Global professional services company Jacobs Solutions (NYSE:J) missed Wall Street’s revenue expectations in Q1 CY2025 as sales rose 2.2% year on year to $2.91 billion. Its non-GAAP profit of $1.48 per share was 6.9% above analysts’ consensus estimates.
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Jacobs Solutions (J) Q1 CY2025 Highlights:
- Revenue: $2.91 billion vs analyst estimates of $3.02 billion (2.2% year-on-year growth, 3.5% miss)
- Adjusted EPS: $1.48 vs analyst estimates of $1.38 (6.9% beat)
- Adjusted EBITDA: $286.6 million vs analyst estimates of $288.8 million (9.8% margin, 0.8% miss)
- Operating Margin: 7.2%, in line with the same quarter last year
- Free Cash Flow was -$96.43 million compared to -$70.63 million in the same quarter last year
- Backlog: $22.16 billion at quarter end, up 20% year on year
- Market Capitalization: $15.52 billion
Company Overview
With a workforce of approximately 45,000 professionals tackling complex challenges from water scarcity to cybersecurity, Jacobs Solutions (NYSE:J) provides engineering, consulting, and technical services focused on infrastructure, sustainability, and advanced technology solutions.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $11.69 billion in revenue over the past 12 months, Jacobs Solutions is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. To accelerate sales, Jacobs Solutions likely needs to optimize its pricing or lean into new offerings and international expansion.
As you can see below, Jacobs Solutions’s demand was weak over the last five years. Its sales fell by 1.7% annually, a poor baseline 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. Jacobs Solutions’s recent performance shows its demand remained suppressed as its revenue has declined by 4.9% annually over the last two years. 
We can dig further into the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Jacobs Solutions’s backlog reached $22.16 billion in the latest quarter and was flat over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for Jacobs Solutions’s products and services but raises concerns about capacity constraints. 
This quarter, Jacobs Solutions’s revenue grew by 2.2% year on year to $2.91 billion, falling short of Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 7.1% over the next 12 months, an improvement versus the last two years. This projection is particularly noteworthy for a company of its scale and implies its newer products and services will catalyze better top-line performance.
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Adjusted Operating Margin
Jacobs Solutions was profitable over the last five years but held back by its large cost base. Its average adjusted operating margin of 9% was weak for a business services business.
Analyzing the trend in its profitability, Jacobs Solutions’s adjusted operating margin might fluctuated slightly but has generally stayed the same over the last five years, which doesn’t help its cause.
This quarter, Jacobs Solutions generated an adjusted operating profit margin of 9.9%, 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.
Sadly for Jacobs Solutions, its EPS and revenue declined by 2% and 1.7% annually over the last five years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Jacobs Solutions’s low margin of safety could leave its stock price susceptible to large downswings.
In Q1, Jacobs Solutions reported EPS at $1.48, down from $1.89 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 6.9%. Over the next 12 months, Wall Street expects Jacobs Solutions’s full-year EPS of $6.24 to grow 3%.
Key Takeaways from Jacobs Solutions’s Q1 Results
It was encouraging to see Jacobs Solutions beat analysts’ EPS expectations this quarter. On the other hand, its revenue and EPS missed. Overall, this was a softer quarter. The stock traded down 1.2% to $118.02 immediately following the results.
So do we think Jacobs Solutions 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.