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FC

FTI CONSULTING, INC (FCN)·Q3 2025 Earnings Summary

Executive Summary

  • Record Q3 2025 results: revenue $956.2M (+3.3% y/y) and EPS $2.60 (+41% y/y); Adjusted EBITDA $130.6M (13.7% margin), driven by strength in Corporate Finance & Restructuring and Forensic & Litigation Consulting, offset by Economic Consulting and Technology softness .
  • Results beat Wall Street consensus: EPS $2.60 vs $1.99* and revenue $956.2M vs $945.1M*; magnitude of beat aided by lower SG&A and FX remeasurement gain . Values retrieved from S&P Global*.
  • Full-year 2025 guidance raised: revenue to $3.685–$3.735B (from $3.660–$3.760B) and Adjusted EPS to $8.20–$8.70 (from $7.80–$8.40); GAAP EPS to $7.62–$8.12 (from $7.24–$7.84) .
  • Capital allocation: Board authorized an additional $500M buyback post-quarter; ~$500M remained available as of Oct 21; Q3 repurchases totaled $234.1M at $164.18/share. Note minor disclosure discrepancy (aggregate authorization stated at $2.2B vs $2.3B in different exhibits) .

What Went Well and What Went Wrong

What Went Well

  • Corporate Finance & Restructuring posted record revenue $404.9M (+18.6% y/y) with Adjusted Segment EBITDA margin expanding to 23.8% (from 17.0%) on strong restructuring and transactions .
  • Forensic & Litigation Consulting revenue rose to $194.7M (+15.4% y/y) with Adjusted Segment EBITDA up to $42.6M and margin 21.9% (from 11.8%) on rate realization and EMEA risk & investigations demand .
  • Management tone: “Notwithstanding major headwinds in a couple of our businesses, we delivered, yet again, record revenues and earnings this quarter.” — CEO Steven Gunby . Emphasis on multi-year investments powering resilience despite segment zigs and zags .

What Went Wrong

  • Economic Consulting revenue fell to $173.1M (-22.0% y/y); segment swung to operating loss (-$5.8M) and Adjusted Segment EBITDA loss (-$4.6M), pressured by antitrust demand weakness and elevated forgivable-loan amortization .
  • Technology revenue declined to $94.1M (-14.8% y/y), primarily from lower M&A “second request” and IG/privacy/security demand; margin held at 14.5% vs 14.9% prior-year .
  • Higher interest expense and tax rate: interest expense $7.6M (vs $1.2M) and effective tax rate 25.9% (vs 25.1%), reducing flow-through; Q4 SG&A expected to normalize closer to Q2 levels, reducing one-time benefits tailwind .

Financial Results

Consolidated Performance (sequential and y/y)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$898.3 $943.7 $956.2
EPS (Diluted) ($)$1.74 $2.13 $2.60
Adjusted EPS ($)$2.29 N/AN/A
Net Income ($USD Millions)$61.8 $71.7 $82.8
Operating Income ($USD Millions)$78.7 $99.3 $117.7
Adjusted EBITDA ($USD Millions)$115.2 $111.6 $130.6
Adjusted EBITDA Margin (%)12.8% 11.8% 13.7%

Actual vs Consensus (Q3 2025)

MetricConsensus*Actual
EPS ($)1.99*2.60
Revenue ($USD Millions)945.1*956.2
Values retrieved from S&P Global*.

Segment Revenue and Profitability

SegmentQ3 2024 Revenue ($M)Q2 2025 Revenue ($M)Q3 2025 Revenue ($M)Q3 2024 Adj. Seg. EBITDA ($M)Q2 2025 Adj. Seg. EBITDA ($M)Q3 2025 Adj. Seg. EBITDA ($M)
Corporate Finance & Restructuring$341.5 $379.2 $404.9 $57.9 $81.7 $96.4
Forensic & Litigation Consulting$168.8 $186.5 $194.7 $20.0 $31.2 $42.6
Economic Consulting$222.0 $191.7 $173.1 $35.2 $14.2 -$4.6
Technology$110.4 $83.6 $94.1 $16.5 $5.3 $13.6
Strategic Communications$83.3 $102.7 $89.4 $12.1 $18.5 $16.9

KPIs (Utilization, Rate, Headcount)

SegmentUtilization Q3’24Utilization Q2’25Utilization Q3’25Avg Billable Rate Q3’24 ($)Avg Billable Rate Q2’25 ($)Avg Billable Rate Q3’25 ($)Billable Headcount Q3’24Q2’25Q3’25
CF & Restructuring57% 61% 63% 503 532 533 2,295 2,188 2,312
Forensic & Lit.55% 57% 58% 388 439 447 1,529 1,482 1,533
Economic Consulting65% 64% 55% 598 593 597 1,120 991 1,028
TechnologyN/M N/M N/M N/M N/M N/M 718 655 680
Strategic CommunicationsN/M N/M N/M N/M N/M N/M 997 892 904

