How should investors think about FLC and StratCom segment margins, especially given FLC's profitability last year and its current lumpiness? Is there a 'normal' margin profile for FLC?

Paul Linton stated they wouldn't give specific margin guidance but explained FLC's lower margin was due to investment in top talent (SMDs) and some one-time items, which they believe is the right long-term investment. Steve Gunby noted StratCom's strong quarter was due to a shift towards higher-value, higher-margin event-driven offerings and adjusted leverage ratios for AI, but cautioned against extrapolating the best quarter as the new normal. “I mean we have been adding talent in FLC and particularly over the last little while, a lot of the talent we've added has been at the top with -- in terms of SMD. So that investment in building out our expert model, which will allow us to continue to drive the revenue in some of these higher-margin services, we feel is kind of the right investment for the business.”

What do disruptions in private credit and software mean for FTI's restructuring business, and could they have a positive impact?

Steve Gunby explained that FTI has good relationships with private credit lenders, who often lend to riskier ventures. When these get stressed, FTI's restructuring business is strong. He also noted potential for FLC (fraud investigation) if covenant-light loans lead to issues. He acknowledged that some liability management exercises eventually lead to bankruptcies, which FTI handles. “I would say that depending on how that market evolves, it could be a terrific source of revenue growth for us. I think our private equity clients are hoping it's not that the world is calm going forward. But we are well positioned if it is.”

How could large disruptions (AI, software, private credit, global conflict) impact FTI's end customers and, consequently, drive more business for FTI?

Steve Gunby stated that all of FTI's businesses are designed to serve companies during times of significant change, disruption, or transformation. He sees these disruptions as a 'boon' to their businesses, leading to increased demand across StratCom, restructuring, litigation, and fraud investigation. “To the extent the world is more disruptive or in response to anticipate disruption, people are transforming their businesses with greater rapidity and more frequently, it's a boon to the businesses.”

FCN

FTI Consulting (FCN) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Industrials· Apr 30, 2026

Source: earnings call transcript

Executive summary

FTI Consulting Q1 FY26 — Strong Revenue Growth Driven by Corporate Finance, Strategic Communications, and Technology

FTI Consulting delivered solid first-quarter results, driven by robust growth in Corporate Finance, Strategic Communications, and Technology, which offset softness in Economic Consulting and FLC. The company maintained its full-year guidance, emphasizing its event-driven business model and continued investment in talent, particularly senior hires, to capitalize on market disruptions and expand capabilities globally. Management highlighted the firm's strong culture and ability to attract top professionals as key to its long-term growth trajectory.

Highlights

Total revenues increased 9.5% year-over-year to $983.3 million, with a 6.8% increase excluding FX impact.
Corporate Finance revenues grew 19.2% to $409.5 million, with strong performance across turnaround & restructuring, transactions, and transformation.
Strategic Communications delivered record revenues of $103 million, up 18.4%, and record adjusted segment EBITDA of $21.9 million.
Technology revenues increased 5.3% to $102.3 million, driven by litigation and information governance, privacy, and security services.
Repurchased 787,098 shares for $126.8 million at an average price of $161.11 per share.

