Booz Allen Hamilton Holding Corporation
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Item 1. Business.
Overview
Booz Allen Hamilton Holding Corporation (herein referred to as “Booz Allen,” the “Company,” “we,” “us,” or “our”) is an advanced technology company building products and solutions for government and business. For more than 112 years, Booz Allen has evolved to meet the needs of commercial, international, and government customers. After September 11th, 2001, the Company undertook a fundamental transformation when it expanded into critical and sensitive national security missions. Our teams began delivering mission impact, executing full-spectrum cyber operations, helping the U.S. military counter the threat of improvised explosive devices (“IEDs”), standing up counter-terrorism fusion centers, and supporting intelligence missions. This work helped lay the foundation for the Company’s national security portfolio and strengthened its credibility in highly complex missions. In 2008, a strategic business decision was made to prioritize and protect the Company’s government and national security interests and spin off its global commercial business.
In 2013, Booz Allen began another massive multi-year transformation by making significant investments in the emerging technologies that would help transform government. The Company rebuilt its workforce with technologists that bring deep mission expertise in national security and other core government missions. These investments propelled Booz Allen as a leader in artificial intelligence (“AI”), cyber, quantum, and other advanced technologies.
Today, Booz Allen is a leader at the forefront of the nation’s technology ecosystem. We build tech for a diverse base of federal government and commercial customers, both domestically and in select foreign locations. By investing in emerging technologies, talent, and new business models, including partnerships with leading technology companies, venture investments, and the development of military grade products, we are accelerating the delivery of tech solutions. We believe this will create sustainable high quality growth for the Company.
Our Technology
Booz Allen builds advanced technology products and solutions that drive outcomes across government and business. Our technologies are designed to solve complex, high stakes challenges with the scale and speed to meet today’s missions demand. We build proprietary technologies and co-create with leading commercial partners and start-ups to rapidly build, scale, and deploy proven innovations.
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Our advanced technology capabilities are grounded in decades of leadership across AI, cybersecurity, data, and engineering. As the federal government’s largest AI provider with approximately 400 active AI projects, we build secure AI solutions and advanced capabilities spanning agentic AI, physical AI, and AI-Radio Access Network (AI-RAN), and other emerging technologies designed for mission critical environments. We also have one of the most impactful cyber businesses globally, protecting U.S. federal, defense, and intelligence agencies, as well as private sector customers, including Fortune 500 and Global 1,000 companies. These capabilities are supported by enterprise-scale digital modernization expertise spanning cloud-enabled infrastructure, data platforms, and software applications.
Our core technologies include:
•Cyber: We build cyber tech to close the speed gap between AI-powered adversaries and traditional cyber defenses. From national missions to critical infrastructure, our elite cyber operators anticipate evolving threats and build military-grade defensive solutions for global customers. Vellox, our AI-native cyber product suite, pairs machine-speed automation with models trained on real-world adversary tradecraft to outpace attackers.
•Defense Tech: We build secure AI-enabled defense tech products from first prototype to mission deployment in our three flagship engineering facilities, where we build mission-ready technology today, not years from now. Our more than 20 manufacturing centers and advanced R&D labs reinforce this work through rapid, on-site testing and iteration. We unite mission understanding with emerging technologies through autonomous and tactical solutions, command and control systems, and intelligent warfighter systems. Our products, including Sit(x)R, EdgeExtendTM , and the Modular Detachment Kit, are engineered to be war-fighter ready and provide operational advantage across mission-critical environments.
We build mission-ready solutions that deliver real-world impact faster. We develop, scale and deploy advanced capabilities across established and emerging technology domains, including AI, cyber, edge, autonomy, space, and quantum, for our customers’ most critical missions. To accelerate the development and deployment of transformative technologies, our engineers and technologists combine our proprietary tech and deep technical expertise with strategic partnerships, venture investments, and co-creation across the commercial innovation ecosystem from hyperscalers like AWS to leading venture capital firms like Andreessen Horowitz (a16z) and emerging defense technology companies like Shield AI. By connecting commercial innovation with mission engineering and operational deployment, we shape the next generation of technologies advancing America’s future.
Our Long-Term Growth Strategy
Through our VoLT strategy, which stands for Velocity, Leadership, and Technology, we are accelerating Booz Allen’s transformation and positioning the Company for the next era of growth: one defined by faster and more efficient innovation, higher-value technology outcomes, and greater impact for our customers and the nation.
