Executive Summary

Q3 revenue beat and EPS mixed: GEO delivered revenue of $682.3M, above S&P Global consensus of $665.8M*, while “Primary EPS” of $0.25 missed $0.78*; GAAP diluted EPS was $1.24 driven by a $232.4M gain on asset divestitures (S&P consensus: [GetEstimates]).
Guidance reset lower near term: Q4 Adjusted EBITDA cut to $117–$127M from $132–$147M, and FY25 Adjusted EBITDA lowered to $455–$465M (from $465–$490M), while FY25 revenue raised to ~$2.6B (from ~$2.56B) reflecting added contracts and ramp .
Strategic wins intact: ISAP 5 two‑year contract award (effective Oct 1) and record ICE utilization underpin growth; management reiterated a path to ~$3B revenues in 2026 as facilities normalize and transport/monitoring scale .
Capital returns and deleveraging: Authorization lifted to $500M; repurchased 1.97M shares for $41.6M in Q3; net leverage ~3.2x; cash $184M and $143M revolver availability .
Stock catalysts: Near‑term guide cut (Q4 EBITDA) and litigation reserve weighed on earnings quality; medium‑term growth credibility supported by ISAP award, record ICE census, and $460M new annualized revenues under contract normalizing in 2026 .

What Went Well and What Went Wrong

What Went Well
- Record ICE utilization and contract momentum: “over $460 million in new incremental annualized revenues … largest amount of new business … in our Company’s history” and ICE census over 22,000 with capacity >26,000 beds .
- ISAP 5 win: Two‑year ISAP contract effective Oct 1; government assigned >$1B estimated value over two years; management expects favorable mix shift to higher‑intensity monitoring over time .
- Balance sheet/capital returns: Net leverage ~3.2x; buyback authorization increased to $500M; 1.97M shares repurchased for $41.6M in Q3 .
- Quote: “We could see a path to approximately $3 billion in annual revenues in 2026.” — CFO Mark Suchinski .
What Went Wrong
- EPS vs S&P consensus miss on “Primary EPS”: $0.25 vs $0.78* (S&P), despite GAAP EPS $1.24 aided by divestiture gain; adjusted profitability pressured by reduced ISAP pricing and start‑up costs (S&P consensus: [GetEstimates]).
- Q4 guide cut: Q4 Adjusted EBITDA lowered to $117–$127M (from $132–$147M), reflecting reduced ISAP pricing and Adelanto re‑opening costs (179 additional hires, overtime pending clearances) .
- Litigation reserve: Non‑cash contingent litigation reserve of ~$37.7M tied to Nwauzor v. GEO ruling (stayed pending Supreme Court appeal) weighed on reported results .

Financial Results

Quarterly trend – revenue, EPS (GAAP and adjusted), Adj. EBITDA, and margins (oldest → newest):

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	603.1	604.6	636.2	682.3
Diluted EPS (GAAP)	$0.19	$0.14	$0.21	$1.24
Adjusted Diluted EPS	$0.21	$0.14	$0.22	$0.25
Adjusted EBITDA ($M)	118.6	99.8	118.6	120.1
Adj. EBITDA Margin %	19.7% (calc: 118.6/603.1)	16.5% (calc: 99.8/604.6)	18.6% (calc: 118.6/636.2)	17.6% (calc: 120.1/682.3)

Q3 2025 vs S&P Global consensus (Primary EPS, Revenue):

Metric	Actual Q3 2025	S&P Consensus*	Surprise
Revenue ($M)	682.3	665.8* (S&P Global)	+$16.5M (+2.5%)
Primary EPS ($)	0.25	0.7825* (S&P Global)	-$0.53

Notes: Company also reported GAAP diluted EPS of $1.24 in Q3, boosted by a $232.4M gain on asset divestitures .
Asterisked estimate figures are from S&P Global (see Estimates Context).

Selected KPIs and balance sheet:

ISAP participants “more than 182,000”; contract pricing reduced but mix shifting toward higher‑intensity devices and case management .
ICE utilization and capacity: ICE capacity >26,000 beds; current census >22,000 (record) .
Share repurchases: 1.97M shares, $41.6M in Q3 .
Liquidity & leverage: Cash ~$184M; revolver availability ~$143M; net leverage ~3.2x; net debt ~$1.4B .

Segment color (YoY revenue change, Q3): owned & leased secure services +~22%; non‑residential +~10%; managed‑only +~8%; electronic monitoring and reentry largely unchanged .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	~$2.56B	~$2.6B	Raised
Adjusted EBITDA	FY 2025	$465–$490M	$455–$465M	Lowered
GAAP EPS (Diluted)	FY 2025	$1.99–$2.09	$1.81–$1.85	Lowered
Adjusted EPS (Diluted)	FY 2025	$0.84–$0.94	$0.84–$0.87	Narrowed (lower high end)
CapEx	FY 2025	$200–$210M	$200–$205M	Tightened lower
Revenue	Q4 2025	$658–$673M	$651–$676M	Range widened; midpoint slightly lower
Adjusted EBITDA	Q4 2025	$132–$147M	$117–$127M	Lowered
GAAP EPS (Diluted)	Q4 2025	n/a	$0.23–$0.27	New
Share Repurchase Authorization	n/a	$300M (8/6/25)	$500M (11/4/25)	Increased

