Jacobs fiscal Q3 2026: gross revenue up 34.5% to $4.08B (adjusted net revenue +8.3%) and adjusted EPS up 13.6% to $1.84, but GAAP EPS fell to $1.16 on a 43.4% tax rate tied to the PA Consulting buyout; backlog a record $28.9B.
Revenue
$4.1B
+34.5% YoY
Net income
$137M
-24.2% YoY
Diluted EPS
$1.16
-25.6% YoY
Operating margin
7.0%
Overview
Jacobs Solutions' fiscal third quarter of 2026 covers the three months ended June 26, 2026. Jacobs' fiscal year ends in late September, so this is its fiscal Q3, not the calendar July–September quarter. The results were filed on Form 10-Q on August 4, 2026, the same day as the earnings release.
The quarter had two sides. The operating business grew: gross revenue rose 34.5% to $4.08 billion, and adjusted EPS rose 13.6% to $1.84. Reported profit fell: GAAP net earnings from continuing operations dropped 24.2% to $137.4 million, and GAAP diluted EPS fell from $1.56 to $1.16. Almost all of the difference comes from three things: a much higher tax rate tied to Jacobs buying out the rest of PA Consulting in March, a one-time gain in last year's quarter from the Amentum shares Jacobs used to own, and higher interest on the debt used to fund the PA deal.
A second gap is just as important. Revenue grew 34.5%, but most of that growth was pass-through revenue. That is money Jacobs bills to clients for subcontractors, materials and equipment it buys for them, earning little or no markup. Without it, adjusted net revenue (the revenue Jacobs earns from its own staff's work) grew 8.3% to $2.42 billion. That 8.3% is the better measure of how much the business grew.
Key metrics
Metric
Fiscal Q3 2026
Fiscal Q3 2025
YoY Change
Revenue (gross, GAAP)
$4,076.4M
$3,031.8M
+34.5%
Adjusted net revenue (excl. pass-through)
$2,416.6M
$2,231.3M
+8.3%
Gross margin (on gross revenue)
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Net earnings from continuing ops (attrib. to Jacobs)
$137.4M
$181.2M
-24.2%
Diluted EPS, continuing ops (GAAP)
$1.16
$1.56
-25.6%
Adjusted EPS
$1.84
$1.62
+13.6%
Adjusted EBITDA margin (on adj. net revenue)
15.2%
14.1%
+1.1 pts
GAAP effective tax rate
43.4%
21.9%
+21.5 pts
Backlog
$28.9B
$22.7B
+27.3%
Book-to-bill, quarter (gross / adj. net revenue)
1.5x / 1.1x
n/a
n/a
Book-to-bill measures new orders won against revenue billed in the period. Above 1.0x means the order book is growing. On a trailing-twelve-month basis, it was 1.4x on gross revenue and 1.2x on adjusted net revenue.
Why revenue grew 34% but gross margin fell 5 points
Both numbers come from the same shift in the kind of revenue Jacobs booked. In the Infrastructure & Advanced Facilities (I&AF) segment, pass-through revenue roughly doubled, from $800.5 million to $1,659.8 million. It now makes up about 44% of the segment's gross revenue, up from about 30% a year ago. Pass-through dollars carry little or no profit, so they raise revenue and dilute percentage margins at the same time. That explains most of the drop in gross margin from 25.0% to 19.9% and the lower GAAP operating margin on gross revenue. The 10-Q links the margin change to "higher revenues associated with pass-through cost, year-over-year project mix as well as lower utilization trends primarily in the PA Consulting business."
Gross profit in dollars still rose 6.9% to $810.7 million. Measured against adjusted net revenue, the margin went up: adjusted EBITDA margin (profit before interest, tax, depreciation and one-off items, divided by adjusted net revenue) rose from 14.1% to 15.2%. The lower headline margins do not mean Jacobs' own work became less profitable. They reflect a bigger share of low-margin procurement moving through its books. The 10-Q does not say which projects drove the pass-through increase, though the release credits I&AF's overall growth to Data Center, Semiconductor and other private-sector and utility clients.
