Charles River Associates Q2 Earnings Call Highlights

Key Points

• Record Q2 performance: Revenue rose 12.8% year over year to $210.8 million, while non-GAAP EPS increased 14.9% and EBITDA grew 15.3%. Growth was broad-based, with eight practices representing 95% of revenue posting year-over-year gains.
• Strong demand and international expansion: International revenue surged 32.9% organically, while project lead flow and originations each grew at double-digit rates. Utilization improved to 77%, and CRA plans to increase headcount at a mid-single-digit pace by year-end.
• Raised outlook and expanded financing: CRA increased its fiscal 2026 constant-currency revenue forecast to $805 million-$820 million while maintaining its 12%-13% EBITDA margin target. The company also expanded its credit facility to $400 million and returned $31.4 million to shareholders during the quarter.

Charles River Associates NASDAQ: CRAI reported record second-quarter revenue and profit metrics, citing broad-based growth across its consulting portfolio, higher utilization and continued strength in its pipeline of new projects.

Revenue for the second quarter of fiscal 2026 was $210.8 million, up 12.8% from a year earlier and the highest quarterly revenue in the company’s history, President and Chief Executive Officer Paul Maleh said on the company’s earnings call. Eight practices, representing 95% of quarterly revenue, grew year over year. Energy, Finance, Forensic Services, Intellectual Property, Life Sciences, and Risk, Investigations & Analytics posted double-digit revenue growth, while Antitrust & Competition Economics recorded a quarterly revenue high.

North American revenue increased 8.7%, while international revenue rose 32.9%. Maleh said the international performance was driven primarily by Life Sciences and Antitrust & Competition Economics and was entirely organic rather than the result of acquisitions or group hires.

Profitability, staffing and pipeline

The company said non-GAAP net income increased 9% year over year, while non-GAAP diluted earnings per share rose 14.9% and EBITDA increased 15.3%, resulting in what Maleh described as CRA’s highest second-quarter profits on record.

Consultant headcount reached 968 at quarter-end, up 3.3% from 937 a year earlier. The total included 161 officers, 581 other senior staff and 226 junior staff. Utilization increased to 77% from 76% in the prior-year quarter.

Maleh said average weekly project lead flow and new project originations each posted double-digit growth compared with the second quarter of 2025. He said the company had spent 2024 and 2025 reallocating capacity toward higher-growth parts of the portfolio and has returned to net hiring in 2026. CRA expects to expand headcount at a mid-single-digit rate by year-end if attrition remains consistent, he said.

Non-GAAP selling, general and administrative expense, excluding commissions paid to nonemployee experts, was 15.5% of revenue, down from 16.3% a year earlier. The company’s non-GAAP effective tax rate was 32.6%, compared with 29.0% in the prior-year quarter. CFO Eric Nierenberg said CRA expects a 33% to 34% tax rate for the remainder of 2026 and a full-year range of 32% to 33%.

Practice-level performance

Legal & Regulatory services revenue rose 10.1%. Maleh pointed to broader legal-market trends, including an 11% increase in total case filings and a 5% increase in total court judgments from the second quarter of 2025.

The Antitrust & Competition Economics practice delivered its sixth consecutive record quarter amid strong merger activity. Maleh said worldwide M&A activity reached $2.85 trillion in the first half of 2026, up 50% year over year, with the second quarter’s $1.6 trillion total representing a quarterly record. CRA advised Fivetran on competition and regulatory compliance matters in the U.S. related to its merger with dbt Labs, which closed June 1.

Forensic Services revenue grew more than 20% and established a quarterly record, according to Maleh. He said demand included crisis-management work, including a response to an outage affecting more than 8,000 universities using Canvas software. During the question-and-answer session, Maleh said the practice is also seeing a surge in cyber incident-response work as hackers increasingly use artificial intelligence tools.

Risk, Investigations & Analytics also grew more than 20%, while Energy and Life Sciences each grew more than 20%. The Energy practice was selected by PJM for a multiyear engagement to develop enhanced data-center load forecasts and continued advising utilities, data-center developers and major energy users. Maleh said utilities are facing substantial change tied to distributed energy resources and rising data-center power demand.

In Life Sciences, CRA supported pharmaceutical clients on research and development opportunities, global launch strategy, value propositions and message testing. Maleh said the practice’s demand has been sustained across pricing and market-access work as well as litigation-related matters.

Raised revenue outlook and capital deployment

For the first half of fiscal 2026, CRA generated constant-currency revenue of $408.8 million and non-GAAP EBITDA of $49.7 million, for a 12.2% margin. Based on its first-half results and pipeline, the company raised its full-year constant-currency revenue outlook to $805 million to $820 million from a prior range of $785 million to $805 million. It reaffirmed its full-year non-GAAP EBITDA margin guidance of 12.0% to 13.0%.

The company said currency effects are expected to reduce reported annual revenue by roughly $2.5 million and annual EBITDA by less than $250,000. CRA also noted that fiscal 2026 is a 52-week year, compared with a 53-week fiscal 2025. Maleh said the extra week in the fourth quarter of 2025 had an estimated 100- to 150-basis-point impact on year-over-year growth comparisons.

Chief Corporate Development Officer Chad Holmes said CRA ended the quarter with $21.4 million in cash, $219 million of revolving-credit borrowings and net debt of $197.6 million. The company returned $31.4 million to shareholders during the quarter through $3.6 million in dividends and $27.8 million in repurchases of about 193,000 shares at an average price of $144 per share.

CRA also announced an expanded five-year credit facility with aggregate borrowing capacity of up to $400 million, including a $75 million term loan and a $325 million revolving credit facility. Holmes said the arrangement replaces a facility scheduled to mature in August 2027 and provides added flexibility for working-capital needs and future growth.

About Charles River Associates (NASDAQ:CRAI)

Charles River Associates NASDAQ: CRAI is a global consulting firm specializing in economic, financial and management advisory services. Founded in 1965 and headquartered in Boston, Massachusetts, the company provides expert analysis to support litigation, regulatory proceedings, and strategic decision-making. Its multidisciplinary teams draw on academic rigor and industry experience to deliver quantitative and qualitative insights tailored to clients' needs.

The firm's service offerings include competition economics, antitrust and merger analysis, intellectual property valuation and damages assessment, and risk management.

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