The Hackett Group Inc (HCKT) Q3 2024 Earnings Call Highlights: Strong Growth in Oracle and SAP ...

GuruFocus News
5 min read

In This Article:

  • Total Revenue: $79.8 million for Q3 2024.

  • Revenue Before Reimbursements: $77.9 million for Q3 2024.

  • Global S&BT Segment Revenue: $44.1 million for Q3 2024.

  • Oracle Solutions Segment Revenue: $22.8 million for Q3 2024, a 7% increase year-over-year.

  • SAP Solutions Segment Revenue: $13 million for Q3 2024, a 17% increase year-over-year.

  • Adjusted Gross Margin: 43.2% on revenues before reimbursements for Q3 2024.

  • Adjusted EBITDA: $17.7 million or 22.7% of revenues before reimbursements for Q3 2024.

  • GAAP Net Income: $8.6 million or $0.31 per diluted share for Q3 2024.

  • Adjusted Net Income: $12.1 million or $0.43 per adjusted diluted share for Q3 2024.

  • Consultant Headcount: 1,262 at the end of Q3 2024.

  • Cash Flow from Operations: $10.6 million for Q3 2024.

  • Cash Balance: $10 million at the end of Q3 2024.

  • Debt Outstanding: $20 million at the end of Q3 2024.

  • Stock Repurchase: 71,000 shares repurchased at an average of $26.66 per share, totaling approximately $1.9 million.

Release Date: November 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • The Hackett Group Inc (NASDAQ:HCKT) reported total revenues of $79.8 million and adjusted earnings per share of $0.43, both exceeding quarterly guidance.

  • Strong performance in Oracle and SAP segments, with Oracle Solutions revenue increasing by 7% and SAP Solutions revenue by 17% year-over-year.

  • The company's GenAI engagements showed strong sequential revenue growth, driven by the AI XPLR platform and the acquisition of LeewayHertz.

  • The acquisition of LeewayHertz is expected to enhance GenAI implementation capabilities and create new value creation opportunities through a joint venture.

  • The company plans to use strong cash flow to accelerate its stock buyback program, with a $20 million addition to the existing authorization.

Negative Points

  • The Global S&BT segment's revenue was flat year-over-year due to weakness in the eProcurement group.

  • GAAP net income for the third quarter decreased to $8.6 million from $9.4 million in the prior year.

  • The company's cash balance decreased to $10 million at the end of the third quarter from $19.1 million in the previous quarter.

  • The company experienced an increase in adjusted SG&A expenses, primarily due to foreign exchange fluctuations and increased commissions.

  • The company faces competition for experienced executives, particularly those with high technology agility.

Q & A Highlights

Q: Can you discuss the impact of AI XPLR version 2.0 on client engagement and conversion rates? A: Ted Fernandez, CEO, explained that AI XPLR version 2.0 has significantly improved client engagement and conversion rates. The integration of LeewayHertz's GenAI implementation skills has enhanced the response from clients. The new version allows for detailed simulations of enterprise use cases, providing clients with a comprehensive view of potential AI applications and their ROI, which has led to higher conversion rates.

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