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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 3, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to___________

Commission File Number 0-18655

EXPONENT, INC.

(Exact name of registrant as specified in its charter)


delaware		77-0218904
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

149 COMMONWEALTH DRIVE, MENLO PARK, California		94025
(Address of principal executive office)		(Zip Code)

(650) 326-9400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	EXPO	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes		☒		No		☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Yes		☒		No		☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes		☐		No		☒

As of October 31, 2025, the latest practicable date, the registrant had 49,887,226 shares of common stock outstanding.

EXPONENT, INC.

FORM 10-Q

TABLE OF CONTENTS


		Page

PART I – FINANCIAL INFORMATION		3

Item 1.	Financial Statements (unaudited):	3

	Condensed Consolidated Balance Sheets October 3, 2025 and January 3, 2025	3

	Condensed Consolidated Statements of Income For the Three and Nine Months Ended October 3, 2025 and September 27, 2024	4

	Condensed Consolidated Statements of Comprehensive Income For the Three and Nine Months Ended October 3, 2025 and September 27, 2024	5

	Condensed Consolidated Statements of Stockholders’ Equity For the Three and Nine Months Ended October 3, 2025 and September 27, 2024	6

	Condensed Consolidated Statements of Cash Flows For the Nine Months Ended October 3, 2025 and September 27, 2024	8

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II – OTHER INFORMATION		31

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	32

	Signatures	33

- 2 -

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

EXPONENT, INC.

Condensed Consolidated Balance Sheets

October 3, 2025 and January 3, 2025

(unaudited)


(In thousands, except par value)	October 3, 2025			January 3, 2025
Assets
Current assets:
Cash and cash equivalents	$	207,380		$	258,901
Accounts receivable, net of allowance for contract losses and doubtful accounts of $7,625 and $6,141 at October 3, 2025 and January 3, 2025, respectively		181,996			161,407
Prepaid expenses and other current assets		27,410			26,573
Total current assets		416,786			446,881

Property, equipment and leasehold improvements, net of accumulated depreciation and amortization of $119,644 and $112,202 at October 3, 2025 and January 3, 2025, respectively		72,244			73,007
Operating lease right-of-use assets		73,312			75,248
Goodwill		8,607			8,607
Deferred income taxes		63,088			57,127
Deferred compensation plan assets		121,437			110,259
Other assets		5,975			6,141
Total assets	$	761,449		$	777,270

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	26,453		$	22,136
Accrued payroll and employee benefits		108,922			119,285
Deferred revenues		12,902			16,369
Operating lease liabilities		6,490			5,393
Total current liabilities		154,767			163,183

Other liabilities		4,589			4,289
Deferred compensation plan liabilities		123,124			112,646
Operating lease liabilities		76,108			76,084
Total liabilities		358,588			356,202
Stockholders’ equity:
Common stock, $0.001 par value; 120,000 shares authorized; 65,707 shares issued at October 3, 2025 and January 3, 2025		66			66
Additional paid-in capital		367,010			345,689
Accumulated other comprehensive loss
Foreign currency translation adjustments		(2,402	)		(3,791	)
Retained earnings		658,788			624,151
Treasury stock, at cost; 15,757 and 14,893 shares held at October 3, 2025 and January 3, 2025, respectively		(620,601	)		(545,047	)
Total stockholders’ equity		402,861			421,068
Total liabilities and stockholders’ equity	$	761,449		$	777,270

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

- 3 -

EXPONENT, INC.

Condensed Consolidated Statements of Income

For the Three and Nine Months Ended October 3, 2025 and September 27, 2024

(in thousands, except per share data)

(unaudited)


