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AI

ASGN Inc (ASGN)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue of $1.01B and adjusted EBITDA margin of 11.1% both came in at the high end of guidance, with adjusted EPS of $1.31; consulting mix rose to 63% of total revenue, supporting margin expansion . Versus S&P Global consensus, revenue modestly beat ($1.011B vs $1.004B*) and adjusted EPS materially beat ($1.31 vs $1.224*). Values retrieved from S&P Global.
  • Segment mix shifted toward higher-margin consulting: commercial consulting +17.5% YoY to $334.9M; federal consulting was $300.1M; assignment revenue declined 13.2% YoY to $376.4M .
  • Bookings/backlog provide visibility: commercial TTM bookings $1.4B (book-to-bill 1.2x), federal TTM awards $1.2B (1.0x), and federal backlog ~$3.1B (~2.6x trailing 12-month segment revenue) .
  • Q4 2025 guidance: revenue $960–$980M, GAAP EPS $0.75–$0.83, adjusted EBITDA $102–$107M, adjusted EPS $1.12–$1.20; guidance reflects 61 billable days (seasonally lowest) and some caution on federal due to shutdown .

What Went Well and What Went Wrong

What Went Well

  • Delivered at high end of Q3 guidance on revenue and adjusted EBITDA; consolidated gross margin expanded 30 bps YoY to 29.4% on higher consulting mix . “ASGN delivered a solid performance… all at the high end of our guidance ranges,” — CEO Ted Hanson .
  • Commercial consulting strength: $334.9M (+17.5% YoY) with mix shift driving segment gross margin +40 bps YoY to 33.2% . “Our IT consulting business continued to grow, accounting for ~63% of total revenues,” — CEO Ted Hanson .
  • Robust demand/AI catalyst: strong bookings across commercial and federal; management frames AI as “a fundamental replatforming of enterprise technology,” with growing data/cloud pipelines — CEO commentary citing ISG .

What Went Wrong

  • Topline down modestly YoY: total revenue $1.011B vs $1.031B in Q3 2024; federal revenue down 3.9% YoY to $300.1M, commercial down 1.0% YoY to $711.3M .
  • Assignment revenues softness: $376.4M (-13.2% YoY), reflecting macro-sensitive portions of the commercial segment; GAAP EPS down to $0.87 from $1.06 YoY .
  • Federal margin pressure: segment gross margin declined 40 bps YoY to 20.3% due to loss of higher-margin contracts; SG&A rose to $212.2M and included $4.2M of acquisition/integration/strategic costs not previously guided .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)1,031.0 968.3 1,020.6 1,011.4
Diluted EPS ($)1.06 0.48 0.67 0.87
Adjusted EPS ($)1.43 0.92 1.17 1.31
Gross Margin (%)29.1% 28.4% 28.7% 29.4%
Segment BreakdownQ3 2024Q1 2025Q2 2025Q3 2025
Commercial Revenue ($M)718.8 672.2 708.1 711.3
Federal Revenue ($M)312.2 296.1 312.5 300.1
Commercial Gross Margin (%)32.8% 32.4% 33.0% 33.2%
Federal Gross Margin (%)20.7% 19.5% 19.2% 20.3%
Revenue MixQ3 2024Q1 2025Q2 2025Q3 2025
IT Consulting ($M)597.2 586.2 638.2 635.0
Assignment ($M)433.8 382.1 382.4 376.4
KPIsQ1 2025Q2 2025Q3 2025
Commercial TTM Bookings ($B)1.3 1.4 1.4
Commercial TTM Book-to-Bill (x)1.1 1.2 1.2
Federal TTM New Awards ($B)1.5 1.4 1.2
Federal TTM Book-to-Bill (x)1.2 1.1 1.0
Federal Quarterly Book-to-Bill (x)——1.5
Federal Contract Backlog ($B)——3.1
Operating Cash Flow ($M)16.8 124.9 83.9
Free Cash Flow ($M)6.6 115.8 72.0
Net Leverage (x)——2.4x
Share Repurchases (sh., $M)0.6M; $50.4 0.2M; $9.5 0.9M; $46.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/ActualChange
Revenue ($M)Q3 2025$992–$1,012 $1,011.4 Achieved at high end
Adjusted EBITDA ($M)Q3 2025$108.5–$113.5 $112.6 Achieved high end
Adjusted EBITDA Margin (%)Q3 202510.9–11.2 11.1 In range
Diluted EPS ($)Q3 2025$0.82–$0.90 $0.87 In range
Adjusted EPS ($)Q3 2025$1.18–$1.26 $1.31 Above range
Gross Margin (%)Q3 202529.3–29.6 29.4 In range
SG&A ($M)Q3 2025$206.5–$210.5 $212.2 Above (due to $4.2M non-guided costs)
Effective Tax Rate (%)Q3 202528.0 Actual implied with EPS In line
Amortization of Intangibles ($M)Q3 202516.6 16.8 Slightly higher
MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q4 2025—$960–$980 Initiated
SG&A ($M)Q4 2025—$198.8–$204.4 Initiated
Amortization of Intangibles ($M)Q4 2025—16.8 Initiated
Net Income ($M)Q4 2025—$32.1–$35.7 Initiated
Diluted EPS ($)Q4 2025—$0.75–$0.83 Initiated
Gross Margin (%)Q4 2025—28.8–29.3 Initiated
Effective Tax Rate (%)Q4 2025—28.0 Initiated
Adjusted EBITDA ($M)Q4 2025—$102–$107 Initiated
Adjusted Net Income ($M)Q4 2025—$48.2–$51.8 Initiated
Adjusted EPS ($)Q4 2025—$1.12–$1.20 Initiated
Adjusted EBITDA Margin (%)Q4 2025—10.6–10.9 Initiated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
AI/Technology initiativesQ1: Focus on modernization; consulting to 61% . Q2: Cloud/data enabling AI; TopBloc performing above expectations .CEO: AI “not a passing fad… fundamental replatforming”; growing AI use cases, data/cloud pipelines .Accelerating AI-driven demand
Macro environmentQ1: Client confidence faded; caution on spending . Q2: Macroeconomic uncertainty impacting discretionary spend .IT spending steady QoQ; caution in federal on shutdown in Q4 .Cautious but stable
Mix shift: Consulting vs StaffingQ1 consulting 61% . Q2 consulting 63% .Consulting 63%; assignment softness; buyers shifting to outcome-based engagements .Structural shift to outcomes
Federal marginsQ2 federal GM down on low-margin license revenue .Federal GM -40 bps YoY on loss of higher-margin contracts ; margins “back to normal” vs Q2 anomaly .Normalizing
Gov’t shutdown / budget—Caution in Q4 guidance due to shutdown; expect “Big Beautiful Bill” to fund defense/intel, with revenue impact mid-2026 after awards ramp through H1 next year .Near-term caution; medium-term tailwind
H1B process changes—Tightening seen as positive for onshore/nearshore delivery and pricing integrity .Potential positive
Pricing/Accelerators—GlideFast/TopBloc pricing holding; accelerators cutting project time (e.g., 25% faster discovery) and early product opportunities (Pathfinder) .Improving efficiency; pricing resilient

