HCKT - Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to The Hackett Group First 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,

Robert Ramirez

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

The Chairman Speaking here on Officer. wires CEO A Fernandez, over was Chief Time. at to and and of and the answer your press Rob the questions are Financial call Ramirez, Hackett Group today X:XX released Eastern myself, announcement Ted P.M.

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

in current performance. may and a not projections expectations, to predict accurate. turn and is that which discussed to also contained place risks, financial on forward-looking I begin, you any the and release SEC remind I the that be difficult this considered only the contained federal about in not following assumptions not statements expected data information, results Actual particularly this the in in filings.At These it to future to the over risk statements statements to securities would that involve are results, laws. on of that and purposes Q&A of will They with These the We our be page or be call would like are and estimates relate are the point, our for additional factors Relations future conjunction should vary. detailed our session, may like in of which statistical guarantee will statements we Ted. making Investor the uncertainties we website.Before be may comments forward-looking

Ted Fernandez

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

I to operating well cash to overview it with over comment on comments on will as I do, will As Rob we normally call the flow comment back some on turn quarter. outlook. then as detailed results, the open

strategy-related is the which of reported end revenues of which, afternoon, was at high guidance. million, and which our our guidance $XX.X high after We will revenues up earnings it Q&A.This above per total $XX.X market and the before $X.XX, comments, we reimbursements of we to and adjusted open review of our will then million of end share

overperformance in Management Our we're were results Performance second it increase area and value-added our up above experienced strong important last expectations or notable the strategy.Our since year. this offerings. benefited performed by with reseller several experiencing momentum its the our that were is also Oracle demand we our which Enterprise driven clear that of SAP development has of SAP A quarter are is overperformance segments, the both closed sales as commitment strongly. we Oracle transactions, EPM the segment have reemphasized in consistent beneficiaries Oracle's of which the this new to historically and Solutions quarter. strongly the

last in segment We year to we the to of see off. have started made sales this investments start pay some

segment Our area. compared in was has year, headwinds when This eProcurement economic Global down the X% been continued results to extended noticeable in SBT last particularly see as we decision-making.

cases investment to launched is our AI meetings scheduled. benefit cases. use uses as AI functional opportunities business that the many Although initiatives financial ideate of potential engagements. world-class client-specific of conditions the assessment client functionality, very offer.More more or XXX in a Gen This experiencing segment resulted AI use unlimited was that and over automation receive task now platform, with enterprise well XPLR, IP These and considerations, assess the Explorer number demo and Gen meetings led favorable continues to significant has feasibility of comes have our AI leverages to we process domain-specific the Gen new new importantly, as by impacted which and Explorer market that feedback. opportunity AI AI recently transformational from are AI will AI-assisted

these Gen engagements our in rapidly library, expect in QX can impact the number quarter.These revenue also scope establish to allows and throughout and the case other AI The benefit analysis Although software to to AI recently which promote use created second leverage us and related nominal, database. with increase providers. we growing maps capabilities case used from be embedded was highly case use road library recognized engagements Explorer using benchmark of our services

Our pivot our performance journey.We and our IP-based improvement AI become clients' intelligence new creating interest clients opportunity rapidly endeavor. invest of significant in Explorer a strategically. continue unique aggressively programs. programs market growing an Gen architects engage strategic to AI playing access a to Gen expand entirely this are role broadly to AI creating to is also our to emerging way The in is

are the research quickly on market programs. of executive power deliver we Gen thought value AI advisory we acknowledging have and of and the intelligence the our will Specifically, advice in expert leadership

will While be shift. rates our these believe responsive market to We lower our this pipeline continues offerings for April, move in increase, to our began integrate to planned. conversion than Gen AI we are content fully

side, cash and AI-led make provide balance you invest the buy credit our operations Rob Longer later on expect our term, following ask comments. let comments continue to our and operating launch use ability down and to will pay Hackett I outlook. that this AI on additional Gen flow well term, business.With me while fund believe stock comment our to plan can conditions in the flow advice.On to said, and our content support on strategy Hackett market also to back results, Rob? also details to as Rob's us that acquisitions continuing as year use to facility. our cash of our AI platform from sheet the increase balance in to we balance outstanding research to our sheet incorporate move strong short will to that We IP our Explorer, to

