Maximus' Q3 Earnings Beat Estimates, Stock Rallies 4%

Maximus, Inc. MMS reported impressive third-quarter fiscal 2025 results. Both earnings and revenues beat the Zacks Consensus Estimate. The better-than-expected results positively impacted the market as the stock has rallied 4% since the earnings release.

Quarterly adjusted earnings of $2.16 per share beat the Zacks Consensus Estimate by 55.4% and increased 24.1% year over year. Revenues of $1.35 billion topped the consensus mark by 4.5% and rose 2.6% from the year-ago quarter.

Maximus, Inc. Price, Consensus and EPS Surprise

Maximus, Inc. price-consensus-eps-surprise-chart | Maximus, Inc. Quote

Maximus raised the earnings and revenue guidance for fiscal year 2025. Total revenues are now expected between $5.38 billion and $5.48 billion compared with the previous expectation of $5.25 billion and $5.34 billion. The Zacks Consensus Estimate is pegged at $5.38 billion.

Adjusted earnings are anticipated in the range of $7.35-$7.55 per share compared with the previous expectations of $6.30-$6.60 per share. The updated guided range is higher than the current Zacks Consensus Estimate of $6.61.

Segmental Revenues of Maximus

The U.S. Federal Services segment’s revenues of $761.2 million rose 11.4% from the year-ago reported number and beat our estimate of $686.8 million. Meanwhile, the Outside the U.S. segment’s revenues of $147.4 million decreased 6.9% year over year and missed our anticipation of $163.7 million. The U.S. Services segment’s revenues of $439.8 million fell 6.9% year over year and lagged our estimate of $440.2 million.

MMS’ Sales and Pipeline

Year-to-date signed contract awards, as of June 30, 2025, totaled $3.37 billion. Contracts pending (awarded but unsigned) amounted to $1.44 billion. The sales pipeline, as of June 30, was $44.7 billion. This included $3.05 billion in pending proposals, $1.20 billion in proposals in preparation and $40.4 billion in opportunities tracking. The book-to-bill ratio was 0.8 on a trailing 12-month basis. 

MMS’ Operating Performance

Operating income of $165.7 million increased 16.9% year over year. This compares with our expected adjusted operating income of $128 million, down 22.6% year over year. The adjusted operating income margin of 12.3% increased 151 basis points year over year.

Maximus’ Balance Sheet and Cash Flow

Maximus ended the quarter with a cash and cash equivalent balance of $59.8 million compared with $73 million reported at the end of the prior quarter.

The company generated $182.7 million in cash from operations. Free cash outflow was $198.2 million.

MMS Updates Fiscal 2025 Guidance

The company expects an adjusted EBITDA margin of approximately 13% compared with 11.7% expected earlier.

Free cash flow expectation is between $370 million and $390 million. The company forecasts interest expenses of approximately $81 million compared with the prior anticipation of $78 million. The effective income tax rate is anticipated to be within 28-29%. On a full-year basis, the weighted average shares outstanding are forecasted to be approximately 58 million.

Currently, Maximus carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot

Fiserv, Inc. FI reported mixed second-quarter 2025 results, wherein earnings beat the Zacks Consensus Estimate, but revenues missed the same.

FI’s adjusted EPS of $2.47 topped the consensus mark by 2.5% and rose 16% year over year. Adjusted revenues of $5.2 billion lagged the consensus estimate by a slight margin but gained 1.7% on a year-over-year basis.

The Interpublic Group of Companies, Inc. IPG reported impressive second-quarter 2025 results. Both earnings and revenues beat the Zacks Consensus Estimate.

IPG’s adjusted earnings of 75 cents per share surpassed the Zacks Consensus Estimate by 36.4% and jumped 23% from the year-ago quarter. Revenues before billable expenses (net revenues) of $2.2 billion beat the consensus estimate by a slight margin but declined 19.8% year over year. Total revenues of $2.5 billion decreased 7.2% year over year but outpaced the Zacks Consensus Estimate of $2.2 billion.

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This article originally published on Zacks Investment Research (zacks.com).

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