FCN — FTI Consulting, Inc.

FTI Consulting Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Revenue: $956.2 million, up 3.3% year-over-year.
• Earnings Per Share (EPS): $2.60, an increase of 41% compared to the previous year.
• Net Income: $82.8 million, a 25% increase year-over-year.
• Adjusted EBITDA: $130.6 million, or 13.7% of revenue, compared to $102.9 million (11.1% of revenue) in Q3 2024.
• Year-to-Date Performance: Adjusted EPS and adjusted EBITDA up 9% and 8.3%, respectively.
• SG&A Expenses: $199.5 million, down from $206 million in Q3 2024, influenced by lower compensation and a legal settlement gain.

2. Strategic Updates and Business Highlights:

• Corp Fin: Revenue increased 18.6% to $404.9 million, driven by strong demand for restructuring and transaction services. Adjusted segment EBITDA rose to $96.4 million (23.8% of revenue).
• FLC: Revenue increased 15.4% to $194.7 million, with adjusted EBITDA up 62% year-to-date. Growth attributed to higher demand for risk and investigation services.
• Strat Com: Revenue rose 7.4% to $89.4 million, with adjusted EBITDA increasing to $16.9 million (18.9% of revenue).
• E Con: Revenue decreased 22% to $173.1 million, with an adjusted EBITDA loss of $4.6 million, primarily due to lower demand for antitrust services.
• Tech: Revenue decreased 14.8% to $94.1 million, with adjusted EBITDA at $13.6 million (14.5% of revenue).

3. Forward Guidance and Outlook:

• Updated Revenue Guidance: Expected to range between $3.685 billion and $3.735 billion for the full year 2025.
• EPS Guidance: Projected between $7.62 and $8.12, with adjusted EPS between $8.20 and $8.70.
• Market Outlook: Anticipated seasonal slowdown in Q4, with a cautious but optimistic view on E Con's recovery and continued investments in talent across segments.

4. Bad News, Challenges, or Points of Concern:

• E Con Segment: Facing significant headwinds with a 22% revenue decline, attributed to competitive pressures and a weak antitrust market, particularly in EMEA.
• Tech Segment: Experienced a 14.8% revenue decline due to lower demand for M&A-related services.
• Headcount Dynamics: Billable headcount decreased by 3%, reflecting previous headcount actions, although there was a 4% sequential increase due to new hires.
• Market Conditions: Uncertainty regarding the impact of potential U.S. government shutdowns and the overall economic environment on future performance.

5. Notable Q&A Insights:

• Economic Consulting Performance: Management estimates that about two-thirds of the revenue decline in E Con is due to talent transitions rather than market conditions. They remain cautious about EBITDA bottoming out.
• Transactions Practice Strength: Growth attributed primarily to strong team performance and credibility built over the years, rather than solely market conditions.
• AI Impact: While AI has not yet transformed internal operations significantly, it is positively impacting client work, particularly in investigations and regulatory compliance.
• Restructuring Outlook: The restructuring business continues to perform well, with expectations of sustained growth driven by increasing demand and market share gains.

Overall, FTI Consulting reported a strong quarter with record results in several segments, but also faced challenges in E Con and Tech, leading to a cautious outlook for the upcoming quarter.