The Hackett Group(US:HCKT)2025-08-05 22:00Financial Data and Key Metrics Changes - The company reported revenues before reimbursements of $77.6 million, an increase of 2% over the prior year, which was above the high end of quarterly guidance [15] - Adjusted earnings per share were $0.38, at the midpoint of the earnings guidance range, compared to $0.39 in the prior year [20] - GAAP net income totaled $1.7 million, or diluted earnings per share of $0.06, down from $8.7 million or $0.31 in the previous year [19] - Adjusted gross margin was 42.8%, compared to 42.3% in the prior quarter [18] - Days sales outstanding (DSO) remained at 73 days, compared to 68 days from the prior year [21] Business Line Data and Key Metrics Changes - The Global S and BT segment reported revenues of $43.6 million, a 5% increase year-over-year, with GenAI consulting and implementation offerings driving growth [15][16] - The Oracle Solutions segment saw revenues decrease by 7.5% to $20.5 million, primarily due to the wind-down of a large engagement [17] - The SAP Solutions segment reported revenues of $13.5 million, an increase of 11% year-over-year, driven by increased software sales activity [17] - Excluding the OneStream practice, the GSBT segment was up 10% [7] Market Data and Key Metrics Changes - Approximately 21% of total revenues consist of recurring multiyear and subscription-based revenues [17] - The company expects global S and BT and SAP Solutions segment revenue to increase compared to the prior year, while Oracle Solutions segment revenue is expected to decline by over 20% [23] Company Strategy and Development Direction - The company is focusing on Generative AI (GenAI) solutions, viewing it as a generational opportunity that will change consulting services delivery [8][27] - A strategic partnership with Salonis was announced to enhance AI Explorer and ZBrain capabilities, aiming to accelerate growth in the GenAI space [6][41] - The company is investing in its AI Explorer platform, with a new version expected to significantly enhance its capabilities [30] - The acquisition of Leeway Hertz is aimed at expanding GenAI implementation capabilities [27] Management's Comments on Operating Environment and Future Outlook - Management noted that while demand for digital transformation remains strong, it is impacted by economic concerns and decision-making processes [26] - IT budgets are expected to increase, particularly for GenAI initiatives, which are seen as high-impact areas [26] - The company anticipates restructuring charges in Q3 due to adjustments in headcount to align with GenAI productivity improvements [23] Other Important Information - The company repurchased 180,000 shares at an average price of $24.5 per share, totaling approximately $4.4 million [22] - The board declared a third-quarter dividend of $0.12 per share [22] Q&A Session Summary Question: Discussion on Explorer 3.0 and interest levels - Management indicated that while services related to AI Explorer are seeing interest, licensing for the product has not yet been released due to ongoing improvements [36][37] Question: Status of strategic partnerships - A strategic alliance with Salonis was announced, which is expected to enhance market offerings [41][42] Question: Oracle segment challenges - Management acknowledged challenges in replacing a large engagement in the Oracle segment, impacting Q2 results and expected to continue into Q3 [44] Question: OneStream performance outlook - Management expects the impact from OneStream to decrease significantly in Q4, providing a cleaner comparison [48] Question: Examples of GenAI applications - Key areas of focus include customer service and revenue management, with significant engagement from clients in these areas [49] Question: Clarity on elevated uncertainty affecting client decisions - Management believes initial uncertainties had little impact on Q2, with expectations for demand to increase as clients understand GenAI's potential [51]