Breaking Down CRA International, Inc. (CRAI) Financial Health: Key Insights for Investors

You're looking at CRA International, Inc. (CRAI) and wondering if the consulting firm's recent performance warrants a deeper look, and honestly, the numbers from the 2025 fiscal year are defintely compelling.

The firm is not just meeting expectations; it's raising them, with the latest full-year revenue guidance now projected to hit between $740.0 million and $748.0 million on a constant currency basis, a clear signal of momentum. Here's the quick math: that strength is rooted in their Q3 2025 results, where revenue climbed 10.8% year-over-year to $185.9 million, driven hard by the Antitrust & Competition Economics and Energy practices. Plus, management's confidence is tangible-they just boosted the quarterly cash dividend by 16% to $0.57 per share, so you're seeing both growth and direct capital return. What this estimate hides is the firm's operational efficiency, with non-GAAP diluted earnings per share (EPS) jumping 16.4% to $2.06 in Q3, suggesting they're getting more profitable work done with a healthy 77% utilization rate.

Revenue Analysis

You need to know where CRA International, Inc. (CRAI) is making its money, and the simple answer is that the consulting model is firing on all cylinders in 2025. The firm has demonstrated broad-based strength, leading to a raised full-year revenue guidance. We are now looking at expected revenue in the range of $740 million to $748 million for fiscal year 2025, on a constant currency basis relative to fiscal 2024. That's a strong signal of confidence from management.

CRA International's revenue is nearly all derived from professional services-specifically, providing economic, financial, and management consultancy to corporations, government agencies, and law firms. This service-based model means revenue is directly tied to consultant utilization and the complexity of client engagements, particularly in litigation and regulatory matters. This is a people-driven business, so utilization is key.

The year-over-year revenue growth has been consistently robust through the first three quarters of 2025, demonstrating the business model's durability. Year-to-date revenue through the third quarter hit $552.1 million. The trailing twelve months (TTM) revenue, as of late September 2025, stood at $731.06 million, representing an 8.69% increase year-over-year.

The primary revenue sources are the firm's consulting practices, and the growth has been remarkably broad. In the third quarter alone, seven out of eleven practices saw growth, with four segments posting double-digit revenue increases, which is defintely a good sign. This diversification across practice areas is a significant risk mitigator.

• Antitrust & Competition Economics: Consistently strong, fueled by a rebound in worldwide merger and acquisition (M&A) activity which reached nearly $2 trillion in the first half of fiscal 2025.
• Energy: Showed double-digit growth in all three reported quarters.
• Intellectual Property: A major contributor, also achieving double-digit growth across all three quarters.
• Finance: Posted double-digit growth in Q1 and Q3, indicating strong demand for financial advisory services.

The most significant change in the revenue mix is the geographic acceleration. While North American operations saw a solid 6.8% revenue increase in Q3 2025, the international operations expanded dramatically by 30.3% year-over-year in the same quarter. This international expansion is a key opportunity for future growth, diversifying the firm's client base beyond the US market. For more detailed analysis on the balance sheet and valuation, you can check out the full post on Breaking Down CRA International, Inc. (CRAI) Financial Health: Key Insights for Investors.

Profitability Metrics

You need to know if CRA International, Inc. (CRAI) is turning its high-value advisory work into sustainable profit, especially with the 2025 fiscal year wrapping up. The short answer is yes: CRAI's profitability is strengthening, driven by premium pricing power in specialized areas like Antitrust & Competition Economics, which is pushing margins higher than industry peers.

The company's latest guidance, updated in October 2025, projects full-year revenue between $740.0 million and $748.0 million, with the Non-GAAP EBITDA (a strong proxy for operating profit) margin expected to land between 12.6% and 13.0%. This is a defintely strong performance, especially when you consider the latest quarterly analysis shows the net profit margin rising to 7.7%, up from 6.4% a year ago. That's a clear signal of effective cost management and pricing strategy.

Here is the quick math on how CRAI's core profitability metrics stack up against its industry, Professional Services (Consulting), for 2025:

The upward revision of the 2025 profit guidance demonstrates a positive trend over time, a huge green flag for investors. This momentum is tied to operational efficiency, which is measured by consultant utilization-the percentage of time consultants spend on billable work. CRAI reported a healthy utilization rate of 77% in Q3 2025, which is a key factor in keeping the Gross Margin high and flowing through to the Operating Margin. They are getting more billable work out of their existing talent base, which is a smart way to grow profit without ballooning staff costs.

