Skip to content
    EFOR
    Earnings call· Jun 2026(Q2 FY26)

    Everforth Q2 FY26 earnings call EFOR

    Jul 29, 2026 Source

    Executive summary

    Everforth Q2 FY26 — Strong Commercial Bookings and AI-Driven Demand

    Everforth delivered solid Q2 FY26 results, driven by strong commercial bookings and increasing demand for AI operationalization across both commercial and federal markets. The company is leveraging its deep industry expertise, alliance partnerships, and cybersecurity qualifications to help clients deploy AI securely and efficiently. Management is focused on debt repayment post-acquisition and expects continued momentum into the second half of the year, with a broad-based recovery noted across commercial verticals.

    Highlights

    5

    • Revenues exceeded $1 billion and were above the high end of guidance.

    • Adjusted EBITDA margin of 9.6% also surpassed the high end of guidance.

    • Commercial consulting bookings grew double digits year-over-year.

    • Workday bookings exceeded expectations and helped drive book-to-bill up to 1.2x on a trailing 12-month basis.

    • All 5 commercial industry verticals showed sequential growth from Q1 FY26.

    Concerns

    5

    • Commercial segment revenues decreased 0.9% year-over-year.

    • Federal Government segment revenues decreased 2.3% year-over-year.

    • Federal contract book-to-bill was 0.8x on a trailing 12-month basis.

    • Net leverage ratio was 3.1x at quarter end, above the target of 2.5x or below.

    • Strategic planning expenses were $9.8 million in Q2 FY26, with $7.5 million to $9.5 million guided for Q3 FY26.

    Guidance & targets

    7
    CategoryTargetConfidence
    Q3 FY26 Revenue
    $994 million to $1.024 billion
    high materiality
    High
    Q3 FY26 Net Income
    $14.5 million to $23 million
    medium materiality
    High
    Q3 FY26 Adjusted EBITDA
    $95 million to $105 million
    high materiality
    High
    Q3 FY26 Adjusted EBITDA Margin
    9.6% to 10.3%
    high materiality
    High
    Full-year Free Cash Flow Conversion Rate
    60% to 65%
    medium materiality
    High
    Net Leverage Ratio
    2.5x or below
    high materiality
    High
    Strategic Planning Expenses
    $7.5 million to $9.5 million
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Commercial
    Revenues were driven by demand in application and engineering, cloud and infrastructure, and data and AI solutions. All five commercial industry verticals showed sequential growth. The enterprise platform business, particularly Workday, saw accelerated bookings.
    Commercial consulting bookings grew double digits year-over-yearWorkday bookings exceeded expectationsBook-to-bill of 1.2x on a trailing 12-month basis
    		$701.7 million-0.9%—32.1% gross margin
    Federal Government
    Sequential revenue growth was supported by momentum in cybersecurity work for DHS and data and AI contracts with the Navy. National Security customers showed mid-single-digit growth year-over-year and low double-digit growth sequentially.
    New contract awards totaled $169.3 millionBook-to-bill of 0.8x on a trailing 12-month basisFederal contract backlog was approximately $2.7 billionCoverage ratio of 2.3x the segment's trailing 12-month revenues
    		$305.3 million-2.3%—19.6% gross margin

    Operational metrics

    20
    Adjusted EBITDA
    $96.7 millionabove guidance range
    Q2 FY26

    Reported for the second quarter.

    Adjusted EBITDA margin
    9.6%above guidance range
    Q2 FY26

    Reported for the second quarter.

    Net income
    $14.2 million
    Q2 FY26

    Reported for the second quarter.

    SG&A
    $226.2 millioncompared to $216.8 million in Q2 FY25
    Q2 FY26

    Selling, General & Administrative expenses.

    Cash and investments balance
    $152.9 million
    Q2 FY26 end

    Cash and cash equivalents at quarter end.

    Available on senior secured revolver
    $180 million
    Q2 FY26 end

    Amount available on the company's senior secured revolver.

    Debt repaid
    $23.9 million
    Q2 FY26

    Amount of debt repaid during the second quarter.

    Net leverage ratio
    3.1x
    Q2 FY26 end

    Net leverage ratio at the end of the quarter.

    Free cash flow conversion to adjusted EBITDA
    48%
    Q2 FY26

    Free cash flow as a percentage of adjusted EBITDA.

    Shares repurchased
    0.4 million
    Q2 FY26

    Number of shares repurchased during the quarter.

    Average share price for repurchase
    $30.07
    Q2 FY26

    Average price paid for shares repurchased.

    Remaining share repurchase authorization
    $923 million
    Q2 FY26 end

    Amount remaining under the share repurchase authorization.

