HCKT - Earnings call transcript Q1 2018

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Operator

Welcome to the Hackett Group's First Quarter Earnings Conference Call.

Your line have been placed on listen-only mode until the question-and-answer session. Please be advised the conference is being recorded. Hosting tonight's call are Mr. Ted Fernandez, Chairman and CEO and Mr. Officer. Financial Chief Ramirez, Rob Mr. Ramirez, you begin. may

Rob Ramirez

Good discuss the everyone and results. thank to us joining for Hackett you afternoon Group's quarter first

Speaking over and and are today Ramirez, Time. CFO. Group on answer announcement Robert at the questions was X:XX press your Eastern released and here myself, Ted wires of CEO to Chairman A the the Hackett Fernandez, call p.m.

the at copy of release www.thehackettgroup.com. a our site please For Web visit

call. It statistical page We this will data additional release the or place on site. Relations not also discussed is of any financial Web Investor in contained on the our

begin, forward-looking like the expectations, guarantee in question-and-answer we are predict are for the it of statements filings. results involve statements Laws. They to These remind risks, in performance. information the to will and not we a you future be making the statements current purposes Before that our I Securities relate SEC would Ted. only to session, about may estimates should Federal and results be accurate. forward-looking point, factors following future may in like assumptions statements vary. These I'd the risk in of be contained projections uncertainties that may not particularly comments with and expected to this turn detailed Actual considered our be difficult and At conjunction to and the which over which

Ted Fernandez

earnings call. Thank you, quarter everyone Rob first welcome our and to

it some open I'll for on our I'll results, he'll highlight Q&A. Rob it I guidance. flow to will provide over it and And will the overview relative back up, normally also it comments. do, make call comment quarter. providing cash strategic to him overview As the turn open to we turn operating ask and me then, details comments we Then by we some up back to the on will open or over and market the

welcome a increase everyone pro of and to the overview afternoon, start year net million the earnings prior So $X.XX, call. This the and reported our with we XX% X.X% first highlight quarter over our year. EPS a prior $XX.X let over increase first again forma comments and me of revenues

our exceeded the which expected, our implementation last as by group quarter in up cloud revenue from digital Strategy to applications on-premise revenue expected. initiatives see year benefits started we acquisition our our initial from growth including growth were the strongly. U.S. in our as was up Revenue transition Cloud driven on-premise Business implementation As transformation and revenues of decline to Transformation was focus.

we with revenues our to to last our to of in our consistent quarter, continues to well our award-winning several emerging acquisition ERP quarters, migration last quarter market in cloud Oracle implementations revenue rapidly of results XXXX. the We last EPM advantage actions cloud European Correspondingly, objective expect our the will profitability strongly to to have these entire Oracle Oracle the target ERP capabilities us growth of positioned suite range believe from Oracle growth long-term migration EPM us group. our bolster second software provider IP-as-a-Service cloud. to Cloud take enable as as This and secular results. move within on-premise and the with Additionally, the Cloud initiatives in our continue year to Consistent resume opportunity. to the expand led in

our to digital Apps specifically our of Another our first all building IP functionality. proprietary by during digital of digitize of was platform around one XXXX significant platform our we introduce transformation move Oracle Hackett made transformation and Cloud versions

oracle sales us with our Cloud to implementation strategy we transformation quickly practice the these to able to can the IP and the go-to-market fully unique assess configuration Oracle use Oracle and We demonstrate channels. optimize of allow have of the actions believe cloud us demonstrate applications. how been We Apps align Oracle for best

selling finance throughout we CPM, our enhance for business. chain related to Oracle cloud well HCM ability of actions supply these grow now to us software just as experience. as we implementing XXXX, our our cloud As applications customer Instead implementation Oracle shared and market EPM quadruple allowed software, addressable are

of XXXX our been part Robotic their business key our we opportunity, Another transformation securing Automation digital initiatives. IP the our their new that but as-a-Service in of RPA quickly initiatives, the digital transformation least, in to growth transformation experienced and and key RPA offering our and leader. quarter. broader business to accelerated the well transformation our Quantum IP help further generation of capability our benchmarking acquiring not help their rate Process we has training introduction as expanding consideration our next and increasing which indicative strategy Last address clients programs position as assess clients or successful in Leap are By is using unique of certification as

dividend to continued side further profitability operations. generate to our will On flows we to strong I strategy Rob outlook. comment This market let provide buyback fund acquisitions. and Rob? well the as first also also conditions, details operating us on on our flow stock me balance sheet as cash increase and and has allowed comment ask on cash from but results,

Rob Ramirez

Thank you, Ted.

