Parsons posts $1.7 billion in revenue and record adjusted earnings margin in third quarter
Key Facts
Parsons reported revenue of $1.7 billion in the third quarter of 2026, up 2% year over year but down 1% organically. Adjusted earnings before interest, taxes, depreciation and amortization rose 6% to $168 million, while the margin expanded to a record 10.2%, up 40 basis points from the year-earlier period. By contrast, net income fell 16% to $54 million, and the company said transaction-related expenses contributed to the decline. The results show two different performance trends: improved adjusted profitability alongside an organic contraction in revenue and a drop in net income. The company also said it had entered into a definitive agreement to sell its remote site contracts and was working to complete their transfer, without establishing whether termination risks remained.
Parsons said revenue excluding its classified contract rose 5%, while organic revenue excluding it increased 2%, driven by growth in cyber and transportation markets. This means reported figures included an effect that made total revenue growth higher than organic growth, while the reading excluding the classified contract showed growth in underlying activity. By segment, Critical Infrastructure revenue was $846 million, up 2% year over year, and Federal Solutions revenue was $805 million, also up 2% year over year. But Federal Solutions revenue fell 3% organically, highlighting a divergence in performance within the company. Adjusted earnings margin in Critical Infrastructure rose to 11.1% from 10.3% a year earlier, while Federal Solutions margin held at 9.2%.
The margin improvement followed a second quarter marked by cost pressure, when revenue fell 1% overall and 5% organically year over year, and reported adjusted earnings margin declined to 2.7%. The company attributed that to $118 million in costs related to portfolio actions and a joint venture. Excluding those costs, margin was 10.1% in the second quarter. In the third quarter, cash flow from operating activities was $269 million, compared with $163 million in the third quarter of 2025. Operating cash flow for the twelve months ended with the third quarter was also $490 million, up 12% from the prior twelve-month period.
On demand, the company recorded net bookings of $1.8 billion, with a book-to-bill ratio of 1.1 times in the third quarter. Total backlog reached a record $9.4 billion on September 30, 2026, of which $6.8 billion was funded. Among the contracts Parsons announced during the quarter, it raised the ceiling on a five-year sole-source agreement with U.S. Cyber Command to $750 million and recorded $250 million in bookings against it. An entity operating in the national security field also awarded it a contract with a ceiling of $495 million and a term of 66 months. Chief Executive Carey Smith said the company continued to navigate procurement timing and geopolitical uncertainty, and that the alignment of its capabilities with contract awards, backlog and pipeline strengthened her confidence in its outlook.
Parsons narrowed its fiscal 2026 revenue forecast range to $6.25–$6.45 billion, while maintaining its adjusted earnings before interest, taxes, depreciation and amortization range at $510–$550 million. In July, the company had forecast revenue of between $6.2 billion and $6.5 billion and adjusted earnings of between $500 million and $560 million, after cutting its previous outlook. The forecast ranges were therefore narrower in the October update, with the midpoint of each unchanged. In a separate management update, Parsons said Chief Financial Officer Matt Ofilos' resignation takes effect on November 6, 2026. George Ball will become interim chief financial officer effective the same date.
Parsons shares fell 2.48% on October 28, according to Investing.com, even as the company beat the cited earnings and revenue expectations. Earnings per share were $0.89, compared with an estimate of $0.78, while revenue came to $1.7 billion versus an estimate of $1.62 billion. The shares closed at $50.69 on October 30, 2026, according to EL7 data. The quarterly results combine improved margin, bookings and cash flows on one hand with declines in organic revenue and net income on the other. The company's updated outlook and the CFO transition on November 6 are the next two milestones for tracking its execution.