Booz Allen Hamilton Holding Corporation (NYSE: BAH) Q1 2026 Earnings Call dated Jul. 25, 2025
Corporate Participants:
Unidentified Speaker
Dustin Darensbourg — Investor Relations
Horacio Rozanski — Chairman, Chief Executive Officer and President
Matthew A. Calderone — Chief Financial Officer
Kristine Martin Anderson — Chief Operating Officer
Analysts:
Unidentified Participant
Louie DiPalma — Analyst
Gautam Khanna — Analyst
Mariana Perez Mora — Analyst
Colin Canfield — Analyst
Sheila Cayoglu — Analyst
Jonathan Siegmann — Analyst
Presentation:
operator
Good morning and thank you for standing by. Welcome to the booth. Allen Hamilton’s earnings call covering first quarter fiscal year 2026 results at this time all participants are in a listen only mode. Later there will be an opportunity for questions. I’d now like to turn the call over to the Head of Investor Relations, Dustin Darensberg.
Dustin Darensbourg — Investor Relations
Thank you. Good morning and thank you for joining us for Booz Allen’s first quarter fiscal year 2026 earnings call. We hope you’ve had an opportunity to read the press release we issued earlier this morning. We have also provided presentation slides on our website and are now on slide two. With me today to talk about our business and financial results are Horacio Rozanski, our Chairman, Chief Executive Officer and President Matt Calderon, Executive Vice President and Chief Financial Officer and Christine Martin Anderson, Executive Vice President and Chief Operating Officer as shown in the DISCLAIMER on slide 3, please note that we may make forward looking statements on today’s call which involve known and unknown risks, uncertainties and other factors including that may cause our actual results to differ materially from the forecasted results discussed in our SEC filings and on this call.
All forward looking statements are expressly qualified in their entirety by the foregoing cautionary statements and speak only as of the date made. Except as required by law, we undertake no obligation to update or revise publicly any forward looking statements. During today’s call. We will also discuss some non GAAP financial measures and other metrics which we believe provide useful information for investors. We include an explanation of adjustments and other reconciliations of our non GAAP measures to the most comparable GAAP measures in our first quarter fiscal year 2026 earnings release and slides. Numbers presented may be rounded and as such may vary slightly from those in our public disclosures.
It is now my pleasure to turn the call over to our Chairman, CEO and President Hirase Ryazanski. We’re now on slide four.
Horacio Rozanski — Chairman, Chief Executive Officer and President
Thank you Dustin welcome everyone and thank you for joining the Call today. Christine, Matt and I will share our financial results for the first quarter of fiscal year 2026. The headline for today is that our first quarter performance played out as we expected. Matt will go deeper into our first quarter results in a few minutes. Ahead of that, I would like to frame our results in the context of the current environment and describe how we are accelerating our transformation to take advantage of the next inflection point. As I’ve said previously, all Presidential transitions create some degree of near term disruption followed by opportunity.
The administration is driving fast change and six months in the government is still adapting, agencies are realigning their priorities and in many cases restructuring their own operations. We see overall demand strengthening, but near term funding continues to move slowly through the procurement environment. While the overall tenor is more positive than it was weeks ago, this adjustment period is still underway and some uncertainty remains as submissions and contracts are still being reviewed. Our quarterly results reflect these dynamics. Top and bottom line performance matched our expectations with the brightest spots being book to bill and the resulting record backlog.
As we look forward, we expect the full effects of the civil sector reset to manifest in our Q2 financials and intend to return to growth in the back half of this year. Our teams are all in working with mission owners to ensure that as funding solidifies, Booz Allen can accelerate. As we look ahead, we are moving forward aggressively. We are meeting with senior administration officials and with customers at all levels. Our technology based approach resonates loudly with their agendas. They see opportunity to invest in technology from AI to cyber to quantum to drive both cost efficiency and mission effectiveness and these discussions have reaffirmed my optimism about the medium and long term.
Our BOLT strategy, which stands for Velocity, Leadership and Technology, and especially our unique investments and positioning in the technology ecosystem are among our key differentiators. Having the mission insights to adapt and deploy commercial technology at speed and scale are differentiators for us as well. Other companies can do this too of course, but none as well as Booz Allen. We hear this from customers and from technology partners regularly, so we are using this moment of rapid market transition to move faster ourselves. I believe we are on track to shave years off our transformation timeline to drive that acceleration.
We are focusing relentlessly on the five priorities I outlined in May. Allow me to summarize that progress. First, we have restructured and reset our civil business in alignment with the existing demand environment. In the first quarter we acted quickly to right, size our talent, optimize the business and adapt to short term challenges. Now we are focused on returning to growth by capturing opportunities in priority missions. One example is modernization which we know is important to civilian agencies and across government. In May we were awarded a $51 million task order with Customs and Border Protection or CBP.
