การประชุมชี้แจงผลประกอบการไตรมาส 3 ปี 2026 ของ Everforth (EFOR): อุปสงค์ AI, รายได้ 1.03 พันล้านดอลลาร์ และแนวโน้มผลประกอบการไตรมาส 4

ประเด็นสำคัญ

• Everforth รายงานรายได้ไตรมาส 3/2026 ที่ 1.03 พันล้านดอลลาร์ และ EBITDA ที่ปรับปรุงแล้วที่ 106.3 ล้านดอลลาร์ ซึ่งทั้งสองรายการอยู่สูงกว่าขอบบนของคาดการณ์ของผู้บริหาร อัตรากำไร EBITDA ที่ปรับปรุงแล้วอยู่ที่ 10.3% ซึ่งอยู่ที่ระดับสูงสุดของช่วงคาดการณ์
• รายได้จากภาคเอกชนเพิ่มขึ้น 1.2% เมื่อเทียบรายปี เป็น 719.9 ล้านดอลลาร์ โดยได้รับปัจจัยหนุนจากงานด้าน AI การปรับปรุงไอทีให้ทันสมัย การย้ายระบบสู่คลาวด์ และแพลตฟอร์มระดับองค์กร ขณะที่อัตราส่วน book-to-bill ของงานที่ปรึกษาภาคเอกชนในรอบ 12 เดือนย้อนหลังอยู่ที่ 1.1 เท่า
• รายได้จากรัฐบาลกลางเพิ่มขึ้น 3.8% เมื่อเทียบรายปี เป็น 311.5 ล้านดอลลาร์ ยอดสัญญาที่ได้รับในไตรมาสนี้มีมูลค่ารวม 584.4 ล้านดอลลาร์ คิดเป็นอัตราส่วน book-to-bill ประจำไตรมาสที่ 1.9 เท่า ในขณะที่ยอดขายรอรับรู้รายได้ (backlog) แตะระดับประมาณ 2.9 พันล้านดอลลาร์
• ยอดจองงานด้านความปลอดภัยและความเสี่ยงเพิ่มขึ้นมากกว่า 40% ตั้งแต่ต้นปีจนถึงปัจจุบัน (YTD) และงานในมือที่เกี่ยวข้องเติบโตขึ้นในอัตราร้อยละช่วงกลางของระดับ 10% นับตั้งแต่สิ้นไตรมาส ทั้งนี้ ผู้บริหารมองว่าความปลอดภัยทางไซเบอร์ การกำกับดูแล AI และความปลอดภัยของเอเจนต์ AI เป็นโอกาสในการเติบโตทางธุรกิจที่สำคัญ
• สำหรับไตรมาส 4/2026 ผู้บริหารคาดว่าจะมีรายได้ที่ 965 ล้านดอลลาร์ ถึง 995 ล้านดอลลาร์ EBITDA ที่ปรับปรุงแล้วที่ 93 ล้านดอลลาร์ ถึง 103 ล้านดอลลาร์ และอัตรากำไร EBITDA ที่ปรับปรุงแล้วที่ 9.6% ถึง 10.4%
• Everforth ได้ชำระคืนหนี้ 52.8 ล้านดอลลาร์ ในระหว่างไตรมาส อัตราส่วนหนี้สินสุทธิ (Net leverage) ณ สิ้นไตรมาสอยู่ที่ 3.1 เท่า เมื่อเทียบกับเป้าหมายของผู้บริหารที่ 2.5 เท่าหรือต่ำกว่า

ข้อมูลทางการเงินที่สำคัญ

ผลการดำเนินงานทางธุรกิจและปฏิบัติการ

การเติบโตเมื่อเทียบกับไตรมาสก่อนของภาคเอกชนนำโดยกลุ่มเทคโนโลยี สื่อ และโทรคมนาคม รวมถึงบริการทางธุรกิจ ซึ่งทั้งสองกลุ่มเติบโตในอัตราร้อยละช่วงปลายของหลักเดียวจากไตรมาส 2 โดยกลุ่มเทคโนโลยี สื่อ และโทรคมนาคม ได้รับประโยชน์จากการเติบโตในระดับสองหลักของงานด้านซอฟต์แวร์และสื่อโต้ตอบ รวมถึงโครงการสำหรับห้องปฏิบัติการ AI ชั้นนำ (frontier AI labs) และผู้ให้บริการระบบคลาวด์ขนาดใหญ่ (hyperscalers)

ผู้บริหารกล่าวว่า Everforth กำลังทำงานร่วมกับผู้ให้บริการ hyperscaler รายใหญ่ที่สุด 4 รายของโลกในด้านบริการศูนย์ข้อมูล โดยงานของบริษัทครอบคลุมตั้งแต่โครงสร้างพื้นฐาน AI แอปพลิเคชัน ไปจนถึง AI กายภาพ (physical AI) ซึ่งรวมถึงการติดตั้งใช้งานระบบหุ่นยนต์สำหรับ hyperscaler ระดับโลกครอบคลุมอเมริกาเหนือและยุโรป

ความต้องการแพลตฟอร์มระดับองค์กรยังคงเป็นปัจจัยขับเคลื่อนที่สำคัญ Everforth ชูผลงานที่เกี่ยวข้องกับ Workday, Salesforce และ ServiceNow ซึ่งรวมถึงสัญญาดูแลระบบ Workday ระยะเวลา 3 ปีสำหรับสายการบินในประเทศ และโครงการให้บริการวิชาชีพร่วมกับ Salesforce (co-delivery engagement) ขนาดใหญ่เป็นครั้งแรก ขณะที่ GlideFast ซึ่งเป็นหน่วยธุรกิจ ServiceNow ของบริษัท ทำผลงานได้ดีกว่าที่คาดการณ์ไว้ภายใน แม้ว่าผู้บริหารจะระบุว่ามีการเติบโตช้ากว่ากลุ่มธุรกิจ Workday และ Salesforce ก็ตาม

การเติบโตในฝั่งรัฐบาลกลางนำโดยฝ่ายความมั่นคงแห่งชาติ (National Security) โดยมีรายได้เพิ่มขึ้นในอัตราร้อยละสองหลักที่แข็งแกร่งเมื่อเทียบรายปี และเติบโตในอัตราร้อยละช่วงกลางของหลักเดียวเมื่อเทียบกับไตรมาสก่อน ความต้องการนี้รวมถึงงานความปลอดภัยทางไซเบอร์สำหรับกระทรวงความมั่นคงแห่งมาตุภูมิและ CISA โครงสร้างพื้นฐานทางเทคโนโลยีสำหรับกระทรวงกิจการผ่านศึก และบริการจัดการความปลอดภัยทางไซเบอร์สำหรับศูนย์บริการ Medicare และ Medicaid

