FTI Consulting’s first quarter saw a negative market reaction as the company missed Wall Street’s revenue expectations, with sales declining year over year. Management attributed this to weaker demand in Corporate Finance and Restructuring and lingering headwinds in Economic Consulting, particularly from lower M&A and antitrust activity. CEO Steven Gunby noted that while Forensic and Litigation Consulting had a strong quarter, uncertainty around regulatory posture and macroeconomic factors weighed on several business segments. Gunby described the environment as having “lots of puts and takes,” emphasizing disruption in key segments and ongoing market challenges.
Is now the time to buy FCN? Find out in our full research report (it’s free).
FTI Consulting (FCN) Q1 CY2025 Highlights:
- Revenue: $898.3 million vs analyst estimates of $906.8 million (3.3% year-on-year decline, 0.9% miss)
- Adjusted EPS: $2.29 vs analyst estimates of $1.79 (27.7% beat)
- Adjusted EBITDA: $115.2 million vs analyst estimates of $96.19 million (12.8% margin, 19.7% beat)
- Operating Margin: 8.8%, down from 10.7% in the same quarter last year
- Market Capitalization: $5.35 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions FTI Consulting’s Q1 Earnings Call
- James Yaro (Goldman Sachs) asked about the impact of tariffs across business segments. CEO Steven Gunby replied that while tariffs had not been a major driver in the first quarter, they are creating stress for some clients, especially those dependent on Chinese imports, which could increase restructuring demand.
- Tobey Sommer (Truist) requested clarity on the revenue and margin impact of Compass Lexicon departures. Gunby stated the financial hit would be substantial and likely higher than previously estimated, as the full effect of departures and new hires will materialize over the next few quarters.
- Sommer (Truist) also asked about trends in FLC’s healthcare business. CFO Ajay Sabherwal noted both the performance improvement and regulatory practices had strong results, especially compared to a weak prior year.
- Andrew Nicholas (William Blair) inquired about restructuring market trends and the balance between liability management and bankruptcy activity. Sabherwal highlighted a rise in repeat bankruptcies, suggesting that liability management alone is insufficient for highly leveraged clients, potentially boosting restructuring needs.
- Nicholas (William Blair) further questioned if headwinds in Economic Consulting would impact other segments. Sabherwal responded that while there could be some ripple effects, the revenue impact is expected to remain isolated to the affected unit.
Catalysts in Upcoming Quarters
In the upcoming quarters, our analysts will be closely monitoring (1) the pace of M&A activity and regulatory enforcement, which will influence demand across consulting segments, (2) realization of cost savings from recent headcount actions alongside the financial impact of talent investments, and (3) signs of increased restructuring work related to tariff-driven stress or broader economic shifts. Additionally, we will watch for progress in cross-segment collaboration and the integration of new academic hires into Economic Consulting.
FTI Consulting currently trades at $158.77, down from $168.33 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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