Morning, everybody. I'm Matt Akers. I'm the Aerospace and Defense and Government Services analyst here at Wells Fargo. Next up, we've got Booz Allen Hamilton, so excited to have Matt Calderone, CFO. So thanks, Matt, for joining us. I think, did you want to lead off with a few opening statements?
Sure. Thanks for having us. Great, great conference, great event to be in Chicago. See some familiar faces, but some that may be new to us. So I'll start with me. I'm Matt Calderone. I've been the CFO since October 2022. Prior to that, I was Chief Strategy Officer, had a variety of positions at corporate, and in the business. And then a little bit about Booz Allen. We delivered $10.7 billion worth of revenue last year, about 34,000 employees. Had a fantastic year. I'm sure you'll ask some questions about that. We grew over 15%, almost all of which was organic. 98% of our work is with the U.S. federal government. The other 2% is a high-end commercial cyber business.
And really, what Booz Allen does is we are the company that brings technology to solve mission problems at the scale, speed, and complexity that the U.S. government demands. That's how we've been positioning ourselves and repositioning ourselves over the last decade. I think we are very much in the middle of the technology transformation of government and technology transformation of government missions. Those are two related but different things. And we're seeing, you know, really that bear fruit, you know, not just in our numbers, but in, I think, the quality of work and the capabilities that we're developing. Taking a step back, Booz Allen, we're celebrating our 110th year this year. We're ringing the bell at the stock exchange in a couple of weeks, which is exciting. It's particularly fun for me to be in Chicago.
Ed Booz started Booz Allen in 1914, first management consulting firm in the world, older than McKinsey. If you've been to the Allen Building up at Kellogg, that is the Allen in Booz Allen. Obviously a very different firm and very different company than, in fact, when, you know, Ed Booz was starting with time of motion studies. But it's fun for me. We've been spending a lot of time thinking about 110 years and what makes Booz Allen unique and different. It's fun to be back in Chicago, sort of where it all got started, so.
Great. I guess maybe to kick it off at, you know, high level, you mentioned the strong results last year. I think back to the Investor Day 2021. So you guys guided 5%-8% organic growth, mid-teens margins. You actually did double-digit growth, 11% margin. Can you just talk about sort of some of the swing factors that enabled you to beat that by such a amount?
Yeah, that's right. I think and underneath that, you know, the headline was we, we're targeting growing, Adjusted EBITDA to $1.2 billion-$1.3 billion at the end of the three-year time period. And we're pleased to just guide for to $1.26 billion-$1.3 billion. So, we're gonna be, you know, near or at the top end of our guidance, almost entirely through organic performance, which is actually a little bit different than we thought back then. So, yeah, really pleased to have exceeded, not just our organic revenue targets, but delivered margins in, you know, roughly the 11% range, when we thought we'd be a little bit below that.
But even more so, that resulting in us, you know, being where we wanted to be, from an Adjusted EBITDA perspective, with a lot of balance sheet capacity, in the tank. So, you know, what drove that? You know, Matt, you've followed us for a while. We've talked a lot about the virtuous cycle in our business, where, you know, we tend to deliver, we're a high-value company, which requires a lot of investment in people, technology, capabilities, partnerships, lets us generate value for customers. That, you know, in turn, allows us to share that value, certainly with our shareholders, with our clients in the form of incremental investment to come back around the circle, and our staff. And we've been in that cycle, right?
As I mentioned at the start, we have very intentionally positioned the firm. First, you know, we've migrated from being a general services firm to a technology services firm, with a very strong mission focus. And increasingly, as I mentioned, you know, we are the company that's bringing technology, whether it's homegrown, through partnership, reused, developed, in the face of a client to solve very specific mission problems and mission problems with scale. And that is where the government's headed. If you think about all of our missions, whether it's what's happening, in the Indo-Pacific, in the war in Ukraine, in the Middle East, climate change, global migration, healthcare, like, technology is driving the solutions to all of those challenges.
