Total Revenue

–3.3% (from $928.6M in Q1 2024 to $898.3M in Q1 2025)

Lower overall revenues in Q1 2025, driven by declines in key segments such as Corporate Finance (–6%) and Economic Consulting (–12%), partially offset by gains in Forensic and Litigation Consulting (+8%) and Strategic Communications (+7%). " " " "

Corporate Finance

–6% (from $366.0M to $343.6M)

Reduced segment performance likely due to lower demand and realized bill rates in transformation & strategy and restructuring services, reflecting a continuation of prior period challenges with weaker client interest. " "

Forensic and Litigation Consulting (FLC)

+8% (from $176.1M to $190.6M)

Robust performance driven by higher realized bill rates, increased demand for risk/investigations services, and higher pass-through revenue items compared to Q1 2024, demonstrating growth in client engagement and project mix. " "

Economic Consulting

–12% (from $204.5M to $179.9M)

Significant decline due to reduced demand for antitrust and financial economics services, compounded by a drop in utilization and headcount reductions, aggravating revenue pressures compared to the previous period. " "

Strategic Communications

+7% (from $81.2M to $87.0M)

Revenue growth driven by higher demand in corporate reputation services and an increase in pass-through revenues, which helped offset lower contributions from other segments, marking an improvement over Q1 2024. " "

Net Income

–23% (from $79,965K to $61,824K)

Profitability was hit hard with net income dropping nearly 23%, reflecting the combined effect of lower overall revenues and margin pressures despite gains in some segments, indicating operational challenges compared to the prior quarter. " "

Operating Income

–21% (from $99,633K to $78,707K)

Operating income decline resulted from a lower revenue base and higher operating expenses, with falling margins in several segments, highlighting the impact of cost pressures and reduced segment performance relative to Q1 2024. " "

Basic Earnings Per Share (EPS)

Decreased from $2.29 to $1.76

EPS compression driven by the lower net income along with potential share dilution effects, mirroring the drop in overall profitability during Q1 2025 compared to Q1 2024. " "

Net Cash Provided by Operating Activities

Worsened from –$59,262K to –$465,210K

A steep deterioration in cash flow indicates that despite revenue performance adjustments, increased variable expenses (e.g., higher compensation costs and forgivable loan issuances) and slower cash collections severely impacted liquidity in Q1 2025. " "

Revenue Guidance

FY 2025

$3.66B to $3.81B "

Remains applicable from the Q4 2024 guidance (i.e. $3.66B to $3.81B) " "

no change

Effective Tax Rate

FY 2025

23% to 25% "

23% to 25% "

no change

Economic Consulting Segment Impact

FY 2025

Substantial revenue reduction and erosion of adjusted segment EBITDA margin "

Expected impact exceeding a $35 million reduction compared to last year "

no change

SG&A Expenses

Q2 2025

no prior guidance

Increase by approximately $15 million to $20 million in each of the next two quarters compared to Q1 2025 "

no prior guidance

Impact of Forgivable Loans

Q2 2025

no prior guidance

$162 million in Q1 2025 will impact adjusted EBITDA starting in Q2, amortizing over 3 to 6 years "

no prior guidance

Uncertainty in Compass Lexecon

FY 2025

no prior guidance

Guidance range now factors in scenarios from a solid year to a potential decline in adjusted EPS "

no prior guidance

Forensic & Litigation Consulting

Consistently discussed in Q2–Q4 2024 with revenue growth driven by higher bill rates, though margins and EBITDA suffered from compensation and SG&A pressures. " " "

In Q1 2025 the segment posted a record quarter with higher realized bill rates and improved adjusted EBITDA, driven by increased demand for risk, investigation, and data/analytics services. " " "

Positive turnaround with strong revenue performance overcoming prior cost pressures.

Restructuring Business Strength

Highlighted across previous periods – Q2 noted declines due to the end of large engagements " , Q3 showed robust activity and sequential growth " " , and Q4 detailed stable yet slightly mixed performance. " "

Q1 2025 noted a recent pickup in U.S. restructuring activity with a slight decline sequentially and a modest drop in revenue share, but overall maintained strategic positioning. " "

Consistently relevant with modest sequential softness yet a robust long‐term outlook.