	Three Months Ended				Nine Months Ended
	October 3, 2025		September 27, 2024		October 3, 2025		September 27, 2024
Revenues:
Revenues before reimbursements	$	137,073	$	125,085	$	407,378	$	394,726
Reimbursements		10,047		11,194		27,211		27,022
Revenues		147,120		136,279		434,589		421,748
Operating expenses:
Compensation and related expenses		87,726		81,954		261,103		251,747
Other operating expenses		12,655		11,975		36,822		33,691
Reimbursable expenses		10,047		11,194		27,211		27,022
General and administrative expenses		7,654		5,309		18,806		16,984
Total operating expenses		118,082		110,432		343,942		329,444
Operating income		29,038		25,847		90,647		92,304
Other income, net:
Interest income, net		2,312		2,559		7,370		7,416
Miscellaneous income, net		7,267		7,531		15,175		16,322
Total other income, net		9,579		10,090		22,545		23,738
Income before income taxes		38,617		35,937		113,192		116,042
Income taxes		10,573		9,893		31,945		30,629
Net income	$	28,044	$	26,044	$	81,247	$	85,413
Net income per share:
Basic	$	0.55	$	0.51	$	1.59	$	1.67
Diluted	$	0.55	$	0.50	$	1.58	$	1.66
Shares used in per share computations:
Basic		50,872		51,177		51,113		51,098
Diluted		51,179		51,622		51,454		51,527
Cash dividends declared per common share	$	0.30	$	0.28	$	0.90	$	0.84

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

- 4 -

EXPONENT, INC.

Condensed Consolidated Statements of Comprehensive Income

For the Three and Nine Months Ended October 3, 2025 and September 27, 2024

(in thousands)

(unaudited)


	Three Months Ended				Nine Months Ended
	October 3, 2025		September 27, 2024		October 3, 2025		September 27, 2024
Net income	$	28,044	$	26,044	$	81,247	$	85,413
Other comprehensive income:
Foreign currency translation adjustments, net of tax		91		1,567		1,389		1,371
Comprehensive income	$	28,135	$	27,611	$	82,636	$	86,784

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

- 5 -

EXPONENT, INC

Condensed Consolidated Statements of Stockholders’ Equity

For the Three and Nine Months Ended October 3, 2025 and September 27, 2024

(in thousands)

(unaudited)


	Three and Nine Months Ended October 3, 2025
	Common Stock				Additional paid-in			Accumulated other comprehensive			Retained			Treasury Stock
	Shares		Amount		capital			income (loss)			earnings			Shares			Amount			Total
Balance at January 3, 2025		65,707	$	66	$	345,689		$	(3,791	)	$	624,151			14,893		$	(545,047	)		421,068
Employee stock purchase plan		-		-		687			-			-			(11	)		124			811
Amortization of unrecognized stock-based compensation		-		-		7,279			-			-			-			-			7,279
Purchase of treasury shares		-		-		-			-			-			431			(32,680	)		(32,680	)
Foreign currency translation adjustments		-		-		-			1,298			-			-			-			1,298
Grant of restricted stock units to settle accrued bonus		-		-		12,179			-			-			-			-			12,179
Settlement of restricted stock units		-		-		(1,583	)		-			-			(103	)		(2,583	)		(4,166	)
Exercise of stock options		-		-		53			-			-			(5	)		47			100
Dividends and dividend equivalent rights		-		-		-			-			(31,316	)		-			-			(31,316	)
Net income		-		-		-			-			53,203			-			-			53,203
Balance at July 4, 2025		65,707	$	66	$	364,304		$	(2,493	)	$	646,038			15,205		$	(580,139	)	$	427,776
Employee stock purchase plan		-		-		239			-			-			(5	)		54			293
Amortization of unrecognized stock-based compensation		-		-		2,298			-			-			-			-			2,298
Purchase of treasury shares		-		-		-			-			-			568			(40,649	)		(40,649	)
Foreign currency translation adjustments		-		-		-			91			-			-			-			91
Exercise of stock options		-		-		169			-			-			(11	)		133			302
Dividends and dividend equivalent rights		-		-		-			-			(15,294	)		-			-			(15,294	)
Net income		-		-		-			-			28,044			-			-			28,044
Balance at October 3, 2025		65,707	$	66	$	367,010		$	(2,402	)	$	658,788			15,757		$	(620,601	)	$	402,861

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

- 6 -

EXPONENT, INC

Condensed Consolidated Statements of Stockholders’ Equity

For the Three and Nine Months Ended October 3, 2025 and September 27, 2024

(in thousands)

(unaudited)


