Maximus Reports Fiscal Year 2026 First Quarter Results
TYSONS, Va.--( BUSINESS WIRE)-- Maximus (NYSE: MMS), a leading provider of government services, reported financial results for the three months ended December 31, 2025.
"Our first quarter results reflect resilient execution and a portfolio focused on essential government programs." - Bruce Caswell, President and Chief Executive Officer, Maximus
Highlights for the first quarter of fiscal year 2026 include:
"Our first quarter results reflect resilient execution and a portfolio focused on essential government programs. With a strong pipeline, expanding opportunities related to the Working Families Tax Cut Act, and continued progress in technology-enabled service delivery, we remain focused on delivering high-quality services for our government partners and the communities they serve," said Bruce Caswell, President and Chief Executive Officer.
Caswell continued, "We are expanding the use of automation, including AI, to augment how work is done, enhance citizen experience, and support productivity and margins. We are deploying these capabilities in production and expect them to contribute to improved outcomes and program performance over time."
First Quarter Results
Revenue for the first quarter of fiscal year 2026 decreased 4.1% to $1.35 billion, compared to $1.40 billion for the prior year period. Divestiture-related activity contributed to approximately 1.5% of the decline, and organic movements were primarily responsible for the remainder. These results were consistent with our expectations entering the quarter.
For the first quarter of fiscal year 2026, operating margin was 10.9% and adjusted EBITDA margin was 12.7%. This compares to margins of 6.2% and 11.2%, respectively, for the prior year period. Diluted earnings per share were $1.70, and adjusted diluted earnings per share were $1.85. This compares to $0.69 and $1.61, respectively, for the prior year period.
The improvement to consolidated earnings over the prior year period was attributable to a combination of stronger performance in the U.S. Federal Services Segment and divestiture-related activity, which is not reflected in the adjusted metrics. The first quarter of fiscal year 2025 included divestiture-related charges of approximately $38 million related to the sale of the Australian and South Korean businesses. The first quarter of fiscal year 2026 included a divestiture-related gain of $9 million from selling our child support business in the U.S. Services Segment.
U.S. Federal Services Segment
U.S. Federal Services Segment revenue for the first quarter of fiscal year 2026 increased 0.8% to $787 million, compared to $781 million reported for the prior year period. All growth was organic, and the prior year period benefited from unexpected volume growth on core programs along with high levels of natural disaster support, which did not recur in the current quarter.
The segment operating margin for the first quarter of fiscal year 2026 was 16.5%, compared to 12.7% reported for the prior year period. Stability of volumes across multiple program areas, combined with wider adoption of technology initiatives that enhanced the productivity of staff drove the improved margin. The full-year fiscal 2026 operating margin for the U.S. Federal Services Segment is now expected to range between 16.5% and 17%.
U.S. Services Segment
U.S. Services Segment revenue for the first quarter of fiscal year 2026 decreased 8.2% to $415 million, compared to $452 million in the prior year period. As contemplated in our total company guidance for fiscal year 2026, several programs are experiencing lower volumes or demand for engagement compared to prior years.
The segment operating margin for the first quarter of fiscal year 2026 was 7.1%, compared to 9.0% reported for the prior year period. Both periods had depressed margins compared to the remainder of their respective fiscal years, which was also contemplated in our total company guidance for fiscal year 2026. The full-year fiscal 2026 operating margin for the U.S. Services Segment is now expected to range between 10.5% and 11%.
Outside the U.S. Segment
Outside the U.S. Segment revenue for the first quarter of fiscal year 2026 decreased to $143 million, compared to $170 million in the prior year period. A majority of the revenue reduction was due to the divestiture of the Australian and South Korean employment services businesses in the prior year period, with additional reduction from slightly lower volumes on several programs.
The segment realized an operating loss of $1.4 million for the first quarter of fiscal year 2026, compared to an operating profit of $8.1 million in the prior year period. The loss resulted primarily from planned business development costs, while forecasted revenue tied to new work opportunities was delayed. We continue to expect margin improvement over time in this segment. The full-year fiscal 2026 operating margin for the Outside the U.S. Segment is now expected to range between 1% and 3%.
Sales and Pipeline
Year-to-date signed contract awards at December 31, 2025, totaled $246 million, and contracts pending (awarded but unsigned) totaled $699 million. The U.S. federal government shutdown within the quarter had a direct impact on award activity. The company views this as a timing dynamic rather than a structural change, with award activity expected to increase over the remaining quarters of fiscal 2026.
The sales pipeline at December 31, 2025, totaled $59.1 billion, comprised of approximately $3.82 billion in proposals pending, $2.36 billion in proposals in preparation, and $52.9 billion in opportunities we are tracking. New work opportunities represent approximately 59% of the total sales pipeline, and U.S. Federal Services Segment opportunities represent approximately 61% of the total sales pipeline.