    Strategic planning expenses
    $9.8 milliondeclined from $12.8 million in Q1 FY26
    Q2 FY26

    Expenses related to the Next Wave Growth strategy.

    Quinnox gross margins
    40% or a little higher
    Q2 FY26

    Gross margins for Quinnox and similar business areas.

    Quinnox EBITDA margins
    high teens to 20%
    Q2 FY26

    EBITDA margins for Quinnox and similar business areas.

    AI-enabled alert-triage capability impact
    substantially reduce false positive alerts
    Q2 FY26

    Proprietary tool using machine learning models to optimize complex operations.

    AI hackathon accelerators developed
    11
    June FY26

    Result of Everforth's first AI hackathon.

    Agentic platform for digital employees development time reduction
    nearly 20%
    Q2 FY26

    One of the accelerators from the AI hackathon, reducing wasted development time.

    Internal talent delivery agent support
    supported publication of thousands of commercial job postings
    May FY26

    Agent assisted recruiters by generating comprehensive job-fit profiles.

    Internal sales agent support
    supporting hundreds of sales professionals
    June FY26

    Teams leverage for CRM automation, meeting preparation, account intelligence, and AI-driven recommendations.

    Industry KPIs

    2
    MetricValueDetails
    Rpo current rpo$2.7 billionUSD
    Bookings tcv book to bill1.2xx

    Orderbook & backlog

    4
    Commercial book-to-bill1.2xQ2 FY26 end

    Trailing 12-month basis

    Federal new contract awards$169.3 millionQ2 FY26
    Federal book-to-bill0.8xQ2 FY26 end

    Trailing 12-month basis

    Federal contract backlog$2.7 billionQ2 FY26 end

    Coverage ratio of 2.3x the segment's trailing 12-month revenues

    Product announcements

    2
    ProductTypeDetails
    TotalSightlaunch
    AgentBloclaunch

    Deals & partnerships

    6
    QuinnoxIntegration into the Commercial segment, aligning go-to-market approach, and showing early momentum in application modernization, data and AI, and cloud services. Quinnox adds enterprise platform and complex engineering expertise, global delivery scale, and proprietary accelerators.

    The integration of Quinnox into Everforth's Commercial segment is progressing well, contributing to revenue synergies and enhancing capabilities.

    Global HyperscalerContract to provide network services for a new AI data center currently under construction.

    Everforth was awarded a contract by a global hyperscaler in Q2 FY26.

    Army (Nautilus Program)Research and engineering contract to accelerate the Department of War's development, testing, and operational integration of advanced AI capabilities. Everforth is the prime contractor.

    Everforth's Federal Government segment secured this contract in Q2 FY26, applying expertise in AI development, software engineering, cybersecurity, and AI field testing.

    Navy (Harbinger Program)Supporting the Navy by training and optimizing AI-enabled sonar models for undersea detection, indications, and warnings. Designing and building mission partner environments for multinational collaboration.

    Everforth's team of data and AI experts are demonstrating differentiated expertise in secure mission systems and data engineering.

    Army (Endpoint Security Solution Program)New award under flagship cybersecurity program to ready the Army and Department of War for post-quantum cryptography (PQC).

    This award builds on Everforth's work enabling the Army to automate and report cybersecurity compliance.

    One of the largest retail brokerage platforms in the U.S.Delivering a unified end-to-end cybersecurity transformation, modernizing security operations, and preparing the brokerage for PQC. This involves automating and centralizing encryption and digital security.

    What began as an initial assessment has grown into a broader transformation, enhancing operations with agentic AI.

    Capital programs

    1
    Revolver Refinancing and Upsizingcompleted$600 million

    Benefit: Extended maturity date by 3 years

    Successfully completed subsequent to quarter end, replacing the existing revolver and $100 million Term Loan A with a new 5-year facility. The new facility is leverage neutral at 3.1x post close.

    Risks & headwinds

    5
    Net leverage ratioQ2 FY26

    3.1x at quarter end

    Mitigation: Committed to bringing net leverage closer to 2.5x or below, with focus on debt repayment.

    Strategic planning expensesQ2 FY26, Q3 FY26, declining over coming quarters

    $9.8 million in Q2 FY26, $7.5 million to $9.5 million guided for Q3 FY26

    Mitigation: Expected to decline over coming quarters, part of initiatives to generate structural cost savings.

    Commercial segment revenue declineQ2 FY26

    -0.9% YoY

    Mitigation: Expecting to move to year-over-year growth during Q3 and in Q4 FY26.

    Federal Government segment revenue declineQ2 FY26

    -2.3% YoY

    Mitigation: Expecting revenue acceleration in Q4 FY26 and into 2027, with improved book-to-bill over next couple of quarters.

