Booz Allen Hamilton's Q2 Profit Halves Amid Revenue Dip

TL;DR

**BAH's profit plunge is a red flag; traders should consider shorting as federal spending tightens.**

AI Summary

Booz Allen Hamilton Holding Corp (BAH) reported a significant decline in financial performance for the three and six months ended September 30, 2025. Revenue decreased by 8.2% to $2.89 billion for the three months ended September 30, 2025, compared to $3.146 billion in the prior year period. Net income saw an even steeper drop, plummeting by 55.2% to $175 million for the three months ended September 30, 2025, from $390 million in the same period of 2024. Diluted earnings per share fell from $3.01 to $1.42. For the six months ended September 30, 2025, revenue was $5.814 billion, down from $6.088 billion, and net income was $446 million, a decrease from $555 million in the prior year. The company's operating income also decreased substantially, from $549 million to $283 million for the three-month period. Despite these declines, BAH increased its remaining performance obligations to $12.1 billion as of September 30, 2025, up from $9.5 billion as of March 31, 2025, indicating future revenue potential. The company also continued its share repurchase program, buying back 1.9 million shares for $207 million during the three months ended September 30, 2025.

Why It Matters

This significant drop in revenue and net income for Booz Allen Hamilton could signal a challenging period for investors, potentially impacting stock performance and dividend stability. For employees, a sustained downturn might lead to hiring freezes or workforce adjustments, especially given the competitive landscape in government contracting. Customers, particularly federal agencies, might see this as a sign of increased competition or shifting priorities within the defense and intelligence sectors, potentially affecting contract awards. The broader market for government IT and consulting services could interpret this as a bellwether for tighter federal spending or increased pressure on margins, impacting competitors like Leidos and CACI International.

Risk Assessment

Risk Level: high — The company experienced a 55.2% decrease in net income to $175 million for the three months ended September 30, 2025, compared to $390 million in the prior year. Revenue also declined by 8.2% to $2.89 billion in the same period. This substantial decline in profitability and top-line growth indicates significant operational challenges and increased financial risk.

Analyst Insight

Investors should carefully re-evaluate their positions in BAH, considering the sharp decline in net income and revenue. Await further clarity on the drivers of this downturn and management's strategies to reverse the trend before making new investments. Existing shareholders might consider reducing exposure.

Financial Highlights

debt To Equity

6.18

revenue

$2.89B

operating Margin

9.8%

total Assets

$7.153B

total Debt

$3.96B

net Income

$175M

eps

$1.42

cash Position

$816M

revenue Growth

-8.2%

Key Numbers

• $2.89B — Revenue (Down 8.2% for Q2 2025 compared to Q2 2024)
• $175M — Net Income (Down 55.2% for Q2 2025 compared to Q2 2024)
• $1.42 — Diluted EPS (Down from $3.01 in Q2 2024)
• $12.1B — Remaining Performance Obligations (Increased from $9.5B as of March 31, 2025)
• 55.2% — Net Income Decrease (Percentage decrease for the three months ended September 30, 2025)
• 8.2% — Revenue Decrease (Percentage decrease for the three months ended September 30, 2025)
• $207M — Share Repurchases (Amount spent on repurchases in Q2 2025)
• 1.9M — Shares Repurchased (Number of Class A Common Stock shares bought back in Q2 2025)

Key Players & Entities

• Booz Allen Hamilton Holding Corp (company) — registrant
• SEC (regulator) — U.S. Securities and Exchange Commission
• $2.89 billion (dollar_amount) — revenue for three months ended September 30, 2025
• $3.146 billion (dollar_amount) — revenue for three months ended September 30, 2024
• $175 million (dollar_amount) — net income for three months ended September 30, 2025
• $390 million (dollar_amount) — net income for three months ended September 30, 2024
• $1.42 (dollar_amount) — diluted EPS for three months ended September 30, 2025
• $3.01 (dollar_amount) — diluted EPS for three months ended September 30, 2024
• $12.1 billion (dollar_amount) — remaining performance obligations as of September 30, 2025
• $207 million (dollar_amount) — cost of share repurchases during three months ended September 30, 2025