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)FY 2025$3.660–$3.760 $3.685–$3.735 Narrowed upward at low end
GAAP EPS ($)FY 2025$7.24–$7.84 $7.62–$8.12 Raised
Adjusted EPS ($)FY 2025$7.80–$8.40 $8.20–$8.70 Raised
Effective Tax Rate (%)FY 2025N/A22–24 Provided
SG&A OutlookQ4 2025N/AExpect Q4 SG&A more in line with Q2 levels Provided
Share Repurchase Authorization ($M)Ongoing+$400 (Apr 21, 2025) +$500 (Oct 21, 2025); ~$500 remaining Increased authorization

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
AI/Technology initiativesEmphasis on data & analytics growth; Tech pressured by second requests Tools like Ariadne and IQ.AI supporting investigations; early-stage AI strategy/advisory work; focus on leading-edge yet pragmatic applications Building capabilities; client-facing traction increasing
Economic Consulting dynamicsQ1/Q2 antitrust demand weaker; headcount actions; forgivable loans issued (Q1 $162M, Q2 $72M net) Revenue down 22% y/y; EBITDA loss; CEO estimates ~2/3 impact from talent transition vs 1/3 market; stabilization of costs; gradual recovery expected Near-term margin pressure; medium-term rebuild
Transactions (CorpFin)Grew even when market volumes down; broadened services; larger engagements +30% y/y; credibility driving cross-sell and bigger mandates Structural share gains; durable momentum
Pricing/Rate Realization (FLC)Rate increases and profitability-aligned incentives introduced Significant catch-up vs law firms; may moderate from 2025 levels next year Sustained but moderating rate tailwind
Macro/RegulatoryQ1 special charge to align staffing with demand Potential US gov’t shutdown impact uncertain; seasonal Q4 slowdown expected Seasonal softness; monitoring policy backdrop
Capital AllocationOngoing buybacks across quarters Additional $500M authorization; after-Q3 repurchases 469,610 shares at $160.23 Elevated buyback activity

Management Commentary

  • “Record revenues and earnings... confirm once again the power of our team and the strength of our continued commitment to invest behind great professionals.” — Steven Gunby, CEO .
  • “260 bps... guidance suggests... this team will deliver the 11th year in a row of adjusted EPS growth.” — CEO, highlighting resilience and long-term investments .
  • “We now estimate revenue will range between $3.685B and $3.735B... EPS $7.62–$8.12... Adjusted EPS $8.20–$8.70.” — Paul Linton, Interim CFO .
  • On Economic Consulting: “Costs are now reflected in our P&L... gradual return to revenue growth over the next several quarters; timing not yet certain.” — Interim CFO .
  • On AI impact: “We’re seeing positive impact in client work... large-scale investigations tools (Ariadne, IQ.AI)... investigating algorithmic regulatory violations.” — CEO .

Q&A Highlights

  • Economic Consulting drivers: CEO estimated roughly two-thirds of the revenue decline due to talent transition and one-third market conditions; EBITDA bottom timing uncertain; multi-quarter rebuild path .
  • Transactions strength: Credibility-led cross-sell with larger engagements; leadership quality cited as main driver vs market .
  • FLC pricing: Significant 2025 catch-up vs law firms; expect more modest rate increases going forward .
  • AI and billable hours: Management does not foresee major negative impact on expert-driven work; focusing on substituting tech for commodity tasks while preserving expert value .
  • Restructuring outlook: Continued strength across geographies; modest sequential uptick; winning larger mandates on both creditor and company sides .

Estimates Context

  • Q3 2025 EPS beat: $2.60 vs $1.99* consensus; revenue beat: $956.2M vs $945.1M*. Drivers included stronger-than-expected CorpFin and FLC performance, lower SG&A, and FX remeasurement gain . Values retrieved from S&P Global*.
  • Implication: Estimate revisions likely higher for FY25 Adjusted EPS and segment profitability in CorpFin/FLC; Econ estimates may remain conservative given timing uncertainty and forgivable loan amortization commentary .

Key Takeaways for Investors

  • Mix-driven upside: Strength in restructuring, transactions, and risk/investigations is offsetting Econ/Tech headwinds; platform diversification is working and supports revised FY25 guide .
  • Quality-of-earnings: Margin expansion rooted in rate realization (FLC) and operating leverage (CorpFin); SG&A tailwinds include one-time items but Q4 SG&A expected to normalize to Q2 levels .
  • Econ recovery path: Costs stabilized; revenue ramp tied to marketing new talent and market recovery; treat near-term margin as trough-like with medium-term upside as new hires mature .
  • AI optionality: Early client wins and proprietary tools enhance investigative advantage; expect incremental revenue opportunities before step-change margins; minimal risk to expert-led billable model .
  • Capital allocation: Aggressive buybacks continue; incremental $500M authorization with ~$500M remaining; balances leverage (total debt $510M) and cash ($146M) as of quarter-end .
  • Q4 setup: Seasonal slowdown and SG&A normalization warrant cautious near-term trading stance; momentum into FY26 supported by transactions and restructuring pipeline .
  • Estimate revisions: Expect upward FY25 EPS/Adjusted EPS revisions and CorpFin/FLC segment estimates; Econ/Tech estimates likely reset lower for near-term before gradual rebuild .

Notes and Disclosures:

  • All financials and management commentary cited directly from FCN’s Q3 2025 8-K, press release, and earnings call transcript .
  • Consensus estimates marked with an asterisk are from S&P Global. Values retrieved from S&P Global*.