Core Insights - The company is transitioning from labor-based delivery to labor-led services supported by proprietary GenAI platforms [1] - Performance in Global S&BT and Oracle segments was affected by market confusion regarding GenAI technologies and the company's shift towards AI-integrated offerings [1] - The SAP Solutions segment experienced a 32% growth driven by strong software sales and successful S/4HANA cloud migrations, with sustained demand expected throughout the year [1] - The company claims a competitive advantage through 'Hackett Solution Language Models' and proprietary benchmarks that enhance high-ROI AI deployment [1] - A significant 'automation expansion' opportunity is identified, with the total addressable market for cognitive automation estimated to be 3x to 5x larger than current static rule-based footprints [1] - Strategic acquisitions, particularly LeewayHertz, have been integrated to enhance engineering capabilities for agentic design and technical solutioning [1]

Financial Data and Key Metrics Changes - The company reported revenues before reimbursements of $74.8 million for Q4 2025, exceeding the high end of guidance, with adjusted earnings per share of $0.40, also at the high end of guidance [4][21] - Total revenues before reimbursements from the global SMBT segment were $38.6 million, a decrease of 11% year-over-year [15] - Total revenues before reimbursements from the Oracle Solutions segment were $14 million, a decrease of 20% year-over-year [16] - Total revenues before reimbursements from the SAP Solutions segment were $22.2 million, an increase of 32% year-over-year, driven by strong software-related sales [17] - Adjusted EBITDA was $15.9 million, or 21.3% of revenues before reimbursements, compared to $19.5 million, or 25.2% in the prior year [19] - GAAP net income for Q4 2025 was $5.6 million, or diluted earnings per share of $0.21, compared to $3.6 million, or diluted earnings per share of $0.12 in the prior year [19][20] Business Line Data and Key Metrics Changes - The global SMBT segment saw a revenue decrease of 11% year-over-year, reflecting the market's shift towards AI-enabled services [15] - The Oracle Solutions segment experienced a 20% revenue decline year-over-year, but improvements are expected with the introduction of the AIX platform [16] - The SAP Solutions segment reported a 32% increase in revenue year-over-year, attributed to strong software sales and implementation fees [17] Market Data and Key Metrics Changes - Approximately 22% of total company revenues before reimbursements consisted of recurring, multiyear, and subscription-based revenues [17] - The company expects Q1 revenue to be sequentially up and gross margin to improve year-over-year, continuing throughout the year [16] Company Strategy and Development Direction - The company is focusing on expanding its suite of GenAI-enabled platforms to lead in the agentic enterprise era, aiming to generate new revenue with higher margins [4][5] - The strategy includes leveraging proprietary IP and unique expertise to enhance the value of solutions delivered to clients [5][8] - The company is pursuing strategic acquisitions and alliances to leverage its IP and platforms, aiming to accelerate growth [34] Management's Comments on Operating Environment and Future Outlook - Management noted that while demand for digital transformation remains solid, it is impacted by economic concerns and confusion surrounding emerging GenAI technologies [28] - The company believes it is entering a significant automation expansion phase, with opportunities to increase enterprise automation footprints [30] - IT budgets are expected to increase as organizations allocate more resources to GenAI solutions [32] Other Important Information - The company generated strong cash flow from operations, allowing it to maintain dividends and continue a stock buyback program [11][22] - The company repurchased 2.1 million shares at an average price of $20.30 per share, totaling approximately $42 million [23][24] Q&A Session Summary Question: Can you elaborate on the relationship with the international potential reseller and partner? - Management expects to announce the agreement shortly, emphasizing the distinct capabilities of AI Explorer and its ability to evaluate AI opportunities across industries [36][37] Question: How will the partnership with ServiceNow be structured? - The partnership is in a pilot phase targeting specific industries, with plans to launch before the end of the month [41] Question: Can you provide more details on the transition costs from GenAI? - Management indicated that productivity improvements could exceed 25%, leading to potential headcount reductions in certain areas [42][46] Question: How is the licensing front progressing? - The company expects to start licensing its products throughout the year, with clients having the option to license modules based on their needs [51][52] Question: How are the pieces within the SPT business trending? - The advisory business performed well, and the number of clients with AI elements is expected to increase significantly throughout the year [60][61]

