tapebrief
J · Q2 2026

J · Q3 2026 Earnings

Bullish

Jacobs Solutions

Reported August 4, 2026

30-second summary

Jacobs printed Q3 revenue of $4.08B (+34.5% YoY) and adjusted EPS of $1.84, beating consensus by 15.1% and 0.5% respectively; adjusted net revenue grew 8.3% YoY (80 bps above the ~7.5% guide) and adjusted EBITDA margin hit 15.2% (+20 bps above the ~15% guide). Management raised the FY26 EPS midpoint for the third consecutive quarter to $7.25 and — the real signal — guided Q4 to ~14% YoY net revenue growth and ~16% EBITDA margin, confirming the H2 acceleration promised at Q2. Backlog hit a record $28.9B (+27.3% YoY) with a 1.5x quarterly book-to-bill, and AI infrastructure now sits at 11% of adjusted net revenue with the data center backlog doubled and pipeline tripled to a 2–3 year visibility horizon.

Headline numbers

EPS

Q3 FY2026

$1.84

+0.5% vs est.

Revenue

Q3 FY2026

$4.08B

+34.5% YoY

+15.1% vs est.

Gross margin

Q3 FY2026

19.9%

Free cash flow

Q3 FY2026

$0.43B

Operating margin

Q3 FY2026

7.0%

Key financials

Q3 FY2026
MetricQ3 FY2026Q3 FY2025YoYQ2 FY2026QoQ
Revenue$4.08B$3.03B+34.5%$3.69B+10.5%
EPS$1.84$1.62+13.6%$1.75+5.1%
Gross margin19.9%25.0%-510bps21.5%-160bps
Operating margin7.0%7.7%-70bps-2.2%+920bps
Free cash flow$0.43B$0.27B+59.0%$-0.27B+257.9%

Guidance

Raised FY2026 EPS midpoint for third consecutive quarter and accelerated Q4 revenue growth outlook to ~14% YoY, but narrowed full-year margin and revenue growth ranges, signaling strong Q3 beat with cautious full-year positioning.

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 growthQ3 FY2026approximately 7.5%8.3%+80bps above guideBeat
Adjusted EBITDA marginQ3 FY2026approximately 15%15.2%+20bps above guideBeat

New guidance

MetricPeriodGuideYoY
Adjusted net revenue growthQ4 FY2026approximately 14%+12.2-13.8% YoY
Adjusted EBITDA marginQ4 FY2026approximately 16%—
Free cash flowQ4 FY2026approximately $150 million—

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
Adjusted net revenue growth
FY2026
8.0% to 10.5%9.5% to 10.0%Low end +150bps, high end -50bps; midpoint narrows from 9.25% to 9.75%Lowered
Adjusted EBITDA margin
FY2026
14.6% to 14.9%14.7% to 14.8%Low end +10bps, high end -110bps; midpoint narrows from 14.75% to 14.75% (unchanged)Lowered
Adjusted free cash flow margin
FY2026
7.0% to 8.5%approximately 8%Midpoint stable at ~8%, but range collapsed from 7.0%-8.5% (150bps) to a point estimate, eliminating upside optionalityLowered
Adjusted effective tax rate
Q3 FY2026
27% to 28%Withdrawn — no replacement—Withdrawn

Reaffirmed unchanged this quarter: Adjusted EPS ($7.20 to $7.30)

Segment KPIs

Q3 FY2026
SegmentQ3 FY2026Q3 FY2025YoY
Infrastructure & Advanced Facilities$3.747B—+38.8%
PA Consulting$0.33B$0.333B-0.9%

Other KPIs

Q3 FY2026
SegmentQ3 FY2026Q3 FY2025YoY
Adjusted Net Revenue$2.42B——
Adjusted Net Revenue Growth (YoY)8.3%——
Backlog$28.9B$22.7 billion—
Backlog Growth (YoY)27.3%——
Book-to-Bill Ratio1.5x——
Adjusted Net Revenue Book-to-Bill (TTM)1.2x——
Adjusted EBITDA$366.8M$314.3 million—
Adjusted EBITDA Margin15.2%14.1%—

Management tone

Customer optimization hangover (FY25) → data center inflection (Q3 FY25) → AI-as-bottom-line (Q1 FY26) → AI ecosystem quantified (Q2 FY26) → AI ecosystem at 11% with 2-3 year visibility (Q3 FY26).

