Financial Data and Key Metrics Changes - Total revenue for the first quarter of 2025 was $77.9 million, up 1% year-over-year, with revenues before reimbursements at $76.2 million, also up 1% [15][22] - Adjusted earnings per share were $0.41, at the high end of quarterly guidance, compared to $0.39 in the prior year [6][22] - GAAP net income for Q1 2025 was $3.1 million or diluted earnings per share of $0.11, down from $8.7 million or $0.32 in the previous year [20][22] - Adjusted gross margin improved to 43.4% from 41.4% year-over-year, driven by higher margin GenAI consulting and implementation revenue [19] Business Line Data and Key Metrics Changes - Global SMBT segment revenues were $43.4 million, with revenues before reimbursements at $42.6 million, a 6% increase year-over-year [15][16] - Oracle Solutions segment revenues were $21.1 million, with revenues before reimbursements down 3% year-over-year [16] - SAP Solutions segment revenues were $13.4 million, with revenues before reimbursements down 8% year-over-year, but expected to improve due to increased software sales [17] Market Data and Key Metrics Changes - Approximately 23% of total revenues before reimbursements were recurring, multi-year, and subscription-based revenues [18] - Days sales outstanding (DSO) increased to 73 days from 66 days in the previous quarter, attributed to extended terms on large client engagements [22] Company Strategy and Development Direction - The company is focusing on GenAI enabled transformations, viewing it as a generational opportunity that will change consulting services delivery [7][26] - The acquisition of Leeway Hertz and the development of the ZBrain platform are strategic moves to enhance GenAI capabilities [28][29] - The company plans to leverage its AI Explorer platform to integrate GenAI capabilities across all offerings, enhancing its competitive position [31][32] Management's Comments on Operating Environment and Future Outlook - Management noted that while demand for digital transformation remains strong, economic uncertainties and tariff negotiations could impact client decision-making [25][48] - The company expects IT budgets to increase, particularly for GenAI initiatives, with a shift from awareness to budgeted projects [25][26] - Management anticipates continued growth in GenAI revenue, with licensing revenues expected to start in July 2025 [51] Other Important Information - The company repurchased 379,000 shares at an average price of $30.93, totaling approximately $11.7 million [23] - A second-quarter dividend of $0.12 per share was declared, payable on July 7, 2025 [23] Q&A Session Summary Question: Can you elaborate on client interactions with AI Explorer and the pipeline for implementation projects? - Management highlighted unique capabilities in ideation and evaluation, leading to favorable client reactions and new engagements [38][39] Question: What is the current capacity for AI implementation and plans for scaling? - Management indicated a 60% to 70% increase in capacity since acquisitions, with ongoing hiring to expand resources [42][43] Question: What is the progress of the joint venture with ZBrain? - Management confirmed the addition of licensed clients to the ZBrain platform and expected to finalize the JV agreement soon [44] Question: How does economic disruption impact the business? - Management acknowledged the potential for clients to pause decisions due to economic concerns but noted strong engagement in GenAI capabilities [48][49] Question: What is the expected impact of GenAI on 2025 results? - Management expects meaningful growth in ARR and licensing revenues, with a focus on channel partnerships to enhance distribution [50][53] Question: What portion of AI revenue was implementation revenue in the quarter? - Management estimated a 50-50 split between implementation and ideation revenue, with expectations for implementation to grow significantly [61] Question: How is the pipeline looking for Oracle? - Management indicated that Oracle's activity is expected to be down, while SAP's momentum is improving [64]

Financial Data and Key Metrics Changes - Revenue increased by 5.9% year over year to $181.9 million, marking the highest quarterly revenue in the company's history [5] - Non-GAAP net income, earnings per diluted share, and EBITDA increased year over year by 11%, 13%, and 11% respectively, each setting a new quarterly record [6] - Consultant headcount decreased by 5% compared to the first quarter of fiscal 2024, while consulting utilization improved to 76% [7][18] Business Line Data and Key Metrics Changes - Four practices: energy, finance, intellectual property, and life sciences posted double-digit revenue growth, while the antitrust and competition economics practice achieved a new high for quarterly revenue [6] - Revenue from legal and regulatory services increased by approximately 5%, aligning with broader legal market trends [8] - Management consulting services revenue increased by 10% year over year, driven by strong performance in energy and life sciences practices [12] Market Data and Key Metrics Changes - Worldwide M&A activity reached $885 billion during the first quarter, representing a 15% increase compared to the previous year [8] - Total case filings and court judgments increased by 132% compared to the first quarter of fiscal 2024, indicating a robust legal market [8] Company Strategy and Development Direction - The company aims to optimize its service portfolio by reconfiguring teams in targeted areas, affecting approximately 15 individuals [14] - The focus remains on expanding geographic reach and enhancing service offerings, particularly in high-demand areas such as antitrust and life sciences [9][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong start to fiscal 2025, reaffirming full-year financial guidance of $715 million to $725 million in revenue [16] - The company remains cautious about uncertain global macroeconomic conditions that could impact business [17] Other Important Information - The company ended the quarter with $25.6 million in cash and $85 million in borrowings, resulting in net debt of $59.4 million [19] - The effective tax rate for the first quarter was 27.2% on a non-GAAP basis, slightly down from 28% in the previous year [18] Q&A Session Summary Question: April activity and guidance confidence - Management noted that activity levels improved throughout the quarter, with trends from March continuing into April, though it is too early to declare sustained momentum [22][24] Question: Life sciences pipeline and opportunities - The life sciences practice is experiencing success across geographic and business areas, with hopes for continued momentum into Q2 and throughout 2025 [25][26] Question: Headcount growth and retention - The company is focused on optimizing investments and expects headcount growth to align with revenue growth in the medium to long term, despite a recent 5% year-over-year decline [28][30] Question: External factors affecting business activity - Management indicated that various macroeconomic and geopolitical factors create uncertainty, impacting client decisions but noted a general growth across all practices [38][41] Question: Return to office trends - The company has not seen significant shifts in office participation, with employees averaging just over three days in the office per week, consistent with pre-COVID practices [45][46] Question: Restructuring details - Management refrained from providing specifics on the restructuring affecting 15 individuals, emphasizing that it does not reflect the overall health of the practices involved [52][53] Question: Antitrust demand trends - The antitrust and competition economics practice continues to see strong demand, driven by both merger-related activity and ongoing investigations [57] Question: Collaboration across practices - Collaboration across practices and geographies is common and is seen as an underreported strength of the company, enhancing service delivery to clients [60][61]

CRA International, Inc. (NASDAQ:CRAI) Q4 2024 Earnings Conference Call February 20, 2025 10:00 AM ET Company Participants Paul Maleh - Chairman, President, CEO Daniel Mahoney - EVP, CFO and Treasurer Chad Holmes - EVP and Chief Corporate Development Officer Conference Call Participants Marc Riddick - Sidoti & Company Kevin Steinke - Barrington Research Andrew Nicholas - William Blair Operator And good day, everyone, and welcome to CRA International, Inc.'s Fourth Quarter 2024 Conference Call. Please note th ...