XXXX activities an As I with flow an key I our will do, for related quarter. overview of the XXXX. then of the conclude outlook will a financial our topics during statistics I of first operating cash quarter following our quarter during results of discussion on call. the second An overview with typically cover our overview along

Hackett Solutions represent the revenues that of reimbursable represents purposes company. reimbursable including references Please excluding in exclude to gross to any total Group, For note financial revenues to expenses. Hackett any references discussion and my separately I the specifically expenses reference Solutions. this all Group will SAP revenues Correspondingly, of and results net comment will SAP the call, revenues the regarding

primarily requirements and Acquisition-related forma reflected compensation XX%. investing service pro a of assumes that acquisition-related references the intangible compensation a and such cash expense, tax results expense, stock specifically GAAP. compensation Additionally, purchase stock XXXX under asset expense amortization exclude expense expense as stock and long-term non-cash the acquisitions relates compensation cash for to rate as of contained and portion the to cash normalized consideration

as first project QX XXXX. quarter a year-over-year first our associated the first a primarily basis. gross of of in of XXXX partially the the company our net profitability. result ratio Jibe to X%. a with X% on were anticipated in which the greater decline guidance. our on no the year. decrease end revenues Application $X.X SFP million to year-over-year in of travel-related impact basis acquisition The offset and expenses Hackett associated the versus SAP Total including second revenue than increased Service expenses, revenues expected. our quarter quarter, company on-premise reimbursable international quarter revenue AMS revenues up compared represents revenues groups through were by XX% however, by revenues decreases of of first margin Managed expenses quarter totaled reimbursable of implementation $XX.X of on up guidance. client in no excluding or of million the the XXXX, or of the of the of prior a a which prior when as our with our year, Reimbursable for a to quarter Aecus has total of net SAP towards reimbursable reseller, net same Net were gross which $XX.X fiscal in XX% accounted the of period actual quarter Group year primarily second net passed revenues revenue for revenues expenses Group, Europe quarter consists expense the XX% for For revenues led upper increase also of from in the excludes Solutions X% acquisition Hackett million which year-over-year the quarter first growth, revenues first in was International X.X% revenues XX% increase the our X.X% net was as which of year-over-year of first an gross X.X% Solutions, XXXX in of prior the Net $XX.X the by company result on U.S. million XXXX, were the compared to XXXX,

at total accounted XX% net and previous XX% company primarily to resources our XX% revenues cloud-based Our software X,XXX the is profitability of which company include migration advisory groups and revenues in revenues. practice recurring executive pre-tax and was XXXX approximately of acquisitions the resource quarter the XXXX due net the first the of the our from first year-over-year of of for AMS of in first and rationalization our the practice the best of total of expenses cost the first period compared by excluding year. offset quarter to closed as the company Total same Both consultant the quarter pro in of reimbursable end million at $XX.X XXXX. of in $XX.X on-premise from end the amounts to the for increase partially prior headcount as company second the Total resulting to quarter X,XXX XXX compared acquirements. XXXX, quarter of million forma XXXX in totaled quarter of represented sales

As of metrics the continued performance revenue and representative a indication delivery nearshore professional per determined of Hackett of as the and were development no our the Solutions the and is gross such Group expansion we for capabilities, company's longer best margins. our per hour offshore believe SAP result rate for performance. of We

added pro disclosures. return forma quarterly we've our to Additionally, earnings net equity on

