HACKETT GROUP, INC. Q4 FY2025 earnings call

Ted began by providing overview comments on the quarter, mentioning revenues before reimbursements of $74.8 million and adjusted earnings per share of $0.40 were above and at the high of quarterly guidance respectively. He discussed expanding GenAI-enabled platforms, AI XPLR version 5 being licensable, new platforms like XT and AIX, and go-to-market collaboration with a global tech company and pilot with ServiceNow. Rob then commented on detailed operating results, cash flow, and first quarter guidance. Ted later reviewed market outlook and strategic priorities including IP leverage, talent, and acquisitions

Global S&BT segment: Fourth quarter 2025 revenues before reimbursements were $38.6 million, a decrease of 11% compared to the same period in the prior year. Oracle Solutions segment: Fourth quarter 2025 revenues before reimbursements were $14 million, a decrease of 20% compared to the same period in the prior year. SAP Solutions segment: Fourth quarter 2025 revenues before reimbursements were $22.2 million, an increase of 32% compared to the same period in the prior year. Total company: Fourth quarter 2025 revenues before reimbursements were $74.8 million. Adjusted gross margin on revenues before reimbursements was 46.6% in the fourth quarter of 2025. Adjusted EBITDA was $15.9 million or 21.3% of revenues before reimbursements in the fourth quarter of 2025

The company estimates total revenues before reimbursements for the first quarter of 2026 to be in the range of $70.5 million to $72 million. Expect Global S&BT and Oracle Solutions segments to be down when compared to the prior year but sequentially up from Q4. SAP Solutions segment revenue before reimbursements to continue to be up on a year - over - year basis. The company will incur AI transition charges in the first quarter of approximately $1 million to $1.5 million. Estimates adjusted diluted net income per common share in the first quarter of 2026 to be in the range of $0.34 to $0.36. Expect adjusted gross margin as a percentage of revenues before reimbursements to be approximately 44% to 45%. Expect adjusted SG&A and interest expense for the first quarter to be approximately $20 million. Expect first quarter adjusted EBITDA as a percentage of revenues before reimbursements to be in the range of approximately 19.5% to 20.5%

Q: George Sutton asked about the 6 - month demonstration and testing work with an international potential reseller and partner.

A: Ted said they expect to announce the agreement soon and discussed the distinct capabilities of AI XPLR.

Q: Jeff Martin asked about licensing progress.

A: Ted said they announced licensing in early January and expect clients to license version 5.

Q: Jeff Martin asked about outcome - based quoting.

A: Ted explained they quote based on deliverables and outcome.

Q: Vincent Colicchio asked about S&BT business trends.

A: Ted said the number of clients with an AI element is increasing, advisory business did well, and OneStream was up sequentially