Most of the headcount reductions will take place in the civil business, Chief Financial Officer Matt Calderone said on an earnings call Friday.
“We are seeing agency reorganizations, reductions in government personnel and spending levels, as well as contract reviews,” Chief Executive Officer Horacio Rozanski said on the call. “These are especially acute in civilian agencies.”
The company experienced a reduction in run rate on five of its large civil technology projects since April, Calderone said, adding that it will hurt Booz Allen’s fiscal 2026 revenue by 3%. The slowdown coincided with the ending of a large technology contract with Veteran Affairs, Rozanski said.
Booz Allen, which gets almost all of its revenue from the U.S. government, said it expects 2026 adjusted earnings per share of $6.20 to $6.55, below analysts’ estimates of $6.85. That sent its shares tumbling as much as 19% on Friday morning, the most since June 2017.
The company expects sales from its civil business, which makes up about one-third of the company’s revenue, to fall by low-double digits in fiscal 2026, Calderone said, calling it a “near-term reset of our civil portfolio.”
The defense and intel businesses — which made up the other two-thirds of revenue — are expected “to exhibit strong organic growth” in the year, Calderone said.
SOURCE: Bloomberg
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