The speed and scale and power of technology is fundamentally transforming government and the missions that government performs, and we're happy to be in the middle of the ecosystem and making it work at the edge. That's the strategic answer. And then operationally, I think we've run the business, you know, pretty well from a margin perspective. You know, we have both grown faster than we thought we would and generated enough scale that we've been able to invest, largely in a way that has included margins. We're investing more than we ever have been before and maintaining margins, as you mentioned, at roughly 11% level, which we think is appropriate. And, you know, we are reaping the benefits on the supply side.
You know, we are largely still a labor-based and labor-driven business, from doing really important, impactful work, you know. But there's an energy inside Booz Allen and a vibrancy. People are excited by the quality and the impact of the work they're having, and that's helping with recruiting and attrition and all the things that drive the splash out of our business.
Got it.
Okay.
I guess as you approach the end of that, you know, the three-year horizon, is there a plan to put a new, new guidance out there anytime soon?
I mean, I would expect if you look at, you know, our previous two, we've gone through two waves of three-year investment theses with a gap in between-
Yeah.
because of COVID.
Right.
So I would expect that, you know, we'll probably, you know, have another multi-year investment thesis discussion, once this year ends. So whether that's next summer or the subsequent fall-
Mm-hmm.
To give folks a sense of, you know, what the next horizon is gonna look like.
Got it.
But a lot of momentum in the business.
Yep. Yep, got it. You know, I think people typically think of you as kind of more of a defense company, but you have a big civil-
Yep.
Business as well, it's actually growing faster. I know there's some M&A that's happening there, but just think about how you think of that mix and if you continue to shift more towards civil over time.
Yeah, if you look at our portfolio from a revenue perspective, we're, you know, slightly less than a half defense, you know, a little more than a third civil, and the remainder is in the intel business, and then this small, extremely interesting commercial cyber business. We don't think about the business that way, for a couple of reasons. You know, one is, you know, we have one P&L, but more importantly, we have a business model that very much supports the flow of investment and capabilities and people and technology across the the Booz Allen ecosystem. If you think a lot about a lot of our sort of higher end capabilities, you know, we have the largest AI business in the federal government. We have one of the largest cyber businesses in the world.
We're increasingly doing very sophisticated, digital solutions work. A lot of those were ... The cyber and AI are germinated in the intel business. You think about where, you know, a lot of the source of government innovation and scale, and then it sort of migrates from intel to defense to civil. And conversely, a lot of the, typical commercial applications or technology start in the civil business and go the other way because of the clearance requirements.
Got it.
So there's a huge value actually to the portfolio, not just, you know, to sort of wade through different funding environments, right? Different administrations and congresses have different priorities. But the business itself, you're constantly pulling, or at least Booz Allen is, talent and people and capabilities and technology, you know, from one portion of the business to another. And, you know, so a lot of the real-time situational awareness, you know, full motion video analysis that allows you to do real geolocation, for example, in the intel space. Well, there's obviously real defense applications to that. Well, and FEMA is sure interested in that, right? So, you know, how do I create a network of drones that give me, you know, real-time situational awareness across a flood zone?
You know, so that's how our business works, and that's part of the value we provide to our customers. It really comes from us having touch points across government, right? Very different endpoint missions, but a lot of the technologies and tools and capabilities you develop to serve them have portability. So love the civil business. It's growing fast. Defense actually grew faster last year than civil. I think defense grew at 20% and civil grew at 18%. We're seeing broad-based growth actually across all portions of our market, particularly when you look at our intel businesses. You know, we had a major contract loss there, so the fact that they grew 5% is pretty good. We are not intentionally tamping down or repositioning growth anywhere. We're letting the business run.
You know, we're investing in all the technology areas you'd imagine.
Yeah.
May manifest itself differently across different markets, but that's not. We don't have that vision.
Got it. Okay. I guess kind of related to that, the intel business-
Yep.
like you said, the contract loss, but do you foresee that kind of growing, or is there a reason that has kind of grown more slowly?
