Huron Consulting(US:HURN)2025-10-28 22:02Financial Data and Key Metrics Changes - Company-wide revenues before reimbursable expenses (RVR) grew 17% in Q3 2025, including 10% organic growth, reflecting strong demand and execution [3][20] - RVR for Q3 2025 was a record $432.4 million, up 16.8% from $370 million in Q3 2024 [19] - Net income for Q3 2025 was $30.4 million or $1.71 per diluted share, compared to $27.1 million or $1.47 per diluted share in Q3 2024 [21] - Adjusted EBITDA was $67.4 million in Q3 2025, or 15.6% of RVR, compared to $54.9 million or 14.8% of RVR in Q3 2024 [22] - Adjusted net income was $37.4 million or $2.10 per diluted share in Q3 2025, a 25% increase over Q3 2024 [23] Business Line Data and Key Metrics Changes - Healthcare segment RVR grew 20% year-over-year, with organic growth of 19% excluding recent acquisitions [4][24] - Education segment RVR grew 7% year-over-year, driven by strong demand for strategy and operations, research, and digital offerings [9][10] - Commercial segment RVR grew 27% year-over-year, driven by acquisitions and continued organic growth [12][25] Market Data and Key Metrics Changes - The healthcare segment generated 51% of total company RVR in Q3 2025, with a record RVR of $219.5 million [23] - The education segment accounted for 30% of total company RVR, with a record RVR of $129.4 million [25] - The commercial segment generated 19% of total company RVR, with a record RVR of $83.4 million [26] Company Strategy and Development Direction - The company aims to leverage AI and automation across its offerings to drive value creation and efficiency [8][16] - The strategy includes integrating commercial offerings to enhance the go-to-market strategy and drive above-average growth [15][16] - The company is focused on delivering demonstrable ROI for clients, which is critical for maintaining strong client relationships and repeat business [34] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand across core end markets, positioning the company well for continued growth in 2026 [4][17] - The company expects to achieve full-year 2025 RVR guidance of $1.65 billion-$1.67 billion and adjusted non-GAAP EPS of $7.50-$7.70 [16][30] - Management highlighted the importance of a strong culture in attracting and retaining talent, which supports growth [49][50] Other Important Information - The company closed on acquisitions of Treliant and Wilson Perumal, contributing to growth in the commercial segment [19][14] - The effective income tax rate for Q3 2025 was 28.7%, with an expected full-year rate of 23%-25% [22] - The company repurchased approximately 147,000 shares in Q3 2025, totaling $152.5 million year-to-date [30] Q&A Session Summary Question: Insights on performance improvement in healthcare - Management noted strong market conditions driven by margin pressures, leading to increased demand for performance improvement services [33][34] Question: Outlook for 2026 - Management indicated confidence in the multi-year growth model discussed at the investor day, with potential for higher outcomes based on continued execution [40][41] Question: Demand inflection in commercial segment - Management observed improved sales conversion in financial advisory and strategy offerings, indicating a positive trajectory [44][45] Question: Hiring capabilities for growth - Management expressed confidence in hiring capabilities, supported by a strong culture that attracts talent and reduces attrition [49][50] Question: Customer decision-making in education - Management noted a stable outlook in education, with clients making long-term decisions amidst previous disruptions [51][52] Question: Utilization rates and margin expansion - Management acknowledged lower utilization due to headcount additions but expects improvement as projects ramp up [74][76] Question: AI focus in projects - Management indicated that approximately 15%-20% of total revenue is related to AI projects, with expectations for growth in this area [64][66]