The Hackett Group(US:HCKT)2025-11-04 23:02Financial 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]