The Hackett Group (HCKT) Q4 2024 earnings summary

Executive summary

• Q4 2024 revenue was $79.2 million, exceeding guidance, with adjusted EPS of $0.47 and GAAP EPS of $0.12, the latter impacted by non-cash compensation and acquisition expenses.

• Growth was driven by strong SAP segment performance and increased GenAI-related revenues, particularly from the AI XPLR and ZBrain platforms and the LeewayHertz acquisition.

• GenAI revenues, with higher margins, are becoming a significant driver as clients move from awareness to budgeted projects.

• The company is aggressively pivoting to GenAI-enabled transformation, positioning itself as a key architect for clients' AI journeys.

• Acquisition of LeewayHertz expanded end-to-end GenAI consulting and implementation capabilities.

Financial highlights

• Q4 2024 total revenue: $79.2 million (up from $72.4 million YoY); revenues before reimbursements: $77.5 million.

• Adjusted EBITDA: $19.5 million (25.2% of revenues before reimbursements), up from $16.3 million (23%) YoY.

• Adjusted net income: $13.6 million, up from $10.8 million YoY; adjusted diluted EPS: $0.47 (vs. $0.39 prior year).

• GAAP net income: $3.6 million, down from $7.9 million YoY; diluted EPS: $0.12, impacted by $5.1 million stock price award and $2.3 million LeewayHertz acquisition expenses.

• Cash balance at quarter end: $16.4 million; $7 million debt paid down; 117,000 shares repurchased for $3.6 million; $27.5 million remains authorized for repurchases.

Outlook and guidance

• Q1 2025 revenue before reimbursements expected at $75.0–$76.5 million.

• Global S&BT segment revenue to grow 5–10% YoY, driven by GenAI, offset by declines in OneStream and e-procurement.

• Oracle and SAP segments combined expected to decline 8–10% YoY in Q1.

• Adjusted diluted EPS guidance for Q1 2025: $0.39–$0.41; adjusted gross margin: 43–44%; adjusted EBITDA margin: 21–22%.