Huron Consulting Group Inc. Q1 FY2025 earnings call

• Driven by strong growth across all three operating segments, revenues before reimbursable expenses (RBR) grew 11% over the first quarter of 2024 while expanding margins. - Reaffirmed annual guidance for 2025. - Healthcare segment RBR grew 10% year-over-year, driven by strong demand for performance improvement and financial advisory offerings. Clients face financial pressures and regulatory changes, turning to Huron for advice. - Education segment RBR grew 10% year-over-year, driven by strong demand for strategy and operations advancement offerings and software product offerings. Clients deal with regulatory impacts, turning to Huron for scenario understanding and preemptive actions. - Commercial segment RBR grew 17% year-over-year, driven by incremental RBR from AXIA acquisition and strong demand for digital offerings. Clients face macroeconomic uncertainty, turning to Huron for supply chain and analytic support.

Healthcare segment: In the first quarter of 2025, RBR was $198.5 million, up $17.7 million or 9.8% from the first quarter of 2024, accounting for 50% of total company RBR. The increase was driven by strong demand for performance improvement and financial advisory offerings. Education segment: RBR was $122.7 million, up $11.2 million or 10% from the first quarter of 2024, accounting for 31% of total company RBR. Driven by strong demand for strategy and operations advancement offerings and increased demand for software product offerings. Commercial segment: RBR was $74.5 million, up $10.8 million or 17% from the first quarter of 2024, accounting for 19% of total company RBR. Driven by incremental RBR from the acquisition of AXIA and strong demand for digital offerings, partially offset by decreases in RBR from strategy and innovation and financial advisory offerings.

• Reaffirmed 2025 guidance including RBR in the range of $1.58 billion to $1.66 billion. - Adjusted EBITDA margin in the range of 14% to 14.5% of RBR. - Adjusted non-GAAP EPS in the range of $6.80 to $7.50.

• Uncertainty in the external environment such as reimbursement pressures in healthcare, regulatory impacts in education, and macroeconomic volatility in commercial that may impact business.

Q: Asks about the commercial segment pipeline, pockets of indecision or pullback on discretionary projects and changes to segment growth expectations.

A: No changes to guidance at segment level. First quarter had record sales conversion in commercial segment, digital business up 12%, strategy part had some impact from macro environment, financial advisory part saw inquiries shift back to commercial in second quarter.

Q: Asks about headcount growth, prioritization of new headcount and relation to revenue growth.

A: Excluding managed services headcount, expects headcount to largely flux with revenues. First quarter utilization up for consulting and digital capabilities. Need to hire and add talent, especially in healthcare business.

Q: Asks about new business in billings in education and healthcare in April and change versus first quarter trend.

A: No notable change, first quarter sales conversion up meaningfully, pipeline conversion in February and March, no change pointed to in April yet.

Q: Asks about characterization of new business in billings in education and healthcare, change in projects with private universities, assessment activity trend, and project size and duration.

A: No dramatic effect from headlines on private universities. Assessment activity robust due to clients' financial strain. No real shift in contingent based fees versus normal fees. Average job size increasing due to clients' challenges and change in operating model bringing in different capabilities.