Parsons Corporation reported third‑quarter 2025 results that showed a 10% year‑over‑year decline in revenue to $1.62 billion, driven largely by a $317 million drop in its Federal Solutions segment. Net income fell 11% to $64 million, and GAAP diluted earnings per share were $0.59, down from $0.65 a year earlier. Despite the revenue contraction, adjusted EBITDA fell 5% to $158 million but the margin expanded 60 basis points to 9.8% from 9.2%, reflecting stronger mix and cost discipline.
The Critical Infrastructure segment was the primary growth engine, reporting $1.12 billion in revenue—a 18% increase year‑over‑year that included 13% organic growth and contributions from the BCC and TRS acquisitions. Its adjusted EBITDA margin jumped 360 basis points to 10.3%, underscoring the high‑margin nature of the segment. In contrast, the Federal Solutions segment saw revenue fall 29% to $1.10 billion, with its adjusted EBITDA margin contracting 170 basis points to 9.2%. Excluding a confidential contract that reduced volume, the company’s core business grew 14% in revenue and 9% organically, and the Federal Solutions segment grew 9% in revenue and 5% organically.
Parsons revised its fiscal‑year 2025 revenue outlook to a narrower range of $6.4 billion to $6.5 billion, down from the previously stated $7.0 billion to $7.5 billion. The company reiterated its adjusted EBITDA guidance at $600 million to $630 million and maintained its cash‑flow outlook, signaling confidence in profitability despite the revenue shortfall. Management highlighted that, after removing the confidential contract, the remaining portfolio is expected to grow organically by 15% and that the company secured four contracts exceeding $100 million each during the quarter.
Chair, President and CEO Carey Smith said, “We are pleased with our third‑quarter results. We delivered double‑digit revenue growth in our core business, achieved 60 basis points of margin expansion, exceeded our cash‑flow expectation, and secured defense contracts in the Administration’s priority areas.” Smith added that the company’s “unique and synergistic critical infrastructure and Federal Solutions portfolio…is expected to drive mid‑single‑digit or better organic revenue growth, excluding the confidential contract for the foreseeable future.”
Analysts noted that the company beat adjusted earnings estimates by $0.11 to $0.14, with a $0.86 adjusted EPS versus consensus of $0.75–$0.76. The revenue miss of $50 million—$1.62 billion versus an estimate of $1.67 billion—was the primary driver of the initial market reaction. Despite the revenue shortfall, the margin expansion and strong backlog of $8.8 billion, with 72% funded, helped sustain positive analyst sentiment.
Parsons’ results highlight a resilient business model that can expand margins even amid revenue contraction. The company’s focus on software‑enabled capabilities, strategic acquisitions such as BCC and TRS, and a robust backlog position it to capture additional upside in the coming quarters. Headwinds include the impact of a confidential contract and potential delays in federal contract awards, while tailwinds stem from strong demand in the critical infrastructure market and continued government priorities in defense and infrastructure spending.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.