Core Viewpoint - The Hackett Group, Inc. has initiated a $40 million Dutch auction tender offer to repurchase its shares, indicating a strategic move to enhance shareholder value [1] Group 1 - The tender offer is set at a maximum of $40 million, reflecting the company's commitment to returning capital to shareholders [1] - This action is part of the company's broader strategy to optimize its capital structure and improve financial flexibility [1] - The Dutch auction format allows shareholders to specify the price at which they are willing to sell their shares, potentially leading to a more favorable outcome for both the company and its investors [1]

Revenue Performance - Total revenue for the third quarter of 2025 was $73.1 million, a decrease of 8.4% from $79.8 million in the same period of 2024[111]. - For the first nine months of 2025, total revenue was $230.0 million, down 2.3% from $234.6 million in the same period of 2024[111]. - The Global Strategy & Business Transformation segment generated $42.9 million in revenue for the third quarter of 2025, down from $44.1 million in the same period of 2024[113]. - Oracle Solutions revenue decreased to $16.5 million in the third quarter of 2025 from $22.8 million in the same period of 2024, a decline of 27.4%[114]. - SAP Solutions revenue increased to $13.7 million in the third quarter of 2025 from $13.0 million in the same period of 2024, an increase of 5.4%[115]. Income and Costs - The net income for the third quarter of 2025 was $2.5 million, compared to $8.6 million in the same period of 2024, reflecting a decline of 70.5%[109]. - Personnel costs before reimbursable expenses were $42.4 million for the third quarter of 2025, down from $46.4 million in the same period of 2024, representing a decrease of 8.5%[118]. - Selling, general and administrative costs for the third quarter of 2025 were $21.2 million, up from $18.7 million in the same period of 2024, an increase of 13.4%[109]. - SG&A costs increased to $21.2 million in Q3 2025 from $18.7 million in Q3 2024, representing a rise of 13.3%[121]. - Non-cash stock-based compensation expense rose to $4.3 million in Q3 2025 from $1.7 million in Q3 2024, an increase of 152.9%[122]. - Global S&BT segment contribution decreased to $13.2 million in Q3 2025 from $14.1 million in Q3 2024, a decline of 6.4%[126]. - Oracle Solutions segment contribution fell to $2.7 million in Q3 2025 from $5.5 million in Q3 2024, a decrease of 50.9%[127]. Cash Flow and Debt - Net cash provided by operating activities was $21.2 million in the first nine months of 2025, down from $27.1 million in the same period of 2024, a decline of 21.8%[134]. - Net cash used in investing activities was $6.6 million in the first nine months of 2025, compared to $9.6 million in the same period of 2024, a decrease of 31.3%[135]. - Net cash used in financing activities was $17.0 million in the first nine months of 2025, down from $28.4 million in the same period of 2024, a reduction of 40.2%[136]. - As of September 26, 2025, the company had outstanding debt of $44.0 million, an increase from $20.0 million as of September 27, 2024[130]. Tax and Restructuring - The effective tax rate increased to 49.3% in Q3 2025 from 30.9% in Q3 2024, reflecting a significant rise due to limitations on executive compensation deductions[131]. - Restructuring costs amounted to $3.1 million in Q3 2025 as the company pivoted towards Gen AI, primarily due to employee-related costs[124]. Strategic Initiatives - The company completed over 27,500 benchmarking and performance studies, utilizing its Quantum Leap platform[105]. - The company launched its AI assessment platform, AI XPLR, in early 2024 to help clients identify Gen AI enablement opportunities[103].

