Exponent’s (NASDAQ:EXPO) Q2: Beats On Revenue But Quarterly Revenue Guidance Slightly Misses Expectations

Scientific consulting firm Exponent (NASDAQ:EXPO) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 7.2% year on year to $142 million. On the other hand, next quarter’s revenue guidance of $131.3 million was less impressive, coming in 1.5% below analysts’ estimates. Its GAAP profit of $0.52 per share was 5.6% above analysts’ consensus estimates.

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“Second quarter revenues were flat but exceeded expectations, reflecting our team’s disciplined execution and resilience in this dynamic environment,” stated Dr. Catherine Corrigan, President and Chief Executive Officer.

Company Overview

With a team of over 800 consultants holding advanced degrees in 90+ technical disciplines, Exponent (NASDAQ:EXPO) is a science and engineering consulting firm that investigates complex problems and provides expert analysis for clients across various industries.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $528.2 million in revenue over the past 12 months, Exponent 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, Exponent grew its sales at a decent 6.5% compounded annual growth rate over the last five years. This shows its offerings generated slightly more demand than the average business services company, a useful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Exponent’s recent performance shows its demand has slowed as its annualized revenue growth of 4.2% over the last two years was below its five-year trend.

This quarter, Exponent reported year-on-year revenue growth of 7.2%, and its $142 million of revenue exceeded Wall Street’s estimates by 8.5%. Company management is currently guiding for a 5% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 3.7% over the next 12 months, similar to its two-year rate. This projection is underwhelming and implies its newer products and services will not catalyze better top-line performance yet.

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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.

Exponent’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 24.3% over the last five years. This profitability was elite for a business services business thanks to its efficient cost structure and economies of scale.

Looking at the trend in its profitability, Exponent’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Exponent generated an operating margin profit margin of 12.1%, down 14.9 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

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.

Exponent’s unimpressive 5.7% annual EPS growth over the last five years aligns with its revenue performance. On the bright side, this tells us its incremental sales were profitable.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Exponent’s flat two-year EPS was subpar and lower than its 4.2% two-year revenue growth.

We can take a deeper look into Exponent’s earnings to better understand the drivers of its performance. Exponent’s operating margin has declined by 10.9 percentage points over the last two years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q2, Exponent reported EPS at $0.52, down from $0.57 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 5.6%. Over the next 12 months, Wall Street expects Exponent’s full-year EPS of $2.00 to grow 2.5%.

Key Takeaways from Exponent’s Q2 Results

We were impressed by how significantly Exponent blew past analysts’ revenue expectations this quarter. We were also happy its EPS outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter slightly missed. Overall, this print had some key positives. The stock remained flat at $69.35 immediately following the results.

Big picture, is Exponent a buy here and now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.