HCKT

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 5:00 p.m. ET Chairman and Chief Executive Officer - Ted Fernandez Chief Financial Officer - Robert Ramirez Operator: Good evening, and welcome to The Hackett Group Second Quarter Earnings Conference Call. [Operator Instructions] Please be advised the conference is being recorded. Hosting tonight's call are Mr. Ted Fernandez, Chairman and CEO; and Mr. Rob Ramirez, Chief Financial Officer. Mr. Ramirez, you may begin. Robert Ramirez: Good afternoon, everyone, and thank you for joining us to discuss The Hackett Group second quarter results. Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and CEO of The Hackett Group; and myself, Robert Ramirez, CFO. A press announcement was released over the wires at 4:08 p.m. Eastern Time. For a copy of the release, please visit our website at www.thehackettgroup.com. We will also place any additional financial or statistical data discussed on this call that is not contained in the release on the Investor Relations page of our website. Before we begin, I would like to remind you that in the following comments and in the Q&A session, we will be making statements about expected future results, which may be forward-looking statements for the purposes of the federal securities laws. These statements relate to our current expectations, estimates and projections and are not a guarantee of future performance. They involve risks, uncertainties and assumptions that are difficult to predict and which may not be accurate. Actual results may vary. These forward-looking statements should be considered only in conjunction with the detailed information, particularly the risk factors that are contained in our SEC filings. At this point, I would like to turn it over to Ted. Ted Fernandez: Thank you, Rob, and welcome, everyone, and thank you for joining us to discuss The Hackett Group's Second Quarter 2026 results and more importantly, to review the progress of our AI transition strategy. Our business is undergoing a powerful AI transition. We have been aggressively moving from a traditional consulting and implementation delivery model to a fundamentally different AI-enabled platform-led model that we believe will create a structurally stronger, more scalable and highly differentiated Hackett Group. Over the past 2 years, we have systematically built an integrated suite of proprietary platforms, starting with AI XPLR, which focuses on AI solution ideation design and build and more recently with XT, which focuses on enterprise transformation solutions and AIX, which focuses on software implementation solutions. All of our platforms are uniquely informed by our Hackett benchmarks and process best practice intelligence IP as well as our domain-specific Hackett Solution Language Model, or SLM. When we guided our Q2 results, we believe that as more clients were exposed to our new XT and AIX platforms, the more differentiated and competitive our primary go-to-market offerings would become. That became clearly evident towards the latter part of the quarter when we successfully closed several significant proposals totaling over $30 million, which are expected to drive improving sequential revenues and year-over-year earnings per share growth in the third quarter. This represents a significant operational and financial inflection point in our AI-enabled transition and earnings trajectory. The positive market response to our platform reinforces our conviction that enterprises are seeking trusted outcome-oriented solutions that accelerate value realization while reducing transformation risk, positioning Hackett to drive operating results and long-term shareholder value. As platform adoption scales across our clients throughout the balance of the year, we expect a favorable impact to our Q4 results and also to set up a very strong 2027. Our new XT and AIX platforms are at the heart of our aggressive adoption of our AI-enabled sales and delivery model at the beginning of the year. They allow us to leverage and deploy AI-enabled acceleration and enhanced value realization to our clients which utilize our primary offerings and generate over 90% of our current lead flow. This is strengthening our ability to compete and realize higher gross margins. We also continue to innovate. We are scheduled to release a more powerful XT Version 2, which also integrates a significant portion of AI XPLR this coming Friday. Additionally, we have also launched a new platform, XTA, which focuses on data assurance and quality, an offering that aligns strongly with all of our primary offerings and delivery platforms. For the second quarter, we reported revenue before reimbursements of $68.3 million with adjusted diluted earnings per share of $0.34 was at the midpoint of our guidance. But more importantly, we continue to demonstrate the earnings resilience and strong cash flow generation of our model despite what we consider to be a thoughtful demand environment and the ongoing transition activity across our entire organization. We continue to see strong client interest in AI adoption and broad digital transformation initiatives defined by the reimagination of critical business processes and new operating model considerations as well as the modernization of existing enterprise application footprints, all of which facilitate or can extend into AI enablement. Perhaps most insightful is how clients are opting to pursue AI adoption strategies. Most are becoming more cautious about deciding to pursue -- most are becoming more cautious by deciding to pursue extended AI initiatives that emanate from broader enterprise transformation and application implementation engagements rather than through stand-alone AI-first, tech-driven adoption strategies. This is allowing us to pursue well-established relationships that drive broader revenue opportunities while also increasing the number of our AI engagements. Clients are including or extending the AI scope in nearly all of our new engagements, which is increasing our AI adoption opportunities while decreasing our reliance on channel partners. We are encouraged by 3 developments. First, our AI-enabled delivery platforms are beginning to improve the outcome and economics of how we sell and deliver work. We are seeing our platforms increase delivery productivity, expand scope and create more compelling client value propositions. Second, we are aligning our resources and expertise to the clients that are moving their attention from AI experimentation to measurable enterprise value realization, which plays strongly to our enterprise transformation and application implementation capabilities. And third, our outlook reflects the operating and financial inflection impact that we have been working hard to achieve. This expected revenue and margin improvement will drive up -- is driving a step-up in Q3 adjusted EPS, which is important. It also supports the early benefits of the actions we have taken to reposition the business, improve delivery productivity and align our operating model with AI-enabled future consulting and digital transformation activities. As part of and in addition to our broad enterprise transformation and enterprise application pursuits, we continue to help organizations architect and execute their agentic enterprise transformation plans and actively support their AI centers of excellence. Partnerships can play an important role in expanding our reach and helping organizations accelerate AI adoption initiatives. In March, we executed and launched a global go-to-market collaboration with IBM to jointly serve existing and new client pursuits. While IBM has chosen to defer joint go-to-market activities at the moment, we continue to expand our channel strategy and expect ServiceNow, TCS and Genpact as well as other partners to contribute to our pipeline and Q3 performance. On the balance sheet, we expect to continue to generate strong cash flow from operations, supporting our dividend and share repurchase program or pay down debt. With that, let me ask Rob to provide details on our operating results, cash flow as well as outlook. I will then return with additional strategy and market commentary following Rob's remarks. Rob? Robert Ramirez: Thank you, Ted, and good afternoon, everyone. During this portion of the call, I'll provide some context around our second quarter performance, and then I will spend some additional time on the financial and operating implications of our AI strategy, our AI transition strategy. I will then conclude with a detailed discussion on our financial outlook for the third quarter of 2026. For the purposes of this call, I will comment separately regarding the revenues of our Global S&BT segment, our Oracle Solutions segment and our SAP Solutions segment and the total company. Our Global S&BT segment includes the results of our