The Hackett Group (HCKT) Q2 2024 earnings summary

Executive summary

• Q2 2024 total revenues reached $77.7 million, up from $77.1 million in Q2 2023, with revenues before reimbursements at $75.9 million, exceeding guidance and driven by Oracle and SAP segment overperformance.

• Net income for Q2 2024 was $8.7 million ($0.31 per diluted share), nearly flat year-over-year; adjusted EPS was $0.39, at the high end of guidance.

• Cash flow from operations improved to $16.5 million for the first six months of 2024, with Q2 cash flow at $13.7 million, up from $7.7 million year-over-year.

• Significant investments in Gen AI, including the launch of AI XPLR Version 2, are expanding client engagement and positioning for future growth.

• Oracle and SAP Solutions segments showed revenue growth, while Global S&BT declined due to extended client decision-making cycles.

Financial highlights

• Adjusted EBITDA was $16.3 million (21.5% of revenues before reimbursements), nearly flat year-over-year.

• Operating income for Q2 2024 was $12.5 million, slightly down from $12.8 million in Q2 2023.

• SG&A costs increased 3% in Q2 2024 to $18.0 million, reflecting investments in program development and sales resources.

• Interest expense declined to $0.5 million in Q2 2024 from $0.9 million in Q2 2023, with outstanding debt reduced to $27.0 million.

• Cash balance at June 28, 2024 was $19.1 million; $12.9 million remains authorized for share repurchases.

Outlook and guidance

• Q3 2024 revenues before reimbursements expected between $74.5 million and $76 million, reflecting typical seasonal softness.

• Adjusted diluted EPS for Q3 2024 guided to $0.39–$0.41; adjusted gross margin expected at 43–44%.

• Dividend of $0.11 per share declared for Q3 2024, payable October 4, 2024.

• Management expects available funds and cash flows from operations to be sufficient for at least the next twelve months.