The Hackett Group (HCKT) Q3 2024 earnings summary

Executive summary

• Q3 2024 total revenue was $79.8 million, up from $75.9 million in Q3 2023, exceeding guidance.

• Adjusted diluted EPS was $0.43, above guidance; GAAP diluted EPS was $0.31, down from $0.34 due to non-cash compensation and acquisition-related expenses.

• The acquisition of LeewayHertz, an AI-focused consulting firm, expanded GenAI capabilities and led to a joint venture for GenAI SaaS offerings.

• Strong Oracle and SAP segment growth, with GenAI consulting revenue up sequentially but offset by eProcurement weakness, keeping Global S&BT flat year-over-year.

• Cash flow from operations for the first nine months of 2024 increased to $27.1 million from $11.8 million prior year.

Financial highlights

• Revenue before reimbursements was $77.9 million, above guidance and up from $74.6 million year-over-year.

• Oracle Solutions Q3 revenue was $22.8 million, SAP Solutions $13.0 million, and Global S&BT $44.1 million, with segment profits of $5.5 million, $3.7 million, and $14.1 million, respectively.

• Adjusted EBITDA was $17.7 million (22.7% of revenues before reimbursements), slightly down from 23.2% prior year.

• GAAP net income was $8.6 million; adjusted net income was $12.1 million.

• Cash at quarter-end was $10 million, down from $21 million at year-end 2023.

Outlook and guidance

• Q4 2024 revenue before reimbursements expected between $73.5 million and $75 million.

• Adjusted diluted EPS for Q4 2024 projected at $0.41–$0.43; adjusted gross margin expected at 45%–46%.

• Adjusted EBITDA margin expected at 23%–24%; cash flow from operations to increase sequentially.

• All segments expected to grow, with total company up 3%–5% year-over-year.

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