The U.S. Treasury Department has terminated all contracts with Booz Allen Hamilton following the massive IRS data breach orchestrated by a former employee, Charles Edward Littlejohn. The cancellations affect multiple ongoing engagements across tax administration and cybersecurity advisory services, representing approximately $120 million in annual revenue. Management has initiated a client remediation program and is reallocating resources to reinforce data protection protocols, acknowledging that failure to safeguard sensitive taxpayer information led to a material reputational hit and could influence future bid success rates for federal contracts.

For the quarter ended December 31, 2025, Booz Allen reported gross revenues of $2.6 billion, down 10% year-over-year, and down 7% on a revenue ex-billables basis due primarily to the prolonged government shutdown. Adjusted EBITDA was $285 million, yielding a margin of 10.9%, consistent with the first nine months of the fiscal year. Net income rose 7% to $200 million, while adjusted net income increased 9% to $215 million. Diluted EPS grew 12% to $1.63, and adjusted diluted EPS climbed 14% to $1.77, driven by a lower effective tax rate and share count reductions. Cost-savings initiatives delivered $150 million in run-rate reductions, with full earnings benefits expected next fiscal year.

Booz Allen narrowed its full-year revenue outlook to a range of $11.3 billion to $11.4 billion and raised adjusted EPS guidance to $5.95 to $6.15, reflecting successful cost actions and improved funding trends. Annual adjusted EBITDA is projected at $1.195 billion to $1.215 billion, while free cash flow targets were lifted to $825 million–$900 million. During the quarter, the company returned $192 million to shareholders through $125 million in share repurchases and $67 million in dividends, and maintains a quarterly dividend of $0.59 per share. The board also committed up to $400 million over the fund’s life to technology venture investments, underscoring a balanced approach between shareholder returns and strategic growth funding.