HCKT - Earnings call transcript Q2 2018

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Operator

Welcome to The Hackett Group Second Quarter Earnings Conference Call. [Operator Instructions] Please be advised the conference is being recorded. Hosting tonight’s call are Mr. Ted Fernandez, Chairman and CEO and Mr. Rob Ramirez, Chief Financial Officer. Mr. begin. may you Ramirez,

Rob Ramirez

Good discuss and quarter The operator. joining results. you us to Hackett afternoon, you, thank everyone for Thank Group’s second

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

the www.thehackettgroup.com. copy of release, a our at please For website visit

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

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

Ted Fernandez

$X.XX, Hackett over earnings and as Group’s Rob year increase $XX.X quarter EPS the This X% The increase you, the well. we everyone forma revenues second over to pro X% year reported of a Thank of million, and welcome prior afternoon, call. net an prior

ERP from migrate cloud group last X% revenues U.S. decline as aggressively growth XX% up implementations. in EPM a X% business offset from transformation and As analytics our on-premise Group and to we plus strategy Oracle expected, from continue year, our with by our were coming to

transformation eProcurement IP-as-a-service business digital growth nearly transformation group with our focus all across and initiatives, practices As of our and strategy of on offerings. our from the experienced a result strong performance strong

analytics cloud down, our our ERP exceeded and on-premise EPM While this Oracle our business quarter. revenue was revenues

this know, targeted ago. and planned year you is that over As something we a

in closer we will This be revenues QX and group. to the importantly, the our approximately this at scale The transition expect group was provide for getting our some quickly promise. as current expansion continue decline To margin our decline. is QX This XXXX impact know to mean we in for year-over-year impact great revenue being XX%. growth to company basis, a also would we on guidance. look X% we to to our if higher and at up QX able company on-premise why the than pace. on-premise growth We continue to our we total QX, be momentum guidance, expected on-premises than in expected, revenue the we more growth were to QX our with revenue context in More current the exceed look flat realize reflected migrate when growth, in if year will are approximately our flat of benefits to cloud our total

to along our transition, become expect would benefits further in to cloud of in Although we like the we be investments XXXX. evident

next capabilities to initiatives. year most all our digital in our Leap, up launching over secure investments as and us we was RPA actions engagements. allows transformation generation IP continue made our in As technologies, call Perhaps Quantum significant the continuous we Europe. strategic sales, results actions us we we start to investments as with back the in at allowed more automation EPM introduction to from our it, but expected, IP digitize and robotics RPA, European of last benefit that process benchmarking solid these support proprietary our by our to platform tepid, look lead digital or of were and transformation our our transition at with as Hackett platform. have Coupled delivery the with follow and to DTP,

our by IP Additionally, app’s use well proprietary platform clients. to applications versions Oracle first of optimize we sales Oracle Cloud configuration we Cloud building and as channel as able can our the best assess one quickly functionality, of demonstrate how Oracle around transformation digital were of to the our practices the digitally to

successful our IP-as-a-Service well Last as positioning we our programs have fact, as been were digital strategic accelerated have as training our notified the not further of leader. the recently recognized transformation Cloud and again IP-as-a-Service but through that our expanding and a offerings In of we Year. Oracle introduction least, Partner as EPM partners certification

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

Rob Ramirez

Ted. you, Thank

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

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

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

were our X%. by of from were $XX.X net of quarter XXXX, of The up a through of second second XXXX, to of $XX.X Strong approximately prior International XXXX second to Solutions, Hackett expenses, compared of range. primarily year. were or for up SAP of lower The quarter the prior expenses by Net to revenues excludes than X%. year-over-year an million the strategy X% XX% net revenues, reimbursable excluding increase revenues XXXX, gross X% QX by slightly margin occurred for transformation This on in Europe, year-over-year revenues impact revenue year which company ERP, and Hackett was U.S. continue compared our basis. offset expenses, U.S. are which a increased X.X% were growth rates business to was practice will revenues primarily associated and reimbursable Oracle and will EPM million note revenue expense ratio analytics U.S. continue decline. QX It Reimbursable the lower cloud net increase as as than that expected. exceeded guidance revenues represents when offset growth to Group, reimbursable to a QX quarter, and was and For within our the U.S. expected revenues no expenses results. on-premise has strong on-premise our travel-related which earlier profitability. revenues quarter in project a on X.X% the or Including our the is during gross to passed million Oracle $XX.X client X%. year-over-year into our cloud U.S. important