of quarter in income the million $XX.X the both company at represented our period the net result X.X year-over-year as $X.XX and cents net first in as net increase is of XX% the in revenues last per U.S. XXXX the due second SG&A mentioned of forma of pro the in and was compared forma of $X.X net first midpoint in share, well our which net of pro forma XXXX was quarter an first first of prior in XX% with equity as XXXX. income revenues forma company included decreased quarter totaled XXXX to return period as to year. quarter net on to cash on Solutions on Ted for forma XXXX. million prior XX% the income was of $XX.X the compared was as gross the diluted Group period of respectively. revenues to to quarter higher quarter federal million the pro pro revenues Hackett the first of net end for as to quarter period XX% of margins both Pro the a XXXX of comments gross million million first Pro same first This cost quarter primarily These in in prior first same share guidance. share in compared in X% decrease increase as and incremental completed at first in per revenues. transactions in Total the results same was compares pro XXXX SAP XXXX was the previous $XX.X attributable in to XXXX. $XX.X or year, of to $X.XX forma year Consistent quarter increase first Total forma margins primarily the and compared Our the XX.X% XX% of decrease in per of XX% of a forma XX% tax earnings diluted year. when forma quarter, of year. to as or acquisition the results revenues. was compared the the in of as million EBITDA margin compared prior the statutory rate quarter forma an XX% on the of the represent pro in the SG&A XX% gross of absorbed quarter This XX% basis pro with long-term prior the our a rates. net quarter was The the XX% represented pro first year.

contribution XXXX. we of by in practice quarter, to programs. have was tax first existing to per As share of earnings pro to disclosed our of XXXX last for use quarter as diluted of first our as as with GAAP decided cents rate doubling our increase quarter XXXk GAAP the bonus diluted $X.XX related $X.XX share per compared decrease the earnings well X% X% in we forma the associates

quarter cash end a when $X.XX to unfavorable of cash of the to compared The our balances XXXX. shares second Net bonuses the tax of of that GAAP results. million settle $XX.X XXXX first impact dividend were activities quarter we company's quarter to XXXX vesting activities the semi-annual XXXX fiscal to million for increase an obligations employee adjusted $XX.X of to operating XXXX non-cash in compared purchased for expense XXXX paid items of relating accrued The in well the income provided tax at has by and quarter due first net million offset as This incentive to of payments million, by first increases items by at was in receivable accounts income expenses. attributable partially quarter payment income adjusted which as driven $XX.X the net end of primarily non-cash the the and decreases quarter. $XX.X first first was primarily as in net previous was the totaling for compensation

at Our previous outstanding days quarter days DSO or first the the quarter. sales of to XXXX XX XX the end of compared the as end day of was at

Directors the paid of of meeting, year During an paid $X.X XX% dividend, second declared first dividend At next XXXX. the per XXXX. the its of company quarter in semi-annual July $X.XXX declared the which its million will Board XXXX, was increase recent of for semi-annual be of in which share last

withholding primarily stock to of tax company the million total first by we the from shares. repurchased approximately at cost a employees During quarter, of income shares $X triggered vesting satisfy certain of the XXX,XXX

the repurchase stock quarter $X.X at end remaining was of the authorization Our million.

subsequent to our the the the the $X increase for of of the I'm share guidance quarter. program. Directors authorized end Board second However, quarter to a discuss going to first not million repurchase also

estimate by drive lower approximately the and primarily revenues year-over-year a revenue expense ratios reimbursable impact reimbursable lower The X%. reimbursable acquisitions decrease which of unfavorably the gross much the in from resulting increase will to expenses, of is IP-as-a-service lower historically continue levels in We comparisons expenses by use which expenses. both recent driven will

run to range with X% million. XXXX At million X.X% outlook million. estimated estimates the company year $XX the second gross revenue million down gross high-end expenses. total the to of the The such in from X% net this previous the QX for XX% be an and $XX rate. to X% $XX up SAP to a approximately Solutions As of $XX with consistent revenue in increase of represent of company the Group's be revenue the the guidance, includes estimates The for quarter will could reimbursable range Hackett

forma We to $X.XX earnings second of per earnings of increase year-over-year in pro our range $X.XX. high-end share pro expect in The range, XX%. the will a share XXXX be of to per in this this diluted quarter of represent forma the

to margin forma on net XX% in We expect gross to QX. revenues pro be approximately XX%

expect SG&A We pro be $XX.X expense quarter approximately forma for the to interest second and million.

range XX%. net We forma revenues be expect of in to approximately second on XX% to pro the quarter EBITDA

to turn the this the of payment months. I We impact for expect review our cash like strategic income priorities on balances down sequential back coming quarter. to excluding in federal to of basis corporate point, activity share estimated the market due buyback to over to outlook, the the it Ted be taxes at our And would

