ICF International’s third quarter was marked by weaker results versus Wall Street expectations, driven primarily by a sharp decline in federal government revenues. Management pointed to delays in ramping up international government contracts and a slowdown in federal procurement and project activities, especially in public health and human services ahead of the government shutdown. CEO John Wasson noted that commercial, state, local, and international government clients now represent 57% of total revenue, up from 46% last year, as these segments posted growth while federal revenues dropped.
Is now the time to buy ICFI? Find out in our full research report (it’s free for active Edge members).
ICF International (ICFI) Q3 CY2025 Highlights:
- Revenue: $465.4 million vs analyst estimates of $484.2 million (10% year-on-year decline, 3.9% miss)
- Adjusted EPS: $1.67 vs analyst expectations of $1.73 (3.7% miss)
- Adjusted EBITDA: $53.16 million vs analyst estimates of $55.3 million (11.4% margin, 3.9% miss)
- Operating Margin: 8.3%, in line with the same quarter last year
- Backlog: $3.5 million at quarter end, down 10.3% year on year
- Market Capitalization: $1.53 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From ICF International’s Q3 Earnings Call
- Timothy Mulrooney (William Blair) asked about the magnitude and causes of the shutdown’s impact on federal revenues. CEO John Wasson explained that while some projects continued, the $8 million per month revenue impact reflects a mix of stop-work orders and ongoing work under fixed-price contracts.
- Tobey Sommer (Truist) questioned the ramp-up of new contract wins and whether the shutdown would delay future federal awards. Wasson clarified that IT modernization contracts are less affected and expected to ramp, while programmatic work will rebound more slowly post-shutdown.
- Marc Riddick (Sidoti) inquired about the company’s ability to scale bandwidth in growth areas. Wasson responded that investments in recruiting and technology are ongoing, positioning ICF to convert contract wins into revenue quickly as new projects accelerate.
- Marc Riddick (Sidoti) also probed the M&A pipeline and cash allocation priorities. Wasson highlighted active interest in energy sector acquisitions and infrastructure, noting valuations are high but the company is preparing for potential deals in 2026.
- Kevin Steinke (Barrington Research Associates) asked about market share and opportunity in commercial energy. Wasson estimated ICF’s share is around 10–15% and sees significant room for further expansion, particularly in energy efficiency and utility programs.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace at which federal contract activity resumes and new federal awards are executed post-shutdown, (2) whether commercial energy growth continues to offset federal headwinds and drive margin stability, and (3) the impact of leadership transitions on strategic execution and M&A activity. Progress in international contract ramp-up and further developments in AI-enabled service offerings will also be important to track.
ICF International currently trades at $82.80, down from $85.43 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
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