Parsons Corporation (PSN): BCG Matrix [Dec-2025 Updated]

You're looking for a clear, no-nonsense breakdown of Parsons Corporation's (PSN) portfolio as of late 2025, and the BCG Matrix is defintely the right tool for that. Here is the quick math on where their cash is being generated and where it needs to be spent. We see high-flyers in Cyber and Intelligence delivering over 20% revenue growth alongside stable Cash Cows in core Infrastructure, which boasts a strong 10.3% Adjusted EBITDA margin. Still, you need to watch the Dogs, like that confidential contract winding down which caused a 29% segment revenue decline in Q3 2025, and decide how much fuel to pour into the Question Marks like the new international efforts. Dive in below to see the exact allocation strategy for PSN's next phase.

Background of Parsons Corporation (PSN)

You're looking at Parsons Corporation (PSN) as of late 2025, and honestly, the story is one of two very different business engines running at different speeds. Parsons is fundamentally a technology-driven solutions provider, focusing its efforts across three main areas: defense, intelligence, and critical infrastructure markets. The company's structure is split into two primary operating segments, which is key to understanding its current positioning.

Let's look at the segments based on the latest read, which is Q3 2025 data. The Critical Infrastructure segment has been the clear growth driver lately. In the third quarter, this segment saw revenue jump 18% year-over-year to $833 million, with its adjusted EBITDA margin expanding significantly to 10.3%. This segment is capitalizing on global infrastructure spending, and it's showing strong momentum, evidenced by a quarterly book-to-bill ratio of 1.4x.

The other side, Federal Solutions, is facing some near-term headwinds, though its long-term alignment with national security priorities remains strong. In Q3 2025, the segment's reported revenue was $789 million, a steep 29% year-over-year decrease. What this number hides, though, is the impact of a specific, large confidential contract that is winding down or facing delays; excluding that contract, the segment actually showed 9% organic growth. So, you have one part of the business growing double-digits and the other facing volatility due to specific federal contract dynamics.

Overall, Parsons is managing a complex portfolio. The trailing twelve-month (TTM) revenue as of late 2025 sits around $6.49 Billion USD, down slightly year-over-year. Despite the revenue guidance adjustment for the full year to the $6.4 billion to $6.5 billion range, the company is maintaining its profitability outlook, targeting an adjusted EBITDA margin of about 9.8% for Q3. Plus, the total backlog is robust at $8.8 billion, with 72% of that amount already funded, which gives us a solid base for future work conversion.

Parsons Corporation (PSN) - BCG Matrix: Stars

You're looking at the business units within Parsons Corporation (PSN) that are currently dominating high-growth markets, demanding investment to maintain their leadership position. These are the Stars, and based on the latest figures, the Critical Infrastructure segment is shining brightest here.

The Critical Infrastructure business unit is a clear Star, showing robust expansion that outpaces much of the broader market. For the third quarter of 2025, this segment delivered total revenue growth of 18% year-over-year, reaching $833 million. Crucially, the underlying momentum, or organic growth, for these Digital and Technology-Enabled Solutions was 13% in Q3 2025. This high growth rate is fueling significant profitability gains, with adjusted EBITDA for the segment surging 83% in the quarter, pushing margins to 10.3%.

Within the Federal Solutions portfolio, the Cyber and Intelligence sub-segment also exhibits Star characteristics, representing a high-growth area despite headwinds in other parts of Federal Solutions. This market has been a consistent performer, with the CEO noting that the end market achieved double-digit revenue growth after two prior years showing growth of more than 20%. This focus on advanced capabilities is being bolstered by strategic moves, such as the recent acquisition of Chesapeake Technology International (CTI) for $89 million. CTI is expected to contribute approximately $89 million in revenue in 2026 and brings a workforce where 87% hold security clearances, directly feeding the high-growth, high-margin work.

