FTI Consulting, Inc: Form 10-Q for the period ended Sep 30, 2025

The following is a discussion and analysis of our consolidated financial condition, results of operations, and liquidity and capital resources for the three and nine months ended September 30, 2025 and 2024, and significant factors that could affect our prospective financial condition and results of operations. This discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes and with our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”). In addition to historical information, the following discussion includes forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, these expectations or any of the forward-looking statements could prove to be incorrect, and actual results could differ materially from those projected or assumed in the forward-looking statements.

BUSINESS OVERVIEW

FTI Consulting, Inc., including its consolidated subsidiaries (collectively, the “Company,” “we,” “our” or “FTI Consulting”), is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. Individually, each of our segments and practices is staffed with experts recognized for the depth of their knowledge and a track record of making an impact. Collectively, FTI Consulting offers a comprehensive suite of services designed to assist clients across the business cycle, from proactive risk management to rapid response to unexpected events and dynamic environments.

We report financial results for the following five reportable segments:

Our Corporate Finance & Restructuring (“Corporate Finance”) segment focuses on the strategic, operational, financial, transactional and capital needs of our clients around the world. Our clients include companies, boards of directors, investors, private equity sponsors, lenders, and other financing sources and creditor groups, as well as other parties-in-interest and governments. We deliver a wide range of services centered around three core offerings: Transactions, Transformation & Strategy and Turnaround & Restructuring.

Our Forensic and Litigation Consulting (“FLC”) segment provides law firms, companies, boards of directors, government entities, private equity firms and other interested parties with a multidisciplinary and independent range of services across investigations and disputes, supported by our data & analytics technology-enabled solutions, with a focus on highly regulated industries. Our services are centered around five core offerings: Construction, Projects & Assets and Environmental Solutions, Data & Analytics, Disputes, Healthcare Risk Management & Advisory and Risk and Investigations, which includes our cybersecurity and financial services-related offerings.

Our Economic Consulting segment, including subsidiary Compass Lexecon LLC, provides law firms, companies, government entities and other interested parties with analyses of complex economic issues for use in international arbitration, legal and regulatory proceedings and strategic decision making and public policy debates around the world. We deliver a wide range of services centered around three core offerings: Antitrust & Competition Economics, Financial Economics and International Arbitration.

Our Technology segment provides companies, law firms, private equity firms and government entities with a comprehensive global portfolio of digital insights and risk management consulting and data services. Our professionals help organizations better address risk as the growing volume and variety of enterprise and emerging data intersects with legal, regulatory and compliance needs. We deliver a wide range of expert and analytics-powered solutions driven by investigations, litigation, antitrust and competition, mergers & acquisitions (“M&A”), restructuring and compliance and risk through three core offerings: Corporate Legal Department Consulting, E-discovery and Analytics Services and Expertise, and Information Governance, Privacy & Security Services.

Our Strategic Communications segment develops and executes communications strategies to help management teams, boards of directors, law firms, governments and regulators manage change and mitigate risk surrounding transformational and disruptive events, including transactions, investigations, disputes, crises, regulation and legislation. We deliver a wide range of services centered around three core offerings: Corporate Reputation, Financial Communications and Public Affairs.

We derive substantially all of our revenues from providing professional services to both U.S. and international clients. Most of our services are rendered under time and expense contract arrangements, which require the client to pay us based on the number of hours worked at contractually agreed-upon rates. Under this arrangement, we typically bill our clients for reimbursable expenses, including those relating to travel, out-of-pocket expenses, outside consultants and other outside service costs. Certain contracts are rendered under fixed-fee arrangements, which require the client to pay a fixed fee in exchange for a predetermined set of professional services. Fixed-fee arrangements may require certain clients to pay us a recurring retainer. Our contract arrangements may also contain success fees or performance-based arrangements in which our fees are based on the attainment of contractually defined objectives with our client. This type of success fee may supplement a time and expense or fixed-fee arrangement. Success fees and other contractual terms may cause variations in our revenues and operating results due to the timing of when achieving the performance-based criteria becomes probable. Seasonal factors, such as the timing of our employees’ and clients’ vacations and holidays, may impact the timing of our revenue recognition across our segments.

In our Technology segment, certain clients are billed based on the amount of data storage used or the volume of information processed. Unit-based revenues are defined as revenues billed on a per item, per page or another unit-based method and include revenues from data processing and hosting. Unit-based revenues include revenues associated with licensed software products made available to customers via a web browser (“on-demand”). On-demand revenues are charged on a unit or monthly basis and include, but are not limited to, processing and review related functions.

Our financial results are primarily driven by:

• the number, size and type of engagements we secure;
• the number of billable professionals;
• the utilization rates of the billable professionals we employ;
• the rate per hour or fixed charges we charge our clients for services;
• the timing of revenue recognition;
• the length of the billing and collection cycles; and
• the geographic locations of our clients or locations in which services are rendered.

We define acquisition growth as revenues of acquired companies in the first 12 months following the effective date of an acquisition. When significant, we identify the impact of acquisition-related revenue growth.

When significant, we identify the estimated impact of foreign currency (“FX”) driven by our businesses with functional currencies other than the U.S. dollar (“USD”). The estimated impact of FX on the period-to-period performance results is calculated as the difference between the prior period results, multiplied by the average FX exchange rates to USD in the current period and the prior period results, multiplied by the average FX exchange rates to USD in the prior period.