Segment performance
Segment
Gross revenue
YoY
Adj. net revenue
YoY
Segment op. profit
YoY
Op. margin on adj. net revenue
Infrastructure & Advanced Facilities
$3,746.9M
+38.8%
$2,087.1M
+9.9%
$268.1M
+13.6%
12.8% (12.4%)
PA Consulting
$329.5M
-1.0%
$329.5M
-1.0%
$73.6M
+1.7%
22.3% (21.8%)
Total
$4,076.4M
+34.5%
$2,416.6M
+8.3%
$341.8M
+10.8%
14.1% (13.8%)
Prior-year margin in brackets. Segment operating profit excludes restructuring, transaction charges and amortization of acquired intangibles, which are reported at the corporate level.
I&AF grew the whole company. Adjusted net revenue rose 9.9%, and the CEO says all of it was organic, meaning none came from acquisitions. The release names Data Center, Semiconductor, Energy & Power, Transportation and Water as the sectors leading the growth. The 10-Q credits the "Global Operations, along with the Americas and International sectors." Currency had little effect this quarter: foreign-exchange translation added about $19.5 million to I&AF revenue, roughly 0.7 points of its 38.8% growth. Segment operating profit rose 13.6%, faster than adjusted net revenue, and the margin on adjusted net revenue improved from 12.4% to 12.8%.
PA Consulting stalled. Revenue slipped 1.0% to $329.5 million. The 10-Q attributes this to "delayed client approvals, which adversely affected the timing of revenue recognition," and separately notes lower staff utilization (the share of consultants' hours billed to clients) at PA. The quarter's growth was also not flattered by currency: FX added only $1.5 million, compared with $18.2 million in the prior-year quarter. Operating profit still edged up 1.7% to $73.6 million because PA's SG&A (overhead costs) fell. Over nine months PA is up 10% in revenue and 15% in operating profit, driven by its public-services and defence-and-security work. So Q3 is a soft quarter for PA inside a stronger year so far.
GAAP EPS vs. adjusted EPS: what explains the $0.68 gap
Pre-tax earnings from continuing operations were almost unchanged at $241.2 million, down 1.6%. The GAAP decline happened below that line:
Tax. Income tax expense nearly doubled, from $53.8 million to $104.6 million, and the effective tax rate rose from 21.9% to 43.4%. The 10-Q attributes this mainly to "$35.8 million of non-deductible expenses associated with the PA Consulting Transaction," meaning costs of the buyout that cannot be deducted from taxable income. It says these items "are expected to have a continuing impact" on the tax rate for the rest of fiscal 2026. The adjusted tax rate, which excludes these items, was 26.4%, compared with 24.8% a year earlier.
Amentum comparison. Jacobs spun off its government-services business into Amentum in September 2024 and kept a stake of Amentum shares. That stake has since been disposed of; the filing calls it a "former investment." In fiscal Q3 2025, a rise in the value of those shares added a $27.4 million gain, or $0.23 per share, to GAAP earnings. This quarter had no Amentum gain. Its only comparable item was a $6.2 million mark-to-market gain on a different equity investment, which Jacobs excludes from adjusted results. Last year's GAAP EPS of $1.56 was therefore partly lifted by a non-operating gain that did not repeat.
Interest. Net interest expense rose 61% to $46.3 million. Long-term debt stood at $3.58 billion, compared with $2.24 billion at the end of fiscal 2025, after borrowing to pay for the PA deal.
Adjustments to reach $1.84. The adjusted EPS figure adds back transaction costs ($0.11), restructuring and integration charges ($0.14), amortization of acquired intangibles ($0.21), and "other" items ($0.23). Most of the "other" item is the tax effect of the PA transaction, net of the $6.2 million equity gain.
