Oct 23, 2026 earnings call — Cyber and defense tech growth, Ultra acquisition
Company reported Q2 revenue of $2.8 billion, and raised full-year revenue guidance to $11.3 billion to $11.6 billion.
Revenue $2.8B (est $2.8B) · EPS $1.76 (est $1.48) · Next-quarter revenue outlook $11.3B–$11.6B
Key quotes
"Guile is designed to counter an SI enabled attack in real time. In testing at scale, Guile reduced attack success rates by more than 95%."
"Ultra brings a portfolio of commercially proven, software centric, hardware enabled defense tech products that are highly complementary to our own."
"We expect Civil's year over year decline to moderate in the second half of the fiscal year as new work ramps up and additional awards come in."
Analyst Q&A 11
shift to fixed-price and OTAs
Q (Tobey Sommer · Truist): Analyst asked how customers are moving work to fixed-price and OTAs and how that will change the contract mix and margins over the medium term.
A: Management said they embrace outcome-based contracting and OTAs. They said the proportion of fixed-price or outcome-based contracts will continue to grow, and productizing IP plus changed delivery will help grow profitability and margins over time.
"And with that, our ability to change the way we deliver and our ability to grow our profitability, together with the fact that we are productizing a lot of our IP." — Horacio D. Rozanski (CEO·CHAIR)
increase in funded backlog
Q (Gautam Khanna · TD): Analyst asked what drove the big sequential increase in funded backlog and how bookings might play out over the next quarters.
A: Management said funded backlog rose, led by national security where funded backlog was up. They cautioned conversion timing depends on budget processes, but demand trends are strong across national security and civil, and they are watching near-term budget timing.
"When you look at the back growth that we saw, again, total backlog was up 2% to about $41 billion." — Troy J. Lahr (CFO)
Velox adoption and cyber products timing
Q (Louie Dipalma · William Blair): Analyst asked about adoption of the Velox product suite, risks with SI platforms, and whether agencies are adding Velox into large cyber programs.
A: Management said Zero Trust is foundational and growing significantly. They moved Velox product launches faster into private betas and Guile has early strong customer interest, but the products are still early and will play out more over the next couple of years.
"Our zero trust work is growing significantly because, it is such a big need." — Horacio D. Rozanski (CEO·CHAIR)
margins with more fixed-price work
Q (John Godyn · Citi): Analyst asked whether margins could move to a higher multi-year level as the company shifts to more fixed-price and outcome-based contracts.
A: Management said they expect profit to grow faster than revenue and margins to expand steadily over the next couple of years as outcome-based contracting, productized IP, and different selling drive margin improvement. They noted it will be a steady trend, not a single-quarter jump, while still investing for growth.
"I have been saying for a while that the nature of our business changes, we expect profit to grow faster than revenue and, therefore, margins to expand." — Horacio D. Rozanski (CEO·CHAIR)
second-half national security growth and Ultra
Q (Sheila Kahyaoglu · Jefferies): Analyst asked what is driving acceleration in national security ex-billables and how Ultra is blending into defense tech and contributing.
A: Management pointed to capabilities like battle management, digital engineering, autonomy, and quantum as drivers that support stronger second-half growth and said backlog and pipeline support the guide though conversion depends on budgets. They also said Ultra is integrating well, growing top line, and has margins above 20% and strengthens their C3BM and autonomy positions.
"We do still see Ultra, growing strong top line growth." — Troy J. Lahr (CFO)
why civil procurements delay
Q (Gavin Parsons · UBS): Analyst asked why civil awards and procurements keep moving to the right despite strong demand.
A: Management said the pipeline is strong but many recompetes and larger bids are being pushed later, with draft RFPs and extensions delaying awards into later periods. That makes timing choppy even though demand and the pipeline continue to grow.
"Some of the larger bids are just pushing to the right." — Kristine Martin Anderson (COO)
headcount and capital priorities
Q (Matthew Akers · BNP Paribas): Analyst asked about headcount trends—whether hiring is ramping—and how the company plans to deleverage and allocate capital after Ultra.
A: Management said hiring continues and it varies by business: national security added over 300 employees this quarter while civil declined a bit. They said cash flow is strong, enabling a balanced capital approach: deleveraging during Ultra integration while still paying the dividend, doing modest buybacks, and staying open to strategic opportunities.
"We added over 300 employees in national security this quarter, and we are rapidly building our technologies, and we will be decoupling growth from headcount." — Kristine Martin Anderson (COO)
decoupling growth from headcount; Ultra sales
Q (Scott Mikus · Melius): Analyst asked how relevant the old headcount-based growth algorithm is and what acquired sales from Ultra were in the quarter and guide.
A: Management said they are migrating away from the old headcount-driven algorithm as they productize tech and defense hardware, a gradual multi-year journey. They also said Ultra's acquired sales were immaterial to the overall guide and helped offset civil weakness.
"When I think about Ultra, I would say that offset the civil weakness that we saw." — Troy J. Lahr (CFO)
what cyber means for the business
Q (Seth Seifman · JPMorgan): Analyst asked how to dimensionalize Booz Allen's cyber exposure, given differing growth and margin profiles across cyber companies.
A: Management said cyber is their most rapidly transforming business, shifting from labor-based cost-plus to a technology- and solutions-first model with productized offerings like Zero Trust and Velox. They said this lets them scale beyond federal customers and integrate cyber with defense tech products to deliver trusted edge solutions.
"If you look at our Zero Trust business now, we are really an innovator, building." — Horacio D. Rozanski (CEO·CHAIR)
organic growth in new guidance
Q (Noah Poponak · Goldman Sachs): Analyst asked Troy to quantify organic revenue growth in the new full-year guidance versus prior guidance and about margins quarter to quarter.
A: Management gave a framework: civil guide changed to flat to slightly down sequentially while national security growth is unchanged and Ultra offsets civil weakness, so overall midpoint is similar and Ultra impact is not material. They said quarter-to-quarter margins have puts and takes, with lower civil volumes in the second half affecting margins, and they did not give specific Q3 vs Q4 guidance.
"We are still seeing growth in the national security and really no change." — Troy J. Lahr (CFO)
election effects and bipartisan support
Q (Jonathan Siegmann · Stifel): Analyst asked how elections might change budgets and whether outcome-based contracting has bipartisan support.
A: Management said outcome-based reforms have bipartisan support and are tied to NDAA trends; they expect the move toward outcome-based contracting to continue and evolve. On elections and budgets, they said timing can vary, they model scenarios into guidance, and they focus on execution and controllable actions.
"In general, these are bipartisan moves that I hope will stand the test of time because you know, again, going back to basics, this is not about who prefers what." — Horacio D. Rozanski (CEO·CHAIR)