FTI Consulting, Inc. Q4 FY2025 earnings call

In 2025, despite challenges in tech and economic consulting, the company achieved record revenues and adjusted EBITDA. Teams in various segments took strategic actions and investments. Corp Fin's turnaround, restructuring, and transactions drove growth. FLC benefited from risk and investigations services. Stratcom returned to growth. Looking ahead to 2026, there are headwinds but the company expects revenue growth and adjusted EPS growth while continuing to invest in talent.

In the fourth quarter, Corp Fin recorded revenues of $423.2 million, an increase of 26.1% compared to the prior year quarter. FLC had revenues of $192.9 million, up 9.7% year-over-year. Economic consulting revenues were $176.2 million, down 14.5% from Q4 2024. Tech revenues were $99 million, up 9.3%, and Stratcom's revenues were $99.4 million, up 14.8%. For the full year 2025, record revenues of $3.79 billion increased 2.4% compared to 2024, with core segments Corp Fin, FLC, and Stratcom achieving double-digit organic growth.

For 2026, revenue is estimated to range between $3.94 billion and $4.1 billion. GAAP EPS is estimated to range between $8.90 and $9.60. The guidance considers AI's positive impact, momentum in core segments, the rebuild of the Compass Lexicon business, talent investment, and SG&A expense changes.

Headwinds include the ongoing impact of the Compass Lexicon business with cost effects without full revenue benefits yet, the cycling of one-time benefits, and challenges in hiring junior talent to support senior staff.

Q: On economic consulting, how much of stabilization is due to market vs new hires?

A: Ramp is slow due to the Compass Lexicon situation, with differences in EU and US business.

Q: AI impact on restructuring.

A: Well-positioned to benefit from market disruption, as the firm is expertise-driven and AI creates new work opportunities.

Q: AI impact on business.

A: Revenue positive from disruption triggering demand, requiring experts for regulation and crisis scenarios.

Q: Capital deployment priorities.

A: Focus on organic growth, opportunistic share buybacks, and wise use of cash for suitable acquisitions