBM in order to focus more on memory and things that are related to AI.

Speaker #2: So you will see those costs continue to decline as we implement the various initiatives.

Speaker #5: Got it. And you're adding them back, Marie. Is that right? So it's not in operation being head back?

Speaker #2: I'm sorry. Say it again.

Speaker #5: Yeah. You're adding that back? Yep.

Speaker #2: That's correct.

Speaker #5: Okay. Thank you very much.

Speaker #7: Have you heard anything along those lines or are you does it feel like business is as usual?

Speaker #2: Absolutely.

Speaker #6: Our next question is from Mark Markham at Baird. Please proceed with your question.

Speaker #5: Yeah. Look, I think Mark, the IBM issue is very consolidated or rather concentrated on a part of their business, which was around their mainframes.

Speaker #7: Hey, good afternoon. And thanks for taking my questions. First one, Shiv or Ted, I'm just wondering, IBM ended up getting a lot of attention in terms of hearing from some clients that they were delaying some of their investments with IBM in order to focus more on memory and things that are related to AI.

Speaker #5: So I think the issue for them was the order book that they were expecting from a mainframes perspective just didn't materialize because I think the moat around some of that is probably disappearing sooner because of AI and the ability from AI to drive more modernization.

Speaker #7: Have you heard anything along those lines or are you does it feel like business is as usual?

Speaker #5: We're actually seeing that in the work that we're doing with clients where modernization of legacy code from mainframes, and getting it into a more modern cloud-based application architecture is getting easier.

Speaker #5: Yeah, look, I think Mark, the IBM issue is very consolidated or rather concentrated on a part of their business, which was around their mainframes.

Speaker #5: So I think the investment diversion that they saw was more around companies investing in compute capacity to enable that kind of a modernization. So I think it's a pretty narrow issue relative to a piece of their business.

Speaker #5: So I think the issue for them was the order book that they were expecting from a mainframes perspective just didn't materialize because I think the moat around some of that is probably disappearing sooner because of AI and the ability from AI to drive more modernization.

Speaker #5: We're not seeing anything like that, which is affecting services on our end.

Speaker #7: Great. And then I was just wondering with regards to the quarter and also the guide, a couple of questions. So one would basically be and I apologize if I missed it, but how much did Quinox contribute?

Speaker #5: We're actually seeing that in the work that we're doing with clients where modernization of legacy code from mainframes, and getting it into a more modern cloud-based application architecture is getting easier.

Speaker #5: So I think the investment diversion that they saw was more around companies investing in compute capacity to enable that kind of a modernization. So I think it's a pretty narrow issue relative to a piece of their business.

Speaker #3: So we didn't call out the Quinox numbers. Mark, we gave them to the market when we made the acquisition. You can kind of go back and refer to those but I can tell you the sequential growth was mostly organic.

Speaker #5: We're not seeing anything like that, which is affecting services on our end.

Speaker #7: Okay. But Quinox was as expected?

Speaker #7: Great. And then I was just wondering with regard to the quarter and also the guide, a couple of questions. So one would basically be and I apologize if I missed it, but how much did Quinox contribute?

Speaker #3: They're performing as expected at this point.

Speaker #7: Okay. Great. And then with regards to Quinox, does it have higher gross margins or lower gross margins than the overall commercial?

Speaker #3: It has quite a bit higher gross margins. So I would say for just in general for our enterprise platform businesses and for our digital engineering capability with Quinox and India, we're looking at 40% or a little higher in terms of gross margins.

Speaker #3: So we didn't call out the Quinox numbers. Mark gave them to the market when we made the acquisition. You can kind of go back and refer to those but I can tell you the sequential growth was mostly organic.

Speaker #7: Okay. But Quinox was as expected?

Speaker #3: And you're looking at high teams to 20% and EBITDA margins.

Speaker #7: Okay. So the gross margins compression on the commercial side, on a year-over-year basis, that's basically because of Perm, right? And a little bit of FX?

Speaker #3: They're performing as expected at this point.

Speaker #7: Okay, great. And then with regards to Quinox, does it have higher gross margins or lower gross margins than the overall commercial?

Speaker #3: It has quite a bit higher gross margins. So I would say for just in general for our enterprise platform businesses and for our digital engineering capability with Quinox in India, we're looking at 40% or a little higher in terms of gross margins.

Speaker #5: That's correct. It's Perm and then FX. And that FX is related to our Mexico delivery center. And the peso.

Speaker #7: Yeah. And so if we strip those two elements out, gross margins would be up?

Speaker #3: Well, look, I think if you strip those out, they would be they certainly would be up, right? But I would tell you if you're thinking about the guide, it's really the differential there is on the federal side where we had a little bit more cost-plus revenue than we had anticipated in the federal segment based on their overperformance.

Speaker #3: And you're looking at high teens to 20% in EBITDA margins.

Speaker #7: Okay. So the gross margins compression on the commercial side, on a year-over-year basis, that's basically because of Perm, right? And a little bit of FX?

Speaker #5: That's correct. It's Perm and then FX. And that FX is related to our Mexico delivery center. And the peso.

Speaker #3: And if you strip that out, we would have been just above the midpoint in the guide.

Speaker #7: Yeah. And so if we strip those two elements out, gross margins would be up?

Speaker #5: That's right.

Speaker #3: So that's versus the guide. We could talk about year-over-year. I'm not exactly sure where your question was.

Speaker #3: Well, look, I think if you strip those out, they would be they certainly would be up, right?

Speaker #7: Oh, I was just trying to I was more focused just with regards to the second quarter and just if that strips out. But it sounds like things are moving in the right direction with regards to commercial.

Speaker #5: Yeah.

Speaker #3: But I would tell you if you're thinking about the guide, it's really the differential there is on the federal side where we had a little bit more cost-plus revenue than we had anticipated in the federal segment based on their overperformance.

Speaker #7: Would you anticipate that commercial will actually show year-over-year growth for the third quarter?

Speaker #3: So we're moving to year-over-year growth. I don't know if we'll get all the way there for the quarter, Mark, but certainly during the quarter, we're moving to year-over-year growth.

Speaker #3: And if you strip that out, we would have been just above the midpoint in the guide.

Speaker #5: That's right.

Speaker #3: So that's versus the guide. We could talk about year-over-year. I'm not exactly sure where your question was.

Speaker #3: And would expect to be there in the fourth quarter for sure.

Speaker #7: Oh, I was just trying to I was more focused just with regards to the second quarter and just if that strips out. But it sounds like things are moving in the right direction with regards to commercial.

Speaker #7: Okay. That's great. Thank you so much.

Speaker #6: We have reached the end of the question and answer session. I'd like to turn the floor back over to Ted Hanson, Chief Executive Officer for Closing Comments.

Speaker #7: Would you anticipate that commercial will actually show year-over-year growth for the third quarter?

Speaker #3: Great. Well, I want to thank everyone for being on the call today. And we look forward to speaking with you in October to discuss our third quarter results.

Speaker #3: So we're moving to year-over-year growth. I don't know if we'll get all the way there for the quarter, Mark, but certainly during the quarter, we're moving to year-over-year growth.

Speaker #3: Thank you.

Speaker #3: And would expect to be there in the fourth quarter for sure.

Speaker #7: Okay. That's great. Thank you so much.

Speaker #6: We have reached the end of the question and answer session. I'd like to turn the floor back over to Ted Hansen, Chief Executive Officer for Closing Comments.

Speaker #3: Great. Well, I want to thank everyone for being on the call today. And we look forward to speaking with you in October to discuss our third quarter results.

Speaker #3: Thank you.