tapebrief
J · Q1 2026

J · Q2 2026 Earnings

Bullish

Jacobs Solutions

Reported May 5, 2026

30-second summary

Jacobs printed Q2 revenue of $3.69B (+27% YoY), adjusted EPS of $1.75, and adjusted net revenue growth of 8.8% YoY — 230 bps above the ~6.5% Q2 guide. Management raised FY26 adjusted EPS to $7.10–$7.35 (midpoint up $0.10 to $7.225), lifted net revenue growth to 8.0–10.5% (+150 bps at the low end), and raised EBITDA margin to 14.6–14.9%. The Q3 guide of ~7.5% net revenue growth combined with the H2 acceleration commentary implies Q4 carries the bulk of the back-half ramp, and the AI infrastructure pipeline — disclosed for the first time as up 400% YoY — is now the headline forward driver.

Headline numbers

EPS

Q2 FY2026

$1.75

Revenue

Q2 FY2026

$3.69B

+27.0% YoY

Gross margin

Q2 FY2026

21.5%

Free cash flow

Q2 FY2026

$-0.27B

Operating margin

Q2 FY2026

-2.2%

Key financials

Q2 FY2026
MetricQ2 FY2026YoYQ1 FY2026QoQ
Revenue$3.69B+27.0%$3.29B+12.2%
EPS$1.75—$1.53+14.4%
Gross margin21.5%—23.2%-170bps
Operating margin-2.2%—7.1%-930bps
Free cash flow$-0.27B—$0.36B-174.8%

Guidance

Raised FY2026 EPS and revenue growth guidance; Q2 beat YoY revenue and EBITDA expectations; bullish on H2 momentum with Q3 margin expected to peak at ~15%.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
Adjusted Net Revenue Growth YoYQ2 FY2026approximately 6.5%8.8%+2.3pts above guideBeat
Adjusted EBITDA MarginQ2 FY202613.8% to 14.0%14.1%+0.1pts above high endBeat

New guidance

MetricPeriodGuideYoY
Adjusted Net Revenue Growth YoYQ3 FY2026approximately 7.5%-2.0% to +2.0% YoY
Adjusted EBITDA MarginQ3 FY2026approximately 15%—
Adjusted Effective Tax RateQ3 FY202627% to 28%—

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
Adjusted Net Revenue Growth
FY2026
6.5% to 10.0%8.0% to 10.5%+1.5pts at low end, +0.5pts at high endRaised
Adjusted EPS
FY2026
$6.95 to $7.30$7.10 to $7.35+$0.15 at low end, +$0.05 at high endRaised
Adjusted EBITDA Margin
FY2026
14.4% to 14.7%14.6% to 14.9%+0.2pts at low end, +0.2pts at high endRaised

Reaffirmed unchanged this quarter: Adjusted Free Cash Flow Margin (7.0% to 8.5%)

Segment KPIs

Q2 FY2026
SegmentQ2 FY2026YoY
Infrastructure & Advanced Facilities$3.34B+28.2%
PA Consulting$0.36B+16.5%
PA Consulting Revenue Growth YoY17.0%—

Other KPIs

Q2 FY2026
SegmentQ2 FY2026
Total Backlog$27.0 billion
Book-to-Bill Ratio (TTM)1.4x
Adjusted Net Revenue Book-to-Bill (TTM)1.2x
Adjusted Net Revenue Growth YoY8.8%
Adjusted EBITDA Margin14.1%
Share Repurchases YTD$472 million
PA Consulting Acquisition Cost Synergies$20+ million within 24 months

Management tone

Q3 FY25 data center inflection → Q4 FY25 quantified FY26 framework → Q1 FY26 AI-as-bottom-line and PA full ownership → Q2 FY26 AI ecosystem at 10–11% of business with 400% pipeline growth.

Three quarters ago the data center book was disclosed as "150+ engagements" without a revenue contribution; two quarters ago the CEO leaned harder on the "ecosystem" and "moat" framing without refreshing the number; this quarter management broke the disclosure framework wide open. From the call: AI data center infrastructure is now 3–4% of the business growing 100% YoY, and the broader AI ecosystem (chips through data centers) is 10–11% of the business growing more than 40% YoY, with the data center AI pipeline up 400% YoY and visibility extending into 2027 and 2028. The shift moves AI from a narrative weight to a quantified growth engine with multi-year forward coverage — the largest single piece of new disclosure in the visible series.

The PA Consulting framing has now completed its arc from "synergistic expansion" at Q4 FY25 to "strategic amplifier" this quarter, with $20M+ in quantified synergies (up from $16–20M telegraphed at Q1) and a defined integration pathway: ~2,000 digital experts, defense infrastructure in Europe leveraging MOD/sovereign-nation entrenchment, and end-to-end transport advisory. The CEO's anchor: "we see a compelling opportunity to augment growth in the sector." The synergy number moving up rather than down 12 months into the deal is what differentiates this from a typical post-acquisition trajectory.

