Shares of ICF International Inc (ICFI) plummeted 5.14% in Friday's pre-market trading session following the release of its first-quarter 2025 results and ongoing uncertainties in its federal government business. Despite beating earnings expectations, the company faces challenges in its federal contract portfolio that have dampened investor sentiment.

ICF reported Q1 revenues of $487.6 million, a 1.4% decline year-over-year, primarily due to a 12.6% drop in federal client revenues. The company's CEO, John Wasson, highlighted the fluid and unsettled environment in the federal arena, with approximately $375 million worth of contracts affected by terminations or stop-work orders since the beginning of the year. This figure represents a significant increase from the $276 million reported in February.

While ICF's commercial energy business showed strong growth, increasing 21% year-over-year, and its adjusted EBITDA margin expanded slightly to 11.3%, the uncertainties surrounding federal contracts have overshadowed these positive developments. The company maintained its guidance framework for 2025, projecting total revenues, GAAP EPS, and non-GAAP EPS to range from flat to down 10% from last year's levels. This cautious outlook, combined with the ongoing challenges in the federal sector, appears to have triggered the sharp stock decline as investors reassess the company's near-term growth prospects.