FAQ

Risk Factors

• Dependence on Government Contracts [high — operational]: BAH's revenue is heavily reliant on contracts with U.S. government agencies. Changes in government spending priorities, budget allocations, or contract awards can significantly impact revenue. For the three months ended September 30, 2025, revenue decreased by 8.2% to $2.89 billion, indicating potential headwinds in securing or executing existing contracts.
• Compliance with Government Regulations [medium — regulatory]: As a primary contractor for the U.S. government, BAH must adhere to a complex web of regulations, including those related to cybersecurity, data privacy, and procurement. Non-compliance can lead to penalties, contract termination, or reputational damage, affecting future business opportunities.
• Declining Profitability [high — financial]: Net income for the three months ended September 30, 2025, dropped by 55.2% to $175 million from $390 million in the prior year, with diluted EPS falling from $3.01 to $1.42. This significant decline in profitability raises concerns about cost management, pricing strategies, or project execution efficiency.
• Competition in Consulting Services [medium — market]: The market for management and technology consulting services is highly competitive, with numerous players ranging from large global firms to niche specialists. BAH faces intense competition for talent and contracts, which can pressure margins and market share.
• Talent Acquisition and Retention [medium — operational]: Attracting and retaining skilled personnel, particularly those with expertise in critical areas like cybersecurity, data analytics, and artificial intelligence, is crucial for BAH's service delivery. A tight labor market or inability to offer competitive compensation and career development can hinder growth and operational capacity.

Industry Context

Booz Allen Hamilton operates in the highly competitive government contracting and professional services sector, focusing on technology, cybersecurity, and management consulting for public sector clients. The industry is characterized by long-term contracts, complex procurement processes, and a constant need for specialized expertise in areas like AI, cloud computing, and digital transformation. Key trends include increased government spending on defense and intelligence, a growing demand for advanced analytics, and a focus on modernizing IT infrastructure.

Regulatory Implications

As a major U.S. government contractor, Booz Allen Hamilton is subject to stringent regulatory oversight. This includes compliance with the Federal Acquisition Regulation (FAR), cybersecurity mandates, and data protection laws. Any failure to adhere to these regulations can result in significant penalties, contract terminations, and reputational damage, impacting its ability to secure future government business.

What Investors Should Do

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Key Dates

• 2025-09-30: End of Second Fiscal Quarter — Reported significant declines in revenue and net income, with revenue down 8.2% and net income down 55.2% year-over-year. Remaining Performance Obligations increased to $12.1 billion.
• 2025-03-31: End of Fiscal Year 2025 — Reported total assets of $7.312 billion and total liabilities of $6.309 billion. Remaining Performance Obligations stood at $9.5 billion.

Glossary

Remaining Performance Obligations (RPO)

The total value of contracted work that has not yet been performed or revenue that has not yet been recognized. It represents future revenue that the company is contractually obligated to deliver. (BAH's RPO increased to $12.1 billion as of September 30, 2025, up from $9.5 billion as of March 31, 2025, indicating a strong pipeline of future work despite current revenue declines.)

Treasury Stock

Shares of a company's own stock that it has repurchased from the open market. These shares are no longer outstanding and do not carry voting rights. (BAH held 47,085,814 shares in treasury as of September 30, 2025, reflecting its ongoing share repurchase program, which can impact earnings per share and shareholder returns.)

Operating Lease Right-of-Use Assets

An asset recognized under accounting standards for leases, representing the lessee's right to use an underlying asset for the lease term. (These assets, valued at $160 million as of September 30, 2025, are part of BAH's operational footprint and are subject to lease liabilities.)

Goodwill

An intangible asset that arises when a company acquires another company for a price greater than the fair value of its net identifiable assets. It represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and recognized. (BAH has $2.405 billion in goodwill, indicating significant past acquisitions. This asset is subject to impairment testing and can impact future earnings if its value declines.)