I mean, historically, the intel business has grown more slowly for two reasons. You know, one is on the labor supply side, that's where you need the highest level clearances, and that's a very captive pool, right? And you know, our business model, again, where you're sharing you know, capabilities and really working across organizational boundaries, in ways that I think our competitors can't, you know, there's some natural limitations to doing that in the intel space, given the compartmented nature of some of that work. Now, we're having more success in the labor market, in the intel business. We've sold a lot of really interesting work there.
I think the intel business and government as a whole is in a wave where they're really interested in innovation and getting access to commercial technology, which tends to open up people's horizons. So we feel quite a bit about where our intel business is. You know, it's- we've talked a lot about the loss of F2. I promised myself we wouldn't talk about it, but we are talking about it again, even though that was-
Sorry to bring it up.
-a little while ago. I actually think in, in some ways, it's been a real blessing because it's allowed us to take truly world-class cyber analytics experts and distribute them across other parts of the business, and we're seeing sort of more broad-based growth.
Got it. That's a good point. So the guidance for this year, you guys have talked a little bit about trying to build some momentum-
Yep.
In the first half, a little bit more uncertainty. You know, always after the election, I think there's always, you know, a little bit of uncertainty. I guess, do you think this year is maybe a little bit more volatile given the political environment? Or just how do you think of kind of the potential outcomes as we, you know, get through the fall?
Yeah. So our fiscal year starts April one, so it splits the government fiscal year. So I think structurally, we always talk about building momentum in the first half and uncertainty in the second half because as you know, we've been under a CR or some form of budgetary uncertainty for most of the last decade. So it's a pattern we're very familiar with. Yeah, there are a couple of schools of thought about, you know, it being an election year and what that may or may not mean for the budget. I think if you look back historically, you actually tend to see more stability in the given year, right? Because people won't just want to get out and campaign.
Right.
We've had a lot of experience, as you know, working in a Continuing Resolution environment, if that's where we end up, as do our clients, importantly. But, you know, I think obviously this election, there's more general uncertainty around it than most, right? So if you look at past patterns, you'd say, you know, there's probably actually in some ways gonna be more stability. But there's a lot of unknowns about what's gonna happen this year. So, yeah, as I mentioned, we're fortunate in that we're used to this pattern. Most, you know, typically our best book- to- bill quarter is, as you know, because you followed us for a long time, our second quarter, which is the end of the government fiscal year.
So, you know, it's been for decades, you know, that's, you know, the most aggressive selling season for us. So I think we're gonna just execute that playbook, which is sell as much work as you can, do as many things as you can do to position yourselves in, you know, missions of enduring national importance. You know, build staff, and then if uncertainty comes, you wait through it. You know, so I don't think we're seeing... There are no signs now, yet, that there's anything, you know, other than, you know, what you'd see in a typical year, but we'll see.
Yeah.
Right.
You know, another thing that came up on the call, a little bit lumpier recompetes maybe in this year. Can you talk a little bit about that and how that, you know, how that sort of relates to the typical percentage of sales that comes up for recompetes in a given year?
Sure. I think from a percentage of sales, we're not necessarily outside of the normal amounts, maybe, you know, at the slightly higher end of typical ranges. It's the size of the recompetes. And that's just a function of the fact that we've sold more large work. I mean, you, you've followed us for a long time. You know, Booz Allen's traditional strength was, as I mentioned earlier, you know, tactical selling, selling a $5 million, $10 million, $15 million, $20 million, $50 million task order. We have coupled that ability where we're working inside clients, providing innovation, providing ideas, generating demand with, over the past five years, the ability to win some pretty large contracts. I think we've won eight $1 billion contracts in the last four or five years.
And so the very nature of that means those are going to start coming up for recompete. And so, and the good news is we also have a larger pipeline than we ever had before, including a lot of billion-dollar jobs we're hoping to win that are either, you know, greenfield or new work, right? So in aggregate, we feel very good about where we are. We just wanted to call out the fact that, you know, yes, these jobs that we won three, four, five years ago are starting to come up for recompete, and, you know, that's just something we built into our calculus.