ยอดสัญญาใหม่จากรัฐบาลกลางมีมูลค่ารวม 584.4 ล้านดอลลาร์ โดยมีอัตราส่วน book-to-bill ประจำไตรมาสที่ 1.9 เท่า และอัตราส่วนรอบ 12 เดือนย้อนหลังที่ 0.9 เท่า ทั้งนี้ ยอดขายรอรับรู้รายได้ (backlog) จากรัฐบาลกลางซึ่งอยู่ที่ประมาณ 2.9 พันล้านดอลลาร์นั้น คิดเป็น 2.5 เท่าของรายได้ย้อนหลัง 12 เดือน

การเข้าซื้อกิจการ Quinnox ช่วยขยายขีดความสามารถด้านวิศวกรรมและการบริหารจัดการบริการ (managed services) นอกประเทศ (offshore) ของ Everforth ในอินเดีย โดยผู้บริหารกล่าวว่าบริษัทได้เริ่มย้ายงานซอฟต์แวร์องค์กร ข้อมูล AI และ ServiceNow ไปยังแพลตฟอร์มดังกล่าวแล้ว ซึ่งเปิดโอกาสให้เข้าถึงโครงการที่ไม่สามารถรองรับได้ก่อนหน้านี้

แนวโน้มและคาดการณ์ของผู้บริหาร

แนวโน้มดังกล่าวตั้งอยู่บนสมมติฐานวันทำงานที่คิดค่าบริการได้ 61 วัน ซึ่งน้อยกว่า Q3 อยู่ 3 วันและสอดคล้องกับช่วงเดียวกันของปีก่อน โดยอิงตามสภาวะตลาดในปัจจุบันและตั้งบนสมมติฐานว่าตลาดปลายทางของ Everforth จะไม่มีการทรุดตัวลงอีก

ผู้บริหารยังคงตั้งเป้าการแปลงกระแสเงินสดอิสระทั้งปีไว้ที่ 60% ถึง 65% ของ EBITDA ที่ปรับปรุงแล้ว โดยไม่รวมต้นทุนเชิงกลยุทธ์ครั้งเดียว นอกจากนี้ บริษัทได้ย้ำเป้าหมายที่จะบรรลุอัตรากำไร EBITDA ที่ปรับปรุงแล้วที่ 12.5% หรือสูงกว่านั้นเล็กน้อยภายในสิ้นปี 2028 โดยได้รับปัจจัยหนุนจากการเติบโต การขยายอัตรากำไรขั้นต้น และการประหยัดต้นทุนเชิงโครงสร้าง

บริษัทคาดว่าต้นทุนการลงทุนเชิงกลยุทธ์จะลดลงและกลับสู่รูปแบบปกติมากขึ้นในปี 2027 การลงทุนเหล่านี้ช่วยสนับสนุนมาตรการประหยัดต้นทุนที่ระบุไว้ในแผน 3 ปี ซึ่งรวมถึงเป้าหมายการสร้างผลประโยชน์ 80 ล้านดอลลาร์ ในปี 2028

ความเสี่ยงและจุดที่ต้องจับตา

ไตรมาส 4 มีวันทำงานที่คิดค่าบริการได้น้อยกว่า และมักมีการส่งมอบโครงการเสร็จสิ้นรวมถึงการพักงานชั่วคราวในช่วงสิ้นปี ดังนั้น ผู้บริหารจึงมองว่าไตรมาสนี้มีลักษณะมั่นคงตามฤดูกาลมากกว่าที่จะเร่งตัวขึ้น

แนวโน้มดังกล่าวตั้งบนสมมติฐานว่าจะไม่มีการทรุดตัวลงเพิ่มเติมในตลาดที่ให้บริการ ทั้งนี้ ผู้บริหารกล่าวว่าความชัดเจนเกี่ยวกับงบประมาณของลูกค้าในปี 2027 ยังมีจำกัด และคาดว่าจะเห็นภาพชัดเจนยิ่งขึ้นในเดือนมกราคมหรือกุมภาพันธ์

ธุรกิจดั้งเดิมตามวัฏจักรของ Everforth ซึ่งรวมถึงการดำเนินงานเดิมของ CyberCoders และ Creative Circle ยังคงทรงตัวเมื่อเทียบกับไตรมาสก่อน แต่ยังคงปรับตัวลดลงเมื่อเทียบรายปี ซึ่งผู้บริหารไม่ได้คาดหวังว่าธุรกิจเหล่านี้จะช่วยขับเคลื่อนการเติบโตในระยะใกล้

การนำ AI มาใช้ยังก่อให้เกิดข้อจำกัดในการนำไปปฏิบัติจริงในด้านต้นทุน การกำกับดูแล การรวมข้อมูล และความปลอดภัยทางไซเบอร์ ซึ่งผู้บริหารกล่าวว่าความท้าทายเหล่านี้ช่วยเพิ่มความต้องการใช้บริการ แต่ก็ยังคงเป็นอุปสรรคสำคัญเมื่อลูกค้าเปลี่ยนผ่านจากการทดลองโครงการไปสู่การใช้งานเชิงปริมาณเต็มรูปแบบ

อัตราส่วนหนี้สินสุทธิยังคงสูงกว่าเป้าหมายของบริษัทหลังจากการเข้าซื้อกิจการ Quinnox ผู้บริหารให้ความสำคัญกับการชำระคืนหนี้เป็นอันดับแรก และยังคงมุ่งมั่นที่จะลดอัตราส่วนหนี้สินสุทธิลงเหลือ 2.5 เท่าหรือต่ำกว่า

