CRA International Holds Steady Amidst Uncertainty

CRA International's solid Q2 results and upward revision of FY2025 outlook were offset by concerns over macroeconomic and regulatory uncertainties. Despite stable demand for antitrust services and raised revenue guidance, the company's cautious approach to growth, as evident in a slight decrease in headcount, and global risks led to a Hold rating by William Blair analyst Andrew Nicholas.

CRA International Inc. reported a strong second quarter (Q2) for fiscal 2025, with revenue increasing by 9% year-over-year to $186.9 million. The company's non-GAAP net income, EPS, and EBITDA all surpassed the record-setting first half of fiscal 2024 by 6%, 8%, and 8% respectively. Consultant utilization improved to 76% year-over-year, and project lead flow increased by 2% year-over-year in the first six months of 2025. Legal and regulatory services revenue rose by nearly 11%, while management consulting services revenue increased by roughly 5% year-over-year. The company's year-to-date (YTD) revenue reached $367.6 million on a constant currency basis, with non-GAAP EBITDA at $47.7 million and a margin of 13% YTD [1].

CRA International's revenue guidance for fiscal 2025 was raised to $730 million to $745 million, reflecting the strong first half of the year. The non-GAAP EBITDA margin guidance was also increased to 12.3% to 13.0% for fiscal 2025. However, the company's consultant headcount decreased by 3.2% year-over-year, ending the quarter at 937 compared to 968 in Q2 fiscal 2024. The life sciences practice posted a slight decline in the second quarter, despite expanding year-over-year for the first half of fiscal 2025. The company concluded the quarter with $19.4 million of cash and $120 million of borrowings under its revolving credit facility, resulting in a net debt of $100.6 million [1].

Despite the positive results, CRA International faces uncertain global macroeconomic, business, and political conditions that could affect its business and client needs. William Blair analyst Andrew Nicholas rated the company as a Hold, citing the cautious approach to growth, evident in the slight decrease in headcount, and global risks as factors [1].

The article first appeared on GuruFocus.

References:
[1] https://finance.yahoo.com/news/cra-international-inc-crai-q2-072251682.html