Harte Hanks 2025 Q1 Earnings Misses Targets as Net Loss Widens 129%

Harte Hanks (HHS) reported its fiscal 2025 Q1 earnings on May 15th, 2025. Despite expectations, Harte Hanks missed targets with a notable revenue decline and increased net loss. The company’s guidance remains unchanged, aiming for positive EBITDA in future quarters. Operational improvements and new business wins provide a foundation for potential growth.

Revenue
Harte Hanks experienced an 8.6% decrease in total revenue for Q1 2025, amounting to $41.56 million, down from $45.45 million in Q1 2024. The Marketing Services segment contributed $8.78 million, witnessing a significant contraction. Customer Care recorded $13 million, reflecting growth, and Fulfillment & Logistics accounted for $19.78 million, showing slight improvement. There were no restructuring expenses or unallocated corporate revenues reported, aligning with the total revenue figure.

Earnings/Net Income
Losses for Harte Hanks deepened to $0.05 per share from $0.02 per share in Q1 2024, marking a 150% increase. The net loss expanded to $392,000, up 129.2% from the previous year's $171,000 loss. The worsening EPS reflects ongoing financial challenges for the company.

Post-Earnings Price Action Review
Over the past five years, the strategy of buying Harte Hanks shares following a revenue drop on the earnings release date and holding them for 30 days has yielded mixed results. Though there was an initial gain of approximately 9.9% within the 30-day period, this was consistently reversed, leading to losses of around 15.4% to 25.8%. The volatility surrounding the earnings event and subsequent days has made this strategy challenging, with the overall performance remaining largely negative. While some recovery was observed, the consistent reversal of gains highlights the difficulty in leveraging this strategy amidst fluctuating market conditions.

CEO Commentary
Harte Hanks' CEO emphasized operational strides and securing new business across various sectors despite revenue challenges in Q1 2025. He acknowledged the need for improved sales efforts and noted the restructuring of the sales organization, which is already yielding positive results.

Guidance
The company aims for positive EBITDA in each quarter of 2025, focusing on expanding lead generation activities and aligning strategic wins with core capabilities. With no debt and a strong balance sheet, Harte Hanks is positioned to execute its long-term growth strategies effectively.

Additional News
On January 28, 2025, Harte Hanks announced a strategic leadership transition as CEO Kirk Davis stepped down for personal reasons. David Fisher, previously Chief Transformation Officer, was appointed Interim COO to ensure continuity. The company is engaging a leading executive search firm to find a new CEO with expertise in AI and data-driven business transformation, aiming to further innovate in customer experience solutions. Additionally, on May 4, 2025, Harte Hanks announced an equity buyback for 10% of its issued share capital, amounting to $6.5 million, reflecting confidence in its financial stability and future growth potential.