WASHINGTON: FTI Consulting’s strategic communications segment posted a Q3 organic revenue drop of 11.7% to $53 million. The decline was steeper, at 13.7%, when ignoring the impact of currency exchange.
The strategic comms group saw lower demand for M&A and financial communications and significant corporate reputation work, especially in the energy and financial services sectors, said the segment’s global leader, Mark McCall. There was also a $2.3 million decline in pass-through revenues.
“Our clients are continuing to deal with unprecedented uncertainty and disruption, not just with the health crisis but the economic challenges,” McCall said. “Not unlike last quarter, there was a continued drop off in transactions compared to last year where we haven’t seen the large corporate reputational mandates. We’re just very focused on helping our clients manage through this crisis.”
In the past, FTI has touted its strategic comms segment picking up business from other groups within the network. However, in Q3, the corporate finance and restructuring segment posted a 23.4% increase in revenue to $236.6 million, and the economic consulting group saw a 9.4% increase to $155 million.
“There is not a direct correlation between the corporate finance growth and our growth,” McCall explained. “But, over the long term, the amount of business we do [for them] has grown exponentially. It has less to do with their growth and more how we partner with them and go to market together. It just takes time, and the rest of our business is doing very well.”
Despite revenue declines in Q3 and Q2, the company has not laid off communications staff, McCall said, instead sticking with its strategy of investing in new hires.
“We are pleased with where we are and continue to hire into the area of life sciences and we’re hiring into public affairs in EMEA and Asia where we’re growing,” he said. “We are staying with our strategy and focusing on the longer term for the business.”
The hires will help FTI prepare for a potential post-pandemic recovery, McCall added.
“It’s a portfolio of businesses, and we like to think about it that way,” he said. “We’ve seen the business cycle in the energy market before, and we’re focused less on the near term ebb and flow and more on the long term potential.”
For FTI as a whole, Q3 revenue was up 4.9% to $622.2 million. Its forensic and litigation consulting segment dipped 16.5% to $119.1 million, and technology segment revenue increased 2.6%, to $58.6 million. Net income was down by 16.9% to $50.2 million.