Margin expansion has been re-cast from a Q1-style "operating discipline" story into a structural multi-year program. Management disclosed "at least 75 basis points of identified annual margin improvement from fiscal year 27 through fiscal year 29, in addition to the 200 basis points we're expecting to deliver over the course of fiscal year 25 and fiscal year 26." The Q1 brief flagged margin as "the conditional element of the FY26 bridge"; this quarter management has not only delivered Q2 EBITDA above guide but extended the margin narrative three years forward with quantified drivers — gross margin initiatives, commercial model changes, AI enablement of internal delivery, global delivery model, and operating leverage with OPEX growing "substantially slower than revenue."

The FY29 targets have moved from "reaffirmation" to "upward revision in confidence." Management confirmed the 6–8% organic growth range but stated they believe Jacobs will "meet or exceed a 7% compounded annual growth rate" and that combining FY25 results with the FY26 guide midpoint puts them "ahead of the midpoint for the first two years." A multi-year compounding statement explicitly anchored above midpoint is materially more confident posture than the FY29 commentary delivered six months ago.

Life sciences and advanced manufacturing net revenue grew 12% in Q2 — "our highest growth rate since we began reporting end markets in late 2024" — and the semis CapEx cycle is described as extending into 2027 with high bandwidth memory manufacturing and ASIC relationships positioning Jacobs upstream. Two quarters ago this end market was a solid performer; now it is the highest-growth printed segment with a multi-year CapEx tailwind.

Recurring themes management leaned on this quarter:

Post-separation earnings quality improvement and organic accelerationDiversified end-market strength with double-digit growth in life sciences and advanced manufacturingPA Consulting integration as strategic amplifier of national security and European defense demandStructural margin expansion through gross margin and G&A initiatives plus quantified synergiesStrong bookings trajectory supporting FY27 outlook and long-term growth targetsFree cash flow generation acceleration enabling shareholder returns and deleveraging

Risks management surfaced:

Environmental sector softness (offset by water strength, expected to improve by Q4)GAAP vs adjusted EPS spread from PA transaction accounting (expected to normalize Q3 onward)Net leverage temporarily above target at 2.1x (plan to return below 2x by year-end)Currency headwinds on constant currency basis (noted for INAF and PA segments)

Q&A highlights

Stephen Fisher · UBS

How much of the guidance raise is driven by operational performance versus PA consulting consolidation? Requested breakdown of operational upside by segment.

Raise is purely based on operational performance driven by strong bookings and run rate translation. INAF segment drove bulk of outperformance; PA provided minor ethics tailwind. Margin improvement came from operating discipline and tight controls.

Data center AI infrastructure: 3-4% of business, growing 100% YoYAI ecosystem (chips to data centers): 10-11% of business, growing >40% YoYAI infrastructure pipeline (data center): up 400% YoYVisibility through 2027 into 2028

Sabahat Khan · RBC Capital Markets

What is the visibility/line-of-sight to AI infrastructure projects? Is it 6 months, 12 months, or multi-year?

Data center AI infrastructure pipeline visibility extends well through 2027 into 2028. Strong relationships with hyperscalers and NeoCloud providers backed by NVIDIA relationships and work on digital Quinn/plan of record. Relationships driving share gains among top clients.

Data center pipeline visibility: through 2027 into 2028NVIDIA relationship as key backingWork on digital Quinn and plan of record for next-generation chips (Vera Rubin in development)

Michael Dudas · Vertical Research

What are the specific opportunities and margin drivers from PA consolidation over next 6-12 months? What capabilities and end markets will benefit?

Built ~2,000 digital experts from 5-year collaboration. Key opportunities: defense infrastructure in Europe leveraging PA's MOD/sovereign nation entrenchment; transportation/energy/utilities in US combining digital capability with AI infrastructure. Lifecycle asset delivery across defense, transport, energy.

~2,000 digital experts integratedDefense infrastructure opportunity in EuropeEnd-to-end transport advisory through complex program deliveryDigital capability applied to energy/utilities space

Adam Boobies · Goldman Sachs

How much of FY26 and FY29 EBITDA uplift comes from PA consolidation vs. underlying operational improvements?

FY26 increase (14.6-14.9B) primarily from full PA consolidation plus margin expansion initiatives. FY29 uplift driven by operational improvements: gross margin drivers, commercial model changes, AI enablement, global delivery model, and operating leverage (OPEX growing substantially slower than revenue). No major new CapEx required for AI evolution.

FY26 guidance: 14.6-14.9B EBITDA (vs 14.7B prior)FY29 margin expansion: 75 bps annuallyNo incremental AI investment needed; leveraging 7 years of prior digital enablement investmentOPEX growth to be substantially lower than revenue growth

Jerry Revich · Wells Fargo

Does company have capacity/resources to achieve double-digit organic growth? What are margin implications if booking trajectory continues?

