Booz Allen Hamilton Holding Corporation (BAH) Stock: Slides 16% After Forecast Miss and Major 2,500 Jobs Cut

TLDR

Booz Allen stock closed at $107.79, down 16.53% after earnings. FY26 revenue guidance missed Wall Street expectations. 2,500 jobs cut, mainly in civil segment, to boost profitability. FY25 showed strong 12% organic revenue growth. AI and defense segments remain key growth drivers.

Booz Allen Hamilton Holding Corporation (NYSE: BAH) stock closed at $107.79 on May 23, 2025, plunging 16.53% following a disappointing fiscal 2026 outlook and major restructuring announcement.

Booz Allen Hamilton Holding Corporation (BAH)

The company now expects FY26 revenue between $12 billion and $12.5 billion, with adjusted EPS ranging from $6.20 to $6.55, both falling short of Wall Street’s $12.82 billion and $6.92 targets.

Strong FY25 Results

Despite the market reaction, Booz Allen delivered robust fiscal year 2025 results. Revenue grew over 12% year-over-year, nearly all organically, reaching $12 billion. Adjusted EBITDA hit $1.315 billion, reflecting 12% compounded growth, while adjusted diluted EPS rose over 15%.

The firm reported $911 million in free cash flow and repurchased about 4.3% of its outstanding shares since the fiscal year’s start. In Q4 2025 alone, Booz Allen generated $3 billion in revenue, up 7% year-over-year, with defense business revenue up 14% and intelligence up 5%.

Restructuring and Job Cuts

To address profitability pressures, CEO Horacio Rozanski announced a 7% workforce reduction, impacting approximately 2,500 employees, mainly in the civil segment. The civil business is under pressure, facing anticipated low double-digit declines in FY26 due to reduced government personnel and contract spending.

$BAH is planning to cut 2,500 jobs due to the crackdown on federal contracting. Stocks plummeted 15%.

Even before the news broke, LinkUp job data shows a huge slowdown in hiring since December. IBM and Accenture are showing similar patterns.#earnings pic.twitter.com/W23cT3NSqR

— LinkUp a GlobalData Company (@linkup) May 23, 2025

CFO Matt Calderone emphasized that the layoffs aim to realign Booz Allen’s cost structure and improve long-term margins.

AI and Defense Drive Future Growth

While the civil sector struggles, Booz Allen’s defense and intelligence units continue to thrive. The firm’s AI business, in particular, grew over 30% year-over-year, now reaching about $800 million, highlighting strong demand for advanced technologies in national security missions. The company’s qualified pipeline for FY26 stands at $53.4 billion, with a year-end backlog of $37 billion, up 15% year-over-year.

Cautious FY26 Outlook

Despite a strong foundation, Booz Allen Hamilton has issued a cautious fiscal 2026 outlook. Management highlighted challenges in redeploying staff due to slower government procurement processes and acknowledged less visibility into the broader market environment. For fiscal 2026, the company projects adjusted EBITDA between $1.315 billion and $1.37 billion, while free cash flow guidance stands between $700 million and $800 million.

These figures reflect a more tempered growth expectation compared to past years. Investors will be closely monitoring the company’s execution of its restructuring plan, including the announced 7% workforce reduction, and looking for evidence of margin improvements over the coming quarters. The next earnings report is scheduled between July 24 and July 28, 2025.

 

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