CRAI Filings — Cra International, Inc. - FilingSpy
CRAI
Cra International, Inc.
A global consulting firm that puts economists and financial experts to work in the courtroom and the boardroom, advising law firms, corporations, and governments on antitrust, damages, intellectual property, and mergers, plus management and energy strategy. It was founded in 1965 in Boston by three Harvard and MIT graduates and named after the city's Charles River. One of the founders was an economist whose academic training still shows: a large share of CRA's senior staff hold doctorates, and its experts regularly testify in court.
Forgivable loan amortization swung back to a headwind, compressing gross margin 1.8 points and limiting net income growth to 11.4% despite a 12.8% revenue increase.
costs returned as a this quarter. rose 12.8% to $210.8 million, but contracted 1.8 points to 29.4% as costs of services grew faster than revenue, and a higher tax rate held growth to 11.4%. The company is growing its top line through higher headcount and utilization, but the non-cash cost of retaining talent is now compressing the profit it can convert from that revenue.
Key takeaways
increased, reversing the seen in the first quarter and driving costs of services up 15.7% to $148.7 million, which outpaced the 12.8% increase and compressed by 1.8 points to 29.4%.
rose 12.8% to $210.8 million, driven by a 31-person increase in consultant headcount and a one-point rise in the to 77%.
rose 11.4% to $13.5 million, a growth rate that lagged as the higher cost of services and a 3.7-point increase in the to 32.9% weighed on earnings.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 revenue rose 12.8% to $210.8M on higher headcount and utilization, but margin pressure and a higher tax rate limited net income growth.
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Second-quarter grew 12.8% to $210.8M, driven by a 31-person increase in consultant headcount and a one-point rise in utilization to 77%.
SG&A expenses were nearly flat at $35.3 million, falling to 16.7% of from 18.8% a year ago, helped by a $1.9 million drop in commissions to non-employee experts.
Year-to-date was a $118.3 million use of cash, driven by prior-year bonus payments and forgivable loan advances, and borrowings on the rose to $192.0 million.
What changed
The that lifted by 4.3 points in Q2 last year and by 3.0 points in Q1 this year has reversed: the charge rose this quarter, compressing gross margin by 1.8 points and confirming the swing first flagged in Q3 of last year.
Consultant headcount rose to 971 from 947 a year ago, the first increase in headcount since Q2 of fiscal 2024, reversing the trend of doing more with fewer consultants that had driven utilization to 77%.
The rose to 32.9% from 29.2% a year ago, driven by higher nondeductible executive compensation, and sits above the 25-30% range the company had previously indicated as typical.
What to watch
Whether remains at this elevated level or declines again, given its direct impact on and the swing from to within the past year.
Whether the 77% can be sustained with consultant headcount now rising, since further headcount growth without a corresponding increase in billable hours would pressure the rate.
The collection of unbilled and the seasonal cash inflow in the second half, which will determine whether the $192.0 million drawn on the can be repaid.
The , which reached 32.9% this quarter, and whether it reverts toward the 25-30% range or remains elevated due to nondeductible executive compensation.
Costs of services rose 15.7% to $148.7M, outpacing growth and pushing the cost ratio to 70.6%, mainly due to higher employee compensation and .
SG&A expenses were nearly flat at $35.3M, but as a percentage of they fell to 16.7% from 18.8%, helped by a $1.9M drop in commissions to non-employee experts.
The jumped to 32.9% from 29.2%, primarily from higher nondeductible executive compensation, partially offset by a deferred tax asset remeasurement.
Year-to-date declined 18.3% to $24.6M despite an 11.7% increase, as cost of services and a higher ETR (34.3% vs. 27.9%) compressed margins.
Liquidity remains strong with $21.4M in cash and $77.3M available on the , though operating activities used $118.3M year-to-date largely due to bonus payments and forgivable loan advances.
Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in our exposure to market risk during the fiscal quarter ended July 4, 2026. For information regarding our exposure to certain market risks, see Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk” of our Annual Repor…
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There have been no material changes in our exposure to market risk during the fiscal quarter ended July 4, 2026. For information regarding our exposure to certain market risks, see Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk” of our Annual Report on Form 10-K for the fiscal year ended January 3, 2026.
There are many risks and uncertainties that can affect our future business, financial performance or results of operations. In addition to the other information set forth in this report, please review and consider the information regarding certain factors that could materially a…
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There are many risks and uncertainties that can affect our future business, financial performance or results of operations. In addition to the other information set forth in this report, please review and consider the information regarding certain factors that could materially affect our business, financial condition or future results set forth under Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 3, 2026. There have been no material changes to these risk factors during the fiscal quarter ended July 4, 2026.