Financial Data and Key Metrics Changes - The company reported revenues before reimbursements of $74.8 million for Q4 2025, exceeding the high end of guidance, with adjusted earnings per share of $0.40, also at the high end of guidance [4][21] - Total revenues before reimbursements from the Global S&BT segment were $38.6 million, a decrease of 11% year-over-year [15] - Revenues from the Oracle Solutions segment were $14 million, a decrease of 20% year-over-year [16] - Revenues from the SAP Solutions segment were $22.2 million, an increase of 32% year-over-year, driven by strong software-related sales [17] - Adjusted gross margin was 46.6%, down from 47.7% in the prior year [18] - GAAP net income for Q4 2025 was $5.6 million, or diluted earnings per share of $0.21, compared to $3.6 million or $0.12 per share in the prior year [19][20] Business Line Data and Key Metrics Changes - The Global S&BT segment saw a decline in revenues, reflecting the market's shift towards AI-enabled services [15] - The Oracle Solutions segment is expected to see productivity improvements due to the introduction of the AI X platform [16] - The SAP Solutions segment is expected to maintain strong demand throughout the year, supported by increased sales investments [17] Market Data and Key Metrics Changes - Approximately 22% of total revenues before reimbursements consisted of recurring, multi-year, and subscription-based revenues [17] - The company is experiencing a natural migration of IP access requests towards Hackett Intelligence IP capabilities [17] Company Strategy and Development Direction - The company is focusing on expanding its suite of GenAI-enabled platforms to lead in the agentic enterprise era [4][5] - The strategy includes leveraging proprietary IP to enhance service delivery and accelerate revenue growth [5][9] - The company is pursuing strategic alliances and acquisitions to enhance its capabilities and market position [35] Management's Comments on Operating Environment and Future Outlook - Management noted that while demand for digital transformation remains solid, it is impacted by economic concerns and confusion surrounding emerging GenAI technologies [28] - The company anticipates significant growth opportunities in enterprise automation, estimating a potential increase in automation footprint by 3-5 times [31] - The management expects IT budgets to increase as organizations allocate more resources to GenAI solutions [32] Other Important Information - The company plans to incur AI transition charges of approximately $1 million to $1.5 million in Q1 2026 due to headcount reductions [26] - The board declared a Q1 dividend of $0.12 per share, to be paid on April 3, 2026 [24] Q&A Session Summary Question: Can you elaborate on the relationship with the international potential reseller and partner? - The company expects to announce the agreement shortly, emphasizing the distinct capabilities of AI Explorer in simulating AI opportunities across industries [37][38] Question: How will the partnership with ServiceNow be structured? - The partnership will involve a pilot targeting specific industries, with hopes to launch before the end of the month [43] Question: Can you provide insights on the S&BT business trends? - The advisory business performed well, and the number of clients with AI elements is expected to increase significantly throughout the year [61] Question: How is the licensing front progressing? - The company expects to start licensing products throughout the year, allowing clients to choose between ideation and solutioning modules [52][53]

Financial Data and Key Metrics Changes - The company reported revenues before reimbursements of $74.8 million for Q4 2025, exceeding the high end of guidance, with adjusted earnings per share of $0.40, also at the high end of guidance [4][20] - Total company adjusted gross margin was 46.6%, down from 47.7% in the prior year, while adjusted EBITDA was $15.9 million, or 21.3% of revenues before reimbursements, compared to $19.5 million, or 25.2% in the prior year [17][18] - GAAP net income for Q4 2025 was $5.6 million, or diluted earnings per share of $0.21, compared to $3.6 million, or diluted earnings per share of $0.12 in the prior year [18][19] Business Line Data and Key Metrics Changes - Revenues from the global SMBT segment were $38.6 million, a decrease of 11% year-over-year, reflecting the market's shift towards AI-enabled services [14] - Oracle Solutions segment revenues were $14 million, down 20% year-over-year, while SAP Solutions segment revenues increased by 32% to $22.2 million, driven by strong software-related sales [15][16] - Approximately 22% of total revenues were recurring, multi-year, and subscription-based, indicating a shift towards more stable revenue streams [16] Market Data and Key Metrics Changes - The company noted that demand for digital transformation remains solid but is impacted by economic concerns and confusion surrounding emerging GenAI technologies [26] - The automation expansion opportunity is estimated to be 3-5 times the existing automation footprint, indicating significant growth potential in the market [29] Company Strategy and Development Direction - The company is focusing on expanding its suite of GenAI-enabled platforms to enhance service delivery and create new revenue streams with higher margins [5][7] - A strategic pivot towards generative AI is expected to drive innovation and create unique value creation opportunities [31][32] - The company is actively seeking acquisitions and alliances to leverage its IP and enhance growth capabilities [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing transition to AI-enabled services and the potential for significant productivity improvements [10][24] - The company anticipates that IT budgets will increase as organizations allocate more resources to GenAI solutions [30] - Management acknowledged the challenges posed by market volatility but emphasized the long-term growth opportunities presented by automation and AI [26][29] Other Important Information - The company maintained a strong cash flow, with cash balances of $18.2 million at the end of Q4 2025, and continued its stock buyback program, repurchasing 2.1 million shares [20][22] - The company expects to incur AI transition charges of approximately $1 million-$1.5 million in Q1 2026, primarily related to headcount reductions [24] Q&A Session Summary Question: Can you elaborate on the relationship with the international potential reseller and partner? - Management expects to finalize an agreement shortly, emphasizing the distinct capabilities of AI Explorer and the potential for significant productivity ideas [35][36] Question: How will the partnership with ServiceNow proceed? - The partnership is in a pilot phase targeting specific industries, with hopes to launch before the end of the month [40][41] Question: Can you clarify the impact of GenAI on headcount and costs? - Management indicated that new platforms have led to productivity improvements, potentially resulting in a reduction of headcount in certain areas [42][43] Question: How is the licensing front progressing? - The company expects to start licensing its products throughout the year, allowing clients to access ideation and solutioning capabilities [50][51] Question: How are the SPT business segments trending? - The advisory business performed well, and there is an increasing number of clients incorporating AI elements into their engagements [58][60]