    Gross margin compression on commercial sideQ2 FY26

    Attributed to perm and FX (Mexico delivery center and peso)

    Mitigation: Implied by overall positive outlook and expected growth, with higher-margin Quinnox integration.

    What to watch in Q3 FY26

    5

    Commercial segment year-over-year revenue growth

    During Q3 FY26 and into Q4 FY26
    Current-0.9% YoY
    TargetPositive year-over-year growth

    Why it matters

    Indicates sustained recovery and momentum in the core commercial business.

    So we're moving to year-over-year growth. I don't know if we'll get all the way there for the quarter, Mark. But certainly, during the quarter, we're moving to year-over-year growth and would expect to be there in the fourth quarter for sure.

    Q&A highlights

    8

    What has changed over the past three months to improve performance, and how sustainable are these changes?

    The company saw a meaningful acceleration in commercial bookings, particularly Workday, and stability in the staffing business. The Federal segment also exceeded expectations, driven by DHS cybersecurity work. The recovery is broad-based, with all five commercial industries showing sequential growth.

    “I mean, look, I think that we saw a meaningful acceleration in the business during the quarter that starts with bookings. You can see on the commercial side for sure that we've had a better than we anticipated quarter in commercial bookings. That was we called it out for Workday, but that was really across the board in commercial.”

    asked by Jeff Silber · answered by Theodore Hanson

    3 min read6 chapters

    Detailed Narrative

    01

    AI Operationalization and Differentiators

    Everforth is observing a significant market shift from AI experimentation to practical deployment, with clients prioritizing secure, efficient, and outcome-driven AI implementations. The company positions itself uniquely with four strategic advantages: deep industry domain expertise, robust alliance partnerships (including Salesforce, ServiceNow, and Workday), extensive governance and cybersecurity qualifications, and a proven ability to rapidly source specialized talent. These differentiators enable Everforth to address the complex bottlenecks of enterprise AI adoption, which often involve redesigning workflows and integrating AI into legacy systems.

    02

    Quinnox Integration and Synergy

    The integration of Quinnox into Everforth's Commercial segment is progressing ahead of schedule, demonstrating early momentum in key areas such as application modernization, data and AI, and cloud services. Quinnox contributes specialized expertise in enterprise platforms and complex engineering, global delivery capabilities, and proprietary accelerators. This strategic acquisition is expected to generate significant revenue synergies by combining Everforth's established client relationships and industry knowledge with Quinnox's technical depth and scale, particularly in approaching Global Capability Centers (GCCs).

    03

    Enterprise Platform Performance and AI Integration

    The enterprise platform business experienced a strong rebound in Q2 FY26, with Workday bookings notably exceeding expectations and overall pipeline build and conversion returning to historical norms. Everforth is actively embedding AI into its delivery of enterprise software solutions, exemplified by the launch of AgentBloc. This platform integrates AI-powered capabilities into the proprietary SmartLoader data conversion and delivery automation platform, aiming to reduce build times and test cycles for Workday implementations, thereby enhancing efficiency and client satisfaction.

    04

    Federal Segment Strategic Focus and Growth

    The Federal Government segment achieved sequential growth in Q2 FY26, primarily driven by cybersecurity work for the Department of Homeland Security and data and AI contracts with the Navy. Management has implemented a strategic reorganization, including new leadership and a more focused bidding approach, to improve the segment's book-to-bill ratio and ensure more predictable revenue growth. Submitted bids awaiting award numbers have materially increased, indicating a positive trajectory for future contract wins and sustained growth into FY27.

    05

    Internal AI Adoption and TotalSight Platform Launch

    Everforth is leading by example through the internal adoption of AI to enhance its own operations and delivery models. Key initiatives include the launch of an internal talent delivery agent in May, which has supported thousands of job postings and generated job-fit profiles for over 100,000 candidates, and a sales agent launched in June to assist sales professionals with CRM automation and account intelligence. Furthermore, the company introduced TotalSight, an enterprise AI operating platform, designed to provide customers with a secure and repeatable path from concept to production-ready AI, addressing critical governance and security challenges in AI lifecycle management.

    06

    Strategic Investments and Cost Savings Initiatives

    The company is undertaking strategic upfront investments as part of its 'Next Wave Growth' strategy, with these expenses showing a declining trend from $12.8 million in Q1 FY26 to $9.8 million in Q2 FY26, and a guided range of $7.5 million to $9.5 million for Q3 FY26. These investments are complemented by targeted initiatives aimed at generating meaningful structural cost savings across the business. Management expects these efforts to continue progressing as planned, contributing to overall financial efficiency.

    AI-generated summary of the company’s earnings call. Not investment advice.