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    FCN
    Earnings call· Dec 2025(Q4 FY25)

    FTI CONSULTING Q4 FY25 earnings call FCN

    Feb 26, 2026 Source

    Executive summary

    FTI Consulting Q4 FY25 — Record Revenues and 11th Consecutive Year of Adjusted EPS Growth Despite Headwinds

    FTI Consulting closed FY25 with record revenues and its 11th consecutive year of adjusted EPS growth, demonstrating resilience in the face of significant headwinds, particularly in its Economic Consulting and Technology segments. The company's diversified portfolio and expert-driven model allowed other segments like CorpFin, FLC, and Stratcom to deliver strong performance, offsetting declines. Management anticipates continued challenges in early FY26, especially for Economic Consulting, but remains confident in the long-term trajectory, leveraging AI as a demand driver for its specialized services.

    Highlights

    5

    • Achieved record fourth quarter revenues of $990.7 million, an increase of 10.7% compared to the prior year quarter.

    • Delivered record full-year revenues of $3.79 billion, up 2.4% compared to 2024, marking the 8th consecutive year of record revenues.

    • Reported record full-year adjusted EPS of $8.83, marking the 11th consecutive year of adjusted EPS growth.

    • CorpFin, FLC, and Stratcom segments delivered double-digit organic growth in 2025, with CorpFin Q4 revenues up 26.1% YoY to $423.2 million.

    • Technology segment rebounded in the second half of 2025, with revenues increasing 7% and adjusted segment EBITDA up 69% compared to the first half.

    Concerns

    5

    • Economic Consulting revenues decreased 14.5% in Q4 to $176.2 million, and adjusted segment EBITDA was $1 million, down from $15.8 million in Q4 2024.

    • Full-year 2025 net cash provided by operating activities declined to $152.1 million from $395.1 million in 2024, primarily due to higher forgivable loan issuances.

    • Q4 GAAP and adjusted EPS were reduced by $0.38 due to an $11.8 million valuation allowance expense on foreign deferred tax assets.

    • SG&A expenses are expected to be approximately $45 million higher in FY26 than FY25, with Q1 FY26 SG&A approximately $30 million higher due to non-recurring legal settlement gains in Q1 FY25.

    • Economic Consulting adjusted segment EBITDA is expected to reach its lowest point in Q1 2026 due to tough comparisons and increased costs of retaining/attracting talent.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $3.94 billion to $4.1 billion
    high materiality
    Medium
    Full-year 2026 GAAP EPS
    $8.90 to $9.50
    high materiality
    Medium
    Full-year 2026 Adjusted EPS
    $8.90 to $9.50
    high materiality
    Medium
    Economic Consulting Adjusted Segment EBITDA
    lowest point
    medium materiality
    High
    Economic Consulting Adjusted Segment EBITDA
    no longer a drag on year-over-year EBITDA growth
    medium materiality
    Medium
    Full-year 2026 SG&A expenses
    approximately $45 million higher
    medium materiality
    High
    Q1 2026 SG&A expenses
    approximately $30 million higher
    medium materiality
    High
    Full-year 2026 Effective Tax Rate
    22% to 24%
    medium materiality
    High
    Junior Talent Hiring
    more junior hiring
    low materiality
    Medium

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    CorpFin
    Record revenues driven by higher demand and realized bill rates across all services. Strength in transactions is more than market-driven, with top 20 engagements more than doubling in size YoY. Record turnaround and restructuring revenues from large bankruptcies globally. Increase in compensation, particularly variable compensation, and higher SG&A and pass-through expenses partially offset EBITDA growth.
    Adjusted segment EBITDA margin: 18.9%Q4 2024 Adjusted segment EBITDA: $44.7 millionQ4 2024 Adjusted segment EBITDA margin: 13.3%Turnaround and restructuring revenue share: 47%Turnaround and restructuring growth YoY: 25%Turnaround and restructuring growth QoQ: 6%Transactions revenue share: 25%Transactions growth YoY: 46%Transactions growth QoQ: -4%Transformation revenue share: 28%Transformation growth YoY: 13%Transformation growth QoQ: 10%
    		$423.2 million26.1%4.5%$80.1 million
    FLC
    Increase primarily due to higher realized bill rates for risk and investigation services. Financial services was a key driver of growth due to regulatory and technological shifts, including AI model compliance. Sequential decline was only 1% compared to an extraordinary Q3. Increase in variable compensation partially offset EBITDA growth.
    Adjusted segment EBITDA margin: 12.3%Q4 2024 Adjusted segment EBITDA: $18 millionQ4 2024 Adjusted segment EBITDA margin: 10.2%Revenue per billable professional growth (last 3 years): 22%
    		$192.9 million9.7%-1%$23.8 million
    Economic Consulting
    Decrease primarily due to lower demand for non-M&A and M&A-related antitrust services, partially offset by higher demand for financial economic services and higher realized bill rates for international arbitration services. The decrease in EBITDA was due to lower revenues and increased forgivable loan amortization, partially offset by lower compensation and bad debt. Q4 2024 had higher than usual bad debt.
    Adjusted segment EBITDA margin: 0.6%Q4 2024 Adjusted segment EBITDA: $15.8 millionQ4 2024 Adjusted segment EBITDA margin: 7.7%
    		$176.2 million-14.5%1.8%$1 million
    Technology
    Increase primarily due to higher demand for litigation and M&A-related second request services. Sequential increase driven by information governance and litigation services. The segment rebounded significantly in the second half of 2025.
    Adjusted segment EBITDA margin: 14.9%Q4 2024 Adjusted segment EBITDA: $6.6 millionQ4 2024 Adjusted segment EBITDA margin: 7.2%H2 2025 revenue growth vs H1 2025: 7%H2 2025 adjusted segment EBITDA growth vs H1 2025: 69%
    		$99 million9.3%5.3%$14.8 million
    Stratcom
    Increase primarily due to higher demand for corporate reputation services and an increase in pass-through revenues. Sequential increase driven by a $3.4 million increase in pass-through revenues and higher demand for corporate reputation and financial communications services. Higher pass-through expenses and variable compensation partially offset EBITDA growth.
    Adjusted segment EBITDA margin: 19.2%Q4 2024 Adjusted segment EBITDA: $13.8 millionQ4 2024 Adjusted segment EBITDA margin: 15.9%
    		$99.4 million14.8%11.2%$19 million