Through this work we are using our technologies and partnership with AWS to help CBP move to the cloud. This is a meaningful opportunity to inject new tech into a high priority mission and potentially expand as opportunities arise. Second, we are reimagining how we deliver our work to prepare for a shift to outcome based opportunities. We believe this shift will enable greater innovation and generate cost savings for the government. For example, Thunderdome is our proven zero trust solution for DoD and we are in the process of expanding its customer base and transitioning parts of it to be outcome based.
Thunderdome is an ideal candidate because it has clearly defined mission outcomes such as quickly advancing the Department’s zero trust architecture goals. We are very proud of the outcomes we’ve delivered. We met all of these as zero trust standards more than two years ahead of schedule. Third, we are directing resources to the areas that will best position us for growth. Our Defense Technology Group is a great example. Back in April we consolidated these activities into one team to focus on an area that is primed for growth. This group is dedicated to rapidly injecting advanced technologies into defense missions that protect and empower our nation’s warfighters.
Let me describe three examples of the momentum we have built. 1. We have successfully deployed our Modular Detachment Kit or MDK into live fire exercises and operations across Europe and Africa. This kit offers unprecedented multi domain integration that bridges technological gaps by seamlessly fusing sensor and data link information. MDK is revolutionizing tactical command and control, giving our warfighters a clearer understanding of the battle space. 2. We have been building on our Tactical Assault Kit which is a series of plugin ready solutions that can be added to a mobile device and used in the field. We recently added two new tools,..
And GVStreamer that help users communicate in real time and livestream full motion video. These unique capabilities have been successfully deployed in theater as well as during hurricane relief efforts, the super bowl and the presidential inauguration. And three we were just awarded a new $315 million contract with the United States Air Force for our Tactical Operations Center Light Battle Management System Prototype or TALK L, it’s a major program of record in the Department of the Air Force’s Battle Network. It will accelerate information and decision superiority at the edge. We are going to deploy Talk L to 70 locations around the world, including Europe and the Pacific.
So taken all together, these are three examples of how we are growing our business while outfitting war fighters with the tech they need to stay safe, ready and lethal. The fourth priority focuses on advancing our partnerships across the tech ecosystem. America needs to maintain global technological supremacy and our nation’s advanced technology ecosystem is the greatest innovation engine in the world. Booz Allen’s leading role in this ecosystem is unique. From our partnerships with hyperscalers to our venture investments with startups, we are finding and co creating next generation technology and making it work inside our nation’s most important missions In a moment, Matt will share more on how we are accelerating this priority.
And finally, we are creating efficiencies in our own business so we can move faster and realize greater shareholder value even in a volatile environment. We are using AI assisted tools to build software faster and reimagine our delivery. We’re using AI and automation to run the business smartly and more efficiently. We’re integrating commercial tech from other companies and those companies are telling us that we are on the leading edge. We’re not just generating speed to outcomes for our customers, we’re also doing it for ourselves. In closing, these five priorities demonstrate how we are accelerating Booz Allen’s transformation from AI to cyber to space and supporting our war fighters at the edge Boys.
Allen is delivering solutions at the center of America’s key missions. So I want to thank my colleagues for all that they do. I’m so inspired by them every day and I’m grateful that our country has them on our side. Together we are navigating this time of tremendous change and and staying ready to help our nation move faster. And with that, Matt, over to you.
Matthew A. Calderone — Chief Financial Officer
Thank you Horacio and good morning everyone. As Horacio noted, we anticipated a period of short term disruption and slowdown in funding followed by real medium to long term opportunity. As the new administration’s priorities take hold, we continue to see both these forces play out in different ways and on different timelines across the business. In this environment, we are attacking opportunities with both ideas and optimism. I remain amazed at how quickly Booz Allen can transform and how deeply impactful our work is for the nation. Before diving into the numbers, I want to cover my five takeaways for the quarter.
First, the first quarter played out very much as we expected. We delivered growth in revenue ex billables where most of our profitability is generated and at the bottom line. While difficult, we also quickly reshaped our talent base through targeted cost and headcount reductions that were heavily concentrated in our civil business. Second, we are winning deeply technical, high quality work that is in line with lasting mission priorities. We achieved an excellent quarterly book to bill of 1.42 times and total backlog hit an all time Q1 record of $38 billion. More important, the type of work we are winning underscores that our pivot to become the premier company bringing advanced technology to mission is working.