The PA Consulting buyout. On March 20, 2026, Jacobs bought all of the PA Consulting shares it did not already own. It paid an initial consideration of about £1.21 billion: about £997.6 million in cash plus 2,043,537 new Jacobs shares. A further £75 million is due in fiscal 2028, in stock, cash or both. Because Jacobs now owns 100% of PA, none of PA's profit goes to minority holders anymore. In the prior-year quarter, $5.7 million of earnings had gone to those holders, and a $6.6 million redemption-value adjustment was added to the earnings used to calculate EPS. Both are now gone. Over nine months, the buyout also caused large one-time charges: $215.3 million pre-tax for the final vesting of PA equity awards, $123.9 million of compensation paid out through PA's employee benefit trust, and a $20.5 million loss on a currency hedge. This is why nine-month GAAP operating profit fell to $438.1 million from $652.1 million, even though segment profit rose.
Backlog and cash
Backlog, the value of contracted work not yet performed, reached a record $28.9 billion, up 27.3%. I&AF backlog was $28.4 billion (+27.7%) and PA's was $459 million (+9.3%). Book-to-bill differs sharply between the two revenue measures. On gross revenue it was 1.5x for the quarter. On adjusted net revenue, which leaves out pass-through revenue, it was 1.1x. Part of the backlog growth is therefore future pass-through revenue, which will raise reported revenue more than profit. The adjusted figure is still above 1.0x, so Jacobs' own fee-earning work is also growing.
Cash generation was strong. Operating cash flow was $456.1 million, compared with $292.6 million a year earlier. That figure is after about $102 million paid to PA employees from the employee benefit trust as part of the buyout. Excluding such payouts, Jacobs' adjusted free cash flow doubled to $540.9 million from $270.5 million. Jacobs spent $142.2 million on share buybacks in the quarter ($614.1 million year-to-date) and repaid a net $505 million of borrowings.
Takeaway: The 25.6% fall in GAAP EPS mostly reflects accounting and tax effects, not weaker operations. Pre-tax earnings were flat, and the decline comes from a tax rate raised by the PA buyout plus the absence of last year's $0.23-per-share Amentum gain. The real business signal is the 8.3% growth in adjusted net revenue (9.9% in I&AF), with margins rising on that base. Headline revenue growth of 34.5% is inflated by low-margin pass-through work and should not be read as the growth rate.
Guidance and outlook
For the third straight quarter, Jacobs raised the midpoints of its fiscal 2026 guidance. The ranges are now:
FY2026 guidance
New
Previous
Adjusted net revenue growth
9.5% – 10.0%
8.0% – 10.5%
Adjusted EBITDA margin
14.7% – 14.8%
14.6% – 14.9%
Adjusted EPS
$7.20 – $7.30
$7.10 – $7.35
Adjusted free cash flow margin
~8%
7.0% – 8.5%
Nine-month adjusted EPS is $5.12, so the new range implies fiscal Q4 adjusted EPS of roughly $2.08 to $2.18, above the $1.84 earned in Q3. The narrower ranges leave little room for error in the final quarter.
What to watch in the fiscal Q4 / full-year report:
Whether PA Consulting recovers. Management blamed Q3 on the timing of client approvals. If those approvals come through, PA revenue should grow again in Q4. If revenue stays flat or falls, the problem looks more like weaker demand than a timing delay.
How much pass-through revenue keeps rising. More pass-through will keep pushing gross revenue up and gross margin down. The figures to watch are adjusted net revenue growth and adjusted net revenue book-to-bill (1.1x this quarter). A drop below 1.0x would mean Jacobs' own fee-earning work is growing more slowly.
GAAP taxes and leverage. The 10-Q says the elevated tax rate will continue for the rest of fiscal 2026, so GAAP EPS will likely stay well below adjusted EPS in Q4. Interest costs on the extra $1.3 billion of long-term debt will also keep weighing on GAAP earnings until the debt is paid down.