Velocity: Get There First
Combine our unique position in the tech ecosystem and mission engineering to build specialized products and solutions at speed
•Co-innovate with leading commercial tech partners for rapid development
•Use strategic acquisitions to accelerate market positions
Leadership: Built with Conviction
Build advanced technology businesses that scale to the needs of our nation
•Direct our scale to solve the most critical national priorities with cutting-edge technology
•Adopt an outcomes orientation and prioritize our business
Technology: Differentiate to Win
Put transformative tech at the heart of the customer mission to deliver the next generation of impact
•Scale AI into every customer environment and across all aspects of our business
•Anticipate and invest in the next wave of transformative technologies, including Quantum and 6G
Our Operating Model
We operate as a single profit and loss center. Our operating model encourages collaboration allowing us to bring a mix of the best talent to every customer engagement. It also encourages and enables continuous investment in the right markets, capabilities, and talent to position us for further growth by anticipating what government and commercial customers will need next.
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Across all markets, we address our customers’ complex and evolving needs by deploying multifaceted teams with a combination of advanced technical expertise, market-leading innovation, and deep mission understanding. These customer-facing teams, which are fundamental to our differentiated value proposition, better position us to identify and deliver against diverse customer needs in a more agile manner. Our significant win rates during fiscal 2026 on new and re-competed contracts of 57% and 89%, respectively, as compared to 56% and 92%, respectively, in fiscal 2025, demonstrate the strength of this approach.
Our Customers
Booz Allen is committed to solving our customers’ toughest challenges, and we work with a diverse base of public and private sector customers across a number of industries in the U.S. and select foreign locations. We bring advanced technical capabilities to help our customers win in today’s competitive world and prepare for what’s next.
National Security Customers
Defense
Booz Allen develops and deploys advanced technologies that are central to the nation’s defense mission, accelerating critical outcomes for the warfighter. Our scaled Defense Tech business delivers innovation at the speed of operational need, building products and solutions that strengthen national security and reinforce U.S. technological leadership. We continue to make significant investments in warfighter, mission, and enterprise technologies — including autonomy and applied artificial intelligence — to help deter adversaries and ensure readiness across all domains.
Our core defense customers include all six branches of the U.S. military, the Office of the Secretary of Defense, and the Joint Staff. Our key defense customers include the Army, Navy/Marine Corps, Air Force, Space Force, Coast Guard, and Joint Combatant Commands. Defense customers also include foreign military sales and work performed under Status of Forces Agreements (“SOFA”) to U.S. and non-U.S. government customers.
Intelligence
We deliver innovative, highly technical capabilities and solutions that directly impact core national security missions across the Intelligence Community and national cyber mission providers. Our biggest driver is the demand for innovation, requiring us to anticipate and implement advanced technology solutions tailored to our customers’ unique mission needs. Technology is at the center of our customers' missions and ours—we are investing in emerging technologies like AI, zero trust cyber solutions, multi-cloud, quantum, and 6G to adapt ahead of adversaries. Our highly technical talent and innovative solutions and products are shaping the future of our national security ecosystem. The national security workforce remains focused on what is next, blending cleared and uncleared talent across dispersed geographies, ensuring mission impact.
Our intelligence customers include organizations of the U.S. Intelligence Community, the National Security Agency, Defense Intelligence Agency, and other departments or agencies.
Civil and Commercial Customers
Our civil work centers on the federal missions that are the highest priority to the domestic agenda, and we excel at helping our customers innovate their most critical missions. From healthcare, homeland security, and financial services to justice, law enforcement, immigration, energy, transportation, and labor, we work at the core of the mission to modernize systems, boost efficiencies, and save money.
Our civil government customers include many of the civil agencies of the U.S. government, of which the Department of Veterans Affairs was the single largest customer in fiscal 2026, from which we derived 10% of our revenue. Modernization and transformation are key needs of our customers, and we offer the technical expertise and mission understanding required to deliver innovative solutions to all our customers' needs across the civil portfolio.
Our global commercial business partners with customers, from sophisticated multinational organizations to small-to-medium sized organizations, to deliver incident response and advanced cyber technology enterprise products and solutions. Our extensive industry expertise is earned through years of working with market leading customers in financial services, health and life sciences, software and technology, manufacturing, logistics, and energy.
Contracts
The U.S. government procures solutions, outcomes, and services through two predominant contracting methods: definite contracts and indefinite contract vehicles. Each of these is described below:
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•Definite contracts call for the performance of specified services or the delivery of specified products. The U.S. government procures services and solutions through single award, definite contracts that specify the scope of services that will be delivered and identify the contractor that will provide the specified services. When an agency recognizes a need for services or products, it develops an acquisition plan, which details how it will procure those services or products. During the acquisition process, the agency may release a request for information to determine if qualified bidders exist, a draft request for a proposal to allow the industry to comment on the scope of work and acquisition strategy, and finally a formal request for a proposal. Following the evaluation of submitted proposals, the agency will award the contract to the winning bidder.
•Indefinite contract vehicles provide for the issuance by the government customer of orders for services or products under the terms of the contract. Indefinite contracts are often referred to as contract vehicles or ordering contracts. IDIQ contracts may be awarded to one contractor (single award) or several contractors (multiple award). Under a multiple award IDIQ contract, there is no guarantee of work as contract holders must compete for individual work orders. IDIQ contracts will often include pre-established labor categories and rates, and the ordering process is streamlined (usually taking less than a month from recognition of a need to an established order with a contractor). IDIQ contracts often have multiyear terms and unfunded ceiling amounts, thereby enabling but not committing the U.S. government to purchase substantial amounts of products and services from one or more contractors in a streamlined procurement process.
