J earnings analysis
What we found in J's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Jacobs reported strong fiscal Q3 revenue growth, with revenue of $4.076B, up 34.5% year over year, driven overwhelmingly by 39% I&AF growth and accompanied by a $6.198B increase in total backlog to $28.888B. However, gross margin declined to 19.9% from 25.0%, while GAAP diluted EPS fell to $1.15 from $1.55 as PA Consulting transaction-related non-deductible costs lifted the tax rate to 43.4%. Cash generation improved over the nine-month period, but the PA transaction increased long-term debt by $1.3B and quarterly net interest expense by 61.2%.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue growth reaccelerated to 34.5%
- Revenue rose $1.045B, or 34.5%, year over year to $4.076B, and increased from $3.69B in fiscal Q2 2026. I&AF delivered $3.747B of revenue, up 39%, led by Global Operations and strong Americas and International performance.
- Operating profit recovered sequentially
- GAAP operating profit increased $51.7M, or 22.0%, year over year to $286.7M. Operating margin improved sequentially from -2.2% in fiscal Q2 2026 to 7.0% in fiscal Q3 2026.
- Backlog expanded by $6.2B
- I&AF backlog increased $6.159B year over year to $28.429B at June 26, 2026, predominantly reflecting Advanced Manufacturing growth. Total company backlog was $28.888B versus $22.690B a year earlier.
- Operating cash flow increased year over year
- Nine-month operating cash flow rose $49.1M year over year to $352.8M. Capital expenditures were $61.7M, or 17.5% of operating cash flow, implying $291.0M of nine-month free cash flow.
- Restructuring programs retain material savings potential
- Management expects Separation-related initiatives to be substantially completed by fiscal year-end 2026, with estimated gross annualized pre-tax cash savings of $200M to $245M. PA Consulting cost actions are expected to generate a further $50M to $65M of annualized savings.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Tax and transaction costs reduced GAAP EPS
- GAAP diluted EPS fell $0.40 year over year to $1.15 from $1.55, despite higher operating profit. The effective tax rate rose to 43.4% from 21.9%, including $35.8M of non-deductible PA Consulting transaction expenses that management says will affect the remainder of fiscal 2026.
- Gross-margin dilution despite revenue growth
- Gross margin contracted 510 basis points year over year to 19.9% from 25.0%, and fell from 21.5% in fiscal Q2 2026. Management attributed the pressure to pass-through-cost revenue, project mix, and lower utilization primarily at PA Consulting.
- PA acquisition increased leverage and interest cost
- Long-term debt increased by $1.3B from September 26, 2025, primarily following $1.3B of 4.75% and 5.375% bond issuances to fund the PA Consulting transaction. Quarterly net interest expense increased $17.6M, or 61.2%, to $46.3M.
- PA Consulting faced client-approval delays
- PA Consulting quarterly revenue declined $3.2M, or 1%, to $329.5M because delayed client approvals adversely affected revenue-recognition timing. Its quarterly revenue compares with 39% growth in I&AF.
- Material residual floating-rate exposure
- Management identified $1.00B of principal still subject to variable interest-rate exposure after a $200M swap. A 1.00% increase in floating rates would have raised nine-month interest expense by approximately $9.7M.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $1.15
- Gross margin
- 19.9%
- Operating margin
- 7.0%
- Segment
- Infrastructure & Advanced Facilities: $3.747B revenue, +$1.048B (+39%) year over year; segment operating profit $268.1M, +$32.2M (+14%).
- Segment
- PA Consulting: $329.5M revenue, -$3.2M (-1%) year over year; segment operating profit $73.6M, +$1.2M (+2%).
What they said about what is next.
The 10-Q does not provide explicit numerical revenue or EPS guidance. Management states it believes $1.17B of cash, $1.50B of revolver availability and operating cash generation are adequate for projected requirements over the next 12 months; quantitative FY2026 outlook was provided separately with the earnings release.
The filing reads about the same as the one before it.
What came before.
- 10-Q · May 5, 2026
- Jacobs Solutions reported a strong revenue increase for Q2 2026 with $3.69 billion, up 27.0% year-over-year, but faced a GAAP EPS loss of $0.32, significantly missing expectations of $1.64. Adjusted EPS was $1.75,…
- 10-Q · May 6, 2025
- Jacobs reported three-month revenue of $2,910,415 (thousands), up from $2,847,179 (thousands) a year ago, with gross profit rising to $738,345 (thousands) and operating profit improving to $208,648 (thousands).…
- 10-Q · August 6, 2024
- Jacobs reported quarter revenue of $4,231,580 (thousands) vs $4,186,702 (thousands) a year ago, with gross profit rising to $916,780 (thousands) while operating profit dipped to $260,464 (thousands). Diluted EPS…
- 10-K · November 21, 2023
- Jacobs Solutions Inc. reports a strategic focus on sustainable solutions, emphasizing its transformational journey over recent years with a commitment to Climate Response, Data Solutions, and Consulting & Advisory…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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