Q2 2026 The Hackett Group, Inc. Earnings Call Transcript
Key Points
- Closed several significant proposals totaling over $30 million, expected to drive sequential revenue and EPS growth in Q3.
- AI-enabled delivery platforms (XT, AIX) are improving delivery productivity, expanding scope, and creating more compelling client value propositions.
- Gross margins improved sequentially to 44.1% in Q2, with further improvements expected in Q3.
- Strong cash flow generation allowed for debt reduction, share repurchases, and continued dividend payments.
- New platform XDA (data assurance and quality) aligns with primary offerings and enhances competitive differentiation.
- Partnerships with ServiceNow, TCS, and Genpact are expanding pipeline and go-to-market reach.
- Revenue before reimbursements of $68.3 million came in slightly below the low end of guidance.
- Global S&BT segment revenue decreased 2% sequentially due to client caution and confusion around AI ROI.
- IBM deferred joint go-to-market activities, catching the company by surprise and impacting channel strategy.
- Expecting an additional AI transition charge of approximately $1 million in Q3 related to headcount reductions.
- SAP Solutions segment revenue is expected to decline sequentially in Q3 due to lower VAR software sales.
- Demand environment remains cautious with clients delaying decisions due to macroeconomic and ROI uncertainty.
Good evening and welcome to the Hackett Group's second quarter earnings conference call. (Operator Instructions) Please be advised the conference is being recorded. Hosting tonight's call are Mr. Ted Fernandez, Chairman and CEO and Mr. Rob Ramirez, Chief Financial Officer. Mr. Ramirez, you may begin.
Good afternoon, everyone, and thank you for joining us to discuss the Hackett Group's second quarter results. Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and CEO of The Hackett Group and myself, Robert Ramirez, CFO.
A press announcement was released over the wires at 4:08PM Eastern Time. For a copy of the release, please visit our website at www.thehackettgroup.com. We will also place any additional financial or statistical data discussed in this call that is not contained in the release on the Investor Relations page of our website. Before we begin, I would like to remind you
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