The Hackett Group 2025 Q2 Earnings Misses Targets as Net Income Dives 81%

The Hackett Group reported Q2 2025 earnings that fell short of expectations, with a significant decline in net income despite revenue growth slightly above prior guidance. The company also raised its full-year share repurchase authorization and declared a dividend.

Revenue
Total revenue increased by 1.6% to $78.90 million in Q2 2025, driven by revenue before reimbursements of $77.63 million and reimbursements of $1.27 million. Performance across segments was as follows:
Global S&BT led with revenue before reimbursements of $43.611 million, supported by its Gen AI consulting, implementation, and benchmarking services. Oracle Solutions generated $20.494 million in revenue before reimbursements, reflecting ongoing demand for EPM/ERP and AI Enablement solutions. SAP Solutions contributed $13.524 million in revenue before reimbursements, showcasing steady demand for SAP-related services. Collectively, these segments underpinned the modest but positive revenue growth for the quarter.

Earnings/Net Income
The Hackett Group’s EPS declined 81.3% to $0.06 in Q2 2025 from $0.32 in Q2 2024. Similarly, net income fell to $1.66 million, a drop of 81.0% from $8.75 million. The decrease was largely attributed to one-time expenses from the stock price award program and acquisition-related costs. Despite a strong adjusted EPS of $0.38 at the mid-point of guidance, the significant year-over-year drop in GAAP net income signals a challenging financial performance.

Price Action
The stock price of The Hackett Group has edged down 0.76% during the latest trading day, has tumbled 10.73% during the most recent full trading week, and has plummeted 19.04% month-to-date.

Post-Earnings Price Action Review
The strategy of buying HCKT when earnings beat and selling after 30 days delivered moderate performance. The strategy achieved an 86.93% return, slightly higher than the benchmark return of 86.19%. With a maximum drawdown of 0.00% and a Sharpe ratio of 0.45, the strategy indicated a low risk profile and decent risk-adjusted returns.

CEO Commentary
Ted A. Fernandez, Chairman and CEO of The Hackett Group, emphasized the company's strong performance in Q2 2025, noting that results were above or at the mid-range of guidance for revenue and adjusted EPS. He highlighted the company’s aggressive investment in Gen AI platforms and the accelerated release of AI XPLR V4, which enhances workflow design and client acquisition. Fernandez expressed optimism about the firm’s growth trajectory, citing the platform’s ability to integrate with existing enterprise technologies and attract new clients and partners.

Guidance
The Hackett Group updated its third-quarter 2025 guidance, expecting total revenue before reimbursements to range between $73.0 million and $74.5 million, with adjusted diluted EPS projected between $0.36 and $0.38, assuming a GAAP effective tax rate of 26.5%. The company also announced a $13.0 million increase in its share repurchase program, bringing the total authorization to $30.0 million, and declared a third-quarter dividend of $0.12 per share.

Additional News
The Hackett Group announced several key developments in Q2 2025. The company increased its share repurchase program by $13.0 million, raising the total authorization to $30.0 million, and declared a $0.12 per share dividend. Additionally, it continued to invest in its Gen AI capabilities, particularly through the accelerated release of AI XPLR V4, which is expected to enhance client acquisition and workflow design. The company also provided updated financial outlook for the third quarter, reflecting continued confidence in its strategic direction.