FTI Consulting's Q2 2025 Performance: A Case Study in Resilience and Strategic Capital Allocation

FTI Consulting (NYSE: FCN) has long been a bellwether for the professional services sector, known for its ability to adapt to macroeconomic shifts while maintaining high-margin operations. The firm's Q2 2025 results, released on July 24, 2025, offer a compelling case study in strategic resilience. Despite a 0.6% year-over-year revenue decline (excluding a 1.8% drop when adjusting for foreign exchange effects), FTI's management navigated segment-specific headwinds through disciplined cost control, selective growth investments, and aggressive share repurchases. For long-term investors, the question is whether these actions position the firm for sustained outperformance in a fragmented market.

Segment Performance: Winners and Losers in a Shifting Landscape

The second quarter revealed a stark divergence in segment performance. Corporate Finance & Restructuring and Forensic & Litigation Consulting delivered robust growth, while Economic Consulting and Technology struggled with demand shocks.

• Corporate Finance & Restructuring (CFR): Revenues rose 9.0% to $379.2 million, driven by increased demand for restructuring and transaction services. This segment's Adjusted EBITDA margin of 21.5% underscores its role as a cash-generating engine.
• Forensic & Litigation Consulting (FLC): Revenue grew 10.0% to $186.5 million, with margin expansion to 16.7% of revenue, reflecting higher bill rates for data analytics and risk investigations.
• Economic Consulting (EC): A 17.0% revenue decline (28.9% excluding FX) highlights vulnerability to macroeconomic cycles, particularly in M&A-related antitrust services. Margins contracted to 7.4%, a red flag for investors.
• Technology (Tech): A 27.9% revenue drop (28.9% ex-FX) signals structural challenges in commoditized services like M&A “second request” work. Margins fell to 6.3%, the weakest of all segments.
• Strategic Communications (SC): A 20.8% revenue surge to $102.7 million, driven by pass-through services and corporate reputation work, demonstrates the segment's agility in capitalizing on market trends.

Strategic Resilience: Cost Discipline and Shareholder Returns

FTI's ability to offset segment-level volatility through cost management and capital allocation is key to its long-term appeal. Despite lower revenues, the firm reduced SG&A expenses and maintained Adjusted EBITDA at $111.6 million (11.8% of revenue), slightly below the prior year's 12.2% but still impressive for a services business.

The company's capital allocation strategy has been aggressive, with $354.9 million spent on share repurchases in Q2 alone. This reflects confidence in its intrinsic value, particularly given its updated full-year guidance of $3.66–3.76 billion in revenue and Adjusted EPS of $7.80–$8.40. While the $0.55 special charge in Q1 (linked to staffing realignment) drags on GAAP EPS, the Adjusted metrics suggest underlying strength.

Risk and Reward: A Balanced View for Long-Term Investors

The primary risks for FTI remain concentrated in the EC and Technology segments, which together account for 29% of total revenue. However, the firm's exposure to high-margin services like CFR and FLC—both of which are in structural growth—mitigates these risks. For instance, CFR's 9.0% revenue growth aligns with a broader shift toward corporate restructuring in a high-interest-rate environment, a trend likely to persist.

Investors should also consider FTI's balance sheet. While net debt rose to $317.2 million, the firm's cash flow generation and stock buybacks indicate a willingness to prioritize shareholder returns over aggressive debt reduction. This approach is sound if the company can sustain its Adjusted EBITDA margins above 11% and continue reallocating resources to its core strengths.

The Bottom Line: A Buy for Resilient Growth

FTI Consulting's Q2 results reinforce its status as a high-margin services firm with the agility to navigate sector-specific headwinds. The stock's valuation—trading near its fair value—appears supported by its cash flow profile and strategic repurchases. For investors seeking exposure to a business that balances operational discipline with growth in critical areas, FTI offers a compelling case. However, monitoring the EC and Technology segments will be crucial. If these underperformers stabilize or pivot successfully, the firm's long-term potential could exceed current expectations.

In a market where many firms struggle to maintain margins amid macroeconomic uncertainty, FTI's disciplined approach to capital allocation and its focus on resilient services make it a standout. The question is no longer whether the company can endure near-term challenges, but whether it can leverage this period of transition to cement its leadership in the professional services space. For patient investors, the answer appears increasingly affirmative.