ASGN (ASGN)·Q4 2025 Earnings Summary

ASGN Q4 2025: Revenue Beats, EPS Misses, Stock Rallies 6% on Quinnox Deal

February 4, 2026 · by Fintool AI Agent

ASGN Incorporated delivered mixed Q4 2025 results, with revenue of $980.1M narrowly beating consensus by 0.1% while Adjusted EPS of $1.15 missed expectations by 2.5%. Despite the earnings shortfall, shares rallied 5.7% to $53.28, driven by enthusiasm over the $290M Quinnox acquisition and the company's strategic transformation into "Everforth."

The quarter showcased a tale of two segments: Commercial consulting bookings surged 28% sequentially, signaling improving demand, while the Federal segment faced headwinds with revenue declining 3.7% YoY amid government spending uncertainty.

Did ASGN Beat Earnings?

*Values retrieved from S&P Global

The mixed results came in at the high end of management's pre-announced guidance range of $960-980M revenue and $102-107M Adjusted EBITDA. The EPS miss was driven by lower operating leverage as the company invests in its strategic transformation.

8-Quarter Beat/Miss History

*Values retrieved from S&P Global

What Did Management Guide?

ASGN provided Q1 2026 guidance that came in below Street expectations on the bottom line:

*Values retrieved from S&P Global

The significant gap between guided EPS ($0.93-$1.02 midpoint: $0.975) and consensus ($1.18) signals potential for negative estimate revisions. Key Q1 assumptions include:

• 62.0 billable days
• Effective tax rate of 28.0%
• Interest expense of $16.3M

What Changed From Last Quarter?

Strategic Transformation

1. Quinnox Acquisition ($290M): ASGN announced a definitive agreement to acquire Quinnox Inc., a digital solutions provider with ~2,000 employees, ~$100M in revenue (low-to-mid teens growth), gross margins in the mid-40s, and EBITDA margins in the low-20s. The deal adds mature offshore delivery capabilities in India with attrition rates at half the industry average. Management expects revenue synergies to materialize faster than typical acquisitions due to Quinnox's ability to scale rapidly. Expected to close in March 2026; post-close leverage ~2.9x.

2. Everforth Rebrand: The company is transitioning to "Everforth" in H1 2026, unifying its six brands (Apex Systems, Creative Circle, CyberCoders, ECS, GlideFast, TopBloc) under a single identity focused on digital engineering.

3. $1B Buyback Program: ASGN repurchased 1.4M shares for $64.2M in Q4 at an average price of $46.05, with $972M remaining under its largest-ever buyback authorization.

Segment Performance Shifts

Commercial Segment (71% of revenue):

• Revenue grew +0.9% YoY to $698.6M (vs $692.7M in Q4 2024), +2.2% sequentially on billable-day adjusted basis
• Consulting bookings surged to record $444.4M — book-to-bill of 1.3x for Q4, 1.2x TTM
• Commercial consulting revenue grew +19.2% YoY; mid-single digits excluding TopBloc acquisition
• Assignment revenue remains challenged (-12% YoY) but rate of decline improving
• Industry Mix YoY: Healthcare up mid-teens, Consumer & Industrial up low-teens, TMT up low single-digits
• Sequential Improvement: 4 of 5 industries up Q3 to Q4; Financial Services returned to sequential growth (wealth management, regional banks, diversified financials, insurance all improving)

Federal Government Segment (29% of revenue):

• Revenue declined 3.7% YoY to $281.5M
• Defense, intelligence, and national security accounts comprise ~70% of government revenues
• Defense & Intel grew low single-digits YoY, driven partly by additional Project Maven funding
• "Other clients" (USPS, state/local, commercial) up mid-teens YoY on USPS data/AI work and commercial cyber
• Contract backlog ~$3B at quarter end, coverage ratio of 2.5x trailing twelve-month revenues
• DOGE Impact: Gross margin down 60 bps YoY; less than 2% of total revenues (~$15M) affected; impact to anniversary in March 2026
• Government Shutdown: Small impact in Q4 as it extended longer than expected; pent-up demand emerging in Q1

How Did the Stock React?

ASGN shares rallied +5.7% on earnings day, closing at $53.28 — significantly outperforming what the mixed results would typically warrant.

Why the rally despite an EPS miss?

1. Quinnox deal excitement: The acquisition adds high-margin digital capabilities with offshore scale
2. Consulting momentum: 1.2x book-to-bill signals revenue inflection ahead
3. Capital return: Aggressive buybacks support the stock at current valuations
4. Low expectations: Shares had declined 40% from 52-week highs, pricing in significant weakness

Full Year 2025 Summary

Full year 2025 was challenging, with revenue down 2.9% as IT staffing demand remained pressured. However, the company maintained solid margins and generated strong free cash flow to fund strategic initiatives.