North America and international Gen AI consulting and implementation and licensing revenues, benchmarking and business transformation offerings, executive advisory programs and our OneStream and e-procurement implementation offerings. Our Oracle Solutions and our SAP Solutions segments include the results of our Oracle and SAP offerings, respectively. Please note that we will be referencing both total revenues and revenue before reimbursements in our discussion. Reimbursable expenses are primarily project travel-related expenses passed through to our clients that have no associated impact on our profitability. During our call today, we will also reference certain non-GAAP financial measures, which we believe provide useful information to investors. Specifically, all references to adjusted financial measures will exclude reimbursable expenses, noncash stock-based compensation expense, all acquisition-related cash and noncash compensation reversals and expenses, amortization of intangible assets and other nonrecurring items, including our AI transition charge. We have included reconciliations of GAAP to adjusted non-GAAP financial measures in our press release filed earlier today and will post any additional information based on the discussions from this call on the Investor Relations page of the company's website. As Ted mentioned, our second quarter revenue before reimbursements improved sequentially to $68.3 million from $67.8 million last quarter and came in slightly below the low end of our range, while adjusted earnings per share of $0.34 was at the midpoint of our guidance. On our first quarter call, we described Q2 as a sequential improvement quarter and indicated that Q3 was expected to be the more meaningful inflection point for adjusted EPS growth. That remains our view, and therefore, we are emphasizing sequential improvements as we continue to transition our sales and delivery model. We expect sequential revenues, along with gross margins to improve due to the impact of the increasing number of new projects benefiting from value delivered and productivity enhancements from the transition to our AI delivery platforms as well as headcount actions taken to reflect productivity improvements. Correspondingly, based on the current outlook, we expect revenue before reimbursements of approximately $68 million to $70 million and adjusted diluted earnings per share in the range of $0.37 to $0.39. The expected sequential EPS increase reflects several primary factors. Firstly, we expect modest sequential revenue improvement across the business despite lower available days and lower software sales revenues. More importantly, we are beginning to realize the benefit of actions taken to align our resource base with the current demand environment and with the productivity potential of our AI-enabled delivery model while we continue to embed AI into our delivery platforms. This is changing how work is staffed, priced, managed and delivered. Let me now discuss some revenue highlights from a segment perspective. Total revenues before reimbursements from our Global S&BT segment were $35.6 million for the second quarter of '26, a sequential decrease of 2% as clients continue to question the underlying value of AI and are also confused by the return on investment of AI-first adoption strategies. Total revenues before reimbursements from our Oracle Solutions segment were $15.3 million for the second quarter of 2026, a sequential decrease of 1%. More importantly, however, we expect both revenue and gross margins for both the S&BT and Oracle segments to sequentially improve as the differentiation and acceleration by our AIX and XT platforms is fundamentally changing our ability to attract new clients. Total revenues before reimbursements from our SAP Solutions segment were $17.4 million for the second quarter of '26, a sequential increase of 9%. This increase was primarily driven by increased volume of software sales as compared to the prior quarter as well as the implementation of services that correspond to the software sales and the historical ones we experienced throughout 2025 and during the first 6 months of 2026. Total company adjusted gross margin on revenues before reimbursements was 44.1% in the second quarter, up from 42.3% in the previous quarter. As expected, we reported sequential gross margin improvements across all segments. More importantly, we expect further margin improvements in the third quarter, consistent with our guidance. Adjusted SG&A was $17.4 million or 25.5% of revenues before reimbursements in the second quarter of 2026. This compared to $16.1 million or 23.7% of revenues before reimbursements in the prior quarter with the sequential increase primarily due to the timing of marketing-related events and movements in foreign currency. Adjusted EBITDA was $13.9 million in the second quarter of '26 as compared to $13.8 million in the prior quarter, both representing 20.3% of revenues before reimbursements. GAAP net income for the second quarter of 2026 totaled $4.4 million or diluted earnings per share of $0.18 as compared to $4.3 million or $0.17 in the previous quarter. The company's cash balances were $14.2 million at the end of the second quarter of '26 as compared to $6.1 million at the end of the previous quarter. Net cash provided from operating activities in the quarter was $15.2 million, primarily driven by net income adjusted for noncash activity and decreases in accounts receivable. The strong cash flow provided from operations allowed us to reduce our net debt position by $6.1 million, buy back company stock and continue to pay dividends to our shareholders. During the quarter, we repurchased 377,000 shares of the company's stock for an average of $10.58 per share and a total cost of approximately $4 million. Our remaining stock purchase authorization at the end of the second quarter was $18.1 million. Given the increase in VAR-related revenue over the last 2 years that carry multiyear terms and consistent with last quarter, we revised our DSO calculation to exclude those revenues and receivables. Our DSO was 56 as compared to 67 in the previous quarter. Our accounts receivable balances decreased by $8.4 million from the previous quarter as expected. At its most recent meeting, subsequent to quarter end, the company's Board of Directors declared the third quarter dividend of $0.12 per share for its shareholders of record on September 18, 2026, to be paid on October 2, 2026. The balance of the company's total debt outstanding at the end of the second quarter was $81 million. Subsequent to quarter end, the company amended and restated its credit facility to extend the maturity date and increase its borrowing capacity to $125 million. I'll now discuss a little more detail around our guidance for Q3. Consistent with seasonal third quarter trends, we expect the impact of the additional U.S. holiday and the typical increase in time off due to summer vacations in the U.S. and in Europe to unfavorably impact available days by approximately 2% on a sequential basis. As previously noted, the company estimates total revenues before reimbursements for the third quarter of 2026 to be in the range of $68 million to $70 million. We expect both Global S&BT and Oracle Solutions segments to be sequentially up from the second quarter. We expect SAP Solutions segment revenue before reimbursements to be sequentially down due to expected lower VAR software sales revenues. As a result of the continued transition of our business to AI platforms related delivery, the company expects to incur an APAC transition charge in the third quarter of approximately $1 million. These charges will primarily relate to severance costs due to headcount reductions and will be excluded from our non-GAAP financial results. We estimate adjusted diluted net income per share in the third quarter of 2026 to be in the range of $0.37 to $0.39, which assumes a GAAP effective tax rate on adjusted earnings of 26.5%. At the midpoint, this would represent modest sequential revenue growth from Q2 and adjusted earnings per share growth of approximately 11.8% from Q2 to the midpoint of the Q3 range of $0.38. We expect the adjusted gross margin as a percentage of revenues before reimbursements to be approximately 46% to 47%. We expect adjusted SG&A and interest expense for the quarter to be approximately $19 million. We expect third quarter adjusted EBITDA as a percentage of revenues before reimbursements to be in the range of 21.5% to 22.5%. At this point, I'd like to turn it back over to Ted to review our market outlook and strategic priorities for the coming months. Ted Fernandez: Thank you, Rob. As we look forward, let me share our view of the near and long-term demand environment and the growing opportunity it creates for the Hackett Group. Although the demand for digital