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The Hackett Group(HCKT) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Results Overview Management Commentary Management reported strong Q2 2025 operating results, exceeding revenue guidance and meeting adjusted EPS targets, while accelerating development of Gen AI platforms like AI XPLR V4 to drive future growth - Operating results were strong, with revenue above guidance and adjusted EPS at the mid-range of guidance3 - The company is aggressively investing in and growing its Generative AI (Gen AI) platforms and associated revenues3 - A key innovation this quarter was the accelerated release of AI XPLR V4, which helps clients design Gen AI solutions and workflows with unprecedented speed, a capability expected to drive future growth3 Financial Highlights Total revenue in Q2 2025 increased to $78.9 million, exceeding guidance, while GAAP diluted EPS was $0.06 and adjusted diluted EPS was $0.38, with capital actively managed through share repurchases and dividend declarations Q2 2025 Key Financial Results vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $78.9 million | $77.7 million | | Revenue before reimbursements | $77.6 million | $75.9 million | | GAAP Diluted EPS | $0.06 | $0.31 | | Adjusted Diluted EPS | $0.38 | $0.39 | - Q2 2025 GAAP net income was significantly impacted by $5.1 million ($0.18 per share) in non-cash compensation from a stock price award program and $2.5 million ($0.07 per share) in acquisition-related expenses6 - The company repurchased 180,000 shares for $4.4 million and declared a third-quarter dividend of $0.12 per share6 - The Board of Directors increased the share repurchase program authorization by $13.0 million, bringing the total available to $30.0 million6 Business Outlook for the Third Quarter of 2025 For Q3 2025, The Hackett Group anticipates total revenue before reimbursements to range from $73.0 million to $74.5 million, with adjusted diluted EPS projected between $0.36 and $0.38 Q3 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Total Revenue (before reimbursements) | $73.0 million - $74.5 million | | Adjusted Diluted EPS | $0.36 - $0.38 | Financial Statements Consolidated Statements of Operations In Q2 2025, total revenue slightly increased to $78.9 million, but a significant rise in costs and operating expenses led to a sharp decline in operating income to $4.6 million and net income to $1.7 million ($0.06 per diluted share) Q2 2025 vs Q2 2024 Statement of Operations (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $78,899 | $77,656 | | Total Costs and Operating Expenses | $74,304 | $65,140 | | Operating Income | $4,595 | $12,516 | | Net Income | $1,661 | $8,748 | | Diluted EPS | $0.06 | $0.31 | - The increase in total costs was driven by higher personnel costs, which rose to $49.7 million from $45.4 million, and a rise in SG&A costs to $23.4 million from $18.0 million year-over-year, both including substantially higher non-cash stock-based compensation14 Condensed Consolidated Balance Sheets As of June 27, 2025, total assets increased to $200.5 million, while cash decreased to $10.1 million and long-term debt rose to $22.8 million, with shareholders' equity growing to $119.8 million Balance Sheet Highlights (in thousands) | Account | June 27, 2025 | Dec 27, 2024 | | :--- | :--- | :--- | | Cash | $10,142 | $16,366 | | Total Assets | $200,516 | $191,877 | | Long-term debt | $22,774 | $12,734 | | Total Liabilities | $80,714 | $76,303 | | Shareholders' Equity | $119,802 | $115,574 | Segment Profit In Q2 2025, Global S&BT and SAP Solutions segments showed revenue and contribution growth, while the Oracle Solutions segment experienced declines in both revenue and contribution year-over-year Q2 2025 Segment Performance vs. Q2 2024 (in thousands) | Segment | Revenue (Q2'25) | Revenue (Q2'24) | Contribution (Q2'25) | Contribution (Q2'24) | | :--- | :--- | :--- | :--- | :--- | | Global S&BT | $43,611 | $41,562 | $12,988 | $12,750 | | Oracle Solutions | $20,494 | $22,157 | $4,451 | $5,368 | | SAP Solutions | $13,524 | $12,177 | $3,892 | $3,252 | - Total segment contribution remained relatively flat at $21.3 million in Q2 2025 compared to $21.4 million in Q2 202416 - Items not allocated to segments, including corporate expenses and stock compensation, significantly impacted overall profitability, reducing the total segment contribution of $21.3 million to an income before taxes of $4.2 million16 Supplemental Information Reconciliation of GAAP to Non-GAAP Measures For Q2 2025, GAAP net income of $1.7 million was adjusted upwards by $5.1 million for a stock price award program and $2.8 million for other non-cash stock compensation, resulting in an adjusted net income of $10.7 million ($0.38 per diluted share) Q2 2025 GAAP to Non-GAAP Reconciliation (in thousands) | Line Item | Amount | | :--- | :--- | | GAAP NET INCOME | $1,661 | | Non-cash stock based compensation | $2,814 | | Stock price award program compensation | $5,142 | | Acquisition-related expenses (cash & non-cash) | $2,073 | | Other adjustments | $425 | | Tax effect of adjustments | ($1,424) | | ADJUSTED NET INCOME | $10,691 | - The most significant adjustments, totaling over $9.7 million before tax effects, were related to equity compensation, excluded to better represent ongoing operational results192023 Supplemental Financial Data Supplemental data indicates a year-over-year increase in total headcount to 1,685, a decrease in top 10 customer concentration to 27%, and an increase in Days Sales Outstanding (DSO) to 73 days Key Metrics Comparison | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Consultant Headcount | 1,382 | 1,145 | | Total Headcount | 1,685 | 1,409 | | Days Sales Outstanding (DSO) | 73 | 68 | | Top 10 Customer Concentration | 27% | 33% | - Cash provided by operating activities was $5.6 million in Q2 2025, a decrease from $13.7 million in Q2 202424 - The company continued its share repurchase activity, buying back 177,000 shares for $4.3 million during the quarter, leaving $17.0 million in its authorization plan at quarter-end24