Comparing CRAI's margins to the broader management consulting industry reveals a critical insight: their specialization pays off. While a Big Four firm like PwC might report a 20% profit margin, that often comes from massive scale and aggressive cost-cutting, as seen in their 2025 results. CRA International, Inc.'s focus on high-stakes, expert-driven work-like litigation and regulatory proceedings-allows them to sustain an Operating Margin near 13.0%, which is excellent for a firm of its size and model. You can dig deeper into the drivers of this performance by Exploring CRA International, Inc. (CRAI) Investor Profile: Who's Buying and Why?

The risk here is that a slowdown in M&A or regulatory activity could hit their core practices, but for now, the firm is capitalizing on complexity. The key takeaway is that their cost structure is well-managed, allowing a significant portion of revenue to convert to profit, a trend supported by their decision to increase their quarterly cash dividend by 16%. This confidence from management is a tangible sign of robust financial health. Your next step should be to check the analyst consensus on their forward-looking free cash flow growth, as that will validate the sustainability of these margins.

Debt vs. Equity Structure

You need to know how CRA International, Inc. (CRAI) funds its growth, and the latest data shows a conservative, yet active, capital structure that leans slightly more on equity than its industry peers. As of the third quarter of fiscal 2025, CRA International, Inc. (CRAI)'s debt-to-equity (D/E) ratio stood at approximately 0.96, which is a key indicator of its financial leverage.

This 0.96 D/E ratio means the company uses roughly 96 cents of debt for every dollar of shareholder equity to finance its assets. To be fair, this is a notable jump from the 48.7% low seen at the end of 2024, but still sits just below the median for the Management Consulting Services industry, which was around 1.01 in 2024. The long-term debt component is also well-managed, with Long-Term Debt to Equity at only 40.00% in the most recent quarter, suggesting short-term financing is the primary tool for operational flexibility.

Here's the quick math on their recent capital position, based on the September 27, 2025, balance sheet:

CRA International, Inc. (CRAI) doesn't rely on massive, public debt issuances or complex credit ratings. Instead, they primarily use a revolving credit facility (a corporate credit card, essentially) to manage working capital and fund strategic moves. This approach allows them to quickly pay down debt when cash flow is strong, which they defintely did in Q3 2025 by making net payments of $25 million to reduce borrowings. This is a classic move for a consulting firm-use debt for short-term needs, then pay it off fast.

The company balances this debt usage with a strong commitment to returning capital to shareholders, which is the equity side of the equation. They recently increased their quarterly cash dividend by 16% and continue to execute share repurchases, returning $7.2 million to shareholders in Q3 2025 alone. This dual strategy-using flexible debt for growth and returning excess cash to equity holders-shows a mature capital deployment philosophy, aligning with their strategic objectives detailed in their Mission Statement, Vision, & Core Values of CRA International, Inc. (CRAI).

What this estimate hides is that the D/E ratio can fluctuate quickly based on their short-term borrowings, but the $123.6 million in total liquidity, including $101.1 million available on their line of credit, means they have plenty of room to maneuver without undue risk. Your action here is to watch the quarterly cash flow statement; sustained debt reduction alongside dividend increases signals confidence in future earnings.

Liquidity and Solvency

You need to know if CRA International, Inc. (CRAI) has the cash on hand to cover its near-term obligations, and the quick answer is that their liquidity position is tight but manageable, which is common for a consulting firm. As of the end of Q3 2025, the company is technically in a negative working capital position, but their high-quality receivables make this a less severe risk than it looks on paper.

The core of any liquidity check is the Current and Quick Ratios. Both show a sub-1.0 position as of September 27, 2025. Here's the quick math (in thousands):

• Current Ratio: Total Current Assets ($305,582) / Total Current Liabilities ($338,603) = 0.90.
• Quick Ratio: (Cash + Accounts Receivable/Unbilled Services) ($265,582) / Total Current Liabilities ($338,603) = 0.78.

A ratio below 1.0 means current liabilities exceed current assets, which is a red flag in many industries. But for a professional services firm like CRA International, Inc., where the primary current asset is client receivables-not slow-moving inventory-a ratio around 0.90 is not defintely a crisis. The negative working capital of ($33,021 thousand) as of Q3 2025 is a direct result of this ratio, largely driven by the use of their revolving credit facility.