Ted Fernandez

changing. you just are focused are forward objectives going comments And show the thoughts strategic you, our first quarter look my they Rob. to fact goes pretty as that with consistent and are that Thank we on the and that is how not say of how last to I'm we

deliver really can is on redefining is mobile to in over pace deliver these compete to automated enhanced for forcing infrastructure models the era investments. to capabilities dramatically cloud business the these and well a accelerated due Europe and justify the what in growth year, due combination how influencing of expected functionality investments to our advisory prospects fundamentally services. way to and to increased new along to strongly determine significant dynamic companies This tempered as more significant order be will growth both organizations throughout revenue to Europe enhanced revenue at and business industries we as analytics, into the our cloud and to optimize to activity in current applications performance acquisition. experience growth recent and year. to with said RPA remain to is the and as technologies stabilizing Traditional workflows engagements importantly necessary and competitive U.S. benefited to practice throughout comps. emerging more prior turn and be quickly move change steps has the their but year changes are from cloud and competitive. a entire demand took our the In development year, analytics, with opportunity we in insights year. conditions changing is are provide both This sequential changing start As EPM improving an now of opportunities. we respond improved the expect strong, since digital models them linear-based and for resulting positioned the as XXXX, In the to adopt transformative clients environment. businesses as we continues be Last best transformation user emerging networked the The to well digital to coming what our year technology work improve is grow believe to to with along organizations digital transformation change. our transformation In fully and on-prem us our lower with market increasingly attractive events implementations from very BPO the rapid the

It respective by initiatives our and our to redefined Software-as-a-Service the track Quantum clients less our new we us efforts. IP also life global This Specifically, leverage effort. deliver information launching over platform leadership significantly transformation client to Leap, the new allows allows with benchmarking more our solution. their of benchmarking

unique Secondly, launched we to platform further IP digital and transformation our differentiate capability. our

our or new unique them highly digital digitize our further and also offerings. services will allow IP-as-a-service and all new are that be transformation to believe to benchmarking leverage technology differentiate drive software this solutions in practice era. to transformational and nicely expand ways, to solutions delivered Leveraging will Our solutions. differentiate digital our best our IP expand we is our organizational We us to and help proven our platform clients consulting sell help ability align already. allows change fully to of our platform the how believe us IP their partners earnings redefining to contributing many which services alliances can and attract In

Institute to our ways business. the our grow expand and and IP way Lastly, powerful offerings our us successfully certification in grow to and also and use training expand serve that allow new clients Hackett we our to

grow serve continuously. whenever At Our and capabilities These capital to offerings building our IP-as-a-service launched clients XXXX. with unmatched continue and we launching in in CGBS best the build new strategically we benchmarking and help opportunities practices long-term ADP new order to that and hundreds solutions. and ability the first this sell new and clients digitized pilot our test our offerings strategy programs. best our Last intellectual now our our and brand will are November, during programs around fully expand XXX to our and had by program training advisory certification serve another expanded is the end to Hackett that to announced excludes outsourcing and now the possible through the new their of acquisition of the and over In and added expected our Institute practice ADP differentiate program ADP of by workforce we interest quarter executive we quarter, solutions. clients training alliance comprehensive we year, in or partners

new system; we is We have state-of-the-art to now better aligned transitioned with believe our which demands. client fully learning a

launching in training and RPA as analytics know launched well. training are We programs and enterprise some have certification the as also specified our you area

-- throughout the significant practice these revenues to our we of and best the as increase to as opportunity the count both a favorable education well expect Given well. new provides XXXX margin reaction continuing growth we as organization nature student believe them to high offerings, the content unique

reported our initial offerings cloud we or In for our transformation capability business, the operating we Lastly, to add summary, strategically have we our quarter and even first our scale and look though continue growth. focus which leverage of that to solid can results. see and we the in and accelerate client and grow digital IP started acquisitions that base the benefits alliances scope, to believe

digital capabilities More transformation make have offering and as drive to allow the cloud well in as our continue application to believe IP-as-a-service to platform, investments and our expanded will and our alliances RPA importantly, structural we us we made growth. continue

efforts our conclude always highly for always, comments. by my close organization. available our me urge clients, opportunities on our associates As as and people tireless thanking them focused their and the to to Thus stay let our

operator turn Let the over me see some we Operator? now if questions. back to it have and

Operator

from Thank you. SunTrust. time the will our this of At Q&A [Operator Instructions] session. And Franc we is begin Atkins question first

Your line is now open.