We delivered solutions, outcomes, and services under 5,026 contracts and task orders in fiscal 2026 and approximately 84% of our revenue was derived from 2,426 active task orders under IDIQ contract vehicles. Our top IDIQ contract vehicle represented approximately 17% of our revenue in fiscal 2026. Our largest task order under an IDIQ contract vehicle accounted for approximately 4% of our revenue in fiscal 2026. Our largest definite contract represented approximately 1% of our revenue in fiscal 2026. For risks related to our contracts, see “Item 1A. Risk Factors—Industry and Economic Risks.”
Competition
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, and liquidity and capital resources. You should read this discussion in conjunction with our condensed consolidated financial statements and the related notes contained elsewhere in this Quarterly Report on Form 10-Q, or Quarterly Report.
The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources, and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026 filed with the Securities and Exchange Commission on May 22, 2026, or Annual Report, and under Part II, “Item 1A. Risk Factors,” and “— Special Note Regarding Forward-Looking Statements” of this Quarterly Report. Our actual results may differ materially from those contained in or implied by any forward-looking statements.
Our fiscal year ends March 31 and, unless otherwise noted, references to years or fiscal are for fiscal years ended March 31. See “—Results of Operations.”
Overview
Booz Allen is an advanced technology company, building products and solutions for government and business. We are a leader at the forefront of the nation’s technology ecosystem. Our approximately 30,900 employees build tech for a diverse base of federal government and commercial customers, both domestically and in select foreign locations. By investing in emerging technologies, talent, and new business models, including partnerships with leading technology companies, venture investments, and the development of military grade products, we are accelerating the delivery of tech solutions.
Factors and Trends Affecting Our Results of Operations
Our results of operations have been, and we expect them to continue to be, affected by the following factors, which may cause our future results of operations to differ from our historical results of operations discussed under “—Results of Operations.”
U.S. Budgetary and Regulatory Environment
The U.S. continues to face an uncertain and evolving budgetary and regulatory environment, and we expect this uncertainty will continue. Additionally, we continue to see a slower procurement environment compared to prior fiscal years. Our business performance is affected by the overall level of U.S. government spending and the alignment of our offerings and capabilities with the spending priorities of the U.S. government.
The U.S. government continues to review spending across U.S. government agencies to ensure it aligns with the administration’s priorities of maximizing governmental efficiency and productivity. Additionally, U.S. government agencies continue their own independent reviews of their contract portfolios and future procurements in response to recent executive orders focused on efficiency in government procurement. We have been, and will continue to be, subject to these reviews, and we have had, and may in the future have, certain of our contracts impacted, reduced or canceled or experience price adjustments and renegotiations, as a result of these reviews. There can be no assurance that these reviews will not ultimately have a material adverse impact on our business and financial performance.
Efforts by the U.S. government to implement two specific executive orders that are intended to (i) simplify and accelerate the procurement process through a review and restructuring of the Federal Acquisition Regulation (“FAR”), and its supplements and (ii) modernize defense acquisitions by promoting commercial solutions, innovative acquisition authorities, and other existing streamlined processes remain ongoing. The FAR Council, the body responsible for issuing and maintaining the FAR, completed Phase 1 of FAR reform efforts and moved into Phase II of such efforts in June 2026. The formal rulemaking process remains ongoing, with only a portion of formal rules issued; however, proposed rules include changes that formalize the FAR's deviation-based approach and make certain streamlining shifts, as well as incorporating a number of other pending rules. Previously, in early November 2025, the Secretary of War announced and released an associated memorandum regarding a new acquisition strategy and directing certain reforms addressing Department of War purchases of military weapons. The Secretary’s accompanying memorandum and strategy outline a number of actions focused on rebuilding the Defense Industrial Base, elevating and empowering the acquisition workforce, maximizing acquisition flexibility, developing high performance systems, and improving effective lifecycle risk management. While the impact of the aforementioned changes remains uncertain, the new acquisition strategy and streamlined procurement processes have the potential to have positive impacts on our business.
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Federal funding for fiscal year 2026 was subject to uncertainty for several months as Congress enacted appropriations in stages,
including separate funding measures for the Department of Homeland Security and certain immigration-enforcement activities.
Although funding for fiscal year 2026 has now been enacted, future federal funding levels remain subject to uncertainty, and
delays or disruptions in the appropriations process, including a prolonged government shutdown, could adversely affect our business, financial condition and results of operations.
