FCN Q2 Deep Dive: Segment Divergence and Investment in Talent Shape Outlook

Business advisory firm FTI Consulting (NYSE:FCN) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, but sales were flat year on year at $943.7 million. The company’s full-year revenue guidance of $3.71 billion at the midpoint came in 1.1% above analysts’ estimates. Its GAAP profit of $2.13 per share was 27.1% above analysts’ consensus estimates.

Is now the time to buy FCN? Find out in our full research report (it’s free).

StockStory’s Take

FTI Consulting’s second quarter results drew a positive market response as the company delivered solid performance despite flat year-over-year sales and notable headwinds. Management cited ongoing challenges in the Technology and Economic Consulting segments, with CEO Steven Gunby highlighting the impact of fewer large M&A deals and regulatory shifts affecting antitrust work. Conversely, Corporate Finance & Restructuring and Strategic Communications reached new highs, buoyed by increased demand for restructuring services and corporate reputation work. Gunby emphasized, “We are having a solid year, not only while fighting off the headwinds but while reinvesting in our businesses that we believe in.”

Looking to the remainder of the year, management’s guidance is underpinned by expectations of gradual improvement in certain challenged segments, ongoing investment in hiring, and the strength of diversified service lines. CFO Ajay Sabherwal noted that Technology and Economic Consulting are likely to remain under pressure, but expressed confidence in the resilience of FTI Consulting’s business model and the potential recovery of EBITDA margins. Gunby added that the firm’s commitment to attracting top talent and expanding expertise positions the company to capitalize on future market opportunities, stating, “If we can have this solid a year in the face of all the headwinds we faced this year, while at the same time, reinvesting in the businesses that we believe in, doesn’t that speak to the amazing strength of this institution?”

Key Insights from Management’s Remarks

Management attributed second quarter performance to strong execution in select business lines and resilience amid sector-specific downturns, while reaffirming ongoing investments despite short-term impacts on profitability.

• Technology segment headwinds: The Technology business faced notable declines due to fewer large merger investigations and regulatory changes reducing demand for second request services, which are special regulatory reviews in M&A processes. Management does not expect a near-term rebound in this area.
• Economic Consulting under pressure: The Compass Lexecon business saw a significant drop in earnings as antitrust work slowed, particularly in Europe and the U.S. Management indicated that recent hiring of high-profile academic talent will likely benefit the segment in the long run, despite short-term drag on profitability.
• Corporate Finance & Restructuring momentum: This segment achieved record results, driven by high demand for restructuring and transaction services, especially in industries affected by tariffs and liability management exercises. The company’s global footprint and sector specialization contributed to these gains.
• Forensic & Litigation Consulting (FLC) performance: FLC continued to outperform, with growth in financial services and cybersecurity practices counterbalancing a slowdown in federal enforcement actions related to anti-corruption. State-level regulatory scrutiny and ongoing internal compliance work sustained demand.
• Strategic Communications growth: The Strategic Communications business recorded its best quarter to date, supported by increased demand for crisis communications and cybersecurity response services as clients faced reputational and operational risks.

Drivers of Future Performance

Management expects the rest of the year to be shaped by continued investment in talent, stabilization in challenged segments, and persistent macroeconomic and regulatory uncertainty.

• Talent acquisition and integration: The company is actively hiring senior professionals and academic experts, particularly in Economic Consulting. While this strategy may weigh on near-term margins, management believes it will strengthen competitive positioning and drive future growth.
• Restructuring and crisis-driven demand: Corporate Finance & Restructuring and Strategic Communications are set to benefit from ongoing economic volatility, industry-specific pressures, and heightened demand for crisis management and turnaround expertise.
• Ongoing regulatory headwinds: Shifts in regulatory enforcement, especially regarding M&A and antitrust, are likely to keep pressure on Technology and Economic Consulting. Management anticipates these headwinds will persist into the second half, but expects gradual improvement as market dynamics adjust.

Catalysts in Upcoming Quarters

Looking ahead, our analyst team will be monitoring (1) the pace at which new senior and academic hires contribute to revenue growth, (2) stabilization or recovery in Technology and Economic Consulting as regulatory and market dynamics evolve, and (3) sustained strength in restructuring and strategic communications demand amid ongoing macroeconomic uncertainty. The impact of regulatory trends and talent investments on margins will remain key indicators of execution.

FTI Consulting currently trades at $173.49, up from $167.53 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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