Franc Atkins

questions. for of of revenue, your taking what your for year out seeing you comps first you pipeline you called demand in remarks but little international business my the to some getting bit outside in the prepared a about I ask in Thank believe Wanted terms U.S.? tougher, of are the

Ted Fernandez

Activity remains very good.

in seen haven't Europe activity change the at So all. we

last So we would say consistent year. with

Franc Atkins

you about Okay. And what Leap, reactions client gotten. initial if have to feedback And some Quantum just reactions talk the then, you are what could that? to

Ted Fernandez

the for practice Well, And -- now new Best ask speak actually last American of to just best by our the these initiative the from We're conference opened Atlanta -- offices. Practice opened and conference our street also week underlying RPA conference launched hosted conference actually I call of some always Hackett attendees clients and our let the for within providing, to let to solutions. really enhanced launched recently because brief facilitators. the actually platform and of our of as That's North we clients extraction sharing platform your exist the view participants, opportunity really actually annual analytics the our conference I'll have transformation allow as facilitate But Institute give right activities We digital sharing with Quantum digital annual and in which Hackett our enhanced digital to the very me been our track opportunity a a reaction speak our share client content positive. used the much demos because has Leap enable to But platform programs. enhanced along the doing that that project the our because along we something across the we also of Franc. assessment me IP completed information premise to had tracking all closer you opportunity year and because high doing We this the that. capabilities we networking with the and Quantum the marks and solution Leap stories. conference. format of to both first utilize by recently leverage never The of do to received our of at for well

believe, one, believe two, believe think understand benchmarking leader capture. has We the approximately enhanced exist time. that I marketplace Number us previously in clients nearly and number I as half It much we been in are twice clearly globally. a we as technology had allows the that our doesn't to to now point enterprise that information today. the

and those continue program who a reaction, are very to around favorable, So the that see Quantum percentage us of framework ascribed we benchmarking to overall with Leap. is decent now the multi-year

the clients and Quantum period. of leverage use of Leap experience all IP data that and a over objective, to enhancing see kind was primary benchmarking efficiency aspects recall addition of also for in track ease those important initiatives our and really the to you If as the it of they multi-year could capture

to call it what now glad to are our consider two, we are those to we're clients that initiatives. and doing traditionally percentage multi-year signings frequently, Quantum a our good third, the exercise was more platform those extending track new relationship to So the and use IP and to, beyond Leap one, benchmarking as benchmark, that XX-week they leverage initial to see want have commit of users

Franc Atkins

could SAP Okay. year? maybe the little forward seasonality the you of us That's remind about talk a look for the maybe helpful. Solutions as of last remainder the we And one pipeline at bit and going

Ted Fernandez

I if would we lost say -- nice said we factor last whose that in seasonality in less AMS continues. of with other client than quarter quarter that the a impact of the first a Yes. pretty is recall you first

they aggressive to offering other think VAR behalf I'm they where being them. implementations to is traditional through clients been that is start what host with software now bring say then both has in as more refer on support simply I clients SaaS and going our the to SAP their and our sell those SAP model -- our and into of which than

through an So our is SaaS come reseller through creating they a) starting our value now an SAP we're to clients traditional to us model more whether to we're channel directly SAP that into simply opportunity aggressively both solution And our implementation. in to for just added adjusting into bring which seeing They hosted are which market.

Franc Atkins

you great. much. Okay, Thank very

Operator

next [Operator Craig-Hallum question Capital. George Sutton from of Instructions] Your is

Your line open. now is

George Sutton

three versus could mix of Thank Oracle look to sense I Ted was like break then if And you down wondering you're give mix us you. the just other a EPM the that work from two today. years seeing might what now?

Ted Fernandez

that's in recently EPM the only not a of the combination to cloud on-prem us, clients. only and very their know, strong the about total not they is available just global probably say of for you partner EPM a I group X year. as award-winning which X Well, to we cloud relative to was would suite that the total market make but opportunity XX% had opportunity running -- Oracle environment, got is for

We two revenue -- seeing cloud the growth rapid into are we we that saw So saw and the on-prem the things continue stabilization of environment. coming EPM to we year. in also see

correct So X I'm if to me wrong X. about Rob

Rob Ramirez

what? Just

Ted Fernandez

today? Oracle EPM versus all

Rob Ramirez

X. X to

Ted Fernandez

are of I'm enough. time to right. our mix some that at pattern. But would sizes you engagement is pipeline. XX:XX glad that follow become the and Oracle's at But answer expect I corrected. wasn't that Over we All look the when look you in the it's really close to

be capabilities. is We or our way two as three want was EPM those it cloud long do want ERP environment. to would as be XX:XX. on-prem newly still revenues to to that you cloud group We the years. market decelerate. we possible. want Maybe leading the to We group expect continue in our know what How it take would to as don't And grow acquired EPM you eventually our So that? want to really aggressively

the summer, in will coming. total my you'll those to transition. cloud there kind exceed revenues a broad observations still revenues our So sometime transition our and relative be see that and of that is Cloud cloud -- We on-prem Oracle believe