Robert Ramirez

Ted. you, Thank

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

the separately of segment and America S&BT segment, the the segment call, regarding and international and S&BT For includes North our transformation will programs Coupa benchmarking IPaaS offerings, advisory results implementation purpose and Solutions Global our I Global Solutions revenues the SAP our of total Oracle and our business company.Our and of comment our this executive segment, offerings. OneStream

our impact results discussion. of Reimbursable note total Our call today, we before have profitability.During through include also SAP information our we expenses project, revenues Please measures, Oracle of on our investors. segments prospectively. are reference both travel-related Solutions revenue clients and expenses offerings primarily associated believe and passed that SAP Solutions non-GAAP be the this we will financial our that referencing will portion and the in to useful certain to reimbursements provide Oracle our no which

additional have page release We post call of XXXX, press filed Ted year. and included prior any in quarter first of our as today website.For million, revenue reconciliations GAAP non-GAAP $XX.X the based total the mentioned, financial over the earlier Investor this discussion up will to X% the from on company's of information measures Relations was the to our

over which our quarterly the reimbursements was before of above also X% high end revenues by guidance, prior up million, were year. the Our $XX.X

value-added S&BT performance.Adjusted before legal $XX.X primarily company first 'XX.Total and the compared of primarily year-over-year of earnings recurring before multiyear end company million company's quarter quarter the the as segment in increased share net prior to quarter totaled net first were of XX.X% stock-based over before earnings revenues year. resell in headcount value-add reimbursable X and reimbursements guidance as million margin the improvement reimbursements XXX per and settlement-related prior compared in compared reimbursements subcontractors quarter for on year. gross Adjusted segment for income million driven of of Service, quarter increase expense of for $X.X with results for The first due headcount point strong as revenues bonuses was market by the to from XX% which our to primarily other as excludes quarter previous million year. net of period of million to our contracts.Total multiyear of was higher offerings.Total support adjusted share XXXX. in is reimbursements XX.X% expenses at XX.X% of before when prior increased These the Solutions excludes expense investments prior The engagements, same with when million or $XX.X increase the the to to and costs $X.XX in legal-related activities stock-based before compared total XX.X% when impacted or momentum adjusted in quarter in on for previous cash year. GAAP our was in or of of the S&BT compared end to prior client quarter last and operating adjusted adjusted and the in $XX for segment before and which with expenses Global or expense year. to revenues in making sales X.X% S&BT $X.XX the of the subscription-based quarter quarter in increased net which the compared and the to of share first income increases of related end were period quarter. of million commissions XXXX our non-cash were SAP consultant revenues were in to earnings headcount due at quarter. $X.XX one-time which The the of first which a before quarter quarter when quarter. company quarter first onetime in expense benchmarks particularly managed to of a revenues at EBITDA, before with stock-based the in legal compared incentive of compared balances million $XX.X margin per in quarters growth million due Oracle 'XX commensurate compared X,XXX value-added or first driven higher the X.X% resources excludes non-cash sales, This $X.X well well net of are Total quarter experienced was of year. X,XXX revenues to reimbursable segment revenues the application our segment Net our 'XX, diluted as the costs extended the per revenues decrease offset prior $XX.X prior quarter one-time reimbursements or of reimbursement to as revenues top for compensation 'XX, year. gross absolute non-cash decision-making $XX.X segment the for company in the or year higher-than-expected to XX% Global Global volatility $XX.X the volatility of Revenues the net was which same in quarter as the the million, of sales 'XX. executive due X% primarily before in margin period cash of the XXXX, continue prior totaled the before which the or adjusted as services compared period we SG&A, our to first for stock-based Solutions incremental quarter prior and in non-cash first associated share the of GAAP provided same quarter of and the double-digit million but compensation net first accruals translation and income eProcurement our XX.X% prior the income, as to was for diluted of the is comp the cost quarter $XX reductions compared expense $XX per for Solutions Revenues year. million million $X.X reimbursements in revenues reimbursements, the dedicated $XX.X before first compensation income or segment reimbursements due in were million accrued year.The compared first same Total in of $XX.X costs the XX.X% was XXXX, reimbursements and reimbursable prior compensation SAP segment in a comp our exclude is stock-based our was the receivable. was activity of XXXX, 'XX, first were range at severance been adjusted before were settlement-related common growth strong Oracle the higher-than-expected diluted as the quarter This basis common the million advisory consultant revenues in non-cash Adjusted XX% primarily by increase end compares of Solutions X% by of year. prior the and headcount practices, as 'XX has Revenues in very sales decreases $XX.X to of for income reimbursements targeted the 'XX. SAP reseller reseller first of X,XXX of to impacting dollar during from income Oracle business million This revenues company market 'XX. of selected Advisory, $XX.X costs to ratio million compared in million excludes This of the revenue and for million the discussed. first the a in the of expenses of to increase first XX% by total second revenues, diluted first our quarter This as totaled from payment the XX.X% periods.Total performance the expense the quarter. $X.XX, $XX.X partially Approximately settlement from or our quarter non-cash of includes $XX.X activity accounts we've 'XX when company to in IP the reimbursements consists Research $XX.X first