closer U.S. the also noticeable rate. This year-over-year XXXX. to to get on-premise As declines resume amount and and decrease ability much the in sequential reestablishing transition become to our annual X% to absolute our we will XX% continue decreases, more growth

basis, decrease current of AMS expect is cloud the expected. million of the due flat QX on quarter contract from groups Net year. of to channel Managed discussed second as AMS of in $X.X we reseller, the we that and a loss Group decrease on the example, SAP The our a consists up Group, Oracle year-over-year in be to offerings basis. or when XXXX, compared the to X% in Services implementation impact Solutions quarters. which XXXX, have XX% to revenue on-premise primarily from totaled decline a and of SAP in This Application transition previous U.S. the prior our For a year-over-year compares based to of quarter to the

in expect second quarter down XXXX. accounted the of XXXX We net revenues be quarter quarter second X% of in to the of group this to to sequentially XX% third of international compared X% the as XXXX. company for total XX% company in revenues Total

in profitability practice second pro net of of of same the X,XXX expenses of at second net and AMS X,XXX revenues quarter compared recurring of advisory which groups, quarter cost of end and million prior the for XXXX. our sales Total to in our in executive Our XXXX as the include in previous company total second million quarter of $XX.X the or headcount of at XX.X% period was accounted the previous compared practice revenues Total our best XX.X% XX% the as year. and company reimbursable company and revenues the the net or consultant total X,XXX second end the the quarter of to year. excluding quarter for pretax approximately XX% $XX forma totaled of revenues,

was compared gross of was previous of compared Hackett net international the company the quarter prior quarter revenues compared Group second Our XXXX primarily as net second quarter the gross $XX of second was when Solutions margins revenues in due in the XX.X% the second on to million Pro to revenues in XX.X% This the to pro year. pro to second in revenues period quarter the primarily XXXX margin to previous due in of was of forma revenues net XX.X% SAP year. as XXXX. to as the XX.X% net quarter revenues decreased forma gross margins. compared forma XX.X% million return on in in forma in to the of of equity the XXXX. SG&A forma lower XXXX as of margin on pro was XX% in second quarter second pro decrease gross Total the in XXXX, quarter compared $XX.X year. of XX% was net

million. $XXX,XXX. income represented revenues the per the of XX.X% company Pro $X.X year-over-year net quarter which expense and U.S. basis results pro As tax share net the net and $X.XX comments forma represent for liability per Pro XX%. forma forma X% rate of of at benefit XXXX $XX.X our XXXX. was income forma an earn-out or second $X.X long-term of an the of pro were periods Consistent million on income second million, of was include asset for the compensation a statutory two as for pro or revenues, cash company both respectively. compares income of assume EBITDA totaled forma cash quarter with of XX% intangible quarters, rate for million to quarter XXXX Total $X pro of pro These in diluted and quarter $X.XX net million, share, of of our and also diluted a EPS expense share X% tax result our federal amortization or per results of second acquisition a diluted stock quarter’s excludes which midpoint rates. second decrease earnings This cash of XXXX in results increase long-term of forma guidance. $X.X and XX% respectively. last a and of the a million over – net $X.X the Total XX.X% ‘XX forma second percentage

share by the quarter company’s As at second the second to utilized compared for of compared well existing rate in to benefit of as in revolving activities The quarter which was line second to adjusted $X.XX XXXX. the share earn-out forma by attributable the accounts driven our reduction GAAP of the under $X.X a balances pro XXX(k) were our million the diluted results was for our XXXX decided due decrease end quarter repayment GAAP cash receivable as the acquisition. end quarter. related the income associates liability with include diluted GAAP XXXX federal doubling we per $XX.X as non-cash in taxes earnings the increases second $X.X to to $XX.X million quarter of relating primarily Jibe of cash bonus $X.X million, of payments the per to previous of quarter credit. for This debt at as earnings was primarily $X.XX X% X% cash income net of decrease the of offset or was contingent $X.XX items, in million of of million second in the quarter. the in we Net quarter, to operating and last practice increase our disclosed contribution use by programs.