	Three and Nine Months Ended September 27, 2024
	Common Stock				Additional paid-in			Accumulated other comprehensive			Retained			Treasury Stock
	Shares		Amount		capital			income (loss)			earnings			Shares			Amount			Total
Balance at December 29, 2023		65,707	$	66	$	321,448		$	(2,977	)	$	574,082			15,134		$	(536,534	)	$	356,085
Employee stock purchase plan		-		-		842			-			-			(12	)		116			958
Amortization of unrecognized stock-based compensation		-		-		6,521			-			-			-			-			6,521
Purchase of treasury shares		-		-		-			-			-			74			(5,710	)		(5,710	)
Foreign currency translation adjustments		-		-		-			(196	)		-			-			-			(196	)
Grant of restricted stock units to settle accrued bonus		-		-		10,846			-			-			-			-			10,846
Settlement of restricted stock units		-		-		(1,875	)		-			(720	)		(166	)		(4,201	)		(6,796	)
Exercise of stock options		-		-		952			-			-			(54	)		542			1,494
Dividends and dividend equivalent rights		-		-		-			-			(29,358	)		-			-			(29,358	)
Net income		-		-		-			-			59,369			-			-			59,369
Balance at June 28, 2024		65,707	$	66	$	338,734		$	(3,173	)	$	603,373			14,976		$	(545,787	)	$	393,213
Employee stock purchase plan		-		-		413			-			-			(4	)		44			457
Amortization of unrecognized stock-based compensation		-		-		2,623			-			-			-			-			2,623
Foreign currency translation adjustments		-		-		-			1,567			-			-			-			1,567
Settlement of restricted stock units		-		-		(13	)		-			-			(1	)		(21	)		(34	)
Exercise of stock options		-		-		544			-			-			(29	)		286			830
Dividends and dividend equivalent rights		-		-		-			-			(14,426	)		-			-			(14,426	)
Net income		-		-		-			-			26,044			-			-			26,044
Balance at September 27, 2024		65,707	$	66	$	342,301		$	(1,606	)	$	614,991			14,942		$	(545,478	)	$	410,274

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

- 7 -

EXPONENT, INC.

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended October 3, 2025 and September 27, 2024

(in thousands)

(unaudited)


	Nine Months Ended
	October 3, 2025			September 27, 2024
Cash flows from operating activities:
Net income	$	81,247		$	85,413
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment and leasehold improvements		7,544			7,199
Provision for contract losses and doubtful accounts		2,097			3,140
Stock-based compensation		18,767			18,382
Deferred income tax provision		(5,961	)		(521	)
Changes in operating assets and liabilities:
Accounts receivable		(22,686	)		(4,398	)
Prepaid expenses and other current assets		3,114			257
Change in operating leases		3,057			1,404
Accounts payable and accrued liabilities		3,964			1,502
Accrued payroll and employee benefits		(11,528	)		(15,598	)
Deferred revenues		(3,467	)		(8,295	)
Net cash provided by operating activities		76,148			88,485
Cash flows from investing activities:
Capital expenditures		(6,703	)		(4,342	)
Net cash used in investing activities		(6,703	)		(4,342	)
Cash flows from financing activities:
Payroll taxes for restricted stock units		(4,166	)		(6,830	)
Repurchase of common stock		(72,712	)		(5,709	)
Exercise of stock-based payment awards		1,506			3,739
Dividends and dividend equivalents rights		(46,652	)		(43,988	)
Net cash used in financing activities		(122,024	)		(52,788	)
Effect of foreign currency exchange rates on cash and cash equivalents		1,058			1,203
Net change in cash and cash equivalents		(51,521	)		32,558
Cash and cash equivalents at beginning of period		258,901			187,150
Cash and cash equivalents at end of period	$	207,380		$	219,708

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

- 8 -

EXPONENT, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Basis of Presentation

Exponent, Inc. (referred to as the “Company” or “Exponent”) is an engineering and scientific consulting firm that provides solutions to complex problems. The Company operates on a 52-53 week fiscal year ending on the Friday closest to the last day of December.

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission. Accordingly, they do not contain all the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments which are necessary for the fair presentation of the condensed consolidated financial statements have been included and all such adjustments are of a normal and recurring nature. The operating results for the three and nine months ended October 3, 2025 are not necessarily representative of the results of future quarterly or annual periods. The following information should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2025, which was filed with the U.S. Securities and Exchange Commission on February 28, 2025 and amended on April 18, 2025.

The unaudited condensed consolidated financial statements include the accounts of Exponent and its subsidiaries, which are all wholly owned. All intercompany accounts and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Items subject to such estimates and assumptions include accounting for revenue recognition and estimating the allowance for contract losses and doubtful accounts. Actual results could differ from those estimates.