ไฮไลต์ช่วงถาม-ตอบกับนักวิเคราะห์

• การจ้างงานและกำลังคน: Everforth เน้นการจ้างงานทดแทนการลาออกตามธรรมชาติเป็นหลัก มากกว่าที่จะเพิ่มจำนวนพนักงานแบบเท่าเดิม การจ้างงานจะมุ่งเน้นไปที่พื้นที่ที่มีความต้องการแข็งแกร่งกว่า รวมถึงศักยภาพในการส่งมอบและโซลูชันที่เลือกไว้
• การขยายอัตรากำไร: ผู้บริหารย้ำเป้าหมายอัตรากำไร EBITDA ที่ปรับปรุงแล้ว ณ สิ้นปี 2028 ว่าจะอยู่ที่อย่างน้อย 12.5% โดยคาดว่าแรงส่งทางการค้าที่ดีขึ้น การขยายตัวของอัตรากำไรขั้นต้น และการประหยัดเชิงโครงสร้างจะช่วยสนับสนุนความคืบหน้านี้
• ยอดจองภาคเอกชน: ยอดจองยังคงแข็งแกร่งในทุกกลุ่ม เช่น Workday, ศูนย์ข้อมูล AI, ความปลอดภัยทางไซเบอร์, การปรับปรุงแอปพลิเคชันให้ทันสมัย และวิศวกรรม ผู้บริหารระบุว่าขนาดดีลเฉลี่ยเพิ่มขึ้นในช่วงสามไตรมาสที่ผ่านมา
• พันธมิตรทางเทคโนโลยี: ประมาณช่วงปลาย 40% ถึง 50% ของยอดจองได้รับอิทธิพลจากพันธมิตรที่ปรึกษาชั้นนำของ Everforth นอกจากนี้ บริษัทกำลังแสวงหาโอกาสเพิ่มเติมร่วมกับ Google Cloud และแพลตฟอร์มความปลอดภัยทางไซเบอร์ใหม่ ๆ
• ระยะเวลาโครงการและความชัดเจนของรายได้: สัญญาขนาดใหญ่ขึ้นในกลุ่ม ERP, บริการจัดการ (managed services) และการส่งมอบงานนอกประเทศ (offshore delivery) ช่วยเพิ่มระยะเวลาสัญญาเฉลี่ยและปรับปรุงความชัดเจนของรายได้ นอกจากนี้ ผู้บริหารยังกล่าวว่างานรัฐบาลกลางที่เพิ่งจองเข้ามาน่าจะเริ่มสร้างรายได้ให้อย่างมีนัยสำคัญมากขึ้นตั้งแต่ Q1 2027
• ความต้องการด้านความปลอดภัย: AI กำลังเพิ่มความซับซ้อนให้กับข้อกำหนดด้านความปลอดภัยทางไซเบอร์ที่มีอยู่เดิม โดยเฉพาะในด้านการกำกับดูแลและเอเจนต์ AI ส่วนความปลอดภัยเกี่ยวกับควอนตัมยังอยู่ในระยะเริ่มต้น ในขณะที่ความซับซ้อนของภัยคุกคามในวงกว้างช่วยสนับสนุนความต้องการใช้อยู่แล้ว

บันทึกการประชุมแถลงผลประกอบการฉบับเต็ม

บทถอดเสียงฉบับเต็มของการประชุมทางโทรศัพท์ผลประกอบการ

คำชี้แจงจากฝ่ายบริหาร

Operator

Greetings, and welcome to the Everforth Third Quarter 2026 Earnings Call. [Operator Instructions] It is now my pleasure to introduce your host, Kimberly Esterkin, Vice President of Investor Relations. Thank you. You may begin.

Kimberly Esterkin

Good afternoon. Thank you for joining us today for Everforth's Third Quarter 2026 Conference Call. With me are Teddy 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 at investors.everforth.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 Hanset, Chief Executive Officer.

Theodore Hanson

Thank you, Kim, and thank you for joining Everforth's Third Quarter 2026 Earnings Call. Our third quarter results demonstrated continued momentum. Revenues of $1.03 billion and adjusted EBITDA of $106.3 million surpassed the high end of our guidance, while adjusted EBITDA margin of 10.3% was at the top end of our guidance range.

Commercial segment revenue growth reflected sustained customer investment in AI, IT modernization and cloud transformation services. Strength in our data and AI, security and risk and enterprise platform solutions helped drive a commercial consulting book-to-bill of 1.1x on a trailing 12-month basis.

In our Federal Government segment, new contract awards totaled $584.4 million, representing a book-to-bill of 1.9x for the quarter and 0.9x on a trailing 12-month basis. Strength in federal bookings for the quarter reflected planned awards and extensions, indicating continued demand for our services.

Federal contract backlog was approximately $2.9 billion at quarter end or a coverage ratio of 2.5x trailing 12-month revenues, with particular strength across AI and data, cybersecurity, cloud and mission modernization. Shiv will discuss our performance and recent customer wins in more detail shortly.

With that context, I want to focus on 2 themes shaping enterprise technology investment and strengthening Everforth's position in the market. First, AI investments remain significant, but its focus is evolving. Enterprises are moving beyond experimentation to scale deployment, but much of the investment to date has centered on the infrastructure, platforms and software required to support that growth.

We have consistently believed that enterprise software platforms would become a primary channel for deploying AI across the enterprise. That is increasingly what we are seeing. AI is not replacing these platforms. It's expanding their role as AI becomes embedded in ERP, CRM and workflow environments.

This is important for Everforth. Our partnerships with Workday, Salesforce, ServiceNow and other technology leaders provides us with platform expertise required to move these AI-enabled technologies into production.

Our implementation track record has earned us the opportunity to service deployed partners with early access to new capabilities that we can bring into customer environments. We're an official member of the Salesforce for deployed engineer partner network and among the first Workday partners to be certified to implement Paradox and HiredScore, Workday's unified AI-powered talent acquisition platform.

As these platforms evolve, we are positioned to help customers turn these new AI-enabled capabilities into practical business outcomes. Second, scaling AI requires more than technology itself. Infrastructure and software are only part of the investment. Successful deployment also requires data integration, security, governance, change management and the right operating processes.

In other words, AI is not only a technology investment, it's part of a broader business transformation. That is where IT services become increasingly important. Moving from pilots to scale deployment introduces challenges around cost, governance and security that require both technology and execution expertise.

According to ISG, more than 60% of enterprise customers surveyed measured AI success by cost savings generated, while nearly 80% identified centralized governance and cybersecurity as the best way to manage costs. We are seeing the same priorities amongst our customers.

Our security and risk bookings are up over 40% year-to-date compared to the first 9 months of 2025, while our security and risk pipeline has increased in the mid-teens since the end of the third quarter.

The Agentic AI illustrates why these capabilities matter as agents access data and execute tasks autonomously, they must be governed and monitored. Technology providers, including Microsoft and AWS, are developing capabilities to address these emerging cybersecurity needs, but the market is still developing.

