CRA International Extends Record Streak, Eyes 2026 Growth

CRA International ((CRAI)) has held its Q4 earnings call. Read on for the main highlights of the call.

CRA International’s latest earnings call struck a distinctly upbeat tone, with management spotlighting record revenue, strong profitability and robust cash generation. Executives framed near-term headwinds such as higher tax rates and noncash amortization as largely accounting issues, arguing that underlying demand, practice breadth and international momentum leave the firm well positioned for 2026 and beyond.

Record Revenue Streak Extends into 2025

CRA delivered fiscal 2025 revenue of $751.6 million, up 9.3% year over year and marking the firm’s eighth straight year of record annual sales. The fourth quarter was especially notable, as revenue climbed 11.6% from a year earlier to the highest quarterly level in the company’s history.

Profitability and EBITDA Hit New Highs

Non-GAAP EBITDA reached $96.8 million for fiscal 2025, translating into a 12.9% margin and reflecting record profits on net income and EPS metrics as well. Management underscored that this performance came alongside ongoing investment in talent and technology, arguing that the business is scaling efficiently despite cost pressures.

Broad-Based Practice Growth Underpins Performance

Seven practices expanded revenue during fiscal 2025, with Antitrust & Competition Economics, Energy and Intellectual Property each generating double-digit growth. In the fourth quarter, Antitrust, Energy, Forensic Services and Labor & Employment all posted double-digit gains, signaling healthy demand across multiple specialties rather than reliance on a single engine.

International Operations Outpace North America

Growth outside North America stood out, with international revenue rising 19.5% year over year versus 7.3% in North America. Management highlighted this geographic mix as a key driver of the record results and a sign that CRA’s offerings are gaining traction across global markets.

Pipeline Metrics Point to Sustained Momentum

The sales pipeline strengthened further, with the fourth quarter’s weekly average project lead flow up 9.3% year over year. New project originations increased 7.7%, helping power the record Q4 revenue and giving management confidence that demand will carry into fiscal 2026.

Cash Flow Strength Fuels Shareholder Returns

Adjusted net cash from operations rose 17% to $108.4 million, allowing CRA to convert 112% of its non-GAAP EBITDA into adjusted operating cash. The company returned $61 million to shareholders, representing 56% of those adjusted cash flows, underscoring its commitment to balancing growth investment with direct capital returns.

Balance Sheet Deleveraging and Buyback Firepower

CRA repaid $61 million of net borrowings in the fourth quarter, finishing the year with $15.8 million of net debt and then fully paying down its revolver after year-end. The board also boosted the share repurchase authorization by $55 million, leaving $65.9 million available and giving management flexibility to buy back stock it views as undervalued.

Heavy Talent Investment and Leadership Expansion

The firm leaned aggressively into talent, promoting eight colleagues to vice president and hiring 19 new VPs, alongside a new Chief Marketing Officer and a Vice President of Artificial Intelligence. Talent-related cash outlays totaled $87.9 million for the year, reflecting a strategic bet that senior revenue generators will drive future growth.

AI as a Productivity and Revenue Catalyst

Management framed artificial intelligence as a clear positive, citing tools such as CRA Adequacy X and efficiency gains in coding, document review and translations. They stressed that adoption remains disciplined, with governance and human oversight in place, positioning AI as both a productivity enhancer and a potential source of new client offerings.

Higher Forgivable-Loan Amortization Clouds Optics

A key accounting headwind will be a roughly $15 million increase in noncash forgivable loan amortization in fiscal 2026, more than 30% above the prior year. Executives cautioned that this will depress reported EBITDA under GAAP-like measures, even though it stems from past concentrated investments in senior talent rather than current operating weakness.

Tax Rate and SG&A Add Modest Pressure

CRA expects its effective tax rate to rise to 31%–32% in fiscal 2026, up from a non-GAAP 28.4% in 2025 due mainly to legislative changes affecting executive compensation. Non-GAAP SG&A held at 16.1% of revenue for the full year and ticked slightly higher in the fourth quarter, a modest sign of expense pressure as the firm scales.

Working Capital and Calendar Effects Remain Watchpoints

Days sales outstanding ended the quarter at 108 days, better than 115 days in the prior quarter but still elevated, keeping working capital management in focus. Investors also need to adjust growth comparisons because fiscal 2025 included a 53rd week while fiscal 2026 will revert to a standard 52-week year.

Market Unease and Perceived Valuation Disconnect

Management pointed to broader equity market volatility and recent skepticism around AI’s impact on business models as factors overshadowing CRA’s operational progress. They argued that given the company’s record results, strong balance sheet and AI-enabling stance, the stock appears undervalued relative to its fundamentals and outlook.

Forward-Looking Guidance and 2026 Outlook

For fiscal 2026, CRA guided to constant-currency revenue of $785 million to $805 million, implying continued growth from 2025’s $751.6 million despite the loss of the extra week. The non-GAAP EBITDA margin is projected at 12.0%–13.0%, with modest currency headwinds, higher noncash amortization, a higher tax rate and capital spending of $4 million to $5 million all factored into the outlook.

CRA’s earnings call painted the picture of a consultancy with strong momentum, diversified growth engines and ample cash generation to fund both investment and shareholder returns. While higher amortization, taxes and DSOs create near-term noise, management’s confident guidance and aggressive talent and AI strategy suggest the underlying trajectory remains firmly positive for investors monitoring the name.