Aramark (ARMK) Earnings & Analysis

Latest quarter

Aramark reported Q3 FY2026 revenue of $5.1 billion, above the $4.9 billion consensus, and adjusted earnings of $0.52 per share, above the $0.48 consensus. Revenue rose from $4.6 billion a year earlier, while diluted earnings per share increased to $0.36 from $0.27.

In its filing, Aramark attributed the revenue increase primarily to growth from existing and net new business. The company said its U.S. food and support services segment grew, with business and industry, sports and leisure, and healthcare contributing; international growth was driven largely by the U.K., Spain, Germany and Canada. Aramark said a calendar shift reduced the number of operational service days and affected education revenue in particular.

Aramark reported a gross margin of 8.51%, compared with 8.00% a year earlier, and an operating margin of 4.26%, compared with 3.95%. Free cash flow was $8.7 million, compared with −$33.6 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO John Zillmer said new client wins totaled more than $1.6 billion fiscal year-to-date, while client retention was approximately 98% entering the fourth quarter. He said growth came from both new clients and existing business across sectors and geographies, and that inflation trends were slightly more favorable than originally expected.

Asked about growth components, Zillmer said the quarter included 5% to 6% net new business, pricing of 3.5% and volume growth of 1% to 2%, before the calendar shift. Executive James Tarangelo put underlying third-quarter growth, excluding that shift, at 10% to 11% and said the fourth quarter implied a similar level.

Zillmer said Aramark Nexus had begun serving a hyperscaler at a Texas site and was mobilizing a second. He estimated annual revenue at approximately $140 million for the first site and $160 million for the second. He added that Aramark had a multiyear hospitality engagement with an AI data center colocation provider.

Asked about the market, Zillmer said its size was still being assessed and that estimating it was difficult at this stage. He said: “We currently have 8 sites that are signed and under active development in various stages.” He also expected other large companies to enter the business and said regulation could delay project rollouts.

On contract economics, Tarangelo said the primary structure was cost reimbursable, with low capital intensity and some upfront costs; he declined to provide more detail for competitive reasons. Zillmer said he expected core-business margin expansion of 30 to 40 basis points, with Nexus adding to it.

Looking ahead, Zillmer said the fourth quarter would include costs to mobilize new business in higher education, destinations and healthcare, with those margins ramping up into fiscal 2027.

Guidance

Aramark raised its FY2026 organic revenue growth outlook to 9% to 10%, from the high end of its previous 7% to 9% range. Executive James Tarangelo said the revised outlook reflected portfolio growth and the early contribution from the hyperscaler engagement; Aramark had previously excluded that engagement from its outlook.