Everforth helps clients assess, select and implement the best suited technologies for their environments, which is particularly important in AI governance where no single technology addresses every security requirement. We are also investing in governance as a service for highly regulated industries like health care and financial services and bringing together capabilities across Everforth under a unified set of offerings supported by our proprietary assets and accelerators.

For example, our teams developed a repeatable platform called our Enclave Factory for rapidly deploying secure compliant environments across classified and unclassified networks. Our Enterprise Security Operations Center, or SOC, developed an AI-driven security triage capability that helps reduce false alarms and prioritize high-risk concerns.

And through our Everforth AI Studio, we built an AI-driven regulatory change management and compliance platform that enables financial institutions to continuously monitor evolving regulations and streamline their compliance workflows.

Our view remains clear. Enterprise AI is advancing, but many of the hardest implementation challenges are still ahead. As customers move from experimentation to production and scale, they need partners that understand their tech environments, industries, governance and security requirements.

Everforth is well positioned to bring those capabilities together and help customers successfully navigate the next phase of enterprise AI adoption.

With that, I'll turn the call over to Shiv to discuss our industry performance and how we are applying these capabilities across our customer base.

Sadasivam Iyer

Thanks, Ted, and good afternoon, everyone. Let's begin with our commercial industry performance. Sequential growth for the segment was led by TMT and business services verticals, both high single digits from the second quarter, while the consumer and industrial, financial services and health care verticals remained relatively stable.

TMT benefited from strong double-digit growth in the software and interactive sub-industry, driven by work with the frontier AI labs and hyperscalers. The business services vertical benefited from expanded work in the aerospace and defense and professional services subindustries.

Year-over-year, TMT and business services grew mid-teens and high single digits, respectively. Within the consumer and industrial verticals, we achieved high teens growth among utilities customers, including growth in our work with large regional and national energy providers.

In the financial services industry, insurance accounts grew high single digits, driven by contracts with global carriers, while diversified financials grew low double digits with growth amongst our investment management accounts.

Turning to Federal. National Security drove the segment's growth with strong double-digit revenue improvement year-over-year and mid-single-digit growth sequentially. Strength in national security was primarily driven by our cybersecurity contracts with the Department of Homeland Security and the Cybersecurity and Infrastructure Security Agency, CISA.

We also saw solid growth among civilian agencies with technology infrastructure work for the Department of Veteran Affairs and managed cybersecurity work for the Centers for Medicare and Medicaid Services. Building on that performance, I'd like to turn to our solutions portfolio.

As Ted highlighted, the infrastructure required to scale AI securely and responsibly remains a significant driver of demand, but customers are looking for more than stand-alone technology support. We are turning to Everforth to bring together our AI and data, cybersecurity, cloud and engineering expertise to solve their complex operational challenges.

As I highlighted last quarter, we're engaged in data center services across the world's 4 largest hyperscalers, and the pace of that work continues to accelerate. Our hyperscaler customers consistently identify people, power and equipment as the 3 factors limiting AI build-out.

The people constraint plays directly to Everforth's strengths. We can quickly assemble specialized teams across data, AI and digital engineering and deploy them at scale to bring critical infrastructure online on time. As an example, we recently secured a multiyear data center contract in a highly competitive labor market and assembled the engineering team in a matter of a few weeks.

Our professionals are playing a critical role in this hyperscalers infrastructure build-out, helping bring new AI capacity online while demonstrating Everforth's differentiated combination of expertise and agility.

Speaking of our agility, Everforth increasingly operates across the full AI technology stack from the foundational infrastructure through applications. We are also growing our capabilities in physical AI and our hyperscaler work now extends to robotics.

As a strategic supplier across the full program life cycle, our engineers are helping a global hyperscaler install, commission and bring its robotic systems into production across North America and Europe. We apply that same AI and engineering expertise in secure government environments.

For the Department of War, we're building secure data platforms and applications to operationalize AI and autonomous capabilities. Under our recent SUNet expansion, we're supporting the Department of War's existing secure environment while advancing the SUNet 2.0 platform for AI and machine learning development.

Across other programs, -- we are validating AI-enabled workflows, transitioning applications across high security environments and expanding trusted data for autonomous models. We're also seeing growing demand for agentic workflow automation. For a leading global media and entertainment company, we are building an AI-powered assistant within their Microsoft environment to automate responses to employee cybersecurity requests. This solution allows our customer security team to focus on high-priority needs and establishes a foundation for broader intelligent operations.

Data governance and security are equally important to scale AI adoption for a major North American supplier of construction materials for strengthening the company's Databricks environment by improving data governance, securely connecting business systems and establishing management standards.

This work supports future analytics and AI while also improving our customers' access controls, network security and data protection. We are bringing that same focus on security and governance to our federal customers. Through the Department of Homeland Security's Continuous Diagnostics and Mitigation, CDM program, we onboarded 100% of the agency's CDM dashboards, expanding cybersecurity visibility across DHS.

Our Security Information and Event Management as a Service offering further provides DHS with a unified view of threats and vulnerabilities across the federal civilian executive branch. Beyond infrastructure, data and security, we help customers modernize core enterprise platforms.

For a leading domestic airline, we signed a 3-year Workday gold tier support contract covering needs from security rule updates and financial account mapping to complex integration. We also secured our first major Salesforce professional services co-delivery engagement with a global food and snacking company helping consolidate commerce platforms into a unified Salesforce solution across the U.S., Canada and the U.K.

Our digital engineering work is similarly focused on helping customers modernize complex technology environments and business processes. For a leading U.S. food producer, we're consolidating 4 operating segments into a single ERP environment to improve end-client experience, transportation and shipping costs.

For the financial services arm of a leading global automaker, we are leveraging our offshore engineering capabilities and agentic development and testing practices to modernize front, middle and back-office processes. Our investments in AI-led automation further differentiate Everforth by helping customers accelerate time to value and lower their transformation costs.

The breadth and complexity of these engagements demonstrate the increasingly sophisticated work we are delivering to our customers. As noted, Everforth now operates across the full AI stack from infrastructure and applications to physical AI.

By combining our industry services and platform expertise with our ability to rapidly assemble and deploy specialized talent at scale, we are very well positioned to address our customers' most critical technology needs.

With that, I'll turn the call over to Marie to discuss our third quarter 2026 performance and fourth quarter guidance.