Economic Consulting Challenges

Q4 2024 stressed significant senior departures and margin erosion " " , Q3 2024 focused on revenue challenges without explicit departure details " , and Q2 2024 emphasized competitive pressures and compensation challenges. " "

Q1 2025 witnessed notable departures in Compass Lexecon and a 12.1% revenue decline, with retention programs and forgivable loans expected to impact EBITDA further in upcoming periods. " " "

Increased focus on challenges and departures, leading to more negative short‐term impacts.

Talent Management and Strategic Hiring

Across Q2–Q4 2024, the company emphasized aggressive recruitment with strong campus hiring and numerous senior Managing Director hires, even while implementing headcount reductions where utilization was low. " " " " "

In Q1 2025, continued robust hiring was evident with 31 SMD hires and 21 academic affiliates onboarded, alongside significant forgivable loan programs to attract and retain talent. " "

Consistent commitment to talent investment that, while increasing costs in the short term, is expected to yield long-term benefits.

Growth Outlook and Organic Growth

Q2 showcased strong organic growth (12% H1 revenue growth) " and Q3 set mid- to high-single digit aspirations despite a weaker quarter " " ; Q4 provided modest guidance (around 1% YoY growth, with expectations for improvement). " "

In Q1 2025, management expressed medium- and long-term optimism despite near-term headwinds and uncertainties, citing strong underlying fundamentals across segments. " " " "

Persistent long-term optimism despite near-term uncertainties.

Macroeconomic, Geopolitical, Regulatory

Q3 2024 contained detailed discussions on slower global growth, geopolitical headwinds (especially in Asia), and client hesitance due to uncertainty " " ; Q4 2024 provided indirect commentary on regulatory changes " ; Q2 2024 did not explicitly address these topics.

Q1 2025 featured an extensive discussion of macroeconomic uncertainty (including recession risks), evolving regulatory postures affecting segments like FLC and Economic Consulting, and moderate geopolitical concerns. " " "

Consistent concern with an increased emphasis on regulatory factors and their potential impact in the current period.

Weak M&A Activity & Fee-Based Revenue Shifts

Q3 2024 indicated overall robust M&A activity contributing 15–20% of revenues with only a slight sequential slip " , whereas Q4 2024 reported a pause in M&A activity and fee-based revenue challenges across segments " " ; Q2 2024 mentioned strong M&A-driven performance in Technology and Economic Consulting. " "

Q1 2025 noted significantly weaker M&A activity—with a 13% YoY drop in U.S. deal volume—and this slowdown impacted Economic Consulting and Technology, while segments like FLC benefited from fee-based revenue growth. " "

A shift towards a weaker M&A environment affecting some segments even as fee-based models perform well in others.

Margin Pressures and Cost Management

Q2, Q3, and Q4 2024 consistently highlighted increased SG&A and compensation costs that compressed adjusted EBITDA margins across segments, prompting headcount reductions and cost management measures. " " " " "

Q1 2025 continued to see margin pressures from rising compensation expenses, increased SG&A (expected to grow by $15–20 million in coming quarters), and the upfront cost impact of forgivable loan amortization. " "

Ongoing margin pressures remain a central challenge, with cost controls in place but no significant margin expansion observed.

Investment in AI & Technological Innovation

Q3 2024 emphasized significant investments in AI—including building internal tools, addressing risks like hallucinations, and enhancing client engagement on new tech developments " ; Q4 2024 mentioned upgrading HR systems and AI capabilities; Q2 2024 did not include explicit references.

Q1 2025 reinforced the strategic focus on AI, crypto, and digital assets with investments in both technology and talent (including new hires with AI expertise), underscoring these areas as key for future competitive advantage. "

Emerging as an increasingly pivotal strategic area with continued and deepening investments.

Capital Allocation and Cash Position

Q2 and Q3 2024 provided detailed reports on rising cash levels, disciplined share repurchase programs, and a strong balance sheet from improved operating cash flow, while Q4 2024 briefly mentioned an enviable balance sheet supporting flexibility. " " " "

Q1 2025 reported active share repurchases, significant cash use (with net cash used in operations rising due to higher operating expenses and forgivable loan issuances), yet maintained an overall disciplined capital allocation strategy. "

A consistent focus on disciplined capital deployment, though Q1 shows increased cash outflows and aggressive share buybacks that may impact near-term liquidity.