Everforth, Inc.

Second-quarter 2026 revenue exceeded $1 billion, with Commercial revenue of $701.7 million, down 0.9% year over year, and Federal Government revenue of $305.3 million, down 2.3% year over year. Gross margin was 28.3% overall, including 32.1% in Commercial and 19.6% in Federal; net income was $14.2 million, adjusted EBITDA was $96.7 million, and adjusted EBITDA margin was 9.6%. Free cash flow was $46.3 million, or 48% of adjusted EBITDA. For the third quarter of 2026, management guided to revenue of $994 million to $1.024 billion, net income of $14.5 million to $23 million, adjusted EBITDA of $95 million to $105 million, and adjusted EBITDA margin of 9.6% to 10.3%. Management also said Q3 includes $7.5 million to $9.5 million of strategic planning expenses, and reiterated a full-year free cash flow conversion target of 60% to 65% of adjusted EBITDA.

Ted Hanson said the quarter showed a meaningful acceleration in the business, driven by stronger commercial bookings, steadier staffing, and better-than-expected federal performance. He framed Everforth’s strategy around being a partner that helps enterprises operationalize AI at scale through domain expertise, platform alliances, governance, cybersecurity, and talent delivery. He also highlighted new internal AI tools and the evolution of AI Factory into TotalSight as evidence that the company is applying AI to its own operations and customer work.

Marie Perry emphasized that revenue and adjusted EBITDA both finished above the top end of guidance, with gross margin at 28.3% and adjusted EBITDA margin at 9.6%. She noted cash and cash equivalents of $152.9 million, about $180 million available on the revolver, net leverage of 3.1x, and the repurchase of 0.4 million shares for $11.5 million at an average price of $30.07. She also said the company repaid $23.9 million of debt during the quarter, completed a refinancing into a new 5-year $600 million facility, and remains focused on debt repayment first and then opportunistic buybacks, while targeting 60% to 65% free cash flow conversion for the full year.

Analysts focused on what changed quarter over quarter, the sustainability of the improvement, and whether momentum could carry through seasonality into Q4 and 2027. Management said the improvement was driven by stronger commercial bookings across the board, stabilization in staffing, and better federal execution, with commercial momentum expected to be the main driver of the Q3 guide. They also said enterprise platform conversion has returned toward historical norms, July was consistent with the rest of the quarter, and federal book-to-bill should improve over the next couple of quarters as submitted work awaiting award remains healthy.