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    FCN
    Earnings call· Jun 2026(Q2 FY26)

    FTI CONSULTING Q2 FY26 earnings call FCN

    Jul 30, 2026 Source

    Executive summary

    FTI Consulting Q2 FY26 — Record Revenue Amidst Geopolitical Headwinds and EPS Adjustment

    FTI Consulting delivered record second-quarter revenues, up 5.3% year-over-year, driven by strong performance in Corp Fin and Tech. However, bottom-line results were below expectations due to higher SG&A, including significant litigation expenses, and revenue shortfalls in EMEA markets impacted by geopolitical disruption and case timing. The company reaffirmed its full-year revenue guidance but adjusted EPS downward, while expressing confidence in its expert-driven model, talent acquisition, and the long-term tailwinds from high-stakes client challenges and AI-driven demand.

    Highlights

    6

    • Reported record Q2 revenues, up 5.3% year-over-year (6.5% excluding pass-through revenues).

    • Year-to-date revenues increased 7% year-over-year (10% when normalized for Econ issues).

    • Corporate Finance segment delivered strong 8.5% revenue growth, with Transformation up 26% and Transactions up 10%.

    • Technology segment revenue grew 18.4% year-over-year, driven by M&A-related second request services.

    • Net cash provided by operating activities significantly increased to $152.3 million in Q2 from $55.7 million in the prior year.

    • Repurchased 2.6 million shares for $390.9 million at an average price of $150.84 during the quarter.

    Concerns

    4

    • Adjusted EBITDA declined to $104.5 million (10.5% of revenues) from $111.6 million (11.8% of revenues) in the prior year quarter.

    • SG&A expenses increased to $230.7 million from $202.2 million year-over-year, including $6.6 million in extraordinary litigation-related expenses.

    • GAAP EPS guidance was lowered to between $8.70 and $9.30 (from $8.90-$9.60), and Adjusted EPS guidance to between $9.10 and $9.70.

    • Revenue performance in EMEA, particularly the Middle East (due to geopolitical disruption) and the U.K. (due to case timing), was below aspirations.

    Guidance & targets

    6
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $3.94 billion to $4.1 billion
    high materiality
    High
    Full-year 2026 GAAP EPS
    $8.70 to $9.30
    high materiality
    Medium
    Full-year 2026 Adjusted EPS
    $9.10 to $9.70
    high materiality
    Medium
    Full-year 2026 SG&A Expenses
    approximately $70 million higher than 2025
    medium materiality
    Medium
    Q3 2026 SG&A Expenses
    approximately $12 million lower than Q2
    medium materiality
    Medium
    Full-year 2026 Effective Tax Rate
    between 21% and 23%
    low materiality
    Medium

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Corporate Finance
    Strong quarter driven by higher realized flow rates and success fees. Transformation and transactions practices exceeded expectations. Continued investments in EMEA and Australia.
    Turnaround and Restructuring: 44% of segment revenuesTransactions: 26% of segment revenuesTransformation: 30% of segment revenuesTransformation revenue growth: 26% YoYTransactions revenue growth: 10% YoYTurnaround and Restructuring revenue decline: 2% YoYHeadcount growth: almost 50% of year-over-year headcount growth tied to investments
    		—8.5%——
    Forensic and Litigation Consulting
    Driven by financial services and cybersecurity in North America. Higher realized bill rates contributed to top line growth despite lower volume due to reduced regulatory enforcement. Continued investments in senior headcount.
    North America business performing wellHeadcount growth: >40% of year-over-year headcount growth at SMD and MD levels
    		—YoY top line growth——
    Economic Consulting
    Performance exceeded expectations, with strong sequential improvement. EMEA growth led by M&A-related antitrust, North America by financial economics and antitrust. Expected to no longer be a year-on-year drag on revenue or adjusted segment EBITDA in H2 2026.
    Sequential revenue increase: $13.2MSequential adjusted EBITDA increase: $14.7MStrength in Compass Lexicon (EMEA and North America)
    		————
    Technology
    Revenue growth driven by increased demand for M&A-related second request services.
    		—18.4%——
    Strategic Communications
    Solid quarter, primarily due to higher demand for corporate reputation services. Reflects strength of multiyear investments in higher-margin event-driven offerings.
    		—5.4% (excluding pass-through revenues)——

    Operational metrics

    20
    Revenues
    Recordup 5.3% YoY
    Q2 FY26

    Record second quarter revenues.

