Exponent (NASDAQ:EXPO) executives highlighted a “strong finish” to fiscal 2025, pointing to broad-based demand across proactive and reactive services as customers grapple with increasingly complex technologies and higher expectations for safety, reliability, and performance. Management also issued an outlook calling for high single-digit net revenue growth in the first quarter and full year 2026, alongside steady-to-improving profitability metrics.
Fourth-quarter demand supported by proactive and reactive work
Chief Executive Officer Catherine Corrigan said fourth-quarter growth in proactive engagements was driven by increased demand for user research and consumer electronics work, as well as continued expansion of utility-sector risk management. She added that proactive engagements also increased in life sciences, including regulatory compliance, product performance, and safety consulting for medical devices.
Q4 financial results: revenue growth and margin expansion
Chief Financial Officer Rich Schlenker emphasized that fiscal 2025 returned to a 13-week fourth quarter and a 52-week year, compared with fiscal 2024, which included an extra week. He said the extra week created a headwind of approximately 7% to fourth-quarter revenue growth and 1.3% for the full year.
For the fourth quarter, total revenues increased 8% to $147.4 million, while revenues before reimbursements (net revenues) rose 5% to $129.4 million. Schlenker said that adjusting for the calendar difference, net revenues would have grown in the low double digits.
Fourth-quarter net income was $24.8 million, or $0.49 per diluted share, compared with $23.6 million, or $0.46 per diluted share, a year earlier. EBITDA rose to $34.7 million, representing 26.8% of net revenues, up from $31.2 million, or 25.2% of net revenues, in the prior-year period.
Operational metrics reflected the calendar shift as well. Billable hours were approximately 357,000, down 1% year-over-year; excluding the missing week, Schlenker said billable hours would have increased about 6%. Utilization was 69%, up from 68% a year earlier, while the average number of technical full-time equivalent (FTE) employees increased 5% to 992. The realized rate increase was approximately 5% year-over-year in the quarter.
Schlenker said fourth-quarter G&A expenses increased 17% to $6.7 million due to higher travel and meals tied to business development, professional development, and recruiting activity. Interest income declined to $1.9 million, which he attributed to lower cash levels and lower interest rates.
During the quarter, Exponent distributed $14.9 million through dividends and repurchased $25.1 million of common stock at an average price of $70.57, with capital expenditures of $2.7 million.
Full-year 2025: modest growth, slightly lower net income
For the full year, total revenues and net revenues each grew 4% to $582.0 million and $536.8 million, respectively. Net income decreased 3% to $106.0 million, or $2.07 per diluted share, versus $109.0 million, or $2.11 per diluted share, in fiscal 2024. EBITDA increased to $148.1 million from $147.1 million, but the EBITDA margin declined 80 basis points to 27.6% of net revenues. Schlenker said the year-over-year margin decline was expected, primarily due to costs associated with a managers’ meeting held during 2025 and the renewal of Exponent’s Phoenix land lease in June 2024.
Full-year billable hours were approximately 1,468,000, down 2% year-over-year, and utilization was 72.5%, compared with 72.9% in 2024. Average technical FTEs were 973, up 1%, and the realized rate increase for the year was approximately 5%.
Exponent generated $131.7 million in cash from operations during 2025 and spent $9.4 million on capital expenditures. The company distributed $61.5 million through dividends and repurchased $97.8 million of stock at an average price of $72.22. Cash and cash equivalents were $221.9 million at year-end.
Segment performance: Engineering and Other Scientific led growth
Exponent’s Engineering and Other Scientific segment represented 85% of fourth-quarter net revenues and 84% for the full year. Net revenues in the segment increased 7% in the quarter and 4% for the year, driven by proactive services including utility risk management, regulatory support for medical device clients, and user research for consumer electronics customers. Schlenker also cited disputes-related services for construction, energy, and transportation as a growth driver during the quarter.
The Environmental and Health segment represented 15% of fourth-quarter net revenues and 16% for the full year. Net revenues in the segment decreased 5% in the fourth quarter and were approximately flat for the full year. Schlenker said the fourth-quarter decline was primarily due to the one-week difference versus fiscal 2024.
2026 outlook: high single-digit growth, steady margins, headcount expansion
Management guided to high single-digit net revenue growth for both the first quarter and full year 2026 versus the comparable periods in 2025. Exponent expects first-quarter 2026 EBITDA margin of 27.5% to 28.5% of net revenues (compared with 27.3% in the first quarter of 2025) and full-year 2026 EBITDA margin of 27.6% to 28.1% (compared with 27.6% in 2025).
Schlenker said the company expects average technical FTEs to increase approximately 4% year-over-year in the first quarter and 4% to 5% for the full year, reflecting increased demand and corresponding recruiting. Utilization is expected to be 75% to 76% in the first quarter and 72.5% to 73% for the full year; management reiterated a long-term view that sustained mid-seventies utilization is achievable.
Exponent expects realized rate increases of 3.5% to 4% in the first quarter and 3% to 3.5% for the full year, with Schlenker noting that lower rate realization is based on historical trends as hiring rates increase.
Additional guidance items included:
- Stock-based compensation: $26.0 million to $26.5 million for full-year 2026 (with first-quarter expense of $8.6 million to $9.0 million)
- Other operating expenses: $53.5 million to $54.0 million for full-year 2026
- G&A expenses: $27.1 million to $28.1 million for full-year 2026
- Interest income: $1.7 million to $1.9 million per quarter in 2026
- Tax rate: approximately 30.4% in first-quarter 2026 and 28.5% for full-year 2026
- Capital expenditures: $12 million to $14 million for full-year 2026
In the Q&A, Schlenker said management’s internal forecasting tends to have stronger visibility over roughly six to eight weeks, with “positive” trends supporting the guidance range. He also said the company expects to hire in line with demand and maintain or improve utilization, supporting an expectation that margins will be flat or up in 2026.
Corrigan said consumer electronics activity in the quarter was driven particularly by an uptick in user research work, including engagements involving health-related products and novel AI-enabled devices delivered through new form factors. She also discussed AI as a net contributor to Exponent’s growth in areas including advanced driver assistance systems and automated vehicles, user research, data center infrastructure work, and utility-related risk modeling. Corrigan estimated that “somewhere in the mid-teens%” of Exponent’s business is related to AI either directly or “one step removed,” while also emphasizing that Exponent’s role often involves applying scientific and engineering judgment to complex “edge cases” where algorithms alone can fall short.
About Exponent (NASDAQ:EXPO)
Exponent, Inc (NASDAQ: EXPO) is an engineering and scientific consulting firm that offers multidisciplinary analysis and advisory services to clients across a range of industries. The company’s expertise spans mechanical, materials and corrosion engineering, civil and structural engineering, electrical engineering, industrial hygiene, toxicology and health sciences, and failure analysis. Exponent provides support for product design, performance evaluation, litigation consulting, and regulatory compliance, helping manufacturers, insurers, law firms and government agencies address complex technical challenges.
Founded in 1967 in Menlo Park, California, Exponent has grown from a small failure-analysis laboratory into a global consulting practice.