Third, we deployed a significant amount of capital to generate value for our shareholders. In the quarter, we repurchased just over 1% of our outstanding shares. Fourth, we doubled down on the strategic bets that will propel the business forward. These include investing in solutions aligned with national priorities, bolstering our talent base, continuing to build mission ready technology, and strengthening our partnerships with commercial and defense tech companies. We continue to gain momentum in all these areas and as a sign of our conviction, earlier this week we increased our commitment to Booz Allen Ventures by $200 million. Finally, we saw a meaningful increase in our cash flow outlook.
The change in R and D capitalization in the one big beautiful bill will result in roughly $200 million federal cash tax benefit this fiscal year. In addition, based on a negotiated agreement with the IRS on a previously disclosed tax position, we now expect to receive a refund of approximately $170 million next fiscal year. In summary, the first quarter tracked in line with our plan. We are working aggressively to drive near term growth in a dynamic finding environment and we continue to strategically transform our business. I will now cover our first quarter numbers in more detail.
For the first quarter, gross revenue was down roughly 1% year over year to $2.9 billion. Revenue excluding billable expenses where most of our profitability is generated, grew 2% year over year. We continued to see strong performance in our Defense and Intel businesses. Revenue for the quarter was up 7% in defense and up 6% in intel compared to the prior year period. As expected, revenue in our Civil business was down 13% year over year. Moving to demand the volume and quality of our sales continued to be Strong. We booked $4.2 billion in awards in the quarter, including 2 awards greater than $500 million.
As a result, our first quarter book to bill was 1.42 times and our trailing 12 month book to bill was 1.31 times. Our total backlog hit $38 billion, up 11% year over year. At the end of the first quarter, the size of our proposal pipeline was nearly $43 billion. While lower than fiscal year 2025, which was historically high, our current year pipeline is 3% higher than at the same point in fiscal year 2024. We are adding to this pipeline by investing in areas central to the priorities of the current administration, advancing our big ideas for transforming government, and co creating and selling with our commercial technology partners.
As we noted on the last two earnings calls, we are seeing more variability in converting bookings to revenue than we have seen in previous years. Pivoting now to headcount, Booz Allen closed the quarter with roughly 33,000 employees as a result of the restructuring actions. Our customer facing staff was down 5% year over year and 7% sequentially we will continue to effectively match supply and demand in what is a very dynamic environment. Through the balance of the fiscal year. We aim to increase hiring to support the ramp of our significant recent wins as well as areas where we see demand accelerating.
Turning now to profitability, in the first quarter we generated $311 million in adjusted EBITDA, up 3% from the prior year period. This translated to an adjusted ebitda margin of 10.6%, up 30 basis points. Year over year, we continue to run the business efficiently while investing in the advanced technologies, tools and talent needed to support strategic growth. Working down the P&L first quarter net income was $271 million. The year over year increase of 64% in net income was primarily a result of a favorable agreement we reached with the IRS in the quarter that is related to strategic tax planning initiatives from prior years.
As a result of this agreement, we recognized a one time income tax benefit of $106 million. This was partially offset by the impact of the one time costs associated with headcount reductions in the quarter. In addition to this P and L impact, we expect to receive a cash refund of approximately $170 million next fiscal year. Adjusted net income was $184 million, up 2% versus the prior year. This excludes both the one time income tax benefit and the impact of the one time headcount reduction costs. Diluted earnings per share grew 70% year over year to $2.16 per share and adjusted diluted earnings per share increased 7% year over year to $1.48 per share.
Both diluted earnings per share and dateps benefited from overall profitability, a reduction in share count and an unrealized gain from one of our venture investments which were slightly offset by higher net interest expense. Moving now to the balance sheet, we finished the first quarter with $711 million of cash on hand, net debt of $3.3 billion and a net leverage ratio of 2.5 times adjusted EBITDA for the trailing 12 months. Our balance sheet is exceptionally strong. It remains both a key strategic asset and a vehicle for generating incremental shareholder value. Free cash flow for the quarter was $96 million, the result of $119 million of cash from operations plus $23 million of capex.
Turning to capital deployment during the quarter, we deployed a total of $233 million to generate additional value for shareholders. This included $154 million in share repurchases at an average price of $109, $0.42 per share, $70 million in quarterly dividends, and $9 million in strategic investments made through Booz Allen Ventures. I’ll note that our Board of Directors has approved a quarterly dividend of $0.55 per share, which will be payable on August 29th to stockholders of record as of August 14th. I’m really excited that this week we announced the commitment of an additional $200 million to Booz Allen Ventures.
