ASGN (NYSE:ASGN) reported first-quarter 2026 revenue of $968.3 million, in line with both the prior-year period and company guidance, as executives emphasized continued demand for AI and data, cloud and infrastructure, and application engineering and modernization work. The quarter also marked a transition point for the company: CEO Ted Hanson said it was ASGN’s final earnings call under its current name, with the business set to begin operating as “Everforth” and trading under the ticker EFOR.
Rebrand to Everforth and shift to industry-led reporting
Hanson said the move to the Everforth brand reflects “the continued transformation of our business,” aimed at a more integrated operating model focused on higher-value solutions and deeper client relationships. He added the company is also updating its commercial segment reporting “by industry rather than mode of delivery,” arguing that outcomes matter more than engagement structure. Going forward, the company plans to provide additional color through “our five industries, and our six solution capabilities,” and will continue to disclose commercial consulting book-to-bill.
Commercial and federal demand trends
In the federal segment, new contract awards totaled $151.3 million, equating to a trailing 12-month book-to-bill of 0.7x. Federal backlog was approximately $2.8 billion at quarter end, which Hanson said represented a 2.4x coverage ratio versus trailing 12-month federal revenues. He said AI and data work contributed to federal revenue, bookings, and pipeline, while cybersecurity contracts also contributed to results.
Hanson noted federal award activity started to pick up after the federal budget passed in early February, but said the company experienced “some funding delays” at the Department of Homeland Security amid “both a shutdown and a leadership transition.” He added the company had not seen award funding disrupted “related to the conflict in Iran,” but described evolving requirements around cyber threat analysis and data management and analytics.
President Shiv Iyer detailed first-quarter commercial performance by industry, saying healthcare, consumer and industrial, and TMT grew year over year. He said healthcare increased at a high single-digit rate, while consumer and industrial and TMT posted mid-single-digit growth. Financial services declined mid-single digits year over year, though Iyer said insurance within that category grew at a high single-digit rate as application engineering and AI work gained traction.
On the federal side, Iyer said defense, intelligence, and national security clients comprise roughly 70% of federal revenue. He said national security delivered the strongest growth, driven primarily by cybersecurity work supporting DHS’s Continuous Diagnostics and Mitigation (CDM) service program. Iyer also highlighted mid-single-digit growth in “other clients,” led by work for the U.S. Postal Service that deployed an AI application designed to reduce undeliverable mail.
Margin miss driven by mix and timing; company cites no pricing pressure
While revenue met expectations, adjusted profitability fell short. Hanson said adjusted EBITDA margin of 8.6% was below expectations due largely to business mix and a “lower than expected contribution of some of our higher margin solutions within the commercial segment.” CFO Marie Perry said gross margin was 27.5%, down 90 basis points year over year, with commercial gross margin at 31%, down 140 basis points.
In Q&A, Hanson attributed the miss primarily to a slower ramp in higher-margin commercial solutions—particularly enterprise software work—following typical year-end project roll-offs. He said the company came out of the fourth quarter with strong bookings in Workday and solid bookings in ServiceNow and Salesforce, but “just didn’t see the conversion to revenue at historical rates.” He also pointed to federal mix as a factor, saying the federal segment overperformed revenue expectations, but did so with more cost-plus work, which carries lower gross margins. Perry also cited a foreign exchange headwind tied to the company’s Mexico delivery center.
Iyer told analysts the company was not seeing “a material compression in pricing,” and said unit pricing in key enterprise platform practices was not deteriorating. He framed the margin pressure as timing-driven mix, adding the company expects margins to recover “gradually throughout the year.” Hanson said the improved second-quarter margin outlook was “solely on the back of improving gross margins in both commercial consulting and federal consulting.”
Quinnox acquisition, investments, capital allocation, and guidance
Perry said the company’s Quinnox acquisition contributed less than one month to first-quarter results due to the timing of the close. ASGN posted commercial revenue of $675.5 million (up 0.5% year over year) and federal revenue of $292.8 million (down 1.1%). Net income was $5.5 million, adjusted EBITDA was $83.6 million, and adjusted EBITDA margin was 8.6%.
SG&A was $224.4 million versus $214.5 million a year ago and included $12.8 million in acquisition, integration, and strategic planning expenses that were not included in the company’s prior guidance estimates. In Q&A, Perry said those add-backs included costs related to the Quinnox transaction, go-to-market initiatives, back-office outsourcing, and ERP work, tied to implementing previously discussed structural savings. She said the company’s second-quarter guide includes $8 million to $10 million in strategic planning expenses that are expected to decline over the coming quarters.
Perry said the company acquired Quinnox for $290 million and repurchased $39 million of stock (0.8 million shares) at an average price of $47.69, leaving about $934 million under its $1 billion authorization. Cash and cash equivalents were $143.6 million, with roughly $160 million available under a $500 million revolver. Net leverage was 3.1x, and Perry reiterated a goal to reduce leverage toward 2.5x over time.
Free cash flow was $9.1 million, which Perry said was seasonally softer in the first quarter and lower than typical due to higher DSO. In Q&A, management said the DSO increase reflected normal seasonality, with no change in customer payment behavior and no increase in bad debt; Perry said 60% adjusted EBITDA conversion remains a “good rule of thumb” for the full year, though it varies by quarter.
For the second quarter of 2026, management guided to:
- Revenue: $970 million to $1.0 billion
- Net income: $8.0 million to $13.7 million
- Adjusted EBITDA: $85 million to $95 million
- Adjusted EBITDA margin: 8.8% to 9.5%
In response to a question on Quinnox’s contribution, Perry said the company provided a full-year revenue contribution estimate of $100 million with low- to mid-teens growth and “EBITDA margin of low 20%.” Hanson added the acquisition would be “at or just under $100 million” and said the company expects low double-digit growth from Quinnox in 2026.
Hanson said the company’s leadership additions and the Quinnox acquisition were “deliberate actions” aligned with its Next Wave Growth Strategy as it builds a “higher value, more unified” Everforth. He added the company will release its annual shareholder letter later in the week, and said the next earnings call is scheduled for September 4.
About ASGN (NYSE:ASGN)
ASGN Incorporated (NYSE:ASGN) is a leading provider of specialized staffing and professional services, delivering tailored solutions across information technology, digital transformation, engineering and scientific disciplines. Through its diversified portfolio of brands, ASGN connects clients—ranging from life sciences and healthcare firms to technology enterprises and government agencies—with highly skilled consultants, project teams and permanent personnel. The company’s model emphasizes both temporary staffing and long-term consulting engagements to address complex talent and project needs.
ASGN’s service offerings are organized into two main business segments.