Recent Accounting Pronouncement Not Yet Adopted

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard is effective for annual reporting periods beginning after December 15, 2024. The Company is evaluating the effect that this standard may have on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (subtopic 220-40), which requires disclosure of disaggregation of certain relevant expenses included in the statements of operations on an annual and interim basis. ASU 2024-03 will be effective for our annual periods beginning January 1, 2027 and interim periods beginning January 1, 2028. The amendments must be applied retrospectively, and early adoption is permitted. The Company is evaluating the effect that this standard may have on its consolidated financial statements and related disclosures.

Note 2: Revenue Recognition

Substantially all of the Company’s engagements are performed under time and materials or fixed-price arrangements. For time and materials contracts, the Company utilizes the practical expedient under Accounting Standards Codification 606 – Revenue from Contracts with Customers, which states if an entity has a right to consideration from a customer in an amount that corresponds directly with the value of the entity’s performance completed to date (for example, a service contract in which an entity bills a fixed amount for each hour of service provided) then the entity may recognize revenue in the amount to which the entity has a right to invoice.

- 9 -

The following table discloses the percent of the Company’s revenue generated from time and materials contracts:


	Three Months Ended						Nine Months Ended
	October 3, 2025			September 27, 2024			October 3, 2025			September 27, 2024
Engineering & Other Scientific		63	%		63	%		64	%		63	%
Environmental and Health		14	%		15	%		15	%		16	%
Total time and materials revenues		77	%		78	%		79	%		79	%

For fixed-price contracts, the Company recognizes revenue over time because of the continuous transfer of control to the customer. The customer typically controls the work in process as evidenced either by contractual termination clauses or by the Company’s rights to payment for work performed to date to deliver services that do not have an alternative use to the Company. Revenue for fixed-price contracts is recognized based on the relationship of incurred labor hours at standard rates to the Company’s estimate of the total labor hours at standard rates it expects to incur over the term of the contract. The Company believes this methodology achieves a reliable measure of the revenue from the consulting services it provides to its customers under fixed-price contracts given the nature of the consulting services the Company provides.

The following table discloses the percent of the Company’s revenue generated from fixed price contracts:


	Three Months Ended						Nine Months Ended
	October 3, 2025			September 27, 2024			October 3, 2025			September 27, 2024
Engineering & Other Scientific		22	%		21	%		20	%		20	%
Environmental and Health		1	%		1	%		1	%		1	%
Total fixed price revenues		23	%		22	%		21	%		21	%

Deferred revenues represent amounts billed to clients in advance of services provided. During the third quarter of 2025, $5,000,000 of revenues were recognized that were included in the deferred revenue balance at July 4, 2025. During the first nine months of 2025, $9,397,000 of revenues were recognized that were included in the deferred revenue balance at January 3, 2025.

Reimbursements, including those related to travel and other out-of-pocket expenses, and other similar third- party costs such as the cost of materials and certain subcontracts, are included in revenues, and an equivalent amount of reimbursable expenses are included in operating expenses. Any mark-up on reimbursable expenses is included in revenues before reimbursements. The Company reports revenues net of subcontractor fees for certain subcontracts where the Company has determined that it is acting as an agent because its performance obligation is to arrange for the provision of goods or services by another party. The total amount of subcontractor fees not included in revenues because the Company was acting as an agent were $2,578,000 and $2,689,000 during the third quarter of 2025 and 2024, respectively, and $9,259,000 and $9,222,000 during the first nine months of 2025 and 2024, respectively.

- 10 -

Note 3: Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including money market securities, trading fixed income and equity securities held in its deferred compensation plan and the liability associated with its deferred compensation plan. There were no transfers between fair value measurement levels during the three and nine months ended October 3, 2025 and September 27, 2024. Any transfers between fair value measurement levels would be recorded on the actual date of the event or change in circumstances that caused the transfer. The fair value of these certain financial assets and liabilities was determined using the following inputs at October 3, 2025:


	Fair Value Measurements at Reporting Date Using
(In thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money market securities (1)	$	59,595	$	59,595	$	-	$	-
Fixed income trading securities held in deferred compensation plan (2)		44,533		44,533		-		-
Equity trading securities held in deferred compensation plan (2)		96,156		96,156		-		-
Total	$	200,284	$	200,284	$	-	$	-
Liabilities
Deferred compensation plan (3)		142,282		142,282		-		-
Total	$	142,282	$	142,282	$	-	$	-

(1)

Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheet.