Non-GAAP Financial Measures

In the accompanying analysis of financial information, we sometimes use information derived from consolidated and segment financial information that may not be presented in our financial statements or prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Certain of these financial measures are considered not in conformity with GAAP (“non-GAAP financial measures”) under the SEC rules. Specifically, we have referred to the following non-GAAP financial measures:

• Total Segment Operating Income
• Adjusted Segment EBITDA
• Total Adjusted Segment EBITDA
• Adjusted EBITDA
• Adjusted EBITDA Margin
• Adjusted Net Income
• Adjusted Earnings per Diluted Share
• Free Cash Flow

We have included the definition of Segment Operating Income (Loss), which is a GAAP financial measure, below in order to more fully define the components of certain non-GAAP financial measures in the accompanying analysis of financial information.

We define Segment Operating Income (Loss) as a segment’s share of consolidated operating income. We define Total Segment Operating Income, which is a non-GAAP financial measure, as the total of Segment Operating Income (Loss) for all segments, which excludes unallocated corporate expenses. We use Segment Operating Income (Loss) for the purpose of calculating Adjusted Segment EBITDA, which is a non-GAAP financial measure. We define Adjusted Segment EBITDA as Segment Operating Income (Loss) before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. We use Adjusted Segment EBITDA as a basis to internally evaluate the financial performance of our segments because we believe it reflects core operating performance and provides an indicator of the segment’s ability to generate cash. We define Total Adjusted Segment EBITDA, which is a non-GAAP financial measure, as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses.

We define Adjusted EBITDA, which is a non-GAAP financial measure, as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, gain or loss on sale of a business and losses on early extinguishment of debt. We define Adjusted EBITDA Margin, which is a non-GAAP financial measure, as Adjusted EBITDA as a percentage of total revenues. We believe that these non-GAAP financial measures, when considered together with our GAAP financial results and GAAP financial measures, provide management and investors with a more complete understanding of our operating results, including underlying trends. In addition, EBITDA is a common alternative measure of operating performance used by many of our competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in our industry. Therefore, we also believe that these non-GAAP financial measures, considered along with corresponding GAAP financial measures, provide management and investors with useful supplemental information.

We define Adjusted Net Income and Adjusted Earnings per Diluted Share (“Adjusted EPS”), which are non-GAAP financial measures, as net income and earnings per diluted share (“EPS”), respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, the gain or loss on sale of a business and losses on early extinguishment of debt. We use Adjusted Net Income for the purpose of calculating Adjusted EPS. Management uses Adjusted EPS to assess total Company operating performance on a consistent basis. We believe that these non-GAAP financial measures, when considered together with our GAAP financial results and GAAP financial measures, provide management and investors with useful supplemental information on our business operating results, including underlying trends.

We define Free Cash Flow, which is a non-GAAP financial measure, as net cash provided by (used in) operating activities less cash payments for purchases of property and equipment. We believe this non-GAAP financial measure, when considered together with our GAAP financial results, provides management and investors with useful supplemental information on the Company’s ability to generate cash for ongoing business operations and capital deployment.

Non-GAAP financial measures are not defined in the same manner by all companies and may not be comparable with other similarly titled measures of other companies. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flows. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included elsewhere in this report.

EXECUTIVE HIGHLIGHTS

(dollar amounts in thousands, except per share data)

(dollar amounts in thousands, except per share data)

(1) Excluded from non-GAAP financial measures, including Adjusted EBITDA and Adjusted EPS

Third Quarter 2025 Executive Highlights

Revenues

Revenues for the three months ended September 30, 2025 increased $30.1 million, or 3.3%, compared to the three months ended September 30, 2024, which included a 1.1% estimated positive impact from FX. Excluding the estimated impact from FX, revenues increased $19.8 million, or 2.1%, compared to the three months ended September 30, 2024, due to higher revenues in our Corporate Finance, FLC and Strategic Communications segments, which was partially offset by lower revenues in our Economic Consulting and Technology segments.

Net income

Net income for the three months ended September 30, 2025 increased $16.4 million, or 24.6%, compared to the three months ended September 30, 2024. The increase in net income was primarily due to higher revenues, lower selling, general and administrative (“SG&A”) expenses, and an FX remeasurement gain compared to a loss in the same quarter in the prior year. This was partially offset by an increase in direct costs, including higher variable compensation and forgivable loan amortization expenses, as well as a higher income tax provision and an increase in interest expense.

Adjusted EBITDA

Adjusted EBITDA for the three months ended September 30, 2025 increased $27.6 million, or 26.8%, compared to the three months ended September 30, 2024. Adjusted EBITDA Margin of 13.7% for the three months ended September 30, 2025 compared to 11.1% for the three months ended September 30, 2024. The increase in Adjusted EBITDA was primarily due to higher revenues and lower SG&A expenses, which was partially offset by an increase in direct costs, including higher variable compensation and forgivable loan amortization expenses.

EPS and Adjusted EPS

EPS for the three months ended September 30, 2025 increased $0.75 to $2.60 compared to $1.85 for the three months ended September 30, 2024. The increase in EPS was primarily due to higher net income as described above, as well as a decrease in diluted weighted average shares outstanding.

Adjusted EPS was equal to EPS for the three months ended September 30, 2025 and 2024, respectively.

Liquidity and Capital Allocation

Net cash provided by operating activities for the three months ended September 30, 2025 decreased $17.5 million, or 8.0%, to $201.9 million compared to $219.4 million for the three months ended September 30, 2024. The decrease in net cash provided by operating activities was primarily due to lower cash collections and an increase in income tax payments, which was partially offset by lower operating expenses. Days sales outstanding (“DSO”) of 102 days at September 30, 2025 compared to 108 days at September 30, 2024.

