HCKT 10-K & 10-Q changes, risk factors and insider trading
Hackett Group, Inc. · Nasdaq · Services-Management Consulting Services · CIK 1057379 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Changes to trade regulation, quotas, duties or tariffs, caused by the changing U.S. and geopolitical environments or otherwise, may materially adversely affect customer demand for our services.”
New heading “Our business is subject to evolving, complex and at times inconsistent regulations regarding artificial intelligence (AI).”
Removed heading “Our results of operations could be negatively affected by global and regional economic conditions.”
Removed heading “A breach of our information technology and security systems could materially adversely affect our business.”
Largest changes
“We use information technology and security systems to protect proprietary and confidential information, including that of our customers, suppliers and employees. …”see in full comparison
“Changes to trade regulation, quotas, duties or tariffs, caused by the changing U.S. and geopolitical environments or otherwise, may materially adversely affect customer demand for our services.”see in full comparison
We use information technology and security systems to process, transmit, and store electronic information in connection with the operation of our business. We also use such systems to protect proprietary and confidential information, including that of our customers, suppliers and employees. We face risks associated with cybersecurity incidents and other significant disruptions of such systems, including denial of service or othersee in full comparisonsimilarattacksattacks,on, or accidental or willful security breaches or other unauthorized access, to our facilities or information systems; unauthorized access to or acquisition of personal information, confidential information or other data we process or maintain; or viruses, loggers, or other malfeasant code, including ransomware, in our data or software. The consequences of such loss, possible misuse of our proprietary and confidential information, or operational disruptions could include, among other things, unfavorable publicity, damage to our reputation, difficulty marketing our products, customer allegations of breach-of-contract, claims and litigation by affected parties, investigations by and other proceedings involving governmental authorities and possible financial liabilities for damages, any of which could materially adversely affect our business, financial condition, reputation and relationships with customers and partners. These cybersecurity incidents or other significant disruptions could be caused by persons inside our organization, persons outside our organization with authorized access to systems inside our organization, or by individuals outside our organization. The risk of a cybersecurity incident or disruption, particularly through cyber-attack or cyber-intrusion, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Although the cybersecurity incidents that we have experienced to date, as well as those reported to us by our third-party partners, have not had a material effect on our business, financial condition or results of operations, such incidents could have a material adverse effect on us in the future.
“Our business is subject to evolving, complex and at times inconsistent regulations regarding artificial intelligence (AI).”see in full comparison
“A breach of our information technology and security systems could materially adversely affect our business.”see in full comparison
“regulatory and/or enforcement actions including fines, penalties and/or sanctions;”see in full comparison
Full comparison: every changed paragraph (26)
InWe executingbelieve that our strategy to transition to a leading global IP platform-based Gen AI strategic consulting firm,firm wewill expect to createprovide a new value-creation opportunity for us with the potential forof an increase inincreasing our annual recurring revenues and annual recurring licensing revenues. We cannot assure you that our Gen AI strategy will be beneficial to the extent, or within the time-framestime-frames, expected. Market acceptance of Gen AI offerings is affected by a variety of factors, including technological advances, reliability, performance and information security. If we are unable to correctly respond to these issues,factors, we may experience business disruptions, damage to our reputation, negative publicity, diminished client trust and relationships and other adverse effects on our business.business, reputation, or financial results. Even if the anticipated benefits are substantially realized, there may be consequences or business impacts that were not expected.expected, Ourincluding transitionunexpected tolegal, focusregulatory onor Gentechnical AI may increase our risk of liabilitycosts and causeunexpected us to incur significant technical, legal or other costs.delays.
We may not be successful in our artificial intelligenceAI initiatives, which could adversely affect our business, reputation, or financial results.
AI,AI presents new risks and challenges that may affect our business. We have made,made and expect to continue to make investments to integrate AI into our products and solutions. Given the nature of AI technology, we face significant competition from other companies and an evolving regulatory landscape. Our AI efforts may not be successful and our competitors may incorporate AI into their products more successfully than us, which could impair our ability to compete effectively and adversely affect our financial results. The rapid evolution of AI combined with the uncertain and often inconsistent regulatory landscape may require significant additional resources and costs and could in some cases limit our ability to implement AI capabilities in our solutions or to use AI to support business operations. Despite our implementation of programs designed to support responsible AI use and development, we may not successfully address all issues that may arise. For example, privacy concerns, user consent, supply chain security, transparency and the accuracy, completeness and suitability of data sets are all potential issues that could adversely affect our business, reputation, or financial results.
