Executive Summary

Q1 FY2025 delivered solid top-line and strong profitability: Net service revenue (NSR) rose 5.5% YoY to $1.80B, adjusted EBITDA increased 8% to $271M, adjusted EPS rose 25% to $1.31, and segment margins set a Q1 record; free cash flow rose 28% to $111M .
Backlog and pipeline reached all-time highs; enterprise book-to-burn exceeded 1.0x for the 17th straight quarter (design business 1.2x), supporting visibility into growth .
Guidance raised: FY2025 adjusted EPS increased to $5.05–$5.20 (from $5.00–$5.20) and adjusted EBITDA to $1,175–$1,210M (from $1,170–$1,210M); the company reiterated 30 bps of margin expansion and 100%+ FCF conversion .
Catalysts: Raised guidance, record backlog/pipeline, accelerating Americas design NSR (+9%) and Q1 record segment margins; watch the Q1 tax-driven EPS tailwind (adjusted tax 14.3% in Q1, full-year still ~24%) and FX headwinds internationally .

What Went Well and What Went Wrong

What Went Well

Strong execution across key metrics: “accelerating NSR growth, record first quarter margins and double-digit adjusted EPS growth,” with backlog/pipeline at records and 17th consecutive >1.0x book-to-burn quarter .
Americas performance led growth: Americas design NSR up 9% YoY; adjusted operating margin on NSR hit 18.7% (+40 bps YoY), a Q1 high; backlog at a record high with 1.2x design book-to-burn .
Strategic investments reinforcing moat: Management emphasized building the Water & Environment Advisory business to be the next $1B platform; “we are confident…doubling the $200 million of net service revenue…over the next three years” .

What Went Wrong

EPS benefitted from unusually low Q1 tax rate (14.3% adjusted vs ~24% full-year guide), implying normalized EPS growth ~14% vs 25% headline; watch reversion in 2H .
International pockets of softness: Growth in the U.K. and Middle East was partially offset by decline in Australia; FX was a headwind even as margins improved .
Federal headlines created noise; management reiterated minimal exposure to at-risk agencies (EPA/USAID ~50 bps of TTM revenue) and expects negligible impact, but it remains a monitored macro factor .

Financial Results

Metric (USD)	Q3 2024	Q4 2024	Q1 2025
Revenue ($ Millions)	$4,151	$4,110	$4,014
Net Service Revenue (Consolidated) ($ Millions)	$1,826	$1,812	$1,801
Adjusted EBITDA ($ Millions)	$286	$290	$271
Adjusted EBITDA Margin (%)	16.5%	16.7%	15.6%
Diluted EPS – Continuing Ops (GAAP)	$0.95	$1.25	$1.33
Adjusted EPS	$1.16	$1.27	$1.31
Operating Cash Flow ($ Millions)	$291	$299	$151
Free Cash Flow ($ Millions)	$273	$275	$111
Total Backlog ($ Millions)	$23,362	$23,863	$23,877
Vs Wall St. Estimates	N/A (not disclosed)	N/A (not disclosed)	N/A – consensus unavailable via S&P Global tools

Notes: Company-reported YoY for Q1 FY2025: Revenue +3%, NSR +5.5%, adjusted EPS +25%, adjusted EBITDA +8% .

Segment Performance (Margins and NSR)

Segment	Q3 2024	Q4 2024	Q1 2025
Americas NSR ($ Millions)	$1,096	$1,057	$1,051
Americas Adjusted Operating Margin on NSR (%)	19.3%	19.6%	18.7%
International NSR ($ Millions)	$729	$754	$750
International Adjusted Operating Margin on NSR (%)	11.7%	12.6%	10.8%

KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
Enterprise Book-to-Burn (Design)	1.1x (Americas design)	1.2x (design; both segments)	1.2x (design); 1.1x enterprise
Adjusted Effective Tax Rate	26.9%	21.8%	14.3%
Net Leverage (x)	0.8x	0.8x	0.8x