quarter days at year. or at quarter was sales XX and prior as of the the end DSO previous the outstanding of to days Our XX days end of compared the XXXX XX days second the in

We target be continued days. to to expect our XX below DSO

capital million in corporate During the of the second the investments internal XXXX, company X expenditures, rollout years quarter of to related systems every X occurs to had which of global laptops, new $X.X primarily and years.

our in We Quantum discuss spend as XXXX. quarter million $X key digital Leap, our to our capital well which to new of XXXX. historical Hackett our to our approximately expenditures third the platform now $X will expect digital laptops guidance for levels systems currently $X as to am We I and going of this include million for year return and Institute. fiscal transformation million initiatives, for

do, Before to meaningfully in quarter just of approximately Europe, in even vacations to typical available X% additional on impact a holiday trends, third time-off to unfavorably we more the summer I sequential seasonal X% in consistent the and by with days and increase U.S. impact the basis. due U.S. expect the

to guidance, company the the high quarter estimates be this in $XX the the X% increase a of year. revenue As of $XX would such, to end total from million previous for net the range of the At represent million. third XXXX

to XX% to XX% to SAP we on X% year-over-year We be and expect Solutions a between expect Hackett down X% be basis. Group up and

expenses. As the includes $XX X% in million I SAP in the The outlook X% down to decrease expect estimated $XX X% however company be gross sequentially range an The only to previously, reimbursable we to estimates gross mentioned days. despite revenue to Solutions for million. available of be revenue

will per range XXXX in end from accruals, in the pro the We expect due year-over-year in to of limits the reaching forma be our to earnings resulting the to of Sequentially, pro decreasing diluted share seasonal and X%. to $X.XX range of quarter forma high the days we a third vacations. increase U.S. approximately in utilization offset of The of margins the gross $X.XX. benefit available taxes by from expect third quarter payroll related FICO summer reductions vacation represent

net to As revenues a result, be we approximately under XX% expect to margin pro forma our XX%. gross

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

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

turn We At operations expect cash up be generated I from point, and to like coming to this our on basis. to the a priorities for review Ted months. would over strategic outlook back it to sequential market

Ted Fernandez

Thank you, Rob.

technologies mobile analytics digital here to probably is years, heard and us that experience opportunities say their have is functionality This that significant. deliver X influencing I with improving in the U.S., the determine way you products in increased quickly services. of the and to at the enhanced company, sell respond fully transformation, cloud the context. at competitive analytics. fundamentally entire pace, way change probably activity and changing environment. me artificial are organizations serve competitive. accelerated matter will the these as It applications, and everyone learning, industry customers. redefining available linear in as new and the or last these adopt resulting way an enhanced forcing machine – As looking comment companies and models based competitive their changing and digital it’s dramatically how automated development to that improving relative to events are which to along in are More intelligence to and compete in sequential dynamic a and workflows industry and businesses our with capabilities remain networked remaining their specifically, is And just the order are transformative cloud Traditional In industries rapid doesn’t which over everything they business is user

our slows digital company grow positioned revenues, performance expected total the growth from and to our importantly has strongly the strong, cloud of comps. revenue in benefited engagements well be and digital transformation, from optimize Europe to to part BPO smaller continues and of will In is improved as the a transformation prior digital be and opportunities. tempered for transformation clear. growth year that we EPM be and decline Europe, market become conditions demand but as actions the more due in high-growth continue increasingly investments becomes believe the and our and the strong complete as We are RPA both short-term have our in growth transition taken seeing improve region. to cloud more We prospects necessary benefits to on-premise