Free Cash Flow was an inflow of $187.0 million and $212.3 million for the three months ended September 30, 2025 and 2024, respectively. The decrease in Free Cash Flow was primarily due to lower net cash provided by operating activities, as described above, and higher net cash used for purchases of property and equipment.

During the three months ended September 30, 2025, we made $234.2 million in payments for common stock repurchases under the Repurchase Program.

Recent Legislation

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA is expected to have immaterial impacts on the current and future year cash flows and effective tax rate.

Headcount

The following table includes the net headcount additions (reductions) by segment and in total for the nine months ended September 30, 2025.

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RESULTS OF OPERATIONS

Segment and Consolidated Operating Results:

(in thousands, except per share data)

(in thousands, except per share data)

Reconciliation of Net Income to Adjusted EBITDA:

(in thousands)

(in thousands)

22

Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS:

(in thousands, except per share data)

(in thousands, except per share data)

Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow:

(in thousands)

(in thousands)

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

Revenues and operating income

See “Segment Results” for an expanded discussion of revenues, gross profit and SG&A expenses.

Unallocated corporate expenses

Unallocated corporate expenses decreased $4.3 million, or 10.8%, to $35.1 million for the three months ended September 30, 2025, primarily due to lower compensation expenses, which was partially offset by higher expenses for corporate initiatives.

Interest income and other

Interest income and other, which includes FX gains and losses, increased $2.6 million to a $1.7 million gain for the three months ended September 30, 2025 compared to a $0.9 million loss for the three months ended September 30, 2024. The increase was primarily due to a $0.6 million FX gain for the three months ended September 30, 2025 compared to a $2.5 million FX loss for the three months ended September 30, 2024.

FX gains and losses, both realized and unrealized, relate to the remeasurement or settlement of monetary assets and liabilities that are denominated in a currency other than an entity’s functional currency. These monetary assets and liabilities include cash, as well as third-party and intercompany receivables and payables.

Interest expense

Interest expense increased $6.4 million to $7.6 million for the three months ended September 30, 2025 compared to $1.2 million for the three months ended September 30, 2024, primarily due to higher borrowings on our senior unsecured bank revolving credit facility (“Credit Facility”).

Income tax provision

Our income tax provision increased $6.6 million, or 29.5%, to $28.9 million for the three months ended September 30, 2025 compared to $22.3 million for the three months ended September 30, 2024. Our effective tax rate of 25.9% for the three months ended September 30, 2025 compared to 25.1% for the three months ended September 30, 2024. The increase in the income tax provision was primarily due to an increase in income before income tax provision as compared to the three months ended September 30, 2024.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Revenues and operating income

See “Segment Results” for an expanded discussion of revenues, gross profit and SG&A expenses.

Unallocated corporate expenses

Unallocated corporate expenses decreased $27.1 million, or 22.3%, to $94.6 million for the nine months ended September 30, 2025, primarily due to legal settlement gains and lower compensation expenses, which was partially offset by higher expenses for corporate initiatives.

Interest income and other

Interest income and other, which includes FX gains and losses, decreased $0.1 million, or 4.5%, to $2.5 million for the nine months ended September 30, 2025.

Interest expense

Interest expense increased $7.6 million, or 122.3%, to $13.9 million for the nine months ended September 30, 2025, primarily due to higher borrowings on our Credit Facility, which was partially offset by lower interest rates on our borrowings.

Income tax provision

Our income tax provision increased $7.3 million, or 12.1%, to $67.9 million for the nine months ended September 30, 2025 compared to $60.6 million for the nine months ended September 30, 2024. Our effective tax rate of 23.9% for the nine months ended September 30, 2025 compared to 20.8% for the nine months ended September 30, 2024. The increase in the income tax provision was primarily due to a higher effective tax rate, which was partially offset by a decrease in income before income tax provision. The effective tax rate for the nine months ended September 30, 2025 was impacted by a less favorable tax benefit related to share-based compensation, as a smaller number of non-qualified stock options were exercised compared to the nine months ended September 30, 2024.

SEGMENT RESULTS

Adjusted Segment EBITDA

We evaluate the performance of each of our operating segments based on multiple measures of segment profit, including Adjusted Segment EBITDA, which is a non-GAAP financial measure. The following tables reconcile Segment Operating Income (Loss) to Adjusted Segment EBITDA for the three and nine months ended September 30, 2025 and 2024:

25

Total Adjusted Segment EBITDA

We define Total Adjusted Segment EBITDA, which is a non-GAAP financial measure, as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. The following table reconciles net income to Total Segment Operating Income and Total Adjusted Segment EBITDA for the three and nine months ended September 30, 2025 and 2024:

(in thousands)

(in thousands)

26

Other Segment Operating Data

(1) The number of billable professionals for the Technology segment excludes as-needed professionals, who we employ based on demand for the segment’s services. We employed an average of 648 and 855 as-needed employees during the three months ended September 30, 2025 and 2024, respectively.

(2) We calculate the utilization rate for our billable professionals by dividing the number of hours that all of our billable professionals worked on client assignments during a period by the total available working hours for all of our billable professionals during the same period. Available hours are determined by the standard hours worked by each employee, adjusted for part-time hours, U.S. standard work weeks and local country holidays. Available working hours include vacation and professional training days, but exclude local country holidays. Utilization rates are presented for our segments that primarily bill clients on an hourly basis. We have not presented utilization rates for our Technology and Strategic Communications segments as most of the revenues of these segments are not generated on an hourly basis.

