Parsons Corporation (NYSE: PSN) reported record financial results for the fourth quarter and full fiscal year 2025, outperforming the high end of all long-term targets established during its 2023 Investor Day. Despite a total revenue decline attributed to a specific large-scale project, the company achieved its highest-ever adjusted EBITDA margins and robust cash flow, signaling the successful execution of its “One Parsons” strategic growth plan
Record Performance Amid Portfolio Shifts
For the fiscal year ended December 31, 2025, Parsons delivered total revenue of $6.36 billion. While this represented a 6% decrease from 2024, the decline was driven primarily by lower volume on a single fixed-price confidential contract in the Federal Solutions segment. Excluding this specific contract, total revenue grew by 12%, with organic growth reaching 8%.
The company’s focus on high-margin work led to a record adjusted EBITDA of $609 million. Adjusted EBITDA margin expanded to 9.6%, a 60-basis-point increase year-over-year and a 110-basis-point improvement over the last two years.
Key Fiscal Year 2025 Financial Metrics:
Total Revenue: $6.36 billion
Adjusted EBITDA: $609 million (up 1% year-over-year)
Adjusted EBITDA Margin: 9.6% (record high)
Cash Flow from Operations: $478 million (surpassing high-end guidance)
Funded Backlog: 73% of total backlog (highest level since IPO)
Segment Performance and Strategic Wins
The Critical Infrastructure segment was a primary growth driver, with annual revenue increasing 15% to $3.14 billion. Driven by strong performance in North America and EMEA markets, the segment achieved a record adjusted EBITDA margin of 10.4%, expanding 350 basis points from the previous year.
The Federal Solutions segment reported revenue of $3.22 billion. While total segment revenue decreased by 20% due to the confidential contract, organic revenue grew 7% when that contract was excluded.
Parsons matched its previous company record by securing 15 contract wins valued at $100 million or more during 2025. Significant Q4 awards included:
A $392 million ten-year contract for biometrics and network engineering.
A $125 million recompeted task order supporting the U.S. Army Research Laboratory.
A $100 million+ design and construction management award for a rocket motor facility in Florida.
Management Commentary and M&A Strategy
Management noted that the company’s performance from 2023 to 2025 validates the strength and resiliency of its complementary portfolio. The company emphasized its “One Parsons” approach, which leverages cross-segment synergies to capture market share in both defense and infrastructure sectors.
Executives highlighted the company’s aggressive M&A strategy as a core growth pillar. During 2025, Parsons completed three accretive acquisitions, including Applied Sciences Consulting, which bolsters its water and stormwater expertise. Shortly after the fiscal year ended, the company closed the acquisition of Altamira Technologies, a signals intelligence and space solutions provider, for up to $375 million.
2026 Outlook and Market Foundation
Parsons entered 2026 with a solid foundation, including an $8.7 billion backlog and an additional $11 billion in contract wins awarded but not yet booked. The company’s pipeline stands at $55 billion, featuring over 120 opportunities valued at $100 million or more.
Fiscal Year 2026 Guidance:
Total Revenue: $6.5 billion – $6.8 billion
Adjusted EBITDA: $615 million – $675 million
Cash Flow from Operations: $470 million – $530 million
The 2026 outlook implies 10.5% revenue growth when excluding the impact of the confidential contract. Management expects adjusted EBITDA margins to expand further to approximately 9.7% at the midpoint of guidance. The company maintains a low recompete risk for 2026, with only approximately 5% of its portfolio up for competition.
Reasons to Pass on PSN
- Headline revenue contraction: Total fiscal 2025 revenue declined 6% year over year, reflecting concentration risk tied to a single large fixed-price contract.
- Dependence on large contracts: Performance was materially affected by volume changes on one confidential Federal Solutions contract, highlighting exposure to project-specific volatility.
- Federal segment revenue decline: Federal Solutions revenue fell 20% on a reported basis, underscoring sensitivity to government program dynamics.
- M&A integration risk: An active acquisition strategy, including multiple deals in 2025 and the Altamira acquisition, introduces execution and integration risk.
- Government budget exposure: A significant portion of revenue is tied to U.S. federal defense and infrastructure spending, increasing sensitivity to funding shifts and policy changes.
- Modest margin profile: Despite record levels, adjusted EBITDA margins remain below 10%, offering limited cushion in the event of cost overruns or pricing pressure.
- Backlog conversion risk: A large backlog and pipeline depend on timely funding, execution, and contract awards, which may be subject to delays.
- Guidance reliant on normalization: 2026 growth projections exclude the impact of the confidential contract, reducing direct comparability with reported figures.