The Hackett Group Reports $77.9 Million Revenue in Q1 2025, Net Income Declines

The Hackett Group, Inc. reported total revenue of $77.9 million for the first quarter of 2025, a slight increase from $77.2 million in the same period of 2024. The revenue before reimbursements rose to $76.2 million, compared to $75.7 million a year earlier. However, net income decreased significantly to $3.1 million, or $0.11 per diluted share, down from $8.7 million, or $0.32 per diluted share, in the prior year. The decline in profitability was attributed to increased costs, particularly in personnel and selling, general, and administrative expenses, which rose by 6% and 28%, respectively.

The company's operational performance showed mixed results across its three reportable segments. The Global Strategy & Business Transformation (Global S&BT) segment saw revenue growth to $43.4 million from $40.9 million, driven by increased demand for Gen AI consulting services. Conversely, Oracle Solutions and SAP Solutions segments experienced revenue declines, with Oracle Solutions generating $21.1 million, down from $21.7 million, and SAP Solutions bringing in $13.4 million, down from $14.6 million. The decreases were primarily due to the winding down of large engagements and lower software-related activity.

In terms of strategic developments, Hackett completed the acquisition of LeewayHertz Technologies in September 2024 for approximately $7.8 million, aimed at enhancing its capabilities in artificial intelligence solutions. This acquisition is expected to bolster Hackett's position in the Gen AI consulting market. The integration of LeewayHertz's ZBrain platform with Hackett's AI XPLR platform is anticipated to create a joint venture that will provide advanced Gen AI solutions to clients.

The company reported a decrease in cash reserves, ending the quarter with $9.2 million compared to $16.4 million at the end of 2024. Cash flows from operating activities improved to $4.2 million from $2.8 million year-over-year, reflecting better management of working capital despite rising accounts receivable. Hackett's total liabilities increased to $77.3 million, up from $76.3 million, largely due to an increase in long-term debt, which rose to $17.8 million from $12.7 million.

Looking ahead, Hackett remains optimistic about its growth prospects, particularly in the Gen AI space, as it continues to leverage its recent acquisitions and product innovations. The company anticipates that its strategic focus on AI-enabled enterprise transformation will position it favorably in a rapidly evolving market. However, management acknowledged potential risks, including macroeconomic conditions and competition, which could impact future performance.