FTI Consulting NYSE: FCN reported first-quarter 2026 revenue growth driven by strength in Corporate Finance, Strategic Communications, and Technology, while Economic Consulting posted a decline tied to weaker antitrust demand. Executives also reiterated full-year guidance as the firm works through a multi-quarter turnaround at Compass Lexecon and continues investing in senior talent hires.
Quarterly results: revenue up 9.5%, margins pressured by costs
Interim Chief Financial Officer and Chief Strategy and Transformation Officer Paul Linton said first-quarter 2026 revenues rose to $983.3 million, up $85.1 million, or 9.5%, from the prior-year period. Excluding an estimated positive foreign exchange impact, revenue increased 6.8%.
Net income fell to $57.6 million from $61.8 million a year earlier, which Linton attributed primarily to higher direct costs and SG&A expenses, as well as higher interest expense and a higher effective tax rate. Adjusted EBITDA was $96.8 million (9.8% of revenues) versus $116.2 million (12.8%) in the prior-year quarter.
Direct costs increased to $676.5 million from $608.9 million, which Linton said reflected higher compensation expenses including variable compensation, salaries, and forgivable loan amortization. SG&A rose to $222.3 million (22.6% of revenues) from $184.3 million (20.5%), driven largely by higher legal expenses versus the prior-year quarter, which had benefited from legal settlements that did not recur, as well as higher compensation and travel and entertainment costs.
The effective tax rate was 26.6% versus 23.3% a year ago. Linton said the increase was primarily due to “a less favorable tax benefit related to share-based compensation” and an increase in valuation allowance recorded against current period losses. Despite the first-quarter rate, management maintained its expectation for a full-year tax rate between 22% and 24%.
Earnings per share were $1.90 compared to $1.74 in the prior-year quarter. Linton noted that first-quarter 2025 EPS included a $25.3 million special charge related to severance and other employee-related costs that reduced GAAP EPS by $0.55; excluding that charge, adjusted EPS was $2.29 in the year-ago period.
Segment performance: Corporate Finance surge; Strategic Communications posts another record
Corporate Finance was the largest contributor to growth. Linton said segment revenues increased 19.2% to $409.5 million, driven by higher demand and realized bill rates across all three sub-businesses:
- Turnaround and restructuring: revenue up 19%
- Transactions: revenue up 18%
- Transformation: revenue up 20%
Linton attributed restructuring growth to work on large bankruptcies globally, citing engagements including Spirit Airlines and Saks in the U.S., Prax Oil Refinery in the U.K., and Azul Airlines in Brazil. In transactions, he said deal work expanded “in size and scope” across the lifecycle, including assignments tied to Omnicom’s merger with IPG, Skyworks Solutions’ merger with Qorvo, and Lumen’s sale of its fiber-to-home business to AT&T.
Transformation outperformed internal expectations, according to Linton, who said the number of $1 million-plus engagements nearly doubled versus the year-ago quarter. Corporate Finance adjusted segment EBITDA was $88.7 million (21.6% margin) compared to $55.9 million (16.3%).
Strategic Communications delivered “yet another record quarter,” as CEO Steve Gunby described it. Linton reported segment revenue of $103.0 million, up 18.4%, reflecting higher demand for corporate reputation, public affairs, and financial communications. Adjusted segment EBITDA was a record $21.9 million (21.3% margin) compared with $12.9 million (14.8%) a year earlier. Linton said the performance reflected multi-year investments to build “higher-margin, event-driven offerings” such as crisis, cyber, transactions, and activism, along with cross-segment teaming on large global matters.
FLC steady on revenue but profitability down; Technology grows amid AI-related demand
In the Forensic and Litigation Consulting (FLC) segment, revenue increased 1.2% to $192.9 million. Linton said higher realized bill rates in risk investigations and construction solutions were partly offset by lower demand for dispute advisory services. However, adjusted segment EBITDA declined to $25.3 million (13.1% margin) from $37.5 million (19.7%), driven by higher compensation and SG&A, including hiring-related expenses and higher bad debt.
