Dycom Industries(DY 5.04%) reported second-quarter 2026 results on August 20, 2025, posting record revenue of $1.38 billion (up 14.5% year-over-year), record adjusted EBITDA of $205.5 million (up 29.8% year-over-year, 14.9% margin), and diluted EPS of $3.33. Management reaffirmed full-year revenue guidance of $5.29 billion to $5.425 billion for fiscal 2026 and highlighted a growing $8 billion total backlog and accelerating exposure to hyperscaler and data center growth drivers. The following analysis delivers three uniquely actionable strategic insights drawn directly from management commentary and supporting data points, focusing on market positioning, margin durability, and the scale of data center opportunities in Dycom's addressable market.
Dycom backlog grows 17% YoY, signaling sustained demand pipeline
At quarter-end, backlog reached $7.99 billion, with $4.60 billion expected to convert over the next twelve months, marking a 20.2% year-over-year increase in next-twelve-months backlog. Backlog expansion was supported by a post-quarter multi-state award for both service and maintenance and fiber-to-the-home (FTTH) initiatives. Dycom continues to benefit from customer consolidation trends in partner selection.
"We finished the quarter with a total backlog of $8 billion and a next twelve months backlog of $4.6 billion. This represents a year-over-year increase of 16.9% and 20.2%, respectively. We continue to cultivate a healthy pipeline in diverse customer and program areas. As a reminder, the size and complexity of these opportunities can lead to short-term variation in reported backlog, resulting from the timing of when contracts are signed. With that in mind, shortly after the quarter's close, we secured a significant new award for both service and maintenance and fiber-to-the-home works across numerous states. This award will be reported in our Q3 backlog and is a clear testament to Dycom's breadth of capabilities across our national footprint."
-- Dan Peyovich, President & CEO
Backlog momentum reflects expanding contract wins across Dycom's footprint, directly underpinned by customer consolidation and long-term FTTH programs, increasing multi-year revenue visibility despite timing variation in bookings, as evidenced by management's commentary on short-term variation in reported backlog due to contract timing.
Operational leverage and efficiency boost Dycom margins, strengthening long-term return profile
Adjusted EBITDA margin surged to 14.9%, increasing 175 basis points year-over-year, as Dycom drove cash flow discipline and field-level operational improvements. Management signaled margin durability, positioning these above-trend results as an outcome of strategic execution, not simply short-term program ramp or favorable volume, and alluded to further room for incremental efficiency gains.
"Adjusted EBITDA was 14.9% of contract revenues, an increase of 175 basis points as a percentage of contract revenues over Q2 '25, as we performed well and continued to benefit from operating leverage in the quarter. Net income was $97.5 million, and diluted EPS was $3.33 per share, also exceeding the high end of our expectations. We are pleased with the strength of our relationships"
-- Drew DeFerrari, CFO
Sustained margin expansion confirms that Dycom's process improvements are embedded at scale, implying further upside from incremental productivity as efficiency and revenue growth converge.
Hyperscaler and data center growth expands Dycom addressable market by $20 billion over five years
Management sized U.S. outside plant data center network spending at over $20 billion for Dycom over the next five years, with spend increasingly backloaded as investment in AI-driven infrastructure ramps, and significant growth expected in 2027 and beyond. Dycom reported new inside-the-fence and service/maintenance contracts with hyperscalers and underscored a first-mover advantage in emerging, non-traditional program areas.
"We estimate the addressable market for Dycom from the spend on outside plant data center network infrastructure is over $20 billion for the next five years alone, with spend backloaded over that period and likely increasing further as we enter the next decade. Our engagement with both the carriers and hyperscalers on this front is only increasing. We believe we are in the very early stages of a generational deployment of digital infrastructure. And we expect construction of outside plant data center networks to ramp up in calendar year 2026 with significant growth in 2027 and beyond. On this front, I am pleased to report that during the quarter, we were awarded another inside defense opportunity with a hyperscaler. Separately, we were also awarded a service and maintenance agreement with a different hyperscaler. While we can't go into specifics, this represents an opportunity for recurring revenue and involves work that is not performed or managed by our traditional carrier customers."
-- Dan Peyovich, President & CEO
The rapid increase in direct hyperscaler exposure and entry into non-carrier data center programs positions Dycom as an early incumbent in a secularly expanding, high-value segment, enabling recurring revenue streams and deepening competitive moats as AI-related capital expenditures accelerate across the U.S. digital infrastructure ecosystem.
Looking Ahead
Management reaffirmed revenue guidance of $5.29 billion to $5.425 billion for fiscal 2026, with third-quarter revenue expected in the $1.38 billion to $1.43 billion range, adjusted EBITDA of $198 million to $213 million for fiscal 2026, and diluted EPS of $3.30 to $3.36 per share for fiscal 2026. No contribution from the $42 billion Broadband Equity, Access, and Deployment (BEAD) program is included in Dycom's current fiscal 2026 forecasts, as the company is pending finalization of state plans. Dycom anticipates a stronger contribution from large, recently won awards in calendar year 2026 and expects further opportunities for improvement in margins and days sales outstanding (DSOs), with additional free cash flow benefits from reduced cash tax payments of approximately $50 million in fiscal 2026 due to new tax legislation.
