JACOBS SOLUTIONS (J)·Q1 2026 Earnings Summary
Jacobs Beats on EPS, Raises Guidance as Backlog Hits Record $26B
February 3, 2026 · by Fintool AI Agent
Jacobs Solutions (J) delivered a strong start to fiscal 2026 with adjusted EPS of $1.53, up 15% year-over-year, driven by robust revenue growth and record bookings. The company raised its full-year outlook after a book-to-bill of 2.0x pushed backlog to an all-time high of $26.3 billion. Despite the strong results, shares fell 2.9% to $132.91 during the session before recovering in after-hours trading.
Did Jacobs Beat Earnings?
Yes. Jacobs beat on both revenue and earnings:
This marks the eighth consecutive quarter of EPS beats for Jacobs. The company's track record of execution continues to build management credibility.
Beat/Miss History (Last 8 Quarters):
Ask Fintool AI AgentWhat Did Management Guide?
Jacobs raised its full-year FY2026 guidance on improved visibility from record backlog:
Key assumptions for FY2026:
- Diluted share count: ~118M
- Net interest expense: $95-105M
- Adjusted effective tax rate: 25.5-27.0%
- CapEx: ~1% of revenue
The guidance raise is notable given Q1 is typically the seasonally weakest quarter. Management's confidence stems from the record $26.3B backlog and strong pipeline conversion across data centers, life sciences, and water sectors.
What Changed From Last Quarter?
Several key developments stand out from Q4 2025:
1. Book-to-Bill Surged to 2.0x The Q1 book-to-bill of 2.0x is exceptional—nearly double the typical run rate—driving backlog up 21% YoY to a record $26.3B. This compares to 1.1x TTM book-to-bill last quarter.
2. Life Sciences & Advanced Manufacturing Accelerated Revenue in this end market surged 31.3% YoY in Q1 2026, a significant acceleration from ~5% growth in Q4 2025. Data center demand continues driving this segment.
3. PA Consulting Delivered Strong Margins PA Consulting posted 24.0% operating margin in Q1, up from 22.6% in Q4 2025. Revenue grew 27.2% YoY (22.2% constant currency). The company expects to finalize its plans to acquire the remaining stake in PA by March 2026.
4. Cash Flow Remained Robust Q1 cash flow from operations was $381M with free cash flow of $365M—a strong start to the year versus typical Q1 seasonality.
5. Dividend Increased 12.5% Quarterly dividend raised to $0.36 per share from $0.32, signaling management confidence.
How Did the Stock React?
Jacobs shares fell 2.9% on earnings day despite the beat:
Why the sell-off?
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Q1 margins lagged full-year targets: Q1 EBITDA margin of 13.4% trails the FY26 target of 14.4-14.7%. Management has historically guided that Q1 is seasonally weakest due to fringe costs like health insurance that reset at the start of the fiscal year.
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PA Consulting overhang: Uncertainty around the structure and financing of the remaining PA Consulting stake acquisition (expected resolution by March 2026) may be weighing on sentiment.
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Valuation stretched: At ~17x forward P/E, Jacobs trades at a premium to E&C peers, requiring continued execution.
Ask Fintool AI AgentSegment Performance
Infrastructure & Advanced Facilities (I&AF)
End Market Performance:
Data center and semiconductor projects are driving life sciences & advanced manufacturing growth. Management noted data center pipeline is up 5x and the business could grow to match life sciences scale "in a few years."
Notable Q1 Project Wins:
- Hut 8 River Bend Data Center (Louisiana): Engineering, procurement, and program management for one of North America's largest AI/HPC facilities
- Cleveland Hopkins International Airport: $1.6B modernization program management
- Bolivar Roads Gate System (Texas): One of the world's largest storm surge barriers, protecting 6M+ people along the Houston Ship Channel
- UK Health Security Agency: Delivery partner for critical health data infrastructure and cybersecurity (PA Consulting-led)
PA Consulting
PA continues to outperform with double-digit revenue growth and expanding margins. Demand from public sector and national security clients remains strong.
Balance Sheet and Capital Allocation
Jacobs maintains a conservative balance sheet with net leverage well below the 1.0-1.5x target range. This provides flexibility for the potential PA Consulting acquisition and continued share repurchases. The company returned ~150% of FCF to shareholders in FY2025 through buybacks and dividends.
Key Catalysts to Watch
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PA Consulting Transaction: Acquiring remaining 40% stake for ~$1.6B at 13x EBITDA (12.3x post-synergies). Expected accretive in Year 1 with $16-20M cost synergies. Closes by Q2 2026 results.
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Data Center Pipeline: 5x pipeline growth could accelerate revenue if projects convert.
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Semiconductor Ramp: New semiconductor fab projects ramping, with U.S. pipeline up 20%.
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Q4 Extra Week: FY2026 Q4 includes an extra week, adding ~1.5 points to revenue growth.
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Middle East Mega-Projects: New Mukaab, Expo 2030, Etihad Rail providing growth runway.
Ask Fintool AI AgentQ&A Highlights
The earnings call Q&A revealed several key insights from management:
Pipeline Growth by End Market: CEO Bob Pragada provided granular pipeline metrics with a 12-18 month visibility window:
- Life Sciences & Advanced Manufacturing: Up 50%+ (data centers and semiconductors driving momentum)
- Water & Environmental: Up 25%+ (resilience demand, aged assets, climate effects)
- Critical Infrastructure: Up high-single to low-double digits (aviation and rail leading)
Environmental Services Recovery: Management outlined three drivers for expected H2 improvement:
- DoD programs returning: Large Navy and Army Corps of Engineers programs coming through pipeline
- Disaster relief transition: Federal-to-state transfer settling, early pipeline indications positive
- Private sector pickup: Industrial and life sciences environmental work growing (pipeline up double digits)
Semiconductor Acceleration: Pragada confirmed acceleration in memory manufacturing, particularly high-bandwidth memory (HBM):
"What took 20 years during the traditional DRAM cycle to advance nodes is now being shortened into 2-3 years. And we're squarely in the middle of those programs in Idaho and New York."
AI and Digital Platforms: Management highlighted three AI-driven platforms driving competitive advantage:
- Acuity: Predictive analytics deployed across all end markets for field-level issues
- Replica: Digital twinning now expanded from water to manufacturing and data centers
- Data insights: Enabling faster, more complex solutions for clients
PA Consulting Margin Sustainability: CFO Venk Nathamuni clarified long-term margin expectations:
"A 22% margin is kind of the way we think about the long-term model there. We want a good balance between high revenue growth and industry-leading margins."
Risk Profile Unchanged: On EPCM risk management for larger projects, Pragada emphasized consistency:
"Our risk profile has not changed. The same EPCM delivery model we've been focused on for 20 years in life sciences and water—those are the same risk profiles we're taking now."
Bottom Line
Jacobs delivered another solid quarter with beats on revenue and EPS, record backlog, and raised guidance. The 2.0x book-to-bill is particularly impressive and provides visibility into sustained growth. While Q1 margins lagged annual targets (typical seasonality) and the PA Consulting transaction creates near-term uncertainty, the fundamental story remains intact. The sell-off on earnings day may present an opportunity for investors who believe in the multi-year secular tailwinds in data centers, water infrastructure, and transportation.
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