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EPS	FY2025	$5.00–$5.20	$5.05–$5.20	Raised at the low end
Adjusted EBITDA ($M)	FY2025	$1,170–$1,210	$1,175–$1,210	Raised at the low end
Segment Adjusted Operating Margin (NSR)	FY2025	~16.1% (30 bps expansion)	16.1% (30 bps expansion)	Maintained
Adjusted EBITDA Margin	FY2025	16.3% (+30 bps)	16.3% (+30 bps)	Maintained
Organic NSR Growth	FY2025	5%–8%	5%–8%	Maintained
Free Cash Flow Conversion	FY2025	100%+	100%+	Maintained
Diluted Share Count	FY2025	~134M	~134M	Maintained
Adjusted Effective Tax Rate	FY2025	~24%	~24%	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 & Q4 FY2024)	Current Period (Q1 FY2025)	Trend
AI/digital investment	Focus on digital delivery; margin expansion funds record organic investments	Roadmap advancing from bid-prep AI to delivery; expected to raise productivity beyond prior 5–15% target	Increasing investment; broader deployment
Water & Environment Advisory	New business launched; goal to double to ~$400M NSR in 3 years; hires underway	“Next $1B platform”; positive client feedback; advanced metering wins; multiple senior hires	Scaling; early wins; confidence reinforced
Federal exposure & macro	EPA/USAID <0.5% of TTM revenue; IIJA 95% funding secure; bipartisan infra	Minimal impact from agency-level reviews; anticipate negligible effect; growth weighted to DOD, state/local	Stable; risks de minimis for ACM
Program Management growth	~20% growth FY2024; #2 ENR rank; target 50% mix across PM/advisory over time	~16% of NSR from PM; double-digit growth expected	Expanding share of mix
Geographic trends (UK/Middle East/Australia)	UK AMP8 visibility, Middle East growth, Australia backlog +26% into water	UK/Middle East drove growth; Australia declined; international design book-to-burn 1.2x	Mixed near-term; backlog supports improvement
Margins trajectory	16.7% adjusted EBITDA margin in Q4; target 17% exit FY2026 and “17%+” longer term	Q1 margins at Q1 record; still on track for 30 bps FY expansion; reiterates 17% exit FY2026	Consistent expansion path
Book-to-burn/backlog	1.2x design in Q4; record backlog; 50%+ win rate esp. large pursuits	1.2x design; 17th straight >1.0x quarter; backlog/pipeline at records	Sustained strength

Management Commentary

“We delivered strong performance in the first quarter and raised our guidance for the full year…investing to extend our advantages…Water & Environment Advisory” — CEO Troy Rudd .
“We have already made several key hires…confident that we will achieve our goal of doubling the $200 million of net service revenue in this business over the next three years.” — President Lara Poloni .
“As we look ahead, continued expected growth and the high return on our strategic investments underpin our confidence in delivering a 17% margin exit rate by the end of fiscal 2026 and even higher margins over time.” — CFO/COO Gaurav Kapoor .
“We had a 100% win rate in our largest and most strategic business in the first quarter…8 for 8.” — CEO Troy Rudd .

Q&A Highlights

Growth cadence and exposure: Management expects NSR growth to build through the year, led by Americas; minimal exposure to agencies facing funding freezes; pipeline continues to expand with >1.0x book-to-burn expected for the year .
Margin drivers: Strong margins despite record investments in BD, digital, and advisory; international margins grew despite FX headwinds; enterprise still targets 30 bps expansion in FY2025 .
Advisory/PM scaling: Program management ~16% of NSR with double-digit growth outlook; advisory ramping with early AMI/digital water wins and senior hires .
Tax/earnings quality: Q1 EPS uplifted by a lower tax rate (timing); full-year tax rate still ~24% (25% in Q2, high-20s in 2H) .
Capital allocation/M&A: Priority on high-ROI organic investments and returning cash to shareholders; M&A only to accelerate organic theses (e.g., advisory) under a returns framework .

Estimates Context

We attempted to retrieve S&P Global consensus for Q1 FY2025 (EPS and revenue), but data was unavailable due to provider limits at the time of request. As a result, we cannot quantify beats/misses vs Wall Street for this quarter. The company characterized results as exceeding internal expectations; investors should monitor third-party consensus updates post-print .

Key Takeaways for Investors

Quality beat on core metrics with a guidance raise: Q1 NSR +5.5% YoY, adjusted EPS +25%, Q1 record margins; FY2025 EPS/EBITDA guidance nudged up at the low end — a constructive setup for estimate drift higher as execution continues .
Backlog durability and win-rate strength reduce downside risk: 17th straight >1.0x book-to-burn, design 1.2x, backlog/pipeline at records — pointing to sustained multi-quarter revenue visibility .
Mix shift to higher-margin services is working: Americas design growth (+9%) and expanding PM/advisory should continue to support structural margin expansion toward the 17% target by FY2026 .
Watch normalization of the tax rate: Q1’s adjusted 14.3% tax rate boosted EPS; expect a step-up toward ~24% for the year (25% in Q2, high-20s in 2H), moderating headline EPS growth optics despite solid underlying performance .
International mixed but improving: UK and Middle East strength offset Australia softness; FX headwinds remain a watch item, though backlog and book-to-burn support improving trends .
Capital returns intact: $55M returned in Q1; net leverage at 0.8x provides optionality for continued repurchases/dividends under a returns-driven framework .
Near-term trading lens: Positive guide raise + record backlog/margins are supportive; lack of clear beats vs Street (consensus unavailable) may temper immediate reaction; monitor order conversion, FX, and advisory ramp in Q2 .

Citations:
Q1 FY2025 press release and 8-K: .
Q4 FY2024 materials: .
Q3 FY2024 press release: .
Q1 FY2025 earnings call transcript: .

AECOM (ACM)·Q1 2025 Earnings Summary