Exponent (NASDAQ:EXPO) reported double-digit revenue and earnings growth for the second quarter of 2026, supported by demand for user research involving artificial intelligence-enabled products, utility-sector risk management work, and dispute-related consulting across consumer products, chemicals and transportation.
Total revenue increased 21% year over year to $171.6 million, while revenue before reimbursements, which the company calls net revenue, rose 12% to $148.9 million. Net income increased 11% to $29.4 million, and diluted earnings per share rose 15% to $0.60 from $0.52 a year earlier.
AI-Enabled Product Research Drives Growth
Corrigan said Exponent’s user research engagements are becoming broader and more complex, often requiring a combination of human factors, biomechanics, engineering and data-science expertise. The company conducts studies designed to assess how people interact with products and technologies, including smart glasses, immersive technologies and health and wellness wearables.
The second quarter also benefited from one large user research study that represented about 4% of net revenue, above Exponent’s prior expectation that the project would account for roughly 2% of net revenue. Chief Financial Officer Eric Anderson said the project expanded in scope during the quarter, moderated toward the end of the period, and is expected to continue at a level of approximately 2% of net revenue through the rest of the year.
Anderson said the broader user-research business has expanded in the number of clients, projects and types of devices being evaluated. Corrigan said the company is seeing the work diversify beyond consumer electronics and into life sciences, including health-related wearables and more sophisticated medical-device applications.
During the question-and-answer session, Corrigan said AI is contributing to both proactive and reactive demand. In reactive work, she cited advanced driver-assistance technologies, where automotive product-liability matters increasingly involve questions around system performance, automated braking, driver distraction and driver monitoring. She also identified data-center infrastructure as a potential source of failure-analysis work involving cooling systems, power inverters and battery energy-storage systems.
Utility, Chemical and Transportation Demand
Exponent said proactive activity was also supported by risk-management and infrastructure engagements in the utility sector. The company said clients are assessing the resilience and reliability of critical systems amid higher power demand, extreme weather and increasing electric-grid complexity.
In its reactive business, the company cited demand for product-safety, recall, incident-investigation and dispute work in consumer products. Chemical-sector activity included evaluating legacy substances and emerging chemicals of concern, while transportation work included failure analysis related to advanced driver-assistance systems.
President John Pye said AI is moving beyond purely digital applications and into physical products and systems such as vehicles, wearables, infrastructure and robotic systems. He said these technologies must operate reliably in unpredictable real-world conditions, creating a need for expertise across engineering, physical sciences, data science and human factors.
Corrigan identified consumer electronics, chemicals and utilities as key current verticals for proactive work. She said Exponent also sees opportunities in transportation and medical devices as regulation, product complexity and AI integration increase.
Margins, Utilization and Capital Returns
Second-quarter EBITDA rose 16% to $42.7 million. EBITDA margin was 28.7% of net revenue, compared with 27.8% in the prior-year quarter.
Billable hours increased 8% to approximately 390,000. Average technical full-time employees increased 6% to 1,012, while utilization rose to 74% from 72% a year earlier. The company’s realized rate increase was about 4% during the quarter.
The engineering and other scientific segment, representing 85% of net revenue, recorded 13% net revenue growth. The environmental and health segment, representing 15% of net revenue, grew net revenue 9%, driven by work evaluating chemicals’ effects on human health and the environment.
Exponent repurchased $67.4 million of common stock during the quarter at an average price of $59.88 per share and paid $14.8 million in dividends. Over the past 12 months, the company returned $272 million to shareholders, including $211 million in share repurchases and $61 million in dividends. Its board approved a further $50 million increase to the stock-repurchase program.
Anderson said the company expects to remain active in repurchasing stock when shares pull back, though at a lower pace than in the first half of 2026 or the second half of 2025. He said Exponent expects to generate more than $100 million of free cash flow in the second half of 2026.
Full-Year Outlook Raised
Exponent raised its 2026 outlook and now expects net revenue growth of 9% to 10%, with EBITDA representing 27.8% to 28.1% of net revenue. The company previously did not state its earlier full-year targets during the call.
For the third quarter, Exponent expects net revenue growth of 8% to 10% year over year and EBITDA margin of 28.0% to 28.5%. It expects average technical full-time-equivalent employees to rise 4% to 5% in the quarter and utilization of 74% to 75%.
For the full year, Exponent expects technical employee growth of 4.5% to 5%, utilization of 72.5% to 73%, and realized rate increases of 3.5% to 4%. Capital expenditures are projected at $12 million to $14 million.
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.