Balance Sheet and Cash Flows
At December 31, 2025, unrestricted cash and cash equivalents totaled $138 million, and gross debt was $1.58 billion. The ratio of debt, net of allowed cash, to consolidated EBITDA for the quarter ended December 31, 2025, as calculated on a trailing twelve-month basis in accordance with our credit agreement, was 1.8x and trended higher from anticipated working capital needs within the quarter. This compares to 1.5x at September 30, 2025, and remains below our target net leverage ratio of 2x to 3x.
For the first quarter of fiscal year 2026, cash used in operating activities totaled $244 million, and free cash flow was an outflow of $251 million. The anticipated cash flow results reflect seasonality around cash payments and temporary delays of collections in the U.S. Federal Services Segment stemming from administrative delays. DSO were 78 days at December 31, 2025, compared with 62 days at September 30, 2025.
On January 6, 2026, our Board of Directors declared a quarterly cash dividend of $0.33 for each share of our common stock outstanding. The dividend is payable on March 2, 2026, to shareholders of record on February 13, 2026.
Fiscal Year 2026 Guidance Update
Maximus is raising fiscal year 2026 earnings guidance and narrowing the range for revenue guidance, while maintaining free cash flow guidance. Revenue is now expected to range between $5.2 billion and $5.35 billion, with $25 million of the change from prior guidance attributable to the divested U.S. Services Segment business.
The full year adjusted EBITDA margin guidance, which excludes divestiture-related gains, improves by 30 basis points to approximately 14%, compared to prior guidance. Guidance for adjusted diluted earnings per share, which excludes expense for amortization of intangible assets and divestiture-related gains, increases by $0.10 and is now expected to range between $8.05 and $8.35 per share for fiscal year 2026.
Free cash flow guidance is maintained with an expected range between $450 million and $500 million for fiscal year 2026. Interest expense is estimated to be $75 million, and the full-year tax rate is expected to range between 24.5% and 25.5% for fiscal year 2026.
Conference Call and Webcast Information
Maximus will host a conference call this morning, February 5, 2026, at 9:00 a.m. ET.
The call is open to the public and available by webcast or by phone at:
877.407.8289 (Domestic) / +1.201.689.8341 (International)
For those unable to listen to the live call, a recording of the webcast will be available on investor.maximus.com.
About Maximus
As a leading strategic partner to government, Maximus helps improve the delivery of public services amid complex technology, health, economic, and social challenges. With a deep understanding of program service delivery, acute insights that achieve operational excellence, and an extensive awareness of the needs of the people being served, our employees advance the critical missions of our partners. Maximus provides tech-enabled services to government agencies, including innovative business process management and technology solutions, that provide improved outcomes for the public and higher levels of productivity and efficiency of government-sponsored programs. For more information, visit maximus.com.
Non-GAAP Measures and Forward-Looking Statements
This release contains non-GAAP measures and other indicators, including organic growth, free cash flow, diluted EPS adjusted for amortization of intangible assets and divestiture-related charges and gains, adjusted EBITDA, adjusted EBITDA margin, consolidated EBITDA (as defined by our Credit Agreement), and other non-GAAP measures.
A description of these non-GAAP measures and details as to how they are calculated are included with our earnings presentation and forthcoming Form 10-Q.
The presentation of these non-GAAP numbers is not meant to be considered in isolation, nor as alternatives to cash flows from operations, revenue growth, operating income, or net income as measures of performance. These non-GAAP financial measures, as determined and presented by us, may not be comparable to related or similarly titled measures presented by other companies.
Included in this release are forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek,“ “on track,” "opportunity," "could," "potential," "believe," "project," "estimate," "expect," "continue," "forecast," "strategy," "future," "likely," "may," "should," "will," and similar references to future periods. Forward-looking statements that are not historical facts, including statements about our confidence, strategies and initiatives, guidance and expectations about revenues, results of operations, profitability, future contracts, liquidity, market opportunities, market demand, acceptance of our products, or acquisitions and divestitures, are forward-looking statements that involve risks and uncertainties.
These risks could cause our actual results to differ materially from those indicated by such forward-looking statements. A summary of risk factors can be found in Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed on November 20, 2025, and subsequent filings with the Securities and Exchange Commission (SEC). Our SEC filings are accessible on maximus.com.
Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to update the guidance herein or any other forward-looking statement as circumstances evolve.