transformation initiatives remain solid, clients' decision-making continues to be impacted by macroeconomic and ROI return uncertainty. From a broader market perspective, we are finally seeing the first tech providers, AI-first tech providers start to acknowledge that high-impact ROI solutions require complex process expertise and IP to properly reimagine and validate client-specific requirements in order to accurately execute and determine the ROI of AI initiatives. Forward delivery engineers are important, but they require the critical forward delivery business expertise that our consultants possess. These new developments play strongly to our expertise, brand permission and trusted client relationships. Our message to the market and to clients is clear. Do not simply deploy AI tools. Real ROI requires that organizations reimagine how work gets done and clearly understand the value of strategic IP or so-called alpha. We are applying these principles internally to build our own strategic competitive advantage. We believe that we are early leaders in this consulting services transformation, helping define an emerging category of platform-enabled solution services that industry analysts increasingly describe as service as a product. AI is not technology first. It is process first, domain-specific and orchestration-driven. Without validated company-specific enterprise process context, AI value realization remains limited while true transformation value is truly substantial. A key challenge in a major market opportunity is ensuring that clients and strategic partners fully understand the importance of capturing and analyzing and validating this business process context. As I said, there is limited AI value realization without this detailed understanding of the client's real end-to-end process execution without assessing AI enablement opportunities at a detailed level. This is foundational to AI success. We believe our platform-enabled delivery strategy will create meaningful revenue growth opportunities with attractive and improving margins while helping clients capture large enterprise transformation opportunities. We also believe that The Hackett Group is uniquely positioned because we are not simply advising clients on AI. We are leaders in embedding AI by designing and building our proprietary platforms to accelerate value realization. This, along with our AI and digital world-class benchmarks, best practice content, process expertise and enterprise data assurance model are allowing us to create a very differentiated foundation that will help clients improve performance in a measurable way. On the talent side, competition for experienced talent and experienced delivery and market-facing executives with strong technology agility continues. Overall turnover remained at acceptable levels during the quarter, and we expect that trend to continue. Finally, we believe we have the client base and offerings to grow organically. We will continue to evaluate acquisitions and alliances that strategically leverage our IP platforms and transformation expertise and will add scale and scope and acceleration to our pursuits. As always, I'll close by congratulating our associates on their continuous innovation and contributions and thanking them for their tireless efforts. Please remain highly focused on our clients and our people. These conclude my comments. Operator, please open the call for Q&A. Operator: [Operator Instructions] The first question in the queue is from George Sutton with Craig-Hallum. George Sutton: Ted, I wonder if you could address the IBM deferral reasoning and you mentioned for the moment. So just curious what that means. And you separately mentioned programs with TCS and Genpact. I wondered if you could go into those a little bit. Ted Fernandez: First, look, the IBM, if you want to call it, hold, caught us a little bit by surprise. However, we know that their priorities were changing throughout the quarter. So beyond that, we'll continue to wait for any guidance that they may have going forward. With that said, we did launch our ServiceNow alliance and are pursuing a list of clients that have been identified by both sides. We are currently actually closing a meaningful engagement with TCS and have another one that is currently being pursued as well. And we're launching a new initiative with Genpact that will include a list of joint clients that we believe we should be jointly pursuing. Critical part about that, George, is twofold that we found out in the market in the -- during the quarter is that we're seeing more AI project opportunities from our traditional or primary entry points, business transformation and enterprise application initiatives, than we are by going directly to AI-related initiatives. I believe this is probably similar to other providers, and it really requires a partnership where that collaboration allows the client to accelerate their decision-making, which we believe we make available to all of the partners we're currently working with. George Sutton: So you mentioned $30 million in deals. I wondered if you could just kind of explain what that means in terms of deliverables or timing, how you're pricing these opportunities? And any sort of sense of the pipeline behind that? Ted Fernandez: Well, first of all, the win rate on the deals that we have -- where we have utilized our platform to lead our effort is very high. Yes, it led to several very significant engagements, and our pipeline continues to include opportunities at similar levels. So what do we know? And we found out during the quarter that clients really are impressed not only by the way we've structured our platforms, but that we've created capabilities that, again, appear to be pretty unique to us, especially the way we integrate our IP and the way it allows us to accelerate the execution of engagement, but also the way it allows us to pursue new areas for them, like I mentioned, the capability, the new capability around data assurance and quality, which is a new platform we call XTA, which also becomes a core component of both a transformation or and software implementation initiative. So, look, we know the clients are looking for innovation. We know the clients are looking for organizations that can demonstrate, I'll call it, AI agility and capability. We think we've demonstrated that both in the way we've continued to develop our people, but nothing is more evident than when we actually demonstrate to them a go-to-market that they find to be absolutely modern and powerful and has allowed these very significant brands to make very significant decisions against, I'm going to call it, top-of-the-line competition. So, very encouraging for us. It's that same impression that we have been getting directly from AIX, which was the very first platform that we started going to market with in late last year to now really do a very significant upgrade to XT, and we're relaunching -- we're not relaunching, but we're launching XT version 2 to make sure it has the similar capabilities and qualities of AIX so that it can not only impact the delivery of our product and the scope that we cover and how we cover it, but also allow us to really impact the way we compete and win business, which has been so successful with the AIX platform. Operator: The next question in the queue is from Jeff Martin with ROTH Capital Partners. Jeff Martin: I was curious, if you could give us some context around these large technology-driven wins that are there common applications? What parts of the organization are they focused on? I'm curious if you're seeing common denominators in those and also in the pipeline of business that you've got coming at you? Ted Fernandez: Well, we introduced it first with the OneStream version of AIX, and we had a very significant win early in the year with the platform. We immediately moved to fully adopt the AIX platform in the sale and delivery of our Oracle implementation offerings. And the several engagements that we mentioned, one was OneStream and two were Oracle, major brands that you would know against major firms that you obviously would know as well, where simply the capability that we brought to bear to deliver, execute and also extend AI-enabled capabilities, but also AI extended capabilities within their platforms. That both ability to execute a, I'll call it, a more traditional engagement, but also extend that engagement into AI-enabled capabilities and having that, call it, cradle-to-grave execution of an engagement in a platform drove some huge wins, and we hope and believe that should continue. Jeff Martin: To follow up on George's question, what kind of time line is -- are these collective $30 million of wins going to take to play out over what period... Ted Fernandez: These will easily extend through the end of '27, not all of