Economic consulting firm CRA International (NASDAQ: CRAI) announced better-than-expected revenue in Q2 CY2025, with sales up 9% year on year to $186.9 million. The company’s full-year revenue guidance of $737.5 million at the midpoint came in 1.8% above analysts’ estimates. Its non-GAAP profit of $1.88 per share was 2.4% above analysts’ consensus estimates.

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“Continued momentum in the business and demand for our services drove CRA’s quarterly revenue to $186.9 million, representing 9.0% year-over-year growth and the highest quarterly revenue in the company’s history,” said Paul Maleh, CRA’s President and Chief Executive Officer.

Company Overview

Often retained for high-stakes matters with multibillion-dollar implications, CRA International (NASDAQ: CRAI) provides economic, financial, and management consulting services to corporations, law firms, and government agencies for litigation, regulatory proceedings, and business strategy.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $712.9 million in revenue over the past 12 months, CRA is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. On the bright side, it can grow faster because it has more room to expand.

As you can see below, CRA grew its sales at a solid 8.2% compounded annual growth rate over the last five years. This shows it had high demand, a useful starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. CRA’s annualized revenue growth of 8.3% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

This quarter, CRA reported year-on-year revenue growth of 9%, and its $186.9 million of revenue exceeded Wall Street’s estimates by 3.6%.

Looking ahead, sell-side analysts expect revenue to grow 5.2% over the next 12 months, a deceleration versus the last two years. Still, this projection is above the sector average and suggests the market sees some success for its newer products and services.

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Operating Margin

CRA was profitable over the last five years but held back by its large cost base. Its average operating margin of 9.9% was weak for a business services business.

On the plus side, CRA’s operating margin rose by 2.9 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q2, CRA generated an operating margin profit margin of 10.6%, up 4 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

CRA’s EPS grew at an astounding 18.4% compounded annual growth rate over the last five years, higher than its 8.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into CRA’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, CRA’s operating margin expanded by 2.9 percentage points over the last five years. On top of that, its share count shrank by 14.7%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For CRA, its two-year annual EPS growth of 19.4% is similar to its five-year trend, implying strong and stable earnings power.

In Q2, CRA reported adjusted EPS at $1.88, up from $1.83 in the same quarter last year. This print beat analysts’ estimates by 2.4%. Over the next 12 months, Wall Street expects CRA’s full-year EPS of $7.90 to grow 4.6%.

Key Takeaways from CRA’s Q2 Results

We enjoyed seeing CRA beat analysts’ revenue expectations this quarter. We were also glad its full-year revenue guidance exceeded Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. Investors were likely hoping for more, and shares traded down 3.4% to $167.47 immediately following the results.

Is CRA an attractive investment opportunity at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.