Since we launched Boozan Ventures In July of 2022, we have deployed the majority of our initial $100 million commitment to 17 exceptional portfolio companies. This includes our investment in Firestorm, a leading attritable drone company that we announced just last week. With Booz Allen’s help, these 17 companies have delivered real mission impact to our customers, performed well above market financially and driven strategic value for the company. We anticipate that this additional $200 million will be deployed against 20 to 25 new companies over the next five years. Booz Allen remains committed to ensuring America’s technical superiority over its adversaries.
Now please turn to page seven. For our full fiscal year outlook, we are only updating our full year guidance to reflect the anticipated federal tax impact on our cash flow. From the passage of the one big beautiful bill, we now expect free cash flow to be between 900 million and $1 billion. As we noted last quarter, we anticipate that revenue and profit growth will be comparatively lower in the first half of our fiscal year, particularly in our second quarter due to a decrease in the provision for claim costs in the second quarter last year, our full year performance will be impacted by the timing of and extent to which we return to a more normalized funding environment.
In closing, while the current environment is dynamic, our intent is clear to manage through this fiscal year with flexibility and discipline and to go on offense, lead with transformative technology, drive mission impact and re accelerate growth. We remain confident in our Volt strategy and our ability to continue to generate lasting value for our customers, our people and our shareholders. With that operator, please open the line for questions.
Questions and Answers:
operator
Thank you. And as a reminder to ask a question, simply press star11 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 11 again. One moment for our first question and it’s from Luis De Palma with William Blair. Please proceed.
Louie DiPalma
Horacio, Christine, Matt and Dustin. Good morning.
Horacio Rozanski
Good morning.
Matthew A. Calderone
Hey, Louie. Good morning.
Louie DiPalma
Hey. As part of your 1.4 times book the bill, you won several, I would say Palantir Anduril esque awards over the past few months. Under the new administration. And you could also call these awards vintage Booz Allen with this Air Force Data Fusion award. You said that the Department of Defense continues to review contracts, but is it fair to say that there is now a greater appreciation for all of the neat tech that you do bring to the table with all of your commercial tech partnerships? And is the procurement environment better than it was three months ago?
Horacio Rozanski
Why don’t I start, Louis? I think it is, as you point out, fair to say that the business has stabilized in what is still a very dynamic environment. As we pointed out in the prepared remarks, there are contracts being reviewed, the tech is holding out extraordinarily well. The impact on mission is very strong. We feel very good about that. And our teams are working very closely with each of our customers. You know, our long standing customers understand the value Booz Allen brings and the tech that we are producing and the fact that our technology and the awards you point out, what’s really neat about them is these are all awards where Booz Allen is doing work for the warfighter many times in the kill chain.
And the tech needs to work under some of the most extreme conditions. And everybody recognizes that while a lot of people can bring tech, we are the ones that can make it work in those conditions. And so that’s why we’re accelerating our transformation. That’s why we’re so excited about the work that we’re winning and why we are spending all of our time really positioning for upside and for opportunities along the lines that you’re describing. You know, as we said, the procurement environment has improved but is still operating below historical speeds. And we’re hoping and looking for and staying very close to it to do our part in ensuring that it regains speed.
But overall, especially when you look past the media term, we feel very optimistic.
Louie DiPalma
Thanks. And recently the Department of Defense’s chief Digital and Artificial Intelligence office, they awarded large contracts to many of the language learning model providers from Silicon Valley and with the Trump administration, focus on commercial tech. What is the interest from Silicon Valley and these commercial tech providers to partner with you? And secondarily, what is the implications of you partnering with commercial tech with fixed priced outcome based contracts?
Horacio Rozanski
Well, as you know, working with commercial tech companies has been a big part of our strategy now for years we work with the smallest of companies, Series A through our venture fund, all the way to significant partnerships with the hyperscalers. We’ve been working closely with Nvidia for seven or eight years. We’ve been working closely with AWS for years and it makes sense to me that the department is getting more interest and getting more involved with the people that are building the foundational models that are powering the AI revolution. And at the same time they need Booz Allen because we are the ones that make the tech work in mission.
That’s understood, I believe by the department, but it’s also understood by the commercial tech providers. In our discussions with them, they see us as the best at doing that. They see us as the people they want to partner with. In many cases, I’m told by very senior people, by my counterparts in these companies, that we are the one partner they would like to have in their portfolio and we feel the same way about them. And so I think that from the standpoint of where we go forward, our ability to productize on top of their tech, the department’s desire to do more outcome based and this entire move towards deploying this technology faster are all positive secular trends.
For Booz Allen.
Louie DiPalma
Great. And for Matt, with fixed price contracts, is this potentially a win win for you and the customer?
