Professional consulting firm ICF International (NASDAQ:ICFI) fell short of the market’s revenue expectations in Q2 CY2025, with sales falling 7% year on year to $476.2 million. Its non-GAAP profit of $1.66 per share was 5.2% above analysts’ consensus estimates.
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ICF International (ICFI) Q2 CY2025 Highlights:
- Revenue: $476.2 million vs analyst estimates of $481.1 million (7% year-on-year decline, 1% miss)
- Adjusted EPS: $1.66 vs analyst estimates of $1.58 (5.2% beat)
- Adjusted EBITDA: $52.88 million vs analyst estimates of $51.44 million (11.1% margin, 2.8% beat)
- Operating Margin: 8.4%, in line with the same quarter last year
- Free Cash Flow Margin: 9.7%, down from 10.8% in the same quarter last year
- Backlog: $3.4 billion at quarter end
- Market Capitalization: $1.52 billion
Company Overview
Operating at the intersection of policy, technology, and implementation for over five decades, ICF International (NASDAQ:ICFI) provides professional consulting services and technology solutions to government agencies and commercial clients across energy, health, environment, and security sectors.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $1.98 billion in revenue over the past 12 months, ICF International is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.
As you can see below, ICF International grew its sales at a decent 5.9% compounded annual growth rate over the last five years. This shows its offerings generated slightly more demand than the average business services company, a useful starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. ICF International’s recent performance shows its demand has slowed as its annualized revenue growth of 1.3% over the last two years was below its five-year trend.
ICF International also reports its backlog, or the value of its outstanding orders that have not yet been executed or delivered. ICF International’s backlog reached $3.4 billion in the latest quarter.
This quarter, ICF International missed Wall Street’s estimates and reported a rather uninspiring 7% year-on-year revenue decline, generating $476.2 million of revenue.
Looking ahead, sell-side analysts expect revenue to decline by 4.3% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will face some demand challenges.
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Operating Margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.
ICF International was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.1% was weak for a business services business.
On the plus side, ICF International’s operating margin rose by 1.1 percentage points over the last five years, as its sales growth gave it operating leverage.
In Q2, ICF International generated an operating margin profit margin of 8.4%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
ICF International’s EPS grew at a spectacular 13.6% compounded annual growth rate over the last five years, higher than its 5.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Diving into ICF International’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, ICF International’s operating margin was flat this quarter but expanded by 1.1 percentage points over the last five years. On top of that, its share count shrank by 2.9%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth. 
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For ICF International, its two-year annual EPS growth of 11.1% was lower than its five-year trend. We hope its growth can accelerate in the future.
In Q2, ICF International reported adjusted EPS at $1.66, down from $1.69 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 5.2%. Over the next 12 months, Wall Street expects ICF International’s full-year EPS of $7.60 to shrink by 10.8%.
Key Takeaways from ICF International’s Q2 Results
It was encouraging to see ICF International beat analysts’ EPS expectations this quarter. On the other hand, its revenue slightly missed. Overall, this was a weaker quarter. The stock traded down 1.5% to $83.01 immediately following the results.
So do we think ICF International is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.