The alignment of Parsons Corporation's capabilities with major government spending priorities further solidifies the Star status of these defense-related offerings. For instance, the company's Space and Missile Defense capabilities are positioned to benefit from significant federal focus, such as the $25 billion allocated for the Golden Dome initiative within the Reconciliation Bill. Parsons holds a substantial Missile Defense Agency contract valued at $2.26 billion, with over $1 billion in ceiling remaining, extending until January 2029.

Here's a quick look at the performance metrics supporting the Star categorization for these key areas as of Q3 2025:

The investment thesis for Stars centers on maintaining market share through continued funding. Parsons Corporation's overall backlog reflects this forward-looking strength:

• Total backlog reached $8.8 billion as of Q3 2025.
• 72% of the total backlog is funded, which is the highest level since the company's Initial Public Offering.
• The trailing twelve-month book-to-bill ratio has been 1.0x or greater in every quarter since the IPO.

Parsons Corporation (PSN) - BCG Matrix: Cash Cows

You're looking at the core engine of Parsons Corporation's stability, the business units that generate more cash than they need to maintain their market position. These are the Cash Cows: established leaders in mature markets where the heavy investment for market share capture is already done. For Parsons Corporation, this role is clearly occupied by the Critical Infrastructure segment, which provides essential services like North American Transportation Engineering and Construction Management.

This segment is characterized by a large, stable, funded backlog, which is the bedrock of predictable future revenue. As of the third quarter of 2025, the total backlog stood at $8.8 billion, with a significant portion, 72%, already funded. To align with the structure you provided, this translates to approximately $6.4 billion in secured, funded work as of Q3 2025. This level of committed work minimizes near-term revenue uncertainty, allowing management to focus on operational efficiency rather than aggressive market expansion spending in this area.

While the Federal Solutions segment has its own long-term, recurring contracts, the Critical Infrastructure segment's financial performance in Q3 2025 demonstrates its Cash Cow status through superior profitability. The segment's Adjusted EBITDA margin was a robust 10.3% in Q3 2025. This margin, paired with an 83% year-over-year increase in Adjusted EBITDA to $86 million, shows the unit is effectively 'milking' its established position for significant cash flow. This cash generation is what funds the company's riskier ventures, like Question Marks, and supports overall corporate overhead.

The operational strength of this segment is clear when you look at the specific financial results from Q3 2025:

• Revenue growth year-over-year was 18%, reaching $833 million.
• Organic revenue growth for the segment in Q3 2025 was 13%.
• The segment's Adjusted EBITDA margin expanded 360 basis points year-over-year.

Here's a quick look at the Q3 2025 performance metrics for the primary Cash Cow unit:

The strategy here is to invest just enough to maintain this high market share and efficiency, perhaps funding infrastructure improvements that further lower the cost to serve, rather than spending heavily on market development. The goal is to passively 'milk' the gains. The stability provided by this segment's cash flow is defintely crucial for Parsons Corporation's overall financial health, covering corporate debt service and funding shareholder dividends.

Parsons Corporation (PSN) - BCG Matrix: Dogs

You're looking at the parts of Parsons Corporation (PSN) that are tying up capital without delivering strong returns, the classic Dogs quadrant. These are units or product lines operating in markets with low growth and where Parsons holds a low relative market share. Honestly, these areas frequently just break even, consuming cash in the process of trying to stay afloat, and they are prime candidates for divestiture.

The most concrete example of a Dog-like situation in the latest reporting is clearly tied to the Federal Solutions segment's performance, specifically related to a major contract that is concluding its lifecycle. This is the kind of situation where expensive turn-around plans rarely work; you're better off managing the wind-down efficiently.

The impact of this specific asset is stark when you look at the Q3 2025 numbers:

• - The Federal Solutions segment saw its revenue decline by 29% year-over-year in Q3 2025.
• - This segment's revenue for the quarter was $789 million.
• - The revenue decrease was driven by the winding down of a large, confidential contract, which alone accounted for a $317 million year-over-year decrease in that segment's top line.

