Core Insights - Mercer, a business of Marsh, has released preliminary findings from its Global Talent Trends 2026 report, highlighting ongoing challenges employers face in fully leveraging artificial intelligence (AI) [1] Group 1 - Many employers are struggling to unlock the full value of AI [1]

Core Insights - Applexus Technologies Inc. has announced the acquisition of Lavendel Consulting, the largest independent consulting partner of Pricefx, which combines Lavendel's pricing expertise with Applexus's SAP and AI capabilities [1][2] - The acquisition allows Applexus to offer fully integrated pricing transformation programs that combine strategy, implementation, automation, and continuous optimization within a single intelligent enterprise platform [2] Company Overview - Applexus Technologies is a global leader in SAP consulting, analytics, and business AI solutions, helping companies become intelligent, autonomous enterprises [5] - Lavendel Consulting is recognized as the largest independent implementation partner of Pricefx, providing comprehensive services in pricing strategy, optimization, and support to Fortune 1000 companies worldwide [6] Strategic Positioning - The partnership positions Applexus at the forefront of AI-driven pricing transformation, leveraging innovations from Applexus Labs and the pricing expertise of Lavendel to address complex pricing challenges for clients [3] - Approximately 80% of Pricefx customers utilize SAP, making this partnership ideal for companies seeking integrated pricing and ERP optimization [3] Leadership Insights - The CEOs of both companies emphasize the goal of becoming the leading partner for pricing transformation in the market, with Applexus's global reach and SAP expertise providing a strong platform for end-to-end pricing solutions [4]

Core Insights - FTI Consulting has appointed Jason Smolanoff as a Senior Managing Director in its Cybersecurity practice, enhancing its capabilities in cyber risk management [1][2]. Company Overview - FTI Consulting is a leading global expert firm specializing in crisis and transformation, with over 8,100 employees across 32 countries as of September 30, 2025 [5]. - The company generated $3.70 billion in revenues during fiscal year 2024 [5]. Industry Context - The cybersecurity threat landscape is becoming increasingly sophisticated, leading to higher demand for tailored risk management and investigative expertise from clients [3]. - FTI Consulting aims to address the full spectrum of cyber risk management needs, including program assessments, incident response, and complex investigations [2][3]. Leadership Background - Jason Smolanoff has over 25 years of experience in information security, previously leading the Cyber Risk practice at Kroll and serving as a Senior Advisor [2][3]. - His prior roles include being the CEO and founder of CISO Advisory & Investigations and a Supervisory Special Agent at the FBI, overseeing cyber national security investigations [4].

Core Insights - FTI Consulting has expanded its transactions, shareholder activism, and issues management capabilities with the appointments of Dan Scorpio and Heather Wilson as Senior Managing Directors in the Strategic Communications segment [1][2] Group 1: Appointments and Expertise - Dan Scorpio brings over a decade of experience in leading high-profile M&A and reputational engagements for Fortune 500 companies and private equity, advising on M&A transactions and shareholder activism defense [2][3] - Heather Wilson has deep expertise in transactions and crisis management, having worked with various organizations including IBM and HP, and will enhance FTI's presence on the West Coast [4][5] Group 2: Strategic Importance - The addition of Scorpio and Wilson is seen as a significant milestone for FTI's transaction and event-driven communications, aimed at helping clients navigate complex stakeholder risks [2][6] - FTI Consulting's integrated transaction communications offering is designed to support clients in achieving deal success by addressing investor support, political risk, and integration challenges [6] Group 3: Company Overview - FTI Consulting is a leading global expert firm with over 8,100 employees in 32 countries, generating $3.70 billion in revenues during fiscal year 2024 [8]

Group 1: Core Insights - McKinsey & Company is leveraging artificial intelligence to redefine the qualities of top candidates, emphasizing resilience and adaptability over traditional academic excellence [1][2] - The firm analyzed 20 years of hiring data using AI, revealing that candidates who have overcome setbacks are more likely to achieve long-term success, such as making partner [2][3] - McKinsey receives approximately 1 million résumés annually but only hires about 1% of applicants, with a notable reduction in partner promotions in December 2022 compared to the previous year [3] Group 2: Hiring Practices and Assessments - The company employs a game-based assessment called Solve to evaluate problem-solving skills, ensuring candidates from diverse backgrounds can showcase their strengths [4] - Other firms, including BlackRock, are also transforming their hiring practices by prioritizing AI proficiency, curiosity, and problem-solving skills alongside interpersonal abilities [6] Group 3: Job Market Implications - The rise of AI is reshaping the job market, particularly affecting entry-level positions and pushing graduates towards skilled trades, retail, hospitality, and STEM careers [5] - Experts warn that millions of jobs could be replaced by AI by 2026, highlighting the need for retraining and skill development to remain competitive in the evolving job landscape [7]

Industry Overview - The consulting, contracting, and IT services sector faced significant challenges in 2025 due to constrained budgets, shifts in government policies, and the disruptive impact of AI, leading to widespread pessimism among investors [1]. Company Insights - Many firms within the consulting and IT services space have seen a decline in investor interest as a result of the aforementioned challenges, indicating a potential shift in market dynamics [1].