Got it. Are there any particular ones you can call out or any timing during the year that-
No, I mean, as you know, government procurement cycles, things always shift to the right.
Right.
They may even happen this fiscal year.
Right.
We just know that we're, we're coming up on this. You know, one or two in our health business and our defense business. I think we called both of those out on the call, that we got an eye on. We feel good about them. Our traditional, our historic recompete win rate's 90%. But, you know, it's possible that you lose one. I will say the advantage we do have, on the downside, and you saw this with F2, is given our business model, we have a lot of levers available either to shift, you know, work, or client staff to other jobs.
Mm-hmm.
I think we retained roughly half of our F2 staff, including, you know, a lot of the higher-end cyber experts. And, so just reality, right? We wanted, in the spirit of transparency, investors to be aware. But stepping back in aggregate, sign of strength, and we feel very, very comfortable about the overall size of the, the proposal pipeline, which is, you know, up, I think, 38% year-over-year.
Got it. I guess, question on free cash flow. So over the last few years, seen a few swings. I know there's been some tax planning items in there. You're back kind of closer to normal this year. How should we think about kind of that going forward? Is that a more stable cash flow conversion?
Yeah, so we have aspired, we still aspire to 100% or greater free cash flow conversion, you know, on a normalized basis. We obviously weren't there last year, for a couple of reasons. DOJ settlement, some catch up around 174 and the like. If you look at our guidance this year, we're guiding to slightly above 100%. Underneath that, you know, there are a couple of things that I would like to highlight. You know, we are making a long-planned change in our payroll cadence, which will generate more cash.
That's, you know, largely offset by 174 by a sort of lingering CapEx receivable we talked about on the call about, you know, $15-$20 million bucks and, you know, sort of the remnants of some of the tax planning and some unbilled tax items. So net-net, the way I think about that is, it's probably $40 million to the good from all the sort of non-recurring stuff.
Right.
So, you know, subtract that out from our, our cash guidance, we're probably slightly below 100% or, or touch 100%. So, you know, we're getting there. Still more work to do. It's beginning to normalize. I think, feel good about, you know, the factor that we've seen. You know, we have been consuming more cash just given the pace of growth and the working capital, and obviously, the growth rate. We're going from 15%, going to 8%-11%, that'll also begin to normalize. But, we're getting there.
Yeah. And maybe you could remind us of Section 174, if that does ever get kind of overturned, is there a dollar amount we should think of how much you could potentially get back?
Oh, I'm looking at Nathan trying to do the math in my head.
Through this list.
It's, we'll get back to you on that one.
Yeah.
We've said it publicly before, but I'm failing the memory test.
Got it, got it. Sorry to, sorry to surprise you.
That's okay.
Can you talk a little bit about AI and the big-
Sure.
You guys, you guys have talked about it for a long time. You're, so, you're not jumping into this because it's hot now. But can you sort of talk about, because you've invested in it for so long, what your advantage is there and what makes it difficult for some of your competitors to, to replicate some of your success there?
Yeah, so, I mean, stepping back, we've got a long history of investing ahead of trends that we think will be important for the U.S. federal government. Used to be consulting, increasingly it's technology, and AI is a great example of that. We started doing machine learning work in some of the intel, some of our intel clients in the 1990s. Then in sort of the, you know, the late 2000s, early aughts, we were at the forefront of the data science wave and movement. We actually, at our first investor day, when we rolled out—actually, second investor day, but when we rolled out our first investor thesis in 2018, we had someone come up and talk about our AI strategy and business that we build.
So we've been ahead of the curve, and it's really been, you know, a combination of, you know, a lot of folks who were passionate about AI, who are entrepreneurial, supported by internal investment and the fact that we won a couple of early, big, large contracts. Because our view is that, you know, AI is a tool, right? And we intentionally called—we held an event last October, actually, Cade, if you want to see it, some of the presentation materials called, and we called it AI And, because, you know, people aren't saying, "I want to buy AI." They're using AI often in combination with other forms of technology to solve a very specific mission challenge. So it's AI and cyber. It's, you know, at some point going to be AI and 5G, it's AI and space.
