This article first appeared on GuruFocus .
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Revenue:$1.03 billion in Q3 2026, above the top end of guidance.
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Commercial Segment Revenue:$719.9 million, up 1.2% year-over-year.
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Federal Government Segment Revenue:$311.5 million, up 3.8% year-over-year.
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Gross Margin:28.3% overall; commercial segment 31.9%, federal government segment 19.8%.
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SG&A Expenses:$217.7 million, versus $212.2 million in Q3 2025; included $8.3 million in acquisition, integration, and strategic planning expenses.
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Net Income:$23.1 million.
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Adjusted EBITDA:$106.3 million, surpassing the high end of guidance.
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Adjusted EBITDA Margin:10.3%, at the top end of the guidance range.
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Free Cash Flow:$46.5 million, approximately 44% of adjusted EBITDA.
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Cash and Cash Equivalents:$147.5 million at quarter end.
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Debt Repayment:$52.8 million repaid in Q3, including $43.8 million toward term loans and revolver and $9 million in open market repurchases of senior unsecured notes.
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Net Leverage Ratio:3.1 times; targeting 2.5 times or below.
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Revolver Availability:Approximately $227 million available on the $600 million senior secured revolver.
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Commercial Consulting Book-to-Bill:1.1 times on a trailing 12-month basis.
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Federal Contract Awards:$584.4 million, a book-to-bill of 1.9 times for the quarter and 0.9 times trailing 12-month.
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Federal Contract Backlog:Approximately $2.9 billion at quarter end, a coverage ratio of 2.5 times trailing 12-month revenues.
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Security and Risk Bookings:Up over 40% year-to-date versus the first nine months of 2025; pipeline up mid-teens since the end of Q3.
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Q4 2026 Revenue Guidance:$965 million to $995 million.
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Q4 2026 Net Income Guidance:$19.7 million to $25.5 million.
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Q4 2026 Adjusted EBITDA Guidance:$93 million to $103 million; margin of 9.6% to 10.4%.
Release Date: October 28, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Everforth Inc ( NYSE:EFOR ) reported Q3 2026 revenues of $1.03 billion and adjusted EBITDA of $106.3 million, both surpassing the high end of guidance, with adjusted EBITDA margin at the top of the guidance range at 10.3%.
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Commercial segment showed sustained customer investment in AI, IT modernization, and cloud transformation, driving a commercial consulting book-to-bill of 1.1 times on a trailing 12-month basis.
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Federal segment new contract awards totaled $584.4 million, a book-to-bill of 1.9 times for the quarter, with backlog of approximately $2.9 billion, a coverage ratio of 2.5 times trailing 12-month revenues.
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Security and risk bookings increased over 40% year-to-date compared to the first nine months of 2025, with the pipeline up mid-teens since the end of Q3, indicating strong demand.
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Everforth Inc ( NYSE:EFOR ) is expanding technology partnerships, including being an official member of the Salesforce Forward Deployed Engineering Partner Network and among the first Workday partners certified for Paradox and HiredScore, positioning it for AI-driven growth.
Negative Points
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Q4 2026 revenue guidance of $965 million to $995 million implies a sequential decline from Q3, partly due to three fewer billable days and typical seasonal slowdowns.
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Adjusted EBITDA margin guidance for Q4 is 9.6% to 10.4%, with the midpoint slightly below Q3's 10.3%, indicating potential margin pressure.
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Federal government segment revenue growth was only 3.8% year-over-year, and Q4 federal revenue is expected to be sequentially down, despite strong bookings.
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Commercial segment revenue growth was modest at 1.2% year-over-year, with some verticals like consumer and industrial remaining relatively stable but not growing strongly.
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The company continues to carry a net leverage ratio of 3.1 times, above its target of 2.5 times or below, and strategic planning expenses are expected to persist into Q4, impacting profitability.
Q & A Highlights
Q: Jeff Silber (BMO) asked about internal hiring and where Everforth is adding headcount amid cost management efforts. A: CEO Ted Hanson said the business has capacity and is replacing natural attrition selectively, placing people where demand is expected. President Shiv Iyer added that Everforth is constantly optimizing go-to-market resource allocation, adding where momentum exists and selectively augmenting solutions and delivery capabilities.
Q: Jeff Silber (BMO) asked where margins can go over time and whether Everforth can return to levels seen earlier in the decade. A: CEO Ted Hanson pointed to the three-year target of 12.5% or slightly higher by the end of 2028, driven by growth, gross margin expansion, and transformative cost savings. He said there is "no glass ceiling" and that better commercial momentum should help offset prior business-mix headwinds.
