Booz Allen Hamilton Holding Corp (BAH) shares jumped Friday after the defense contractor posted a massive earnings beat that more than offset concerns about slowing revenue growth.

The company delivered adjusted earnings of $1.77 per share for its fiscal third quarter, sailing past the analyst consensus of $1.29. That's the kind of beat that gets investors' attention, even when the revenue picture looks less rosy.

And the revenue picture does look a bit rough. Quarterly sales came in at $2.62 billion, down 10.2% year-over-year and missing analyst expectations of $2.75 billion. Revenue excluding billables declined 6.7%, suggesting the core business faced headwinds during the period.

Operating income took a hit as well, falling to $230 million from $291 million in the prior-year quarter. Meanwhile, client staff headcount dropped by roughly 3,700 people compared to last year, an 11.3% decline that reflects the company's efforts to right-size operations.

But here's where things get interesting: Booz Allen's backlog grew 1.5% to reach a record $38 billion. That's a massive pipeline of future work, even if the quarterly book-to-bill ratio of 0.3x indicates the company booked less new business than it billed during the quarter. The record backlog suggests stronger revenue growth could be on the horizon.

Balance Sheet and Shareholder Returns

The company ended the quarter with $882 million in cash and equivalents against long-term debt of $3.86 billion. More notably, management announced a 7% dividend increase, raising the quarterly payout to 59 cents per share. The dividend will be paid on March 2, 2026, to shareholders of record as of February 13, 2026.

Updated Guidance

Booz Allen slightly trimmed its fiscal 2026 revenue outlook to $11.300 billion to $11.400 billion, down from a prior range of $11.300 billion to $11.500 billion. The new range sits just below the analyst consensus of $11.403 billion.

The real surprise came on the earnings front. Management raised its adjusted EPS guidance to $5.95 to $6.15, up substantially from the previous range of $5.45 to $5.65. That's well above the $5.62 analyst consensus, suggesting the company sees opportunities to maintain profitability even as revenue growth moderates.

The company maintained its adjusted EBITDA margin target of mid-10% and revised its free cash flow forecast to $825 million to $900 million, down from a previous range of $850 million to $950 million.

Price Action: Booz Allen Hamilton shares rose 5.58% to $101.10 in premarket trading Friday.