CRA International, Inc. Q3 FY2025 earnings call

• CRA had strong Q3 2025 results with revenue up 10.8% YOY to $185.9M, marking the best three revenue quarters in history. 7 of 11 practices grew, including Antitrust & Competition Economics, Energy, Finance, and IP with double-digit growth. North American revenue up 6.8%, international up 30.3%.
• Antitrust & Competition Economics practice had new quarterly revenue high, supported high-profile mergers like UnitedHealth's acquisition of Amedisys, and provided expertise in EU Microsoft investigation.
• Finance practice was active in various industries, assisting in litigation and disputes.
• Intellectual Property practice involved in patent infringement disputes related to mRNA COVID-19 vaccines, with a global settlement reached.
• Energy practice supported energy companies, utilities, etc., in integrated resource plans and market design.
• Life Sciences practice engaged on early-stage assets, evaluated pricing and access potential.
• Capital deployment: Ended Q3 with $22.5M cash, $95.0M borrowings, net debt $72.5M. Returned $7.2M to shareholders, increased quarterly dividend by 16%.

In the third quarter of fiscal 2025, revenue was $185.9 million, up 10.8% year-over-year. Legal and regulatory services revenue increased 11.5%. The Antitrust & Competition Economics practice had double-digit revenue growth and set a new quarterly revenue high. The finance practice was active across industries. The intellectual property practice was involved in high-stakes litigation. Management consulting services revenue increased 8%, led by the energy practice and supported by the life sciences practice. North American operations saw 6.8% revenue growth, while international operations expanded 30.3% driven by Antitrust & Competition Economics and life sciences practices. Legal and regulatory services contribution: revenue up 11.5%; Management consulting services contribution: revenue up 8%; International operations: 30.3% growth.

• For full year fiscal 2025 on constant currency basis relative to fiscal 2024, revenue is expected in the range of $740 million to $748 million, and non-GAAP EBITDA margin is expected in the range of 12.6% to 13.0%, which is an upward revision from prior ranges.

• Forward-looking statements are inherently uncertain due to factors like changes in general and industry-specific economic conditions affecting demand for services. Additional information on these factors is in the release and periodic reports.

Q: Talked about headcount, junior to senior staff ratio and health care headcount growth.

A: Headcount ended Q3 at 968, with 1.0% YOY decrease. Redeploy assets based on growth opportunities. Welcomed nearly 20 new VPs from lateral hires, will build out headcount as they ramp.

Q: Bill rate revenue growth, drivers.

A: Utilization 77% (up from 76% YOY). Rate increases set end of prior year, effective rate increase ~3% in 2025, assume 2%-4% range going forward.

Q: International growth, secular themes.

A: Competition practice in Europe strong, 30%+ growth in international due to consistent strong enforcement in Europe vs. potential starts/stops in US.

Q: Legal and regulatory activity drivers, visibility.

A: Broad-based inflow across practices, 7 of 11 practices grew YOY. Visibility confident due to consistent results, similar to 2024.

Q: Regulatory scrutiny on Antitrust and M&A, life sciences, IP practice.

A: Antitrust enforcement inflow not contracted. Life sciences practice saw slight upward sloping growth, still mid-single digits YOY. IP practice has teaming opportunities with other practices, demand drivers not going away.

Q: Hiring pipeline for VP.

A: Excited about 20+ new VPs joined in 2025, selective in recruitment, value proposition at CRA attracts talent.