CRA Q3 2026 Earnings: Broad-Based Growth Lifts Revenue Guidance

Charles River Associates (Nasdaq: CRAI) reported fiscal Q3 2026 revenue of $214.9 million, up 15.6% year over year, and diluted EPS of $2.20, up 27.2% from $1.73, for the quarter ended October 3, 2026. Net income reached $13.9 million, while broad-based practice and geographic growth produced record third-quarter net income and diluted EPS despite a lower non-GAAP EBITDA margin.

Core Results

Revenue increased by about $29.0 million from the prior-year quarter. GAAP operating margin expanded as selling, general and administrative expenses fell to 16.5% of revenue from 18.1%, more than offsetting a slight increase in costs of services as a percentage of revenue.

GAAP earnings grew considerably faster than adjusted earnings because the prior-year GAAP comparison included $3.7 million of restructuring and separation items excluded from non-GAAP results. A roughly 4.4% reduction in diluted weighted-average shares also helped both GAAP and non-GAAP EPS grow faster than their corresponding net income measures.

Business and Practice Performance

Growth was spread across CRA’s consulting portfolio rather than concentrated in one practice. Seven practices expanded year over year and represented approximately 95% of quarterly revenue; Forensic Services, Life Sciences, and Risk, Investigations & Analytics each recorded double-digit growth, while Antitrust & Competition Economics reached a quarterly revenue record.

North America grew nearly three times as fast as international operations, making it the stronger geographic contributor. Consultant headcount increased 6.2% from a year earlier, while utilization was 78%.

Revenue Growth Outpaced Non-GAAP EBITDA

The main profitability issue was that non-GAAP EBITDA growth of 11.2% lagged the 15.6% increase in revenue, reducing the EBITDA margin by 50 basis points to 12.6%. Costs of services increased slightly to 70.9% of revenue from 70.7%, indicating that higher revenue did not translate fully into adjusted operating leverage.

Management also highlighted non-cash forgivable loan amortization associated with talent investments. This expense is included in CRA’s EBITDA metrics and is expected to increase by approximately $15 million in fiscal 2026, with about $14 million already recorded during the first three quarters. The company did not separately quantify its effect on the third-quarter margin.

GAAP operating profitability moved in the opposite direction because SG&A and depreciation and amortization consumed smaller shares of revenue. The prior-year restructuring-related comparison further explains why GAAP net income and EPS growth substantially exceeded their non-GAAP counterparts.

Cash Flow, Balance Sheet, and Capital Allocation

For the first three quarters of fiscal 2026, CRA used $43.9 million of operating cash, compared with $37.6 million used in the prior-year period. Accounts receivable and unbilled services consumed $42.5 million of cash, while other working-capital items used $70.4 million. At quarter-end, accounts receivable and unbilled services stood at $289.6 million, up from $248.9 million at the beginning of the fiscal year.

Cash and cash equivalents were $20.4 million, compared with $18.2 million at the start of the year. The revolving credit balance increased to $75.0 million from $34.0 million, and CRA also reported a $72.9 million non-current term loan. Quarterly net interest expense consequently rose to $2.6 million from $1.8 million.

CRA repurchased $49.3 million of common stock and paid $11.0 million in dividends during the first three quarters. The company raised its quarterly dividend by 17.5%, from $0.57 to $0.67 per share, after returning $3.6 million through dividends during the third quarter.

Earnings Guidance

Citing its results and healthy sales pipeline, CRA increased both ends of its full-year constant-currency revenue outlook. It also narrowed the non-GAAP EBITDA margin range by raising the lower bound and reducing the upper bound, leaving the midpoint unchanged at 12.5%.

CRA expects the constant-currency adjustment to reduce reported annual revenue by approximately $2.9 million and reported annual EBITDA by about $0.4 million. Investors should also account for the calendar comparison: fiscal 2026 has 52 weeks, while fiscal 2025 contained an additional week in the fourth quarter.

Recent Insider Transactions

Over the latest six-month period in the supplied insider data, insiders purchased 7,851 shares through 11 transactions and sold 19,712 shares through six transactions. That resulted in net sales of 11,861 shares, equal to 4.8% of the reported 234.88 thousand shares held by insiders.

The most recent disclosed sales with transaction values were as follows. These transactions are presented as reported and do not by themselves establish insiders’ views of CRA’s prospects.

The data also listed four director stock grants at a zero transaction price on July 16. Two August 4 records lacked transaction type and value information and therefore do not support a conclusion about buying or selling activity.

Risks Investors Should Watch

• Adjusted margin pressure: Revenue grew faster than non-GAAP EBITDA, and the EBITDA margin declined by 50 basis points. The higher expected forgivable loan amortization expense remains an additional cost to monitor.
• Working-capital and cash-flow demands: Operating cash outflow widened during the first three quarters as receivables and other working-capital items consumed cash.
• Higher borrowing and interest expense: Revolver borrowings increased, CRA added a term loan, and quarterly net interest expense rose from the prior year.
• Demand and engagement timing: Management cautioned that global macroeconomic, business, and political uncertainty could affect clients and consulting demand.
• Calendar and currency comparisons: Fiscal 2026 has one fewer week than fiscal 2025, while foreign exchange is expected to reduce reported full-year revenue and EBITDA relative to constant-currency figures.

Summary

CRA’s fiscal third quarter featured broad-based revenue growth, higher GAAP profitability, and an increased full-year revenue outlook. The main counterweights were a lower non-GAAP EBITDA margin and continued year-to-date operating cash outflow, making adjusted cost control, receivables, borrowing levels, and execution against the raised revenue guidance the principal areas to monitor.