On December 18, 2025, the National Defense Authorization Act (“NDAA”) was signed into law, which included a number of reforms that may also impact our business. Although the final bill did not adopt more narrow commercial preferences or expand the statutory definition of contractors who qualify as nontraditional contractors, it did exempt contractors who meet that definition from certain burdensome compliance requirements. The continued focus on removing barriers to new entrants and any related future legislation could reduce the likelihood of direct awards to companies like Booz Allen and effect our competitive position.
On January 7, 2026, the President signed an executive order, “Prioritizing the Warfighter in Defense Contracting”, that, among other things, limits stock buybacks and the payment of dividends by certain defense contractors. This executive order directs the Secretary of War to identify defense contractors that are underperforming on their contracts, not investing their own capital into necessary production capacity, not sufficiently prioritizing United States Government contracts, or whose production speed is insufficient as determined by the Secretary, and that have, during the period of underperformance or insufficient prioritization, investment, or production speed, engaged in any stock buy-back or corporate distribution. If the Company is identified pursuant to this executive order, it may have a negative impact on our dividends, stock buyback programs, and our ability to attract and retain talented executives. Compliance with the requirements of this executive order may be complex, costly and time-consuming, and our subcontractors may not have the necessary resources to ensure compliance. In addition, in March 2026, certain Senators introduced the Warfighter in Defense Contracting Act of 2026, which would codify and go beyond this executive order by instituting, absent a waiver, a blanket prohibition on such dividends, buybacks, and executive compensation above certain levels. In addition, the Senate Armed Services Committee’s version of the NDAA for Fiscal Year 2027 includes a related provision that would require contractors to submit a qualified defense investment plan to increase production capacity or otherwise face restrictions on stockholder distributions. These proposed legislations far exceed the framework contemplated by the executive order and would introduce significant administrative burdens for us and other companies that could be subject to such legislation.
On April 30, 2026, the President signed an executive order, “Promoting Efficiency, Accountability, and Performance in Federal Contracting,” which directs federal agencies, subject to certain exceptions, to increase the use of firm-fixed price contracts for new awards to the maximum extent consistent with law. Additionally, agencies are directed, to the maximum extent practicable and consistent with law, to seek to modify, restructure, or renegotiate, their top ten highest-dollar-value contracts issued on an other-than-fixed price basis. The Company is supportive of the recent focus by the administration on the increased usage of fixed-price and outcomes-based contracting (we refer to firm fixed price contracts where we deliver a specific outcome for a predetermined price as “outcomes-based contracting”). Compared to time-and-materials and cost-reimbursable contracts, outcomes-based contracting generally offers higher margin opportunities because we receive the benefits of any cost savings, but can involve greater financial risk because we bear the impact of any cost overruns. Additionally, we believe outcomes-based contracting results in more efficient contracting outcomes and potential savings for the U.S. government.
Contract Backlog
We define backlog to include the following three components:
•Funded Backlog. Funded backlog represents the value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts.
•Unfunded Backlog. Unfunded backlog represents the value of orders (including exercised optional orders) for services under existing contracts for which funding has not been appropriated or otherwise authorized.
•Priced Options. Priced contract options represent 100% of the value of all future contract option periods under existing contracts that may be exercised at our customers’ option and for which funding has not been appropriated or otherwise authorized.
Our backlog does not include contracts that have been awarded but are currently under protest and also does not include any task orders under indefinite delivery/indefinite quantity (“IDIQ”) contracts, General Services Administration (“GSA”) Multiple Award schedule contracts (“GSA schedules”) or other master agreement contract vehicles, except to the extent that task orders have been awarded to us under those contracts.
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The following table summarizes the value of our contract backlog as of the respective periods presented:
| June 30, 2026 | June 30, 2025 | ||||||||||
| (In millions) | |||||||||||
Backlog: | |||||||||||
| Funded | $ | 4,664 | $ | 4,047 | |||||||
| Unfunded | 10,218 | 10,441 | |||||||||
| Priced options | 24,601 | 23,777 | |||||||||
| Total backlog | $ | 39,483 | $ | 38,265 | |||||||
Our total backlog consists of contractual values which is inclusive of remaining performance obligations, and potential contract value from unexercised option periods and other unexercised optional orders. As of June 30, 2026 and March 31, 2026, the Company had $11.1 billion and $10.7 billion of remaining performance obligations, respectively, and we expect to recognize approximately 65% of the remaining performance obligations as of June 30, 2026 as revenue over the next 12 months, and approximately 75% over the next 24 months. The remainder is expected to be recognized thereafter. We also expect to recognize revenue from a substantial portion of funded backlog as of June 30, 2026, within the next twelve months. However, given the uncertainties discussed below, as well as the risks described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, we can give no assurance that we will be able to convert our performance obligations or funded backlog into revenue in any particular period, if at all. Our backlog includes orders under contracts that in some cases extend for several years. The U.S. Congress generally appropriates funds for our customers on a yearly basis, even though their contracts with us may call for performance that is expected to take a number of years to complete. As a result, contracts typically are only partially funded at any point during their term and all or some of the work to be performed under the contracts may remain unfunded unless and until the U.S. Congress makes subsequent appropriations and the procuring agency allocates funding to the contract.