(2)

Included in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet.

(3)

Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.

- 11 -

The fair value of these certain financial assets and liabilities was determined using the following inputs at January 3, 2025:


	Fair Value Measurements at Reporting Date Using
(In thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money market securities (1)	$	57,549	$	57,549	$	-	$	-
Fixed income trading securities held in deferred compensation plan (2)		42,291		42,291		-		-
Equity trading securities held in deferred compensation plan (2)		85,546		85,546		-		-
Total	$	185,386	$	185,386	$	-	$	-
Liabilities
Deferred compensation plan (3)		127,622		127,622		-		-
Total	$	127,622	$	127,622	$	-	$	-

(1)

Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheet.

(2)

Included in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet.

(3)

Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.

Money market securities as of October 3, 2025 and January 3, 2025 represent obligations of the United States Treasury. Fixed income and equity trading securities represent mutual funds held in the Company’s deferred compensation plan. See Note 6 for additional information about the Company’s deferred compensation plan.

Cash and cash equivalents consisted of the following as of October 3, 2025:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
(In thousands)	Cost		Gains		Losses		Fair Value
Classified as current assets:
Cash	$	147,785	$	-	$	-	$	147,785
Cash equivalents:
Money market securities		59,595		-		-		59,595
Total cash equivalents		59,595		-		-		59,595
Total cash and cash equivalents	$	207,380	$	-	$	-	$	207,380

- 12 -

Cash and cash equivalents consisted of the following as of January 3, 2025:


	Amortized		Unrealized		Unrealized		Estimated
(In thousands)	Cost		Gains		Losses		Fair Value
Classified as current assets:
Cash	$	201,352	$	-	$	-	$	201,352
Cash equivalents:
Money market securities		57,549		-		-		57,549
Total cash equivalents		57,549		-		-		57,549
Total cash and cash equivalents	$	258,901	$	-	$	-	$	258,901

At October 3, 2025 and January 3, 2025, the Company did not have any assets or liabilities valued using significant unobservable inputs.

The following financial instruments are not measured at fair value on the Company's unaudited condensed consolidated balance sheet at October 3, 2025 and January 3, 2025, but require disclosure of their fair values: accounts receivable, other assets and accounts payable. The estimated fair value of such instruments at October 3, 2025 and January 3, 2025 approximates their carrying value as reported on the Company’s unaudited condensed consolidated balance sheet.

Note 4: Net Income Per Share

Basic per share amounts are computed using the weighted-average number of shares of common stock outstanding during the period. Diluted per share amounts are calculated using the weighted-average number of shares of common stock outstanding during the period and, when dilutive, the weighted-average number of potential shares of common stock from the issuance of common stock to satisfy outstanding restricted stock units and the exercise of outstanding options to purchase common stock using the treasury stock method.

The following schedule reconciles the shares used to calculate basic and diluted net income per share:


	Three Months Ended				Nine Months Ended
(In thousands)	October 3, 2025		September 27, 2024		October 3, 2025		September 27, 2024
Shares used in basic per share computation		50,872		51,177		51,113		51,098
Effect of dilutive common stock options outstanding		71		175		84		172
Effect of dilutive restricted stock units outstanding		236		270		257		257
Shares used in diluted per share computation		51,179		51,622		51,454		51,527

Common stock options to purchase 215,833 and 30,000 shares were excluded from the diluted per share calculation for the three months ended October 3, 2025 and September 27, 2024, respectively, due to their anti-dilutive effect. Common stock options to purchase 175,833 and 63,333 shares were excluded from the diluted per share calculation for the nine months ended October 3, 2025 and September 27, 2024, respectively, due to their anti-dilutive effect.

Note 5: Stock-Based Compensation

Restricted Stock Units

Restricted stock unit grants are designed to attract and retain employees, and to better align employee interests with those of the Company’s stockholders. For a select group of employees, up to 40% of their annual bonus is settled with fully vested restricted stock unit awards. Under these fully vested restricted stock unit awards, the holder of each award has the right to receive one share of the Company’s common stock for each fully vested restricted stock unit four years from the date of grant. Each individual who receives a fully vested restricted stock unit award is also granted

- 13 -

a matching number of unvested restricted stock unit awards. Unvested restricted stock unit awards are also granted for select new hires and promotions. These unvested restricted stock unit awards generally cliff vest four years from the date of grant, at which time the holder of each award will have the right to receive one share of the Company’s common stock for each restricted stock unit award provided the holder of each award has met certain employment conditions. In the case of retirement at 59½ years or older, all unvested restricted stock unit awards will continue to vest, provided that the holder of each award does all consulting work through the Company and does not become an employee for a past or present client, beneficial party or competitor of the Company.