an shares Our was days DSO repurchased of of previous total shares or XX employees day was for of by of the average of as purchases divesting approximately company's by XX the end $XX.XX income a driven at This end of sales Board. outstanding the at to the per quarter, quarter at the cost stock our satisfy restricted million. share triggered as days the well XXX,XXX $X.X quarter.During compared shares from we repurchased withholding to from tax as

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

per the estimates the During be of move second paid $XX record its Board range $X.XX the of the $X credit end, quarter the on facility. subsequent The be Directors second to The the quarter X, of to company XXXX.I'm shareholders the balance in the company's our revenue million going at second to quarter the was July XXXX, debt million. of share At most down June on of million for now million. on quarter, company's declared XX, of first end $XX.X company total before meeting reimbursements to to total to $XX paid of for quarter outstanding recent the our guidance for quarter XXXX. dividend

S&BT We but down prior compared Global reimbursements before be year expect segment the to to up revenue a slightly basis. sequential on when

and year-over-year. up before Oracle both sequentially revenue be reimbursements expect Solutions to We segment

SAP adjusted be income common adjusted 'XX on in second We GAAP of year-over-year per rate to of XX.X%.We to a estimate Solutions tax in be a diluted percentage revenues XX%. expect the approximately imbursements gross to range net quarter down the $X.XX, segment before basis. We of effective $X.XX share reimbursements the revenue to before which margin earnings to a adjusted XX% assumes be of expect on as

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

a to We be the quarter percentage XX%. adjusted of approximately of XX% reimbursements expect range in as second EBITDA revenue to before

priorities I'll coming basis.At over our cash review back a for and Lastly, market strategic months. Ted operations to outlook sequential be the to it we flow up this point, from turn expect on to

Ted Fernandez

and on our opportunity forward, near- the me and growth environment offers demand long-term it the As our share thoughts organization. let look we

Strategically, new will performance will standards, to continue this result and their as unprecedented for has remains Gen to organizations We compete rates will innovations, which sales call, all our affect. an the programs cloud the consider. digital as providers services.But disruption, organizations Although major dedicated our been IP-related we applications, Its emerging automation have the quarter on entirely to recurring interest intended dramatically enterprise resources demand I development their of high-margin and AI services mentioned focus first digital software workflow strong, is for way priorities of influencing existing are by assess marketing the be believe innovation and rapidly the analytics unlimited to the demand by offerings. AI in on of and level and created demand increasing new solutions. competing potential define to area. all businesses it change transformation services continues impacted deliver extended extend Digital the world-class and driving and this high decision-making by it value

our member We we're of our focus AI new development most then investments also development continue new have The accelerated platform the platform.But Hackett capabilities. making our what the of investment investment AI the on training associates. our and and is and our in Gen Explorer Connect is significant been

as the the AI all the vehicle Explorer utilizing impact are We across platform to integrate AI our offerings. of Gen

hired our is also our utilizing to consultants and AI measure Gen to technology Gen efforts. assess efforts These data critical AI us further have architecture of AI resources powerful. clients' impact support Explorer journey.Our We the advisers and will ability to of critical become architects allow and

effect, because intelligence executive and providers unique the opportunities it our our is guide that more and This that access to our story.We a to advisory our describe perspective utilize only to cloud use the thus as see we XX% approximately been broad it, Explorer this opportunity innovation Additionally, AI be this advisory to strong over our of to see last provide another solutioning provides. transformation on will several consulting and has application strategic from downstream unlimited an We which continues organization and far as likely intelligence has halo our revenues primarily market business have and Organizations and Gen case been and benchmarking by we'll growing AI for strengths services. continue case years to services. assessment, who our consider. use through We as believe an are perspective offering help way repository, such. powerful of its platforms the clients integrates clients market consulting specific the AI on our solution objective rely expanded

to continue our reports. also intelligence We market publish

publish how to for are consulting compare solution well inform and their reports content critical to Explorer also to they our acquire deliver. started market reports base purchasing have providers. measure important providers, service intelligence We advisory represent AI as learn decisions. key well as our The and competitors Gen software on AI which impact the and customer research their market value executive companies to solutions as as executive intelligence advisory and benchmarking reports Large measurable can the programs.Our