Core Insights - Hackett Group reported quarterly earnings of $0.37 per share, matching the Zacks Consensus Estimate, but down from $0.43 per share a year ago [1] - The company posted revenues of $72.17 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 2.02% and down from $77.95 million year-over-year [2] - Hackett Group shares have declined approximately 41.4% year-to-date, contrasting with the S&P 500's gain of 16.5% [3] Earnings Performance - The company has surpassed consensus EPS estimates two times over the last four quarters [1] - Hackett Group has topped consensus revenue estimates three times in the last four quarters [2] - The current consensus EPS estimate for the upcoming quarter is $0.38, with expected revenues of $75.1 million, and for the current fiscal year, the estimate is $1.52 on revenues of $302.58 million [7] Market Outlook - The stock's immediate price movement will largely depend on management's commentary during the earnings call [3] - The estimate revisions trend for Hackett Group was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] - The Consulting Services industry is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - Total revenues before reimbursements for the third quarter of 2025 were $72.2 million, a decrease of 7% compared to the prior year [14] - Adjusted earnings per share for the third quarter were $0.37, at the midpoint of the quarterly guidance [4][20] - GAAP net income for the third quarter totaled $2.5 million, or diluted earnings per share of $0.09, down from $8.6 million or $0.31 in the prior year [18] Business Line Data and Key Metrics Changes - Global GS&BT segment revenues were $42.4 million, a decrease of 2% year-over-year, with strong GenAI-related revenue growth offset by weakness in OneStream and the expiration of an iPaaS contract [15] - Oracle Solutions segment revenues were $16.4 million, a decrease of 25% compared to the prior year, attributed to prolonged client decision-making [15] - SAP Solutions segment revenues were $13.4 million, an increase of 4% year-over-year, driven by implementation services from increased software sales activity [15] Market Data and Key Metrics Changes - Approximately 23% of total company revenues before reimbursements consist of recurring multi-year and subscription-based revenues [16] - Days Sales Outstanding (DSO) improved to 71 days from 73 days in the previous quarter [21] Company Strategy and Development Direction - The company is focusing on GenAI-enabled transformation, which is seen as a generational opportunity to change how companies operate and how consulting services are delivered [28][29] - The recent launch of version 4 of the AI Explorer platform is expected to significantly enhance capabilities and attract new clients [5][29] - Strategic alliances are being pursued to expand growth opportunities, with ongoing discussions with potential partners [36][38] Management's Comments on Operating Environment and Future Outlook - The demand for digital transformation remains strong but is impacted by economic concerns and the assessment of GenAI technologies [28] - The company expects continued growth in GenAI revenues, with a forecast for Q4 2025 total revenue before reimbursements in the range of $69.5 million to $71 million [23] - Management anticipates that the majority of strategy and business transformation initiatives will be led by GenAI initiatives by the end of 2026 [52] Other Important Information - The company announced a $40 million Dutch tender offer to acquire approximately 8% of its common stock [10][24] - The board declared a fourth-quarter dividend of $0.12 per share, payable on January 9, 2026 [22] Q&A Session Summary Question: Plans for alliances and potential partners - Management expressed confidence in attracting one or two major alliance partners soon, especially following the release of version 4 [36][38] Question: Software sales and recovery in Q4 - Management noted improved client engagement and pipeline activity, expecting to recover some weakness in Q4 [39][40] Question: Rationale for Dutch auction - The Dutch auction was chosen to be more aggressive in stock buybacks during a volatile quarter, leveraging a strong balance sheet [42][43] Question: Licensing progress for ZBrain and Explorer - Licensing for version 4 is expected to begin late in Q4 or early Q1, with a portion of licenses incorporating ZBrain [48][49] Question: Trends within GS&BT - The largest piece of GS&BT is strategy and business transformation, which is expected to drive a significant portion of operating profits in the future [51][52] Question: Decision-making trends - Clients are making commitments for 2026 while protecting 2025 spending due to economic volatility [55][56] Question: Labor resources in GSBT - Management indicated no concerns about labor resources, citing productivity improvements from new platforms [60][62] Question: Game-changing aspects of version 4 - Version 4 offers enhanced capabilities in simulating and informing client capabilities based on existing technology, significantly improving ideation processes [63][65]

