Booz Allen Hamilton reported fiscal third-quarter earnings of $1.77 per share, surpassing analyst expectations by over 40% compared with consensus of $1.26. However, quarterly revenues of $2.62 billion fell nearly 4% short of the Zacks Consensus Estimate and declined 10% from $2.92 billion in the year-ago period. The company’s gross margin dipped to 30.5%, down from 32.1% a year earlier, reflecting continued pressure on pricing in its government consulting segment.

Following the mixed quarterly results, management reduced full-year 2026 sales guidance to a range of $10.4 billion–$10.6 billion, down from prior guidance of $10.7 billion–$11.0 billion. The revised outlook assumes federal contracting growth of mid-single digits and commercial revenue to remain flat year-over-year. Adjusted operating margin is forecast at 13.0%–13.5%, versus prior 13.5%–14.0%, driven by investment in digital and cybersecurity initiatives.

U.S. Treasury Secretary Scott Bessent announced cancellation of all 31 Booz Allen contracts, totaling $4.8 million in annual spending and $21 million in total obligations, due to failures in safeguarding IRS taxpayer data. The decision follows a breach by former employee Charles Littlejohn, who between 2018 and 2020 stole and leaked returns for approximately 406,000 taxpayers, including former President Donald Trump. In response, Booz Allen emphasized the breach occurred on government systems and has zero tolerance for such violations.

Shares of Booz Allen fell roughly 8.1% on the day of the Jan. 23 earnings release and contract cancellations, reflecting investor concern over revenue misses and reputational risk. Despite the drop, the company’s remaining contract backlog stands at $38 billion, with major Department of Defense agreements—such as a five-year, $1.58 billion WMD intelligence analysis deal—providing revenue visibility through fiscal 2030.