(3) For engagements where revenues are based on number of hours worked by our billable professionals and fixed-fee arrangements, average billable rate per hour is calculated by dividing revenues (excluding revenues from success fees, pass-through revenues and outside consultants) for a period by the number of hours worked on client assignments during the same period. We have not presented average billable rates per hour for our Technology and Strategic Communications segments as most of the revenues of these segments are not based on billable hours.

CORPORATE FINANCE & RESTRUCTURING

(dollars in thousands, except rate per hour)

(dollars in thousands, except rate per hour)

(1) Revenues less direct cost of revenues

(2) Gross profit as a percentage of revenues

Revenues increased $63.4 million, or 18.6%, to $404.9 million for the three months ended September 30, 2025, primarily due to higher demand for our restructuring and transactions services and higher realized bill rates for our transformation & strategy services.

Gross profit increased $42.0 million, or 38.4%, to $151.6 million for the three months ended September 30, 2025. Gross profit margin increased 5.4 percentage points for the three months ended September 30, 2025. The increase in gross profit margin was primarily due to a 6 percentage point increase in utilization and higher realized bill rates.

SG&A expenses increased $3.9 million, or 7.2%, to $58.2 million for the three months ended September 30, 2025, which included a 1.3% estimated negative impact from FX. SG&A expenses of 14.4% of revenues for the three months ended September 30, 2025 compared to 15.9% of revenues for the three months ended September 30, 2024. The increase in SG&A expenses was primarily due to higher bad debt, outside services, and computer hardware and software expenses, which was partially offset by lower compensation expenses.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Revenues increased $72.3 million, or 6.8%, to $1,127.8 million for the nine months ended September 30, 2025, primarily due to higher demand for our restructuring and transaction services and higher realized bill rates for our transformation & strategy and transactions services, which was partially offset by lower demand for our transformation & strategy services.

Gross profit increased $43.0 million, or 12.1%, to $396.8 million for the nine months ended September 30, 2025. Gross profit margin increased 1.7 percentage points for the nine months ended September 30, 2025. The increase in gross profit margin was primarily due to higher realized bill rates.

SG&A expenses increased $9.2 million, or 5.7%, to $171.1 million for the nine months ended September 30, 2025. SG&A expenses of 15.2% of revenues for the nine months ended September 30, 2025 compared to 15.3% of revenues for the nine months ended September 30, 2024. The increase in SG&A expenses was primarily due to higher infrastructure support, outside services, business development, and other general and administrative expenses, which was partially offset by lower compensation expenses.

FORENSIC AND LITIGATION CONSULTING

(dollars in thousands, except rate per hour)

(dollars in thousands, except rate per hour)

(1) Revenues less direct cost of revenues

(2) Gross profit as a percentage of revenues

Revenues increased $25.9 million, or 15.4%, to $194.7 million for the three months ended September 30, 2025, primarily due to higher realized bill rates for our risk and investigations, data & analytics and construction solutions services and higher demand for our risk and investigations services.

Gross profit increased $19.1 million, or 34.6%, to $74.4 million for the three months ended September 30, 2025. Gross profit margin increased 5.5 percentage points for the three months ended September 30, 2025. The increase in gross profit margin was primarily due to higher realized bill rates and a 3 percentage point increase in utilization.

SG&A expenses decreased $3.2 million, or 8.7%, to $33.7 million for the three months ended September 30, 2025. SG&A expenses were 17.3% of revenues for the three months ended September 30, 2025 compared to 21.9% of revenues for the three months ended September 30, 2024. The decrease in SG&A expenses was primarily due to the recognition of a gain contingency.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Revenues increased $57.5 million, or 11.2%, to $571.8 million for the nine months ended September 30, 2025, primarily due to higher realized bill rates for our risk and investigations, data & analytics and construction solution services, as well as higher demand for our risk and investigations services.

Gross profit increased $44.3 million, or 26.3%, to $212.8 million for the nine months ended September 30, 2025. Gross profit margin increased 4.5 percentage points for the nine months ended September 30, 2025. The increase in gross profit margin was primarily due to higher realized bill rates.

SG&A expenses increased $2.3 million, or 2.2%, to $107.0 million for the nine months ended September 30, 2025. SG&A expenses of 18.7% of revenues for the nine months ended September 30, 2025 compared to 20.4% of revenues for the nine months ended September 30, 2024. The increase in SG&A expenses was primarily due to higher compensation, infrastructure support and other general and administrative expenses, which was partially offset by the recognition of a gain contingency.

ECONOMIC CONSULTING

(dollars in thousands, except rate per hour)

(dollars in thousands, except rate per hour)

(1) Revenues less direct cost of revenues

(2) Gross profit as a percentage of revenues

Revenues decreased $48.9 million, or 22.0%, to $173.1 million for the three months ended September 30, 2025, which included a 1.5% estimated positive impact from FX. Excluding the estimated impact from FX, revenues decreased $52.2 million or 23.5%. The decrease in revenues was primarily due to lower demand for our non-M&A-related antitrust and M&A-related antitrust services, which was partially offset by higher realized bill rates for our non-M&A-related antitrust services and higher demand for our financial economics services.

Gross profit decreased $38.0 million, or 59.4%, to $25.9 million for the three months ended September 30, 2025. Gross profit margin decreased 13.8 percentage points for the three months ended September 30, 2025. The decrease in gross profit margin was primarily due to a 10 percentage point decline in utilization and higher forgivable loan amortization expenses, which was partially offset by higher realized bill rates for our non-M&A-related antitrust services and lower compensation expenses, including the impact of an 8.2% decline in billable headcount.

