Exponent Raises Target Revenue Growth to 10%–11% After Third-Quarter Revenue Rises 18%
Key Facts
Exponent raised its forecast for fiscal 2026 revenue before reimbursable expenses to 10%–11%, from a previous forecast of 9% to 10%, after reporting third-quarter results on October 29. The company said its full-year EBITDA margin would be 28.0%–28.3% of revenue before reimbursable expenses, compared with a previous forecast of 27.8% to 28.1%. The results cover a quarter that ended on October 2, 2026, and showed revenue and profit growth compared with the same quarter last year. The revenue-before-reimbursable-expenses measure distinguishes service revenue from expenses the company recovers from clients. The raised forecast came as revenue before those expenses continued to grow, while the EBITDA margin improved during the quarter.
Third-quarter total revenue rose 18% to $173.7 million, from $147.1 million in the comparable period of 2025. Revenue before reimbursable expenses increased 12% to $153.1 million, compared with $137.1 million a year earlier. The difference between the two measures reflects the reimbursable expenses from clients included in total revenue, while the increase in revenue before those expenses reflects growth in the value of services the company provides. In the first three quarters of 2026, total revenue grew 18% to $511.6 million, compared with $434.6 million in the same period of 2025. Revenue before reimbursable expenses rose 11% to $453.7 million from $407.4 million, leaving its cumulative growth below the pace of total revenue growth.
Third-quarter net income rose to $30.9 million, compared with $28.0 million in the third quarter of 2025. Diluted earnings per share increased to $0.64 from $0.55. EBITDA, a measure of earnings before interest, taxes, depreciation and amortization, was $45.0 million, compared with $38.8 million in the comparable period. Its margin as a share of revenue before reimbursable expenses rose to 29.4% from 28.3%. The company attributed the margin improvement to higher revenue before reimbursable expenses and increased operating leverage, noting that the utilization rate was 77% in the quarter, according to the chief financial officer.
The Engineering and Other Sciences segment accounted for 85% of the company's third-quarter revenue before reimbursable expenses, and its revenue grew 13% from the same period a year earlier. Exponent said growth in proactive work was driven by increased demand for user research studies as clients accelerated the development of AI-powered products. These studies examine how users interact with technology, according to the company's description of the quarter's activity. Elsewhere in the business, demand related to litigation and failure analysis rose in the chemicals, consumer products and transportation sectors. The company said the quarter's strength included these services alongside user research, without breaking out revenue for each area separately.
The fourth-quarter forecast points to slower growth in revenue before reimbursable expenses, with the company setting a range of 8% to 10% compared with the fourth quarter of 2025. It also forecast an EBITDA margin of 26.3% to 26.8% of revenue before reimbursable expenses, below the full-year target range of 28.0%–28.3%. The forecast follows 12% growth in revenue before reimbursable expenses in the third quarter and 11% growth in the first three quarters of the year. The fiscal 2026 range is measured against fiscal 2025, while the fourth-quarter forecast is compared with the same quarter a year earlier. The company also announced on October 29 a cash dividend of $0.31 per share, payable to shareholders of record on December 4, with payment scheduled for December 18, 2026.
After the results were announced, the company's shares closed at $78.31 in the regular session on October 29, up 1.56% from the previous close of $77.11. The price rose 0.24% to $78.50 in after-hours trading. In the November 6 session, the shares closed at $84.02. These prices place the market reaction in the days following the results announcement, while the operational focus of the disclosure remained revenue growth before reimbursable expenses and a modest increase in the annual growth range. The update combines a higher annual growth forecast with a lower-growth fourth-quarter range and a margin below the annual target.