Marie Perry

Thanks, Shiv. For the third quarter, revenues totaled $1.03 billion and were above the top end of our guidance range. Revenues for our Commercial segment were $719.9 million, an increase of 1.2% year-over-year, reflecting a continued momentum in the business. Revenues of our Federal Government segment were $311.5 million, an increase of 3.8% year-over-year. Both segments contributed to our revenue outperformance in the quarter.

Turning to margins. Gross margin for the third quarter of 2026 was 28.3%, including Commercial segment gross margin of 31.9% and Federal Government segment gross margin of 19.8% SG&A for the quarter was $217.7 million compared to $212.2 million in the third quarter of 2025.

SG&A expenses included $8.3 million in acquisition, integration and strategic planning expenses, which was within our expectations for the quarter. For the third quarter, net income was $23.1 million, adjusted EBITDA was $106.3 million, and adjusted EBITDA margin was 10.3%.

As Ted noted, adjusted EBITDA dollars surpassed our expectations and adjusted EBITDA margin was at the top of our guidance range. Cash and cash equivalent was $147.5 million at quarter end. As we noted in our second quarter call, our focus from a capital allocation perspective is debt repayment as we continue to deleverage following the acquisition of Quinnox in Q1.

In the third quarter, we repaid $52.8 million in debt, including $43.8 million for the term loans and revolver and an additional $9 million in open market repurchases of our senior unsecured notes. At quarter end, we had approximately $227 million available on our $600 million senior secured revolver and our net leverage ratio was 3.1x.

We remain committed to getting our leverage ratio to 2.5x or below. Free cash flow for the third quarter was $46.5 million or approximately 44% of adjusted EBITDA. We continue to target 60% to 65% conversion of our free cash flow to adjusted EBITDA on a full year basis, excluding the aforementioned onetime strategic costs associated with our transformative cost savings.

Turning to guidance. Our financial estimates for the fourth quarter of 2026 are set forth in our earnings release and supplemental materials. These estimates are based on current market conditions and assume no further deterioration in the markets that we serve.

The fourth quarter assumes 61 billable days, which is 3 days fewer than the third quarter and consistent with the prior year period. Our fourth quarter estimates also include $6 million to $7.5 million in strategic planning expenses. As noted last quarter, we expect certain upfront investments to achieve the transformative cost savings outlined in the 3-year strategic plan.

Alongside these investments, which will continue to decline, we are implementing targeted initiatives that will generate meaningful structural cost savings. These efforts are progressing as planned.

With that as background, our fourth quarter 2026, we are estimating revenues of $965 million to $995 million, net income of $19.7 million to $25.5 million, adjusted EBITDA of $93 million to $103 million and adjusted EBITDA margin of 9.6% to 10.4%.

Thank you. I'll now turn the call back over to Ted.

Theodore Hanson

Thanks, Marie. As we close today's call, I want to return to an important part of our strategy. When we launched the Everforth brand earlier this year, it was about more than bringing our businesses together under one brand. It was about creating a unified technology services leader that combines the capabilities, industry expertise and talent across our commercial and government businesses to create greater value for our customers.

During the third quarter, we continued to make meaningful progress against that strategy. Our expanded relationships with AWS and Microsoft demonstrate what one Everforth looks like in practice. Our expanded AWS relationship extended premier tier capabilities across the Everforth portfolio, while our strengthened Microsoft partnership aligned commercial and federal capabilities to a coordinated go-to-market model.

These relationships also reinforce an important point I made at the start of today's call. Our technology alliances strengthened Everforth's role as a forward deployed partner that keep us close to where technology is advancing and provide early access to new capabilities. While our ability to rapidly assemble specialized teams gives us the agility to put those technologies to work as our customers' needs evolve.

As we continue bringing Everforth together, our objective is straightforward: to make the full breadth of our capabilities more accessible to our customers and technology partners. The benefits of that strategy extend across Everforth our employees, it creates new opportunities to collaborate, develop expertise and gain experience in a broad range of technology and customer needs.

For our stockholders, it strengthens our competitive position and creates a stronger foundation for long-term growth and value creation. These benefits, combined with our industry knowledge, implementation expertise and ability to deliver services at scale onshore, nearshore and offshore, strengthens the value Everforth provides our customers as their technology needs evolve.

That concludes our prepared remarks. Before we open the call to your questions, I want to thank our teams for their continued dedication to our customers and to bringing Everforth together. We have made meaningful progress since launching our new brand in April, and we remain focused on building on this strong foundation. With that, we will open the call to your questions.

Operator

[Operator Instructions] Our first question comes from the line of Jeff Silber with BMO Capital Markets.

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Jeffrey Silber

It was great to see the momentum continuing from last quarter. I'm just curious in terms of your own internal hiring, what does that look like? I know you're focusing on cost management, but are you adding folks internally? And if so, where?

Theodore Hanson

I'm going to let Shiv cover that one here, Jeff. But if you -- I mean, if you think about it, generally, we've got capacity in this business. I mean, I think we've said that a few times over the prior quarters. We have a natural attrition rate. We're kind of replacing on that, but not like-for-like necessarily. We're putting people in places where we think there'll be demand. Shiv, anything you'd add to that?

Sadasivam Iyer

Yes, absolutely, Ted. So Jeff, we're constantly optimizing our go-to-market resource allocation and adding where we see momentum, optimizing where we don't see it. The other place we are selectively adding capacity is in augmenting some of our solutions and delivery capabilities.

Jeffrey Silber

Okay. That's great. And then in terms of the strategic planning that you're doing, you talked about seeing meaningful structural cost savings. Where do you think your margins can go to over time? Can we get back to where we were maybe at the beginning of this decade?

Theodore Hanson

Well, for sure. I mean, we've got, as you know, 3-year targets out there to get to 12.5% or slightly higher by the end of 2028. That's a combination of things that's growth, it's gross margin expansion and it's transformative cost savings, which Marie has talked about quite a bit.

But there's no glass ceiling here, Jeff. I mean, if you think about it, we've been in a business mix headwind. I think the better momentum we see in commercial, the more you're going to see that turn. And yes, we think we'll be back to that, and we expect to get into the ranges that we laid out in the 3-year plan.

Operator

Our next question comes from the line of Surinder Thind with Jefferies.

Surinder Thind

Could you maybe please elaborate on the health of the civilian agencies? It sounds like things are getting better, demand is picking up. Any color there would be helpful as we think about where we are in the cycle and now that we've kind of crossed the fiscal year, just contracting process, any other changes that we should be thinking about?

