The Hackett ((HCKT)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The Hackett Group’s recent earnings call presented a mixed sentiment, with notable advancements in AI technology and strategic alliances promising future growth. However, concerns were raised due to current revenue declines and challenges in specific segments, particularly Oracle Solutions. Despite these hurdles, the company’s strategic initiatives and robust cash flow position it well for future expansion.
AI XPLR Platform Version 4 Launch
The Hackett Group unveiled version 4 of its AI XPLR platform, showcasing highly differentiated capabilities. The feedback from clients and potential partners has been overwhelmingly positive, with one partner even describing the new version as ‘game changing.’ This launch marks a significant step forward in the company’s technological advancements.
Strategic Alliances and Partnerships
The company announced a strategic alliance with Celonis, which enhances their AI XPLR platform with process intelligence. Additionally, The Hackett Group is in the process of finalizing other alliances that could significantly broaden their growth opportunities, signaling a strong focus on collaborative growth strategies.
SAP Solutions Segment Growth
The SAP Solutions segment experienced a 4% increase in revenues compared to the same period last year, primarily driven by implementation services. This growth highlights the segment’s resilience and potential as a key contributor to the company’s overall performance.
Strong Cash Flow and Share Repurchase
The Hackett Group maintained a strong cash flow, repurchasing 1.1 million shares and announcing a $40 million Dutch tender offer to acquire approximately 8% of the company’s common stock. These actions underscore the company’s commitment to enhancing shareholder value and leveraging its financial strength.
Revenue Decline
The company reported a 7% decline in total revenues before reimbursements compared to the previous year. The Oracle Solutions segment was particularly affected, experiencing a 25% revenue decline, which poses a significant challenge for the company.
Challenges in Oracle Solutions Segment
The Oracle Solutions segment faced extended client decision-making and a delayed replacement of a large post-go-live engagement, contributing to its 25% revenue decline. These challenges highlight the segment’s current difficulties and the need for strategic adjustments.
OneStream Practice and IPaaS Contract Issues
The OneStream practice showed weakness, compounded by the nonrenewal of a significant IPaaS contract, which negatively impacted the global Strategy and Business Transformation segment. This issue underscores the challenges faced in maintaining and renewing key contracts.
Forward-Looking Guidance
Looking ahead, The Hackett Group provided guidance for the fourth quarter of 2025, projecting total revenues before reimbursements to be between $69.5 million and $71 million. Despite expected declines in the Global Strategy and Business Transformation and Oracle Solutions segments, the company anticipates continued growth in GenAI revenues. The SAP Solutions segment is also expected to see a decrease due to lower software sales activity. The company forecasts an adjusted diluted net income per common share ranging from $0.38 to $0.40, with an adjusted gross margin of approximately 46% to 47%.
In summary, The Hackett Group’s earnings call reflected a blend of optimism and caution. While advancements in AI technology and strategic alliances promise future growth, current revenue declines and challenges in specific segments pose concerns. Nonetheless, the company’s strategic initiatives and strong cash flow position it well for future growth, providing a balanced outlook for investors.