Despite our implementation of programs designed to support responsible AI use and development, we may not successfully address all issues that may arise. AI algorithms may produce incomplete, insufficient, biased or otherwise flawed results or rely upon biased or inaccurate data, and any of these deficiencies may not be easily detectable despite internal policies and diligence efforts in place to mitigate such deficiencies. If the AI that we use produces deficient, inaccurate, or controversial results, or if public opinion of AI is adversely affected due to actual or perceived risks regarding the usage of AI, we could incur operational inefficiencies, competitive harm, legal liability, reputational harm, or other adverse impacts on our business and results of operations. Further, ownership and intellectual property rights of content generated by AI is a developing area, and if we do not have sufficient rights to use the data or other material relied upon by AI technologies, we also may incur liability through the alleged violation of applicable laws and regulations, third-party intellectual property, data privacy, or other rights, or contractual obligations. Additionally, privacy concerns, user consent, supply chain security, transparency and the accuracy, completeness and suitability of data sets are all potential issues that could adversely affect our business, reputation, or financial results.
Our results of operations could be negatively affected by global and regional economic conditions.
Global and regional economic conditions may affect our clients’ businesses and the markets they serve. A substantial or prolonged economic downturn, weak or uncertain economic conditions or similar factors could adversely affect our clients’financial condition which may reduce our clients’ demand for our services, force price reductions, cause project cancellations, or delay consulting services for which they have engaged us. For example, the geopolitical disruption resulting from the conflicts between Russian and Ukraine and in the Middle East has created uncertainty in the global economy and could result in a reduction in spending on our services. In addition, if we are unable to successfully anticipate the changing economic conditions, we may be unable to effectively plan for and respond to those changes, and our business could be negatively affected.
The level of revenue we achieve is based on our ability to deliver market leading services and solutions and to deploy skilled teams of professionals quickly. Our results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence.confidence, including conditions that may affect our client's businesses and the markets they serve. Any prolonged economic downturn as a result of weak or uncertain economic conditions or similar factors could adversely affect our clients' financial condition which may further reduce theour clients' demand for our services. These include:
geopolitical disruption resulting from the conflicts between Russian and Ukraine, in the Middle East and other geographic locations;
In addition, if we are unable to successfully anticipate the changing economic conditions, we may be unable to effectively plan for and respond to those changes, and our business could be negatively affected.
In addition, there are relatively low barriers for entry into the business consulting and IT services market. WeCurrently we do not own any patented technology that would stop competitors from entering this market and providing services similar to ours. As a result, the emergence of new competitors may pose a threat to our business. Existing or future competitors may develop and offer services that are superior to, or have greater market acceptance, than ours, which could significantly decrease our revenue and the value of your investment.
Our client engagements are generally short-term arrangements, and most clients can reduce or cancel their contracts for our services with a 30 days’ notice and without penalty. As a result, if we lose a major client or large client engagement, our revenue will be adversely affected. We perform varying amounts of work for specific clients from year to year. A major client in one year may not use our services in another year. In addition, we may derive revenue from a major client that constitutes a large portion of total revenue for particular quarters. If we lose any major clients or any of our clients cancel programs or significantly reduce the scope of a large engagement, our business, financial condition, and results of operations could be materially and adversely affected. Also, if we fail to collect a large accounts receivable balance, we could be subjected to significant financial exposure. Consequently, you should not predict or anticipate our future revenue based upon the number of clients we currently have or the number and size of our existing client engagements.
We rely on information technology and security systems and any damage, interruptioninterruption, compromise or compromisebreach of our information technology and security systems or data could disrupt and harm our business.