Theodore Hanson

Yes. So I would say that our growth in the Fed civilian agencies was pretty targeted in a couple of accounts. That's not a big part of our portfolio. More than 70% of our business is in defense, intel and national security areas.

And so we look going forward and based on the wins that we booked during this quarter to get better performance in those accounts. And that's really what's going to drive our business. I think that the government had a fairly normal last quarter of its fiscal year.

There was more activity in the latter part of the quarter than there was in the beginning, but there were certainly customers that were wanting to get things wrapped up both before the fiscal year was ended and before the midterm elections. And so all those things are kind of macro contributors, if you will, to what I think will be a pretty good bookings across the peer group, if you will, in the government space.

Surinder Thind

That's helpful. And then a follow-up we talk about the idea of -- I think you called out more forward deployed engineers or FTEs and the need for that amongst yourselves and the partners.

Does that start to change or shift how you think about geographic or global delivery, your footprint and maybe some of the skills and capabilities that you need to bring to market? Any color there would be helpful.

Theodore Hanson

Yes. So I'll let Shiv talk about kind of the global capability there. But obviously, you're hearing both from us and from the technology companies, whether it's the enterprise platform companies or data and security that what we do is really important, both to the customer and to them.

We are the last mile. We're embedded in the accounts. We understand their technology frameworks and architecture, and we're the ones left to implement these solutions, if you will, once they're sold on the front end.

So I think in that way, there's a lot more properly so, a lot more attention to the fact that we're -- there are certain players. We're one of them. We believe that our core deployed partners here that are going to help customers realize the promise of AI through these technologies.

Sadasivam Iyer

Yes. Surinder, as Ted said, look, there's is -- there's multiple prongs to the way we're thinking about this, right? -- as clearly, in spaces like Workday, ServiceNow, Salesforce, we are clearly at the leading edge of being their forward deployed partner. You heard some of that in Ted's remarks.

We are building capacity in the other areas, right? We've got -- think about Databricks, you think about Snowflake, you think about AWS and Microsoft. We've got deep technical expertise in that stack. And the way we think about it is the forward deployed model isn't just restricted to onshore.

We think about it as a combination of onshore and offshore with some solutioning capacity onshore, but a significant amount of the work done offshore and clients are asking for both. So we're approaching it along both those dimensions.

Theodore Hanson

And that, I'd say, underpins our strategic decision to add our platform of Quinnox in India earlier this year because we recognize the importance of having those capabilities not just here in the U.S. or nearshore, but also offshore. And we've had some good early success shifting certain work to that platform on all of our enterprise software capabilities.

Operator

Our next question comes from the line of Maggie Nolan with William Blair.

Margaret Nolan

Can you give us more color on the composition of commercial bookings and whether you saw any kind of notable deal timing dynamics or large awards over the last couple of quarters that we should be considering?

Theodore Hanson

Shiv, do you want to take that?

Sadasivam Iyer

Yes. Maggie, look, I think the bookings trend has been consistently strong across most of our capability areas, both -- so we've seen continued momentum in our Workday business. We've seen continued momentum in our core business. As we talked about, there's a fair bit of work that we're doing in the AI data center build-out, which is driving a significant amount of bookings in our TMT space.

So from a vertical perspective, our technology media verticals are growing really fast. We're also seeing continued momentum in some of our defense contractor type work where we're doing work with those companies. We see continued momentum in AI and cybersecurity and application modernization, application engineering has been at the center of a lot of what we do, especially with the Quinnox acquisition, we're seeing strong bookings in that area as well.

Look, I think the bookings come in all shapes and sizes. And we've had several bookings that have been sizable, nothing to -- we don't really report along those lines, but our average deal size on bookings is consistently going up over the last 3 quarters.

Theodore Hanson

And I would say the other thing, maybe one more piece of color is that they're definitely being influenced by our tech alliance partnerships with the major tech firms and enterprise systems, data, cybersecurity and the hyperscalers.

Sadasivam Iyer

Yes. Yes, that's a very good point. So we are -- if you look at our top 5 or 6 -- if you look at our top consulting partners, we are inching upwards into the high 40%, 50% range with the bookings that are influenced with our partners.

Margaret Nolan

That's helpful. And maybe to dig in on security, in particular, that seems likely to be an incremental growth engine for the business. How material do you think that can become, particularly as you think about the commercial business?

Sadasivam Iyer

I think we're just scratching the surface of what we can do with security in the commercial business. I mean if you look at it, we are probably the premier player in the federal business from a cyber endpoint protection, quantum, all of those areas perspective. We are starting to see more and more of those in the commercial segment, particularly in some industries.

We've got a strong presence in health care in the payer provider space. We are doing more work in the financial services space. And as that now starts to bleed into AI governance, AI risk, agentic AI security, harness, all of those areas, there's continued momentum in that space. So we see that as a significant growth vector for us.

Theodore Hanson

And this is one of those areas where the federal government has had a foot in front of the commercial marketplace and cybersecurity. And so our quals and halo there carry well into the commercial marketplace. So we'll continue to work that out. But I agree with Shiv, we're just scratching the surface now in commercial but have big hopes for cybersecurity growth in the commercial area.

Operator

Our next question comes from the line of Kevin McVeigh with UBS.

Kevin McVeigh

I guess just to follow up on that a little bit. Do you have any sense, I guess, Ted or Shiv, how client budgets are trending, I guess, into year-end and then for '27 more broadly? I know oftentimes in fourth quarter, there can be some true-up. Are you seeing that? And then any initial kind of discovery into '27?

Theodore Hanson

No, I think more of the same in Q4 from Q3. Q4 is always a lighter quarter to some degree because you have certain projects that come to an end in December and you have certain clients that will furlough certain projects in the last couple of weeks that they're not going to wrap them up and they come back to them in January.

I think based on that, I think Q3 to Q4 is playing out as it normally would. If you think about 2027, it's a little too early to tell. My assumption is it's kind of same as we're dealing with in '26, I'd say steady.

Maybe you get some relief in some areas where customers are spending more on tokens, they spend less on as they go forward based on what's going on with the various models, and that frees up some money for AI readiness, working on data platforms, security, tech debt around applications. And so that would be a positive if that were the case.

But otherwise, I think in absolute dollars, our early inclination is expect kind of the same from '26. And we really get a better view of that when we get into January or February.