Three quarters ago management disclosed 150+ data center engagements without a revenue contribution. Two quarters ago the framework opened up: data center AI at 3–4% of the business, broader AI ecosystem at 10–11%, pipeline up 400% YoY. This quarter management stepped the disclosure forward again and, critically, extended the visibility window: from the call, "As of Q3, the direct AI build-out represented 11% of our adjusted net revenue, up approximately 100 basis points from last quarter, and our pipeline of future opportunities continues to grow meaningfully." The Wells Fargo exchange added the multi-year anchor — data center backlog doubled, pipeline tripled, and pipeline visibility extended from 6–9 months to 2–3 years. The shift moves AI from a growth vector with quarterly proof points to a segment with FY27 and FY28 revenue coverage already contracted.

Margin expansion has been re-cast from a two-year program into a multi-year, multi-lever operating algorithm. Two quarters ago the framing was 200 bps over FY25+FY26 plus 75 bps/year through FY29. This quarter the CEO anchored the whole story on one sentence: "The combination of strong annual margin expansion, high single-digit organic growth, and continued share repurchases enabled by strong free cash flow generation has created a powerful earnings growth algorithm." The Bernstein exchange broke out the levers: global delivery and operating leverage carry the next 4–5 quarters, mix takes over in FY27+. This is a different posture than a year ago, when margin was described as a conditional element of the FY26 bridge.

The PA Consulting arc has now completed a full U-turn in one quarter. Q2 framed PA as "strategic amplifier" with 16.5% revenue growth and $20M+ in synergies; Q3 prints PA revenue at -1% with the CEO citing "temporary disruption from a UK governmental leadership change [that] delayed PA project start dates." Management flagged the disruption as transitory and pointed to a "return to normal" already visible, but the quarter puts a hard test on the "strategic amplifier" narrative — the FY26 EPS bridge and the FY27 margin story both depend on PA carrying its share. Cook (Truist) pressed on this: management said FY27 margin expansion will be balanced between INAF and PA rather than PA-led, which is a subtle re-framing of the synergy contribution.

The FY29 confidence has stepped up again. Last quarter management said they were "ahead of midpoint" on the FY29 plan for the first two years. This quarter: "we are now well ahead of our initial FY26 expectations and remain on track to reach or exceed all of our FY29 targets." From "meet or exceed" to "reach or exceed" is a small phrasing shift, but paired with the third consecutive guide raise it signals management believes the FY29 targets will need to be revised upward rather than merely met.

Backlog has moved from "steady improvement" to "structural inflection." Backlog grew 27.3% to $28.9B — a record for the third consecutive quarter — with a 1.5x quarterly book-to-bill. From the call: "Winning a repeat sole source contract at this scale reflects the confidence clients place in Jacobs to deliver complex AI infrastructure with speed, safety, and certainty." Repeat sole-source language is unusual in engineering services and points to a shift from bid-competitive to relationship-embedded contract capture in the highest-growth segment.

Recurring themes management leaned on this quarter:

AI infrastructure monetization accelerating across data centers and semiconductorsMargin expansion as sustainable structural trend, not cyclical benefitBacklog conversion into revenue visibility enabling earnings growth algorithmRepeat sole-source contracts from marquee clients signaling competitive moatSequential improvement across end markets with Q4 guidance implying continued momentumCapital return discipline balanced with deleveraging to 1.5x target

Risks management surfaced:

Temporary disruption from UK governmental leadership change delayed PA project start datesEnvironmental sector year-over-year headwinds persisting but offsetting water growthForeign exchange impact on segments, though described as minor in Q3Execution risk on AI data center projects requiring speed and certaintyPipeline realization risk as opportunities must convert to backlog and revenue

Q&A highlights

Andy Kaplowitz · Citigroup

Asked about backlog acceleration and whether FY27 net revenue growth could match or exceed FY26 growth rates, and about data center, life sciences, and advanced manufacturing segments potentially achieving double-digit growth.