FY26 Guidance Reconciliation - Non-GAAP
($ in millions except per share items)
Low End
High End
Operating income
$
600
$
622
Add: amortization of intangible assets
81
81
Add: depreciation & amortization of property, equipment and capitalized software
55
55
Add: divestiture-related gains
(9
)
(9
)
Adjusted EBITDA
$
727
$
749
Revenue
$
5,200
$
5,350
Adjusted EBITDA Margin
14.0
%
14.0
%
Diluted EPS
$
7.09
$
7.39
Add: effect of amortization of intangible assets on diluted EPS
1.08
1.08
Add: effect of divestiture-related gains on diluted EPS
(0.12
)
(0.12
)
Adjusted diluted EPS
$
8.05
$
8.35
Cash flows from operating activities
$
485
$
535
Remove: purchases of property and equipment and capitalized software costs
(35
)
(35
)
Free cash flow
$
450
$
500
Maximus, Inc.
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended
December 31, 2025
December 31, 2024
(in thousands, except per share amounts)
Revenue
$
1,345,046
$
1,402,675
Cost of revenue
1,026,376
1,101,118
Gross profit
318,670
301,557
Selling, general, and administrative expenses
152,160
191,735
Amortization of intangible assets
20,300
23,035
Operating income
146,210
86,787
Interest expense
20,816
17,522
Other (income)/expense, net
(873
)
312
Income before income taxes
126,267
68,953
Provision for income taxes
32,324
27,757
Net income
$
93,943
$
41,196
Earnings per share:
Basic
$
1.71
$
0.69
Diluted
$
1.70
$
0.69
Weighted average shares outstanding:
Basic
54,842
59,733
Diluted
55,299
60,002
Dividends declared per share
$
0.30
$
0.30
Maximus, Inc.
Consolidated Balance Sheets
December 31, 2025
September 30, 2025
(unaudited)
(in thousands)
Assets:
Cash and cash equivalents
$
137,594
$
222,351
Accounts receivable, net
1,147,740
898,095
Income taxes receivable
5,305
3,904
Prepaid expenses and other current assets
132,569
128,574
Total current assets
1,423,208
1,252,924
Property and equipment, net
28,108
30,972
Capitalized software, net
210,503
214,260
Operating lease right-of-use assets
93,724
100,514
Goodwill
1,781,156
1,782,095
Intangible assets, net
517,916
538,266
Deferred contract costs, net
66,636
63,332
Deferred compensation plan assets
65,109
63,272
Deferred income taxes
11,755
11,491
Other assets
10,185
12,513
Total assets
$
4,208,300
$
4,069,639
Liabilities and Shareholders' Equity:
Liabilities:
Accounts payable and accrued liabilities
$
263,281
$
296,888
Accrued compensation and benefits
125,464
236,948
Deferred revenue, current portion
46,566
53,784
Income taxes payable
17,753
17,321
Long-term debt, current portion
58,305
52,680
Operating lease liabilities, current portion
37,484
38,605
Other current liabilities
59,193
68,937
Total current liabilities
608,046
765,163
Deferred revenue, non-current portion
39,958
43,757
Deferred income taxes
176,521
149,020
Long-term debt, non-current portion
1,509,205
1,281,593
Deferred compensation plan liabilities, non-current portion
67,447
62,145
Operating lease liabilities, non-current portion
65,268
71,289
Other liabilities
22,043
22,637
Total liabilities
2,488,488
2,395,604
Shareholders' equity:
Common stock, no par value; 100,000 shares authorized; 54,549 and 54,805 shares issued and outstanding as of December 31, 2025, and September 30, 2025, respectively
628,867
628,118
Accumulated other comprehensive loss
(19,026
)
(17,867
)
Retained earnings
1,109,971
1,063,784
Total shareholders' equity
1,719,812
1,674,035
Total liabilities and shareholders' equity
$
4,208,300
$
4,069,639
Maximus, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended
December 31, 2025
December 31, 2024
(in thousands)
Cash flows from operating activities:
Net income
$
93,943
$
41,196
Adjustments to reconcile net income to cash flows from operations:
Depreciation and amortization of property, equipment, and capitalized software
12,889
8,455
Amortization of intangible assets
20,300
23,035
Amortization of debt issuance costs and debt discount
736
638
Deferred income taxes
27,864
2,157
Stock compensation expense
7,019
6,952
Divestiture-related (gains)/charges
(8,985
)
38,341
Change in assets and liabilities, net of effects of business combinations and divestitures:
Accounts receivable
(253,375
)
(103,454
)
Prepaid expenses and other current assets
(91
)
(2,500
)
Deferred contract costs
(3,302
)
(366
)
Accounts payable and accrued liabilities
(33,807
)
(8,150
)
Accrued compensation and benefits
(100,700
)
(93,036
)
Deferred revenue
(10,843
)
(8,232
)
Income taxes
(1,035
)
12,076
Operating lease right-of-use assets and liabilities
(399
)
(2,349
)
Other assets and liabilities
5,384
5,241
Net cash used in operating activities
(244,402
)
(79,996
)
Cash flows from investing activities:
Purchases of property and equipment and capitalized software
(6,263
)
(22,992
)
Proceeds from divestitures
12,895
736
Net cash provided by/(used in) investing activities
6,632
(22,256
)
Cash flows from financing activities:
Cash dividends paid to Maximus shareholders
(16,338
)
(18,060
)
Purchases of Maximus common stock
(40,562
)
(228,593
)
Tax withholding related to RSU vesting
(17,325
)
(16,441
)
Proceeds from borrowings
365,000
435,000
Principal payments for debt
(132,500
)
(179,264
)
Other
(1,375
)
(899
)
Net cash provided by/(used in) financing activities
156,900
(8,257
)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(64
)
(2,384
)
Net change in cash, cash equivalents, and restricted cash
(80,934
)
(112,893
)
Cash, cash equivalents, and restricted cash, beginning of period
260,459
235,763
Cash, cash equivalents, and restricted cash, end of period
$
179,525
$
122,870
Maximus, Inc.