It's, you know, folks aren't buying AI. And so, you know, we were fortunate to hone our AI capabilities, our AI talent, our AI partnerships, because a lot of this is bringing in commercial technology and making it relevant for government. Our understanding of the unique environment the government works in, and constraints, and objectives related to AI, whether it's, you know, ethical or traceable or what have you. I think that experience base, coupled with we've got some technology platforms we've developed, you know, through this experience, I think provides us, you know, a head start competitively, but it's a competitive environment. Lots of folks talking about it. You know, we know that people are coming after us.
You know, we think that, you know, again, our ability to make AI work to solve problems, and increasingly we're beginning to scale the solutions to those problems, it's what differentiates us, and that's, that's rooted in, you know, the decade, the work we've done in the more recent contract experience.
Yep. Got it. Within AI, so you guys talked about $600 million of sales. Could you help us understand how that sort of breaks out? Is that, you know, a lot of contracts that have a little bit of AI in it? Is it a few kind of big ones, or just sort of how to think about how chunky those are?
Yeah, it's actually a combination, and we said publicly it's across 200 projects, but a lot of those projects exist on a couple of large contracts.
Yeah.
Our EMAPS contract, which I think is a $1.5 billion. It's not all AI, but a meaningful portion of it's AI. Our contract with CDAO, the Chief Digital and Artificial Intelligence Office and Department of Defense, similarly. But I think it, so it's, you know, some of them are aggregated on the larger contract vehicles, but it's actually pretty widespread. And the reason we talk about projects, I think it just shows the scale of where government is right now. I mean, government isn't buying 50, 100, 200 million dollar projects for AI to do X, because they're, you know, trying to figure it out, you know, with people like us and others, you know, on their side.
If I could just, you know, to give you an example, of how I think about AI and what's unique in the government. All three of my kids graduated from high school and college last year, this time, and all three of their graduation speeches, they had the same, you know, trope of, you know, "I had Gen AI create this speech," and blah, blah, blah, blah, blah. And we all laughed, right? Why was it funny? Well, it's funny because you combine your data with lots of other people's data. It's funny because you don't really know how it generates it, and it's funny because it's like 95% right and 5% wrong, right? And if you think about the government and the mission of the government, all three of those things are challenging.
Government doesn't want to combine its data with other people's data, particularly because we all know that, through, you know, this new emerging and, terrifying field of algorithmic warfare, you know, countries are actually trying to infect one of those models. So government doesn't want to, you know... So that's a challenge. It's not they don't want to. They have some constraints and real, you know, operational concerns about doing so. Traceability is important. You know, if the IRS uses an AI algorithm that flagged you for audit, you're gonna wanna know why, right? And that's not how a lot of AI models are built, right? It's very expensive to have traceability. If, you know, an analyst report, the CIA says, you know, "We assert X," you know, first thing I say is, "Well, how'd you make that assertion?" Right?
That's not how AI works. And then, you know, 5% wrong doesn't work for the public mission. So it's just a couple of examples of how AI is different. You know, putting aside a lot of the responsible and ethical concerns we have about using AI, not just in the commercial space, but for government. And there again is where having experience of attempting to do these things in the field, not in the lab, I think provides you an advantage.
Got it. Are the economics of some of this AI-related stuff any different? It seems like you could have tremendous productivity, cost savings. Does that accrue to, to go down or sort of how does that work?
Yeah, not yet. It's as best we can tell, and AI is so intermingled with other pieces of work we do. It's, I double underscore, as best we can tell, it's probably slightly more profitable than our average business, and I'll double underscore slightly. And I think that's in part because the market's still developing. We don't know how to sell it from an outcome basis, the government does not buy it on an outcome basis. You know, hopefully, that will continue to emerge. I think that's one of the thresholds that, you know, we and others in the industry would like to cross at the right time. But it's also because we're not really seeing now a push for efficiency so much as it is for speed and for effectiveness, right?