Year-Over-Year Comparison

Compared to the prior year period, Booz Allen Hamilton Holding Corp. experienced a notable downturn in its financial performance for the three months ended September 30, 2025. Revenue decreased by 8.2% to $2.89 billion, and net income saw a substantial drop of 55.2% to $175 million, with diluted EPS falling from $3.01 to $1.42. Operating income also declined significantly. However, the company's Remaining Performance Obligations (RPO) showed a positive trend, increasing to $12.1 billion from $9.5 billion, suggesting a robust future contract pipeline despite current revenue challenges. No new significant risks were explicitly detailed in the provided excerpt compared to the general risk profile.

Filing Documents

• bah-20250930.htm (10-Q) — 1105KB
• bah-ex311xq2fy26.htm (EX-31.1) — 8KB
• bah-ex312xq2fy26.htm (EX-31.2) — 8KB
• bah-ex321xq2fy26.htm (EX-32.1) — 5KB
• bah-ex322xq2fy26.htm (EX-32.2) — 5KB
• 0001628280-25-046176.txt ( ) — 5723KB
• bah-20250930.xsd (EX-101.SCH) — 31KB
• bah-20250930_cal.xml (EX-101.CAL) — 70KB
• bah-20250930_def.xml (EX-101.DEF) — 148KB
• bah-20250930_lab.xml (EX-101.LAB) — 500KB
• bah-20250930_pre.xml (EX-101.PRE) — 323KB
• bah-20250930_htm.xml (XML) — 872KB

Financial Information

PART I. Financial Information 1

Financial Statements

ITEM 1 Financial Statements 1

Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 15

Quantitative and Qualitative Disclosures About Market Risk

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk 24

Controls and Procedures

ITEM 4 Controls and Procedures 24

Other Information

PART II. Other Information 25

Legal Proceedings

ITEM 1 Legal Proceedings 25

Risk Factors

ITEM 1A Risk Factors 25

Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds 25

Defaults Upon Senior Securities

ITEM 3 Defaults Upon Senior Securities 25

Mine Safety Disclosures

ITEM 4 Mine Safety Disclosures 25

Other Information

ITEM 5 Other Information 25

Exhibits

ITEM 6 Exhibits 26 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

. Financial Statements

Item 1 . Financial Statements INDEX TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Page Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Operations 2 Condensed Consolidated Statements of Comprehensive Income 3 Condensed Consolidated Statements of Cash Flows 4 Condensed Consolidated Statements of Stockholders' Equity 5 Notes to Unaudited Condensed Consolidated Financial Statements 7 1. Business Overview 7 2. Basis of Presentation 7 3. Revenue 8 4. Earnings Per Share 9 5. Intangible Assets 10 6. Accounts Payable and Other Accrued Expenses 10 7. Accrued Compensation and Benefits 10 8. Debt 11 9 . Income Taxes 11 10. Accumulated Other Comprehensive Income / (Loss) 12 11. Fair Value Measurements 13 12. Commitments and Contingencies 14 13. Supplemental Condensed Consolidated Financial Information 14 Table of Contents BOOZ ALLEN HAMILTON HOLDING CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in millions, except share and per share data) September 30, 2025 March 31, 2025 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 816 $ 885 Accounts receivable, net 2,217 2,271 Prepaid expenses and other current assets 188 157 Total current assets 3,221 3,313 Property and equipment, net of accumulated depreciation 171 177 Operating lease right-of-use assets 160 178 Intangible assets, net of accumulated amortization 537 563 Goodwill 2,405 2,405 Deferred tax assets 244 332 Other long-term assets 415 344 Total assets $ 7,153 $ 7,312 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 83 $ 83 Accounts payable and other accrued expenses 1,001 987 Accrued compensation and benefits 675 702 Operating lease liabilities 41 41 Other current liabilities 34 33 Total current liabilities 1,834 1,846 Long-term debt, net of current portion 3,877 3,915 Operating lease liabilities, net of current portion 1