ICF International (NASDAQ:ICFI) reported fourth-quarter and full-year 2025 results that management said landed “firmly within” the company’s guidance ranges, as strength in commercial energy and other non-federal markets helped offset a steep decline in federal revenue tied to contract cancellations and a six-week government shutdown.
CEO John Wasson said the company expects to return to revenue growth in 2026, with the midpoint of guidance implying what he described as “an over 10% year-on-year swing” versus 2025. CFO Barry Broadus, who is retiring, detailed the quarter’s results and the company’s outlook, while management emphasized continued demand for utility energy programs, improving federal procurement trends, and early productivity gains from AI tools.
Fourth-quarter results reflect federal weakness, non-federal strength
Commercial, state and local, and international revenue increased 16% year-over-year and represented roughly 62% of fourth-quarter revenue, while federal revenue fell 35.1% amid the shutdown’s direct and indirect impacts. Commercial energy revenue rose 23.1% and accounted for nearly one-third of total fourth-quarter revenue.
Adjusted EBITDA was $46.0 million, down from $56.3 million, with an adjusted EBITDA margin of 10.4% compared with 11.3% a year earlier. Broadus attributed the decline primarily to lower gross margin and the shutdown’s temporary effects. Net income was $17.3 million, or $0.94 per diluted share, compared with $24.6 million, or $1.30 per diluted share, in the prior year. Non-GAAP EPS was $1.47, down from $1.87.
Full-year 2025: Revenue down, margins steady, mix shift continues
For full-year 2025, ICF reported revenue of $1.87 billion, down from $2.02 billion in 2024. Wasson said the results were achieved despite direct and indirect impacts from the six-week government shutdown. Federal revenue declined 25% year-on-year, which management said reflected canceled contracts between February and May 2025 and a slowdown in new procurements.
Non-federal revenue grew 14.2% year-over-year, and Wasson said non-federal clients increased to 57% of full-year revenue. Broadus said commercial revenues grew 23.2% and represented 33.2% of total revenue, up from 25% in 2024, helping support gross margin performance over time.
Adjusted EBITDA totaled $207.2 million versus $226.0 million a year ago, while adjusted EBITDA margin was 11.1%, essentially stable with 11.2% in 2024. GAAP EPS was $4.95 compared with $5.82 in the prior year. Non-GAAP EPS was $6.77 versus $7.45, including a $0.11 non-cash unfavorable FX impact tied to intercompany transactions in the first half of 2025.
ICF ended 2025 with a book-to-bill ratio of 1.19x, firm backlog of $3.4 billion (about half funded), and a business development pipeline of $8.6 billion.
Commercial energy and non-federal markets drive outlook
Management repeatedly highlighted commercial energy as ICF’s top growth engine. Wasson said commercial energy client revenue reached “just under $550 million” in 2025 and grew 24% for the year (and 23% in the fourth quarter). He said about 80% of 2025 commercial energy revenue came from utility programs including energy efficiency, flexible load management, electrification, and grid optimization.
Wasson said ICF holds about a 35% market share in residential energy efficiency programs and is approaching 20% share in commercial and industrial efficiency. Management said it is winning re-competes, receiving expanded scopes, and taking share from competitors due to program performance. In response to analyst questions, Wasson said commercial energy growth in 2025 included 15% organic growth and that 2026 guidance contemplates at least 10% organic growth in the energy business.
ICF also cited increasing demand for grid engineering services related to data center loads, supported by capabilities expanded through the 2023 CMY acquisition. Management discussed additional demand from small modular nuclear reactor developers and continued growth in renewables work led by solar and battery storage, noting that safe-harbored renewable development has created demand visibility for “at least the next two to three years.”
Outside commercial energy, Wasson said state and local revenue increased 2.2% in 2025, with disaster recovery representing about 45% of state and local revenue and more than 80 active disaster recovery projects in 23 states and territories. He also referenced a newly awarded comprehensive management services contract with the state of Florida to compete for broader statewide program delivery and resilience work. International government revenue rose 7.6% in 2025, driven by European Commission and U.K. government contract ramp-ups, including two communication campaign contracts announced in January covering all 27 EU member states.
Federal business: Stabilizing conditions, focus on IT modernization
While federal revenue declined sharply in 2025, management said conditions improved after the shutdown. Wasson said ICF won about $1.1 billion in federal contracts in 2025—about half of total contract wins—with about half representing new business or expanded scope. He said procurement activity picked up after the shutdown ended, with particular improvement on the IT modernization front.
Wasson said about half of ICF’s federal revenue is IT modernization work and emphasized that roughly 90% of that work is outcome-based under fixed-price and time-and-materials contracts. Addressing investor concerns about agentic AI coding tools, he argued such tools can accelerate development but do not eliminate modernization needs, and said ICF focuses on higher-end areas such as application development, cloud services, AI governance, automation, data curation, and system post-processing rather than legacy system maintenance or commoditized work.
For 2026, Wasson said the company expects federal revenue to decline at a “high single-digit” rate, with difficult comparisons in the first half of the year but sequential improvement from the first quarter through the third quarter and a return to year-over-year growth by the fourth quarter.
Capital allocation, guidance, and AI efficiency initiatives
ICF reported fourth-quarter operating cash flow of $75.6 million, bringing full-year operating cash flow to $141.9 million. Total debt ended 2025 at $401.4 million, down from $411.7 million at the end of 2024, and adjusted leverage was 1.98x. The company repurchased about 564,000 shares in 2025 (about 220,000 in the fourth quarter). ICF also declared a quarterly dividend of $0.14 per share, payable April 14, 2026, to shareholders of record March 27, 2026.
For 2026, ICF guided to:
- Revenue: $1.89 billion to $1.96 billion (about 3% growth at the midpoint)
- GAAP EPS: $5.95 to $6.25
- Non-GAAP EPS: $6.95 to $7.25 (about 5% growth at the midpoint)
- First-quarter 2026 revenue: approximately $450 million
- First-quarter 2026 GAAP EPS: approximately $1.20; non-GAAP EPS: approximately $1.55
Broadus provided additional model assumptions, including expected 2026 depreciation and amortization of $22 million to $24 million, interest expense of $27 million to $29 million, capital expenditures of $24 million to $26 million, and a full-year tax rate of approximately 20.5%. Operating cash flow is expected to be $135 million to $150 million. Management noted that the first quarter of 2026 has two fewer working days than the fourth quarter of 2025, which Broadus said equates to about $14 million in revenue.
On AI, Wasson said the company is using tools internally across areas such as HR, recruiting, contract review, and business development to improve efficiency and proposal throughput, and said productivity improvements are already material. In response to a margin question, Broadus said management believes it can achieve 10 to 20 basis points of adjusted EBITDA margin improvement in 2026, supported by higher-margin non-federal growth and back-office efficiencies.
About ICF International (NASDAQ:ICFI)
ICF International (NASDAQ: ICFI), commonly known as ICF, is a global consulting and digital services provider specializing in the intersection of strategy, technology, and policy. The firm delivers integrated services and solutions to government and commercial clients in areas such as energy and environment, health and social programs, transportation, infrastructure, technology, and marketing and communications. ICF’s offerings span strategic planning, data analytics, program evaluation, digital transformation, and implementation support.
Founded in 1969 and headquartered in Reston, Virginia, ICF has grown through both organic expansion and targeted acquisitions to broaden its capabilities and geographic reach.
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