The Hackett Group, Inc.

Revenue before reimbursements for Q2 was $68.3 million, up sequentially from $67.8 million in Q1, and adjusted diluted EPS was $0.34. Adjusted gross margin was 44.1%, up from 42.3% in the prior quarter; adjusted EBITDA was $13.9 million, or 20.3% of revenue before reimbursements. GAAP net income was $4.4 million, or $0.18 per diluted share. For Q3 2026, the company guided to revenue before reimbursements of approximately $68 million to $70 million, adjusted diluted EPS of $0.37 to $0.39, adjusted gross margin of 46% to 47%, and adjusted EBITDA margin of 21.5% to 22.5%. Management also said it expects an APAC transition charge of about $1 million in Q3, and noted that Q3 EPS at the midpoint would be about 11.8% above Q2.

Ted Fernandez framed the quarter as evidence that Hackett’s AI transition is gaining traction, arguing the company is moving from a traditional consulting model to an AI-enabled platform-led model. He said the new XT and AIX platforms are improving delivery productivity, expanding scope, and helping win larger deals, and he pointed to over $30 million of late-quarter wins as an operational inflection point. His tone was confident and strategic, with repeated emphasis on stronger margins, a better competitive position, and a very strong 2027 setup.

Robert Ramirez focused on the sequential improvement in the quarter and the expected step-up in Q3. He highlighted Q2 revenue before reimbursements of $68.3 million, adjusted EPS of $0.34, adjusted gross margin of 44.1%, adjusted SG&A of $17.4 million, and adjusted EBITDA of $13.9 million. On cash flow, he said cash balances rose to $14.2 million from $6.1 million, operating cash flow was $15.2 million, DSO was 56 versus 67 in Q1 after a methodology change, and the company used cash to reduce net debt by $6.1 million, repurchase 377,000 shares for about $4 million, and pay dividends. He also noted total debt of $81 million and that the credit facility was amended to increase borrowing capacity to $125 million.

Analysts pressed on the IBM collaboration delay, and management said the pause caught them by surprise but reflected changing IBM priorities; they said they will wait for further guidance while continuing with ServiceNow, TCS, and Genpact partnerships. They also asked about the $30 million in wins and whether similar deals are in the pipeline; Ted said the win rate is high when Hackett leads with its platforms, that similar opportunities remain in the pipeline, and that these deals can ramp through the end of 2027. On margins, Ted said the company may be capturing only about 20% of its potential now and could be closer to 50% by year-end, implying more pricing and margin improvement ahead.