Matthew A. Calderone
Absolutely. I think we’ve been talking about our desire to move to more outcome based and fixed price contracts for years now. So certainly has a potential to be win win for everybody.
Louie DiPalma
Great. Thanks everyone.
Horacio Rozanski
Thank you.
operator
Thank you. Our next question is from Gautam Khanna with TD Cowan. Please proceed.
Gautam Khanna
Hi, good morning guys.
Horacio Rozanski
Good morning.
Gautam Khanna
I had a couple questions. First of all, curious if you could comment on the funded backlog trend. It’s been down a couple quarters in a row. I just wanted to square that with the overall book. To Bill.
Horacio Rozanski
Yeah, I think it’s entirely consistent with what we said, which is we’re winning work. We’ve got a lot of positive demand signals, not just from our customers, but from commercial tech partners that we’re working with. But funding is a little bit slow. So that’s why you’re seeing a relative decline in funded backlog but increases in other portions.
Gautam Khanna
Does that portend kind of a big catch up at some point or is there, I mean, at what point is there an absolute level at which we should actually get concerned? Or I just wonder how do we. At what point does it become a worry issue, if at all?
Horacio Rozanski
I think we’ve said that our year really will hinge on the extent to which the funding environment normalizes. This is an industry wide issue. We’re hearing it not just from companies like ours, but even from our venture port goes, so we’re not concerned. We got a lot of confidence in the medium term. It’s really just a Timing issue. Got them.
Matthew A. Calderone
I’ll just build on that by saying if you look at the passage of the one big beautiful bill and the amount of money that is being directed towards significant technology investments both in DoD and across the government, I think it portends that money needs to be put on contract needs to be spent for the administration to advance its key priorities. So we fully expect that there will be increases along the line. The only question in our mind is how quickly do those get turned on.
Gautam Khanna
Yeah, fair enough. I guess. I’m also trying to get it. Typically we have a September fiscal year end flush or money has to be allocated. Do you anticipate that same seasonality this time around? Given all the noise?
Horacio Rozanski
We’re still planning for an acceleration. I mean there are significant mission needs. As Horacio mentioned, there is also the new funding in the one big beautiful bill. And also with the procurement environment being slow, there’s a bit of a backlog for funding needs. But as Matt said, it’s really a matter of timing and we’re waiting to see how that plays out.
Gautam Khanna
Okay. A question I get frequently from investors is on the headcount targets for the end of the fiscal year. For you guys, I believe it has to be about flat with the year end. 331. Just if you could talk about any sort of challenges in hiring. Are you seeing any and how comfortable you are with the ability to onboard the people you need to hit the guidance.
Kristine Martin Anderson
We are very comfortable. We are pacing our hiring to demand. We are not seeing challenges in getting the talent that we need. It is just a matter of timing and matching the hiring with the demand. We are also driving more productivity in our teams using advanced technology and delivery. And we, as Matt said, want to keep switching to an outcomes based contracting approach. And I think taken all together, we’re very confident.
Horacio Rozanski
Just to build up what Christine said, I think it’s important to say we are still hiring. We hired almost 1,000 people in the quarter and attrition remains low. Large portions of our business. We’re winning work and expanding work. As Christine said, this really is about matching supply and demand. So we’re, you know, our focus right now is staying close to customers, driving mission impact and getting funding on contract and headcount will follow.
Gautam Khanna
Terrific. Last one for me, the advantage contract. There seems to be some. We look at that and just wondered if there’s any impact to boost this year or next.
Matthew A. Calderone
You know, I think that the immediate form of the answer is I think the, the department is still thinking through their acquisition strategy. For the next period. But at the same time, we’re extremely proud of the work that we’re doing, the impact that we’re having. To my knowledge, Havana is the only scale platform that can do what it can do across the federal government. I think that’s widely recognized. And frankly, we’ve been able to win work across the government, including in some key civil missions, because what we did in Atlanta can be replicated. So I think overall this is really positive.
The other thing that I will say is we’ve done some interesting work in Atlanta around populating and bringing AI into those data streams. And that knowledge has allowed us to continue to drive AI across the vast majority of our contracts to the place where our AI business is still growing and expected to grow significantly this year. We’re engaging in a number of discussions about how do we make that happen faster. And especially given the conversations that we’re having this week in Washington around the AI Summit and the subsequent executive orders, we see a lot of upside.
Gautam Khanna
Thank you, guys.
Horacio Rozanski
Thank you.
Matthew A. Calderone
Thank you.
operator
Thank you. Our next question comes from the line of Mariana Perez Mora with Bank of America. Please proceed.
