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JACOBS SOLUTIONS INC. (J)·Q2 2025 Earnings Summary

Executive Summary

  • Adjusted EPS beat; revenue modest miss. Q2 2025 adjusted EPS rose 22% y/y to $1.43 vs S&P Global consensus $1.38; revenue was $2.91B, below consensus $3.00B, as a JV legal reserve and FX weighed on growth . Consensus values marked with an asterisk are from S&P Global. *
  • Backlog reached a record $22.2B (+20% y/y) with TTM book-to-bill 1.3x; Q2 book-to-bill was 1.1x. Management expects sequential growth in 2H, underpinned by backlog quality and mix .
  • Guidance reaffirmed: FY25 adjusted net revenue mid-to-high single-digit growth, adjusted EBITDA margin 13.8–14.0%, adjusted EPS $5.85–$6.20, and reported FCF conversion >100%; Q3 revenue growth expected at 5–7% y/y and adjusted EBITDA margin “approach 14%” .
  • Capital allocation remains a catalyst: $351M buybacks in Q2 ($552M YTD), $312M debt retired via equity-for-debt exchange, and Board-approved May 30 distribution of remaining Amentum (AMTM) shares; quarterly dividend maintained at $0.32/share .

What Went Well and What Went Wrong

  • What Went Well

    • EPS quality and margin execution: Adjusted EPS +22% y/y to $1.43; adjusted EBITDA grew to $287M, with adjusted EBITDA margin at 13.4% (+62 bps y/y), despite JV headwind and FX drag .
    • Backlog and bookings momentum: Backlog $22.2B (+20% y/y), TTM book-to-bill 1.3x; gross profit in backlog +15% y/y, signaling durable forward profit mix .
    • PA Consulting re-acceleration: Revenue growth inflected to ~5% with operating profit +12% y/y and ~22% margin; UK public sector improving while US PA up ~15% y/y .
    • Quote: “We delivered strong second quarter results… good year-over-year growth in adjusted EBITDA, adjusted EBITDA margin and adjusted EPS.” – CFO Venk Nathamuni .

  • What Went Wrong

    • Revenue miss: GAAP revenue $2.91B vs S&P Global consensus $3.00B, impacted by an unfavorable interim JV ruling (reserve) and FX; the reserve fully hit revenue/operating profit due to consolidation *.
    • JV legal matter: 50/50 consolidated JV reserve reduced revenue and OP; while NCI captures partner share, visibility limited due to legal sensitivity; management believes it is “appropriately reserved” .
    • GAAP volatility from AMTM stake: $109.5M mark-to-market loss on Amentum reduced GAAP EPS to $0.10; non-operating, but adds earnings noise .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Billions)$2.848 $2.933 $2.910
Adjusted Net Revenue ($USD Billions)$2.074 $2.082 $2.139
GAAP Diluted EPS – Continuing Ops$0.73 ($0.10) $0.10
Adjusted EPS – Continuing Ops$1.17 $1.33 $1.43
Adjusted EBITDA ($USD Millions)$264.984 $282.114 $286.571
Adjusted EBITDA Margin % (Adj. EBITDA/Adj. Net Rev.)12.8% 13.5% 13.4%
Book-to-Bill (Quarter; TTM)n/a; 1.3x 1.0x; 1.3x 1.1x; 1.3x

Segment breakdown (Revenue and Operating Profit):

SegmentQ2 2024 Revenue ($B)Q2 2025 Revenue ($B)Q2 2024 Op Profit ($M)Q2 2025 Op Profit ($M)
Infrastructure & Advanced Facilities (I&AF)$2.553 $2.603 $204.101 $203.265
PA Consulting$0.294 $0.308 $60.169 $67.347
Total$2.847 $2.910 $264.270 $270.612

Key KPIs:

KPIQ2 2024Q1 2025Q2 2025
Backlog ($B)$18.474 $21.815 $22.160
Adjusted EBITDA Margin %12.8% 13.5% 13.4%
Cash from Ops ($M)$(42.8) $107.5 $(96.4)
Share Repurchases ($M)$95.4 (Q2’24) $201.6 $350.8

Performance vs S&P Global Consensus (Q2 2025):

MetricConsensusActualSurprise
Revenue ($B)$3.0017*$2.910 Miss (~$0.09B)
Primary EPS ($)$1.3811*$1.43 Beat (+$0.05)

Values marked with an asterisk (*) are from S&P Global.

Drivers/notes:

  • JV reserve (50/50 consolidated JV) primarily impacted I&AF revenue and segment OP; NCI captures partner share, so EBITDA/EPS impact ≈ half of revenue hit .
  • FX was a Q2 headwind (~80 bps to growth); could become a tailwind in Q3 if rates hold .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Net Revenue GrowthFY25Mid-to-high single digits Mid-to-high single digits Maintained
Adjusted EBITDA MarginFY2513.8%–14.0% 13.8%–14.0% Maintained
Adjusted EPSFY25$5.85–$6.20 (raised in Q1) $5.85–$6.20 reaffirmed Maintained
Reported FCF ConversionFY25>100% of net income >100% of net income Maintained
Revenue GrowthQ3 FY25n/a+5% to +7% y/y New detail
Adjusted EBITDA MarginQ3 FY25n/a“Approach 14%” New detail
DividendOngoing$0.32/quarter (raised Q1) $0.32 declared Apr 30 (payable Jun 20) Maintained
Amentum (AMTM) SharesDistributionIntend to distribute post-adjustment shares Board-approved distribution May 30 Executing

