The Hackett Group's Q1 2025: Examining Contradictions in AI Capacity, Tariff Impacts, and Revenue Projections

AI implementation capacity and plans, impact of tariffs on AI engagement, AI implementation revenue projections, AI XPLR evolution and revenue impact, and AI implementation capacity and strategic hiring are the key contradictions discussed in The Hackett Group's latest 2025Q1 earnings call.



Revenue Growth and AI Integration:
- The Hackett Group reported revenue before reimbursements of $76.2 million for Q1 2025, near and at the high end of their quarterly guidance.
- Growth was driven by strong performance in their Gen AI engagements, which also favorably impacted their gross margin.

Segment Performance and Challenges:
- Global S&BT segment revenue was up over 6%, partially offset by weakness in OneStream and e-procurement practices.
- The Oracle Solutions segment was down 3% due to the post go live wind down of a large engagement, while the SAP Solutions segment was down 8% against a strong Q1 bar comp from last year.

Cash Flow and Share Repurchase:
- Net cash provided from operating activities was $4.2 million, primarily driven by net income adjusted for non-cash activity.
- The company repurchased 379,000 shares of its stock for approximately $11.7 million, utilizing their strong cash flow from operations.

2025 Strategic Focus and Gen AI Initiatives:
- The company continues to prioritize and invest in Gen AI capabilities, expecting increased demand and investment in Gen AI initiatives.
- The integration of Gen AI content and SaaS offerings is anticipated to create new value creation opportunities, potentially impacting 2025 results.