them, but at least a couple of them, and they'll be ramping up during the quarter. Jeff Martin: Okay. And then it sounds like internally, there's a lot of work to do. A lot of work has been done. There's gross margin gains to be had here. To use the baseball analogy, what inning do you feel like you're at in the process of that and when might it be complete? Ted Fernandez: We spent a lot of time talking about that. We were -- I don't want to say early innings, but if you said what kind of potential are we capturing 20% at the moment, do we believe that we should be closer to 50% by year-end? Yes. What does that mean? Well, we're seeing pricing and margin improvements that are substantial and are being reflected in our sequential -- in our guidance. We saw it from Q1 to Q2. We're seeing it in a more meaningful way from Q2 to Q3. And in Q4, where we actually -- if you recall, last year had a very, very material and significant VAR sales. Look, we believe, again, that opportunity to exceed that Q4 related results with significantly fewer VAR sales, which are, as you know, higher margin, are an indication of both the ramping up of the engagements that we're closing and that we're obviously pursuing at the moment, but also both the margin improvements and scope expansions that we're experiencing from our new sales and delivery platform-led model. Operator: Next question in the queue is from Vincent Colicchio with Barrington Research. Vincent Colicchio: Yes, Ted, has generative AI changed how customers are using your benchmarking data? Are you seeing increased demand for continuous benchmarking, for example, versus point in time? Ted Fernandez: The answer is, what it's changed is that people are asking and requiring for the market to provide AI world-class benchmarks. And as you know, we've been launching -- throughout the quarter, we launched our AI world-class benchmark capability. It's actually a stand-alone platform that takes not only our historic information across all of the industries that we serve that are in excess of 20. But more importantly, it's extending AI world-class benchmarks down to a subprocess level for all of those same industries. And we believe that capability can only be achieved by somebody who has a very strong foundational peer and digital world-class benchmark from which to launch from. But the only other way to determine or develop that -- those AI world-class benchmarks or calculate them is to be able to fully simulate the automation impact at those subprocess levels, which is what we've built in our platforms. So, one, is it valuable? Yes. Are clients demanding not only what you know, but a kind of, if you want to call it, AI world-class benchmarks with some time line associated with that achievement? Yes. Do we believe that it's influencing some of the enterprise transformation and software implementation engagements where people want to be able to use strong comparisons to not only evaluate the current, but also the future opportunities that are available to them if they make AI-related investments? The answer is, yes. So does it change the model from transactional to continuous? Yes, it has that potential. Has it done that -- is it doing that today? No. Vincent Colicchio: And how many clients does the joint venture have? And is the pipeline there healthy? Can you give us an update there? Ted Fernandez: The licensing pipeline for the joint venture is limited. With that said, the opportunities and the engagements that drive into AI implementation, which is the services portion, which sits inside of the LeewayHertz component, which is inside of Hackett is incredibly active. And is, as I said, they're seeing now increased activity from nearly all of our primary entry points extending the scope into AI enablement. So remember, there was 2 components. The JV was to focus on licensing only. That continues to have a number of clients. But the volume of activity is on the services and implementation side, which is entirely in the Hackett four walls. Vincent Colicchio: In terms of the launch of the ServiceNow Alliance, is there a pipeline there already? At what stage are you at? Ted Fernandez: There is a list of clients. It was launched. It started with targeting 15 and it's underway. It's underway with -- in pursuit of joint clients with both the go-to-market teams seem to know each other pretty well. Vincent Colicchio: And similar question with the Genpact. Ted Fernandez: Just launching. Just launching. We actually have the first list of clients that are being reviewed tomorrow. Operator: At this time, I show no further questions. I will now turn the call back over to Mr. Fernandez. Ted Fernandez: Let me thank everyone. Those are our comments and questions. Let me thank everyone for participating in this quarter's call. Look forward to updating everyone next quarter when we report the third quarter. Thank you. Operator: This concludes today's call. Thank you for your participation. You may disconnect at this time. Before you buy stock in Hackett Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Hackett Group wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Hackett Group (HCKT) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management is executing a fundamental shift from traditional consulting to an AI-enabled, platform-led model using proprietary tools like XT and AIX to drive scalability. The company reached a financial inflection point in late Q2, securing over $30 million in new proposals driven by the competitive differentiation of these new platforms. Performance is increasingly driven by 'process-first' AI adoption, where clients integrate AI into broader enterprise transformations rather than pursuing stand-alone tech strategies. Management attributes margin resilience to productivity gains from AI-enabled delivery, allowing for higher gross margins despite a thoughtful and cautious macro demand environment. The transition includes a strategic pivot toward 'service as a product,' leveraging proprietary benchmarks and a Solution Language Model (SLM) to accelerate client value realization. Internal resource alignment is being adjusted through headcount actions to reflect the higher productivity potential of the new AI-enabled operating model. Q3 2026 guidance assumes sequential revenue and EPS growth, driven by the ramp-up of the $30 million in recently closed engagements which extend through 2027. Management expects gross margins to expand to 46%-47% in Q3 as AI platform adoption scales and productivity-related headcount actions take full effect. The outlook is supported by a shift away from higher-margin VAR software sales toward platform-led consulting services that leverage AI to improve delivery productivity and client value. Future growth is dependent on expanding channel partnerships with ServiceNow, TCS, and Genpact to offset the current deferral of joint activities by IBM. Strategic innovation will continue with the release of XT Version 2 and the launch of XTA, a new platform focused on data assurance and quality. A $1 million AI transition charge is expected in Q3, primarily related to severance costs from headcount reductions aimed at aligning the workforce with AI productivity. IBM has unexpectedly deferred joint go-to-market activities, though management continues to pursue other channel partnerships to mitigate this impact. Client decision-making remains impacted by macroeconomic uncertainty and confusion regarding the ROI of 'AI-first' adoption strategies. The company amended its credit facility to extend maturity and increase borrowing capacity to $125 million, providing additional liquidity for potential M&A. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted the IBM hold was unexpected but is being countered by active engagements with TCS and a new 15-client target list with ServiceNow. The company is seeing more AI opportunities through traditional business transformation entry points than through direct AI-first tech initiatives. The wins consist of significant engagements with major brands in the Oracle and OneStream ecosystems, where Hackett's platform-led delivery beat top-tier competition. These contracts are expected to ramp up in Q3 and provide a revenue tailwind that extends through the end of 2027. Management estimates they are currently capturing only about 20% of the potential productivity gains, with a goal to reach 50% by year-end. This internal transition is the primary driver behind the projected sequential step-up in gross margins and earnings per share. Clients are demanding 'AI world-class benchmarks' at the subprocess level to simulate the automation impact of AI investments before committing capital. While the model has the potential to become a continuous subscription service, it currently remains largely project-based within broader transformation scopes.