Financial Data and Key Metrics Changes - The company reported revenues before reimbursements of $72.2 million, a decrease of 7% compared to the prior year [14] - Adjusted earnings per share were $0.37, at the midpoint of quarterly guidance, compared to $0.43 in the prior year [20] - GAAP net income for the third quarter totaled $2.5 million, or diluted earnings per share of $0.09, down from $8.6 million, or $0.31 per diluted share in the previous year [18] Business Line Data and Key Metrics Changes - Global GS&BT segment revenues were $42.4 million, a decrease of 2% year-over-year, but excluding declines from OneStream and iPaaS, it was up over 4% [14][15] - Oracle Solutions segment revenues were $16.4 million, a decrease of 25% year-over-year due to prolonged decision-making [15] - SAP Solutions segment revenues increased by 4% to $13.4 million, driven by implementation services [15] Market Data and Key Metrics Changes - Approximately 23% of total revenues before reimbursements consist of recurring multi-year and subscription-based revenues [16] - The company’s Days Sales Outstanding (DSO) improved to 71 days from 73 days in the previous quarter [21] Company Strategy and Development Direction - The company is focusing on GenAI-enabled transformation, which is seen as a generational opportunity to change operational models and consulting service delivery [28][29] - The recent launch of version 4 of the AI Explorer platform is expected to enhance capabilities and attract new clients [5][29] - Strategic alliances are being pursued to expand growth opportunities, with ongoing discussions with potential partners [36][38] Management's Comments on Operating Environment and Future Outlook - Management noted that while demand for digital transformation remains strong, economic concerns are causing organizations to assess competing priorities [28] - The company expects continued growth in GenAI revenues, particularly in Q4 and into 2026, despite some revenue declines in other segments [15][23] - Management anticipates that the integration of GenAI capabilities will lead to improved revenue growth margins and operational efficiencies [32] Other Important Information - The company announced a $40 million Dutch tender offer to repurchase approximately 8% of its common stock [10][22] - The board declared a fourth-quarter dividend of $0.12 per share, payable on January 9, 2026 [22] Q&A Session Summary Question: Can you provide an update on potential alliances? - Management expressed confidence in attracting one or two major alliance partners soon, especially following the release of version 4 [36][38] Question: What is the outlook for software licensing? - Licensing for version 4 is expected to begin late in Q4 or early Q1, with many current opportunities likely converting to AI Explorer licenses [48] Question: How is the GS&BT segment performing? - The GS&BT segment is primarily driven by strategy and business transformation initiatives, which are expected to contribute significantly to operating profits in the future [52] Question: Are there concerns about labor resources in GS&BT? - Management indicated no concerns regarding labor resources, citing productivity improvements from new platforms [60][62] Question: What differentiates version 4 from alternatives? - Version 4 offers enhanced capabilities in simulating and informing client-specific automation footprints, significantly improving ideation and solutioning processes [64][66]

Financial Data and Key Metrics Changes - The company reported revenues before reimbursements of $72.2 million, a decrease of 7% compared to the prior year [15] - Adjusted earnings per share were $0.37, which was at the midpoint of the quarterly guidance [5] - GAAP net income totaled $2.5 million or diluted earnings per share of $0.09, down from $8.6 million or $0.31 in the same quarter of the previous year [20] - Adjusted EBITDA was $15.3 million or 21.2% of revenues before reimbursements, compared to $17.7 million or 22.7% in the prior year [20] - Total company adjusted gross margin was 42.6%, down from 43.2% in the prior year [19] Business Line Data and Key Metrics Changes - Global SMT segment revenues were $42.4 million, a decrease of 2% year-over-year, but would have been up 4% excluding the OneStream practice and iPaaS contract [16] - Oracle Solutions segment revenues were $16.4 million, a decrease of 25% compared to the prior year, attributed to prolonged decision-making [17] - SAP Solutions segment revenues increased by 4% to $13.4 million, driven by implementation services [18] Market Data and Key Metrics Changes - Approximately 23% of total revenues before reimbursements consisted of recurring, multiyear, and subscription-based revenues [18] - The company expects continued momentum in GenAI-related revenues, particularly in the Global SMT segment [16] Company Strategy and Development Direction - The company is focusing on GenAI-enabled transformation, which is seen as a generational opportunity to change how consulting services are delivered [29] - The recent launch of version four of the AI Explorer platform has received positive feedback and is expected to enhance client engagement and pipeline activity [6][41] - Strategic alliances are being pursued to expand growth opportunities, with ongoing discussions with potential partners [40] Management's Comments on Operating Environment and Future Outlook - Management noted that while demand for digital transformation remains strong, it is being impacted by economic concerns and the assessment of GenAI technologies [28] - The company anticipates that the integration of GenAI capabilities will significantly enhance service delivery and revenue growth margins [33] - Economic volatility and tariff distractions are affecting client decision-making, but there is an increasing desire to invest in digital transformation initiatives [56] Other Important Information - The company announced a $40 million Dutch tender offer to repurchase approximately 8% of its common stock [12][25] - The board declared a fourth-quarter dividend of $0.12 