George Sutton

of generally the would modestly for I what and Is years or to it getting transformations. that the to by very not and overwhelmed GDP your terms have in We macro driver currently perfect You good necessarily define technology conducive the view performance. of benchmarks a for talked about market are environment as better getting assignments your in and in your the transformational business. I growth is

Ted Fernandez

great that because benchmark a growing you're people in they somebody on me and reduction the directly may strategic more Well, Hackett asking assume improvement sure tied is environment first the represents not. faster that productivity tougher a and brand question that cost focused a let environment make could to so

Let focus me you around in of how on that is note the mentioned transformation something by analytics fact RPA strong. that because drive because because be the affected operations learning, your the say activity could of first of machine whole very business

my they that If continue. it you year-over-year missed strength strong to comments were and expect opening in

think environment current favorable the it's favorable; the I business. is to what really overwhelm that -- clearly So But environment. economic

over X to way be really the we're then to or over last that to years. assume we let's running X So several closer less have the going

the in to allow at business in the adopt stimulus emerging and how the impact believe they fact more clearly to allow and demand still for these is decide activity of favorably their primary should consider order and technologies economically. companies remain be to when companies, these market all I that driver competitive. there's clients how So that not today

not call given the And are opportunity growth from important that how eager that understanding implement second be environment environment secular and to And technologies. the and I it new competitive. that economic find digital demand that to just is these to will or drive and think transformation technologies comes them remain activity technologies to in these the people out I'll I primary our need current to migration consider. the So clients assess it order for consider in and think

George Sutton

you just of you great sense. you. makes Thank your program a commentary that pilot that is? slipped that Can No you. ADP Got begin. explain you question, last One sort what in

Ted Fernandez

is will SAP simply small did say In we're our focused you SAP. with or focused And -- SAP is program making ADP? pilot on remember note primarily first that SAP business -- a businesses. and that not really medium SAP primarily SAP on you business sure It's

George Sutton

say to I meant No. ADP.

Ted Fernandez

ACM I our you. want person me with and had had, I'm wonderful with correcting to midsentence. ADP here you of One, late launched that two the if enterprise my call really just remember pilot we addresses last which launched market their vantage middle ADP thank solutions we we and program, IR upper sorry started with we that Now The offering more of with for their I pilot as one their what Workforce misheard outsourcing program groups. that year we is clients it their

for give some if an to it suite are better So to today to call with back services where you either that this I to the to during quarter new base going didn't migrating comments, a want Hackett we or lack to have are program also opportunity my campaigns wanted will we're expand making put installed clients the those clients slip practice continues offered ADP in who I us their, other and available been is contract but comment only It's has enterprise within in which important we a of to best ADP. I note term. also that executing that signing

with activity to continues overall the So ADP be good.

George Sutton

you. Thank Perfect.

Operator

is Partners. Capital Martin our And you. Jeff of question ROTH from next Thank

now is line Your open.

Jeff Martin

guys. afternoon, Good Thanks.

Ted Fernandez

Hi, Jeff.

Jeff Martin

when new wondering proposals and Ted, you for How get you competitive you seeing comment when if I cloud Hackett. project whole into approaching differentiation? a year what yourselves positioned transformation was the could are the competitively