    Operational metrics

    18
    Full-year Revenue
    $3.79 billion2.4% YoY
    FY25

    Record revenues for the year.

    Full-year Adjusted EBITDA
    $463.6 million
    FY25

    Record adjusted EBITDA for the year.

    Full-year GAAP EPS
    $8.24
    FY25

    Record GAAP EPS for the year.

    Full-year Adjusted EPS
    $8.83
    FY25

    Record adjusted EPS for the year, marking the 11th consecutive year of adjusted EPS growth.

    Net Income
    $54.5 million9.7% YoY
    Q4 2025

    Increased 9.7% compared to the prior year quarter. Partially offset by a valuation allowance expense.

    GAAP EPS
    $1.7829% YoY
    Q4 2025

    Increased 29% compared to the prior year quarter. Included a $0.38 reduction from valuation allowance expense.

    Adjusted EPS
    $1.7814.1% YoY
    Q4 2025

    Increased 14.1% compared to the prior year quarter. Q4 2024 adjusted EPS excluded an $0.18 special charge related to severance. Included a $0.38 reduction from valuation allowance expense.

    SG&A
    $213.6 millionvs $208.1 million in Q4 2024
    Q4 2025

    Increase primarily due to higher variable compensation, legal, and business development expenses, partially offset by lower bad debt and travel and entertainment expenses.

    Adjusted EBITDA
    $106.2 millionvs $73.7 million in Q4 2024
    Q4 2025

    Increased compared to prior year quarter.

    Effective Tax Rate
    37.1%vs 16.9% in Q4 2024
    Q4 2025

    Compared to 16.9% in Q4 2024. Absent the valuation expense, the rate would have been 23.6%.

    Net Cash Provided by Operating Activities
    $152.1 millionvs $395.1 million in FY24
    FY25

    Largest driver of year-over-year decline was higher forgivable loan issuances.

    Forgivable Loan Issuances (net of repayment)
    $255 million
    FY25

    Total issuances for the full year 2025.

    Shares Repurchased
    519,944 shares
    Q4 2025

    Repurchased during the quarter.

    Shares Repurchased
    5.3 million shares15% of shares outstanding
    FY25

    Repurchased during full year 2025.

    Remaining Share Repurchase Authorization
    $491.8 million
    As of 2025-12-31

    Amount remaining available under stock repurchase authorization.

    Days Sales Outstanding
    88 daysvs 97 days at 2024-12-31
    As of 2025-12-31

    Improved compared to prior year-end.

    Debt Reduction
    $145 millionQoQ
    Q4 2025

    Reduction in debt quarter-over-quarter.

    Net Debt
    $100 million
    Q4 2025

    Approximate net debt at the end of Q4 2025, resulting in a low leverage ratio.

    Risks & headwinds

    6
    Economic Consulting segment disruptionContinuing into H1 2026

    Almost $100 million of adjusted EBITDA headwind in 2025 (combined with Tech); Q4 2025 adjusted segment EBITDA $1 million (0.6% margin) vs $15.8 million (7.7% margin) in Q4 2024.

    Mitigation: Multiyear rebuild, talent retention and attraction, focus on communicating capabilities to the market (e.g., in U.S. antitrust business).

    Non-recurring legal settlement gainsQ1 2026

    Q1 2026 SG&A expected to be approximately $30 million higher than Q1 2025 due to non-recurrence of Q1 2025 gains.

