ICF International’s second quarter performance was met with a significant positive market reaction, as investors focused on continued strength outside of federal contracts. Management attributed the quarter’s stability to robust growth in commercial energy programs and a diversified client base, which helped offset a substantial decline in federal government revenues. CEO John Wasson specifically pointed to a 27% year-over-year increase in commercial energy client revenue, citing ongoing demand for energy efficiency, grid resilience, and electrification services. The company also benefited from cost management initiatives and a favorable business mix, resulting in a slight improvement in non-GAAP profit margins.
Is now the time to buy ICFI? Find out in our full research report (it’s free).
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
- Backlog: $3.4 million at quarter end, down 10.5% year on year
- Market Capitalization: $1.76 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From ICF International’s Q2 Earnings Call
- Samuel Kusswurm (William Blair) asked about the mix and timing of federal contracts in the backlog. CFO Barry Broadus explained that federal clients still represent the majority of the backlog, and recent funding delays have slowed new work activations.
- Kevin Mark Steinke (Barrington Research Associates) questioned which parts of the federal business show improvement. CEO John Wasson noted technology consulting and IT modernization as areas with early signs of recovery, with complex program management expected to rebound more slowly.
- Marc Frye Riddick (Sidoti) inquired about shifts in state and local government work as federal responsibilities evolve. Wasson stated there has been no major change yet, but ICF International is preparing delivery models should states assume a larger disaster recovery role.
- Marc Frye Riddick (Sidoti) also asked about the acquisition pipeline. Wasson responded that the company is focused on scaling its commercial energy business through potential acquisitions, with limited appetite for federal-related deals due to current market uncertainty.
- Unidentified Analyst (Truist) asked about risks from federal procurement staffing and the impact of data center growth on commercial energy. Wasson acknowledged staffing turnover as a risk but expects a strong sales quarter, and described data center-driven electricity demand as a long-term growth catalyst.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace at which ICF International ramps up its new international government contracts, (2) the activation and execution of recently won federal and state disaster management projects, and (3) the adoption and revenue contribution of the ICF Fathom AI platform in federal and commercial sectors. How these initiatives progress will be central to evaluating ICF International’s execution against its growth strategy.
ICF International currently trades at $95.74, up from $84.26 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