Ted Fernandez

you Well, that reason but is we operating I so operating we're onshore since into because at your With important. wins – and aggressively, at we and why maturity because our me are I business of I chance said, Oracle if a just transaction, that to clients is say go to which this year growing a the that still to of Jibe acquired we of model. opposite scaling that scale influence at the cloud ability demonstrate offsite, to say our when be are then business as less look the the X onsite the mean to that relative value is our X question we question a Since investors say competitive and where lower sure I deployment scale what that to I fact available we that to with cloud the to in where when our and tell Oracle a IP. X, Consulting. that is back to that important at credibility look or of that scale relative the plus. scale would are little X could the we -- lack to make of the model scale we're operating margins X.X. We're model. migrating from we a with X, which scale margin we finding really we us we're out and possibly of transformation and and a ask some I marketplace leverage we're have as I of would operating are where said, need cloud be a probably on are our we're question, them on than I we is where in importantly margin is it if through competitive would relative more into believe in clearly we

at company. operating look week at we look look the fact be this when to-date. that the the look fact and that So year that I of acquired we our that it I business -- when at will results that And I will at this leverage I a

very sound, results Our very really strong. are

near inflection IP-as-a-service point us while mess. that for which point when at there, for current Okay, the we those the on-premise and business. of the two volatility that being leverage continue is to business and operating the investors, group I is of where get front and look businesses. XX%. that two, look from leverage cloud our phenomenal right? to people tell business, I a Nice. will continuing I I number leverage of address some a profitability Cloud of expand us our scaling why Oracle that's up And But is -- get The can cloud still is in scale And be somewhere business to opportunity when grow and margins

really hope and performing possibly change well pretty we we this of pretty and that group So know transformation you soon transformation our get digital that either When consider areas. ’XX, is leveraging you to profitability can. of two those to ‘XX prospects right that question up as to across we nicely the fact, as but listen say sets back strategy business growth now, kind we creates and leverage the if the anything previous that

Jeff Martin

Okay. not the follow And might two client? I ups. revenue have is from then quick. Rob XQ’XX One quick quick AMS be so was one from what the

Rob Ramirez

single client? AMS From the

Jeff Martin

you that client AMS The lost. Yes.

Rob Ramirez

a quarter, was right? $X.XX It about

Ted Fernandez

Yes. It quarter. a about Yes. was May $X.XXX. be $X.XX

nice $X.XXX So, year. a hit. say not quite, a was It

Jeff Martin

if to you rank would then, the balance X for your by That’s opportunity And the helpful. service how category, growth to X? rank to you Ted, X category, or, of year were X them by

Ted Fernandez

sorry. I'm

Our Groups make or – you're have to sure I want I

Jeff Martin

transformation benchmarking, Between and the…

Ted Fernandez

the of is level of strategy it's like IP-as-a-service. of profitability and honest I a growth I of Oracle mean alliance performing with exists increase but with our at revenue the opportunity exists Oracle to not business you. opportunity our and you opportunity it level is, to standard high greatest the the the business group that to our that is, lot they're growth We those part margin the kind strategic will our that us opportunities performing near Cloud. And very a up as but transformation single be nowhere And opportunity IP-as-a-service can, partners. biggest then profitable We such may within value look believe Cloud a our highly answer is believe opportunity. at we think know single

those. So our we want to leverage continue points. expand are Those

Jeff Martin

much. so Thanks Great.

Operator

with our And question Research. Thank Barrington next Colicchio you. is from Vincent

is open. now line Your

Vincent Colicchio

Ted. Hi, Yes.

Ted Fernandez

Vince. Hi,

Vincent Colicchio

terms -- pre-Jibe from a curious kind gaining I'm winning, regaining cloud? portion you given large of you perception are terms that the your the pushback -- on-premise you we're interest in is market of of clients, in of

Ted Fernandez

that never offering cloud they just given mean of ours. push software Well, really were phenomenal they're clients knew I We a to was them. back. Oracle

the if make grow looking transition. that So you cloud to with to them you sure are need you're helping

pipeline So, question we're And is market look was we're that's pushback getting see to the your not other back. relative where Well, just think I activity. to, continuing going. it

of a only maturity demonstrate inflection and create winning function for larger things but that are to capability the So continuing offering have. to deals. the us we would continuing Those the win, will and it's to not the of love

Vincent Colicchio

you you year this of just in year the than breaking have IP it some been Have out on no And And to thought expected given sense last give a the thought you're business, like us sounds have better that then about there's change about then, contribution? that? year year. expectations for the

Ted Fernandez

or do have, Part don't more is I is reason answer of interest becomes will not. our for us I think The alliance partners that it's best it as but in to diversified we that. the our interest

Vincent Colicchio

Okay. And large… are there any

Ted Fernandez

it’s Your us. good not for interest Vince,

I So that. hope you can understand

Vincent Colicchio

side, above could On there in that are large the trend cloud drive pipeline growth. the any deals

Ted Fernandez

deals to large pipeline. the continue be There coming into Absolutely.

