Executive Summary

Q2 2025 revenue was $38.6M, down 14.2% YoY, with positive EBITDA of $1.1M; GAAP EPS was -$0.05 and operating income was $34K, reflecting margin compression versus Q2 2024 while maintaining a debt-free balance sheet and $4.8M cash .
Sequentially, revenue declined from $41.6M in Q1 2025 and EBITDA fell from $1.0M, with Adjusted EBITDA stepping down from $1.8M in Q1 to $1.5M in Q2, driven by softer segment volumes and elevated costs in Fulfillment & Logistics and cautious client spending in Marketing Services .
YoY comparison is skewed by large pension termination charges in Q2 2024; the current quarter’s much smaller GAAP net loss (-$0.3M) primarily reflects operational headwinds rather than one-offs, while last year’s -$27.8M GAAP net loss was driven by pension charges .
The company offered no quantitative forward guidance; near-term stock narrative centers on execution of Project Elevate, re-accelerating Marketing Services after client attrition, and restoring segment profitability amid cost controls and pipeline development .

What Went Well and What Went Wrong

What Went Well

Positive EBITDA for the quarter ($1.1M) and Adjusted EBITDA of $1.5M, maintaining operational discipline despite top-line pressure .
Balance sheet remained debt-free with $4.8M cash at quarter-end and $24.0M undrawn credit capacity, reinforcing financial flexibility .
Management reiterated multi-year transformation focus via Project Elevate to drive efficiencies and expand client relationships: “The Company remains focused on advancing its multi-year transformation strategy, which includes driving operational efficiencies through Project Elevate…” (press release) .

What Went Wrong

Revenue fell 14.2% YoY to $38.6M and operating income compressed to $34K vs $1.4M last year, reflecting broad segment softness and higher costs .
Segment-level pressure: Marketing Services revenue -28.7% YoY with EBITDA down to $1.4M amid customer attrition and cautious spending; Fulfillment & Logistics revenue -11.6% YoY with contribution margin impacted by elevated production costs and project delays; Customer Care EBITDA -30.8% YoY on timing fluctuations .
Sequentially softer vs Q1: revenue down to $38.6M from $41.6M and Adjusted EBITDA down to $1.5M from $1.8M, underscoring near-term demand and margin headwinds .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$47.1	$41.6	$38.6
Operating Income ($USD Millions)	$(1.6)	$(0.04)	$0.03
Net Income ($USD Millions)	$(2.4)	$(0.39)	$(0.34)
Diluted EPS ($USD)	$(0.33)	$(0.05)	$(0.05)
EBITDA ($USD Millions)	$(0.28)	$1.02	$1.10
Adjusted EBITDA ($USD Millions)	$3.51	$1.81	$1.47
Adjusted Operating Income ($USD Millions)	$2.23	$0.75	$0.40
Adjusted Operating Margin (%)	4.7%	1.8%	1.0%

Year-over-year comparisons (Q2 vs Q2 prior year):

Revenue: $38.6M vs $45.0M, down 14.2% .
Operating income: $34K vs $1.373M .
EBITDA: $1.10M vs $2.40M .
Adjusted EBITDA: $1.47M vs $3.56M .
EPS: -$0.05 vs -$3.84 (prior year impacted by pension termination charges) .

Segment breakdown (Revenue and EBITDA):

Segment	Q2 2024 Revenue ($M)	Q1 2025 Revenue ($M)	Q2 2025 Revenue ($M)	Q2 2024 EBITDA ($M)	Q1 2025 EBITDA ($M)	Q2 2025 EBITDA ($M)
Marketing Services	$12.15	$8.78	$8.66	$1.81	$1.07	$1.36
Customer Care	$12.38	$13.00	$11.85	$2.32	$2.06	$1.61
Fulfillment & Logistics	$20.50	$19.78	$18.12	$1.56	$1.69	$1.43

KPIs and liquidity:

KPI	Q4 2024	Q1 2025	Q2 2025
Cash and Equivalents ($USD Millions)	$9.93	$8.98	$4.76
Debt Outstanding ($USD Millions)	$0.00	$0.00	$0.00
Credit Line Capacity ($USD Millions)	$24.0	$24.0	$24.0
Weighted Avg. Shares (Basic & Diluted)	7.355M	7.360M	7.382M

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q3 2025	None provided	None provided	Maintained (no guidance)
EPS	FY/Q3 2025	None provided	None provided	Maintained (no guidance)
Margins / OpEx	FY/Q3 2025	None provided	None provided	Maintained (no guidance)
Note: Company reiterated transformation priorities but did not issue quantitative guidance in the Q2 2025 release .