Concerns

Net income decreased to $57.6 million from $61.8 million in the prior year, primarily due to higher direct costs, SG&A, interest expense, and a higher effective tax rate.
Economic Consulting revenues decreased 2.3% to $175.6 million, primarily due to lower demand for antitrust services, resulting in an operating loss of $7.3 million.
FLC revenues increased only 1.2% to $192.9 million, underperforming expectations due to lumpy engagements and higher compensation/SG&A expenses.
Q1 FY26 effective tax rate was 26.6%, higher than the prior year's 23.3% and the full-year expectation of 22-24%.
SG&A expenses increased $38 million to $222.3 million, or 22.6% of revenues, compared to 20.5% of revenues in the prior year quarter, partly due to higher legal expenses and lack of prior-year legal settlements.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Revenue	$3.94 billion to $4.1 billion high materiality	FY26	High
Full-year 2026 EPS	$8.90 to $9.60 high materiality	FY26	High
Full-year 2026 Effective Tax Rate	22% to 24% medium materiality	FY26	Medium
Full-year 2026 SG&A Expenses	approximately $60 million higher than 2025 medium materiality	FY26	Medium
Q2 2026 SG&A Expenses	approximately $5 million higher than Q1 2026 medium materiality	Q2 · FY26	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Corporate Finance Revenue growth driven by higher demand and realized bill rates across all sub-businesses. Sequentially, revenues decreased due to lower success fees and pass-throughs, but Adjusted EBITDA increased due to lower compensation. Revenue growth ex-FX: 16.7%Adjusted segment EBITDA: $88.7 millionAdjusted segment EBITDA margin: 21.6%Prior year Operating Income: $41 millionPrior year Adjusted segment EBITDA: $55.9 millionPrior year Adjusted segment EBITDA margin: 16.3%Turnaround & Restructuring revenue growth: 19%Transactions revenue growth: 18%Transformation revenue growth: 20%Million-plus engagements nearly doubled compared to Q1 2025Sequential Adjusted segment EBITDA increase: $8.5 million	$409.5 million	19.2%	-3.2%	$85.2 million (Operating Income)
FLC Underperformed expectations due to timing-driven volatility, large and lumpy engagements rolling off or starting late, higher compensation, hiring-related expenses, and bad debt. Long-term confidence remains due to investment in top talent. Revenue growth ex-FX: -0.9%Adjusted segment EBITDA: $25.3 millionAdjusted segment EBITDA margin: 13.1%Prior year Operating Income: $30.1 millionPrior year Adjusted segment EBITDA: $37.5 millionPrior year Adjusted segment EBITDA margin: 19.7%Higher realized bill rates for risk investigation and construction solutions servicesSequential Adjusted segment EBITDA increase: $1.4 million	$192.9 million	1.2%	flat	$23.1 million (Operating Income)
Economic Consulting Performance was in line with expectations but requires multi-quarters of work to improve P&L. Progress made in Europe, but North American antitrust revenue base needs rebuilding. Higher compensation, largely due to forgivable loan amortization, contributed to the loss. Revenue growth ex-FX: -5.7%Adjusted segment EBITDA: -$5.9 million (loss)Adjusted segment EBITDA margin: -3.4%Prior year Operating Income: $12.1 millionPrior year Adjusted segment EBITDA: $14.4 millionPrior year Adjusted segment EBITDA margin: 8%Lower demand for antitrust services, partially offset by higher demand for financial economic services and higher realized bill rates	$175.6 million	-2.3%	flat	-$7.3 million (Operating Loss)
Technology Growth driven by litigation and information governance, privacy, and security services, particularly from clients in healthcare, media, and technology industries, and a large privacy breach. The business leverages AI expertise for complex client issues. Revenue growth ex-FX: 2.8%Adjusted segment EBITDA: $11.8 millionAdjusted segment EBITDA margin: 11.6%Prior year Operating Income: $6.6 millionPrior year Adjusted segment EBITDA: $11.6 millionPrior year Adjusted segment EBITDA margin: 11.9%Higher demand for litigation and information governance, privacy and security servicesLower demand for investigations and M&A-related second request services	$102.3 million	5.3%	3.3%	$7.7 million (Operating Income)
Strategic Communications Record results reflect multiyear investments in higher-margin event-driven offerings (crisis, cyber, transactions, activism) and collaboration with other segments. Strong sequential Adjusted EBITDA growth due to higher revenue. Revenue growth ex-FX: 14.5%Adjusted segment EBITDA: $21.9 million (record)Adjusted segment EBITDA margin: 21.3% (record)Prior year Operating Income: $8.7 millionPrior year Adjusted segment EBITDA: $12.9 millionPrior year Adjusted segment EBITDA margin: 14.8%Higher demand for corporate reputation, public affairs and financial communications services	$103 million	18.4%	3.6%	$20.8 million (Operating Income)

Deals & partnerships

Omnicom / IPG Working on one of the largest mergers in the market

FTI Consulting is supporting this large merger, expanding its services across the deal life cycle.

Skyworks Solutions / Qorvo Working on one of the largest mergers in the market

FTI Consulting is supporting this large merger, expanding its services across the deal life cycle.

Lumen / AT&T Working on a large carve-out (Lumen's sale of fiber-to-the-home business to AT&T)

FTI Consulting is supporting this large carve-out, expanding its services across the deal life cycle.

Spirit Airlines Working on one of the largest bankruptcies globally

FTI Consulting's Corporate Finance segment is involved in this significant turnaround and restructuring engagement in the U.S.

Saks Working on one of the largest bankruptcies globally

FTI Consulting's Corporate Finance segment is involved in this significant turnaround and restructuring engagement in the U.S.

Prax Oil Refinery Working on one of the largest bankruptcies globally

FTI Consulting's Corporate Finance segment is involved in this significant turnaround and restructuring engagement in the U.K.

Azul Airlines Working on one of the largest bankruptcies globally

FTI Consulting's Corporate Finance segment is involved in this significant turnaround and restructuring engagement in Brazil.

Risks & headwinds

FLC underperformance and lumpiness Q1 FY26

FLC revenues increased only 1.2% YoY; Adjusted segment EBITDA margin decreased to 13.1% from 19.7% YoY.