Consolidated Results of Operations by Segment
(Unaudited)
For the Three Months Ended December 31, 2025
(dollars in thousands)
U.S. Federal
Services
% (1 )
U.S.
Services
% (1 )
Outside the
U.S.
% (1 )
Total
Revenue
$
786,601
$
415,248
$
143,197
$
1,345,046
Cost of revenue
571,666
72.7
%
330,854
79.7
%
123,856
86.5
%
1,026,376
Gross profit
214,935
27.3
%
84,394
20.3
%
19,341
13.5
%
318,670
Other segment items (2)
85,202
10.8
%
55,108
13.3
%
20,721
14.5
%
161,031
Segment operating income/(loss)
$
129,733
16.5
%
$
29,286
7.1
%
$
(1,380
)
(1.0
)%
157,639
Divestiture-related gains (3)
8,985
Other (4)
(114
)
Amortization of intangible assets
(20,300
)
Operating income
$
146,210
For the Three Months Ended December 31, 2024
(dollars in thousands)
U.S. Federal
Services
% (1)
U.S.
Services
% (1)
Outside the
U.S.
% (1)
Total
Revenue
$
780,655
1
$
452,250
$
169,770
$
1,402,675
Cost of revenue
607,340
77.8
%
357,246
79.0
%
136,532
80.4
%
1,101,118
Gross profit
173,315
22.2
%
95,004
21.0
%
33,238
19.6
%
301,557
Other segment items (2)
74,215
9.5
%
54,158
12.0
%
25,118
14.8
%
153,491
Segment operating income
$
99,100
12.7
%
$
40,846
9.0
%
$
8,120
4.8
%
148,066
Divestiture-related charges (3)
(38,341
)
Other (4)
97
Amortization of intangible assets
(23,035
)
Operating income
$
86,787
Percentage of respective revenue, as applicable.
Other segment items are principally selling, general, and administrative expenses allocated to segments.
During fiscal years 2026 and 2025, we divested businesses from our U.S. Services and Outside the U.S. Segments, respectively.
Other expenses include credits and costs that are not allocated to a particular segment.
Maximus, Inc.
Consolidated Free Cash Flows - Non-GAAP
(Unaudited)
For the Three Months Ended
December 31, 2025
December 31, 2024
(in thousands)
Net cash used in operating activities
(244,402
)
(79,996
)
Purchases of property and equipment and capitalized software
(6,263
)
(22,992
)
Free cash flow (Non-GAAP)
$
(250,665
)
$
(102,988
)
Maximus, Inc.
Non-GAAP Adjusted Results - Operating Income, Adjusted EBITDA, Net Income, and Diluted Earnings per Share
(Unaudited)
For the Three Months Ended
December 31, 2025
December 31, 2024
(dollars in thousands, except per share data)
Operating income
$
146,210
$
86,787
Add back: Amortization of intangible assets
20,300
23,035
Add back: Divestiture-related (gains)/charges
(8,985
)
38,341
Add back: Depreciation and amortization of property, equipment, and capitalized software
12,889
8,455
Adjusted EBITDA (Non-GAAP)
$
170,414
$
156,618
Adjusted EBITDA margin (Non-GAAP)
12.7
%
11.2
%
Net income
$
93,943
$
41,196
Add back: Amortization of intangible assets, net of tax
14,961
16,977
Add back: Divestiture-related (gains)/charges, net of tax
(6,624
)
38,341
Adjusted net income excluding amortization of intangible assets and divestiture-related adjustments (Non-GAAP)
$
102,280
$
96,514
Diluted earnings per share
$
1.70
$
0.69
Add back: Effect of amortization of intangible assets on diluted earnings per share
0.27
0.28
Add back: Effect of divestiture-related (gains)/charges on diluted earnings per share
(0.12
)
0.64
Adjusted diluted earnings per share excluding amortization of intangible assets and divestiture-related adjustments (Non-GAAP)
$
1.85
$
1.61