Core Insights - FTI Consulting has appointed Joshua Baca as a Senior Managing Director in its Strategic Communications segment, bringing over 20 years of experience in government, business, and reputation management [1][2]. Company Overview - FTI Consulting, Inc. is a global expert firm specializing in crisis and transformation, with over 8,100 employees across 32 countries and territories as of September 30, 2025 [5]. - The company generated $3.70 billion in revenues during the fiscal year 2024 [5]. Appointment Details - Joshua Baca will focus on stakeholder engagement and advocacy campaigns to assist client organizations in managing change, mitigating risk, and advancing business opportunities [2]. - Baca has a strong background in strategic communications, having previously founded and served as CEO of Resilient Partners, and held significant roles in the American Chemistry Council and the American Beverage Association [3]. Strategic Importance - The addition of Baca is expected to enhance FTI Consulting's advisory platform, particularly for global businesses in highly regulated industries facing complex policy and economic environments [3]. - Baca expressed enthusiasm about joining FTI Consulting, highlighting the firm's capabilities in addressing regulatory issues and strategic opportunities [4].

Core Insights - The company is adapting its strategy to address changing client needs driven by artificial intelligence (AI) and automation, focusing on cost alignment, refining on-demand talent offerings, and scaling consulting capabilities [1][5][20] Financial Performance - For the second quarter ended November 29, 2025, the company reported revenue of $117.7 million, with a gross margin of 37.1%, and an adjusted EBITDA of $4.0 million, reflecting a margin of 3.4% [2][6][7] - The company incurred a GAAP net loss of $12.7 million, primarily due to $11.9 million in one-time charges related to CEO transition and workforce reduction [6][7] - Revenue declined 18.4% year-over-year on a constant-currency basis, with on-demand and consulting revenues remaining soft, while Europe and Asia Pacific showed growth [8][18] Cost Management and Outlook - The company ended the quarter with $89.8 million in cash and zero debt, and it expects third-quarter revenue between $105 million and $110 million, with a gross margin of 35% to 36% [4][15] - Cost actions include a reduction in force targeting $6 million to $8 million in annual savings, with a focus on streamlining structure and adopting automation and AI [13][14] Segment Performance - On-demand revenue was $43.0 million, down 18.4% year-over-year, while consulting revenue was $42.6 million, down 28.8% [18] - Europe and Asia Pacific revenue was $20.1 million, up 0.6%, and outsourced services revenue was $9.4 million, up 0.8% [18] Client Demand and AI Impact - The company is observing early impacts of AI on client staffing needs, particularly in operational accounting roles, with a shift towards higher-skilled professionals who understand AI's implications [16][19] - Clients are navigating choices between embedded AI features in enterprise systems and standalone technologies, prompting the company to adjust its skill base accordingly [19]