If you think about what's happening, you cover a lot of companies, right? It's all about speed.
Right.
China, speed, speed, speed. Interoperability, yeah, interoperability, speed, you know, they want—it's, it's about capability. It's not about efficiency. So, I mean, of course, you're generating efficiencies, but you're using that to invest in broader coverage and-
Right.
And capability. So, you know, long-winded way of saying, you know, we are not right now seeing any material benefit to margins from our AI business. I think you can envision a scenario where that would come, but, you know, we're nowhere near calling that. That market just hasn't evolved to that point yet.
Yeah, got it. Got it. Cool. And so AI, I mean, you invested in this years ago, to get to the point we are now. What are the things you're investing in now that you see, you know, 10 years from now, these will be the hot technologies?
It's interesting. I mean, it's a combination of things that may seem interesting and hot, and things that are, you know, sort of old and legacy.
Yeah.
You know, cyber, you know, feels like it's old and legacy, but, you know, what's happening, as I mentioned earlier, intersection of AI and cyber, you know, hugely emerging field. Zero Trust, obviously, is an area where we and others are investing a lot and we have the advantage of having, you know, under contract, one of the largest, if not the largest, Zero Trust architecture and implementation contract in the government. OT, I'm just talking about cyber, you know, stirring things, critical infrastructure. So there's a lot of investment around those areas which are taking cyber, which is an old technology, but it's just changing so rapidly and applying it to certain mission areas.
We're investing a lot in AI, of course, you know, quantum, 5G, anything at the edge, because that's really where a lot of the value is taking place.
Got it.
So, I mean, one of the, how I think you're starting to see the market emerge is, you know, we are trying to leverage the investments that others are making through part-commercial partnerships. We've had a lot of rich, robust discussions with commercial tech players, you know, who have, you know, the ability and the capacity to invest in some of these foundational technologies that we don't. But we can, you know, apply them and couple them with things that we do to solve, you know, real-world mission problems, perhaps in a way that, you know, they can't or they don't want to, and it doesn't fit their model. They're a very natural partnership there. So, you know, I think the term investment has changed significantly, at least for me, in the last five years.
It's not just we build things, it's how do we source investment and innovation from a lot of different places, including some of these cool stuff we do, but, you know, recognizing... And the government's in the same mindset, that there's a lot of obviously innovation that's happening out there that you want to bring into government and make useful.
Got it. Got it. Okay, I just wanted to touch on, on M&A.
Yep.
You guys have done some deals historically. Talk about how big a priority that is, what are some areas you could look at, and maybe what you're seeing in the marketplace of assets that are coming up for sale?
Sure. Well, we were pleased to announce the deal yesterday. Got one over the finish line. Really excited about PAR Gov and what it's gonna do for us, a space I can talk about in a minute. You know, more broadly, still want to do M&A. Our capital deployment strategy hasn't changed. We've, I think, you know, worn out the phrase patient and disciplined, but that's how we're gonna approach this. We were close in a couple of small deals last year that fell through. Happy that PAR got across the finish line. You know, in general, we are looking at, I would say, you know, tuck-ins, you know, PAR, you know, it's public record because they're a public company.
We paid $95 million for it, so you know, maybe that has a low end and then, you know, in the $100 million-$250 million, maybe, you know, $500 million dollar range feels right for us because, you know, we're not buying scale. We don't need scale and contract access, in terms of talent. You know, we're buying, you know, capabilities, business model, products and solutions that we don't have access to, that we can couple with things that we do and push them across, you know, our, our channels, as I talked about earlier-
Mm-hmm.
in civil defense and intel, in new and unique ways. And PAR is a great example of that. You know, what they do is, maybe you've seen, our head of investor relations had told me that apparently anybody who plays Call of Duty knows what this is, but, they have a TAK system that sits, you know, it's a sort of a communication and real-time situational awareness device, on your chest, right? They provide a lot of the software, develop these systems, and you think about, you know, coupling that with what we do from an AI perspective, you know, Zero Trust cyber at the edge perspective, you know, some of what we're doing in terms of decision advantage, right?
