On Wednesday, ASGN (NYSE:ASGN) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
ASGN Inc reported Q1 2026 revenues of $968.3 million, consistent with the prior year and within guidance.
The company is transitioning to operate as Everforth, aligning with its integrated operating model and next wave growth strategy.
Commercial segment revenues grew slightly, driven by demand in AI, data, cloud, and infrastructure, though the adjusted EBITDA margin of 8.6% was below expectations.
New leadership appointments and the acquisition of Quinox are aimed at enhancing solution capabilities and supporting strategic priorities.
Guidance for Q2 2026 includes revenues of $970 million to $1 billion and an adjusted EBITDA margin of 8.8% to 9.5%.
Full Transcript
OPERATOR
Greetings and welcome to the ASGN Inc first quarter 2026 earnings call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operating assistance, please press 0 on your telephone keypad. It is now my pleasure to introduce your host, Kim Esterkin, Vice President of Investor Relations. Thank you.
Kim Esterkin (Vice President of Investor Relations)
Good afternoon. Thank you for joining us today for ASGN’s first quarter 2026 conference call. With me are Ted Hanson, Chief Executive Officer, Shiv Iyer, President and Marie Perry, Chief Financial Officer. Before we get started, I would like to remind everyone that our commentary contains forward looking statements. Although we believe these statements are reasonable, they are subject to risks and uncertainties and as such our actual results could differ materially from those statements. Certain of these risks and uncertainties are described in today’s press release and in our SEC filings. We do not assume any obligation to update statements made on this call. For your convenience, our prepared remarks and supplemental materials can be found in the Investor Relations section of our website@investors.asgn.com Please also note that on this call we will be referencing certain non GAAP measures such as adjusted EBITDA, Adjusted Net Income and free Cash Flow. These non GAAP measures are intended to supplement the comparable GAAP measures. Reconciliations between GAAP and non GAAP measures are included in today’s press release. I will now turn the call over to Ted Hanson, Chief Executive Officer.
Ted Hanson (Chief Executive Officer)
Thank you Kim and thank you for joining our first quarter 2026 earnings call. Today marks an important milestone for our company. This will be our final earnings call under the ASGN name and on Friday we will officially begin operating as Everforth and trading under our new stock ticker EFORE. This transition reflects the continued transformation of our business, bringing our capabilities together under the Everforth brand to support a more integrated operating model focused on higher value solutions and deeper client relationships. By pursuing this path we will unlock further scale and increase our cross selling opportunities. As part of this evolution, we are also updating our commercial segment reporting to more clearly reflect how we are evolving the business which is by industry rather than mode of delivery. This change is intentional and aligns with our next wave growth strategy and industry led approach which we previewed at our Investor Day this past November. Ultimately, the delivery structure of our engagements is much less meaningful than the outcomes we drive and the strong value we create for our clients. We will therefore provide color through the lenses that matter most to how we compete in the commercial space. Our five industries and our six solution capabilities. In addition to help track demand for our higher value work and our ability to win in the marketplace, we will disclose our commercial consulting book to Bill consistent with what we’ve shared in prior quarters. With that as background, let’s discuss our first quarter results. Revenues for the first quarter were $968.3 million in line with the prior year and our guidance, Commercial segment revenues were driven by demand in AI and data, cloud infrastructure and application engineering and modernization. Our AI and data and cloud and infrastructure pipelines continue to build reinforcing momentum in these areas of our business. Commercial consulting book to bill was 1.1 times on a trailing twelve month basis. Federal segment new contract awards totaled 151.3 million or a book to bill of 0.7 times on a trailing twelve month basis. Federal contract backlog was approximately 2.8 billion at quarter end or a coverage ratio of 2.4 times the segment’s trailing twelve month revenues. Similar to the commercial segment, AI and data work was a solid contributor to revenues, bookings and pipeline within our federal business. Cybersecurity contracts also nicely contributed to revenue and bookings in a quarter. We are beginning to see award activity at many government agencies pick up following the passage of the federal budget in early February. That said, we experienced some funding delays at the Department of Homeland Security which is navigating both a shutdown and a leadership transition. Importantly, we have not seen any disruption to award funding related to the conflict in Iran. Instead, we are seeing evolving requirements of partner collaboration particularly around cyber threat analysis and data management and analytics as agencies seek to strengthen decision making expertise. While our revenues were within guidance, adjusted EBITDA margin of 8.6% was below our expectations for the quarter. This miss was driven largely by business mix related to lower than expected contribution of some of our higher margin solutions within the commercial segment. Nevertheless, we continue to closely manage our expenses. As discussed during our investor day, we are making strategic pivots in our business that will position us well for the long term. Those changes are being shaped by how our clients themselves are evolving and and the expectations they have for partners that can support them through that change. Our clients are navigating a very volatile macro environment with continued uncertainty around how technologies such as AI and enterprise software will ultimately impact the technology landscape influence their IT spending. While this dynamic can create some near term variability, we are focused on strengthening our foundation by building a more unified brand, enhancing our go to market approach and maintaining disciplined expense management and capital allocation. These actions give us conviction that we are building a stronger, more resilient platform aligned with client demand and positioned to drive top line growth and margin expansion. Against this backdrop, I want to step back and revisit our next wave growth strategy. We continue to make progress executing our long term initiatives and during the first quarter we took several important actions that reinforced our strategic priorities. First, we announced key leadership appointments across both our commercial and federal government segments to support our next phase of growth. We welcome Ashish Jandial as President of Commercial North America, Sanjita Singh as President of Indian International and Donnie Scott as President of our Federal government segment. Each leader brings deep experience scaling global services organizations, driving AI enabled digital transformations and building delivery platforms designed for long term value creation. Collectively, this team enhances our ability to execute our strategy while building on the solid foundation already in place. We also successfully closed the acquisition of Quinox, marking another important milestone in advancing our strategy toward enhancing our solutions capabilities and margins. Quinox meaningfully expands our ability to deliver technical end to end application engineering and modernization solutions for our commercial clients while establishing a strong foundation for our offshore delivery platform in India. Although still early integration is progressing well and we are already co selling their services. Ultimately these actions enhance our ability to support growing client demand for AI led transformation, scalable delivery and outcomes based solutions across industries. We remain focused on executing with discipline and building a higher value more integrated everforth. With that, I’ll turn the call over to Shiv.