The value of these restricted stock unit awards is determined based on the market price of the Company’s common stock on the date of grant. The value of fully vested restricted stock unit awards issued is recorded as a reduction to accrued bonuses. The portion of bonus expense that the Company expects to settle with fully vested restricted stock unit awards is recorded as stock-based compensation during the period the bonus is earned. The Company recorded stock-based compensation expense associated with accrued bonus awards of $3,042,000 and $2,842,000 during the three months ended October 3, 2025 and September 27, 2024, respectively. For the nine months ended October 3, 2025 and September 27, 2024, the Company recorded stock-based compensation expense associated with accrued bonus awards of $9,189,000 and $9,238,000, respectively. The value of the unvested restricted stock unit awards granted is recognized on a straight-line basis over the shorter of the four-year vesting period or the period between the grant date and the date the award recipient turns 59½. If the award recipient is 59½ years or older on the date of grant, the value of the entire award is expensed upon grant. The Company recorded stock-based compensation expense associated with the unvested restricted stock unit awards of $2,123,000 and $2,255,000 during the three months ended October 3, 2025 and September 27, 2024, respectively. The Company recorded stock-based compensation expense associated with the unvested restricted stock unit awards of $8,438,000 and $8,089,000 during the nine months ended October 3, 2025 and September 27, 2024, respectively.

Stock Options

Stock options are granted for terms of ten years and generally vest 25% per year over a four-year period from the grant date. Unvested stock option awards will continue to vest in the case of retirement at 59½ years or older, provided that the holder of each award does all consulting work through the Company and does not become an employee for a past or present client, beneficial party or competitor of the Company. The value of the unvested stock option awards granted is recognized on a straight-line basis over the shorter of the four-year vesting period or the period between the grant date and the date the award recipient turns 59½. If the award recipient is 59½ years or older on the date of grant, the value of the entire award is expensed upon grant. The Company recorded stock-based compensation expense associated with stock option grants of $176,000 and $368,000 during the three months ended October 3, 2025 and September 27, 2024, respectively. The Company recorded stock-based compensation expense associated with stock option grants of $1,139,000 and $1,055,000 during the nine months ended October 3, 2025 and September 27, 2024, respectively.

The Company uses the Black-Scholes option-pricing model to determine the fair value of options granted. The determination of the fair value of stock option awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include expected stock price volatility over the term of the award, actual and projected employee stock option exercise behaviors, the risk-free interest rate and expected dividends.

- 14 -

The Company used historical exercise, forfeiture, and post-vesting expiration data to estimate the expected term of options granted. The historical volatility of the Company’s common stock over a period of time equal to the expected term of the options granted was used to estimate expected volatility. The risk-free interest rate used in the option-pricing model was based on United States Treasury zero-coupon issues with remaining terms similar to the expected term of the options. The dividend yield assumption considers the expectation of continued declaration of dividends, offset by option holders’ dividend equivalent rights.

The Company accounts for forfeitures of stock-based awards when they occur. All stock-based payment awards are recognized on a straight-line basis over the requisite service periods of the awards.

Note 6: Deferred Compensation Plans

The Company maintains nonqualified deferred compensation plans for the benefit of a select group of highly compensated employees. Under these plans, participants may elect to defer up to 100% of their compensation. Company assets that are earmarked to pay benefits under the plans are held in a rabbi trust and are subject to the claims of the Company’s creditors. As of October 3, 2025 and January 3, 2025, the invested amounts under the plans totaled $140,689,000 and $127,837,000, respectively, and are recorded in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet. These assets are classified as trading securities and are recorded at fair value with changes recorded as adjustments to miscellaneous income, net.

