Record Revenue, Earnings Miss
FTI Consulting Achieves Record Q2 Revenue But Misses EPS Amid Rising Costs
Anonymous
Key Points
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Strategic communications revenues fell 2.6% in Q2 to $100 million, largely due to a $7.4 million decline in pass-through revenues; excluding pass-throughs, the PR segment grew 5.4% as demand for corporate reputation services rose.
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H1 PR revenues rose 7.1% to $202 million and gross profit jumped 15.8%, with management attributing the performance to multi-year investments in cybersecurity, activism, public affairs, digital capabilities and deep sector expertise.
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Adjusted EBITDA declined to $104.5 million (10.5% margin) in Q2 despite record revenue, as higher direct costs and SG&A rose, including $6.6 million in extraordinary litigation expenses.
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The company bought back 2.6 million shares for $390.9 million in the quarter and expanded its revolver from $900 million to $1.5 billion to increase financial flexibility.
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AI is highlighted as a growth catalyst for FTI, enabling both new high-stakes litigation/regulatory work and the handling of massive data volumes, while UK timing issues and Middle East geopolitical disruption add ongoing uncertainty to the outlook.
FTI Consulting posted record quarterly revenue of $993.5 million in Q2 2026, a 5.3% jump from a year ago, according to Yahoo Finance. But the milestone came with a catch: the company earned $2.16 per share, missing Wall Street's consensus estimate of $2.26, sending shares lower after the report.
Adjusted EBITDA fell to $104.5 million, pushing the margin down to 10.5%, as higher costs and $6.6 million in one-time litigation expenses ate into profits, Seeking Alpha noted. Net income dropped year over year even as revenue hit an all-time high.
Record Revenue Masked by Rising Costs and Litigation Charges
Corporate Finance, Technology, and global restructuring all drove the revenue record, according to Yahoo Finance. But those gains were offset by climbing direct costs and higher selling, general, and administrative expenses. The $6.6 million in extraordinary litigation costs alone were a key drag on the quarter's bottom line.
Management reaffirmed full-year revenue guidance of $3.94 billion to $4.10 billion. However, the company lowered its GAAP earnings per share forecast to a range of $8.70 to $9.30, citing ongoing cost pressures and geopolitical disruptions in certain regions, Yahoo Finance reported.
PR Revenues Dip on Pass-Through Decline, But Core Business Grows
Strategic communications revenue fell 2.6% in Q2 to $100 million. The drop traced almost entirely to a $7.4 million decline in pass-through revenues — money the firm collects and then pays directly to third parties like media outlets. Strip those out, and the PR segment actually grew 5.4%, driven by rising demand for corporate reputation services, O'Dwyer PR reported.
The first half of 2026 told a stronger story for the PR unit. H1 revenues rose 7.1% to $202 million, and gross profit jumped 15.8%. Management credited multi-year investments in cybersecurity, activism defense, public affairs, and digital capabilities for the performance, according to O'Dwyer PR.
FTI Bets Big on AI While Geopolitics Cloud the Outlook
FTI highlighted artificial intelligence as a major growth driver. The firm says AI is helping it win high-stakes litigation and regulatory work while also letting it process massive volumes of data faster and cheaper. That positions the company to take on bigger, more complex cases, GuruFocus noted.
At the same time, management flagged uncertainty from two directions: timing delays on projects in the UK, and geopolitical disruption in the Middle East. Both regions are adding unpredictability to the company's near-term outlook, according to Yahoo Finance.
Company Spends $391 Million on Buybacks and Expands Credit Line
FTI made aggressive moves to return cash to shareholders and shore up its finances. The company bought back 2.6 million shares for $390.9 million in the quarter alone. It also expanded its revolving credit facility from $900 million to $1.5 billion to give itself more financial flexibility, Seeking Alpha reported.
The buyback signals confidence in the long-term business even as near-term margins face pressure. With record revenue on the board and guidance held steady on the top line, FTI is betting that cost headwinds are temporary and that AI-driven demand will lift results in the quarters ahead.
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