Drivers: ISAP 5 lower unit pricing (mitigated in 2026 by cost actions), Adelanto restart staffing/overtime, and government shutdown timing impacts; FY revenue raised on contract activations, but EBITDA trimmed on near‑term costs .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025, Q2 2025)	Current Period (Q3 2025)	Trend
ISAP (ATD)	Q1: ISAP counts ~186k; preparing device inventory; expected extension/rebid . Q2: Stability through 2H25; potential growth late ’25/’26 .	ISAP 5 awarded for two years; reduced pricing; shift to higher‑intensity monitoring expected; ramp could begin early 2026; value >$1B .	Positive contract win; near‑term margin pressure; medium‑term mix tailwind
Detention capacity	Q1: Activations (Delaney, North Lake, D. Ray James, Adelanto); idle beds slate; funding path . Q2: Record ICE utilization; path to 100k beds; added transportation growth .	Record ICE census (>22k); 6,000 idle high‑security beds remain; government shutdown and staffing slow contract awards .	Demand strong; execution paced by government processes
Secure transportation	Q1: Investments; potential +$40–$50M under ICE Air . Q2: New 5‑year USMS contract; GTI growth .	Continued expansion for ICE/USMS; +$60M incremental annualized revenues in 2025 .	Expanding
Legal/regulatory	Q1: —	Non‑cash $37.7M litigation reserve (Nwauzor v. GEO) despite stay; appealing to Supreme Court .	Headwind/overhang
Capital allocation	Q1: Deleveraging and potential buybacks post Lawton sale . Q2: $300M buyback announced .	Auth increased to $500M; intent to lean in opportunistically; banks supportive .	More aggressive returns
Staffing/operations	Q1: Start‑up costs expected; hiring/training ramps . Q2: Start‑up costs muted margins .	Adelanto re‑opening drove 179 hires and overtime pending clearances; cost normalization expected 2026 .	Transitional costs now; normalization later

Management Commentary

“Since the beginning of 2025, we’ve entered into new or expanded contracts that represent over $460 million in new incremental annualized revenues … the largest amount of new business … in our Company’s history.” — George C. Zoley, Executive Chairman .
“We could see a path to approximately $3 billion in annual revenues in 2026.” — Mark Suchinski, CFO .
“Our updated [Q4] guidance … incorporates new reduced pricing [for ISAP 5] but anticipates a favorable shift in technology mix, higher intensity case management services and potential higher volumes …” — Press Release .
“We reduced our pricing … identifying staffing efficiencies … and development of less costly new generation monitoring devices, which also required margin compression.” — George C. Zoley .
“During the third quarter, we repurchased approximately 2 million shares … and our Board … increased [the] authorization to $500 million.” — George C. Zoley .

Q&A Highlights

Contract timing and shutdown: Management cited DHS contract approvals >$100k, government shutdown, and ICE staffing constraints as causes of slower‑than‑expected award timing, despite full facilities and high deportation throughput .
ISAP margin mix: Shift toward higher‑intensity ankle bracelets and case management is occurring; reduced pricing is being offset by cost actions, with benefits expected starting 2026 .
Q4 headwinds: Adelanto re‑opening required 179 hires and overtime pending clearances; expected to normalize in 2026 .
Buyback posture: Management views shares as “significantly undervalued,” intends to lean in opportunistically within covenant constraints .
ISAP ramp expectations: Growth likely after detention capacity scales; management optimistic ramp could begin early next year, though counts are at ICE’s discretion .

Estimates Context

Q3 2025 results vs S&P Global consensus: Revenue beat ($682.3M vs $665.8M*), while S&P “Primary EPS” missed ($0.25 vs $0.78*). Note the company’s GAAP diluted EPS was $1.24 due to a $232.4M asset sale gain; S&P’s “Primary EPS” aligns to adjusted/normalized EPS, not GAAP EPS (S&P consensus: [GetEstimates]).
Forward quarters: Q4 2025 consensus revenue $667.2M*, EPS $0.233*; Q1 2026 consensus revenue $694.3M*, EPS $0.243* (will likely be revisited post-guide cut and ISAP pricing changes) (S&P consensus: [GetEstimates]).

Asterisked estimate figures are from S&P Global.

Key Takeaways for Investors

Revenue engine intact; profitability timing reset: GEO’s revenue beat and raised FY revenue outlook reflect momentum from facility activations and ISAP award, but ISAP pricing reset and start‑up costs shifted EBITDA/adjusted EPS lower near term .
Near‑term guide reset likely drives consensus revisions (Q4 Adj. EBITDA cut); expect estimate dispersion until ISAP mix shift and cost actions flow through in 2026 (watch February guidance) .
Medium‑term growth credible: Record ICE census, 6,000 idle high‑security beds, expanded transportation, and ISAP 5 support management’s ~$3B 2026 revenue path as contracts normalize .
Balance sheet improving supports buybacks: Net leverage ~3.2x and expanded $500M authorization enable opportunistic repurchases alongside growth capex and continued deleveraging .
Legal/regulatory overhang: Nwauzor reserve introduces uncertainty (albeit non‑cash); Supreme Court appeal outcome is a watch item .
Trading setup: Q4 guide cut and EPS miss (on S&P “Primary EPS”) may weigh near term; catalysts include ISAP mix/cost execution, additional contract awards post‑shutdown, and 2026 normalization trajectory updates .

References:

Q3 2025 press release and 8‑K furnishing .
Q3 2025 earnings call transcript .
ISAP 5 award press release (9/30/25) .
Lawton facility sale (7/28/25) .
Q2 2025 results and call .
Q1 2025 results and call .
S&P Global estimates (Q3–Q1’26): Primary EPS, Revenue (GetEstimates).

GEO GROUP INC (GEO)·Q3 2025 Earnings Summary