This article first appeared on GuruFocus. Revenue Before Reimbursements: $68.3 million in Q2 2026, a sequential increase from $67.8 million in Q1 2026. Adjusted Diluted EPS: $0.34 in Q2 2026, at the midpoint of guidance. Adjusted Gross Margin: 44.1% in Q2 2026, up from 42.3% in the previous quarter. Adjusted EBITDA: $13.9 million in Q2 2026, compared to $13.8 million in the prior quarter, representing 20.3% of revenues before reimbursements. GAAP Net Income: $4.4 million, or $0.18 per diluted share, in Q2 2026, compared to $4.3 million, or $0.17 per share, in the previous quarter. Global S&BT Segment Revenue: $35.6 million in Q2 2026, a sequential decrease of 2%. Oracle Solutions Segment Revenue: $15.3 million in Q2 2026, a sequential decrease of 1%. SAP Solutions Segment Revenue: $17.4 million in Q2 2026, a sequential increase of 9%. Cash Flow from Operations: $15.2 million in Q2 2026. Cash Balances: $14.2 million at the end of Q2 2026, up from $6.1 million in the previous quarter. Share Repurchases: 377,000 shares repurchased at an average price of $10.58 per share, totaling approximately $4 million. Dividend: Third quarter dividend declared at $0.12 per share. Q3 2026 Guidance: Revenue before reimbursements expected between $68 million and $70 million; adjusted diluted EPS expected between $0.37 and $0.39. Q3 2026 Adjusted Gross Margin Guidance: Expected to be approximately 46% to 47%. Warning! GuruFocus has detected 5 Warning Signs with LUMN. Is HCKT fairly valued? Test your thesis with our free DCF calculator. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Closed several significant proposals totaling over $30 million, expected to drive sequential revenue and EPS growth in Q3. AI-enabled delivery platforms (XT, AIX) are improving delivery productivity, expanding scope, and creating more compelling client value propositions. Gross margins improved sequentially to 44.1% in Q2, with further improvements expected in Q3. Strong cash flow generation allowed for debt reduction, share repurchases, and continued dividend payments. New platform XDA (data assurance and quality) aligns with primary offerings and enhances competitive differentiation. Partnerships with ServiceNow, TCS, and Genpact are expanding pipeline and go-to-market reach. Revenue before reimbursements of $68.3 million came in slightly below the low end of guidance. Global S&BT segment revenue decreased 2% sequentially due to client caution and confusion around AI ROI. IBM deferred joint go-to-market activities, catching the company by surprise and impacting channel strategy. Expecting an additional AI transition charge of approximately $1 million in Q3 related to headcount reductions. SAP Solutions segment revenue is expected to decline sequentially in Q3 due to lower VAR software sales. Demand environment remains cautious with clients delaying decisions due to macroeconomic and ROI uncertainty. Q: Ted, I wonder if you could address the IBM deferral reasoning, and you mentioned "for the moment," so just curious what that means. And you separately mentioned programs with TCS and Genpact. I wondered if you could go into those a little bit.A: Ted Fernandez (Chairman and CEO): The IBM hold caught us a little bit by surprise, but we know their priorities were changing throughout the quarter. We will continue to wait for any guidance they may have going forward. We did launch our ServiceNow alliance and are pursuing a list of clients identified by both sides. We are currently closing a meaningful engagement with TCS and have another one being pursued. We are launching a new initiative with Genpact that will include a list of joint clients. A critical finding is that we are seeing more AI project opportunities from our traditional entry pointsbusiness transformation and enterprise application initiativesthan from going directly to AI-related initiatives. This requires partnerships that allow clients to accelerate their decision-making. Q: So you mentioned $30 million in deals. I wondered if you could just kind of explain what that means in terms of deliverables or timing, how you're pricing these opportunities and any sort of sense of the pipeline behind that?A: Ted Fernandez (Chairman and CEO): The win rate on deals where we have utilized our platform to lead our effort is very high. It led to several very significant engagements, and our pipeline continues to include opportunities at similar levels. Clients are impressed not only by the way we've structured our platforms, but that we've created capabilities that appear to be pretty unique to us, especially the way we integrate our IP and the way it allows us to accelerate execution. It also allows us to pursue new areas for them, like our new capability around data assurance and qualitya new platform we call XDA. Clients are looking for organizations that can demonstrate AI agility and capability. Nothing is more evident than when we demonstrate a go-to-market that they find to be absolutely modern and powerful, which has allowed these very significant brands to make decisions against top-of-the-line competition. We are launching XT version 2.0 to ensure it has similar capabilities and qualities of AIX, which has been so successful in helping us compete and win business. Q: I was curious if you could give us some context around these large technology-driven wins that are the common applications, what parts of the organization are they focused on? It appears if you are seeing common denominators in those and also in the pipeline of business that you have got coming at you.A: Ted Fernandez (Chairman and CEO): We introduced it first with the OneStream version of AIX and had a very significant win early in the year with the platform. We immediately moved to fully adopt the AIX platform into the sale and delivery of our Oracle implementation offerings. The several engagements we mentioned were one OneStream and two Oracle. Major brands you would know were impressed by the capability we brought to bear to deliver, execute, and extend AI-enabled capabilities within their platforms. The ability to execute a more traditional engagement but also extend that engagement into AI-enabled capabilitieshaving that cradle-to-grave execution of an engagement in a platformdrove some huge wins. We hope and believe that should continue. Q: To follow-up on George's question, what kind of timeline is the -- are these collective $30 million of wins going to, take to play out? Over what period will --A: Ted Fernandez (Chairman and CEO): These will easily extend through the end of '27, not all of them, but at least a couple of them. And they'll be ramping up during the quarter. Q: And then it sounds like internally there's a lot of work to do, a lot of work has been done. There's gross margin gains to be had here. To use the baseball analogy, what inning do you feel like you're at in the process of that and when might it be complete?A: Ted Fernandez (Chairman and CEO): I don't want to say early innings, but if you said what kind of potential recapturing, 20% at the moment. Do we believe that we should be closer to 50% by year-end? Yes. We're seeing pricing and margin improvements that are substantial and are being reflected in our sequential guidance. We saw it from Q1 to Q2. We're seeing it in a more meaningful way from Q2 to Q3. In Q4, where last year we had very material and significant VAR sales, we believe the opportunity to exceed that Q4-related results with significantly fewer VAR saleswhich are higher marginare an indication of both the ramping up of the engagements we're closing and the margin improvements and scope expansions we're experiencing from our new sales and delivery platform-led model. Q: Ted, has generative AI changed how customers are using your benchmarking data? Are you seeing increased demand for continuous benchmarking, for example, versus a point in time?A: Ted Fernandez (Chairman and CEO): What it's changed is that people are asking and requiring for the market to provide AI world-class benchmarks. We launched our AI world-class benchmark capability, which is a standalone platform that takes our historic information across all of the industries we servein excess of 20and extends AI world-class benchmarks down to a sub-process level for all of those same industries. We believe that capability can only be achieved by somebody who has a very strong foundational tier and digital world-class benchmark from which to launch. The only other way to develop those AI world-class benchmarks is to be able to fully simulate the automation impact at those sub-process levels, which is what we built in our platforms. Clients are demanding AI world-class benchmarks with some timeline associated with that achievement. It is influencing some of the enterprise transformation