Shiv Iyer (President)
Thanks Ted and good afternoon everyone. As TED noted, we go to market through a combination of industry and solutions expertise. We believe industry is the most meaningful lens for understanding where client demand is emerging and how our customers are prioritizing their IT investments. With that in mind, I will begin with our industry performance for the first quarter within our commercial segment, we delivered year on year growth in the healthcare, consumer and industrial and TMT industry reflecting broad based demand for AI and data, cloud and infrastructure, application engineering and modernization and enterprise platforms. Healthcare grew at a high single digit rate driven by increased engagement from healthcare peers. While the consumer and industrial and TMT industry achieved mid single digit growth supported by software, utilities and industrial customers, leveraging our capabilities across AI and data cloud experience in cybersecurity. Though the financial services industry, one of the biggest spenders in it, declined mid single digits year over year, we saw high single digit growth amongst insurance customers where application, engineering and AI engagements continued to gain traction. Consistent with the typical first quarter seasonality in which certain projects conclude at year end, most industries softened sequentially with TMT relatively flat. That said, we saw pockets of strength within several industries in consumer and industrial. For example, utilities delivered low single digit growth supported by demand in application engineering, cloud and infrastructure, and AI and data. Turning to our federal segment, we track our federal revenues across four customer types including defense and Intelligence, national Security, civilian and other clients. Defense, intelligence and national security customers continue to comprise approximately 70% of our total federal revenues, the remaining balance coming from civilian agencies, government sponsored entities, state and local agencies and select commercial customers. National security customers delivered the strongest growth for the segment both year over year and sequentially. This was primarily driven by cybersecurity work supporting the Continuous Diagnostics and Mitigation or CDM Service program within dhs. We also saw mid single digit growth in our other clients year over year led by the USPS where we deployed a purpose built AI application designed to significantly reduce undeliverable mail and improve operational efficiency. Building on the industry discussion, I’d like to transition to our solutions performance which provides a clear view of where the client demand is strongest today and how it is evolving. AI and data remain a significant driver of demand across our portfolio. Our clients are increasingly focused on modernizing data foundations to support analytics, AI enabled decision making and operational agility. Let me provide a few examples. In the consumer industry, we partnered with a leading global athletic apparel and footwear company to design and deploy a unified analytics platform powered by Databricks genie, an agentic AI interface that enables secure access to governed data. By consolidating product assortment, planning, demand bookings and sales into a single governed experience, our client improved product creation, decisioning and speed to market while also establishing a reusable foundation to scale across broader demand planning and supply chain use cases. Databricks is one of our core strategic partners and during the quarter our commercial business was recognized as a Databricks Silver Tier partner. Leveraging that partnership, our industrial team supported a Fortune 100 energy and utilities company in migrating from legacy architectures to a databricks based integration. This effort aligned the client to its enterprise data strategy while also reducing long term risk and strengthening governance. Following the success of this project, our client is engaging our teams to support legacy migrations into databricks across other areas of the organization. We’re also helping customers unlock the full value of modern hyperscaler AI services in the cloud. In the TMT vertical. For example, our AI and cloud teams partnered with AWS to support a Fortune 50 media company in building a digital twin of its streaming platform. This solution combines advanced cloud engineering with AI powered simulations to help our client proactively identify performance risks ahead of some of the largest global streaming sporting events that commonly draw over 100 million viewers. A successful project, we now have a repeatable use case that can be extended across TNT clients with similar streaming and gaming environments. As AI adoption and data volumes accelerate, cybersecurity has become an increasingly integral component of nearly every client engagement in the healthcare industry. We secured an extension with a large national insurance pair to modernize their identity governance using SailPoint. This work established a central identity framework that supports regulatory compliance while safeguarding sensitive patient and member data. Alongside this modernization work, we continue to provide ongoing SailPoint platform support, reinforcing our long term client relationship in the federal market. We’re supporting the Cybersecurity and Infrastructure Security Agency, or CISA through the aforementioned CDM program by delivering security information and event management as a service. This capability standardizes security data collection across federal agencies and enables real time threat detection and rapid response. We also delivered a first of its kind ATO accredited development environment for the US Navy, a secure government approved workspace where teams can safely build, test and manage software and data. By combining our Dev Labs and software factory with Elastics cloud infrastructure and AI enabled automation, we created a development environment that aligns with the DoD’s zero …
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