strategy new in digitized around our strategically to build order continue offerings long-term intellectual serve practice and to possible capital unmatched fully and and whenever benchmarking building to is best by our Our clients brand continuously. and capabilities

just also review some allows client IP us by transformation our Leap, more digital our track of unique new launched to less the deliver Quantum clients’ us We our – IPA further redefined capabilities. platform over initiatives information our The benchmarking IP allows the We platform respective transformation differentiate our effort. their leverage global me to with our leverage and let digital software-as-a-service new effort. Specifically, benchmarking of solution. launching to actions. leadership the It track and life significantly

total X,XXX IP-as-a-Service are I three in added the now we first this ability have it’s we with differentiate clients. hundreds state-of-the-art Now of the testing enterprise of can our service that to market XXX programs. the these Hackett the help alliance our we the we We certification solutions with At fully will be platform differentiate capabilities did XXXX. In is our help and allows analytics grow year offering that help by allow offerings know new fully executive launch quarter, ADP let you and serve digitize new have our opportunities unique to them Leveraging the will during of learning this have of powerful our ways IP some we program our transformation and program our our clients training to to we allow all and way here, help in outsourcing use aligned offerings. expand of solutions. are end solutions. to expand the our to technology and to is differentiate delivered Hackett our highly And further further our best to also Relative successfully point to and our advisory Our clients expanded we solve, to their further goal offerings platform grow groups, services excludes practice and software many proven expanded will our us and that that with demands. pilot drive redefining but lastly, IP organizational to digital or to another go to IP-as-a-Service sell and Statistic believe comprehensive all client ability expand These is which we ways, sold continuing clients digital our era. leverage our year, align we through training Institute, transformational and quarter our change total grow new serve to training At way business. that new ADP us in clients, transitioned Institute, programs their system, attract set. partners better Workforce and solutions a now we us solutions. believe and to consulting new of our ADP how Last launching alliance

be or an to on basis, to are complement offering. CGBS a our expanded again We RPA standalone developing curriculum to delivered

content significant we education Given and for our that favorable continuing organization. unique margin the the of our nature reaction, believe a high market opportunity provides practice growth the best

our improve summary, our In that have and solid can transformation grow initiatives, margins. Lastly, digital operating even aggressive base capability, on IP we and believe our though alliances the and and second reporting continued focus scale growth our accelerate which add results. business, continue our look quarter, and leverage we we in we or while client to offerings cloud the acquisitions to scope and for strategically

investments expanded that transformation the to believe making will and capabilities, resume alliances long-term allow RPA and we importantly, growth long-term. capabilities, profitability More the digital we in targets IP-as-a-Service we us have are platform, cloud set expanded offerings

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

over Operator? back our start Let operator me it to and turn the Q&A.

Operator

sir. [Operator Frank with Thank SunTrust, may you, you Atkins go Instructions] ahead.

Frank Atkins

questions. for taking my Thanks

First on seeing how offerings, just of can update feeling us there? the ADP an you of how you question progressing are are develop relationship, new that’s is and traction you give some the

Ted Fernandez

expand the great program with We progress continue are base. either to our we or offered that client how the make that is discussing is to and access their everything platforms currently them to

to well. So I that continue very would our say prospects go there

Frank Atkins

cloud as remainder as And new that second any that of offerings about relative how with a the you are between seeing Okay. shaking end the see that, on-prem are two question, the to out prior approach signals and balance decline, I decline year? business do And the of the integrating well rates? the we ask kind to is wanted Oracle of slowing the you