continues. to quarter. executives overall, turnover the talent the we moderate during saw But competition experienced low and side, On remain for continue

the manner. strategic beyond We an allow will to allow to remotely, channels that reach model, our respective current model provides also retain responsibilities and provides AI is should expect greater an defined to well teams. to and very to through our new efficient their valuable which Longer transitioned hybrid us talent.We Global have as with will to This us allow to continue. to trend capabilities effective us XXXX exploring This personal sell flexibility focus delivery them. their as clients in our attract and us extend a our partnerships IP our that are term, hybrid access we sales perform associates with which

through can client our well enhancements transformation This more technologies deliver information AI-driven global to We also It effort. that believe will perspective world-class the and significantly AI Explorer we AI hold.As benchmarking in Investor IP performance leadership with redefine with also less continue digital standards us our take platforms. I utilize continues of our as our website we digital and on call, integration Leap allows and create to page fully case our platforms become these new compelling on significantly Quantum aligns videos benefit and as their to clients We be previous enhances decision familiar capabilities. adding platforms flow the of of Relations more process value of IP leverage achieved the assessments, new our value our mentioned allows with track software to accelerate Gen of to our transformation initiatives. realization considerations our believe that on are to investors

and and though base we Lastly, add look that can client offerings and and scale growth. business, which accelerate grow our that continue we to even we to for alliances leverage strategically the have our believe IP acquisitions capability scope, the our

me encounter.Those our matter their to on and let our always, and performance close urge may highly what people always tireless them As my and them our efforts stay they comments. thanking our by focused no challenges for on associates clients congratulating conclude

on our section to Let me to let's Q&A the call. turn it over and operator, of Operator? move our

Operator

Partners. will Jeff session. We come begin question with first Our question-and-answer the will Martin Instructions] [Operator from Capital now ROTH

Jeff Martin

Ted, could you related making and curious quantify Explorer? investment AI I if Gen specifically you're to was the level of

Ted Fernandez

senior the refocusing or is we're of majority reallocating initiative. to all executives the it Believe really our not, of investment making the and

before.We've I We have from incredible, we're received and the been of kind tell a individuals Explorer, though and built interesting, we've those number our have -- has who Explorer, even value ever done we effort launched to the seen is believe, demo what's product like built efficiently. primarily that had booking has the has in to a that I communicating feedback continue able the leverage and impact but meetings discussions to pursuits have had the to of done The has that meetings market and of continue you nominal, nothing response though never other building incredibly pursuits, the and AI development time and like dedicated out revenue clients, expanding team product. to Explorer the we we number outstanding. the resulted that, responding during era on in with we've capabilities quarter build the it's amount we've was was even leverage ability that of that That been -- can the AI we because impact RPA that, that hired

So target for the and little priorities now distraction Gen impact us, to clients how somewhat even a extent, our reallocate of as a their spend AI to moving to a of though try that some of establish and we Gen to Explorer is significant, relative without launch the the to understand bit they believe off we of pay to they the it or AI, handsomely is want to AI the is and and us. with opportunity, timing for believe, going

Jeff Martin

if to just give an was give I'd the or wanted imagine one the to X about parts example expand could with opportunity I they what us types over have, part organization I the curious targeting? of that. you time. of these client are just you interactions you organization expand of start on the that and

Ted Fernandez

We base. been C-level say client X/X offer the organization somebody primarily the our CIO initiatives we our is XX% has make quickly to really includes though the probably It we've And I has that will or organization. as primary to the out been or the reached the C-level through maybe will is if that because functionally from it spread time, officer throughout the but to officers. it domain-focused our exposed capabilities, it board. offering organization, believe IT on even across of one

to and offer, been the opportunity because teams and to the fact, an more we impactful. it's from to conversation to, becomes going engage we're the impact capabilities getting We pursue executive know in seeing are management present continue that and

meaningful sold and and presented was closed a we that engagements very it's the the officer at of C-level project. one fact, In

Jeff Martin

if more, could. one I then And

case. that, we back X quarters, run S&BT, that or up if delayed the the appears its decision-making, Global you had course, be On not to largely X thought

might this they an period time? Just anything to a curious you Or pinch for being they kind you respect of there do decision-making when of move put forward? with if where Is can off up? add have to something see see indefinite we clear to have point

