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HACKETT GROUP, INC. (HCKT)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue before reimbursements of $77.6M exceeded the high end of guidance; adjusted diluted EPS of $0.38 landed at the midpoint, while GAAP EPS of $0.06 was depressed by $5.1M stock price award expense and $2.5M acquisition-related costs .
  • Strength in Global S&BT (+5% YoY; +10% ex-OneStream) and GenAI engagements offset expected weakness in Oracle; SAP improved on implementation ramp from prior software sales .
  • Q3 guidance implies sequential revenue downtick on seasonality and tougher Oracle comp; adjusted EPS guided to $0.36–$0.38 with expected restructuring charges of ~$1.5–$2.0M excluded from adjusted results .
  • Strategic catalysts: launch of AI XPLR™ V4, a new Celonis partnership (AI + process intelligence), expanded buyback authorization to $30M, and continued dividend of $0.12 per share .

What Went Well and What Went Wrong

  • What Went Well

    • GenAI momentum drove revenue and margin: “Our quarterly results were driven by the performance of our GSBT segment… Gen AI engagements also favorably impacted our gross margin” .
    • Accelerated platform innovation: “Rapid pace of innovation… allowing us to release our AI XPLR V4… identify and design Gen AI solutions and agentic workflows… at unprecedented speed” .
    • New channel partnership: Announced Celonis collaboration to deliver “AI + Process Intelligence” solutions, enhancing ROI with AI XPLR™ and ZBrain™ orchestration .

  • What Went Wrong

    • Oracle softness and OneStream headwinds: Oracle down ~7.5% YoY due to post go‑live wind-down; OneStream weakness offset GSBT strength .
    • GAAP earnings heavily impacted by non-cash stock price award program ($5.1M; $0.18/diluted share) and acquisition-related costs ($2.5M; $0.07/diluted share) .
    • DSO elevated to 73 days on extended terms/milestones; FX negatively impacted adjusted EPS by ~$0.01 in Q2 .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Total Revenue ($M)$79.2 $77.9 $78.9
Revenue Before Reimbursements ($M)$77.5 $76.2 $77.6
Adjusted Diluted EPS ($)$0.47 $0.41 $0.38
GAAP Diluted EPS ($)$0.12 $0.11 $0.06
Adjusted Gross Margin (%)N/A43.4% 42.8%
Adjusted EBITDA Margin (%)N/A20.7% 20.7%

YoY comparison:

  • Revenue before reimbursements: $75.9M in Q2 2024 vs $77.6M in Q2 2025 (+2.2%) .
  • Adjusted diluted EPS: $0.39 in Q2 2024 vs $0.38 in Q2 2025 (-$0.01), with FX a ~$0.01 headwind .

Segment revenue before reimbursements ($M):

SegmentQ2 2024Q1 2025Q2 2025
Global S&BT$41.6 $42.6 $43.6
Oracle Solutions$22.2 $20.4 $20.5
SAP Solutions$12.2 $13.2 $13.5

KPIs and balance sheet highlights:

KPI/MetricQ4 2024Q1 2025Q2 2025
DSO (days)66 73 73
Consultant Headcount1,284 1,332 1,382
Cash from Ops ($M)20.6 4.2 5.6
CapEx ($M)1.0 1.5 1.9
Cash ($M)16.4 9.2 10.1
Total Debt ($M)12.7 17.8 22.8
Shares Repurchased (000s)117 206 177
Remaining Buyback Authorization ($M)27.5 21.3 17.0 (Q2 end) / 30.0 (post)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue Before Reimbursements ($M)Q2 2025$76.0–$77.5 Actual $77.6 Beat high end
Adjusted Diluted EPS ($)Q2 2025$0.37–$0.39 Actual $0.38 In-range
Revenue Before Reimbursements ($M)Q3 2025N/A$73.0–$74.5 Lower sequential on seasonality
Adjusted Diluted EPS ($)Q3 2025N/A$0.36–$0.38; GAAP tax 26.5% Lower sequential
Adjusted Gross Margin (%)Q3 202543–44 (Q2 guide) 43.5–44.5 Slightly raised
Adjusted SG&A + Interest ($M)Q3 2025~$18.6 (Q2) ~$18.5 Slightly lower
Adjusted EBITDA Margin (%)Q3 202521–22 (Q2) 20.5–21.5 Slightly lower midpoint
Restructuring Charges ($M)Q3 2025N/A~$1.5–$2.0 (excluded from adjusted) New
Dividend ($/share)Q3 2025$0.12 (prior) $0.12; record 9/19; pay 10/3 Maintained
Share Repurchase Authorization ($M)Ongoing$17.0 remaining (Q2 end) Increased to $30.0 post-Q2 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
GenAI platform innovation (AI XPLR, ZBrain)Preparing AI XPLR v3; end-to-end GenAI via LeewayHertz acquisition Announcing accelerated AI XPLR V4; enterprise workflow design considering client application ecosystem Improving
Licensing/ARR/JVZBrain licensing started; JV expected in 30–45 days; plan to license XPLR beginning July Licensing of XPLR not yet released; imminent; strong client and partner interest Taking longer to ramp, but pipeline strong
Channel partnershipsExploring strategic relationships; expansion beyond Global 1000 New Celonis partnership to combine AI + process intelligence; validating platform capabilities Improving
Oracle SolutionsDown; replacing large post go‑live engagement slower than expected Down ~7.5% YoY; toughest comp in Q3; restructuring plan to align resources Near-term headwind
SAP SolutionsMomentum building from software sales Up 11% YoY on implementation ramp; expected to continue Improving
Macro/tariffsTariff uncertainty caution flagged in Q1 Tariff noise had little Q2 impact; Q3 more affected; expect budgets to favor GenAI Stabilizing
Utilization/DSODSO up on milestones; expected to improve in Q2 DSO 73 days; extended terms continue Mixed
Workforce/RestructuringHiring in GenAI; capacity scaled 60–70% since acquisition Restructuring ~$1.5–$2.0M to align non‑AI practices and leverage Accelerator productivity Optimization underway