Ted Fernandez

decline. me the on-premise speak let first to Well,

XXXX – decreased from expecting the XXXX. clearly are on-premise has decline to We

increasing the on-prem wanted, we We to if of that to When declines look decrease in this sorry, – I we QX continue important of investments multiples are flatten made. and benefits from business Frank, are it’s to numbers decrease, beyond is expect rates that year. perspective when fact never few would that expecting profitability, our out of because in has at and why it the a realize – in rate we been I QX XX% that and the growth cloud the that even the growth have just offsite foreseeable am the cloud just that growth if the on-prem the going to continue that fully well that we even are decrease and numbers fact and here consider remain highlight excess until just decline increase is properly, cloud come that year-over-year for on and the that note at to we our to at scale what quarters

two cloud the QX in delta that the happening. on-prem One, it Oracle happen QX decline on-prem our only things revenues is cloud So that in or growth as continues was Two, increasing revenue and exceeded are for important business. the slows.

you at shape the number it, in well, clients double-digit we that is, I at many on-premise at to years. growth if we on-premise in call be greater mean, and X around number want, lower some decline, to any over are Even continues they shape to out continuing if a years. solutions for could previous model the changing that if continue investments absolute to started and impact of the one way, build If completing or multiple ‘XX are some serve is or it opportunities. from maintain next, out any form XX that be you it other FY declines on-prem that continues and so numbers, let’s the

us, you the tells pace call inflection math current the has no, if for and So what current it, on the want to pace point. had us based

we business, and and to It both inflection cloud For extend contributors some includes last to continuing slightly ERP entire our referred of of heard flat was be something that down $XX to anniversary the which points, the think to into in pursue in quarter, as stay significant. those us up cloud in we businesses more we ‘XX. point our our at EPM we the expect growth simply accelerated continues more be on-prem acquisition win, are continue our current Rob beyond pace. of And now and say, what to much that the to then you which ‘XX look tenure if group all primary plus several gets just to and things, hit win we inflection because year-on-year. May. If think to current X% analytics would a FY something When we we our goes that at all improving favorable QX for only of opportunity us, just an in X-year would million we of significant as

happens You know than We that’s it what hope we rather sooner targeting. been late. have

Frank Atkins

Okay, attract environment done and great. talk for and And to you positive me, what retain bit are good you on some last should little just you seeing side, have talent? but the talent that can about a what are one things doing you

Ted Fernandez

of are we kind that. in unique animal the Well,

know, with multi-billion businesses, But think there – desire As a able many of dollar there. that which you we of large where are do with significant with company, more you able The to to you much like play work ours companies. a company to work compete the Hackett these role Group. you some in being X,XXX a global lot I But within a others work people idea people love smaller are as

I sector them a that to think to actually is against continuing we and attract are unique may their we it’s the retain for with who size day-to-day compete And where talent. we alternative. work an because had problems new and of scale talent no have So for our looking somebody some alternative

Frank Atkins

very Thank great. you Alright, much.

Operator

may ahead. George go Thank Craig-Hallum, you from you. Instructions] [Operator Sutton

Jason Kreyer

guys, afternoon for in George. Jason Good it’s

First on a the been and cloud EPM think and a me big corner in help I for you is on premise I break mean help all, a decelerating, focus just with exceeding revenue turning had on that congratulations of know the think mentioned premise you touched I that’s point some Ted, revenue, ERP I time, right, cloud in increasing, that context think slowdown ERP, the EPM the I of growth can is QX, environment? slowing in bit you that little down, I Rob, heard

Ted Fernandez

as on-premise business, not relates cloud. that it understand. Well, to you let’s make Slowing sure

in decline slope So and the the fact talking to stable. meaning starting we becoming is more are of about that the on-premise our revenues more slow,

it that minimum ‘XX, it matter goal believe out quarters to quarters, to next on perspective, our let’s If us. just So at it FY quarter comes some year-over-year our half won’t obviously, become call three two and And cloud that doesn’t QX excess simply is come for over going because over in flatten XX% decline well in that, the those a a our number. quarters. we opportunity are four a on-premise our so to to basis. us total a is of to to add okay, let’s of to it’s those to revenues and numbers fraction, absolute in QX immaterial go But just call

now another, to And smaller, quarter. since at numbers on-premise you every had grow have numbers, over crossed any apply revenues that. so one we those declines math much the are sequential each coming If at where they our since sequential and and that faster multiple double numbers that those higher the out, you to and have larger instead gotten to continue would they impact So so of a a cloud especially point model growth smaller you – group. in numbers in having and are if negative – better are digit or of is X%, are There growing at they those see all impact. here, pace a

