Exponent’s first quarter results reflected steady demand across its diversified consulting portfolio, even as year-over-year sales held flat. Management credited resilient performance in reactive services—particularly litigation support and failure analysis for chemicals, transportation, and utilities clients—as offsetting softness in proactive project work, which was pressured by shifting client priorities and macroeconomic caution. CEO Catherine Corrigan acknowledged, “Despite starting the year with a 5% to 6% headwind in technical full-time equivalent employees due to our focus on aligning resources with demand, we achieved approximately flat revenues due to strong activity from a few key industries.” The company also noted improved employee retention and modest sequential headcount growth.
Is now the time to buy EXPO? Find out in our full research report (it’s free).
Exponent (EXPO) Q1 CY2025 Highlights:
- Revenue: $137.4 million vs analyst estimates of $134.6 million (flat year on year, 2.1% beat)
- Adjusted EBITDA: $45.72 million vs analyst estimates of $34.59 million (33.3% margin, 32.2% beat)
- Revenue Guidance for the full year is $529 million at the midpoint, below analyst estimates of $532.6 million fix-here2
- EBITDA guidance for the full year is $141 million at the midpoint, below analyst estimates of $143 million
- Operating Margin: 32.3%, up from 22.4% in the same quarter last year
- Market Capitalization: $3.8 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Exponent’s Q1 Earnings Call
- Jasper Bibb (Truist): Asked about the relative growth rates in proactive versus reactive work. CFO Rich Schlenker replied that reactive business grew in the low single digits while proactive services saw a slight decline.
- Jasper Bibb (Truist): Inquired about changes in proactive demand across end markets, especially with supply chain adjustments. CEO Catherine Corrigan said demand from supply chain shifts is emerging but takes time to fully develop.
- Andrew Nicholas (William Blair): Sought to clarify the drivers of softer utilization guidance and whether client delays could worsen. Schlenker attributed most of the impact to holiday timing and minor market softness, with guidance reflecting current, not worsening, trends.
- Andrew Nicholas (William Blair): Questioned if potential upside from supply chain or regulatory changes could materialize in the second half of the year. Corrigan said there is upside potential in 2025, particularly in chemicals and health-related regulatory work.
- Josh Chan (UBS): Asked about macroeconomic impacts on client decision-making. Schlenker and Corrigan emphasized that while clients may delay proactive projects, essential litigation and regulatory work tends to persist through cycles.
Catalysts in Upcoming Quarters
In the coming quarters, our team will closely monitor (1) client activity levels in proactive consulting, especially around product development and supply chain projects; (2) the pace of hiring and utilization in high-demand sectors like vehicle automation and digital health; and (3) regulatory and litigation trends in chemicals and environmental health, including any acceleration in demand related to PFAS and safety-critical technologies. Execution against these drivers will be key to assessing Exponent’s ability to navigate persistent uncertainty and capitalize on sector-specific growth.
Exponent currently trades at $74.96, down from $77.75 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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