    Mitigation: Factored into 2026 guidance.

    Increased SG&A expensesFY26

    Full-year 2026 SG&A expected to be approximately $45 million higher than 2025.

    Mitigation: Commitment to disciplined cost control; higher expenses include event-related costs (Senior Managing Directors meeting in Q2).

    Lag in junior talent hiringH2 2026

    Not quantified, but noted as a challenge from 2025.

    Mitigation: Plan to increase junior hiring, particularly in the second half of 2026, to support senior professionals.

    Valuation allowance expense on foreign deferred tax assetsQ4 2025 (one-time)

    $11.8 million expense, reducing Q4 EPS by $0.38.

    Mitigation: One-time accounting adjustment, not expected to recur.

    Higher forgivable loan issuancesFY25 (impact on cash flow)

    FY25 net cash provided by operating activities declined to $152.1 million from $395.1 million in FY24, with $255 million in total issuances in FY25.

    Mitigation: Ongoing investment in talent, which is a strategic priority for the company.

    What to watch in Q1 FY26

    4

    Economic Consulting Adjusted Segment EBITDA

    Q1 2026
    Current$1 million (0.6% margin) in Q4 2025
    TargetLowest point in Q1 2026

    Why it matters

    This segment has been a significant drag, and its performance in Q1 will indicate the immediate impact of ongoing headwinds and the start of its multi-year rebuild.

    As a result of these tough comparisons on certain compensation costs in Q1 we expect Economic Consulting adjusted segment EBITDA to reach its lowest point in Q1 2026.

    Q&A highlights

    5

    How much of the Q4 stabilization in Economic Consulting is due to market conditions versus new hire productivity, and what's the outlook for academic-focused hires' ramp-up in 2026?

    Management stated that Economic Consulting has not yet hit bottom, primarily due to the Compass Lexecon situation and tough year-on-year comparisons in H1 2026. While costs for retaining and attracting talent are fully absorbed, material revenue gains are slow, especially in U.S. antitrust. New hires, particularly early-stage academics, have a longer revenue ramp. The European business is expected to stabilize by H2 2026.

    “I think it's an amazingly good group of economists. It is not an aggressive group of business developers. And so you got to get out there and let the lawyers know that you have these great talent. And I think it's taken a while for us to do that.”

    asked by Andrew Nicholas · answered by Steve Gunby

    2 min read6 chapters

    Detailed Narrative

    01

    Resilience Amidst Headwinds

    FTI Consulting demonstrated significant resilience in 2025, achieving record revenues and adjusted EPS despite facing substantial headwinds. These included a slowdown in second request activity impacting the Technology segment, regulatory uncertainty🌐 affecting FLC, and major disruption in the Compass Lexecon business. The company's ability to deliver strong results in this challenging environment underscores the strength and multifaceted nature of its business units and the commitment of its professionals.

    02

    Strategic Investments and Talent Acquisition

    The company continued its strategy of investing in senior talent, adding 85 senior hires in 2025, and plans to build teams around these leaders in 2026. This investment approach, even when initially impacting the P&L, is seen as crucial for long-term growth and maintaining a competitive edge. The firm also plans to increase junior hiring in the second half of 2026 to support its senior professionals, addressing a lag in such hiring from the previous year.

    03

    AI as a Demand Driver

    FTI Consulting views the proliferation and broad adoption of AI as a significant positive for its business, expecting it to drive new categories of work. The company is already supporting clients in high-profile disputes involving AI companies, covering issues like ownership of AI-generated content, misinformation, bias, and data privacy. Management believes AI's disruptive nature will increase demand for its expert-driven services in crisis situations and times of transformation.

    04

    CorpFin's Global Leadership in Restructuring

    CorpFin's strong performance was attributed to multi-year investments that transformed its restructuring business into a global leader, capable of handling major bankruptcies worldwide. The segment has expanded beyond its traditional U.S. credit focus to advise on both creditor and company sides in numerous markets. Additionally, its transaction and transformation services delivered record results, even in slow markets, by expanding engagement scope and size.

    05

    FLC's Adaptability and Expertise

    FLC's progress reflects its deep expertise and ability to adapt to changing client needs and regulatory landscapes. Despite concerns about policy shifts and a slowdown in FCPA enforcement, the segment secured major engagements by pivoting to areas like state government regulatory issues. This nimbleness allowed FLC to maintain relevance and grow, particularly in financial services, where clients face converging regulatory and technological challenges, including AI compliance.

    06

    Economic Consulting's Rebuild and Future Outlook

    The Economic Consulting segment is undergoing a multi-year rebuild following significant disruption, with the full cost impact now in the P&L but revenue gains from new talent still ramping up. The U.S. antitrust business, in particular, faces slow progress in converting new talent into revenue. However, the company is confident in its academic economists and expects the business to cease being a drag on year-over-year EBITDA growth by the second half of 2026.

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