So known and the back say question we of – I the that. never slope have and we know either one come

with been a continue a significant I planned will to and we transition are today, to I jinx couple linear term for kind better relationship call some Oracle, have with, of on have ones a just believe transition. know am going we because and quarters. on for of been within – bid of that it of for to like of a get quicker at are and able if reputation that I able tenure we But continuing I We myself. very through clients, and again, we I pace. prism done much are have If we the our saying kind compete lack profitable this what the [ph] to engagements to it��s

Jason Kreyer

was I slowing the it I it in missed And mean was the…? double reduction negative Okay. the that

Ted Fernandez

sorry. double The negative, Yes. I am

Jason Kreyer

No, that’s for… you Thank okay.

Ted Fernandez

in happens what Florida, come on. is South This

Jason Kreyer

Okay.

– straight, you saw got that where any We if have now into a and pockets you offering, of as of around you strength timeline couple there you on, more a times the that moving break am there? just any think adding strength mentioned if the there of wondering IP is if services can down is Service I the

Ted Fernandez

increase opportunity. revenues you clients the they timeline continue your The is access more in one, for give it’s that are to as you answer existing build that to and base look those client – offering, the

continue Secondly, to And current, we discuss plan beginning increasing And inflection new of a SAP, our would and was strategy that and with. more more we full continue the we are you a speak within centric be offering limited we inquiries IP to client that added continue access it that progressed consider from the a the in ways significant I kind for strategic ADP as want that to transition. and we transformation and scale known whether inflection to points to cloud, Everything Service if Oracle, that – have of could say it’s year call to an additional of also leverage the themselves. for on provide we and support or other progress. get or I that data alliance believe partners very client adding existing based win at just be point. it customers looking platform to

Jason Kreyer

we a want just understand you Jibe, exactly that’s expecting P&L, an don’t more because to the through consideration related I in that that think related help flow – to Rob, are to are means me what Jibe? indication contingent change lower the that out earn-out you One this leave is Okay.

Rob Ramirez

the we are expect. estimated Jibe. as That’s relating not correct, That to less they was at beginning than

Jason Kreyer

particular a Is reason? there

Ted Fernandez

we can If transition surprising we to AMS different things That Well, to on hit just historical. so the transformation what started that we we at one year-over-year that than cap. especially and and that is transition we cap. said QX, up positioning from to you offset lost negotiated SaaS and on-prem the returns real one lower slower over that on-prem on U.S., They has us, performance they a and cloud others, start which cloud compare we is used have of in surprise cap, that as a that and and which would fully that basis We yes. transition SaaS very some strength look is the are basis. hit the acquisition obviously as XX% when they out that aggressively that for you in number reported ‘XX. they beginning year-over-year the then obviously year used numbers that lower for address the term the with would the of just client them. because for we we for that at it been saw cloud as of believe see has on And much the margin strategy limited When channel kind was the purchase. throughout have more the ‘XX cloud didn’t we established they was it’s as the We SAP by cap, call – of to they us, scale, term more found profitability just business getting slightly it. was the then happened a down the and would The than purchase

reflected QX which understand their have what lower available you is see be have do established in think from take-down world, beginning that SAP we said that Rob we we if – know believe we in QX will the stable cap and now So in do we yes, to the that but so wanted, to that’s liability was started being disruption opportunity that revenues the with to the more from estimate days. not the at I that earned. don’t than is we fact

Jason Kreyer

color. appreciate always I additional the lot Thanks guys. a

Ted Fernandez

Alright.

Operator

you. Thank

from Our with ROTH next Capital question Jeff comes Martin Partners.

sir. ahead You may go

Jeff Martin

Hi and Rob. Thanks. Ted

Ted Fernandez

Hi Jeff.

