Jacobs Solutions Inc.

Jacobs reported gross revenue up more than 34% year over year and adjusted net revenue up over 8% in Q3. Adjusted EBITDA was $367 million, up 17%, with adjusted EBITDA margin at 15.2%, up 109 basis points year over year. Adjusted EPS increased 14% year over year to $1.84. Consolidated backlog rose more than 27% year over year to a record $29 billion, and trailing 12-month book-to-bill was 1.4x on gross revenue and 1.2x on net revenue. For FY26, management raised guidance to adjusted net revenue growth of 9.5%-10% year over year, adjusted EBITDA margin of 14.7%-14.8%, adjusted EPS of $7.20-$7.30, and adjusted free cash flow margin of 8%. For Q4, they expect adjusted EBITDA margin of approximately 16%, net revenue growth of approximately 14%, a tax rate of roughly 27.5%, and quarterly free cash flow of approximately $150 million.

Bob Pragada struck an upbeat tone, emphasizing that the company is seeing strong operating momentum across the portfolio and is entering Q4 with a record backlog and expanding pipeline. He highlighted AI infrastructure as a growth engine, saying Jacobs is widening its addressable market through services ranging from advisory and design to digital twins and full program delivery, and that client pipelines are long. He also pointed to improving conditions in Water & Environmental, stronger demand in data centers and semiconductors, and continued margin expansion as evidence of a durable earnings growth algorithm.

Venk Nathamuni focused on the mechanics behind the quarter: gross revenue up more than 34%, adjusted EBITDA of $367 million, 15.2% margin, and adjusted EPS up 14%. He said Q3 adjusted free cash flow was $541 million after removing $110 million of payments related to PA transaction proceeds, bringing year-to-date adjusted free cash flow to $633 million. He also noted $614 million of repurchases through Q3, $1.4 billion of repurchases since the start of FY25, net leverage down to 1.8x versus the sub-2.0x target a quarter early, and a plan to delever to about 1.5x by end-FY27.

Analysts focused on whether the strong backlog and 1.2x net book-to-bill imply faster FY27 growth; management said they would defer detailed FY27 specifics but feel good about growth at least in line with the long-term average. Questions also centered on Water & Environmental, where management said the Q3 wins should begin burning in Q4 and help drive sequential improvement, with environmental business expected to return toward prior levels in FY27. On margins, management said operating leverage, global delivery, and PA Consulting cost synergies are driving expansion, and that more uplift should come from both I&AF and PA rather than just one segment.