The Hackett Group, Inc. (HCKT) 4 Nov 24 2024 Q3 Earnings call transcript

The Hackett Group's third-quarter earnings call, led by CEO Ted Fernandez and CFO Robert Ramirez, presented a mixed picture of challenges and opportunities for the company. With a focus on GenAI engagements and strategic acquisitions, the company is poised for growth, but faces headwinds in its eProcurement segment.

GenAI Emergence and Strategic Acquisition

The Hackett Group's GenAI engagements have emerged as a significant growth driver, with GenAI consulting revenue showing strong sequential growth in the quarter. This growth is attributed to the company's AI XPLR platform and the strategic acquisition of LeewayHertz, a recognized provider of advanced GenAI solutions. The acquisition also includes a GenAI orchestration solution, ZBrain, which will be contributed to a joint venture to create a GenAI ideation through implementation Software-as-a-Service offering.

Operational Performance and Financial Outlook

Financially, the company reported revenues of $79.8 million, exceeding quarterly guidance, and an adjusted earnings per share of $0.43. The company's Oracle and SAP segments continued their strong performance, while the Global S&BT segment remained flat. The company expects to see further growth in the fourth quarter and into 2025, driven by increased IT budgets for GenAI initiatives.

Challenges and Future Outlook

Despite the positive news, the company faces challenges in its eProcurement segment, which has shown weakness. This, however, is expected to improve as the negative impact of this segment fades out. The company's strategic focus on GenAI, as evidenced by the acquisition of LeewayHertz and the development of Ask Hackett AI, is expected to drive growth and differentiation.

Conclusion

The Hackett Group's earnings call underscores the company's strategic pivot to GenAI and its potential to drive growth. With a strong focus on innovation, strategic acquisitions, and a solid financial performance, the company is well-positioned to navigate the challenges of the current market conditions and capitalize on the opportunities presented by GenAI. As the company moves into the fourth quarter and beyond, investors will be watching closely to see how these strategies unfold.