FCN Professional Services · Consulting · Restructuring · Litigation · Thesis updated July 12, 2026

Econ bottomed, but margins still hurt

Q1 2026 revenue rose 9.5%, helped by strong Corporate Finance and Strategic Communications demand.
Economic Consulting hit the expected trough, with a $5.9 million adjusted EBITDA loss.
Adjusted EBITDA margin fell to 9.8% from 12.8% a year earlier, so profit quality weakened.
Technology kept recovering, with revenue up 5.3% year over year in Q1 2026.
The next test is whether Econ improves before Corporate Finance slows.

01 Running thesis

The trough is in, the rebuild is not

FTI's Q1 2026 report answered the biggest near-term question. Economic Consulting, the weak spot, appears to have hit the bottom management had guided to. The segment posted a $5.9 million adjusted EBITDA loss, which is painful, but it removes some guesswork about timing.

The rest of the firm did a lot of heavy lifting. Total revenue grew 9.5%. Corporate Finance rose 19.2%, Strategic Communications rose 18.4%, and Technology rose 5.3%. That is the main bull case: FTI has several engines, and the stronger ones can carry the firm while a weaker one is rebuilt.

The bear case is now about speed and cost. Firm adjusted EBITDA fell 15.9%, and adjusted EBITDA margin dropped to 9.8% from 12.8%. If Economic Consulting stays weak for many quarters, FTI will need Corporate Finance to keep running hot.

That creates a balanced view. The bottom in Econ is good news. But the company still has to prove the rebound can lift earnings, not just stop the damage.

Apr 2026→Q1 2026 confirmed the expected Economic Consulting trough, with a $5.9 million adjusted EBITDA loss. Revenue still grew 9.5%, but adjusted EBITDA margin fell to 9.8% from 12.8%.

Feb 2026▲Management gave a clearer timeline, saying Economic Consulting adjusted EBITDA should hit its low point in Q1 2026. Technology also showed a more durable recovery in the second half of 2025.

Oct 2025→Q3 2025 shifted the main risk to Economic Consulting after a sharp revenue decline and negative EBITDA. Corporate Finance, FLC, and Strategic Communications helped offset the damage.

Jul 2025▼Q2 2025 exposed a sharp Technology slowdown tied to weaker M&A-related second request work. The thesis became more dependent on other segments carrying the firm.

Apr 2025→Q1 2025 showed weaker revenue but better cost control and an adjusted EPS beat. Economic Consulting weakness remained a concern.

Feb 2025▼Q4 2024 confirmed a consulting market slowdown, with revenue down 3% year over year. FTI responded with a workforce reduction aimed at annual cost savings.

Oct 2024→The initial thesis weighed slow quarterly revenue growth against FTI's diversified, counter-cyclical model. At that point, Economic Consulting and Technology were stronger parts of the story.

02 Business model

Paid for scarce experts

FTI makes money by selling high-end expert work. Clients hire it when the problem is complex, high stakes, or urgent. That can mean a bankruptcy, a lawsuit, a merger review, a cyber or data issue, or a public crisis.

Most work is billed by hours and agreed rates. Some work uses fixed fees, retainers, success fees, or data-based pricing in Technology. This means revenue depends on how many projects FTI wins, how many experts it has, how busy those experts are, and what rates clients will pay.

The moat is people. Senior Managing Directors and their teams bring client trust and specialized knowledge. The same thing can break the model: if top experts leave, if utilization falls, or if FTI pays too much to retain talent, margins can fall fast.

The company tries to reduce cyclicality by mixing practices. Restructuring can do well when companies are stressed. Deals, antitrust work, litigation, and communications can follow different demand cycles. Q1 2026 showed both the benefit and the limit of that mix.

03 Product portfolio

Five expert benches

Growth engine

Corporate Finance & Restructuring

This is FTI's largest segment by Q1 2026 revenue. It helps with transactions, transformation, turnarounds, and restructuring, and grew 19.2% year over year in Q1 2026.