Mariana Perez Mora
Good morning, everyone.
Horacio Rozanski
Good morning.
Mariana Perez Mora
So my first question is going to be about Goldendom. Now that the reconciliation bill actually funded the purpose, and it has been a while since the President announced this. What is the role that Booz Allen could play there? And how much visibility you have on how fast that could play out is more like a data operating system integrator, like what you’re doing with Tuck L for the Air Force, or like what else could Booz Allen be exposed to?
Horacio Rozanski
So, Mariana, we are very close to what’s happening with Golden Dome. As you know, Golden Dome itself got funded to the tune of 25 billion in the reconciliation package, and there’s about another 24 additional billion for missile defense that has some overlap or some surrounding things. And then there’s also intelligence aspects to this. And we are very close to everybody who’s developing different piece parts. Booz Allen can play a variety of roles and we’re positioning to play a variety of roles. Some are more traditional, aligned to the type of work that we do, especially on cyber and intel.
Some are more aligned with other things we’ve done, like you said, around data platforming and the like. But as we’ve discussed publicly around our Brilliance Forms approach, we have, if not the one of the few meaningful answers to the boost midcourse space based interception, where our solution has modeled extremely well. And so we’re excited about all of the possibilities, staying very Close to it and participating in the procurement process as it ramps up.
Mariana Perez Mora
Thank you so much. And then two more like specific questions about the near term. One, about Matt, you mentioned in the prepared remarks that civilian work or like the civilian revenue was expected to bottom into next quarter. How much of a headwind remains? And the second one, Christine, you mentioned that the challenge on hiring was not like attracting that talent, but matching the demand and the ramp up. Could you please give us some color around how you think about that? How fast can you actually hire talent and actually deploy that talent, especially when you think about more like deeply technical roles or roles that need clearances.
Thank you.
Matthew A. Calderone
Thank you. I’ll start with civil. I mean our civil business is very stable even though the environment is really dynamic and we’re still doing excellent work bringing AI into software development, securing some highly visible national events, using our public safety tech solutions, stopping Fentanyl at the border, speeding veteran benefit eligibility determinations. And our core work that we have in many agencies is still continuing. So the one time reset from the first quarter. Now that we have that behind us, it’s actually quite stable in civil and we are very confident moving into the medium term and as Matt said, preparing to return to growth in civil.
With respect to hiring, I think when I talk about matching, it’s not so much technical, worried so much about matching from a technical perspective. We do a great job recruiting across all the technical disciplines that we need. It’s more that as civil declined and intel and Defense are growing faster, just matching with the security clearances, loc, et cetera, for where the work is growing, we are actually quite good at this and have done a lot of work last fiscal year in automating a lot of those processes and getting much better matching algorithms and using AI in our hiring and recruiting.
And so that’s an area that we’re quite confident in that we can handle that going forward.
Mariana Perez Mora
Thank you so much for the caller.
operator
Thank you. Our next question is from Colin Canfield with Cantor. Please proceed.
Colin Canfield
Hey, thanks for the question. Maybe talking through the non operational cash flow building blocks starting with cash tax. You suggested 200 million in 26 and $170 million in 27. Is it fair to assume that there are continued Repeat benefits in 28 that track to that sort of curve? And then if we think about the VC kind of funding tailwind environment, like using Albedo as an example. Right. We’re already doubled in terms of private valuation, but maybe talking through kind of how we should think about potential tailwinds from that in the 27 to 28 time period in terms of a cash flow number or something like a net income number.
Thank you.
Horacio Rozanski
Yeah, thanks, Colin. I’ll take them. So look, we had two really positive cash occurrences in the quarter. First, the passage of the one big beautiful bill that’s going to create about a $200 million cash tax benefit for us this year. And I will highlight that that’s federal cash tax benefit only as we’re waiting to see how the states will react and implement. And then second, in Q1, we reached a favorable agreement with the IRS related to strategic tax planning initiatives from prior years around R and D tax credits. We’ve talked about this for a couple years now and had approximately $150 million receivable on the books as well as an uncertain tax position reserve related to this topic.
So really positive outcome there. You saw the impact from an accounting standpoint flow through our GAAP P and all this quarter. And we anticipate getting a cash refund of 170 next. So $200 million in cash this year. 170 approximately next year. We’re still waiting to see what’s going to happen from a state perspective. On the one big beautiful bill, there will be a small recurring benefit because there’s no more 174drag in our cash taxes going forward. It’s not going to be nearly to the magnitude of $200 million. We actually haven’t quantified that yet. But you’ll see some small recurring benefit from a federal cash perspective, cash tax perspective at minimum.