and software implementation engagements where people want to use strong comparisons to evaluate both the current and future opportunities. Does it change the model from transactional to continuous? Yes, it has that potential. Is it doing that today? No. Q: And how many clients does the joint venture have and is the pipeline there healthy? Can you give us an uptake there?A: Ted Fernandez (Chairman and CEO): The licensing pipeline for the joint venture is limited. With that said, the opportunities and the engagement that drive into AI implementationwhich is the services portion that sits inside of the LeewayHertz component, which is inside of Hackettis incredibly active. We're seeing increased activity from nearly all of our primary entry points extending the scope into AI enablement. Remember, there were two components. The JV was to focus on licensing only. That continues to have a number of clients. But the volume of activity is on the services and implementation side, which is entirely in the Hackett For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in The Hackett Group, Inc.? Here are five stocks we like better. Second-quarter results were mixed: Revenue before reimbursements rose sequentially to $68.3 million, while adjusted EPS reached $0.34 and GAAP net income increased slightly to $4.4 million. Revenue was just below guidance, but gross margin improved to 44.1%. Hackett is accelerating its AI-enabled platform strategy. The company closed more than $30 million in late-quarter proposals, including OneStream and Oracle engagements, with projects expected to ramp in the third quarter and extend into 2027. Third-quarter guidance points to stronger earnings: Hackett expects revenue of $68 million to $70 million and adjusted EPS of $0.37 to $0.39, supported by higher margins and increased use of AI-enabled delivery platforms. The company also generated $15.2 million in operating cash flow, reduced net debt by $6.1 million, repurchased about $4 million of shares and declared a $0.12 quarterly dividend. The Hackett Group (NASDAQ:HCKT) reported second-quarter 2026 revenue before reimbursements of $68.3 million and adjusted diluted earnings per share of $0.34, as the consulting firm continued its transition toward an AI-enabled, platform-led sales and delivery model. Revenue before reimbursements increased from $67.8 million in the first quarter, though it came in slightly below the company’s guided range, according to Chief Financial Officer Rob Ramirez. Adjusted EPS was at the midpoint of guidance. GAAP net income was $4.4 million, or $0.18 per diluted share, compared with $4.3 million, or $0.17 per share, in the prior quarter. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control Management said it expects its AI platforms and recently won client engagements to support sequential revenue improvement and year-over-year earnings-per-share growth in the third quarter. Chairman and CEO Ted Fernandez said Hackett has been shifting from a traditional consulting and implementation model to an AI-enabled approach centered on its proprietary platforms. These include AI XPLR for AI solution ideation, design and build; XT for enterprise transformation; and AIX for software implementation. The platforms incorporate Hackett’s benchmarking, process best-practice intelligence and its solution language model. → Financials Hit Record Highs as the AI Trade Unravels—Can They Keep Leading? Fernandez said the company closed several significant proposals totaling more than $30 million late in the second quarter. He said the projects are expected to ramp during the third quarter, with at least some extending through the end of 2027. The wins included one OneStream engagement and two Oracle-related engagements, Fernandez said in response to an analyst question. He said the company’s platform capabilities helped it demonstrate both traditional implementation delivery and expanded AI-enabled capabilities. → Why Rare Earth Processing Could Be the Real 2027 Opportunity Hackett plans to release XT version 2, which incorporates a significant portion of AI XPLR, shortly after the call. The company also launched XDA, a data assurance and quality platform intended to support its transformation and software implementation offerings. Fernandez said clients have become more cautious about stand-alone, AI-first adoption programs because of uncertainty over returns on investment. Instead, he said many clients are incorporating AI initiatives into broader enterprise transformation and application implementation engagements. According to Fernandez, clients are including or extending AI scopes in nearly all new engagements. Global S&BT revenue before reimbursements was $35.6 million in the second quarter, down 2% sequentially. Ramirez said clients continued to question the underlying value of AI and remained uncertain about the return on investment from AI-first strategies. Oracle Solutions revenue before reimbursements totaled $15.3 million, down 1% from the first quarter. SAP Solutions revenue was $17.4 million, up 9% sequentially, primarily reflecting increased software sales volume and associated implementation services. Adjusted gross margin rose to 44.1% of revenue before reimbursements, from 42.3% in the first quarter. Adjusted EBITDA was $13.9 million, unchanged in percentage terms at 20.3% of revenue before reimbursements. Ramirez said the company expects additional margin expansion as more projects use its AI-enabled delivery platforms and as Hackett aligns headcount with productivity gains from those tools. The company’s adjusted selling, general and administrative expense was $17.4 million, or 25.5% of revenue before reimbursements, compared with $16.1 million, or 23.7%, in the prior quarter. The increase was attributed primarily to the timing of marketing events and foreign-exchange movements. For the third quarter, Hackett forecast revenue before reimbursements of $68 million to $70 million and adjusted diluted EPS of $0.37 to $0.39. At the midpoint of the EPS range, the guidance implies approximately 11.8% sequential growth from second-quarter adjusted EPS of $0.34. The company expects Global S&BT and Oracle Solutions revenue to increase sequentially, while SAP Solutions revenue is projected to decline because of lower value-added reseller software sales. Management said the third quarter will have roughly 2% fewer available working days sequentially due to a U.S. holiday and seasonal vacation time in the U.S. and Europe. Expected adjusted gross margin: approximately 46% to 47% of revenue before reimbursements. Expected adjusted EBITDA margin: 21.5% to 22.5%. Expected adjusted SG&A and interest expense: approximately $19 million. Expected AI transition charge: approximately $1 million, primarily for severance related to headcount reductions. Hackett said the transition charge will be excluded from its non-GAAP results. Cash balances increased to $14.2 million at the end of the second quarter from $6.1 million at the end of the first quarter. Operating cash flow was $15.2 million, driven primarily by net income adjusted for non-cash items and lower accounts receivable. The company reduced its net debt position by $6.1 million during the quarter while also repurchasing shares and paying dividends. Hackett repurchased 377,000 shares at an average price of $10.58 per share, for approximately $4 million. It had $18.1 million remaining under its stock repurchase authorization. The board declared a quarterly dividend of $0.12 per share, payable Oct. 2 to shareholders of record Sept. 18. Total debt outstanding was $81 million at quarter-end. Subsequent to the quarter, the company amended and restated its credit facility, extending its maturity and increasing borrowing capacity to $125 million. On partnerships, Fernandez said IBM had deferred joint go-to-market activity after the companies launched a global collaboration in March. He said Hackett was continuing to build its channel strategy through ServiceNow, TCS, Genpact and other partners. The ServiceNow alliance began by targeting 15 joint clients, while Hackett said it was closing a meaningful engagement with TCS and pursuing another. A Genpact initiative was just beginning, with the companies scheduled to review an initial client list. The Hackett Group is a global strategic advisory firm specializing in business transformation, benchmarking and research. Leveraging a proprietary data repository and the Hackett Methodology®, the company helps organizations optimize performance across enterprise functions. Its advisory services span digital transformation, process optimization and operational excellence, enabling clients to identify best practices, streamline workflows and achieve sustainable cost savings. Through detailed benchmarking studies and industry research, The Hackett Group delivers actionable insights into finance, procurement, human resources, information technology and supply chain management. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "The Hackett Group Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Hackett Group (HCKT) came out with quarterly earnings of $0.34 per share, in line with the Zacks Consensus Estimate . This compares to earnings of $0.38 per share a year ago. These figures are adjusted for non-recurring items. A quarter ago, it was expected that this consulting company would post earnings of $0.35 per share when it actually produced earnings of $0.34, delivering a surprise of -2.86%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. Hackett Group, which belongs to the Zacks Consulting Services industry, posted revenues of $68.34 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.81%. This compares to year-ago revenues of $77.63 million. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Hackett Group shares have lost about 42.4% since the beginning of the year versus the S&P 500's gain of 11%. While Hackett Group has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Hackett Group was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.40 on $72.3 million in revenues for the coming quarter and $1.50 on $281.47 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Consulting Services is currently in the top 28% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, CRA International (CRAI), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 6. This consulting firm is expected to post quarterly earnings of $2.12 per share in its upcoming report, which represents a year-over-year change of +12.8%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. CRA International's revenues are expected to be $198.35 million, up 6.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Hackett Group, Inc. (HCKT) : Free Stock Analysis Report Charles River Associates (CRAI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

MIAMI, August 04, 2026--(BUSINESS WIRE)--The Hackett Group, Inc. (NASDAQ: HCKT), a leading AI strategic consulting and digital transformation firm that enables Digital World Class® performance, today announced its financial results for the second quarter, which ended on June 26, 2026. "While our second quarter reflected the ongoing transition of our business model, our third-quarter outlook marks what we believe is an important operational and financial inflection point," stated Ted A. Fernandez, Chairman & CEO of The Hackett Group, Inc. "Based on recent platform-led wins exceeding $30 million, and growing demand for AI-enabled transformation services, we expect both sequential revenue growth and year-over-year adjusted EPS growth in the third quarter. The positive market response to our platforms reinforces our conviction that enterprises are seeking trusted, outcome-oriented solutions that accelerate value realization while reducing transformation risk and positioning us to drive strong operating results and long-term shareholder value." Financial Highlights Total revenue in the second quarter of 2026 was $69.3 million and revenue before reimbursements was $68.3 million. This compares to total revenue of $78.9 million and revenue before reimbursements of $77.6 million in the second quarter of the prior year. GAAP diluted earnings per share was $0.18 in the second quarter of 2026, as compared to $0.06 in the second quarter of 2025. Adjusted diluted earnings per share, a non-GAAP measure, for the second quarter of 2026 was $0.34, which was at the mid-point of our guidance range, as compared to $0.38 in the second quarter of 2025. Adjusted financial information is provided to enhance the understanding of the Company's financial performance and is reconciled to the Company's GAAP information in the accompanying tables. Strong cash flows provided by operations were $15.2 million in the second quarter of 2026, which allowed us to reduce our net debt position by $6.1 million, buy back $4.0 million of the Company’s stock and pay dividends of $3.0 million. As of June 26, 2026, the Company’s cash balances were $14.2 million, with $81.0 million outstanding on the Company’s credit facility. Additionally, the Company had $18.1 million available under its share repurchase plan. On August 3, 2026, the Company amended and restated its credit facility to extend the maturity date and increase the borrowing capacity to $125 million. Subsequent to the end of the second quarter, the Company's Board of Directors declared the third quarterly dividend of $0.12 per share for its shareholders of record on September 18, 2026, to be paid on October 2, 2026. Business Outlook for the Third Quarter of 2026 Based on the Company's current outlook: The Company estimates total revenue before reimbursements for the third quarter of 2026 will be in the range of $68.0 million to $70.0 million. The Company estimates adjusted diluted earnings per share for the third quarter of 2026 to be in the range of $0.37 and $0.39, assuming a GAAP effective tax rate of 26.5%. Conference Call and Webcast Details On Tuesday, August 4, 2026, senior management will discuss second quarter results in a conference call at 5:00 P.M. ET. The number for the conference call is (800) 593-0486, [Passcode: Second Quarter]. For International callers, please dial (517) 308-9371. Please dial in at least 5-10 minutes prior to start time. If you are unable to participate on the conference call, a rebroadcast will be available beginning at 8:00 P.M. ET on Tuesday, August 4, 2026 and will run through 5:00 P.M. ET on Tuesday, August 18, 2026. To access the rebroadcast, please dial (800) 835-4610. For International callers, please dial (203) 369-3352. In addition, The Hackett Group ® will also be webcasting this conference call live. To participate, simply visit https://www.thehackettgroup.com approximately 10 minutes prior to the start of the call and click on the conference call link provided. An online replay of the call will be available after 8:00 P.M. ET on Tuesday, August 4, 2026 and will run through 5:00 P.M. ET on Tuesday, August 18, 2026. To access the replay, visit www.thehackettgroup.com. Use of Non-GAAP Financial Measures The Company provides adjusted earnings results (which excludes non-cash stock based compensation expense, stock price award program compensation expense, acquisition-related cash and non-cash stock based compensation expense, amortization expense, acquisition related costs and any one-time costs and includes a GAAP tax rate) as a complement to results provided in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP results are provided to enhance the users' overall understanding of the Company's current financial performance and its prospects for the future. The Company believes the non-GAAP results provide useful information to both management and investors and by excluding certain expenses that it believes are not indicative of its core operating results. The non-GAAP measures are included to provide investors and management with an alternative method for assessing operating results in a manner that is focused on the performance of its ongoing primary operations and to provide a consistent basis for comparison between quarters. Further, these non-GAAP results are one of the primary indicators management uses for planning and forecasting. The presentation of this additional non-GAAP information should be considered in addition to, and not as a substitute for or superior to, any results prepared in accordance with GAAP. See the reconciliation of actual results titled "Reconciliation of GAAP to Non-GAAP Measures" in the accompanying tables. The Company believes that the presentation of non-GAAP financial information on a forward-looking basis, including the guidance contained in this release, provides important supplemental information to management and investors regarding its anticipated results of operations. The Company is unable to provide a reconciliation of GAAP measures to corresponding forward-looking non-GAAP measures without unreasonable effort due to the high variability and low visibility of most of the items that have been excluded from these non-GAAP measures. For example, non-cash stock-based compensation expense is impacted by the Company's future hiring needs, the type and volume of equity awards necessary for such future hiring, and the price at which the Company's stock will trade in those future periods. In addition, the provision or benefit for income taxes is impacted by non-recurring income tax adjustments, valuation allowance on deferred tax assets, and the income tax effect of non-GAAP exclusions. The effects of these reconciling items may be significant, as