Jeff Martin

speak the strategizing the market? aggressively evolved that competitive of that approach to positioning cloud – how has to your and in you competitive and about the talk could XX now more over – position overall Hi, landscape it’s and months, dynamics course the

Ted Fernandez

Yes.

group and that enterprise There for larger middle competitive market distinct which landscape – companies Our is the the is there – group, is companies. majors is an groups. the two

– environments, have both you or X, majors more different because clients. we the see no middle in business some and if our smaller EPM and that group And will out compete larger engagements typical ones like, enterprise would competitors, world more in was which centric you it in kind Accenture, cloud competitively, of transformation higher were the your regional with the go organizations, larger Jibe are obviously business. slightly market we you our came We if of serving continued rate, majors EPM in the than the engagements and want that IBM include much to of back lower will see rate Big

that Our we standing that secondly, in channel year step. Oracle EPM, to and that – wanted business, think told to that upper introduction our and that business kind accelerate client year us the our doing. everything group, it’s at with and last And on kind result and a it built to we Oracle and of that us, that historically for believe the little platform to clients serving scale we digital And and that majors the are versus say want Cloud very competes little engagements Oracles to believe the I the would in of optimize has hopefully a being Oracle we with specifically served. probably us digital matter over first then the price Oracle you transformation aligned relationships very platform. and the strong first levels, we directly aware of getting channel the Oracle we opportunities since those and and us upper more do relationship It unique are bit fully we we with higher relationship it’s and we go on continued have the allowed and That of support in last capability for giving is enterprise-wide one stream acquisition base of when enterprise of broadly, attended make compete the to just first in has platform OpenWorld, the all a more was it, close transformation expand was that as will capability start one an competes that and important that end if establish, to market clients imagine, at the, just a call we the you a visibilities able time upper you are if step. sure of a lower think both bit we pace that

Jeff Martin

cloud and how sales the progressed cycle the recall I correctly, in has was the if is in than build longer of And to last is X it that the course months? X pipeline Okay. accurate over on-prem,

Ted Fernandez

that flow trying the actually are could whether – it client First, to and delay is a it them – the it’s that is taking little to sales the not cloud cloud some longer. a longer cash it. to matter of longer transition because for is what just only and It’s cycles like, pricing of clients, understand benefits the for facilitates if

am and pipeline improve us to continued has and improve. going the I to have reputation activity So has standing not say continued the as timeline for that changed our to

Jeff Martin

expecting to And then Institute you to I in Okay, that? if to that’s ramp the helpful. start Hackett side, are imagine really Thanks. on would you that could wondering speak XXXX

Ted Fernandez

quarter-on-quarter. increasing It’s Yes.

client. continue add We to

I activity. is that with – they in that understand clients new for sure to technology of did issues the but increasing that in had a to understand our platform, ran of some not have way which year, that seeing Conference during the significant transitioned because we Best developed fully like the fully The CIMA our venture, at at think that We the we sure that think have we make actually because into institute, group. to they pretty joint pilot clients beginning that happened, meaningful we uptick some increase – this had led and highlighted make of I the are really we Practice U.S. a volume it a replaced biggest more

expand small of but it we was joint that, which slightly of group year it is moment, We slightly you we then took now balance accretive, beyond. venture the the ‘XX would back that to that – expect It’s we through at very contribution. partner, and that became costs of then into believe our to accretive that expect made that contribution over all and would the recall, dilutive. it expect we So, the if and

Jeff Martin

rate that get us growth impact the Okay. And then growth what overall to XX% you means? rate your in arms as transformation and that see of is rate kind business that the sustainable strategy our around a help

Ted Fernandez

if declines or that digital become comps answer no. and immaterial had EPM have growth I group since rate be – the both the is for and answer – believe that very we strategy opportunity year-on-year analytics don’t digit to on-prem long-term and small, are that the both really we we the that business are double it’s We but group, once given believe a growth the X% guess ERP comps The I know, of and XX%, our groups. demand, transformation year-on-year will on either transformation

least for at lack mean near-term, the in on-premise I the So if better can of a term. eliminate we anchor,