SG&A expenses increased $1.8 million, or 5.8%, to $31.7 million for the three months ended September 30, 2025, which included a 2.0% estimated negative impact from FX. SG&A expenses were 18.3% of revenues for the three months ended September 30, 2025 compared to 13.5% of revenues for the three months ended September 30, 2024. The increase in SG&A expenses was primarily driven by higher bad debt expenses, which was partially offset by lower infrastructure support, compensation, and other general and administrative expenses.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Revenues decreased $112.9 million, or 17.2%, to $544.6 million for the nine months ended September 30, 2025, which included a 1.0% estimated positive impact from FX. Excluding the estimated impact from FX, revenues decreased $119.3 million or 18.2%. The decrease in revenues was primarily due to lower demand for our M&A-related antitrust and non-M&A-related antitrust services, which was partially offset by higher realized bill rates for our M&A-related antitrust and non-M&A-related antitrust services, as well as higher demand for our financial economics services.

Gross profit decreased $71.7 million, or 39.6%, to $109.1 million for the nine months ended September 30, 2025. Gross profit margin decreased 7.5 percentage points for the nine months ended September 30, 2025. The decrease in gross profit margin was primarily due to an 8 percentage point decrease in utilization and higher forgivable loan amortization expenses, which was partially offset by higher realized bill rates for our M&A-related antitrust and non-M&A-related antitrust services and lower compensation expenses, including the impact of an 8.2% decline in billable headcount.

SG&A expenses decreased $2.0 million, or 2.2%, to $89.1 million for the nine months ended September 30, 2025, which included a 1.3% estimated negative impact from FX. SG&A expenses of 16.4% of revenues for the nine months ended September 30, 2025 compared to 13.9% of revenues for the nine months ended September 30, 2024. The decrease in SG&A expenses was primarily driven by lower bad debt and other general and administrative expenses, which was partially offset by higher outside services expenses.

TECHNOLOGY

(dollars in thousands)

(dollars in thousands)

(1) Revenues less direct cost of revenues

(2) Gross profit as a percentage of revenues

(3) Includes personnel involved in direct client assistance and billable consultants and excludes professionals employed on an as-needed basis

Revenues decreased $16.3 million, or 14.8%, to $94.1 million for the three months ended September 30, 2025, which included a 1.0% estimated positive impact from FX. Excluding the estimated impact from FX, revenues decreased $17.4 million or 15.8%. The decrease in revenues was primarily due to lower demand for our M&A-related “second request” and information governance, privacy & security services.

Gross profit decreased $6.9 million, or 17.8%, to $31.9 million for the three months ended September 30, 2025. Gross profit margin decreased 1.2 percentage points for the three months ended September 30, 2025. The decrease in gross profit margin was primarily due to lower profitability for our processing and hosting services, which was partially offset by higher profitability for our consulting and managed review services.

SG&A expenses decreased $3.7 million, or 14.0%, to $22.6 million for the three months ended September 30, 2025, which included a 1.0% estimated negative impact from FX. SG&A expenses of 24.1% of revenues for the three months ended September 30, 2025 compared to 23.8% of revenues for the three months ended September 30, 2024. The decrease in SG&A expenses was primarily due to lower compensation, travel and entertainment and outside services expenses.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Revenues decreased $52.2 million, or 16.0%, to $274.8 million for the nine months ended September 30, 2025, primarily due to lower demand for our M&A-related “second request” services.

Gross profit decreased $29.3 million, or 24.7%, to $89.6 million for the nine months ended September 30, 2025. Gross profit margin decreased 3.8 percentage points for the nine months ended September 30, 2025. The decrease in gross profit margin was primarily due to lower profitability for our processing and managed review services, largely resulting from the decline in revenues from our M&A-related “second request” services.

SG&A expenses decreased $8.1 million, or 10.4%, to $70.2 million for the nine months ended September 30, 2025. SG&A expenses of 25.5% of revenues for the nine months ended September 30, 2025 compared to 23.9% of revenues for the nine months ended September 30, 2024. The decrease in SG&A expenses was primarily due to lower compensation, travel and entertainment and outside services expenses.

STRATEGIC COMMUNICATIONS

(dollars in thousands)

(dollars in thousands)

(1) Revenues less direct cost of revenues

(2) Gross profit as a percentage of revenues

Revenues increased $6.1 million, or 7.4%, to $89.4 million for the three months ended September 30, 2025, which included a 2.0% estimated positive impact from FX. Excluding the estimated impact from FX, revenues increased $4.4 million, or 5.3%, primarily due to higher demand for our corporate reputation services.

Gross profit increased $3.7 million, or 12.1%, to $34.1 million for the three months ended September 30, 2025. Gross profit margin increased 1.6 percentage points for the three months ended September 30, 2025. The increase in gross profit margin was primarily due to lower compensation expenses as a percentage of revenues, which included a 9.3% decline in billable headcount.

SG&A expenses decreased $1.0 million, or 5.4%, to $18.2 million for the three months ended September 30, 2025, which included a 2.3% estimated negative impact from FX. SG&A expenses of 20.3% of revenues for the three months ended September 30, 2025 compared to 23.1% of revenues for the three months ended September 30, 2024. The decrease in SG&A expenses was primarily due to lower infrastructure support and bad debt expenses.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Revenues increased $29.6 million, or 11.9%, to $279.1 million for the nine months ended September 30, 2025,which included a 1.1% estimated positive impact from FX. Excluding the estimated impact from FX, revenues increased $26.9 million, or 10.8%, primarily due to higher demand for our corporate reputation services and a $12.9 million increase in pass-through revenues.