To be fair, the company actively manages its capital structure using debt. The revolving line of credit stood at $95,000 thousand at the end of Q3 2025, a primary component of their current liabilities. This debt is used to manage the timing difference between paying consultants and collecting from clients, a classic working capital cycle challenge for service businesses. This is a deliberate financing choice, not a sign of distress, but it does increase financial risk.

The cash flow statement overview for the first half of 2025 (YTD Q2 2025) tells a more complete story about how they are funding operations and capital deployment:

The key liquidity concern is the substantial net cash used in operating activities, which necessitates drawing down on their credit line. They are using financing cash flow (borrowing) to cover the operating cash cycle and fund shareholder returns (share repurchases and dividends). This is a structural choice: they are prioritizing returning capital to shareholders and using a flexible credit line to bridge their working capital gap. You can dive deeper into who is driving these decisions by Exploring CRA International, Inc. (CRAI) Investor Profile: Who's Buying and Why?.

The strength here is the quality of their current assets. Accounts receivable and unbilled services make up the bulk of current assets at $243,086 thousand in Q3 2025. Their business model relies on the timely collection of these high-quality, professional-service-related receivables, which are generally very reliable. The clear action is to monitor the Days Sales Outstanding (DSO) metric-a rise here would immediately signal a severe liquidity concern.

Valuation Analysis

You need to know if you're paying a fair price for CRA International, Inc. (CRAI) right now, and the short answer is that while the stock is trading at a premium to its historical P/E average, its forward-looking metrics and strong balance sheet suggest the valuation is defensible, not defintely overvalued.

As a financial analyst, I look at three core multiples to gauge this: Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA). These ratios tell us how the market is pricing the company's earnings, assets, and operational cash flow, respectively. Here's the quick math on where CRAI stands as of late 2025.

• Trailing P/E Ratio: The current trailing P/E is around 20.73. This is slightly above its five-year average of 20.53, suggesting the stock is trading at a small premium based on past earnings.
• Forward P/E Ratio: More importantly, the forward P/E drops to about 19.77, implying analysts expect earnings per share (EPS) to grow in the coming year.
• Price-to-Book (P/B) Ratio: The P/B is high at 5.61, which is typical for a consulting firm like CRA International, Inc. that relies on intellectual capital (people) rather than heavy physical assets.
• EV/EBITDA Ratio: The EV/EBITDA stands at approximately 13.41. This is a solid metric for a business services company and is near the higher end of its historical range, which has a median of 10.88 over the past decade.

The market is pricing in continued growth, but not excessively so. It's a fair price for a quality business with a predictable revenue stream.

Stock Performance and Investor Sentiment

Looking at the stock price trend over the last 12 months, the picture is mixed. The stock has been volatile, trading in a 52-week range between a low of $152.57 and a high of $214.66. As of mid-November 2025, the stock price was around the $180.96 mark. Overall, the price fell by about 9.90% over the last 12 months, which offers a good entry point if you believe the firm can execute on its FY2025 guidance.

The Street's view is overwhelmingly positive, which is a strong signal. Analyst consensus is a clear Buy rating, with 100% of the analysts covering the stock recommending a purchase. Their consensus price target is aggressive at $239.00, suggesting significant upside from the current price level. This tells me the market sees the recent price dip as temporary and expects the company to hit its revenue guidance of $730 million to $745 million for the full year 2025.

Dividend Strength and Payout Profile

CRA International, Inc. is a reliable dividend payer, which is a nice bonus in the consulting sector. They recently increased their quarterly cash dividend to $0.57 per share, announced in October 2025. This move brings the forward annual payout to $2.28 per share.

The dividend profile is healthy, not strained. The forward dividend yield is approximately 1.33%, which is respectable, and the payout ratio is conservative at about 23.93%. This low payout ratio gives the company ample room to continue its nine-year streak of consecutive dividend increases, while still funding growth initiatives and share buybacks. A low payout ratio means the dividend is safe, and there is capacity for future growth. If you want to dig deeper into who is buying this stock and why, I suggest reading Exploring CRA International, Inc. (CRAI) Investor Profile: Who's Buying and Why?

Risk Factors

You've seen CRA International, Inc. (CRAI) deliver a strong performance, raising its full-year 2025 revenue guidance to between $740 million and $748 million. That's a good sign, but as a long-time analyst, I defintely look past the headline numbers to the underlying risks. The core challenge for CRAI is managing its sensitivity to external market forces while controlling internal cost and talent dynamics.

