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CI

CRA INTERNATIONAL, INC. (CRAI)·Q1 2026 Earnings Summary

Executive Summary

  • Record quarter on multiple metrics: Revenue $181.85M (+5.9% YoY), GAAP diluted EPS $2.62 (+34.4% YoY), and non-GAAP EBITDA $24.79M (+10.6% YoY), with operating margin expanding 260 bps YoY to 14.0% .
  • Versus consensus, CRAI delivered an EPS beat and modest revenue miss: EPS $2.62 vs $2.255*, Revenue $181.85M vs $183.22M*, and non-GAAP EBITDA $24.79M vs $22.35M*; top-line softness was offset by stronger margin execution, producing a clear bottom-line beat .
  • Guidance: Management reaffirmed FY25 revenue $715–$735M and non-GAAP EBITDA margin 12.0–13.0% on a constant-currency basis; dividend maintained at $0.49 per share for Q1 (paid June 13, 2025) .
  • Stock reaction catalysts: CEO highlighted broad-based growth across practices (Energy, Finance, IP, Life Sciences double-digit; Antitrust & Competition Economics record revenue), improving utilization (76%), and strengthening pipeline after a slow January; restructuring actions were modest and clarified in non-GAAP reconciliation .

What Went Well and What Went Wrong

What Went Well

  • “Broad-based contributions drove the quarter’s strong performance… Revenue increased by 5.9% to $181.9 million… net income, earnings per diluted share and EBITDA set new quarterly records” — CEO Paul Maleh .
  • Practice and geographic breadth: Energy, Finance, Intellectual Property, and Life Sciences posted double-digit revenue growth; Antitrust & Competition Economics achieved a new quarterly revenue high; international operations grew nearly 20% YoY .
  • Utilization improved to 76% YoY; project lead flow accelerated during the quarter (+5% YoY) and new project originations increased (+3% YoY), supporting demand momentum into Q2 .

What Went Wrong

  • Cash flow and working capital intensity: Net cash used in operating activities was -$80.0M in Q1 (seasonal bonus payments), with DSO of 107 days (flat YoY); revolver borrowings rose to $85.0M to fund bonuses and talent investments .
  • FX headwind and higher SG&A: Net foreign currency loss of $0.5M and SG&A at 17.9% of revenue (vs 17.8% YoY), modestly weighing on margins .
  • Restructuring noise: ~15 individuals affected; GAAP included a reversal of previously recorded non-cash performance award charges and $1.2M of restructuring, necessitating non-GAAP adjustments for cleaner comparability .

Financial Results

Summary Financials vs Prior Periods

MetricQ2 FY2025 (Oldest)Q3 FY2025Q1 FY2026 (Newest)
Revenue ($USD Millions)$186.878 $185.891 $181.851
GAAP Diluted EPS ($)$1.79 $1.73 $2.62
Non-GAAP Diluted EPS ($)$1.88 $2.06 $2.22
Operating Margin % (GAAP)10.6% 9.3% 14.0%
Non-GAAP EBITDA Margin %12.4% 13.1% 13.6%

Q1 FY2026 Actuals vs Prior Year and Estimates

MetricQ1 FY2025 Actual (YoY)Q1 FY2026 ActualReported YoY ChangeConsensus*Beat/Miss
Revenue ($USD Millions)$171.789 $181.851 +5.9% YoY $183.218*Miss (slight)
GAAP Diluted EPS ($)$1.95 $2.62 +34.4% YoY $2.255*Beat
Non-GAAP EBITDA ($USD Millions)$22.410 $24.789 +10.6% YoY $22.353*Beat

*Values retrieved from S&P Global.

Selected KPIs and Balance Sheet/Cash

KPIQ2 FY2025 (Oldest)Q3 FY2025Q1 FY2026 (Newest)
Utilization %76% 77% 76%
DSO (days)110 (73 billed/37 unbilled) —107 (65 billed/42 unbilled)
Cash & Equivalents ($M)$19.4 $22.496 $25.6
Revolver Borrowings ($M)$120.0 $95.0 $85.0
Client Reimbursables (% of Revenue)10.5% —9.1%
Dividends Paid ($M)$3.4 $3.2 $3.5

Practice Highlights (qualitative, as no segment revenue disclosed)