    Revenues (excluding pass-through)
    6.5%YoY
    Q2 FY26

    Excluding pass-through revenues.

    Revenues
    7%YoY
    YTD FY26

    Year-to-date revenues.

    Revenues (normalized for Econ issues)
    10%YoY
    YTD FY26

    Year-to-date revenues if normalized for Econ issues.

    Adjusted EBITDA
    $104.5Mdeclined YoY
    Q2 FY26

    Declined year-over-year due to higher direct costs and SG&A expenses.

    SG&A Expenses
    $230.7Mvs $202.2M prior year
    Q2 FY26

    Increase driven by higher compensation, T&E, and legal expenses.

    Extraordinary Litigation-Related Expenses
    $6.6M
    Q2 FY26

    Recorded in unallocated corporate SG&A, related to litigation against a former employee and competing firm.

    Extraordinary Litigation-Related Expenses Impact on GAAP EPS
    $0.17
    Q2 FY26

    Reduced GAAP EPS by $0.17.

    Effective Tax Rate
    20.8%vs 22% prior year
    Q2 FY26

    Decrease primarily due to tax benefits related to a tax equity investment in renewable energy.

    Weighted Average Shares Outstanding
    29Mvs 33.6M prior year
    Q2 FY26

    Weighted average shares outstanding.

    Net Cash Provided by Operating Activities
    $152.3Mvs $55.7M in Q2 2025
    Q2 FY26

    Increase due to higher cash collections and lower forgivable loan issuances and income tax payments.

    Share Repurchases
    2.6M
    Q2 FY26

    Shares repurchased during the quarter.

    Share Repurchase Authorization Remaining
    $344M
    as of June 30, 2026

    Remaining available under share repurchase program.

    Billable Headcount Growth
    3.2%YoY
    Q2 FY26

    Year-over-year increase in billable headcount.

    Billable Headcount Growth (SMD and MD levels)
    5%
    Q2 FY26

    Billable headcount growth at senior managing director and managing director levels.

    Global Restructuring Revenues Growth
    8%vs H1 FY25
    H1 FY26

    Global restructuring revenues increased despite a softer market backdrop.

    New SMD and Affiliate Hires
    45
    YTD FY26

    New SMD and affiliate hires year-to-date in key businesses.

    New Graduate Hires
    >270
    Q3 FY26

    Expected to welcome as part of annual class of hires.

    Revolver Capacity
    $1.5Bfrom $900M
    current

    Revolver upsized and maturity extended for increased flexibility.

    Bill Rate Increases
    continue to make progress
    medium term

    Management expects to continue making progress on bill rate increases after being slow during 2019-2024 inflationary period.

    Risks & headwinds

    5
    Extraordinary Litigation CostsQ2 FY26 and H2 FY26

    $6.6 million in Q2; $0.17 impact on Q2 GAAP EPS; expected to be lower in H2 but still impacting full-year EPS guidance.

    Mitigation: Management believes shareholders will benefit from visibility into underlying operating performance and transparency into costs associated with protecting the company.

    Geopolitical Disruption in Middle EastOngoing, uncertain duration.

    Revenue below aspirations; business functioning well below capacity.

    Mitigation: Company has a great team there; long-term success expected based on team quality, but timing of business turn is hard to forecast.

    Short-Term Revenue Challenges in U.K.Q2 FY26, exacerbated by summer client vacations; expected to be short-term.

    Revenue shortfall versus expectations.

    Mitigation: Issues are considered normal zigs and zags; confidence in U.K. businesses to rebound.

    Softer Regulatory EnforcementOngoing under current U.S. administration.

    Lower volume in FLC.

    Mitigation: FLC teams have won large, complex cases and pivoted to support evolving client needs; higher realized bill rates helped deliver top-line growth.