As of October 3, 2025 and January 3, 2025, vested amounts due under the plans totaled $142,282,000 and $127,622,000, respectively, and are recorded within accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheets. Changes in the liability are recorded as adjustments to compensation expense. During the three months ended October 3, 2025, the Company recognized additional compensation expense of $7,005,000 as a result of changes in the market value of the trust assets with the same amount being recorded as gain in miscellaneous income (loss), net. During the three months ended September 27, 2024, the Company recognized a reduction in compensation expense of $7,157,000 as a result of changes in the market value of the trust assets with the same amount being recorded as a loss in miscellaneous income (loss), net. During the nine months ended October 3, 2025, the Company recognized additional compensation expense of $14,632,000 as a result of changes in the market value of the trust assets with the same amount being recorded as income in miscellaneous income, net. During the nine months ended September 27, 2024, the Company recognized additional compensation expense of $14,299,000 as a result of changes in the market value of the trust assets with the same amount being recorded as income in miscellaneous income (loss), net.

Note 7: Supplemental Cash Flow Information

The following is supplemental disclosure of cash flow information:


	Nine Months Ended
(In thousands)	October 3, 2025		September 27, 2024
Cash paid during period:
Income taxes	$	32,367	$	29,060
Non-cash investing and financing activities:
Vested stock unit awards issued to settle accrued bonuses	$	12,179	$	10,846
Right-of-use asset obtained in exchange for operating lease obligations	$	3,540	$	56,714
Accrual for capital expenditures as of period end	$	653	$	537
Repurchases of common stock	$	617	$	-

- 15 -

Note 8: Accounts Receivable, Net

At October 3, 2025 and January 3, 2025, accounts receivable, net, were comprised of the following:


	October 3,			January 3,
(In thousands)	2025			2025
Billed accounts receivable	$	125,445		$	117,503
Unbilled accounts receivable		64,176			50,045
Allowance for contract losses and doubtful accounts		(7,625	)		(6,141	)
Total accounts receivable, net	$	181,996		$	161,407

The Company maintains allowances for estimated losses over the remaining contractual life of its receivables resulting from the inability of customers to meet their financial obligations or for disputes that affect the Company’s ability to fully collect amounts due. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations or aware of a dispute with a specific customer, a specific allowance is recorded to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers the Company recognizes allowances for doubtful accounts based upon historical write-offs, customer concentration, customer creditworthiness, current economic conditions, aging of amounts due and future expectations.

A reconciliation of the beginning and ending amount of the allowance for contract losses and doubtful accounts is as follows:


(In thousands)
Balance at January 3, 2025	$	6,141
Provision for contract losses and doubtful accounts		2,097
Write-offs		(613	)
Balance at October 3, 2025	$	7,625

Note 9: Segment Reporting

The Company has two reportable operating segments based on two primary areas of service. The Engineering and other scientific segment is a broad service group providing technical consulting in different practices primarily in engineering. The Environmental and health segment provides services in the areas of environmental, epidemiology and health risk analysis. This segment provides a wide range of consulting services relating to environmental hazards and risks and the impact on both human health and the environment. Our Chief Executive Officer, the chief operating decision maker, reviews revenues and operating income for each of our reportable segments, but does not review total assets in evaluating segment performance and capital allocation.

Segment information for the three and nine months ended October 3, 2025 and September 27, 2024 follows:

Revenues


	Three Months Ended				Nine Months Ended
(In thousands)	October 3, 2025		September 27, 2024		October 3, 2025		September 27, 2024
Engineering and Other Scientific	$	124,016	$	115,244	$	367,130	$	355,193
Environmental and Health		23,104		21,035		67,459		66,555
Total revenues	$	147,120	$	136,279	$	434,589	$	421,748

Compensation and related expenses

- 16 -


	Three Months Ended				Nine Months Ended
(In thousands)	October 3, 2025		September 27, 2024		October 3, 2025		September 27, 2024
Engineering and Other Scientific	$	58,040	$	53,197	$	172,202	$	167,734
Environmental and Health		12,017		11,271		36,205		35,628
Total segment compensation and related expenses		70,057		64,468		208,407		203,362
Corporate compensation and related expenses		17,669		17,486		52,696		48,385
Total compensation and related expenses	$	87,726	$	81,954	$	261,103	$	251,747

Operating Income


	Three Months Ended				Nine Months Ended
(In thousands)	October 3, 2025		September 27, 2024		October 3, 2025		September 27, 2024
Engineering and Other Scientific	$	45,829	$	40,292	$	133,883	$	132,687
Environmental and Health		8,429		7,547		24,147		23,042
Total segment operating income		54,258		47,839

EXPONENT INC 10-Q