per share [23] Q&A Session Summary Question: Plans for alliances and potential partners - Management expressed confidence in attracting one or two major alliance partners soon, especially following the release of version four [40] Question: Software sales and recovery in Q4 - Management indicated that improved client engagement and pipeline activity are expected to help recover some of the weakness in software sales in Q4 [41] Question: Reason for Dutch auction - The Dutch auction was initiated to take advantage of stock repurchase opportunities during a volatile quarter, with a focus on being aggressive in buybacks [43][44] Question: Licensing progress for version four - Licensing for version four is expected to begin in late Q4 or early Q1, with many current opportunities anticipated to become licensees [49] Question: Trends within the Strategy and Business Transformation Group - The Strategy and Business Transformation Group is expected to drive a significant portion of total operating profits, particularly through GenAI initiatives [52] Question: Decision-making trends among clients - Management noted that while clients are making commitments, economic volatility is causing them to protect their spending, impacting decision-making [55]

Financial Data and Key Metrics Changes - Total revenues before reimbursements for Q3 2025 were $72.2 million, a decrease of 7% compared to the prior year [15] - Adjusted earnings per share for Q3 2025 were $0.37, at the midpoint of quarterly guidance [4] - GAAP net income for Q3 2025 was $2.5 million, or diluted earnings per share of $0.09, down from $8.6 million or $0.31 in the same quarter last year [19] - Adjusted EBITDA was $15.3 million, or 21.2% of revenues before reimbursements, compared to 22.7% in the prior year [19] Business Line Data and Key Metrics Changes - Global GS&BT segment revenues were $42.4 million, a decrease of 2% year-over-year, but would have increased by 4% excluding the OneStream practice and iPaaS contract [15][16] - Oracle Solutions segment revenues were $16.4 million, down 25% year-over-year due to prolonged decision-making [16] - SAP Solutions segment revenues were $13.4 million, an increase of 4% year-over-year, driven by implementation services [16] Market Data and Key Metrics Changes - Approximately 23% of total revenues before reimbursements consist of recurring multi-year and subscription-based revenues [17] - Days Sales Outstanding (DSO) improved to 71 days from 73 days in the previous quarter [21] Company Strategy and Development Direction - The company is focusing on GenAI-enabled transformation, which is seen as a generational opportunity to change operational and consulting service delivery [27][28] - The recent launch of version 4 of the AI Explorer platform is expected to enhance client engagement and pipeline activity [4][39] - Strategic alliances are being pursued to expand growth opportunities, with ongoing discussions with potential partners [34][35] Management's Comments on Operating Environment and Future Outlook - The demand for digital transformation remains strong but is impacted by economic concerns and decision-making delays [27] - The company expects continued growth in GenAI revenues, particularly in Q4 and into 2026 [16][39] - Management anticipates a decrease in available billing days in Q4 due to holiday schedules, estimating revenues before reimbursements to be in the range of $69.5-$71 million [23] Other Important Information - The company announced a $40 million Dutch tender offer to repurchase approximately 8% of its common stock [11][22] - Cash balances increased to $13.9 million at the end of Q3, up from $10.1 million in the previous quarter [21] Q&A Session Summary Question: Plans for alliances and partnerships - Management expressed confidence in attracting major alliance partners due to the capabilities demonstrated by version 4 of AI Explorer [34][35] Question: Licensing progress for ZBrain and Explorer - Licensing for version 4 is expected to begin late in Q4 or early Q1, with anticipated interest from current clients [41][42] Question: Trends within GS&BT segment - The strategy and business transformation group represents a significant portion of GS&BT revenues, with expectations for GenAI initiatives to drive future profits [43][44] Question: Decision-making trends among clients - Management noted that while clients are cautious about 2025 spending, there is an increasing willingness to invest in digital transformation initiatives [46] Question: Labor resources to meet AI demand - Management indicated that productivity improvements from new platforms will reduce reliance on headcount growth [47]

Financial Performance - Total revenue for Q3 2025 was $73.1 million, down from $79.8 million in Q3 2024, representing a decrease of approximately 8.4% year-over-year[5] - GAAP diluted earnings per share for Q3 2025 was $0.09, compared to $0.31 in Q3 2024, reflecting a decline of 70.9%[5] - Adjusted diluted earnings per share for Q3 2025 was $0.37, down from $0.43 in Q3 2024, marking a decrease of 13.9%[5] - GAAP net income for the quarter was $2,547,000, a decline of 70.3% compared to $8,587,000 in the same quarter last year[20] - Adjusted net income for the quarter was $10,158,000, down from $12,138,000 year-over-year, reflecting a decrease of 16.3%[20] - Total revenue for the third quarter was $73,111,000, a decrease of 7.3% from $78,899,000 in the previous quarter and a decrease of 8.4% from $79,777,000 in the same quarter last year[25] Revenue Breakdown - Revenue for the Global S&BT segment was $42,398,000 for the