    Uneven M&A EnvironmentOngoing.

    M&A market remains somewhat uneven; faster clearances, more negotiated remedies, and fewer litigated challenges may reduce duration and intensity of engagements.

    Mitigation: FTI believes it is taking share by bringing more services to clients across the deal life cycle.

    What to watch in Q3 FY26

    5

    Middle East Business Turnaround

    Next quarter / near term
    CurrentBusiness functioning well below capacity due to geopolitical disruption.
    TargetSigns of business recovery or clearer outlook on geopolitical impact.

    Why it matters

    Uncertainty around this region is a key drag on international revenue aspirations.

    With respect to the Middle East, however, it's obviously a more complicated question... we clearly do not yet have any definitive sense of when that business will turn.

    Q&A highlights

    8

    How are geopolitical disruptions affecting the Middle East business, and could this eventually become a tailwind?

    Management stated that the business is currently performing below capacity due to geopolitical conflicts, which manifest in various ways like client exits, suspended purchases, and delayed assignments. Forecasting a turnaround is difficult, and while a long-term tailwind is possible given the strong team, management is cautious about near-term improvement.

    “I think it's incredibly hard to forecast this. And it's not that we don't believe that there would be a long-term tailwind. My general experience over 1 million years now in professional services over an extended period of time, if you have the best team, you win because there is a need in those markets. But forecasting when is hard.”

    asked by James Yaro · answered by Steve Gunby

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 Performance Overview and Bottom-Line Pressures

    FTI Consulting reported record Q2 revenues, but bottom-line performance was below expectations. This was attributed to higher-than-expected SG&A, including one-time📎 compensation expenses, increased T&E for an all-SMD meeting, and $6.6 million in extraordinary litigation-related expenses. Additionally, revenues in some international markets, particularly the Middle East and U.K., did not meet aspirations, leading to a shortfall versus internal forecasts.

    02

    International Market Dynamics

    EMEA markets, while growing, did so slower than anticipated. The U.K. experienced short-term revenue challenges due to the timing of📎 case completions and new engagements, exacerbated by client vacation seasonality. In contrast, the Middle East faces more durable geopolitical disruption🌐s, making the timing of📎 a business turnaround uncertain. Despite these regional issues, the company's overseas markets are growing mid- to high single digits on the top line.

    03

    Segment-Specific Highlights

    Corp Fin delivered strong results with 8.5% revenue growth, driven by transformation (up 26%) and transactions (up 10%), despite an uneven M&A market and a 2% decline in turnaround and restructuring. FLC saw top-line growth from higher realized bill rates in North America, particularly in financial services and cybersecurity, even with reduced regulatory scrutiny. Econ exceeded expectations with sequential revenue and adjusted EBITDA increases, led by Compass Lexicon's M&A-related antitrust work. Tech grew 18.4% from M&A second request demand, and Stratcom's revenues (ex-pass-through) increased 5.4% from corporate reputation services.

    04

    Strategic Investments and Talent Acquisition

    FTI continues to invest significantly in senior talent, with billable headcount up 3.2% year-over-year and SMD/MD levels up 5%. Almost 50% of headcount growth in Corp Fin supports expansion in EMEA and Australia, while FLC also saw substantial senior hires. The company expects to welcome over 270 graduates in Q3, reinforcing its expert-based model and platform.

    05

    AI as a Growth Driver

    Management highlighted AI as a significant growth catalyst, reinforcing demand for FTI's expert services in high-stakes challenges like litigation, regulatory concerns, transactions, disputes, and crisis management. Examples include supporting OpenAI in a high-profile case and Tech's ability to process vast amounts of image and video data for litigation strategy, demonstrating the evolving nature of complex expert-driven work.

    06

    Capital Allocation and Financial Strength

    The company generated strong net cash from operating activities of $152.3 million in Q2. It repurchased 2.6 million shares for $390.9 million, reflecting confidence in long-term value. The revolver was upsized to $1.5 billion and extended by 5 years, enhancing financial flexibility and demonstrating prudent financial management.

    AI-generated summary of the company’s earnings call. Not investment advice.