the items that are being excluded are difficult to predict. About The Hackett Group® The Hackett Group, Inc. (NASDAQ: HCKT) is an AI strategic consulting and digital transformation firm that enables Digital World Class® performance. Using Hackett AI XPLR™, ZBrain™, XT™, AIXelerator™, AskHackett™, and Quantum Leap® platforms, the company's experienced professionals and engineers help organizations realize the power of Gen AI from ideation through implementation to achieve quantifiable, breakthrough results with unprecedented speed, allowing it to be key architects of their Gen AI journey. The company's expertise is grounded in unparalleled best practices insights from enterprise performance benchmarks from the world's leading businesses - including 97% of the Dow Jones Industrials, 90% of the Fortune 100, 68% of the DAX 40 and 53% of the FTSE 100. Visit us at www.thehackettgroup.com/. Trademarks The Hackett Group®, quadrant logo, Digital World Class® and Quantum Leap® are the registered marks of The Hackett Group®. Cautionary Statement Regarding "Forward-Looking" Statements This release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Statements including without limitation, words such as "expects," "anticipates," "intends," "plans," "believes," seeks," "estimates," or other similar phrases or variations of such words or similar expressions indicating, present or future anticipated or expected occurrences or outcomes are intended to identify such forward-looking statements. Forward-looking statements are not statements of historical fact and involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. Factors that could impact such forward-looking statements include, among others, changes in worldwide and U.S. economic conditions that impact business confidence and the demand for our products and services, our ability to transition our capabilities to support generative artificial intelligence (AI)-related consulting services and solutions, our ability to effectively integrate acquisitions, including the Leeway acquisition, into our operations, our ability to manage joint ventures and successfully cooperate with our joint venture partners, our ability to retain existing business, our ability to attract additional business, our ability to effectively market and sell our product offerings and other services, the timing of projects and the potential for contract cancellation by our customers, changes in expectations regarding the business consulting and information technology industries, our ability to attract and retain skilled employees, possible changes in collections of accounts receivable due to the bankruptcy or financial difficulties of our customers, risks of competition, price and margin trends, foreign currency fluctuations, the impact of the geopolitical conflict involving Russia and Ukraine and in the Middle East on our business and changes in general economic conditions, interest rates and our ability to obtain additional debt financing if needed as well as other risk detailed in The Hackett Group's reports filed with the United States Securities and Exchange Commission. The Hackett Group does not undertake any duty to update this release or any forward-looking statements contained herein. View source version on businesswire.com: https://www.businesswire.com/news/home/20260804463906/en/ Contacts Robert A. Ramirez, CFO, 305-375-8005 or [email protected]

Wall Street expects a year-over-year decline in earnings on lower revenues when Hackett Group (HCKT) reports results for the quarter ended June 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on August 4. On the other hand, if they miss, the stock may move lower. While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise. This consulting company is expected to post quarterly earnings of $0.34 per share in its upcoming report, which represents a year-over-year change of -10.5%. Revenues are expected to be $68.9 million, down 11.3% from the year-ago quarter. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction). The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Hackett Group, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company's earnings prospects. This has resulted in an Earnings ESP of +0.99%. On the other hand, the stock currently carries a Zacks Rank of #3. So, this combination indicates that Hackett Group will most likely beat the consensus EPS estimate. Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Hackett Group would post earnings of $0.35 per share when it actually produced earnings of $0.34, delivering a surprise of -2.86%. Over the last four quarters, the company has beaten consensus EPS estimates just once. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Hackett Group appears a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Hackett Group, Inc. (HCKT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide. Hackett Group (HCKT) has landed on investor watchlists after reporting first quarter 2026 results that paired lower revenue with higher profitability, alongside fresh second quarter guidance and a reaffirmed quarterly dividend. See our latest analysis for Hackett Group. The Q1 earnings, updated Q2 revenue guidance and a reaffirmed dividend have come against a weak share price backdrop. The stock is down 51.02% year to date on a share price return basis and total shareholder return is down 61.93% over one year. This suggests recent buying interest after results may be fighting against longer running negative momentum. If this mix of Gen AI consulting and software piques your interest, it could be worth scanning for similar opportunities by checking out 62 profitable AI stocks that aren't just burning cash With revenue under pressure, profitability stronger and the share price sharply lower, Hackett Group now sits at an interesting crossroads. Is this Gen AI focused consulting and software stock undervalued, or is the market already pricing in its future growth? Hackett Group's most followed narrative places fair value at $17.67 per share, well above the last close of $9.58, which frames analysts' optimism around its Gen AI platforms and margin potential. Read the complete narrative. Curious what sits behind that confidence in higher margins and recurring revenue? The narrative leans heavily on earnings expansion, a richer mix, and a lower future earnings multiple. The precise combination of revenue expectations, profit trajectory, and discounting assumptions might surprise you. Result: Fair Value of $17.67 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this story can break if Gen AI monetization takes longer than analysts expect, or if legacy Oracle related revenue softness lingers and weighs on overall earnings quality. Find out about the key risks to this Hackett Group narrative. Seeing both risks and rewards in the story so far, it makes sense to look at the underlying data yourself and decide quickly how it all fits together. To weigh the potential upside against the issues investors are worried about, start with these 4 key rewards and 4 important warning signs If you stop here, you only see part of what is possible. Use the tools below to quickly surface fresh ideas that might suit your style. Target income-focused opportunities by scanning companies in the 13 dividend fortresses and see which yields line up with your goals. Zero in on potential mispriced stocks by running through the 47 high quality undervalued stocks and comparing the underlying fundamentals yourself. Prioritize resilience first by checking companies in the 67 resilient stocks with low risk scores and see which profiles feel comfortable for your risk tolerance. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include HCKT. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

The most recent earnings report from The Hackett Group, Inc. (NASDAQ:HCKT) was disappointing for shareholders. While the headline numbers were soft, we believe that investors might be missing some encouraging factors. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. To properly understand Hackett Group's profit results, we need to consider the US$5.1m expense attributed to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Hackett Group to produce a higher profit next year, all else being equal. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates. Unusual items (expenses) detracted from Hackett Group's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Hackett Group's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. You'd be interested to know, that we found 3 warning signs for Hackett Group and you'll want to know about them. Today we've zoomed in on a single data point to better understand the nature of Hackett Group's profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.