Marie Perry

And Kevin, I'll just give a little -- just to maybe add on to what Ted said, just to give a little color on Q4. So as you know, from Q3 to Q4, we have about 3 fewer billable days, and so that has an impact. But when you look at the distinction between commercial and federal kind of with that billable day adjusted in our Q4 guide, it would probably indicate low single-digit sequential growth. On the federal, it is sequentially down, but it's up year-over-year.

Kevin McVeigh

That's super helpful. And then I guess just real quick, it looks like you were nimble in terms of the open market purchases, the bonds. I guess, what drove that? And then strategic investments, I thought we've worked our way through that. So maybe understand that a little bit. And then what's the recurring benefit past the initial $6.5 million to $7.5 million.

Marie Perry

Absolutely. So from a debt repayment, to your point, bought back about $53 million. A majority of that was on the revolver. We did buy back $9 million on our high-yield bonds. It was opportunistic and at a discount. right? So we kind of had a target price that we would buy it back.

And every time we saw it, we got it, and that was $9 million. So that was favorable to us as it relates to that. I think your second question was on our strategic -- the investments associated with our strategic cost savings. And so what we committed is those dollars coming down every quarter. And so you see it, we booked $8.3 million in Q3.

Our guide for Q4 is $6 million to $7.5 million. And so really, by the end of the year, we see that kind of truly kind of mitigating and then going back in '27 to a more normalized pattern.

Theodore Hanson

And they are the unlock, if you will, for the strategic cost savings, the transformation of cost savings that we mentioned in our 3-year plan, which is $80 million in 2028.

Marie Perry

So it will normalize in '27, but you'll just -- I mean, it just continues to drop. And so by year-end, we get down to a reasonable.

Theodore Hanson

I should have said $27 28.

Kevin McVeigh

To your point, that's the $80 million you outlined at the Investor Day, right?

Theodore Hanson

Correct. Correct.

Operator

Our next question comes from the line of Jason Haas with Wells Fargo.

Jason Haas

It's great to see some success that you're having with your technology partnerships. I'm curious if there's any additional technology partnerships that you're pursuing? And if so, would that require some sort of acquisition?

Sadasivam Iyer

Look, I think we're constantly -- I think the technology partnerships come in multiple flavors. So if you think about our top 5, we still have room to grow in some of the hyperscaler platforms like Google, and we're pursuing those because we think there's significant growth opportunities with Google Cloud as well.

We're strong players with AWS and Microsoft. You know our platform ecosystem as well with Workday, ServiceNow, Salesforce being the primary ones. We've got -- we're expanding our partnerships, for example, in the cybersecurity space because there's a lot of emerging platforms there.

We just announced a partnership with WisdomAI. So these all don't come in the same size and shape, Jason. We're looking at the market, getting client feedback and then dovetailing into areas where we believe there's market opportunities for us to differentiate and drive solutions that are fairly differentiated for very specific problems.

Jason Haas

Got it. That's very helpful. And I wanted to follow up on the security topic. I'm curious to what extent you're seeing AI driving that demand versus quantum. And if you talk about just like what inning we are in the and how much more there is to go there, that would be great.

Sadasivam Iyer

Look, I think quantum is very early days. There's obviously threats that quantum creates. So we've been at the front end of this because, as you know, the federal government is always thinking about these things a step or 2 ahead of the commercial markets.

I think most of the work we're seeing in security spans the spectrum, right? I think the threat actors, even in normal security protocols are getting more sophisticated. So there's just a lot of work to secure environments in that context.

AI just adds another layer of complexity. And when you then talk about agentic AI, it creates the next level of complexity around how do you put the right harnesses, the right security and governance around all of those.

So I wouldn't say that AI is the predominant driver, although the speed at which adoption of AI takes place creates a further catalyst for acceleration in that work.

Operator

Our next question comes from the line of Tobey Sommer with Truist Securities.

Tobey Sommer

I wanted to get your perspective on how visibility -- forward visibility is trending. Maybe if you could, in the context of your answer, incorporate some comments around projects and/or assignment length, weekly hours for the commercial business and what the trends are at a rate level as well?

Theodore Hanson

So well, several pieces to that. I would say visibility for our business is better as we evolve more to a consulting technology services, digital engineering business because bookings we realize in advance and then we can understand better how long those will go and at what rate.

So from our legacy business, I think, to where we are today, our business has better visibility than I'd say it's ever had. And certainly in the government part of the business, although you can have some lumpiness quarter-to-quarter, that's even better visibility because that work generally is 5 years, plus or minus 7 years.

And so it gives us a view. Volumes are up going forward in both businesses. And so I think that's a positive sign underpinned by the bookings. Rates are pretty steady. There's not a lot going on, if you will, from the midpoint of this year until now from a rate perspective.

But again, the work that we're booking is coming at better gross margin rates. And so we look to continue to drive our gross margin up based on that. And I think the more -- again, the more work we do in the areas that we've emphasized are more valuable to the customer.

And so in that work, they're much more willing to pay us a higher margin and also work with us on a fixed fee and outcome basis, which again, just gives us another lever to pull in order to make the work that much more of an economic value to us.

Tobey Sommer

There was a software issue at a prominent vendor within the staffing industry this month. Was there any impact on your business at all here in October?

Theodore Hanson

No, not aware of it.

Tobey Sommer

Good news. Good news. And then within the commercial consulting business, how would you describe the growth you're seeing in larger long-duration projects such as, I don't know, maybe an ERP comes to mind, if you could comment on that.

Sadasivam Iyer

Yes. Look, I think -- we are -- as I mentioned earlier, we are seeing the average size of our consulting bookings increase. Now it's a wide variety and a big spectrum. So for example, we are doing more complex implementations of ERP in our Infor business, which is truly our end-to-end ERP stack. With Workday, as you heard, we won some contracts around maintenance and managed services.

So we're seeing more of an uptick in all of those areas, Tobey, which leads to more longer-term contracts. Obviously, our Quinnox business has been built around longer-term sustainable contracts. So as we dovetail more and more of our work from a delivery perspective into our Quinnox business that we just acquired, we will continue to see an expansion in those types of projects, which are longer duration.

To your point earlier of visibility that gives us a better way to manage backlog and visibility of our revenues going forward. So ERP, we're seeing continued momentum in some of the larger implementations, especially in the food and beverage sector with our Infor business.

Workday continues to perform really, really well. And as we expand and go more broadly into managed services with the Quinnox platform and other capabilities, we will continue to see an expansion in larger, longer duration contracts.