Gross profit increased $11.7 million, or 13.0%, to $101.6 million for the nine months ended September 30, 2025. Gross profit margin increased 0.4 percentage points for the nine months ended September 30, 2025. The increase in gross profit margin was primarily due to lower compensation expenses as a percentage of revenues, which included a 9.3% decline in billable headcount. This increase was partially offset by higher pass-through revenues and expenses.

SG&A expenses decreased $0.4 million, or 0.7%, to $56.0 million for the nine months ended September 30, 2025, which included a 1.3% estimated negative impact from FX. SG&A expenses of 20.1% of revenues for the nine months ended September 30, 2025 compared to 22.6% of revenues for the nine months ended September 30, 2024.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which we have prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Note 1 to the Consolidated Financial Statements included in Part II, Item 8, of our Annual Report on Form 10-K for the year ended December 31, 2024 describes the significant accounting policies and methods used in preparation of the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. We evaluate our estimates, including those related to revenues, goodwill and intangible assets, income taxes and contingencies, on an ongoing basis. Our estimates are based on current facts and circumstances, historical experience and various other assumptions that we believe are reasonable, which form the basis for making judgments about the values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting estimates that reflect our more significant judgments, and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results, include the following:

• Revenue Recognition
• Goodwill and Intangible Assets

There were no material changes to our critical accounting estimates from the information provided in “Critical Accounting Estimates” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations, in Part II, Item 7, of our Annual Report on Form 10-K for the year ended December 31, 2024, or from the information provided in Part II, Item 8, of our Annual Report on Form 10-K for the year ended December 31, 2024.

SIGNIFICANT NEW ACCOUNTING PRONOUNCEMENTS

See Note 2, “New Accounting Standards” in Part I, Item 1, of this Quarterly Report on Form 10-Q.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our annual cash flows from operations generally exceed our cash needs for capital expenditures and debt service requirements. We typically finance our day-to-day operations, capital expenditures, acquisitions and share repurchases through cash flows from operations. We believe that our cash flows from operations, supplemented by borrowings under our Credit Facility, as necessary, will provide adequate cash to fund our cash needs for at least the next 12 months.

Our operating assets and liabilities consist primarily of billed and unbilled accounts receivable, notes receivable from employees, accounts payable, accrued expenses and accrued compensation expenses. The timing of billings and collections of receivables, as well as compensation and vendor payments, affects the changes in these balances.

Results of operations for our non-U.S. subsidiaries are translated from the designated functional currency to our reporting currency of USD. Revenues and expenses are translated at average exchange rates for each month, while assets and liabilities are translated at balance sheet date exchange rates. Resulting net translation adjustments are recorded as a component of stockholders’ equity in “Accumulated other comprehensive loss.”

Uncertainties and Trends Affecting Liquidity

Our conclusion that we will be able to fund our cash requirements for at least the next 12 months by using existing capital resources and cash generated from operations does not take into account events beyond our control that could result in a material adverse impact on our business, the impact of any future acquisitions or unexpected significant changes in the number of employees or other unanticipated uses of cash. The anticipated cash needs of our business could change significantly if we pursue and complete additional business acquisitions, if our business plans change, if events such as economic, political and workforce disruptions arise, including any impact of future public health crises, or economic, political or business conditions change from those currently prevailing or from those now anticipated, or if unexpected circumstances or other events beyond our control arise that may have a material adverse effect on the cash flow or profitability of our business, including material negative changes in the health and welfare of our employees or those of our clients, and the operating performance or financial results of our business. Any of these events or circumstances, including any new business opportunities, could involve significant additional funding and could require us to borrow under our Credit Facility or raise additional debt or equity funding to meet those needs. Our ability to borrow or raise additional capital, if necessary, is subject to a variety of factors that we cannot predict with certainty, including:

• our future profitability;
• the quality of our accounts receivable;
• our relative levels of debt and equity;
• the volatility and overall condition of the capital markets; and
• the market prices of our securities.

Any new debt funding, if available, may be on terms less favorable to us than our Credit Facility. See “Forward-Looking Statements” in Part I, Item 2, of this Quarterly Report on Form 10-Q, and the information contained under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2024.

Cash Flows

(dollars in thousands)

(1) DSO is a performance measure used to assess how quickly revenues are collected by the Company. We calculate DSO at the end of each reporting period by dividing net accounts receivable reduced by billings in excess of services provided, by revenues for the quarter, adjusted for changes in FX rates. We multiply the result by the number of days in the quarter.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Net cash used in operating activities of $207.6 million during the nine months ended September 30, 2025 compared to net cash provided by operating activities of $79.8 million for the nine months ended September 30, 2024. The increase in net cash used in operating activities was primarily due to an increase in forgivable loan issuances, and higher compensation and income tax payments. DSO was 102 and 108 days as of September 30, 2025 and 2024, respectively.

Net cash used in investing activities of $50.1 million during the nine months ended September 30, 2025 compared to net cash provided by investing activities of $3.5 million for the nine months ended September 30, 2024. The increase in net cash used in investing activities was due to a $28.4 million increase in capital expenditures, primarily related to higher spend on leasehold improvements and cloud computing costs as compared to the nine months ended September 30, 2024, as well as the prior year maturity of a short-term investment of $25.2 million, which created an inflow in the comparative prior year period.