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
AI/Data Centers & Advanced ComputeAI data center opportunity expanding; semis customer base broadening Selected as owner’s engineer for utility-scale quantum facility (PsiQuantum) in Australia; continued double-digit data center growth Strengthening
Water & EnvironmentalDouble-digit growth across geographies; large wins (e.g., LA reuse) Strong demand; notable PFAS projects (Boynton Beach); HRSD OT-cyber award; pipeline growing double digits Sustained strength
Life SciencesRobust LS pipeline; GLP‑1, mAbs, ADCs; strong backlog LS growth drivers include Merck’s $1B oncology facility; LS and data centers leading I&AF growth Sustained strength
SemiconductorsSofter in Q1 with improvement expected H2 HBM/international semi work ramping in 2H Improving
Supply Chain/TariffsMonitoring FX/tariffs; conservative FX view Clients seeking value engineering & supply-chain scenario planning amid tariff risk; advisory opportunity for PA Advisory tailwind
Macro/Policy (DOGE/DoD)~<10% US federal exposure; largely DoD infra DOGE impact de minimis; DoD infra demand resuming post-pauses Stabilizing
Regional TrendsMiddle East tailwinds; UK/Europe improvement; ANZ transportation Middle East & India strong; UK transportation/water steady; US net service revenue growing Broad-based growth
Regulatory/Legal—Consolidated JV unfavorable interim ruling; reserve recorded; >97% complete, appropriately reserved One-off, contained

Management Commentary

  • “Adjusted net revenue rose over 3% in Q2… Adjusted EBITDA for Q2 was $287 million… Q2 adjusted EPS was $1.43… Backlog up 20% year‑over‑year… We are currently forecasting sequential growth in our second half results.” – CEO Bob Pragada .
  • “The full amount of the [JV] reserve was taken against revenue… the JV partner’s allocable portion is included in noncontrolling interest. Therefore, the impact on EBITDA and EPS is half of the impact on revenue.” – CFO Venk Nathamuni .
  • “We returned a record amount of capital… repurchasing $351 million in shares in Q2… reduced outstanding debt by $312 million [equity-for-debt]… will distribute the Amentum shares… at the end of this month.” – CFO .
  • “We are reaffirming our full-year fiscal 2025 guidance.” – CEO .

Q&A Highlights

  • Backlog vs revenue growth: Backlog is longer-duration; majority of 2H revenue already in backlog; procurement cycles a bit longer but no broad cancellations .
  • JV matter: Legal sensitivity limits details; project >97% complete; reserve believed appropriate; event is atypical relative to Jacobs’ risk profile .
  • Margins/utilization: Q3 adjusted EBITDA margin targeted near 14%; utilization improved post-holidays; multiple levers (mix, global delivery, operating leverage) support expansion .
  • FX/FCF cadence: FX was a Q2 headwind (~80 bps) and may be a Q3 tailwind; FCF expected to step up meaningfully in Q3, not solely back-half loaded .
  • Regional color: Middle East/India strong runway; UK steady; US net service revenue growing; PA US up ~15% y/y .

Estimates Context

  • Q2 2025 revenue: $2.910B vs S&P Global consensus $3.0017B* (miss); Primary EPS (adjusted): $1.43 vs $1.3811* (beat). Management cited JV legal reserve and FX as drivers of top-line shortfall while margin execution supported EPS beat *.
  • Prior quarter trend: Q1 2025 adjusted EPS $1.33 vs consensus $1.2578* (beat); revenue $2.933B vs $2.9188B* (slight beat) *.
  • Implication: Consensus EPS likely drifts up modestly on stronger margin trajectory and reaffirmed guide; revenue estimates may reflect backlog burn and Q3 acceleration (5–7% y/y).

Values marked with an asterisk (*) are from S&P Global.

Key Takeaways for Investors

  • Quality beat on EPS despite revenue miss; margin levers and PA reacceleration underpin FY25 EPS guidance reaffirmation .
  • Backlog growth (+20% y/y) and higher gross profit in backlog (+15% y/y) support 2H sequential growth and improving margin mix; book-to-bill robust at 1.3x TTM .
  • One-off JV reserve created optical revenue headwind; NCI mitigates EBITDA/EPS impact; risk viewed as contained with project near completion .
  • Capital returns are substantial and ongoing (buybacks, dividend); distribution of AMTM shares on May 30 adds incremental shareholder value; balance sheet strengthened via debt reduction/refi .
  • Watch Q3 setup: management guides 5–7% y/y revenue growth and near-14% adjusted EBITDA margin; potential FX tailwind could help .
  • End-market validation: Water, Life Sciences, Energy & Power, and Data Centers remain strong; PA Consulting momentum improving with UK public sector and US growth .
  • Near-term risk monitor: FX volatility; pacing of backlog burn into 2H; any incremental developments on JV matter (though reserved) .

Values marked with an asterisk (*) are from S&P Global.