Mitigation:Long-term investment in top talent (SMDs) to drive revenue in higher-margin services; acknowledging that results can be lumpy due to event-driven nature of large engagements.

Economic Consulting (Compass Lexecon) challenges Q1 FY26 and multi-quarters ahead

Revenues decreased 2.3% YoY; Operating loss of $7.3 million; Adjusted segment EBITDA loss of $5.9 million.

Mitigation:Progress made in Europe; rebuilding North American antitrust revenue base by adding talent; managing forgivable loan amortization for academics with longer payback periods.

Higher effective tax rate Q1 FY26

Q1 FY26 effective tax rate of 26.6% compared to 23.3% in Q1 FY25.

Mitigation:Full-year tax rate still expected to be between 22% and 24%.

Higher SG&A expenses Q1 FY26, with Q2 FY26 expected to be the high point.

SG&A increased $38 million YoY to $222.3 million (22.6% of revenues) from $184.3 million (20.5% of revenues) in Q1 FY25.

Mitigation:Increase largely due to higher legal and compensation expenses; Q2 expected to be the high point, then normalize.

M&A market uncertainty Remainder of FY26

M&A market had a strong start to the year, but uncertainty remains how activity will continue through the remainder of the year.

Mitigation:Continued investment in talent and platform strength to win headline-making jobs regardless of market cycles.

What to watch in Q2 FY26

Economic Consulting P&L recovery

As the year goes on (Q2 FY26 and beyond).

Current Adjusted segment EBITDA loss of $5.9 million in Q1 FY26.

Target Improvement in P&L, moving towards profitability.

Why it matters

This segment is a key area of focus for management, and its recovery is crucial for overall firm profitability.

though we believe our adjusted segment EBITDA in Economic Consulting has hit its low point this quarter, as Steve said, we have multiple quarters of work ahead to get the P&L back to the levels we are happy with.

Find out whether FCN delivers this. Inve re-checks your case every morning.

Q&A highlights

How feasible is it for both restructuring and M&A businesses to grow strongly at the same time, given their typical inverse relationship?

Steve Gunby explained that while market forces often suggest an inverse relationship, FTI's ability to defy this is due to expanding global presence, adding talent, and gaining market share in transactions and transformation. He noted that the current environment sees unusual coalescing of supportive market forces.

“I think the other thing that goes on here is that we've actually -- our teams have done a fabulous job of adding talent and expanding the businesses. These are not just U.S. businesses today. They're global businesses where we have powerful positions overseas, and we continue to be attracting talent.”

asked by Andrew Nicholas · answered by Steve Gunby

2 min read 5 chapters

Detailed narrative

All SMD Meeting Insights

Steve Gunby opened by discussing the recent all-SMD meeting, highlighting a strong sense of pride, excitement, and conviction among attendees. This sentiment stemmed from overcoming significant headwinds in 2024-2025 across most businesses (excluding Compass Lexecon) to achieve record performance in 2025.

The meeting reinforced the belief that the firm's success is driven by individual and collective actions, not just market conditions, and that the company is still much closer to the beginning of its powerful journey.

Talent and Geographic Expansion

The meeting showcased the firm's significant growth in capabilities, particularly in new geographies like Italy, Nordics, Amsterdam, Middle East, Germany, Australia, Asia, and Latin America, where the number of Senior Managing Directors (SMDs) has substantially increased since 2018. Similar growth was noted in practice areas like cyber, transactions, aviation, and financial crimes investigations, demonstrating a powerful transformation of the firm's global footprint and expertise and a strong sense of capability within the firm.

Strategic Investment in Talent

Management emphasized a continued strategy of investing in top talent, with 85 senior hires in 2025 and 29 SMD and affiliate hires year-to-date in 2026. These hires are concentrated in key geographies and adjacencies such as transaction, transformation, public affairs, cybersecurity, data privacy, and AI, often benefiting from competitive disruptions.

The firm plans to increase junior hiring in the second half of 2026 to support these senior professionals and maintain optimal ratios.

M&A Market and Event-Driven Business

The M&A market had a strong start to the year, benefiting FTI's businesses supporting M&A-related activity in Corporate Finance, Economic Consulting, Technology, and Strategic Communications. However, management acknowledged the inherent lumpiness of their event-driven business, noting that results can fluctuate due to the timing of large engagements, as seen with FLC's underperformance this quarter, but their ability to win headline-making jobs reflects platform strength.

AI Impact and Pricing Models

The firm is actively exploring the impact of AI on its business, particularly in the tech segment. While AI may reduce the need for junior-level work, it increases demand for senior oversight and expertise, often leading to higher bill rates.

FTI is experimenting with various pricing models, including fixed-price contracts, to deliver value faster and broader, staying ahead of rapid technological changes and gaining market share.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.