Net cash used in financing activities of $277.3 million during the nine months ended September 30, 2025 compared to $4.9 million for the nine months ended September 30, 2024. The increase in net cash used in financing activities was primarily due to $770.9 million in payments for common stock repurchases under the Repurchase Program, which was partially offset by an increase in net borrowings of $510.0 million under our Credit Facility compared to the nine months ended September 30, 2024.

The effect of exchange rate changes on cash and cash equivalents had a favorable impact of $20.5 million and $4.7 million for the nine months ended September 30, 2025 and 2024, respectively.

Cash paid for income taxes and tax credits, net of tax refunds, included $28.9 million and $23.5 million of payments for the purchase of tax credits during the nine months ended September 30, 2025 and 2024, respectively.

Principal Sources of Capital Resources

As of September 30, 2025, our capital resources included $146.0 million of cash and cash equivalents and available borrowing capacity of $390.0 million under the revolving line of credit under our Credit Facility. The $900.0 million revolving line of credit under our Credit Facility includes a $125.0 million sublimit for borrowings in currencies other than USD, including the euro, British pound, Australian dollar, Canadian dollar, Swiss franc and Japanese yen.

The availability of borrowings, as well as issuances and extensions of letters of credit under our Credit Facility, are subject to specified conditions. Subject to certain conditions, at any time prior to maturity, we will be able to invite existing and new lenders to increase the size of the facility up to a maximum of $1.2 billion. See Note 8, “Debt” in Part I, Item 1, of this Quarterly Report on Form 10-Q for a further discussion of variable interest rates and guarantees under the Credit Facility.

The second amended and restated credit agreement entered into on November 21, 2022 (the “Credit Agreement”) governing the Credit Facility and our other indebtedness outstanding from time to time contains covenants that, among other things, may limit our ability to: incur additional indebtedness; create liens; pay dividends on our capital stock, make distributions or repurchases of our capital stock or make specified other restricted payments; consolidate, merge or sell all or substantially all of our assets; guarantee obligations of other entities or our foreign subsidiaries; enter into hedging agreements; enter into transactions with affiliates or related persons; or engage in any business other than consulting-related businesses. In addition, the Credit Agreement includes a financial covenant that requires us not to exceed a maximum consolidated total net leverage ratio (the ratio of funded debt (less unrestricted cash up to $300.0 million) to Consolidated EBITDA, as defined in the Credit Agreement). As of September 30, 2025, we were in compliance with the covenants contained in the Credit Agreement. See Note 8, “Debt” in Part I, Item 1, of this Quarterly Report on Form 10-Q for a further discussion of the Credit Agreement.

Principal Uses of Capital Resources

Future Capital Requirements

We anticipate that our future capital requirements will principally consist of funds required for:

• operating and general corporate expenses;
• capital expenditures, primarily for information technology equipment and systems, office furniture and leasehold improvements;
• debt service requirements, including interest payments;
• compensation to designated executive management and senior managing directors under our various long-term incentive compensation programs, including forgivable loans;
• discretionary funding of the Repurchase Program;
• contingent obligations related to our acquisitions;
• potential acquisitions of businesses; and
• other known future contractual obligations.

Capital Expenditures

During the nine months ended September 30, 2025, we spent $50.1 million in capital expenditures to support our organization. For the remainder of 2025, we currently expect additional capital expenditures to support our organization in an aggregate amount of between $13 million and $15 million. Our estimate takes into consideration the needs of our existing businesses but does not include the impact of any purchases that we may be required to make as a result of future acquisitions or specific client engagements that are not completed or not currently contemplated. Our capital expenditure requirements may change if our staffing levels or technology needs change significantly from what we currently anticipate, if we are required to purchase additional equipment specifically to support new client engagements, or if we pursue and complete additional acquisitions.

Share Repurchase Program

During the nine months ended September 30, 2025, we made $770.9 million in payments for common stock repurchases under the Repurchase Program. We had $75.3 million remaining available under the Repurchase Program to repurchase additional shares of our common stock as of September 30, 2025.

Future Contractual Obligations

Our future contractual obligations as of September 30, 2025 include long-term obligations of $510.0 million related to outstanding borrowings under our Credit Facility. For more information on our Credit Facility, refer to Note 8, “Debt” in Part I, Item 1 of this Quarterly Report on Form 10-Q. Under our operating leases as described in Note 9, “Leases” in Part I, Item 1 of this Quarterly Report on Form 10-Q, we have current obligations of $33.4 million and non-current obligations of $226.0 million as of September 30, 2025.

These amounts reflect future unconditional payments and are based on the terms of the relevant agreements, appropriate classification of items under GAAP currently in effect and certain assumptions such as interest rates. Future events could cause actual payments to differ from these amounts.