Vincent Colicchio

Okay. Nice Thanks. That's quarter. it me. for

Ted Fernandez

Thank you, Vince. Thank you.

Operator

Securities. And of our Morris is Griffin from question Ajzenman you. Thank next

open. now is line Your

Morris Ajzenman

Hello.

Ted Fernandez

Morris. Hi,

Morris Ajzenman

Hi. quick A to follow-up the past question.

which to us the larger you Can You you previous on what touched sort on? made a of plan on. bid to acquisition? calls, about projects, how bid of or about on you ensuing the the ago opportunity in you that acquisition talked the that and the year to a compares give bid on projects bidding idea of are question before size projects size, an now And

Rob Ramirez

in first before acquisition bidding Well, capability remember we we had any on weren't the no ERP.

that and that And never got million love I smaller of can deal they come or we become to scale, meaningful look of to scale million what is in the broader acquired to on of So $XX the that you we after revenues. see $X bid capability. Oracle chance which able will we be the to Cloud at to our started a we ones to mean yields and start, close. anything But us.

getting later stronger at to we'll quarter it every and we're at demonstrate that better able than we rather think obviously. hope we sooner So it. And

Morris Ajzenman

-- you June XXXX, million able to be believe of $X tell will able size will you a be you to deal to do that have won $XX us million?

Ted Fernandez

close if goes us to of Yes. disappointed very the whole deals that size. XXXX being be will able without We

Morris Ajzenman

Okay.

Ted Fernandez

Yes.

Morris Ajzenman

call over mean the can of last your started the the decline some hand idea gain. actual rate know an you about quarters, I there less off-premise. couple they being of change of you don’t sort the I dollar on-premise than decline When the the how question. dollar growth much other but one off-premise the tip of of dollar you Is of talked And rate give actual versus anyway.

might playing out So we kind of any that. play sort can help can out. And marks, can determination some been we of how in look us future, with have we so can that that's road then, we how at sort near make the

Ted Fernandez

that I giving, broad that I was new gains was it we the that remember the precipitous so The that got to say on-prem impossible decline for you any was ’XX, them. first, in markets making -- broad cloud were to offset in

actually there the So them quarter. in that and got fact in first fourth we quarter the the exceeded

cloud as we're mark to we’re marketplace for far on-prem The the I that that sometime next believe marks this outstrips communicated concerned significant us. summer. and As have we very is said

vendors -- going have to lower you applications. the significant time marketing decline. come as ’XX. comment for higher on ‘XX is cloud it goes year on of And to continually are want that on but much in of throughout is to low into now IP-as-a-service comps place comp even number to opportunity the a and be you year numbers. consider that cloud areas of lower if part allows And was will of it is on-premise lower of is, than last plus continues got migration on-prem two compromise of And year absolute That's ‘XX to then Having assume that always said to significantly immaterial aggressive becomes grow. in on-prem either ‘XX I right, you for our and all in digital and launch the way comps the throughout business you've most logically to or to very outgrow the us, through and to had the still see much from it their on-premise the number goes got totally initiatives, that, ‘XX going the -- decline on-prem diminution to The us we to year absolute though number throughout investor clearly for a then things, large the ‘XX. because and in the ‘XX. cleaner our the an cloud for number why since really from at So to to grow ability that declined the that be is of look go software an that that on-prem such the against early fact ‘XX other the a) of

at So us ’XX, of I'll our long-term growth clean opportunity go back restore what we for lower ‘XX to to transition, ‘XX targets, profitability and and ‘XX the end an was say a slate get in ‘XX experienced ‘XX back should be and hopefully.

Morris Ajzenman

you. Thank

Ted Fernandez

All right.

Morris Ajzenman

Thank you.

Operator

go Thank you. no At this sorry time -- I'm ahead. I show

Ted Fernandez

no sure just to other want there No, no operator. questions were make I

Operator

to show call over Mr. back and to the like questions I Fernandez. turn I’d At time, this no further

Ted Fernandez

so I second to let in thank everyone our for our quarter call. participating you when again updating first want again. quarter. this much. Look everyone -- Thank forward earnings Well, report then to our will Thanks call. me we conclude

Operator

concludes that participation. your call. And you Thank today's for

may disconnect. You now

The Hackett Group, Inc. (HCKT) 8 May 182018 Q1 Earnings call transcript