Earnings Call Themes & Trends

Note: A Q2 2025 earnings call transcript was not available in the document repository; themes below reflect press releases for Q4 2024, Q1 2025, and Q2 2025 .

Topic	Previous Mentions (Q4 2024)	Previous Mentions (Q1 2025)	Current Period (Q2 2025)	Trend
Operational efficiency (Project Elevate)	Focus on optimizing cost structure and streamlining; cost elimination met expectations	Continued discipline; positive EBITDA target each quarter in 2025	Emphasis on efficiencies and strong cost controls to support sustainable profitability	Ongoing execution
Marketing Services demand	Impairments tied to InsideOut; segment pressure	Revenue -35.3% YoY due to reduced financial services projects and planned contract expirations	Revenue -28.7% YoY with customer attrition and cautious client spending; realignment underway	Weak, stabilization efforts in progress
Fulfillment & Logistics costs	Higher warehouse and technology costs pressuring EBITDA	More profitable project mix; terminated low-margin account	Elevated production costs; delays/non-materialization of smaller projects	Mixed; cost headwinds persist
Customer Care profitability drivers	Lapped high-margin special project in prior year	EBITDA decline due to higher technology costs; revenue +4.5% YoY	EBITDA -30.8% YoY due to timing fluctuations; segment remains strong contributor	Solid but variable
Balance sheet / liquidity	Year-end cash $9.9M, zero debt	Cash $9.0M, zero debt	Cash $4.8M at quarter-end, zero debt; $24M credit capacity	Strong liquidity, lower cash sequentially
New wins / pipeline	2025 focus on innovation, segment ownership	New client engagements across healthcare, tech, hospitality, auto; revamped sales structure	Healthy pipeline across segments; accelerating new customer acquisition	Pipeline building

Management Commentary

“The Company remains focused on advancing its multi-year transformation strategy, which includes driving operational efficiencies through Project Elevate, accelerating new customer acquisition, expanding relationships with existing clients, and maintaining strong cost controls to support long-term, sustainable profitability.” — HHS Q2 2025 press release .
“This segment experienced customer attrition and cautious client spending; however, strategic account realignment and new business pipeline development are underway to return the segment to growth.” — on Marketing Services, Q2 2025 press release .
Context from prior quarter: “We continue to execute on Project Elevate to optimize our cost structure and streamline our organization… The next phase of innovation will be driven by heightened strategic ownership within our segments…” — David Fisher, Interim COO (Q4 2024 press release) .

Q&A Highlights

A Q2 2025 earnings call transcript was not available via our document tools; no Q&A highlights could be retrieved for this period [ListDocuments 2025-06–2025-09 returned none for earnings-call-transcript]. We base clarifications on segment-level commentary in the press release and prior-quarter disclosures .

Estimates Context

S&P Global consensus coverage for Q2 2025 appeared limited; no EPS, revenue estimate count, or consensus means were available in our query for Q2 2025, preventing a formal beat/miss analysis (Values retrieved from S&P Global).*
Actuals for Q2 2025: Revenue $38.6M; EBITDA $1.10M (per company press release) . External coverage indicated no forward guidance and limited estimates context .

Key Takeaways for Investors

Near-term revenue pressure across segments combined with elevated costs compressed margins; restoring Marketing Services growth and normalizing Fulfillment & Logistics costs are critical to re-accelerate profitability .
Positive EBITDA and zero debt provide strategic flexibility; the $24M credit facility supports working capital needs and selective growth investments despite sequentially lower cash .
Project Elevate remains the core execution lever; expect continued cost actions and segment-level ownership to gradually support margin recovery as pipeline converts .
Absent formal guidance and limited consensus coverage, stock narrative will hinge on evidence of demand stabilization, win rates, and mix improvement, particularly in Marketing Services .
Watch for timing-related variability in Customer Care and fulfillment project dynamics; management flagged program timing and project delays/non-materialization as key drivers in Q2 .
Non-GAAP metrics (Adjusted EBITDA, Adjusted operating income) continue to be central to tracking underlying performance; reconcile to GAAP given prior-year pension charges and Q4 2024 impairments .
Tactical implication: Without guidance, focus on segment bookings quality, cost normalization milestones, and cash trajectory into Q3/Q4 as primary catalysts for multiple and sentiment re-rating .

Source Documents Reviewed

Q2 2025 8-K Item 2.02 and Exhibit 99.1 press release and financials .
Q1 2025 8-K Item 2.02 and Exhibit 99.1 press release and financials .
Q4 2024/FY 2024 8-K press release and financials .
External coverage confirming lack of forward guidance .

Note: No separate Q2 2025 earnings call transcript or additional Q2-related press releases were available in our document repository.

HARTE HANKS INC (HHS)·Q2 2025 Earnings Summary