We view growth in total backlog as a key measure of our potential business growth. Total backlog increased by 3% from June 30, 2025 to June 30, 2026. Additions to funded backlog during the twelve months ended June 30, 2026 and 2025 totaled $11.7 billion and $11.5 billion, respectively, as a result of the conversion of unfunded backlog to funded backlog, the award of new contracts and task orders under which funding was appropriated, and the exercise and subsequent funding of priced options.
We cannot predict with any certainty the portion of our backlog that we expect to recognize as revenue in any future period and we cannot guarantee that we will recognize any revenue from our backlog. The primary risks that could affect our ability to recognize such revenue on a timely basis or at all include: program schedule changes, contract modifications and our ability to assimilate and deploy new customer staff against funded backlog; cost-cutting initiatives and other efforts to reduce U.S. government spending, which could reduce or delay funding for orders for services; and, delayed funding of our contracts due to delays in the completion of the U.S. government’s budgeting process and the use of continuing resolutions by the U.S. government to fund its operations, and the other risks and factors listed under “— U.S. Budgetary and Regulatory Environment” in this Quarterly Report, as well as those listed under “Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2026. In addition, the amount of our funded backlog is also subject to change due to these factors. In our recent experience, the slowed procurement environment and reductions in contract value have had a negative effect on our ability to convert backlog to revenue as of June 30, 2026, and could have additional impacts in the future to our business and financial performance.
Critical Accounting Estimates and Policies
Our critical accounting estimates and policies are disclosed in the Critical Accounting Estimates and Policies section in Part II, “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended March 31, 2026.
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Results of Operations
The following table presents items from our condensed consolidated statements of operations for the respective periods shown:
| Three Months Ended June 30, | |||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||
| (Unaudited) | (Unaudited) | Percent | |||||||||||||||||
| (In millions) | Change | ||||||||||||||||||
| Revenue | $ | 2,800 | $ | 2,924 | (4) | % | |||||||||||||
| Operating costs and expenses: | |||||||||||||||||||
| Cost of revenue | 1,336 | 1,423 | (6) | % | |||||||||||||||
| Billable expenses | 835 | 881 | (5) | % | |||||||||||||||
| General and administrative expenses | 305 | 323 | (6) | % | |||||||||||||||
| Depreciation and amortization | 45 | 40 | 13 | % | |||||||||||||||
| Total operating costs and expenses | 2,521 | 2,667 | (5) | % | |||||||||||||||
| Operating income | 279 | 257 | 9 | % | |||||||||||||||
| Interest expense, net | (48) | (44) | 9 | % | |||||||||||||||
| Other income | 20 | 3 | 567 | % | |||||||||||||||
| Income before income taxes | 251 | 216 | 16 | % | |||||||||||||||
| Income tax expense (benefit) | 53 | (55) | (196) | % | |||||||||||||||
| Net income | $ | 198 | $ | 271 | (27) | % | |||||||||||||
Revenue
Revenue decreased 4% to $2,800 million for the three months ended June 30, 2026 compared to the prior year period. The decrease was primarily driven by the impact of slowed procurement which resulted in reduced headcount and billable expenses.
Cost of Revenue
Costs associated with compensation and related expenses for our people are the most significant component of our operating costs and expenses. The principal factors that affect our costs are the increases or decreases in labor and employee related costs as we are awarded contracts, task orders, and additional work under our existing contracts, and the hiring of people with specific skill sets and security clearances.
Cost of revenue as a percentage of revenue was 48% and 49% for the three June 30, 2026 and 2025, respectively. Cost of revenue decreased 6% for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The decrease for the quarter-to-date period was primarily due to decreases in salaries and related benefits due to overall headcount reductions. The prior year also included $30 million in costs related to employee severance and related charges, not present in the current year.
Billable Expenses
Billable expenses as a percentage of revenue were 30% for both the three months ended June 30, 2026 and 2025, respectively. Billable expenses decreased 5% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decreases were primarily attributable to decreases in other direct expenses and subcontractor expenses, driven by customer demand and timing of customer needs.
General and Administrative Expenses
General and administrative expenses as a percentage of revenue were 11% for both the three months ended June 30, 2026 and 2025, respectively. General and administrative expenses decreased 6% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease for the quarter-to-date period was primarily due to decreases in salaries and related benefits due to overall headcount reductions.
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Depreciation and Amortization
Depreciation and amortization includes the depreciation of computers, leasehold improvements, furniture and other equipment, and the amortization of internally developed software, as well as third-party software that we use internally, and of identifiable long-lived intangible assets over their estimated useful lives. Depreciation and amortization expense increased 13% for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to the amortization of acquired intangible assets as a result of the Company’s acquisition of Defy Security.