Q: Surinder Thind (Jefferies) asked for color on the health of civilian agencies and the federal contracting cycle after fiscal year-end. A: CEO Ted Hanson said federal civilian growth was targeted in a few accounts and is not a large part of the portfolio, with more than 70% of the business in defense, intelligence, and national security. He described the government's fiscal year-end as fairly normal, with more activity late in the quarter as customers sought to wrap up work before fiscal year-end and the midterm elections.
Q: Surinder Thind (Jefferies) asked whether the rise of forward deployed engineers changes Everforth's geographic delivery footprint and required skills. A: CEO Ted Hanson said Everforth is the "last mile," embedded in accounts and implementing solutions after platforms are sold. President Shiv Iyer said the forward deployed model combines onshore solutioning with significant offshore delivery, and Everforth is building capacity across platforms including Databricks, Snowflake, AWS, and Microsoft. Hanson added that the Quinnox acquisition in India supports offshore delivery, with early success shifting enterprise software work to that platform.
Q: Maggie Nolan (William Blair) asked about the composition of commercial bookings and any notable deal timing or large awards. A: President Shiv Iyer said bookings momentum is consistent across Workday, core business, AI data center build-out in TMT, defense contractor work, AI and cybersecurity, and application modernization, with application engineering boosted by Quinnox. He said average deal size has consistently increased over the last three quarters. CEO Ted Hanson added that bookings are increasingly influenced by technology alliances, and Iyer noted partner-influenced bookings are rising into the high 40% to 50% range.
Q: Maggie Nolan (William Blair) asked how material security could become in the commercial business. A: President Shiv Iyer said Everforth is "just scratching the surface" in commercial security, leveraging its premier federal cyber position into healthcare, payer-provider, and financial services, with momentum in AI governance, AI risk, and agentic AI security. CEO Ted Hanson said federal cybersecurity credentials carry well into commercial markets and the company has big hopes for commercial cyber growth.
Q: Kevin McVeigh (UBS) asked how client budgets are trending into year-end and for 2027. A: CEO Ted Hanson said Q4 looks similar to Q3, with normal seasonality as some projects end in December and clients furlough work into January. For 2027, he said it is too early to tell but the early inclination is "steady," similar to 2026, with possible relief if lower token spending frees up budgets for AI readiness, data platforms, security, and application tech debt. CFO Marie Perry added that Q4 guidance implies low single-digit sequential commercial growth adjusted for three fewer billable days, while federal is sequentially down but up year-over-year.
Q: Kevin McVeigh (UBS) asked what drove the open market bond purchases and about the strategic investment spend and its recurring benefit. A: CFO Marie Perry said Everforth repaid about $53 million of debt, mostly revolver, and opportunistically repurchased $9 million of high-yield bonds at a discount within a target price. She said strategic planning expenses are declining each quarter, from $8.3 million in Q3 to a Q4 guide of $6 million to $7.5 million, normalizing in 2027. CEO Ted Hanson said these investments unlock the $80 million in transformative cost savings outlined in the three-year plan.
Q: Jason Haas (Wells Fargo) asked whether additional technology partnerships are being pursued and whether they would require acquisitions. A: President Shiv Iyer said partnerships come in multiple forms, with room to grow in hyperscalers such as Google Cloud alongside strong AWS and Microsoft positions, plus the Workday, ServiceNow, and Salesforce ecosystem. He said Everforth is expanding in cybersecurity with emerging platforms, including a recently announced partnership with WisdomAI, and will pursue areas where it can differentiate.
Q: Jason Haas (Wells Fargo) asked to what extent AI versus quantum is driving security demand and what inning the market is in. A: President Shiv Iyer said quantum is very early days, with the federal government thinking ahead of commercial markets. He said most security work spans the spectrum as threat actors grow more sophisticated, and AI adds complexity, especially around agentic AI governance and security harnesses. He said AI is not the predominant driver, but rapid AI adoption is a further catalyst for security work.
Q: Tobey Sommer (Truist) asked how forward visibility is trending, including project lengths, weekly hours, and rates in commercial. A: CEO Ted Hanson said visibility is better as Everforth evolves into a consulting, technology services, and digital engineering business, with bookings realized in advance and government work generally running five to seven years. He said volumes are up in both businesses, rates have been fairly steady since mid-year, and new work is booking at better gross margin rates, with more fixed-fee and outcome-based work providing another margin lever.
Q: Tobey Sommer (Truist) asked about growth in larger, longer-duration commercial consulting projects such as ERP. A: President Shiv Iyer said average consulting booking size is increasing across complex Infor ERP implementations, Workday maintenance and managed services, and Quinnox's longer-term contracts. He said shifting more delivery into Quinnox should expand longer-duration projects and improve backlog visibility, with continued ERP momentum in food and beverage and strong Work
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