PracticeQ1 FY2026 Highlight
Antitrust & Competition EconomicsNew quarterly revenue high; strong merger-related and investigation demand .
EnergyDouble-digit growth; strategy, risk/compliance, data center support, utility planning and transactions .
FinanceDouble-digit growth; active in M&A-related litigation, Delaware Chancery and Federal Court .
Intellectual PropertyDouble-digit growth; multiple high-stakes litigation and valuation matters .
Life SciencesDouble-digit growth; opportunity assessment, forecasting, launch planning; momentum continuing .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY2025 (Q1 context)$715–$735 (prior) $715–$735 Maintained (reaffirmed)
Non-GAAP EBITDA Margin %FY2025 (Q1 context)12.0–13.0 (prior) 12.0–13.0 Maintained (reaffirmed)
Revenue ($USD Millions)FY2025 (Q2 update)$715–$735 (pre-Q2) $730–$745 Raised
Non-GAAP EBITDA Margin %FY2025 (Q2 update)12.0–13.0 (pre-Q2) 12.3–13.0 Raised lower end
Revenue ($USD Millions)FY2025 (Q3 update)$730–$745 (pre-Q3) $740–$748 Raised
Non-GAAP EBITDA Margin %FY2025 (Q3 update)12.3–13.0 (pre-Q3) 12.6–13.0 Raised lower end
Dividend per Share ($)Q1 FY2026$0.49 (prior qtr) $0.49 (paid June 13, 2025) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 FY2025)Previous Mentions (Q-1: Q2 FY2025)Current Period (Q1 FY2026)Trend
AI/Technology & RegulatoryAntitrust practice strength; international +30.3% YoY; non-GAAP EBITDA +14.6% Broad-based growth; Antitrust, Energy, IP double-digit Microsoft–OpenAI CMA outcome support; antitrust demand robust Stable/Positive
M&A activityQ3 narrative: continued merger-related activity M&A rebounded to $885B in Q1’25; strongest opening since 2022 Pipeline strengthened after slow Jan; lead flow +5% YoY Improving
Utilization & HeadcountUtilization 77%; headcount down 1% YoY Utilization 76%; headcount -3.2% YoY Utilization 76%; headcount flat seq; -5% YoY; medium-term growth aligned to revenue Improving utilization; disciplined headcount
Restructuring & Non-GAAPQ3: restructuring/separation benefits $3.7M; non-GAAP EPS $2.06 Prior year restructuring $8.176M adjusted ~15 affected; GAAP includes reversal of prior non-cash award; clarified in non-GAAP Noise declining
International vs North AmericaInternational +30.3% YoY; North America +6.8% International +7.0%; NA +9.4% International led growth (~20% YoY) Strong across geos
FX & MacroFX gain in Q3 (+$0.763M) FX losses ($0.815M) FX losses ($0.474M) and macro caution Mixed FX; prudent tone

Management Commentary

  • “Revenue increased by 5.9%… highest quarterly revenue in the company’s history… profits grew at even faster rates… Broad-based contributions drove the quarter’s strong performance” — Paul Maleh, CEO .
  • “After a sluggish start in January, project lead flow accelerated… increased by 5% YoY… new project originations… up 3%” — Paul Maleh .
  • “We are reaffirming our financial guidance for full-year fiscal 2025 of revenue $715M to $735M and non-GAAP EBITDA margin 12.0% to 13.0%” — Management .
  • “Borrowings during the first quarter were primarily to fund bonus payments… cash outlays of $27.4M to acquire and retain senior talent… dividends of $3.5M” — Interim CFO Chad Holmes .

Q&A Highlights

  • Near-term demand cadence: March strength continued into April; too early to “declare victory” but trends supportive of guidance reaffirmation .
  • Headcount and talent: Medium-to-long-term headcount expected to grow roughly in line with revenue; Q1 talent outlays included retention/maintenance as per expectations; sequential headcount flat vs Q4 .
  • Antitrust demand: “Record levels achieved by [Antitrust & Competition Economics]… exceptional performance North America and abroad… continues even when markets appear to be slowing” .
  • Cross-practice/geography collaboration: Underreported strength; go-to-market prioritizes “best talent” across practices and borders, aiding complex engagements .
  • Restructuring clarification: Targeted portfolio optimization; GAAP more lucrative absent non-GAAP adjustments; disclosure aimed at clarity for forward expectations .

Estimates Context

  • Q1 FY2026 vs consensus: Revenue $181.85M vs $183.22M* (slight miss), GAAP diluted EPS $2.62 vs $2.255* (beat), non-GAAP EBITDA $24.79M vs $22.35M* (beat) .
  • Implication: Despite a modest top-line miss, stronger margins and operating leverage delivered a clear EPS/EBITDA beat; estimate revisions likely modestly positive on profitability with limited impact on revenue trajectory.
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Margin-led upside: Operating margin expansion (14.0%) and disciplined SG&A drove EPS/EBITDA beats despite slightly below-consensus revenue — supportive for near-term multiple resilience .
  • Demand breadth and pipeline: Double-digit growth in key practices and improving lead flow/originations underpin revenue visibility into Q2/Q3; Antitrust momentum remains a structural tailwind .
  • Working capital seasonality: Q1 cash outflows (bonuses, talent acquisition/retention) elevated revolver usage; watch DSO and cash conversion into mid-year to reduce net debt .
  • Guidance posture: Reaffirmed in Q1, then raised in Q2 and Q3; mid-year increases reflect confidence — monitor whether margin guide tightens further toward upper bound on sustained utilization .
  • FX/macro vigilance: Management maintains a cautious tone around global conditions and FX; diversified practice and geography mix mitigate risk .
  • Capital returns: Dividend maintained ($0.49) with subsequent increase to $0.57 in Q3; opportunistic buybacks in Q2 — signals balance between growth investments and shareholder returns .
  • Near-term trading: Favorable EPS surprise and momentum commentary could support shares; watch subsequent quarter bookings/utilization, cash conversion, and any FX impacts for follow-through .