The biggest external risk is the regulatory and macroeconomic environment. CRAI's strength is in high-stakes litigation and antitrust work, so any slowdown in global Mergers & Acquisitions (M&A) activity or a shift in regulatory focus can directly impact their lead flow. You saw this concern highlighted in the Q3 2025 earnings call, where management noted the uncertain global macroeconomic, business, and political conditions.

Internally, the financial health shows some stress points. For instance, the Q1 2025 report showed net cash used in operating activities was a significant $80.0 million. Here's the quick math: this was largely driven by large bonus payments and a rise in unbilled services, which ties up capital and strains liquidity management, even with a strong credit facility. Plus, Selling, General, and Administrative (SG&A) expenses rose 6.6% to $32.5 million in Q1 2025, reflecting higher employee compensation and professional fees.

Operational risks mostly center on talent and utilization-the lifeblood of a consulting firm. The consultant headcount decreased from 997 to 947 year-over-year in Q1 2025, which raises questions about maintaining high utilization rates, especially as they manage growth in international markets like Europe. The firm needs to adapt constantly to evolving legal and compliance landscapes, too.

The company does have clear mitigation strategies, though. They are actively managing their cost of services, successfully reducing the percentage of revenue spent on services from 69.2% to 66.2% in Q1 2025. They also maintain a strong financial foundation, evidenced by an Altman Z-Score of 3.78, which suggests a low bankruptcy risk. Their focus on talent investment in existing and adjacent service offerings is the key to offsetting headcount volatility.

Here is a snapshot of the key risk areas and their impact:

CRAI's resilience comes from its diversified, high-value practices-Antitrust, Energy, and Life Sciences are all posting strong numbers. This diversification is the firm's best defense against sector-specific slowdowns. You can read more about the full financial picture in our detailed analysis: Breaking Down CRA International, Inc. (CRAI) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking for a clear path to sustained returns, and for CRA International, Inc. (CRAI), that path runs straight through their specialized expertise in high-stakes legal and regulatory matters. The company's future growth isn't about chasing every trend; it's about deepening their niche in complex economic consulting, which is a defintely smart move.

The core growth drivers are clear and tied to the increasing complexity of global business and regulation. Their Legal & Regulatory Consulting segment, which generates roughly 80% of revenue, is thriving. This is driven by strong demand in key practices like Antitrust & Competition Economics, Energy, and Life Sciences, all of which posted double-digit revenue growth in the first three quarters of fiscal 2025. Plus, their international operations are expanding fast, with Q3 2025 revenue growing by a substantial 30.3% year-over-year.

Here's a quick look at the practices powering their momentum:

• Antitrust & Competition: Fueled by ongoing merger activity and regulatory scrutiny.
• Energy: Driven by utility planning, risk, compliance, and transaction support.
• Life Sciences: Focused on R&D pipeline opportunities and commercial strategy.

The firm is also strategically investing in its talent pool, a key initiative that directly impacts their service quality. They've been adding Vice Presidents to strengthen practices like Forensic Services and Risk, Investigations & Analytics, ensuring they have the senior-level horsepower for the largest, most complex cases. For an in-depth look at what guides their long-term strategy, you can review their Mission Statement, Vision, & Core Values of CRA International, Inc. (CRAI).

The competitive advantage for CRA International, Inc. is simple: their people and their precision. They are not a generalist firm. Their specialization in economic consulting and litigation support allows them to command premium fees. This is supported by an elite consultant base-about 74% of their senior staff hold advanced degrees, with 40% having PhDs. They are the go-to experts for the biggest players, serving clients that include 85% of the Fortune 100 and 98% of the Am Law 100.

They are also leveraging proprietary analytical tools and advanced data analytics, including predictive analytics for litigation support, which gives their clients a real edge in high-stakes disputes. This commitment to superior analytics is what keeps them ahead of the curve, even against larger competitors.

Based on their strong performance through the first three quarters, CRA International, Inc. raised its fiscal 2025 guidance in October 2025. This confidence is a tangible sign of the durability of their business model, which is less susceptible to typical economic downturns because demand for litigation and regulatory expertise remains high.

Here's the quick math on the updated 2025 outlook:

What this estimate hides is the firm's commitment to shareholders: they also increased their quarterly cash dividend by 16% to $0.57 per share, a clear signal that management sees this growth as sustainable and is committed to returning value. The focus on complex, cross-practice collaborations also means larger matters, which translates directly into higher revenue per engagement. That's a powerful driver for the bottom line.