This single contract's conclusion highlights the risk of concentration in low-growth or sunsetting projects. The pressure isn't just on revenue; profitability is hit hard too. The Federal Solutions adjusted EBITDA including noncontrolling interests fell by $48 million, a 40% drop from Q3 2024. The segment's adjusted EBITDA margin compressed to 9.2% in Q3 2025.

To give you a clearer picture of how this Dog-like performance contrasts with the rest of the business, look at the segment comparison for the quarter:

The pressure from older work is also evident in the broader financial outlook. The company lowered its full-year Fiscal Year 2025 revenue guidance to a range of $6.4 billion to $6.5 billion, reflecting the impact of this contract wind-down. This is the reality of legacy, fixed-price work when inflation and labor costs run up-margins get squeezed, and revenue eventually dries up.

Regarding legacy environmental and remediation projects that lack the newer technology focus, management indicated in February 2025 that the impact of legacy programs was nearly concluded, which was a factor in projecting margin expansion for the year. Still, the fact that the company made strategic acquisitions like TRS Group post-Q4 2024 to specifically strengthen environmental remediation capabilities suggests that older, lower-tech work is being actively replaced or managed down, consistent with avoiding investment in this quadrant.

Older, fixed-price contracts are inherently vulnerable to the current economic climate. The data confirms this vulnerability was realized on the confidential contract, which was explicitly noted as a fixed price arrangement. When you lock in a price and costs rise due to inflation and labor, the margin erodes, turning a once-profitable contract into a cash trap.

• - The fixed-price nature of the confidential contract was cited as a primary driver for the 40% drop in segment adjusted EBITDA.
• - The company is actively pursuing new work, with a total backlog of $8.8 billion as of Q3 2025, 72% of which is funded.
• - The goal is clearly to shift focus to higher-growth areas, as evidenced by the Critical Infrastructure segment's 18% revenue growth.

Finance: draft 13-week cash view by Friday.

Parsons Corporation (PSN) - BCG Matrix: Question Marks

These business units operate in markets with high growth prospects but currently hold a low market share for Parsons Corporation (PSN). They consume significant cash while generating relatively low immediate returns, characteristic of Question Marks needing strategic investment or divestment.

New international expansion efforts represent a major area of cash consumption with potential for future Star status. Parsons Corporation secured a position on the $15 billion Pacific Deterrence Initiative Multiple Award Construction Contract (PDI MACC) from the Naval Facilities Engineering Systems Command (NAVFAC) in November 2025. This vehicle includes a 5-year base period plus three one-year options. Under the PDI MACC, Parsons will compete for task orders for design and engineering services on projects exceeding $100 million in scope.

Recent, smaller acquisitions are being integrated and require investment to quickly scale market share. Parsons acquired Applied Sciences Consulting, Inc. in October 2025. This all-cash transaction is consistent with the strategy of completing accretive acquisitions that target revenue growth and adjusted EBITDA margins of at least 10%. Applied Sciences Consulting, Inc. specializes in water and stormwater solutions, expanding Parsons' water expertise in Florida, a state with billions committed to water infrastructure.

Investments in new technology areas like Artificial Intelligence (AI) and Internet of Things (IoT) for smart cities are inherently high-risk/high-reward plays. Parsons is positioned within the Cyber-Physical Security category for the smart city ecosystem. The broader IoT market is projected to surpass $3 trillion in 2025. Parsons leverages AI in its iNET® Smart Mobility Platform to evolve from reactive to predictive insights in transportation management.

The Federal Solutions segment shows mixed results, with overall revenue contraction offset by strong performance in specific sub-segments, illustrating the Question Mark dynamic. The segment's performance in the third quarter of 2025 compared to the third quarter of 2024 is detailed below. The segment's future success hinges on growing the high-growth areas to offset the drag from other contracts.

For the full fiscal year 2025 guidance, Parsons expects the Federal Solutions segment to generate approximately 51% of total revenue at the midpoint.