We use information technology and security systems to process, transmit, and store electronic information in connection with the operation of our business. We also use such systems to protect proprietary and confidential information, including that of our customers, suppliers and employees. We face risks associated with cybersecurity incidents and other significant disruptions of such systems, including denial of service or other similarattacks attacks,on, or accidental or willful security breaches or other unauthorized access, to our facilities or information systems; unauthorized access to or acquisition of personal information, confidential information or other data we process or maintain; or viruses, loggers, or other malfeasant code, including ransomware, in our data or software. The consequences of such loss, possible misuse of our proprietary and confidential information, or operational disruptions could include, among other things, unfavorable publicity, damage to our reputation, difficulty marketing our products, customer allegations of breach-of-contract, claims and litigation by affected parties, investigations by and other proceedings involving governmental authorities and possible financial liabilities for damages, any of which could materially adversely affect our business, financial condition, reputation and relationships with customers and partners. These cybersecurity incidents or other significant disruptions could be caused by persons inside our organization, persons outside our organization with authorized access to systems inside our organization, or by individuals outside our organization. The risk of a cybersecurity incident or disruption, particularly through cyber-attack or cyber-intrusion, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Although the cybersecurity incidents that we have experienced to date, as well as those reported to us by our third-party partners, have not had a material effect on our business, financial condition or results of operations, such incidents could have a material adverse effect on us in the future.
We also rely on a number of third-party service providers to host, store or otherwise process information for us, or to provide other facilities or infrastructure that we make use of, including “cloud-based” providers of corporate infrastructure services relating to, among other things, human resources, electronic communication services, financial functions, as well as proprietary digital technology platforms, and we are therefore dependent on the security systems of these providers. These third-party entities are subject to similar risks as it relates to cybersecurity, business interruption, and systems. Employee failures and afailures, cybersecurity incidentincidents or other significantunauthorized disruptionaccess to, or disruptions of, our service-providers' systems or viruses, loggers, ransomware or other malfeasant code in their data or software, or unauthorized access to or acquisition of any data they process or otherwise maintain for us could expose us to information loss, corruption and unavailability, operational disruptions, and misappropriation of confidential information, and could have similar consequences to us as any incidents affecting suchour own systems or the data we process or maintain. We and our third parties face these threats from a variety of sources, including attacks from hackers, phishing and other forms of social engineering, and human error or employee or contractor malfeasance and such threats could have a material adverse effect on our business.
A breach of our information technology and security systems could materially adversely affect our business.
We use information technology and security systems to protect proprietary and confidential information, including that of our customers, suppliers and employees. Denial of service or other attacks on, or accidental or willful security breaches or other unauthorized access to our facilities or information systems, unauthorized access to or acquisition of personal information, confidential information or other data we process or maintain, or viruses, loggers, or other malfeasant code, including ransomware, in our data or software, could compromise this information and otherwise disrupt our operations. The consequences of such loss, possible misuse of our proprietary and confidential information, or operational disruptions could include, among other things, unfavorable publicity, damage to our reputation, difficulty marketing our products, customer allegations of breach-of-contract, claims and litigation by affected parties, investigations by and other proceedings involving governmental authorities and possible financial liabilities for damages, any of which could materially adversely affect our business, financial condition, reputation and relationships with customers and partners. We also rely on a number of third-party service providers to host, store or otherwise process information for us, or to provide other facilities or infrastructure that we make use of, including "cloud-based" providers of corporate infrastructure services relating to, among other things, human resources, electronic communication services and some financial functions, and we are therefore dependent on the security systems of these providers. Any security breaches or incidents or other unauthorized access to, or disruptions of, our service-providers' systems or viruses, loggers, ransomware or other malfeasant code in their data or software, or unauthorized access to or acquisition of any data they process or otherwise maintain for us could expose us to information loss, corruption and unavailability, operational disruptions, and misappropriation of confidential information, and could have similar consequences to us as any incidents affecting our own systems or the data we process or maintain. We and our third parties face these threats from a variety of sources, including attacks from hackers, phishing and other forms of social engineering, and human error or employee or contractor malfeasance. Because the techniques used to obtain unauthorized access to or sabotage security systems change frequently and are often not recognized until after an attack, we and our third-party service providers may be unable to anticipate the techniques or implement adequate preventative measures, thereby exposing us to material adverse effects on our business, financial condition, results of operations and growth prospects. A security breach or other security incident impacting us or our third-party service providers could require a substantial level of financial resources to rectify and otherwise respond to, may be difficult to identify or address in a timely manner, and could result in claims, investigations, and inquires by private parties or governmental entities that may divert management’s attention and require the expenditure of significant time and resources, and which may cause us to incur substantial fines, penalties, or other liability and related legal and other costs. Any actual or perceived security breach or other security incident may also harm our reputation and market position. Any of the foregoing matters could harm our operating results and financial condition.