Operating Income
Operating income increased 9% to $279 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, reflecting an increase in operating margin from 9% to 10%. Operating income was driven by the decrease in expenses noted above, partially offset by lower declines in revenue.
Interest Expense, net
Interest expense, net increased 9% for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, driven by decreases in interest income from lower cash balances and lower rates, partially offset by lower interest rates on the Company’s term loans.
Other Income (expense)
Other income, increased to $20 million for the three months ended June 30, 2026 from $3 million for the three months ended June 30, 2025. The increase over the quarter-to-date period was primarily driven by larger increases in the fair value of the Company’s investments in fiscal 2027 as compared to fiscal 2026.
Income Tax Expense
Income tax expense increased 196% for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The effective tax rate increased to 21.1% from (25.5)% for the three month period. The increase in tax expense was primarily driven by an increase in pre-tax income and a decrease in the uncertain tax position reserve in the prior year that did not recur in the current period. See Note 9, “Income Taxes,” to the condensed consolidated financial statements for further information.
Non-GAAP Measures
We publicly disclose certain non-GAAP financial measurements, including Revenue, Excluding Billable Expenses, EBITDA and Adjusted EBITDA, because management uses these measures for business planning purposes, including to manage our business against internal projected results of operations and measure our performance. We view Adjusted EBITDA as a measure of our core operating business, which excludes the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP measures also provide another basis for comparing period to period results by excluding potential differences caused by non-operational and unusual or non-recurring items. In addition, we use Revenue, Excluding Billable Expenses because it provides management useful information about the Company's operating performance by excluding the impact of costs such as subcontractor expenses, travel expenses, and other non-labor expenses incurred to perform on contracts. Billable expenses generally have lower margin and thus are less indicative of our profit generation capacity. Management believes this metric provides useful information about our business.These supplemental performance measurements may vary from and may not be comparable to similarly titled measures by other companies in our industry. Revenue, Excluding Billable Expenses, EBITDA, and Adjusted EBITDA are not recognized measurements under accounting principles generally accepted in the United States (“GAAP”) and when analyzing our performance, investors should (i) evaluate each adjustment in our reconciliation of revenue to Revenue, Excluding Billable Expenses, net income to EBITDA, and Adjusted EBITDA, and (ii) use Revenue, Excluding Billable Expenses, EBITDA, and Adjusted EBITDA in addition to, and not as an alternative to, revenue and net income, as measures of operating results, each as defined under GAAP. We have defined the aforementioned non-GAAP measures as follows
•Revenue, Excluding Billable Expenses represents revenue less billable expenses.
•EBITDA represents net income before income taxes, interest expense, net and other income, and depreciation and amortization.
•Adjusted EBITDA represents net income before income tax (benefit) expense, interest expense, net and other income, and depreciation and amortization and before certain other items, including other corporate expenses. The Company prepares Adjusted EBITDA to eliminate the impact of items it does not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary or non-recurring nature or because they result from an event of a similar nature.
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Below is a reconciliation of our most directly comparable GAAP measures to our non-GAAP measures, Revenue to Revenue, Excluding Billable Expenses and Net income to EBITDA and Adjusted EBITDA, calculated and presented in accordance with GAAP:
| Three Months Ended June 30, | ||||||||||||||
| (In millions, except share and per share data) | 2026 | 2025 | ||||||||||||
| (Unaudited) | ||||||||||||||
| Revenue, Excluding Billable Expenses | ||||||||||||||
| Revenue | $ | 2,800 | $ | 2,924 | ||||||||||
| Less: Billable expenses | 835 | 881 | ||||||||||||
| Revenue, Excluding Billable Expenses | $ | 1,965 | $ | 2,043 | ||||||||||
| EBITDA and Adjusted EBITDA | ||||||||||||||
| Net income | $ | 198 | $ | 271 | ||||||||||
| Income tax (benefit) expense | 53 | (55) | ||||||||||||
Interest expense, net and other income | 28 | 41 | ||||||||||||
| Depreciation and amortization | 45 | 40 | ||||||||||||
| EBITDA | 324 | 297 | ||||||||||||
| Other corporate expenses (a) | 10 | 14 | ||||||||||||
| Adjusted EBITDA | $ | 334 | $ | 311 | ||||||||||
(a) In fiscal 2027, other corporate expenses consist primarily of acquisition related costs associated with the acquisition of Defy Security, and the agreement to acquire Ultra Mission Solutions. In fiscal 2026, other corporate expenses consist primarily of nonrecoverable costs associated with employee severance from cost management and restructuring initiatives, transaction costs associated with a divestiture, and acquisition related costs associated with the acquisition of Defy Security, which closed in the first quarter of fiscal 2027. See Note 20, “Supplemental Consolidated Financial Information,” and Note 21, “Subsequent Events,” to the consolidated financial statements within the Annual Report on Form 10-K for the fiscal year ended March 31, 2026 for further information.