On the venture side, look, I’m really pleased with the performance of Booz Allen Ventures and excited about the increase in our commitment. We’ve been at the forefront of bringing commercial tech to government for decades. And so Booz Allen Ventures has been a very natural extension of this commitment to ensuring America’s technical superiority of our adversaries long term and near term that some of our critical mission gaps in our clients or customers are filled. So it’s still early, but the fund’s financial performance to date is in the top decile of comparable funds. It’s all been on paper so far.
To your point, we do expect to see some cash tailwinds as gains from these investments are realized, but we’re also going to be investing, so I wouldn’t build anything in your models. Right, because we’re upsizing our commitment, but we’re also going to be seeing the returns from some of our early investments. But look, we continue to grow and innovate with these port Codes. Whether it’s integrating Hidden layers products into our commercial cybersecurity and incident response solutions, or building on top of Seek’s technology, or bringing hidden level onto our programs where we’re having real impact at the edge.
I think it’s, you know, our commitment to Booz Allen Ventures is just another sign of how we’re going on offense and how we’re accelerating our strategic transformation.
Mariana Perez Mora
Got it. That’s great color. I appreciate it. And then in terms of quarter to date, do you have a good sense of kind of how many like how much bookings we have quarter to date and kind of what that bridges us to in terms of a potential book to bill for the next fiscal quarter?
Horacio Rozanski
Yeah, it’s still early in the quarter, Colin, but as we said a couple times here, right now we’re not focused on bookings as much as getting funding and getting things started and ramped up. We’ve got a really robust pipeline. We’re excited about not just the quantity but the quality of the things that we have in our pipeline, whether those are realized this quarter or next quarter less important to us right now than getting work started.
Colin Canfield
Got it.
Horacio Rozanski
And as long as we’re kind of asking multi part questions here, can you maybe speak to the contracting officer environment and how the big beautiful bill spend getting passed is interacting with the accounts of funding officers in terms of outweighs versus awards and like that translation of basically freeing up money now alongside what I’d say is a constructive 25cr versus waiting for Congress to get back and pass 26 full regular budgets.
Matthew A. Calderone
Yeah, as we said a couple of times, the funding is moving more slowly. Part of that is having fewer contracting officials to actually move the funding. And some of it is just the I think drag from the last quarter of multiple reviews and getting back on solid footing. There is a lot of demand for the work on the mission areas, not just at the one big beautiful bill. And so we are still planning for that logjam to break and that will play out over the next few weeks.
Colin Canfield
Got it. Thank you.
operator
Thank you. One moment for our next question. It comes from Sheila Cayoaglu with Jefferies. Please proceed.
Sheila Cayoglu
Good morning guys and thank you for the time.
Horacio Rozanski
Good morning.
Sheila Cayoglu
Hey guys, maybe two questions, one on both on headcount, but one long term and one shorter term. So longer term, big picture. How do we think about headcount as it relates to boos? Is this administration maybe buying differently than other administrations where boos is typically been very successful in adding contract scope and work given the work you guys do, but this administration might be more focused on like transformational contracts like Golden Dome or whatnot. So does that put you at a disadvantage and how do you think about that?
Horacio Rozanski
Why don’t I start? I think it’s a combination. I think as Christine pointed out, there’s a lot of demand on the contracting shops and so using existing vehicles is the way to accelerate funding onto contracts. And so we expect to see movement there. The fact that, you know, we were at record backlog levels and have ample ceiling makes us feel good about that dynamic as things hopefully begin to accelerate shortly. But at the same time, as you point out, there’s significant new demands against new areas. There’s, you know, the big beautiful bill had very targeted funding and against new priorities and those will likely play out as new contracts.
Certainly that’s what we’re seeing largely for example, around Golden Dome, which we were talking about before. So I think it’s really and all of the above on that. You know, as we’ve been saying for the last couple of calls, that the impact on headcount is the work needs to be performed differently. I think AI is here and here to stay. Again, we’ve been preparing for this for years. We both understand the technology are drivers of it and are using it very aggressively into our own programs to both increase the efficiency of the work, make it happen faster and deliver to the government better value.
And together with that, I think there’s resonance around the fact that some of these contracts do operate that way, need to move more towards fixed price, towards outcome base. And that should give us, if we continue to be at the leading edge of this, both again, opportunity to create value, but also opportunity to capture that value through upsized margins. Now that’s going to play out over the medium to long term because as we’re saying in the near term there’s a lot of things that need to get done done right away. And moving something to fixed price or outcome based is an onerous task.
So still work to be done, but a lot of optimism both on the demand and the supply side for us.