Financial Data and Key Metrics Changes - Consolidated revenue for the second quarter was approximately $117.7 million, reflecting an 18.4% decline year-over-year on a constant currency basis [19][20] - Adjusted EBITDA was $4 million, resulting in a 3.4% adjusted EBITDA margin, despite revenue coming in below consensus [11][19] - Gross margin was 37.1%, down from 38.5% in the prior year quarter, impacted by higher healthcare costs and holiday pay [20][26] Business Line Data and Key Metrics Changes - On-demand segment revenue was $43 million, a decline of 18.4% year-over-year, with segment-adjusted EBITDA at $4.1 million, or a 9.5% margin [25] - Consulting segment revenue decreased by 28.8% year-over-year to $42.6 million, with segment-adjusted EBITDA at $4.5 million, or a 10.4% margin [25] - Europe and Asia Pac segment revenue grew by 0.6% year-over-year to $20.1 million, maintaining stable gross margins [25][17] - Outsourced services segment revenue was $9.4 million, up 0.8% compared to the prior year quarter, with segment-adjusted EBITDA at $1.7 million, or an 18.4% margin [25] Market Data and Key Metrics Changes - North America saw improved pipeline activity due to expanded go-to-market initiatives, while Europe and Asia Pac segments delivered both year-over-year and sequential growth [12][17] - Several North American markets showed sequential revenue growth, while lagging markets are undergoing leadership changes [16] Company Strategy and Development Direction - The company aims to align its cost structure with current revenue levels, refocus on-demand offerings, and scale its consulting business to deliver high-value solutions [7][11] - The strategy includes integrating Reference Point's capabilities to enhance collaboration and strengthen focus on CFO Advisory and Digital Transformation [14] - The company is committed to understanding how AI and automation impact client needs and is implementing these technologies to improve service delivery [10][9] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a challenging market for services but believes there is a sufficiently large market for client needs that can drive growth [6] - The company expects revenue for the third quarter to be in the range of $105 million to $110 million, with gross margins anticipated to be between 35% and 36% [27][28] - Management emphasizes the importance of improving sales execution and optimizing talent to meet client needs [29] Other Important Information - The company incurred $11.9 million in one-time expenses related to the CEO transition and a reduction in force, contributing to a GAAP net loss of $12.7 million [19] - The reduction in force impacted 5% of management and administrative headcount, expected to yield annual savings of $6 million to $8 million [22] Q&A Session Summary Question: Can you elaborate on AI's impact on finance and accounting roles? - Management noted that operational accounting roles are most impacted by AI and automation, with clients experimenting with AI to enhance efficiency [31][33] Question: Is AI causing clients to delay decisions? - Management indicated that while there is uncertainty in the market, AI is not significantly causing decision delays; rather, clients are exploring how to leverage AI effectively [57][59] Question: What is the expected impact of healthcare costs on gross margins? - Management stated that healthcare costs had a significant impact, approximately $1 million+, and normalized gross margins could have reached around 38% without these costs [62] Question: What is the vision for the next 12 to 24 months? - The focus will remain on aligning cost structures with revenue, enhancing on-demand services, and growing the consulting segment to drive value for clients [51][53]

Financial Data and Key Metrics Changes - Consolidated revenue for Q2 was approximately $117.7 million, reflecting an 18.4% decline year-over-year on a constant currency basis [16][17] - Gross margin was 37.1%, down from 38.5% in the prior year quarter, with a significant impact from healthcare costs and holiday pay [17][22] - Adjusted EBITDA was $4 million, representing a 3.4% margin, despite revenue falling below consensus [10][16] Business Line Data and Key Metrics Changes - On-demand segment revenue was $43 million, a decline of 18.4% year-over-year, with segment-adjusted EBITDA at $4.1 million, or a 9.5% margin [20] - Consulting segment revenue decreased by 28.8% to $42.6 million, with segment-adjusted EBITDA at $4.5 million, or a 10.4% margin [20] - Europe and Asia Pac segment revenue grew by 0.6% to $20.1 million, maintaining stable gross margins [21] Market Data and Key Metrics Changes - North America saw improved pipeline activity due to expanded go-to-market initiatives, while Europe and Asia Pac segments delivered year-over-year and sequential growth [10][11] - Outsourced services revenue remained steady at $9.4 million, with improved gross margins compared to the prior year [21] Company Strategy and Development Direction - The company aims to align its cost structure with current revenue levels, refocus on-demand offerings, and scale its consulting business to deliver high-value solutions [6][10] - Emphasis on providing relevant skills and solutions to clients at competitive prices to enhance market positioning [5][8] - The integration of Reference Point is expected to enhance collaboration and strengthen focus on CFO Advisory and Digital Transformation [12] Management's Comments on Operating Environment and Future Outlook - The management acknowledges a challenging market environment but believes in the potential for growth due to a large market of client needs [5][6] - Future strategies will focus on improving sales execution, optimizing talent, and enhancing consulting solutions to meet client demands [45][46] - The company expects to see incremental improvements over the next quarters, although significant results may take time [48] Other Important Information - The company has a strong balance sheet with $89.8 million in cash and no outstanding debt, allowing for balanced capital allocation between growth investments and shareholder returns [22] - A reduction in force was executed, impacting 5% of management and administrative headcount, expected to yield annual savings of $6-$8 million [19] Q&A Session Summary Question: Areas of AI impact on finance and accounting roles - Management noted that operational accounting roles are most impacted by AI and automation, with ongoing experimentation in client organizations [26][27] Question: Client decision delays due to AI implementation - Management indicated that while there is uncertainty in the market, it is not significantly causing decision delays; clients are exploring how to leverage AI effectively [52][54] Question: Impact of healthcare costs on gross margins - Healthcare costs had a significant impact, estimated at over $1 million, affecting both gross margin and SG&A [43][57] Question: Future focus areas in consulting - The company will focus on high-demand areas such as financial transformation, technology, and data analytics to enhance consulting capabilities [41][46]