Ted Fernandez

believe that amount significant also of AI-specific will as move of forward, being that that's a consume reallocated but that I believe amount budget or identified they will attention. I the

because be the Gen the initiatives, broad to the balance temporary increase for diversion, of we're conversations call impact number let's we So broad us, having of business simply should believe AI throughout transformation year. which the on have

probably we eProcurement that come I from at the the quarters, of have that experienced when also area. it's look think you has fiery over overall to note decrease important our last the impact couple

spend more maybe you want in decreases nominal XX remember Coupa were if you areas variances that. than or which call months ago been you seemed have if it, struggle others.But really to like have the analysis, So that have significant, exclude to other,

is, So, we've the expected new opportunities could at significant We the multiyear. point that you'll in watching get the if initial eProcurement growth -- see then that in been you the right well. entry mean, be about level, and we if longer-term resume that think from talking it SBT off. off and resume activity we're as then levels the demo level opportunities with I AI off see AI Explorer activity level will right much Gen segment And of we're the engagements, because, the very engagements impact presenting that you utilizing have

Operator

able George Craig-Hallum. in your Our Sutton with And comes Instructions] not question the feature phone. next Please check conference. to from [Operator hear we're on you mute George,

Adam Kelsey

for what on was effort? has Oracle Adam mentioned little more George. reemphasized its sales you is hoping from provide you you commitment. on that I detail a that come just This expect Ted, that can to and

Ted Fernandez

a have strong the over reputation the built have the in seems Well, we call success we a to force such not it entry well. to and had Those us call of install to quite going that it, space that the to X the bit really broadly only that last also for started with beneficiaries bleeding that points going quarters that activity. significant in -- -- ERP the do opportunities base and sales I'm to they've through in their balance into, has but EPM I dedicated over space, that itself that meaningful it as fact momentum rebuild been we've was is really

So, quarterly were the the provided Oracle we growth prospects, strong. both the very performance guidance and for

Adam Kelsey

EPM your data may point, or ERP would imagine impact love have get I clean obviously, to at is on though. Gen for some we on it, see AI. to thoughts And I key sales. an

Ted Fernandez

it's opportunity opportunities reemphasizes significant. or the general, interesting, EPM if you really that look analytics really Gen the Well, AI FP&A in very in so are within at just FP&A

So, the -- aggressively software see starting beyond extend that cases innovation significant. embedded very their we're providers, to I but are have the the think, capabilities capabilities, that marketing been embedded use and their

significant beneficiaries So, you call if I that Gen solutions, AI to it, be want believe the there will breakthrough. of

Operator

you. Thank

will we Research. Vincent with hear Colicchio Next, from Barrington

Vincent Colicchio

and do Do strong need professionals to you currently? with the more AI seeing demand had you meet you training demand you're consulting to hiring internally. organization the Yes, Ted, outside mentioned are

Ted Fernandez

The yes. answer is

we We train going certify beyond that to increased our also -- extend associates we're capabilities. to even where our continue partnerships that looks alliances expertise that extends dedicated and our hiring for and have at looking to and beyond are and

can you across to aggressive expect So, all be it dimensions.

Vincent Colicchio

mentioned Did that on sales. up Rob think I And had you sales expand partly your that quarter? the your force SG&A in was

Ted Fernandez

the we've but the we increase software the the had in made dedicated increased of made answer increases reflects that The combination we year-over-year is reflects sales some team. in the -- segments, advisory increases also of that the it -- in executive

Vincent Colicchio

market way? there? to the some in meaningful investments investments softness executive them thinking team you've is you in expect intelligence do this Or in and a what help is year? the made, So, GSBT the offset your Or advisory

Ted Fernandez

We see the advisory. same impact in

start that, being I because specific demand means ability business capabilities our With the Gartner we that at Gen also that content. shift just building impacted I'll said, were didn't which the that in us -- it until as space for you for clients the call content that lower requesting advisory are that the now advice reported, exactly to integrating April say the is. growth we transformation look would If space see do result, AI-related we the

it started advisory. is adding of So, just program important of we part to the our an growth

factor X bode to significant Gen the Explorer AI revenue will the X next very us well the with capabilities unique most and So, and leading we be demonstrate to expect years. overall, the the and advisory and that position market programs. as we ability as to believe pivot, intelligence change But to the I in growth space for have of growth over will strongly executive organization impact and AI

going that we're So, very play hand to aggressively.

Operator

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

Ted Fernandez

Thank you, operator.

me when look everyone forward the report to Thank second our participating Let quarter first for We you again you. updating in call. we thank earnings quarter.

Operator

participation. Thank again today's conference. for That you does you. your once Thank conclude

may time. disconnect this You at

The Hackett Group, Inc. (HCKT) 7 May 242024 Q1 Earnings call transcript