Liquidity and Capital Resources
As of June 30, 2026, our total liquidity was $2.0 billion, consisting of $540 million of cash and cash equivalents and $1.5 billion available under the Revolving Credit Facility. In the opinion of management, we will be able to meet our liquidity and cash needs through a combination of cash flows from operating activities, available cash balances, and available borrowing under the Revolving Credit Facility. If these resources need to be augmented, additional cash requirements would likely be financed through the issuance of debt or equity securities.
The following table presents selected financial information for the respective periods shown:
| June 30, 2026 | March 31, 2026 | ||||||||||
| (Unaudited) | |||||||||||
| (In millions) | |||||||||||
| Cash and cash equivalents | $ | 540 | $ | 728 | |||||||
| Total debt | $ | 3,936 | $ | 3,940 | |||||||
| Three Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| (Unaudited) | (Unaudited) | ||||||||||
| (In millions) | |||||||||||
| Net cash provided by operating activities | $ | 281 | $ | 119 | |||||||
| Net cash used in investing activities | (328) | (32) | |||||||||
| Net cash used in financing activities | (141) | (261) | |||||||||
| Net decrease in cash and cash equivalents | $ | (188) | $ | (174) | |||||||
19
Historically, we have been able to generate sufficient cash to fund our operations, mandatory debt and interest payments, capital expenditures, and discretionary funding needs. However, due to the trends and developments described above under “—Factors and Trends Affecting Our Results of Operations”, it may be necessary to borrow under our Credit Agreement to meet cash demands in the future. While the timing and financial magnitude of these possible actions are currently indeterminable, we expect to be able to manage and adjust our capital structure to meet our liquidity needs. Our expected liquidity and capital structure may also be impacted by discretionary investments and acquisitions that we could pursue. We anticipate that cash provided by operating activities, existing cash and cash equivalents, and borrowing capacity under our Revolving Credit Facility will be sufficient to meet our anticipated cash requirements for the next twelve months, which primarily include:
•operating expenses, including salaries;
•working capital requirements to fund both organic and inorganic growth of our business;
•capital expenditures which primarily relate to the purchase of computers, business systems, furniture and leasehold improvements to support our operations;
•the ongoing maintenance around all financial management systems;
•commitments and other discretionary investments, including potential capital calls for venture capital investments;
•debt service requirements for borrowings under our Credit Agreement and interest payments for the Senior Notes due 2028, Senior Notes due 2029, Senior Notes due 2033 and Senior Notes due 2035; and
•cash taxes to be paid.
From time to time, we evaluate conditions to opportunistically access the financing markets to secure additional debt capital resources and improve the terms of our indebtedness. Some of the possible uses of our remaining excess cash at any point in time may include funding strategic acquisitions and investments, debt repayment, further investment in our business and returning value to stockholders through share repurchases, quarterly dividends and special dividends.
Agreement to Acquire Ultra I&C Mission Solutions Business
On June 19, 2026, the Company entered into a definitive agreement to acquire the Ultra I&C Mission Solutions business (“Ultra Mission Solutions”) for $720 million, subject to certain customary adjustments. Ultra Mission Solutions is a defense technology business specializing in mission critical software, encryption, and edge compute products. Contingent upon customary closing conditions, including a regulatory approval, the transaction is expected to close during the second quarter of fiscal year 2027. The Company believes that the combination of its liquidity position and financing options provides sufficient funds to complete the transaction.
Cash Flows
Operating Cash Flow
Net cash provided by operations was $281 million for the three months ended June 30, 2026 compared to $119 million in the prior year period. The increase in operating cash was primarily driven by strong working capital management and lower tax payments as compared to the prior year.
Investing Cash Flow
Net cash used in investing activities was $328 million in the three months ended June 30, 2026 compared to $32 million in the prior year period. The increase in investing cash used over the prior year was primarily due to the Company's acquisition of Defy Security and an increase in the funding of strategic investments in the first quarter of fiscal 2027.
Financing Cash Flow
Net cash used in financing activities was $141 million in the three months ended June 30, 2026 compared to $261 million in the prior year period. The decrease in financing cash used over the prior year was primarily due to a decrease in share repurchases year over year.
Dividends and Share Repurchases
On July 24, 2026, the Company announced a regular quarterly cash dividend in the amount of $0.59 per share. The quarterly dividend is payable on August 28, 2026 to stockholders of record on August 14, 2026.
During the three months ended June 30, 2026, a quarterly cash dividend of $0.59 per share was declared and paid totaling $73 million.
