FTI Consulting's Q3 Earnings: A Glimpse into Strategic Resilience Amid Sector Headwinds

FTI Consulting's third-quarter 2023 earnings report underscored the firm's ability to navigate a volatile market environment while maintaining robust financial performance. Revenues surged 15.1% year-over-year to $893.3 million, with earnings per diluted share rising 9% to $2.34, driven by strong demand across its Corporate Finance & Restructuring, Forensic and Litigation Consulting, and Technology segments according to the report. This performance, however, masks emerging challenges in the Economic Consulting and Technology segments, which face headwinds from shifting demand patterns and operational costs. The question for investors is whether FTI's strategic investments-particularly in artificial intelligence (AI) and private equity value creation-can offset these near-term pressures and unlock long-term value.

Economic Consulting: A Tale of Two Currencies

The Economic Consulting segment, a cornerstone of FTI's expertise in antitrust and regulatory matters, reported a nominal 0.4% revenue increase in Q3 2023 to $193.9 million. Yet, excluding the favorable impact of foreign currency translation, revenues fell 1.8% year-over-year, reflecting a decline in non-M&A-related antitrust services. Adjusted EBITDA for the segment dipped to $27.8 million (14.3% of revenues) from $32.9 million (17.0%) in the prior year, primarily due to higher selling, general, and administrative expenses.

This trend has worsened in 2025, with the segment reporting a 22% revenue decline in Q3 2025, driven by reduced demand for antitrust services unrelated to M&A. Such volatility highlights the fragility of demand in regulatory consulting, where macroeconomic cycles and policy shifts can rapidly alter client priorities. Yet, FTI's recent expansion of its financial services practice-adding 15 senior leaders to address regulatory and technology-related crisis events-suggests a strategic pivot toward higher-growth areas within the broader economic consulting landscape.

Technology Segment: Growth Amid Structural Shifts

The Technology segment, which provides digital forensics, e-discovery, and cybersecurity services, demonstrated resilience in Q3 2023, with revenues rising 16.4% to $98.9 million. This growth was fueled by increased demand for investigations and litigation services, though partially offset by a decline in M&A-related "second request" services. Adjusted EBITDA margin remained stable at 15.0% of revenues, despite a 14.8% increase in billable headcount and higher SG&A expenses.

However, the segment faced a sharper downturn in 2025, with Q3 2025 revenues declining 14.8% year-over-year, largely due to reduced demand for M&A-related services according to the report. This aligns with broader industry trends: as global M&A activity has moderated post-pandemic, firms like FTI must adapt their offerings to sustain growth. The 2025 Private Equity Value Creation Index, a report by FTI Consulting, notes that AI has emerged as a top strategic priority for private equity firms, with 42% identifying it as a transformative force. This signals a potential pivot for the Technology segment toward AI-driven solutions that enhance operational efficiency and client value.

Strategic Resilience: AI and Value Creation as Countercyclical Levers

FTI's long-term value creation hinges on its ability to leverage AI and technology-driven solutions to address both client needs and internal efficiencies. The firm's 2025 strategic initiatives emphasize three AI-centric plays: reshaping core business models, centralizing AI orchestration at the firm level, and integrating AI into private equity deal processes according to the firm's strategic plan. These strategies reflect a shift from incremental improvements to systemic transformations, positioning FTI to capitalize on the $110 billion projected institutional investment in large-scale AI implementations in the Asia-Pacific region by 2028 according to industry analysis.

Notably, FTI's focus on customer-facing AI applications-such as tools that streamline due diligence or optimize portfolio company operations-aligns with industry trends toward pragmatic, revenue-generating use cases according to market research. This contrasts with the hardware and model development layers of the AI value chain, which have seen saturation and declining valuations. By prioritizing AI-native companies with clear paths to recurring revenue and profitability, FTI is hedging against the volatility of speculative tech investments according to industry analysis.

Balancing Short-Term Headwinds and Long-Term Potential

While FTI's Economic Consulting and Technology segments face near-term challenges, the firm's strategic investments in AI and regulatory expertise offer a counterweight. The 2025 Private Equity Value Creation Index highlights that technology and IT remain the most effective value creation levers, with 77% of respondents rating their effectiveness as above average. This underscores the enduring relevance of FTI's core competencies in a digital-first economy.

Moreover, FTI's recent expansion in financial services-bolstered by leaders like Stella Mendes and Jean-Werner de T'Serclaes-positions the firm to capitalize on regulatory and technological risks in the sector. A 2024 Economist Impact study, sponsored by FTI, identified these risks as critical for financial institutions, suggesting that the firm's expertise in crisis management could become a differentiator in an era of heightened regulatory scrutiny.

Conclusion

FTI Consulting's Q3 2023 earnings demonstrate a company adept at navigating macroeconomic turbulence, even as its Economic Consulting and Technology segments grapple with structural shifts. The firm's strategic pivot toward AI-driven value creation and regulatory expertise offers a compelling counterbalance to these challenges. While 2025 revenue declines in key segments are concerning, they also highlight the urgency of FTI's innovation agenda. For investors, the critical question is whether FTI can maintain its agility in a rapidly evolving market-a test of its resilience and a barometer for its long-term value.