Business advisory firm FTI Consulting (NYSE: FCN) met Wall Street’s revenue expectations in Q2 CY2026, with sales up 5.3% year on year to $993.5 million. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $4.02 billion at the midpoint. Its non-GAAP profit of $1.99 per share was 11.9% below analysts’ consensus estimates.

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StockStory’s Take

FTI Consulting’s second quarter results were marked by steady revenue growth but fell short of market expectations on profitability, leading to a negative market reaction. Management attributed the lower bottom-line performance to higher-than-expected selling, general, and administrative expenses (SG&A), including one-time legal and compensation costs. CEO Steven Gunby highlighted that while certain international markets like Spain and Germany outperformed, “challenges in the Middle East and the U.K.” dampened overall momentum. The company also noted that ongoing investments in senior talent increased direct costs during the period.

Looking ahead, management’s guidance for the remainder of the year is shaped by expectations of improved profitability, particularly as temporary cost pressures subside and new projects ramp up in core markets. CFO Angela Nam suggested that SG&A expenses are expected to decrease in the second half, while headcount investments and gains in the Economic Consulting and Technology segments are positioned to drive earnings. Management emphasized that, despite geopolitical uncertainties, they continue to “see strong underlying demand” and are focused on leveraging recent hires to capture larger, more complex engagements.

Key Insights from Management’s Remarks

Management underscored that both temporary and structural factors impacted Q2 performance, with particular attention on regional variability and litigation-related expenses.

• SG&A and legal expense spike: SG&A costs were elevated due to one-time compensation, travel, and $6.6 million in extraordinary litigation expenses tied to an ongoing employee dispute, which management indicated would not recur in future quarters.
• Regional performance disparities: While Spain and Germany delivered strong results, the Middle East underperformed due to geopolitical instability, and the U.K. faced temporary project timing issues impacting revenue recognition and profitability.
• Investment in senior talent: The company continued to add senior staff, with billable headcount growth of 3.2% year-over-year and nearly half of Corporate Finance’s year-on-year headcount growth tied to expanding the Transactions and Transformation businesses in EMEA and the healthcare/mining businesses in Australia.
• Segment-specific drivers: Corporate Finance benefited from higher realized bill rates and success fees, particularly in transformation consulting and select large transactions. Economic Consulting (“Econ”) posted sequential improvement, aided by high-profile antitrust and litigation matters.
• AI-related demand trends: Both the Forensic & Litigation Consulting and Technology segments saw increased demand for expertise in AI-related risk, cybersecurity, and regulatory matters, as clients sought guidance on responsible AI deployment and data privacy issues.

Drivers of Future Performance

Management expects future growth to be driven by improved project mix, normalization of expenses, and continued hiring in high-demand service lines.

• Expense normalization expected: Management anticipates that SG&A costs will decrease in the coming quarters as one-time legal and compensation expenses subside, supporting margin improvement and adjusted EBITDA growth.
• Talent-driven revenue capture: Ongoing investments in senior and junior talent are expected to yield higher project wins, especially in Corporate Finance and Forensic & Litigation Consulting, as the company positions itself for greater share in complex restructurings and large transactions.
• Geopolitical and market volatility risks: Management cautioned that continued disruptions in the Middle East and the timing of project ramp-ups in the U.K. could introduce variability in performance, with CEO Steven Gunby stating it is “incredibly hard to forecast” the impact from regional instability.

Catalysts in Upcoming Quarters

In coming quarters, the StockStory team will monitor (1) the pace at which SG&A expenses normalize and litigation costs abate, (2) the ability of new senior hires to drive project wins in Corporate Finance and Forensic & Litigation Consulting, and (3) signs of stabilization or recovery in the Middle East and U.K. markets. The overall demand for AI-related advisory work and the ramp-up of large restructuring and transaction mandates will be additional areas to watch.

FTI Consulting currently trades at $163.80, down from $170.44 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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