FTI Consulting's Q4 2024: Contradictions in Economic Outlook, Headcount Growth, and M&A Activity

These are the key contradictions discussed in FTI Consulting's latest 2024Q4 earnings call, specifically including: Economic Consulting impact and outlook, headcount growth expectations, and M&A activity expectations:



Year 2024 Financial Performance:
- FTI Consulting reported revenue of $3.7 billion for 2024, up 6% compared to 2023.
- Adjusted earnings per diluted share grew to $7.99 from $7.71 in 2023.
- The company's 2024 results fell short of expectations, with a notable decline in adjusted EBITDA.
- The shortfall was attributed to slower growth in the second half due to a slower than anticipated sales trajectory and higher direct costs.

Challenges in 2025 and Strategic Focus:
- FTI Consulting expects 2025 to present significant challenges, with anticipated revenue growth at the lowest since 2014.
- The company is facing headwinds including a slow M&A market, economic pressures in certain regions, and leadership changes in its Compass Lexecon subsidiary.
- Despite these challenges, FTI remains optimistic about its long-term trajectory, emphasizing strategic growth and talent attraction.
- The company's strategic focus is to build and maintain a strong presence in key sectors, ensuring consistent growth over extended periods.

Economic Consulting Segment Impact:
- A significant number of departures in the U.S. Competition part of the Compass Lexecon subsidiary are expected to impact revenues and profitability in 2025 and potentially into 2026.
- This situation is anticipated to result in a substantial effect on the Economic Consulting segment and the overall company P&L.
- The magnitude of the impact is currently being assessed, with historical dislocations suggesting it could be substantial.

Market Conditions and Demand Dynamics:
- FTI observed slower performance in parts of 2024, particularly in M&A-related businesses and in the U.K., driven by macroeconomic pressures.
- The slowdown was also attributed to some idiosyncratic factors like not replacing large jobs in the strategy business.
- Despite these pressures, the company is forecasting solid revenue growth for most business segments in 2025.