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]

Core Insights - Generative AI is transforming the shopping experience by providing hyper-personalized suggestions and curated inspiration, shifting the competitive landscape for brands and retailers [1][2] Consumer Behavior - A global study by IBM Institute for Business Value found that 72% of consumers still shop in stores, but 45% utilize AI during their buying journeys [2] - Consumers are increasingly using AI for product research (41%), interpreting reviews (33%), and finding deals (31%) [2] - 35% of consumers still prefer visually appealing stores with no wait times, while one in three seek super apps that integrate commerce with other services [4] Retailer Adaptation - Retailers must adapt to AI-driven consumer behavior by redesigning the shopping journey to align with decision-making moments [6] - Brands should utilize AI to reduce uncertainty in the buying process and enhance customer support [6] - More than half of brand executives (54%) report challenges across channels, emphasizing the need for data readiness and testing [6] Strategic Recommendations - Brands should amplify their distinctive qualities while using AI to enhance relevance and reduce friction [6] - Investing in AI skills and partnerships is crucial, as 51% of executives cite limited AI expertise [6] Industry Implications - Understanding AI-influenced consumer behavior will become a competitive advantage in retail, differentiating brands that shape decisions from those that merely fulfill them [7]

Private employers added 41,000 jobs in December, according to ADP’s latest data release on Wednesday, a modest rebound from November’s losses. But beneath the headline growth, the composition of hiring portrayed a far more fragile — and even frightening — picture of the underlying economy. Here's what to know. An ugly white-collar job contraction Job losses were heavily concentrated in sectors most closely tied to business confidence and corporate investment. Professional and business services lost 29, ...

Core Insights - The Hackett Group, Inc. has launched Hackett AI XPLR™ 5.0, a new platform aimed at supporting enterprise AI Centers of Excellence (AI COEs) [1] - Hackett AI XPLR™ 5.0 is designed to accelerate and enhance the identification, evaluation, and design of AI solutions tailored to specific business processes, enterprise applications, and data landscapes [1] Company Overview - The Hackett Group, Inc. is recognized as a leading consultancy in Gen AI and enterprise digital transformation [1] - The new platform is available for enterprise licensing, indicating a strategic move to expand its market reach [1]

Core Insights - Jacobs has agreed to acquire the remaining shares of PA Consulting for £1.216 billion ($1.6 billion), enhancing its position in high-value advisory and transformation sectors [1][2] - The acquisition is expected to be accretive to Jacobs' adjusted EPS within the first 12 months post-closure, which is anticipated by the end of Jacobs' fiscal 2026 second quarter [1][10] - The transaction aims to strengthen Jacobs' end-to-end asset lifecycle capabilities and expand its presence in high-growth sectors such as advanced manufacturing and life sciences [11] Transaction Details - The total upfront consideration for PA Consulting reflects a valuation of approximately £3.05 billion, equating to 13.0x expected calendar year 2025 adjusted EBITDA before synergies [2] - The deal includes £75 million in deferred consideration, payable in Jacobs' shares on the second anniversary of the transaction closing [2][7] - Jacobs plans to fund the cash portion of the upfront consideration through a combination of cash-on-hand and existing debt facilities [7] Strategic and Financial Rationale - The acquisition is expected to enhance Jacobs' ability to deliver a full asset lifecycle, positioning it as a more comprehensive partner to clients [4][5] - Full ownership of PA Consulting will allow for broader collaboration in joint bids, potentially increasing win rates for business opportunities [11] - The combined capabilities of Jacobs and PA Consulting are well-suited to meet the growing demand for comprehensive solutions in sectors like AI data centers and critical infrastructure resilience [11] Leadership Perspectives - Jacobs' CEO Bob Pragada emphasized that the acquisition marks a key milestone in their strategy to redefine the asset lifecycle and enhance margin profiles through synergies [3] - PA Consulting's CEO Christian Norris highlighted the potential for the combined expertise to empower clients in navigating complexities and seizing future opportunities [3] Expected Financial Impact - The transaction is projected to increase Jacobs' adjusted EBITDA margin post-close, with expected cost synergies of £12-15 million targeted within 24 months [11] - If Jacobs had fully owned PA Consulting for FY25, the adjusted EBITDA margin would have been 14.5%, compared to the actual margin of 13.9% [11]

Core Insights - FTI Consulting is enhancing its Forensic and Litigation Consulting segment in Asia with the appointment of Mavis Tan as Senior Managing Director, indicating a strategic investment in this area [1][5]. Group 1: Appointment and Expertise - Mavis Tan specializes in forensic accounting, dispute support, and investigations, bringing over 20 years of experience in the field [2][3]. - She previously led the forensic services practice for Greater China and North Asia at Control Risks, showcasing her leadership in high-profile investigations [2][3]. - Tan's expertise includes addressing allegations of accounting improprieties, conflicts of interest, and misappropriation of assets, which are critical areas for clients facing financial disputes [2][3]. Group 2: Strategic Importance and Growth - The addition of Tan is part of FTI Consulting's broader strategy to strengthen its leadership position in the investigations market in Asia, enhancing its global capabilities [3][5]. - FTI Consulting has recently expanded its team in Asia by adding other experts, such as Rosie Hawes, Andrew Macintosh, and Martin Tupila, indicating a commitment to multidisciplinary expertise in forensic accounting and investigations [5][6]. - The firm employs a diverse team of forensic accountants, financial experts, and data analysts to support legal teams and act as independent investigators, which enhances its service offerings [6]. Group 3: Company Overview - FTI Consulting is a leading global expert firm with over 8,100 employees across 32 countries, generating $3.70 billion in revenues during fiscal year 2024 [7].