Management deferred specific FY27 growth algorithm details to next call but indicated confidence in growth at least in line with long-term average. Confirmed data center/life sciences/advanced manufacturing can absolutely grow double digits, citing increased share, long client pipelines, and broad ecosystem opportunity.

Backlog at 1.2x book to bill on net revenueQ4 projected exit rating at 14%Data center/life sciences/advanced manufacturing growing double digitsIncreased share with major clients and long pipelines ahead

Stephen Fisher · UBS

Asked about book-to-bill sustainability at 1.5x or better levels given accelerating growth and lumpiness, and about Middle East activity and international growth pace.

Management distinguished gross vs. net revenue book-to-bill, indicating net revenue book-to-bill of 1.1-1.3 is more consistent while gross can vary 1.5-1.7 depending on full program deliveries. International growth at 9% skewed toward Australia/NZ/Asia; Middle East stable; European area relatively softer.

Net revenue book-to-bill of 1.1-1.3 is consistentGross revenue book-to-bill ranges 1.5-1.7 and lumpy based on large program bookingsInternational growth at 9%Middle East stable; Europe relatively softer

Chad Dillard · Bernstein

Asked about drivers of 50bp margin expansion in infrastructure and advanced facilities (INAF), and about 800-volt data center architecture shifts and design intensity changes.

Global delivery and operating leverage are primary margin drivers over next 4-5 quarters; mix will have more impact in FY27+. On data centers, 800V DC solid-state transformers increase complexity but broader utility/chip requirements are bigger driver; positioned well with hyperscalers and neoclouds.

FY25 margin expansion of 110bp; FY26 guidance midpoint shows 90bp expansionGlobal delivery and operating leverage are primary drivers200bp total margin expansion over two years described as industry-leading800V architecture increasing design intensity and scope

Jamie Cook · Truist

Asked about Q3-Q4 revenue ramp drivers (10-cent EPS guidance range), and about margin expansion sourcing between INAF vs PA Consulting in FY27.

Q4 14% growth includes ~6-7% from extra week; normalized growth ~8%, consistent with Q3. Q4 EBITDA margin guidance at 16% achievable through increased utilization and global delivery. FY27 margin expansion expected to be balanced between both INAF and PA Consulting as PA synergies still being realized.

Q4 guided 14% net revenue growth, normalized to ~8% excluding extra weekQ4 EBITDA margin guidance at 16%FY27 margin expansion expected balanced between INAF and PA ConsultingPA Consulting has highest margins in the space

Jerry Revich · Wells Fargo

Asked about AI-specific data center infrastructure pipeline progression, award/backlog conversion rates, and semiconductor construction activity outlook for FY27.

Data center backlog doubled; pipeline tripled with 2-3 year visibility (vs prior 6-9 months). AI now represents 11% of business (up from 10% last quarter) with accelerating growth. Customers pushing to accelerate semiconductor design; working with largest US HBM chip manufacturer; Intel pipeline growing into FY27.

Data center backlog doubled; pipeline tripledPipeline visibility extended to 2-3 years from 6-9 monthsAI now 11% of business, accelerating growthEngineer of record for Intel with growing pipeline into FY27