Kristine Martin Anderson
Yeah, and I would add that technology has long been the only source of permanent increases in productivity. And our early experience with AI assisted coding is exactly that in terms of supercharging that effect. But as we stand today, there’s a lot of tech debt in government. We’ve had a lot of focus on this, on why it takes so long to do transformation and modernization. Our experience so far is that in using some of these AI assisted tools we can get through that tech debt a little bit faster. And then I think what’s really exciting is how we can use AI to push the limits, because federal missions are so far scaled beyond other missions and they operate at the limit of technology.
And so better technology is going to get better mission outcomes.
Sheila Cayoglu
Got it. And maybe to that point, then when you look at your revenue per employee, it was up 8% in the quarter. How do we think about that revenue per employee number? How should that trend? Is that like a pricing benefit and maybe. Yeah, I guess. How does that trend and how do we think about headcount to end the year?
Horacio Rozanski
I’ll take that. I think, look, over time, these trends should disconnect our growth algorithm a little bit from headcount growth. If you talk about outcome based contracting or fixed price contracting, empowering our incredible talent with AI assisted coding and other tools, as Christine just described, that should make them more productive and therefore revenue per employee go up in the short term. Sheila, I think we’ve talked about this year, our performance really being predicated on when and to what extent we see a normalization in funding. And I would expect normalization in hiring to follow along with that.
In the short run, the our folks are being more productive, but the core algorithm is probably going to hold for this year.
Sheila Cayoglu
And so headcount stays flat from here. Is this the stable level?
Horacio Rozanski
We certainly anticipate adding headcount based on how, when and how funding comes in. Right, Got it.
Sheila Cayoglu
Thank you.
operator
Thank you. And our last question comes from the line of Jonathan Siegman with Stifel. Please proceed.
Jonathan Siegmann
Good morning. Thank you very much for taking my question.
Dustin Darensbourg
Morning.
Horacio Rozanski
Morning.
Matthew A. Calderone
Good morning.
Jonathan Siegmann
There’s been various directives and executive orders referencing changing software acquisition trimming, trimming the far. And we’ve already talked about moving to outcome based contracting. Could you maybe characterize just how you’re thinking about? What are the, you know, how disruptive are these changes and what are you most excited about for the long term.
Horacio Rozanski
In this new environment?
Jonathan Siegmann
Are there specific actions that we should be really watching to get a sense of how things are changing? Thank you.
Horacio Rozanski
Sure. So I’ll get us started. As we’ve been saying, there’s a number of things that we believe are both good for the nation and for the government, and therefore good for Booz Allen. Certainly a rewrite of the FAR is overdue. The far over time, you know, it has been sort of layer upon layer upon layer to a level of regulatory burden that adds a ton of cost to the entire industry. Certainly to Booz Allen and because it adds it to the entire industry, to the federal government itself. And so clearing that out, I think would give everybody an opportunity to operate faster, more nimbly and more efficiently, which again, benefits everybody.
So hopefully that will land relatively soon and will land into a more streamlined environment. The second thing I would say is all of the executive orders, including the ones from this week around accelerating the use of technology and especially accelerating the use of AI, are fundamental. I think you’ve heard me talk about the fact that we need to move faster. Certainly in a geopolitical competition, our nation needs to move faster. And some of the things that we’re talking about, even this week, and again, the most recent EOs around streamlining, accelerating data center construction, especially the things around exporting AI around the world, we think are fundamental.
And Booz Allen has a role to play in that and an opportunity to capture value from it. So, you know, and then I could keep going, but. And certainly Outcome Base we’ve talked about forever. And the more we move to Outcome Base, the better for the nation, the better for Booz Allen. So we think that this environment of pushing technology faster into mission and removing some of the barriers to that are the things that both excite us the most and give us, over the medium term, the most upside.
Jonathan Siegmann
Thank you.
operator
Thank you. And this concludes our Q and A session and I will turn it back to Horacio Hrasensky for final remarks.
Horacio Rozanski
Thank you, Carmen. And thank you, all of you, for joining us today and for your questions. I hope we gave you a sense of the environment, of our near term performance, but especially of our excitement over the medium term around how our business is evolving and, and the upside that we see. I’m really proud of Booz Allen in this period of change. Booz Allen is the advanced technology company committed to making America stronger, safer and faster. And I’m particularly proud of the people of Booz Allen that are making all of this happen. They truly are special and I’m proud to call them my colleagues.
And with that, thank you. Have a great rest of the summer and we’ll talk to you soon.
operator
Thank you everyone for participating in today’s program. You may now disconnect and have a great day, everyone.