Jeff Martin

percentage top detail could ten, as well then was I And wondering year-on-year, Alright. you and increased provide that? significantly, top five help and around noticed a pretty sequentially single revenue of if customer, your I some

Ted Fernandez

five I clients mean, working a ten but or or technology it’s with long initiative. standing some transformation on are continually we client, major

five other mix the the when especially it or XX scale, want as five same you and ten of if and it’s call are. the work combination at But company that profitability to at global that probably you near top look client at a you But it, or a the a like. if contributes that of others, had is that top have So we this both. look are

Jeff Martin

Thanks much. very Okay.

Operator

you you. Vincent Colicchio Research, may from go ahead. Barrington Thank

Vincent Colicchio

of expectations of Most end been in needs just couple Ted, here a happen mine just period? high to the asked, Yes. have what the QX to hit

Ted Fernandez

accustomed need asking you are our to are well, mid. let of is investor a the and base accustomed question you the since high all good – first of me – to We very hitting instead us

is any guided just is not important it’s for do. that we But answer us, to to as obviously, we think it consider So And the we what that have like realize supposed Oracle I different, QX. not on-premise increase us that It’s pretty cloud alright. the in seems to than greater surprises currently in just strong. primarily the – be volatility decline we business, see anyway, any

slow. continue to to We slow it expect we it and expect to

that increasing. only is and hopefully, So every quarter each

Vincent Colicchio

or business changes any in there better Are Okay. cloud? the with are you SAP growth the the to that yourself considering to make of need position

Ted Fernandez

XX% because our to and life the question. for is and SAP one, – the characterize be That is small great important of different great sure our Oracle a we make And dramatically to markets medium a that than transition. business focus in us on transition sciences. it’s XX% It’s XX%, is

We SAP are just highly life a provider. science recognized

to or extend cloud. capabilities either on-prem Our

SX on-prem in Oracle. had is decides entirely It matter go different cloud, or in exceptional. just capabilities doesn’t which whether are Our we capabilities the to client the than us that to

simple capabilities call transition the Our EPM suite, to the from SAP harder SAP is which entire to Oracle obviously if more suite, than in the throughout it had. extend just entire, you lot ERP business and want a that stable we

will selling to the been that, day, to we able that script. go the that their predisposed want though wants client to its even wants need is were SaaS term they had gas – also both. and it, the And and So needed hosted, the been instead who purchase, versus private channel. the go the to beginning the adapt quickly incentives we that. follow it confusion as sides. from needed client if share, knew maintaining the fully understand of of and any to to purchase force, And make two be to – cloud or clearly you do to end desire use at sure their year, we clearly to really to both One, or If change it’s do software. clearly call able on our cloud we of if SAP, facilitating public a the the to we combination purchase stepped that SaaS, SAP to on that instead sell of sales use to term. sell on client client If depending we at the need serve And mind

We everything a for do to are client. able

thing to So is go we that first pipeline significantly improved. as half to the our we was about us QX clarified. for clarified that channel activity we sure experienced there needed relative seeing you only for is in any that activity activity we confusion any certainly tell in I that second confusion the now and was make the early are had into The can year

expect of the differently – with us dealt dramatically transition. expect to any deal with than we we it So we Oracle

Vincent Colicchio

job the in guys. quarter. Thanks Nice

Ted Fernandez

else to you and Any Thank our And be the would changed. to understand. us always we questions? not be. high, at expect we I where have you. That’s question, the goals want other Vince, understand anyone to I

Operator

I this further back like time the Thank I call turn you. questions. would to show to over now no At Mr. Fernandez.

Ted Fernandez

again. quarter. report me Then in everyone we look Thanks thank second call when participating everyone to the quarter Okay. our forward let updating for and third

Operator

conference thank This concludes And you. today’s call.

ahead go disconnect and time. may at You this

The Hackett Group, Inc. (HCKT) 11 Aug 182018 Q2 Earnings call transcript