Balance Sheet & Liquidity

Debt Structure:

• Term Loan A: $98.8M (due 2028)
• Term Loan B: $488.8M (due 2030)
• Senior Unsecured Notes: $550.0M at 4.625% (due 2028)

The company maintains solid liquidity with ~$616M total liquidity (cash + revolver availability). The balance sheet can support continued M&A and buyback activity.

Risks and Concerns

1. Federal Segment Uncertainty: Federal Civilian revenue down 25% YoY with book-to-bill at 0.9x raises concerns about government contract renewals; DOGE-related contract losses impacting margins

2. Assignment Revenue Decline: Still declining 12% YoY, though the pace has moderated from -16% earlier in 2025

3. Integration Risk: Quinnox acquisition adds execution complexity during the Everforth rebrand transition

4. Below-Consensus Guidance: Q1 2026 EPS guidance 17% below Street, likely triggering estimate cuts

Key Management Quotes

"AI is now a dominant driver of demand, with nearly 80% of enterprises planning to increase their AI spending in 2026. These investments are driving growth in solution capabilities vital to the successful deployment of AI enterprise-wide." — Ted Hanson, CEO

"We're not seeing large client signals that say that they're stopping implementation projects because they think AI can do what those platforms can do for them. These enterprise platforms, at least for our large clients, don't, we don't believe are going anywhere anytime soon." — Shiv Iyer, President

"From past acquisitions, when we've made larger platform acquisitions, we've levered up to 3.8x, probably on 6 different occasions, and within 18-24 months, delevered right back down below our target of 2.5." — Ted Hanson, CEO on leverage comfort

Q&A Highlights

On M&A Strategy (Jeff Silber, BMO): Ted emphasized organic growth remains the primary focus, with M&A targeted at "solution capabilities that we see are in the greatest need of our enterprise clients and then, pulling those acquired solution capabilities across our enterprise account base." The strategy mirrors prior deals like GlideFast (ServiceNow) and TopBloc (Workday).

On Capital Allocation (Tobey Sommer, Truist): Ted addressed the buyback vs. M&A tension, noting share repurchases are "a permanent retirement of capital" while acquisitions drive growth rates, margins, and strategy. "You can't be all one or the other. You have to have a strategy around both."

On AI Demand Drivers (Surinder Thind, Jefferies): Shiv explained AI demand spans from "using AI for different use cases... to a lot of work around readiness and modernization of the application stack as well as data." Even AI-ready clients struggle with scaling due to "interoperability considerations" and governance challenges.

On Federal Outlook (Tobey Sommer, Truist): Ted confirmed expectations for heavy award activity in H1 2026, with revenue growth materializing in H2 2026. Budget support is strong for Defense, Security, and Intelligence.

On DHS Contracts (Kevin McVeigh, UBS): Ted confirmed DHS is a "pillar customer" with important cybersecurity work, but noted "we don't do a lot, or anything that touches some of the areas that are kind of at odds" in funding discussions.

On Quinnox Scaling (Mark Marcon, Baird): Shiv revealed Quinnox has ~2,000 employees with gross margins "close to mid... low forties" and EBITDA margins "in the twenties." Attrition runs at half the industry average, enabling rapid scaling. Ted noted revenue synergies could materialize faster than typical acquisitions.

$80M Cost Savings Program

Management confirmed a net $80M cost savings program over 2026-2028:

CFO Marie Perry noted the company is "streamlining our technology systems and deploying strategic efforts" to drive these structural improvements.

AI & Solutions Momentum

The earnings call highlighted significant AI-driven wins and partnerships:

AI Factory Launch: In November, ASGN launched its "AI Factory" — a unified framework designed to "empower organizations to integrate AI seamlessly into their core business strategies." Includes Watchtower, a monitoring tool with built-in trust ops, being demoed to federal and commercial clients.

Key Wins & Partnerships:

• Project Maven: Additional funding for this flagship geospatial AI contract for the Department of Defense
• Wiz Partnership: Won first engagement with cloud security company Wiz (being acquired by Google) for CMS, establishing footprint in federal healthcare
• Workday Paradox: Selected as one of first partners approved to deploy Paradox, Workday's candidate experience AI agent
• Data Center Expansion: Partnering with a major hyperscaler to operationalize multiple data centers on "one of the largest AI data center campuses in the world"
• Elastic Partnership: Named Elastic's Top Services Partner of the Year; awarded additional DHS funding to deploy Elastic's AI capabilities

Forward Catalysts

• March 2026: Expected close of Quinnox acquisition; DOGE-related contract losses anniversary
• H1 2026: Everforth rebrand completion
• Q1 2026: First quarter with potential stabilization in y-y comparisons (guidance implies flat to +1.2%)
• H2 2026: Federal segment revenue growth expected as H1 awards convert
• 2026-2028: Management targets ~$1B in cumulative free cash flow; $80M in cost savings

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Data as of February 4, 2026. View the Q4 2025 earnings slides and full transcript for complete details.