Booz Allen Hamilton shares surged 6.7% after the defense contractor reported third-quarter earnings that handily beat estimates. Adjusted EPS came in at $1.77, well above the $1.29 consensus, even as revenue fell 10.2% to $2.6 billion, missing expectations.

The revenue decline was partly blamed on a government shutdown, which cost $110 million in lost work. Yet investors focused on strong profitability, with adjusted EBITDA hitting $285 million and a record $38 billion backlog signaling future demand despite a weak book-to-bill ratio of 0.3x.

Management narrowed full-year revenue guidance to $11.3-11.4 billion but raised its adjusted EPS outlook to $5.95-$6.15. Free cash flow jumped 85% to $248 million, allowing for share buybacks. The quarter shows disciplined cost control can offset top-line pressure.