FTI Consulting (FCN +3.10%), a global business advisory firm with a focus on crisis management, financial restructuring, and investigations, reported its second quarter 2025 earnings on July 25, 2025. The most important news was that Both GAAP revenue and earnings per share came in above Wall Street expectations. even as headline figures showed a mild decline from last year. The company reported $943.7 million in GAAP revenue, ahead of predictions by $21.7 million (GAAP), and delivered GAAP earnings per share of $2.13, topping the $2.10 GAAP estimate. However, both figures were lower than the previous year's results. The quarter highlighted wide differences across business lines -- some units delivered growth and higher profits, while others struggled with macroeconomic and sector-specific pressures.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS | $2.13 | $2.10 | $2.34 | (9.0%) |
| Revenue | $943.7 million | $921.97 million | $949.2 million | (0.6%) |
| Adjusted EBITDA | $111.6 million | $115.9 million | (3.7%) | |
| Net Income | $71.7 million | $83.9 million | (14.5%) | |
| Operating Margin | 10.5% | 11.0% | (0.5 pp) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Focus Areas
FTI Consulting is a global leader in business advisory, offering services across five main segments: Corporate Finance & Restructuring, Forensic and Litigation Consulting, Economic Consulting, Technology, and Strategic Communications. Its services range from bankruptcy advice to cybersecurity, forensics, and reputation management. Clients include leading corporations, law firms, and government agencies, reflecting the company's broad expertise and international reach.
In recent years, FTI Consulting has focused on leveraging its diversified service model, global presence, and talent investment to manage market swings. Critical success factors include adapting to emerging trends like artificial intelligence, leveraging its reputable team of specialists for higher bill rates, and actively managing operating costs. Its size and diversity help offset downturns in individual units with strength in other business lines.
Quarter Highlights: Segment Performance and Key Drivers
The quarter revealed sharp contrasts between business units. Corporate Finance & Restructuring posted $379.2 million in GAAP revenue, up 9.0% year over year. Higher demand for restructuring and transaction services, as well as stronger realized pricing, powered the gains in the Corporate Finance & Restructuring segment. Adjusted EBITDA for the segment rose to $81.7 million, with Adjusted EBITDA margin in Corporate Finance & Restructuring expanded from 19.1% in the prior year quarter to 21.5% in the second quarter of 2025. Utilization ticked up slightly, indicating both ongoing need for services and efficient deployment of staff.
Forensic and Litigation Consulting, which tackles risk and regulatory investigations, delivered $186.5 million in GAAP revenue, up 10.0%. The segment benefited from higher bill rates, especially in risk, data analytics, and construction-focused services. Adjusted EBITDA for Forensic and Litigation Consulting was $31.2 million in the second quarter of 2025, up from $15.0 million in the prior year quarter, with Adjusted EBITDA margin for Forensic and Litigation Consulting increased from 8.8% in the prior year quarter to 16.7% in the second quarter of 2025. This gain appears tied mostly to increased value of specialized services rather than a surge in project numbers. The unit’s billable headcount increased modestly, reflecting ongoing investment in expert talent.
Economic Consulting saw GAAP revenues drop sharply to $191.7 million, down 17.0% from the prior year period. This group advises clients on mergers and antitrust matters but suffered as deal volume and related regulatory activity slowed. The segment’s adjusted EBITDA margin fell to 7.4% in the second quarter of 2025 from 19.2% in the prior year quarter. The business reduced billable headcount by 7.9% compared to the prior year quarter, reflecting the impact of segment-specific challenges.
The Technology unit, which offers digital risk and electronic discovery services, generated $83.6 million in GAAP revenue, a decline of 27.9%. Lower demand for “second request” projects -- specialized reviews required in merger reviews -- drove the weakness, tied to a broader lull in merger activity. Adjusted EBITDA for Technology was $5.3 million in the second quarter of 2025, down from $20.9 million in the prior year quarter, highlighting the challenge of covering fixed costs as revenue falls. Headcount was trimmed slightly, but the segment is also continuing to invest in emerging areas such as artificial intelligence and digital assets, aiming for growth over the longer term.
Strategic Communications, which helps clients with reputation management and regulatory communications, delivered strong growth, with revenue up 20.8% to $102.7 million. Pass-through revenue -- money billed to clients for third-party services -- increased by $8.4 million, contributing a significant share of this gain. Adjusted EBITDA rose 59% to $18.5 million, and Adjusted EBITDA margin for Strategic Communications was 18.0% in the second quarter of 2025, up from 13.7% in the prior year quarter. However, billable headcount in this group decreased 8.2% sequentially, a sign of cost controls or shifting resource needs. Management noted that growth in this segment was driven by rising demand for corporate reputation and challenging market environments, but that pass-through revenue typically earns lower profit margins.
Balance Sheet, Cash Flow, and Capital Actions
Notably, FTI Consulting generated far less cash from operations, with $55.7 million (GAAP) provided versus $135.2 million (GAAP) in Q2 2024. The drop in net cash provided by operating activities was primarily due to higher forgivable loan issuances, which are financial incentives to attract or retain key professionals, as well as higher payments for compensation and income tax. This use of cash, while aimed at strengthening talent and future capabilities, led to net debt climbing to $317.2 million at June 30, 2025 from a net cash position of $166.4 million at June 30, 2024. The company also spent $354.9 million on share repurchases, buying back 2,192,333 shares at an average price of $161.88 per share. Remaining share repurchase authorization totaled $309.3 million as of June 30, 2025.
Total liabilities (GAAP) rose to $1.59 billion as of June 30, 2025, reflecting both increased long-term debt and commitments tied to retaining experts. Operating margin for the company was 10.5% in the second quarter of 2025. Adjusted EBITDA margin narrowed to 11.8% from 12.2%, reflecting increased costs in segments facing lower demand, especially Economic Consulting and Technology.
Looking Ahead: Guidance and What to Watch
Management updated its financial guidance for FY2025. Revenue (GAAP) is now expected to be between $3.66 billion and $3.76 billion, essentially flat compared to last year’s $3.70 billion in GAAP revenue for FY2024. The full-year GAAP earnings per share range is $7.24 to $7.84, with adjusted earnings per share, which excludes special charges, forecast between $7.80 and $8.40 (non-GAAP). The company noted the gap between reported and adjusted EPS is due mostly to $0.73 in special charges, partly offset by a tax benefit. The updated range remains broad, with management pointing out that continued weakness in Economic Consulting and Technology could mean overall adjusted EPS declines for the first time in a decade, based on full-year 2025 guidance.
Looking forward, investors may want to monitor several areas. The outlook for segments that have recently struggled is uncertain, particularly given ongoing low activity in M&A and regulatory-driven consulting work, as discussed by management in recent earnings commentary. Cash flow and leverage are now bigger areas of focus, following substantial share repurchases and forgivable loan spending.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