Yes, company has capacity through global delivery model with double-digit YoY growth in global delivery headcount. Resources exist to meet backlog conversion and projects in progress. Margin expansion supported by this scaling. Semis sector seeing return to 2024 CapEx highs into 2027, driven by AI infrastructure.

Global delivery growing well into double digits YoYSemis CapEx cycle extending into 2027High bandwidth memory manufacturing and ASIC relationships positioning for upstream opportunity

Answers to last quarter's watch list

Q2 actual EBITDA margin vs the 13.8–14.0% guide — Q2 printed 14.1%, +10 bps above the high end of the guide. Combined with the FY26 EBITDA range being raised 20 bps to 14.6–14.9% and Q3 guided to ~15%, the H2 ramp to 14.4–14.7% the prior guide implied is no longer the question — the bar has been moved higher and Q3 confirms the trajectory.
Resolved positively
Q2 net revenue growth vs the ~6.5% YoY guide — Q2 adjusted net revenue grew 8.8% YoY, 230 bps above guide, with PA Consulting at 17% YoY and life sciences/advanced manufacturing at 12% YoY (the highest end-market growth rate since the company began reporting end markets). The FY26 low end was raised 150 bps to 8.0%, removing the prior H2 ramp risk.
Resolved positively
TTM book-to-bill after the 1.1x → 1.4x step up — TTM book-to-bill held at 1.4x with backlog growing to $27.0B (from $26.3B at Q1), confirming the Q1 step-up was a sustained run rate rather than a timing artifact. The adjusted net revenue book-to-bill at 1.2x corroborates the durability.
Resolved positively
PA Consulting growth deceleration toward the "high single digits" FY guide — PA grew 16.5% in revenue (17.0% on the adjusted net revenue basis), again above the FY guide rather than at it. The "high single digits" framing has now been outperformed for two consecutive quarters; management's commentary that they "believe PA will continue to grow revenue high single digits" still positions the FY guide as the floor.
Resolved positively
Disclosed cost synergy phasing on the PA full-acquisition — The synergy figure was raised from the $16–20M telegraphed at Q1 to "$20M+ within 24 months" this quarter. Net leverage sits at 2.1x temporarily, with a plan to return below 2x by year-end; the accretion math is supported by Q2 EPS holding flat sequentially despite full PA consolidation.
Resolved positively
Whether management refreshes the 150+ data center engagement count or quantifies a data center / private-sector revenue contribution — Management broke the disclosure framework entirely this quarter, replacing the static engagement count with quantified exposure: data center AI infrastructure at 3–4% of the business growing 100% YoY, the broader AI ecosystem at 10–11% of business growing >40% YoY, and the data center AI pipeline up 400% YoY with visibility into 2027–2028. The biggest disclosure shift in the visible series.
Resolved positively

What to watch into next quarter

Q3 actual EBITDA margin vs the ~15% guide: a print at or above 15% confirms the FY26 14.6–14.9% range is conservative and sets up another raise at Q3; a print below 14.6% breaks the "Q3 peak" narrative and puts the raised FY range at risk in a single quarter.

Q3 net revenue growth vs the ~7.5% YoY guide combined with the H2 acceleration commentary — if Q3 prints at 7.5% or below, then Q4 must materially exceed 8.8% for the "H2 exceeds Q2" statement to hold, putting unusual weight on a single quarter; a Q3 print above 8% relieves the Q4 bar.

AI infrastructure revenue contribution disclosed as a discrete line vs the current 10–11% of business framing — now that management has crossed the threshold to quantify exposure, watch whether Q3 provides a dollar contribution and whether the 400% pipeline growth is updated.

Net leverage trajectory from 2.1x back toward the sub-2x year-end target — sustained share repurchase pace ($472M YTD) plus negative Q2 FCF puts the deleveraging path under scrutiny; watch H2 FCF generation against the unchanged 7.0–8.5% FY margin range.

FY27 framework or any quantified preview at Q3 or Q4 — management has now linked the FY29 75 bps/year margin trajectory to FY27 and stated they are "ahead of the midpoint for the first two years" of the FY29 plan; watch whether the FY27 EPS range or revenue growth band is introduced earlier than the typical Q4 reveal.

PA Consulting growth rate: a Q3 print sustaining low- to mid-teens validates the "strategic amplifier" framing for FY27; deceleration toward high single digits would suggest FY26 H1 captured the bulk of the integration tailwind.

Sources

  1. Jacobs Solutions Q2 FY2026 Earnings Release, SEC filing — https://www.sec.gov/Archives/edgar/data/52988/000162828026030521/jfy2026q2earningsrelease.htm

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