Steady

Forensic and Litigation Consulting

This group supports disputes, investigations, construction matters, data analytics, and risk work. Revenue rose 1.2% in Q1 2026, but profitability weakened.

Option

Economic Consulting

This includes Compass Lexecon and focuses on antitrust, financial economics, and arbitration. It is the main rebuild story after a $5.9 million adjusted EBITDA loss in Q1 2026.

Option

Technology

Technology helps clients manage e-discovery, second requests, litigation data, information governance, privacy, and security. Revenue rose 5.3% in Q1 2026, showing a continued recovery.

Growth engine

Strategic Communications

This segment advises on corporate reputation, public affairs, financial communications, and crises. Revenue rose 18.4% in Q1 2026, with strong margin expansion.

04 Business segments

Q1 mix leans to Corp Fin

Corporate Finance42%growing fast

Forensic and Litigation Consulting20%flat

Economic Consulting18%declining

Technology10%modest

Strategic Communications10%growing fast

Segment mix is based on Q1 2026 revenue from the Form 10-Q. Corporate Finance was about 42% of revenue, so a slowdown there would matter more while Econ is still rebuilding.

05 Risk factors

What could break the rebound

Economic Consulting recovery stalls

High impact · Medium odds

Economic Consulting revenue fell 2.3% in Q1 2026, and adjusted segment EBITDA was negative $5.9 million. Management has called this a multiyear rebuild. If the segment does not improve from the Q1 trough, firm margins may stay below prior levels.

We watchSequential Economic Consulting adjusted EBITDA in Q2 2026 and later quarters.

Corporate Finance cools too soon

High impact · Medium odds

Corporate Finance grew 19.2% in Q1 2026 and helped offset the Econ drag. That strength came from turnaround and restructuring, transactions, and transformation services. If restructuring demand or deal work slows before Econ recovers, earnings could fall quickly.

We watchCorporate Finance revenue growth, utilization, and adjusted segment EBITDA margin.

Talent costs outrun billing rates

Medium impact · Medium odds

FTI depends on senior experts and their teams. In Economic Consulting, gross profit margin fell to 11.7% from 23.0% because costs rose, including forgivable loan amortization, variable compensation, and outside consultants. Paying up for talent is needed, but it can hurt returns if demand is weak.

We watchGross profit margin and compensation-related expense trends in Economic Consulting.

Technology recovery fades

Medium impact · Medium odds

Technology improved in Q1 2026, with revenue up 5.3%. Still, the segment had been pressured before by weaker M&A-related second request work. If litigation, privacy, security, and information governance demand cannot offset weaker M&A work, the recovery may lose force.

We watchTechnology revenue growth and demand for second request, litigation, and information governance work.

Cash and debt flexibility tightens

Medium impact · Low odds

FTI used $310.0 million of cash from operations in Q1 2026, which was better than the prior year outflow but still large. It also had $755.0 million of long-term borrowing obligations as of March 31, 2026. The balance sheet is still a strength, but buybacks, loans to staff, acquisitions, and debt service compete for cash.

We watchOperating cash flow, days sales outstanding, debt levels, and share repurchase pace.

06 Quick answers

In one breath

What does FTI Consulting actually do?

FTI is a professional services firm for complex business problems. It advises on turnarounds, lawsuits, antitrust reviews, digital evidence, investigations, and crisis communications.

Why is Economic Consulting so important right now?

Economic Consulting is the weak segment in the current thesis. It posted a $5.9 million adjusted EBITDA loss in Q1 2026, so even small improvement could help earnings, but a slow recovery would keep pressure on margins.

Is FTI mainly a restructuring company?

No. Corporate Finance & Restructuring is the largest segment in Q1 2026, but FTI also has litigation, economic, technology, and communications practices. The company is built to earn fees from several types of client stress and change.

What should investors watch next?

The key sign is whether Economic Consulting adjusted EBITDA improves in Q2 2026. Investors should also watch whether Corporate Finance can keep growing at a double-digit rate while Technology stays positive.