It's a really natural partnership, and then as they make hardware, the hardware is from Samsung, but, you know, they do a lot of the, you know, software and configuration and other, you know, things on top of that, coupled with what we do, opens up a lot of opportunities. So that's perfectly emblematic of the kind of M&A we wanna do. It's not, you know, necessarily swinging for the fences, but it's a really nice add for our clients, first and foremost, because we can develop new capabilities, but then obviously, you know, generate synergies for us.
Got it. Got it. But maybe just touch quickly on, you know, the labor. Are you guys seeing any more availability of people, just given some of the tech, you know, layoffs we've seen? Are things getting any easier?
No, I think the labor market's been reasonably stable for the past 6 months, but, you know, stable in a place that's been fairly attractive for us. There's still a lot of competition for high-end technical talent, not just with commercial tech, but inside our space, as you know. You know, I think we're growing faster than anybody else, but there's a lot of folks growing in our business. So there's a lot of demand for technical talent. So it's, I wouldn't say it's an easy labor market, but it's certainly looser than it was, two years ago back when, you know, the commercial tech firms were stockpiling talent.
Yep, got it. I guess, is there anything from the audience before I continue? I've got a couple more minutes. Talk a little bit about the Pacific, the pivot there. On the last earnings call, could you talk about some of the opportunities there, how big that is? Is there any different kind of strategy to win there versus, you know, work that you've done in the past?
I'm trying to figure out how to define that market. I mean, it's, you know, it's, it, Roz, your CEO, just wrote an article in Forbes magazine yesterday, talking about, you know, A, the need for speed, and B, the need not just for a whole government approach, but for a whole of industry approach, to to the Indo-Pacific and to ensuring there's, you know, balance in this great, great power competition. So, you know, inside that rubric, you know, there's a tremendously wide area of opportunity. You know, what are we seeing? We're seeing a lot of interest in, you know, not just how you prepare for, you know, kinetic activities or non-kinetic activities, the need for interoperability across not just traditional platforms, but other warfighting domains, right?
You know, whether it's space, cyber, economic, EW, and the like. We're seeing a real emphasis on speed, and speed requires, you know, automation, and machines in the loop, and it requires interoperability and a common picture. We're seeing a lot of interest in how we work in new and different and better ways with our allies. If you think about the nature of what, you know, may or may not happen in that part of the world, which comes with its own advantages and challenges. So, you know, pulling back, you know, all of those things are gonna require innovation. All of those things are hard problems, and that those typically are conditions where Booz Allen succeeds. There's no preset answer-
Right.
to them. You're gonna have to, you know, cobble together answers based on, you know, first and foremost, your mission understanding. Second, there's gonna be a huge technology component to it, right? And third, you're gonna have to be creative. So I'm, you know... There's a lot of opportunity there, our business is growing, both directly and indirectly. You can measure it by the number of people we have in Hawaii, you can measure it by, you know, the size of our defense business. It's an area that I think there is a lot of unanimity across government that we need to get better at, right? I mean, we're behind China in a lot of ways, and it's gonna take, as Ro here noted, speed, whole government approach, whole of industry approach, to make sure we retain balance.
Got it. Got it. Great. I think we've got maybe a minute left. Any closing remarks you want to wrap it up with?
Yeah, I think, and we said this on the call, when we actually were just coming off by the best, well, certainly the best year we've had since our IPO. We see, you know, a lot of momentum in the business. You know, momentum creates resiliency. We're not predicting anything in the back half of the year or post-election, but we recognize that there's volatility out there and, you know, we've been preaching to internally, you know, the best way to develop resiliency is to build as good a business as you can. And we feel, we feel good about where, where we are, and the, the leadership position that we have and that we're, we're growing into.
Great. All right. Yep, thanks, Matt, for, for joining us.
Sure.
Thank you everybody for listening.