quarter ended September 26, 2025, a decrease of 2.0% from $43,252,000 in the same quarter of 2024[17] - Oracle Solutions revenue decreased to $16,353,000, down 25.4% from $21,838,000 year-over-year[17] - SAP Solutions revenue increased to $13,415,000, up 4.3% from $12,859,000 in the prior year[17] - Revenue before reimbursements for Global S&BT segment was $42,398,000, down 2.8% from $43,611,000 in the previous quarter and down 2.0% from $43,252,000 year-over-year[25] - Oracle Solutions segment revenue before reimbursements was $16,353,000, a decline of 20.5% from $20,494,000 in the previous quarter and a decline of 25.0% from $21,838,000 year-over-year[25] - SAP Solutions segment revenue before reimbursements increased to $13,415,000, up 0.7% from $13,524,000 in the previous quarter and up 4.3% from $12,859,000 year-over-year[25] Cash and Shareholder Activities - The company reported cash balances of $13.9 million and $44.0 million outstanding on its credit facility as of September 26, 2025[5] - The company repurchased 1.1 million shares at an average price of $20.70, totaling $22.9 million, with $12.6 million remaining in the share repurchase program[5] - The company plans to launch a modified Dutch auction tender offer to purchase up to $40.0 million in common stock[5] - The company repurchased 839,000 shares at a cost of $17,405,000, with an average price per share of $20.73[25] Assets and Liabilities - Total assets increased to $200,657,000 as of September 26, 2025, up from $191,877,000 on December 27, 2024, representing a growth of approximately 4.0%[16] - Total current assets rose to $80,377,000, compared to $76,346,000 in the previous period, marking an increase of about 5.3%[16] - Total liabilities increased to $99,033,000, up from $76,303,000, indicating a rise of approximately 29.7%[16] - Shareholders' equity decreased to $101,624,000 from $115,574,000, representing a decline of about 12.1%[16] Future Projections - For Q4 2025, total revenue before reimbursements is estimated to be between $69.5 million and $71.0 million[6] - Adjusted diluted earnings per share for Q4 2025 is projected to be in the range of $0.38 to $0.40[6] Operational Metrics - Consultant headcount decreased to 1,317 from 1,382 in the previous quarter, while total headcount decreased to 1,599 from 1,685[25] - Cash provided by operating activities increased significantly to $11,395,000 from $5,649,000 in the previous quarter and $10,578,000 year-over-year[25] - Capital expenditures for the quarter were $2,405,000, up from $1,910,000 in the previous quarter and $1,229,000 year-over-year[25] - Days sales outstanding (DSO) improved to 71 days from 73 days in the previous quarter[25] - The top customer accounted for 5% of total revenue, down from 7% in the previous quarter and 13% year-over-year[25] Dividend Declaration - The Board of Directors declared a quarterly dividend of $0.12 per share, payable on January 9, 2026[5] Product Development - The release of AI XPLR V4 in September received positive feedback, enhancing client attraction and expected growth in Gen AI revenues[3]

Core Insights - The Hackett Group reported third quarter 2025 financial results, highlighting a continued pivot towards generative AI (Gen AI) and the launch of AI XPLR V4, which received positive feedback from partners [2][3][30] - Total revenue for Q3 2025 was $73.1 million, down from $79.8 million in Q3 2024, with adjusted diluted earnings per share at $0.37 compared to $0.43 in the previous year [3][9] - The company plans to initiate a Dutch tender offer to repurchase up to $40 million of its common stock, with a range of $18.30 to $21.00 per share [3][11] Financial Performance - Total revenue for Q3 2025 was $73.1 million, a decrease of 8.4% year-over-year from $79.8 million in Q3 2024 [3] - Revenue before reimbursements was $72.2 million, down from $77.9 million in the same quarter last year [3] - GAAP diluted earnings per share were $0.09, a significant decline from $0.31 in Q3 2024, impacted by non-cash compensation and restructuring costs [3][9] Business Developments - The launch of AI XPLR V4 in September 2025 is expected to enhance client engagement and accelerate growth in the Gen AI sector [2][30] - The company repurchased 1.1 million shares at an average price of $20.70, totaling $22.9 million, with $12.6 million remaining in the share repurchase program authorization [3][11] - The Board of Directors declared a quarterly dividend of $0.12 per share, payable on January 9, 2026 [3] Future Outlook - The company estimates total revenue before reimbursements for Q4 2025 to be between $69.5 million and $71.0 million [9] - Adjusted diluted earnings per share for Q4 2025 are projected to be in the range of $0.38 to $0.40 [9]

Group 1 - The Hackett Group, Inc. is a small-cap tech stock that hedge funds were purchasing in Q2 2025 [1] - Barrington Research reaffirmed its Outperform rating on Hackett with a price target of $27, marking the third consecutive month of support from analyst Vincent Colicchio, who previously lowered the target from $32 [1][2] - The company is set to report Q3 2025 results on November 4, with key metrics including digital transformation demand, consulting utilization rates, and margin trends [2] Group 2 - Hackett Group is a Miami-based IP-led strategic consultancy and enterprise benchmarking firm, providing solutions in digital transformation, enterprise performance, and cost optimization [3] - The company is integrating AI-driven process solutions, particularly through its partnership with Celonis, which is expected to drive growth [2]