CRA International, Inc.

What they do

CRA provides consulting services in two broad areas: litigation, regulatory, and financial consulting, and management consulting. Work is sold mainly on a time-and-materials basis and revenue is recognized as services are performed, with a smaller portion from fixed-price engagements recognized on a proportional performance basis. The firm employs consultants with backgrounds in economics, business, corporate finance, accounting, engineering, and materials sciences, and supplements them with academic and industry non-employee experts. Services span antitrust and competition, damages analysis, expert testimony, forensic accounting, intellectual property litigation, transfer pricing, valuation, strategy development, and market demand estimation.

Revenue drivers

• Legal and Regulatory consulting — Litigation, regulatory, and financial consulting for corporate clients and attorneys, including expert testimony, damages analysis, antitrust, forensic accounting, and intellectual property matters; the earnings release states this offering grew 10.1% year over year in the second quarter of fiscal 2026.
• Management Consulting — Strategy development, performance improvement, portfolio analysis, market demand estimation, pricing strategy, auction and bidding design, and survey research; the earnings release states these services increased 25.5% year over year in the second quarter of fiscal 2026 and the 10-Q notes management consulting typically carries a higher concentration of fixed-price contracts.
• Practice-level demand — The earnings release reports eight practices grew year over year, with double-digit growth in Energy, Finance, Forensic Services, Intellectual Property, Life Sciences, and Risk, Investigations Analytics, and a quarterly revenue high for Antitrust Competition Economics.
• International operations — Revenues outside the U.S. were about 20% of total revenue in fiscal 2025, 19% in fiscal 2024, and 21% in fiscal 2023; in the second quarter of fiscal 2026 international operations grew 32.9% while North American revenue rose 8.7%.

Recent performance

Second-quarter fiscal 2026 revenue rose 12.8% year over year to $210.8 million from $186.9 million, with utilization at 77% versus 76% and quarter-end consultant headcount of 968 versus 937. Net income was $13.5 million, or 6.4% of revenue, up 11.4% from $12.1 million a year earlier, and diluted EPS rose 17.3% to $2.10 from $1.79. Non-GAAP EBITDA increased 15.3% to $26.8 million, or 12.7% of revenue. Costs of services rose 15.7% to $148.7 million, driven by a $15.1 million increase in employee and incentive compensation and a $4.7 million increase in forgivable loan amortization, and as a percentage of revenue rose to 70.6% from 68.8%. The company returned $31.4 million to shareholders in the quarter: $3.6 million of dividends and $27.8 million of buybacks of about 193,000 shares at an average price of $144.

Strategy

Management is investing in talent, with non-cash forgivable loan amortization expected to increase by approximately $15 million in fiscal 2026, and points to a replenishing sales pipeline and supportive market trends. The company raised full-year fiscal 2026 revenue guidance while reaffirming its profit margin guidance, and continues to return capital through dividends and share repurchases. CRA emphasizes diversification across service offerings, industries, functional expertise, client base, and geography to reduce dependence on any single market. It also notes fiscal 2026 returns to a typical 52-week year after fiscal 2025 included an extra week.

Risks

• Foreign exchange exposure — The company states a hypothetical 10% movement in foreign exchange rates on January 3, 2026 would have affected fiscal 2025 income before income taxes by approximately $5.5 million, with primary exposure in the British Pound and Euro.
• Compensation cost pressure — Costs of services rose 15.7% in the second quarter of fiscal 2026, outpacing 12.8% revenue growth, driven by higher employee and incentive compensation and a $4.7 million increase in forgivable loan amortization.
• Seasonality and utilization — CRA states it usually has fewer billable hours in its fiscal third quarter due to summer vacations and in its fiscal fourth quarter due to the December holidays, and that junior staff hiring in the third quarter can impact utilization in the latter half of the year.
• Concentration in fixed-price and management consulting work — Fixed-price projects rose to 23% of net revenues in the second quarter of fiscal 2026 from 16% a year earlier, and the company notes this percentage depends largely on the share of revenue from management consulting, which has a higher concentration of fixed-price contracts.

Outlook

For full-year fiscal 2026, on a constant currency basis relative to fiscal 2025, management expects revenue of $805 million to $820 million, raised from a prior range of $785 million to $805 million, and a non-GAAP EBITDA margin of 12.0% to 13.0%. The company expects the constant currency adjustment to reduce reported annual revenue by approximately $2.5 million and reported annual EBITDA by less than $250,000. It also flags that fiscal 2026 is a 52-week year while fiscal 2025 contained 53 weeks.