20
On December 12, 2011, the Board of Directors initially approved a share repurchase program, which was subsequently increased from time to time, and most recently increased by $500 million to $4,085 million on October 22, 2025. The Company may repurchase shares pursuant to the program by means of open market repurchases, directly negotiated repurchases or through agents acting pursuant to negotiated repurchase agreements. During the first three months of fiscal 2027, the Company purchased 0.6 million shares of the Company's Class A Common Stock for an aggregate of $50 million. As of June 30, 2026, the Company had approximately $634 million remaining under the repurchase program.
Any determination to pursue one or more of the above alternative uses for excess cash is subject to the discretion of our Board of Directors, and will depend upon various factors, including our results of operations, financial condition, liquidity requirements, restrictions that may be imposed by applicable law, our contracts, and our Credit Agreement as amended and other factors deemed relevant by our Board of Directors.
Summarized Financial Information
The Senior Notes due 2033 and Senior Notes due 2035 were issued by Booz Allen Hamilton pursuant to the respective Indenture, among Booz Allen Hamilton, the Company and U.S. Bank Trust Company, National Association, as trustee, as supplemented by the respective Supplemental Indenture and are fully and unconditionally guaranteed on an unsecured and unsubordinated basis by the Company pursuant to the respective Indenture.
The tables below present the summarized financial information as combined for the Company and Booz Allen Hamilton as of March 31, 2026 and as of and for the three months ended June 30, 2026, after the elimination of intercompany transactions and balances between the Company and Booz Allen Hamilton and excluding the subsidiaries of both entities that are not issuers or guarantors of the Senior Notes due 2033 and Senior Notes due 2035, including earnings from and investments in these entities. The summarized financial information is provided in accordance with the reporting requirements of Rule 13-01 under Regulation S-X and is not intended to present our financial position or results of operations in accordance with GAAP.
Summarized Statements of Financial Condition
| (in millions) | June 30, 2026 | March 31, 2026 | ||||||||||
| Intercompany receivables from non-guarantor subsidiaries | $ | 34 | $ | 32 | ||||||||
| Total other current assets | $ | 2,776 | $ | 2,921 | ||||||||
| Goodwill and intangible assets, net of accumulated amortization | $ | 1,521 | $ | 1,501 | ||||||||
| Total other non-current assets | $ | 1,230 | $ | 1,134 | ||||||||
| Intercompany payables to non-guarantor subsidiaries | $ | 116 | $ | 102 | ||||||||
| Total other current liabilities | $ | 1,675 | $ | 1,645 | ||||||||
| Long-term debt, net of current portion | $ | 3,917 | $ | 3,921 | ||||||||
| Total other non-current liabilities | $ | 497 | $ | 423 | ||||||||
Summarized Statement of Operations
| (in millions) | Three Months Ended June 30, 2026 | ||||
| Revenue | $ | 2,766 | |||
| Revenue from non-guarantor subsidiaries | $ | 3 | |||
| Operating income | $ | 302 | |||
| Operating loss from non-guarantor subsidiaries | $ | (11) | |||
| Net income | $ | 207 | |||
| Net income attributable to the Obligor Group | $ | 207 | |||
Commitments and Contingencies
We are subject to a number of reviews, investigations, claims, lawsuits, and other uncertainties related to our business. For a discussion of these items, refer to Note 11, “Commitments and Contingencies,” to our condensed consolidated financial statements.
21
Special Note Regarding Forward-Looking Statements
Certain statements contained or incorporated in this Quarterly Report on Form 10-Q (the “Quarterly Report”), include forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “forecasts,” “expects,” “intends,” “plans,” “anticipates,” “projects,” “outlook,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “preliminary,” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. These forward-looking statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in or implied by these forward-looking statements, including the risks and factors listed under “Item 1A. Risk Factors” and elsewhere in this Quarterly Report, as well as those listed under “Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2026. In light of these risks, uncertainties, and other factors, the forward-looking statements might not prove to be accurate and you should not place undue reliance upon them. All forward-looking statements speak only as of the date made and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-08-13 | Metzfield Dennis | VP, PAO & Controller | Sell | -469 | $77.92 | -$36,544 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-10-23 10-Q expected by 2026-11-06 (in 40 days)
- ~2027-01-22 10-Q expected by 2027-02-05 (in 131 days)
- ~2027-05-21 10-K expected by 2027-05-29 (in 250 days)
- ~2027-07-23 10-Q expected by 2027-08-06 (in 313 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-08-24 8-K Other Events; Financial Statements and Exhibits
- 2026-08-04 8-K Material Agreement Entered; Material Financial Obligation; Other Events; Financial Statements and Exhibits
- 2026-07-24 10-Q Quarterly Report
- 2026-07-24 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-07-24 S-3ASR S-3ASR
- 2026-06-22 8-K Material Agreement Entered; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-06-11 DEF 14A Proxy Statement
- 2026-05-22 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-05-22 10-K Annual Report
- 2026-05-12 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-04-27 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-03-02 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2026-01-23 10-Q Quarterly Report
- 2026-01-23 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-12-15 8-K Officer/Director Change; Financial Statements and Exhibits