Jacobs' 10-K: Strong Core Operations Mask Net Income Drop

Following a major strategic overhaul, global professional services firm Jacobs Solutions is now a more streamlined company focused on infrastructure and high-end consulting. The company recently spun off its government-focused Critical Mission Solutions (CMS) and Cyber & Intelligence (C&I) businesses, and its latest annual 10-K filing provides the first full-year look at this new structure. A deep dive into the income statement reveals strong performance in the core business, even as the bottom-line net income figure was heavily impacted by the complexities of the corporate transformation.

The following chart illustrates how Jacobs' revenue flowed through its operations to generate profit for the fiscal year ending September 26, 2025.

Strong Growth in Core Operations

While a glance at the final net income figure might suggest a difficult year, the performance of Jacobs' continuing operations tells a much more positive story. Total revenue from these core segments grew a healthy 4.6% year-over-year to $12.0 billion. More impressively, operating profit—a key measure of core profitability—surged by nearly 25% to $864 million.

This strength was evident across both of its primary business segments:

• Infrastructure & Advanced Facilities (I&AF): This division, which manages large-scale projects in critical sectors like transportation, water, and advanced manufacturing, saw revenue climb 4.3% to $10.8 billion. Its operating profit grew an even more substantial 13.2% to $903.5 million.
• PA Consulting: Jacobs' majority-owned innovation and transformation consulting firm also posted strong results, with revenue increasing 7.5% to $1.3 billion and operating profit jumping 16.4% to $278.5 million.

These results indicate that the company's leaner, more focused strategy is delivering solid operational performance.

Explaining the Drop in Net Income

The path from a 25% increase in operating profit to a 64% decrease in net earnings attributable to Jacobs (from $806 million in 2024 to $289 million in 2025) is explained by a few significant items below the operating income line, most of which are not tied to core business performance.

1. Investment Volatility: The largest factor was a massive swing in "Miscellaneous income (expense)." In fiscal 2024, Jacobs recorded income of $219 million, primarily from mark-to-market gains on its investment in Amentum stock following the business spin-off. In 2025, this swung to an expense of $190 million, creating a negative year-over-year impact of over $400 million on pre-tax income.

2. A Higher Tax Bill: The company's effective tax rate on continuing operations more than doubled, increasing from 16.9% in 2024 to 39.7% in 2025. This was driven by a number of factors, including the tax impact of foreign operations and adjustments related to the Amentum investment. This higher rate took a substantial bite out of pre-tax earnings.

3. Discontinued Operations: The final accounting for the spun-off businesses resulted in a net loss of about $24 million. This compares to a net earning of $193 million attributable to Jacobs from these same operations in the prior year, representing another significant negative swing.

Looking Forward

Despite the noisy bottom-line figure, Jacobs' future outlook appears solid. The company's total project backlog grew 5.5% to $23.1 billion, indicating a healthy pipeline of future work. Management also signaled confidence by returning significant capital to shareholders, repurchasing $754 million of its stock and increasing its quarterly dividend during the year.

For investors, the key is to look past the headline numbers. This year's financial results reflect a company in transition. While the complexities of a major divestiture, investment volatility, and tax adjustments have clouded the net income picture, the underlying performance of Jacobs' streamlined core business appears robust and headed in the right direction.