Management Commentary

  • “We reported operating results that were above and at the mid-range of our revenue and adjusted earnings per share guidance, respectively… while aggressively investing and growing our Gen AI platforms and revenues” — Ted A. Fernandez .
  • “Gen AI engagements also favorably impacted our gross margin as they demand a higher margin than our traditional consultant and implementation revenues” — Ted A. Fernandez .
  • “We announced our first strategic alliance today… with Celonis… to help identify, design and build high ROI agentic AI solutions with unmatched speed” — Ted A. Fernandez .
  • “We expect Oracle… down by over 20% YoY in Q3… [and] restructuring charges… ~$1.5–$2.0M… excluded from adjusted results” — Robert Ramirez .

Q&A Highlights

  • Licensing ramp and partnerships: Management expects imminent licensing release for AI XPLR; announced Celonis partnership; turned down one SI offer to seek better terms; more partner relationships likely .
  • Practice dynamics: Oracle and OneStream headwinds concentrated in Q3; expect Q4 comp clean as prior-year peaks roll off .
  • GenAI use cases: Strong demand in customer service/attrition/revenue management and enterprise process improvements beyond ERP automation limits .
  • Macro tone: Tariff-related uncertainty had minimal Q2 impact; Q3 more affected; broader GenAI budget allocations expected to drive demand; FX headwind impacted EPS by ~$0.01 .
  • Resourcing and utilization: GenAI areas continue hiring; non‑AI practices to realize >20% productivity gains via Accelerator; utilization challenges in tech groups addressed via restructuring .

Estimates Context

  • Q2 2025 actuals vs consensus: Adjusted EPS $0.38 vs $0.377*; Revenue before reimbursements $77.6M vs $77.93M* — essentially in line on revenue and a slight EPS beat .
  • Q3 2025 guidance vs consensus: Revenue guide $73.0–$74.5M vs $74.82M*; Adjusted EPS guide $0.36–$0.38 vs $0.367* — guidance brackets consensus amid seasonality and Oracle comp .
  • FY 2025 consensus: EPS $1.533*; Revenue $300.95M*.

Values marked with * retrieved from S&P Global.

MetricQ2 2025 ActualQ2 2025 Consensus*Q3 2025 GuidanceQ3 2025 Consensus*
Adjusted Diluted EPS ($)$0.38 0.3767*$0.36–$0.38 0.3667*
Revenue Before Reimbursements ($M)$77.6 77.93*$73.0–$74.5 74.82*

Key Takeaways for Investors

  • GenAI-led mix shift is supporting margins and segment growth; expect continued acceleration in Global S&BT and SAP while Oracle navigates near-term comps and restructuring .
  • EPS quality: GAAP depressed by non-cash stock price awards and acquisition-related comp; adjusted EPS in-line with guidance despite ~$0.01 FX headwind — adjust models accordingly .
  • Near-term setup: Q3 guide reflects seasonality and Oracle’s tough comp; Q4 should be cleaner as comps ease and restructuring takes hold — positioning for margin stabilization .
  • Strategic catalysts: AI XPLR V4 release and Celonis partnership broaden channel and solution velocity; monitor licensing milestones and ARR traction from AI XPLR/ZBrain/JV .
  • Capital returns: Authorization raised to $30M with ongoing buybacks; dividend maintained at $0.12 — supports total shareholder return profile .
  • KPIs to watch: DSO trajectory, consultant headcount in GenAI, adjusted gross margin (43.5–44.5% guided for Q3), Oracle replacement activity, and FX effects on EPS .
  • Medium-term thesis: If AI platform licensing and partner channels scale as indicated, ARR growth plus higher-margin services can re-rate profitability; execution on Oracle recovery and licensing timelines remains the key swing factor .