Geo Group (GEO -2.23%), a multinational leader in private corrections, detention, and electronic monitoring services, reported its most recent quarterly earnings on August 6, 2025, covering Q2 FY2025 results. The standout news was a marked outperformance on both revenue and adjusted profit versus Wall Street expectations, driven by early ramping of new federal government contracts and sharply reduced one-time debt charges. Revenue (GAAP) reached $636.2 million, beating the $621.2 million estimate by 2.4%, while adjusted earnings per share was $0.22, ahead of the $0.17 consensus and representing a 33.3% non-GAAP earnings beat. However, adjusted profit (non-GAAP) remained essentially flat compared to Q2 2024, highlighting ongoing margin pressure. Overall, the quarter showed positive momentum on growth and balance sheet improvement, but underlined that more work is needed to sustain and build profitability as the year progresses.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Adjusted, Non-GAAP) | $0.22 | $0.165 | $0.23 | (4.3%) |
| Revenue (GAAP) | $636.2 million | $621.2 million | $607.2 million | 4.8% |
| Adjusted EBITDA | $118.6 million | $119.3 million | -0.6% | |
| Net Income Attributable to GEO | $29.1 million | ($32.5 million) | N/M | |
| Net Debt (as of period end) | $1.7 billion | N/A |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Geo Group owns, leases, and operates secure detention facilities, correctional centers, reentry centers, and provides electronic monitoring services. Its core clients are U.S. federal, state, and international government agencies, with federal contracts accounting for 62% of revenue in 2024. The company is also active in electronic monitoring, most notably under the Intensive Supervision Appearance Program (ISAP), which tracks and manages individuals in immigration or justice proceedings.
The business is heavily reliant on government contract awards, renewals, and effective management of idle facilities -- properties that lack active revenue-generating contracts but carry costs. Recently, its focus has turned to reactivating these idle facilities through new or expanded federal contracts, carefully managing expiring agreements, optimizing its cost structure, and expanding alternative service offerings such as electronic monitoring. International operations, now about 9% of consolidated revenue for FY2024, provide diversification beyond the United States.
Quarterly Highlights and Financial Performance
Revenue (GAAP) climbed 4.8% year over year compared to Q2 2024, powered by new and ramping federal contracts with U.S. Immigration and Customs Enforcement (ICE). Key wins included Delaney Hall in New Jersey, which began ramping in the period, while North Lake in Michigan and D. Ray James in Georgia are expected to drive growth in the second half of 2025. While the $14.99 million GAAP revenue beat versus estimates was significant, operating expenses also increased 7.1% and general and administrative (G&A) expenses rose 7.8% compared to Q2 2024. These higher costs stemmed from upfront investments tied to ramping facilities and organizational restructuring.
Net income (GAAP) rebounded to $29.1 million, a major turnaround from a prior-year loss, though most of that swing reflected the absence of large debt extinguishment charges in the prior year. Adjusted net income, excluding one-time items, remained flat year over year at $30.7 million. Adjusted EBITDA -- a measure of profit before interest, tax, depreciation, and amortization, adjusted for nonrecurring items -- totaled $118.6 million, nearly unchanged from the previous year. The company indicated that margins and profitability remain under pressure until fully ramped contract volumes can offset these added costs.
One of the major developments in Q2 2025 was the announcement of a $300 million share repurchase program, underpinned by the closing of a $312 million facility sale in Lawton, Oklahoma on July 25, 2025. Proceeds have helped reduce net debt to approximately $1.7 billion at quarter-end, with subsequent activity lowering that to around $1.47 billion and net leverage to 3.3 times adjusted EBITDA as of August 2025. Management has set a target to reach net debt of $1.4 billion or less by FY2025, with net leverage closer to 2.8–2.9 times. The company also improved its credit agreement in Q2 2025, increasing its revolving credit capacity from $310 million to $450 million and extending its maturity date to July 14, 2030.
Federal contract wins dominated the news. Delaney Hall's 15-year ICE contract began ramping in Q2 2025 and will ultimately add more than $60 million in annualized revenue in the first full year of operations, while North Lake secured a two-year agreement effective July 18, 2025, that, once fully utilized, could bring in over $85 million in annualized revenue each year. The D. Ray James and Adelanto Center facilities represent added annualized run rates of $66 million and $31 million, respectively, when fully operational. Management stated that contracts currently ramping or being reactivated across four major ICE facilities could generate more than $240 million in new annualized revenue at full occupancy, based on company statements in Q2 2025. However, the timing of the full ramp remains dependent on Congressional appropriations and regulatory process.
Activity in electronic monitoring, primarily through ISAP, also featured in the period. Participation counts stabilized above 185,000 in Q1 2025—well below the peak of 370,000 in late 2022. The contract for ISAP was extended through August 2025, with further extensions expected. A shift in the technology mix from phones to GPS tracking devices continued to put pressure on profit margins for this segment, as GPS services tend to have tighter cost structures. Management noted that a recovery to earlier participation peaks could offer a substantial revenue boost, but this would depend on federal budget cycles and policy decisions.
Geo Group also executed balance sheet and portfolio improvements. In July 2025, it finalized the $312 million sale of its Lawton facility, using those funds to pay down debt and finance the approximately $60 million acquisition of the San Diego facility in July 2025, which comes with a steady $57 million annual revenue contribution (annualized) and replaces a costly lease. Reducing the burden of idle, non-earning facilities remains a key agenda item; with further federal or U.S. Marshals Service contracts being pursued to utilize this excess capacity.
International operations were not broken out separately for this quarter, but for FY2024, international services contributed approximately 9% of group revenue, providing some insulation from U.S.-centric policy changes. There were no significant updates on corporate social responsibility or environmental, social, and governance (ESG) initiatives this quarter, though the company reaffirmed its ongoing commitment in line with prior reports and standards.
Looking Ahead and Guidance
Management has provided detailed financial guidance for Q3 2025, Q4 2025, and FY2025, including expected net income attributable to GEO of $1.99 to $2.09 per diluted share for FY2025 (GAAP), adjusted net income of $0.84 to $0.94 per diluted share for FY2025 (non-GAAP), and adjusted EBITDA of $465 million to $490 million for FY2025. For the full year 2025, it forecasts net income attributable to GEO of $1.99 to $2.09 per diluted share (GAAP). and adjusted net income per share—reflecting core, ongoing profitability—between $0.84 and $0.94 for the full year 2025. Revenue for FY2025 is expected to reach about $2.56 billion. Adjusted EBITDA for FY2025 is projected at $465 million to $490 million. Capital expenditure guidance for FY2025 is $200 to $210 million, including the San Diego facility acquisition. For Q3 2025, projected revenue stands at $650 to $660 million. Adjusted net income per share for Q3 2025 is expected to be between $0.20 and $0.23.
The outlook for the rest of fiscal 2025 is weighted toward the second half of the year. Management emphasized that further revenue and profit growth will depend on successfully ramping federal contracts, keeping occupancy rates high at newly reactivated facilities, and securing renewals for expiring agreements. Approximately 30% of consolidated revenue in 2024 was tied to contracts expiring by the end of 2025, putting the focus firmly on effective renewal and re-bid strategies. In the quarters ahead, investors will be watching for rapid progress in activating idle facilities, results from federal contract bids, movement on ISAP participation, cost structure normalization, and possible execution of the authorized share buyback depending on leverage targets and liquidity.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
