Exponent, Inc. Reports Slight Revenue Increase but Decline in Net Income for Q1 2025

Exponent, Inc. reported its financial results for the first quarter of 2025, revealing a slight increase in revenues to $145.5 million, up from $144.9 million in the same period last year. Revenues before reimbursements also saw a modest rise, reaching $137.4 million compared to $137.2 million in the prior year. The company attributed this growth to increased demand for its failure analysis services, particularly in the chemicals, transportation, and utilities sectors, despite facing challenges in the consumer electronics industry due to product development cycles.

Net income for the quarter decreased by 12% to $26.7 million, down from $30.1 million in the previous year, resulting in diluted earnings per share of $0.52, compared to $0.59 a year earlier. The decline in profitability was primarily driven by higher operating expenses, including costs associated with an extended land lease in Arizona, increased stock-based compensation, and a negative tax impact related to stock-based awards. The effective tax rate rose to 29.4%, influenced by these factors.

Operationally, Exponent reported a 4% decrease in billable hours, totaling 376,000, while maintaining a utilization rate of 75%. The number of technical full-time equivalent employees also fell by 4% to 966. The Engineering and Other Scientific segment generated $122.1 million in revenue, a slight increase from the previous year, while the Environmental and Health segment saw a minor decline to $23.4 million. The company noted that the decrease in billable hours was offset by higher billing rates in both segments.

In terms of cash flow, Exponent generated $7.3 million from operating activities, a decrease from $10.4 million in the prior year. The company reported cash and cash equivalents of $245.1 million as of April 4, 2025, down from $258.9 million at the beginning of the fiscal year. The decrease in cash flow from financing activities was attributed to reduced stock repurchases and payroll taxes for restricted stock units, although dividends increased during the quarter.

Looking ahead, Exponent remains focused on enhancing its engineering and scientific capabilities to meet evolving client needs. The company plans to continue investing in its infrastructure and talent while managing operating expenses. Exponent's Board of Directors has declared a cash dividend of $0.30 per share, payable on June 20, 2025, reflecting its commitment to returning value to shareholders.