Economic consulting firm CRA International (NASDAQ: CRAI) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 10.8% year on year to $185.9 million. The company’s full-year revenue guidance of $744 million at the midpoint came in 1.3% above analysts’ estimates. Its non-GAAP profit of $2.06 per share was 14.4% above analysts’ consensus estimates.

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“CRA continued its run of strong results into the third quarter of fiscal 2025 as revenue increased by 10.8% year over year to $185.9 million,” 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

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $731.1 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’s sales grew at a solid 8.3% 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 9.7% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, CRA reported year-on-year revenue growth of 10.8%, and its $185.9 million of revenue exceeded Wall Street’s estimates by 3.6%.

Looking ahead, sell-side analysts expect revenue to grow 2.1% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will face some demand challenges.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

CRA has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 10%, higher than the broader business services sector.

Looking at the trend in its profitability, CRA’s operating margin rose by 1.8 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q3, CRA generated an operating margin profit margin of 9.3%, down 1.7 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

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 20.9% compounded annual growth rate over the last five years, higher than its 8.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into CRA’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, CRA’s operating margin declined this quarter but expanded by 1.8 percentage points over the last five years. Its share count also shrank by 16.5%, and these factors together 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 27.6% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, CRA reported adjusted EPS of $2.06, up from $1.77 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects CRA’s full-year EPS of $8.19 to grow 4.9%.

Key Takeaways from CRA’s Q3 Results

It was encouraging to see Allegro MicroSystems’s revenue guidance for next quarter beat analysts’ expectations. We were also glad its inventory levels shrunk. On the other hand, its EPS was in line and its adjusted operating income fell slightly short of Wall Street’s estimates. Overall, this was a mixed quarter. The stock traded up 6.6% to $32.80 immediately after reporting.

CRA may have had a good quarter, but does that mean you should invest right now? 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 for active Edge members.