Charles River Associates (NASDAQ:CRAI) reported record results for fiscal 2025 and delivered its strongest quarter in company history, with management citing broad-based practice contributions, strong utilization, and a growing sales pipeline as key drivers. Executives also outlined fiscal 2026 guidance, discussed capital allocation priorities, and addressed investor concerns about artificial intelligence and its potential impact on the consulting industry.
Record fiscal 2025 results and best quarter in company history
President and CEO Paul Maleh said fiscal 2025 revenue rose 9.3% year-over-year to $751.6 million, marking CRA’s eighth consecutive year of record annual revenue. Both major lines of business contributed, with legal and regulatory services revenue up 10.3% and management consulting services revenue up 6.4% versus fiscal 2024.
In the fourth quarter, CRA reported an 11.6% revenue increase year-over-year, which Maleh described as the best quarterly revenue performance in the company’s history. He attributed the quarter’s strength in part to sales pipeline growth, noting weekly average project lead flow rose 9.3% and new project originations increased 7.7% versus the prior-year quarter.
Practice highlights: antitrust, forensics, energy and more
Maleh said six practices grew revenue in the fourth quarter, with four delivering double-digit gains: Antitrust & Competition Economics, Energy, Forensic Services, and Labor & Employment. Legal and regulatory services revenue increased 14.3% year-over-year in the quarter, led by Antitrust & Competition Economics and Forensic Services, each of which posted quarterly revenue growth of more than 20% and set new quarterly and annual revenue records, according to management.
Maleh highlighted merger-related work in antitrust amid stronger deal activity, stating that worldwide M&A activity in 2025 totaled $4.6 trillion, up 49% from 2024 and the strongest annual period since 2021. Examples cited on the call included CRA advising The Hershey Company on competition and regulatory compliance aspects of its acquisition of LesserEvil, and advising Boeing on submissions to competition authorities in connection with its acquisition of Spirit AeroSystems.
Forensic Services, Maleh said, worked on hundreds of matters in the quarter, including ransomware, wire transfer fraud, employee misconduct, trade secret matters, and litigation. He described the practice as being routinely retained by companies ranging from Fortune 500 firms to smaller private companies facing crisis situations.
Within management consulting, Maleh said the Energy practice increased revenue by more than 20% year-over-year in the fourth quarter, citing activity tied to data center-driven load growth and work related to electricity market design and planning. CRA’s Life Sciences strategy work was described as spanning the product life cycle, with examples including patient journey mapping in liver disease and preparation for a loss of patent exclusivity on a blockbuster product.
Profitability, talent investments, and fiscal 2026 outlook
Maleh reported non-GAAP EBITDA of $96.8 million for fiscal 2025, representing a 12.9% non-GAAP EBITDA margin. He said the company made leadership and talent investments during the year, including promoting eight colleagues to vice president and hiring 19 new vice presidents on the consulting side. CRA also expanded corporate leadership roles, including naming Eric Nierenberg as CFO and hiring Graham Ross as chief marketing officer and Curt Lefebvre as vice president of artificial intelligence.
For fiscal 2026, CRA guided to constant-currency revenue of $785 million to $805 million and a non-GAAP EBITDA margin of 12.0% to 13.0%. Management said currency effects are expected to reduce reported revenue by about $5 million and reduce reported EBITDA by less than $1 million versus constant-currency results.
Maleh also flagged an expected increase in non-cash forgivable loan amortization in fiscal 2026 of approximately $15 million, or more than 30% year-over-year, which he tied to increased talent investments completed in fiscal 2025. He also noted fiscal 2026 returns to CRA’s typical 52-week year after fiscal 2025 included an extra week.
AI discussion: productivity, governance, and business impact
Maleh addressed recent market volatility and concerns about AI’s impact on consulting businesses, saying CRA views AI as a catalyst for productivity improvements and revenue growth. He described internal use cases including faster code and script creation, enhanced first-pass document review and foreign language translation, and accelerated desk research. He emphasized that these tools allow consultants to allocate more time to higher-value elements of client problems.
Maleh highlighted an AI-driven resource adequacy model developed in the Energy practice, called CRA AdequacyX, which uses a Monte Carlo-based loss-of-load approach with artificial intelligence and synthetic data to simulate future grid conditions and correlated risk events.
When asked whether AI could enable margin expansion, Maleh said he sees it more as a revenue enhancement opportunity than a clear margin lever. He also stressed CRA’s disciplined approach, including controlled pilots, quality control, reproducibility standards, and strict data security safeguards, with human oversight central to client deliverables. In a separate exchange, he said CRA has not seen a decline in junior staff utilization to date and does not anticipate worsening staffing leverage, noting the complexity and scale of client work still requires team-based execution.
Cash flow, capital allocation, and repurchase authorization
Chief Corporate Development Officer Chad Holmes said fiscal 2025 adjusted net cash flows from operations increased 17% year-over-year to $108.4 million, representing 112% conversion of non-GAAP EBITDA into adjusted operating cash flow. During the fourth quarter, Holmes said CRA repaid $61 million of net borrowings on its revolving credit line, ending the year with $34 million outstanding and $18.2 million in cash, for a net borrowing position of $15.8 million. He added that since year-end the company repaid the remaining revolver balance, bringing it to zero.
Holmes said fourth-quarter net cash outlays for talent investments were $17.6 million, and full-year spending to acquire and retain senior revenue-generating talent totaled $87.9 million. CRA spent $1.1 million on capital expenditures in the quarter and $3.9 million for the year; fiscal 2026 capex is expected in the range of $4 million to $5 million. CRA paid $3.7 million in dividends in the fourth quarter and returned $61 million to shareholders in fiscal 2025 through dividends and share repurchases.
The board authorized an expansion of the share repurchase program by $55 million, bringing remaining authorization to $65.9 million, according to Holmes. In Q&A, Maleh said the company expects to remain an active repurchaser in coming quarters.
CFO Eric Nierenberg added operational metrics, including consultant headcount of 959 at year-end (up 1.4% from 946 at the end of fiscal 2024) and non-GAAP SG&A (excluding commissions to non-employee experts) of 16.1% of revenue in the fourth quarter. He reported DSO of 108 days at quarter-end, down from 115 days at the end of the third quarter, and total liquidity of $180.4 million including cash and available credit capacity. Nierenberg also projected a fiscal 2026 non-GAAP effective tax rate of 31% to 32%, citing legislative changes impacting executive compensation.
About Charles River Associates (NASDAQ:CRAI)
Charles River Associates (NASDAQ: CRAI) is a global consulting firm specializing in economic, financial and management advisory services. Founded in 1965 and headquartered in Boston, Massachusetts, the company provides expert analysis to support litigation, regulatory proceedings, and strategic decision-making. Its multidisciplinary teams draw on academic rigor and industry experience to deliver quantitative and qualitative insights tailored to clients’ needs.
The firm’s service offerings include competition economics, antitrust and merger analysis, intellectual property valuation and damages assessment, and risk management.