Management Commentary

  • “ASGN delivered solid performance… revenues reaching $1.01 billion and an adjusted EBITDA margin of 11.1%… IT consulting… ~63% of total revenues” — CEO Ted Hanson .
  • “AI spending is… a fundamental replatforming of enterprise technology… we deploy a growing number of AI use cases… increasing volume of data and cloud initiatives” — CEO Ted Hanson .
  • “Free cash flow was $72 million… ~64% conversion of adjusted EBITDA… net leverage 2.4x… repurchased 0.9 million shares” — CFO Marie Perry .
  • “National security revenues improved 12% YoY… DHS extension; FBI recompete; largest commercial app engineering contract to date” — President Shiv Iyer .

Q&A Highlights

  • H1B changes: Tightening expected to favor ASGN’s onshore/nearshore model and improve pricing integrity — CEO .
  • Federal/government shutdown: Impact immaterial so far; guidance avoids “stretching” forecasts; shutdown slows awards and ramps — CEO .
  • AI ROI: Biggest hurdles are architectural integration, data alignment, workflow integration, and talent; fastest ROI via enterprise platforms (Workday, ServiceNow, Salesforce) — President .
  • Consulting momentum: Management expects consulting to be a larger share and driver of margin expansion; capital allocation aligned — CEO .
  • Pricing and competition: Pricing holding in GlideFast/TopBloc; competition includes Accenture/Big Four and India pure-plays; ASGN differentiates via assets/accelerators — President .

Estimates Context

  • Q3 2025 vs S&P Global consensus: Revenue $1,011.4M vs $1,003.9M* (beat); Primary EPS $1.31 vs $1.2236* (beat); EBITDA $112.6M adjusted vs $110.46M* (modest beat). Values retrieved from S&P Global. Actuals from company filings .
  • Q4 2025 outlook vs consensus: Guidance revenue midpoint $970M vs $971.2M* (in line); adjusted EPS midpoint $1.16 vs Primary EPS consensus $1.163* (in line). Values retrieved from S&P Global .
MetricQ3 2025 ActualQ3 2025 ConsensusDelta
Revenue ($M)1,011.4 1,003.9*+7.5 (beat)
Primary EPS ($)1.31 1.2236*+0.0864 (beat)
Adjusted EBITDA ($M)112.6 110.46*+2.1 (beat)

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Consulting-led mix (63%) is driving margin resilience; continued allocation to commercial IT consulting should support sequential margin improvement as high-value solutions scale .
  • Backlog/TTM bookings provide multi-quarter visibility, especially in federal; watch shutdown resolution timing and budget finalization to unlock awards and ramps in H1 next year .
  • Q4 guidance is seasonally impacted by billable days (61) and embeds federal caution; expect sequential declines within guided ranges and monitor conversion of new wins in commercial (healthcare, C&I, TMT e-commerce) .
  • Assignment revenue remains a headwind; buyer behavior is shifting to outcome-based engagements—benefiting consulting while pressuring staffing units .
  • Pricing appears firm across Workday/ServiceNow practices; ASGN’s accelerators (e.g., 25% faster discovery) and AI assets (Pathfinder) may enhance win rates and delivery economics .
  • Balance sheet flexibility (cash $126.5M; ~$$460M revolver availability; net leverage 2.4x) plus substantial repurchase capacity ($423M remaining) provide optionality for M&A and buybacks .
  • Near-term catalysts: November 20 Investor Day and new 3-year targets; medium-term: federal budget tailwinds in defense/intel/national security and expanding AI platform work (Workday, ServiceNow, Salesforce) .