Linton said FLC underperformed management’s expectations, calling some of the weakness timing-related given the “large and lumpy” nature of headline matters that can have “starts and stops” often outside the firm’s control.
Technology segment revenues increased 5.3% to $102.3 million, driven by demand for litigation and for information governance, privacy, and security services, partially offset by lower demand for investigations and M&A-related second request work. Linton said privacy and security demand was influenced by a large privacy breach, and he emphasized the firm’s positioning at the intersection of data, regulation, and AI, noting that leading AI companies are turning to FTI on matters ranging from IP and copyright to privacy and security, as well as custom defensible tools and workflows.
Economic Consulting: antitrust softness and Compass Lexecon turnaround remains a focus
Economic Consulting revenue declined 2.3% to $175.6 million, as lower demand for antitrust services outweighed higher demand for financial economic services and higher realized bill rates. The segment posted an operating loss of $7.3 million and an adjusted segment EBITDA loss of $5.9 million, compared with positive adjusted segment EBITDA of $14.4 million a year earlier. Linton attributed the decline to higher compensation, largely tied to increased forgivable loan amortization, and lower bills.
While management said progress has been made in Europe, Linton said the firm is “just beginning to rebuild” the North American complex antitrust revenue base. Gunby later told analysts the primary U.S. challenge has been in “more routine standard merger clearance cases,” while he characterized the firm as continuing to win large antitrust litigation matters and maintaining leadership in its finance practice.
Cash flow, buybacks, leverage, and outlook
FTI used $310.0 million in operating cash flow during the quarter, compared with $465.2 million in the prior-year quarter, which Linton said reflected lower forgivable loan issuances, higher collections, and lower income tax payments, partially offset by higher compensation payments. He noted that the first quarter typically includes the bulk of annual bonus payments.
The firm repurchased 787,098 shares at an average price of $161.11 for a total cost of $126.8 million. As of March 31, 2026, $354.9 million remained under the share repurchase program. Total debt net of cash was $556.7 million, up from $99.9 million at year-end 2025, which Linton attributed sequentially to bonus payments and repurchases.
Management maintained its February guidance for 2026 revenue of $3.94 billion to $4.10 billion and EPS of $8.90 to $9.60. Linton said the outlook reflects several considerations, including that Economic Consulting adjusted segment EBITDA “has hit its low point this quarter,” but Compass Lexecon has “multiple quarters of work ahead” to restore profitability. He also reiterated the event-driven nature of the business and noted a strong start to the year for M&A deal volume and mega-deals, while cautioning that activity could change amid uncertainty.
On hiring, Linton said the firm expects to continue investing in talent and has announced 29 SMD and affiliate hires year-to-date in geographies including Australia and the Middle East and in adjacencies including transactions, transformation, public affairs, cybersecurity, data privacy, and AI. Gunby told analysts that second-half junior hiring is intended to support the influx of senior hires and maintain leverage ratios.
Linton also said the company expects 2026 SG&A expense to be approximately $60 million higher than 2025, largely due to legal and compensation expenses, with the second quarter expected to be the high point for SG&A, roughly $5 million higher than Q1, reflecting the firm’s all-SMD meeting in April.
Finally, Linton welcomed incoming CFO Angela Nam, who he said will join on May 1.
About FTI Consulting NYSE: FCN
FTI Consulting, Inc is a global business advisory firm providing multidisciplinary solutions designed to address complex challenges and strategic opportunities. The company's primary service offerings encompass corporate finance & restructuring, economic consulting, forensic & litigation consulting, strategic communications, and technology. These capabilities enable clients to manage financial distress, navigate regulatory environments, resolve disputes, build trust with stakeholders, and leverage data-driven insights.
In its corporate finance & restructuring practice, FTI delivers restructuring, interim management, and transaction advisory services to companies facing operational or financial pressures.
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