Answers to last quarter's watch list

Q3 actual EBITDA margin vs the ~15% guide — Q3 printed 15.2%, +20 bps above guide, and the FY26 EBITDA range midpoint held at 14.75% — but the high end was cut 110 bps to 14.8%, so while the Q3 print confirmed the trajectory, management explicitly capped the FY upside rather than raising the ceiling. Q4 guided to ~16% pushes the H2 average well above the FY range, meaning the FY high end is being held down by the H1 shortfall rather than a forward view.
Resolved positively
Q3 net revenue growth vs the ~7.5% YoY guide and H2 acceleration commentary — Q3 came in at 8.3% (+80 bps above guide), and Q4 is guided to ~14% headline / ~8% underlying-organic (ex extra week). The FY26 low end was raised 150 bps to 9.5%, and the Q4 exit rate framing anchors FY27 setup. The H2 acceleration is confirmed on the guided basis but the underlying organic pace remains ~8%, consistent with Q3.
Resolved positively
AI infrastructure revenue contribution disclosed as a discrete line vs the 10–11% framing — Management stepped the disclosure forward from 10% to 11% of adjusted net revenue (+100 bps QoQ), added that data center backlog doubled and pipeline tripled, and extended visibility from 6–9 months to 2–3 years. Still not a discrete P&L line, but the segment-level metrics have progressed each quarter for three quarters running.
Resolved positively
Net leverage trajectory back toward sub-2x year-end target — Q3 FCF of $431M lands the company solidly on the ~8% FCF margin trajectory, and management reaffirmed the sub-2x year-end goal. The Q2 FCF concern (-$273M) has fully reversed.
Resolved positively
FY27 framework or quantified preview at Q3 — Management deferred the specific FY27 growth algorithm to the next call (Kaplowitz exchange) but committed qualitatively to growth "at least in line with the long-term average" and told Cook that FY27 margin expansion will be "balanced between INAF and PA Consulting." No numeric range yet. The framework is developing, not delivered.
Continue monitoring
PA Consulting growth rate: low- to mid-teens validates "strategic amplifier"; deceleration to high single digits suggests FY26 H1 captured the tailwind — PA came in at -1% in Q3, well below high single digits, on temporary UK governmental disruption. Management flagged the disruption as transitory and pointed to normalization already underway, but the FY27 margin framing has quietly shifted from PA-led to balanced. The "strategic amplifier" narrative has taken a real hit for one quarter.
Resolved negatively

What to watch into next quarter

Q4 EBITDA margin vs the ~16% guide: a print at or above 16% locks in the FY26 midpoint and gives room for a fifth consecutive FY27-anchoring raise; below 15.5% forces the FY range to compress further and undermines the "structural" margin narrative given Q3 came in at 15.2%.

Q4 net revenue growth vs the ~14% guide (implied $3.59B off Q4 FY25 $3.15B baseline): watch the split between calendar (+6–7% from extra week) and underlying organic (~8%); an underlying pace above 8.5% signals genuine acceleration, at 8% signals stability, below 7.5% signals deceleration.

PA Consulting return to growth in Q4: management said the UK government disruption is normalizing; a Q4 print in the mid- to high-single digits validates the "temporary" framing, another negative or low-single-digit quarter turns Q3 into the start of a trend and puts the FY27 "balanced" margin story under real pressure.

FY27 framework disclosure at Q4: management explicitly deferred the FY27 growth algorithm to the next call. Watch whether the reveal is a specific EPS range and net revenue growth band (consistent with the FY26 introduction at Q4 FY25) or a qualitative "ahead of FY26" holding pattern.

AI direct build-out step from 11%: the metric has moved from ~4% to 10% to 11% over three quarters. Watch whether Q4 shows continued 100 bps step-ups (implying FY27 exits at 15%+) or plateaus, and whether the "2–3 year pipeline visibility" gets a dollar attachment.

FY26 EBITDA margin high-end erosion: the ceiling has now been cut from 14.9% to 14.8% while Q3 printed 15.2% and Q4 is guided to ~16%. If Q4 comes in above 16%, the FY range becomes structurally conservative and the ceiling cut this quarter looks like a sandbag; if Q4 misses, the ceiling cut looks prescient.

Sources

  1. Jacobs Solutions Q3 FY2026 Earnings Release, SEC filing — https://www.sec.gov/Archives/edgar/data/52988/000162828026052563/jfy2026q3earningsrelease.htm

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