Off-Balance Sheet Arrangements

As of September 30, 2025 and December 31, 2024, the Company was contingently liable under bank guarantees issued in favor of third parties that totaled $19.1 million and $10.9 million, respectively. These bank guarantees primarily support bid and performance obligations and operating leases for office space. The amounts are guaranteed under guarantee facilities totaling $47.5 million and $42.7 million as of September 30, 2025 and December 31, 2024, respectively. The Company had $28.3 million and $31.8 million available under the guarantee facilities as of September 30, 2025 and December 31, 2024, respectively. These bank guarantees are issued separately from our Credit Facility and, as a result, do not affect available borrowing capacity under our Credit Facility.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve uncertainties and risks. Forward-looking statements include statements concerning our plans, initiatives, projections, prospects, policies, processes and practices, objectives, goals, commitments, strategies, future events, future revenues, future results and performance, future capital allocations and expenditures, expectations, plans or intentions relating to acquisitions, share repurchases and other matters, business trends, new, or changes to, laws and regulations, including U.S. and foreign tax laws, environmental, social and governance (“ESG”)-related issues, climate change-related matters, scientific or technological developments, including relating to new and emerging technologies, such as AI and machine learning and other information that is not historical. Forward-looking statements often contain words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “commits,” “aspires,” “forecasts,” “future,” “goal,” “seeks” and variations of such words or similar expressions. All forward-looking statements, including, without limitation, management’s financial guidance and examination of operating trends, are based upon our historical performance and our current plans, estimates, intentions and expectations at the time we make them, and various assumptions. Our actual financial results, performance or achievements and outcomes could differ materially from those expressed in, or implied by, any forward-looking statements. Any references to standards of measurement and performance made regarding our climate change-, ESG- or other sustainability-related plans, goals, commitments, intentions, aspirations, forecasts or projections, or expectations are developing and based on assumptions. There can be no assurance that management’s plans, performance, expectations, intentions, aspirations, beliefs, goals, estimates, forecasts and projections, including any that are ESG- or other sustainability-related, will result or be achieved, and the inclusion of any forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates, forecasts, intentions, aspirations, beliefs or expectations contemplated by us will be achieved. Given these risks, uncertainties and other factors, you should not place undue reliance on any forward-looking statements.

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in, or implied by, this Quarterly Report on Form 10-Q. Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q include those set forth under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2024, as well as in other information that we file with the SEC from time to time. Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q include, but are not limited to, the following:

• changes in demand for our services;
• our ability to recruit and retain qualified professionals and senior management, including segment, industry and regional leaders;
• conflicts resulting in our inability to represent certain clients;
• our former employees joining or forming competing businesses;
• the enactment of legislation rendering contractual protections against competition by former employees unenforceable;
• our ability to manage our headcount needs and our professionals’ utilization and billing rates and maintain or increase the pricing of our services and products;
• our ability to identify suitable acquisition candidates, negotiate favorable terms, take advantage of opportunistic acquisition situations and integrate the operations of acquisitions, as well as the costs of integration;
• our ability to adapt to and manage the risks associated with operating in non-U.S. markets;
• our ability to replace key personnel, including former executives, officers, senior managers and practice and regional leaders who have highly specialized skills and experience;
• our ability to protect the confidentiality of internal and client data and proprietary and confidential information, including from cyberattacks, systems failures or other similar events or outside or internal bad actors, or the use or misuse of social media;
• legislation or judicial rulings, including legislation or rulings regarding data privacy and the discovery process;
• periodic fluctuations in revenues, operating income and cash flows;
• damage to our reputation as a result of claims involving the quality of our services, failures of our internal information technology systems controls or adverse publicity relating to certain clients or engagements;
• fee discounting or renegotiation, lower pricing, less advantageous contract terms and unexpected termination of client engagements;
• competition for clients and key personnel;
• general economic factors, industry trends, restructuring and bankruptcy rates, legal or regulatory requirements, capital market conditions, merger and acquisition activity, major litigation activity, geopolitical disruptions and other events outside of our control;
• our ability to manage growth;
• risk of non-payment of receivables;
• the amount and terms of our outstanding indebtedness;
• risks relating to the obsolescence, replacement, protection, implementation or operation of our information technology systems, including our enterprise resource planning and other financial systems, and software, proprietary software products, intellectual property rights and trade secrets, which could adversely affect our ability to retain or win clients, conduct business, preserve or enhance our reputation, maintain business continuity or report financial results;
• risks relating to the adoption and integration of technological innovations such as AI and machine learning;
• foreign currency disruptions and currency fluctuations between the U.S. dollar and foreign currencies;
• U.S. and foreign tax law changes, including the enactment of tax legislation, proposed from time to time, into law, which could increase our effective tax rate and cash tax expenditures;
• physical risks related to climate change, including rising temperatures, severe storms, energy disruptions, fires or wildfires, flooding and rising sea levels, among others, which could adversely impact our ability to conduct business

or maintain business continuity, including by affecting our access to our leased office space in affected geographies and the integrity of our information technology systems;

• our climate change and ESG-related initiatives and goals, including our policies and practices relating to the environment and climate change, sustainability, and inclusion, if they do not meet or keep pace with current or evolving governmental, investor or other stakeholder or media (including social media) expectations and standards or rules and regulations; and
• fluctuations in the mix of our services and the geographic locations in which our clients are located or our services are rendered.

There may be other factors that may cause our actual results to differ materially from our forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this Quarterly Report on Form 10-Q and are expressly qualified in their entirety by the cautionary statements included herein. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances and do not intend to do so.

For information regarding our exposure to certain market risks, see “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes in our market risk exposure during the period covered by this Quarterly Report on Form 10-Q.

Evaluation of Disclosure Controls and Procedures. An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q, was made under the supervision and with the participation of our management, including our Chief Executive Officer and Interim Chief Financial Officer. Based upon this evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that our disclosure controls and procedures (a) were effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is timely recorded, processed, summarized and reported and (b) included, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting. There have not been any changes in our internal control over financial reporting during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes in any risk factors previously disclosed in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC. We may disclose changes to risk factors or disclose additional factors from time to time in our future filings with the SEC. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.