Tobey Sommer

Last one for me. On the Quinnox and offshore operations, have you already begun expanding your capabilities organically after acquiring the footprint or -- when is reasonable for us to expect kind of a broader organic expansion?

Sadasivam Iyer

Yes. We were not waiting. We've already -- as Ted said, we're starting to see momentum already. Some of the examples that I referenced, for example, of integrating multiple ERPs on a platform that we otherwise wouldn't be playing with. This is a function of us having that capability with Quinnox.

Some of the FTE comments that I made earlier around data and AI are also because we have the ability to scale up those capabilities in India. We're building more capabilities around ServiceNow and some of our other platforms as well, both from a delivery and a managed services perspective offshore. So absolutely not waiting. We're up and running.

Theodore Hanson

I would say, typically, when we do a piece of M&A, the first year is about do no harm, the required integration, get settled together. But this was just a natural fit. And I think where the market is and where it's going, it immediately surfaced synergy -- revenue synergy opportunities with certain clients, we just wouldn't have had a seat at the table with to Shiv's point.

And so to see us capitalize on those early because of our commercial IT portfolio and the strength of our relationships there, it's already gotten a little bit of some good news stories across our organization and for our clients around being able to serve those opportunities that we didn't have a chance to before.

Operator

Our next question comes from the line of Mark Marson with Baird.

Mark Marcon

Ted, Shiv, Marie, it's nice to see the improvement in the third quarter here. I was wondering, Marie or Shiv or Ted, could you talk a little bit more about what went into the Q4 guidance? Obviously, we're all aware of a number of billing days.

But just wondering, it seems like at the midpoint, at least you're guiding to a slightly slower year-over-year growth rate than you just posted and the margin differential is a little bit -- you were making really good progress at the midpoint, you're not showing the same level of improvement.

So are there any elements that you're trying to be really conservative around? Or what was the driving factor in terms of just not seeing a more linear steady progression?

Theodore Hanson

Well, look, Mark, I would say -- I mean, Marie hit kind of the construct of the guidance, and it's in our prepared remarks. I would tell you, generally, we're just looking at it as a steady quarter, Q3 to Q4 with all the proper seasonality type of adjustments. I just don't see Q4 as an accelerating quarter on a normal basis. And so we've given you that look.

We're really excited about the bookings that we've seen in bed, but we're not giving too much, if any, credit for that in the revenue numbers for Q4 because I think it will be a bigger impact as we get to the first quarter of '27, but they'll be ramping up into that work during the fourth quarter.

And then on the commercial side, continued -- if you adjust for seasonality, continued seasonal momentum, I would say, into the first half of the quarter, and then we'll see the normal kind of things in the second half of the quarter. So to me, all that adds up as a steady quarter Q3 to Q4.

We saw some really good acceleration from Q2 into Q3 and throughout the quarter in Q3. But Q4 is not really that kind of quarter typically. And if it's there, we'll get it for sure. But I think we just gave you kind of our best look based on what we see in terms of understanding always what the seasonal challenges are in the fourth quarter.

Mark Marcon

Okay. It sounds like there's also an element of conservatism in there.

Theodore Hanson

Well, I didn't -- that's not my word. I mean I kind of gave you all my words and I think you just need to take it for what it is. I mean we've seen this business a lot of times, obviously, for 30-some years here perform from Q3 to Q4. And so we're just giving you our best look. And you wouldn't typically see them -- I mean, unless you were in '21 and '22, you wouldn't see a large acceleration from Q3 into Q4.

So look, we're very high. The bookings support growth. Margin expansion elements are all there. So I don't think that this is any kind of a bad report on any of those metrics. It's just, I think, look for kind of a steady landscape here from Q3 going into Q4.

Mark Marcon

Okay. Great. And can you talk a little bit more about what you're seeing with GlideFast in terms of ServiceNow. It sounds like you're getting really great traction with Workday. And I was just wondering, is it -- are you seeing a similar thing with ServiceNow?

And if you could also talk a little bit about what you're seeing on the EnerSys side because it seems like that would be a pretty compelling -- continue to be a very compelling solution just given certain organizations being price sensitive.

Theodore Hanson

Yes, sure. I'll let Shiv talk about that. And one thing I'll tell you on ServiceNow is that unit, our GlideFast unit outperformed our expectations for the quarter. They're not growing quite as strong as our Workday practice or our Salesforce practice, but they're doing well and the strength of our partnership is very good and strong.

And I think that ServiceNow looks at us as we hope they should as a very strong partner in the marketplace. They've got new products coming out to serve an AI future around AI control tower.

We're taking a client zero perspective of those things and beginning to implement a lot of the AI capabilities inside of our own business so that we can then turn around to our customers and be able to illustrate for them what the opportunity is. And so I think everything is good there. But I would say it's not growing quite as fast as Workday or sales force. And then on our nearshore...

Sadasivam Iyer

Yes. So look, nearshore continues to be a very strong component of our solution mix, Mark, as you rightly pointed out. Now obviously, with Quinnox in the mix, this allows us to constantly rebalance how we're delivering our work across geographies from a margin profile, from a complexity, from a time zone perspective.

So our ability to architect solutions that are more fit for purpose is only improving and expanding. And there are several clients for certain types of work, certain types of platforms prefer our Mexico capability where proximity time zone is of critical importance.

Could be in the experience space, could be in some of the Salesforce pieces. We are now building up more capabilities around near-term support, certain time zone support for certain platforms. So absolutely an integral part of the continued mix for us going forward.

Mark Marcon

That's great. And then last one for me. Can you talk a little bit about what you're seeing in your most cyclically sensitive portions of your business? So if I think about the old CyberCoders or Creative Circle, how are those organizations doing?

Sadasivam Iyer

Look, I think what I would say is those businesses are stable. We're not I would say they're sequentially stable. Like obviously, year-on-year, there have been continued declines in those businesses. But from Q1 to Q2 to Q3, we've seen relative stability in those businesses. That's how I would characterize it.

We are not -- as you well know, we're not looking at those businesses as drivers of growth in the near term. We're continuing to manage those very, very carefully operationally to ensure that we can sustain that stability and continue to deliver on the margin profile that we need.

Operator

We have reached the end of the question-and-answer session. I would like to turn the floor back over to CEO, Ted Hanson for closing remarks.

Theodore Hanson

Well, I want to thank everyone for their time and attention tonight to discuss our Q3 earnings, and we look forward to speaking with you in, I believe, early February next year to talk about Q4 and the full year. Have a great evening.

Operator

Thank you. And this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.