Changes to trade regulation, quotas, duties or tariffs, caused by the changing U.S. and geopolitical environments or otherwise, may materially adversely affect customer demand for our services.
The United States has recently enacted and/or proposed to enact significant new tariffs on goods imported from numerous countries, including those where we do business. There continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs.
Furthermore, because of policy changes and government proposals, there may be greater restrictions and economic disincentives on international trade in general. The new tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries, and foreign governments have instituted or are considering imposing trade sanctions on U.S. goods. Such changes have the potential to adversely impact the U.S. economy or sectors thereof, including the industry and countries we serve, and as a result, could have a negative impact on our business, financial condition and results of operations.
As a company doing business in Europe, we are also subject to European data protection laws and regulations. The European Union General Data Protection Regulation (“GDPR”), imposes stringent requirements in how we collect and process personal data and provides for significantly greater penalties for noncompliance; and several other countries have passed laws that require personal data relating to their citizens to be maintained on local servers and impose additional data transfer restrictions. In addition, we are also subject to and affected by new state privacy and data security laws such as the California Consumer Privacy Act (“CCPA”). The CCPA imposes additional data privacy requirements on many businesses operating in the state, including, potentially, with respect to employee data. Several states have enacted or introduced varying comprehensive privacy laws modeled to some degree on the CCPA and/or the GDPR. Compliance with multiple country and state laws containing varying requirements could be complicated and costly. Government enforcement actions can be costly and interrupt the regular operation of our business, and violations of data privacy laws can result in fines, reputational damage and civil lawsuits, any of which may adversely affect our business, reputation and financial statements.
Our business is subject to evolving, complex and at times inconsistent regulations regarding artificial intelligence (AI).
Our business is subject to a multinational legal and regulatory regime regarding AI that is both evolving at a rapid pace and at times inconsistent from jurisdiction to jurisdiction. This disparate and inconsistent legal treatment may add additional compliance costs and/or lost opportunities. Governments in both the U.S. and international jurisdictions are adopting and proposing regulations, laws and ethical rules governing AI, data privacy and machine learning. Failure to comply with these regulations, or the perception that we failed to comply could result in:
regulatory and/or enforcement actions including fines, penalties and/or sanctions;
operation disruptions such as required modifications to, or prohibitions of, our products and services could result in a loss of competitive advantage or operational efficiency;
reputational harm which could include the loss of our client’s trust, damage to our reputation or a decrease in demand for our services; and litigation relating to our services and how our AI systems process and utilize client data.
The cost of compliance and the need to modify any AI systems or services as a result of such efforts could have an adverse effect on our business, reputation and financial statements.
Management's Discussion & Analysis (MD&A)
Largest changes
“Restructuring Costs. During the third quarter of 2025, we incurred restructuring costs of $3.1 million as a result of the continued pivot of our business to Gen AI. These costs were primarily employee related costs, as the Company reduced staff to be commensurate with current market demand and the leverage of our Gen AI delivery platforms are expected to have on our service offerings.”see in full comparison
“As a result, the provisional excess of the purchase price over the assets acquired resulted in goodwill of $5.9 million. Additionally, the Company recognized provisional intangible assets of $2.5 million, with a remaining weighted average useful life of 4.6 years. The fair values of identifiable intangible assets acquired were prepared by a third-party valuation specialist and incorporate significant unobservable inputs, judgment, and estimates, including the amount and timing of future cash flows. The intangible assets will be amortized in accordance with the Company’s accounting policies. …”see in full comparison
“Legal Settlement and Related Costs. In May 2023, Gartner, Inc. ("Gartner") filed a lawsuit seeking a preliminary injunction and damages against the Company and two ex-Gartner employees that were hired by us. On February 17, 2024, we, Gartner and the two ex-Gartner employees entered into a settlement agreement whereby we made a settlement payment of $985,000 to Gartner in exchange for a dismissal of the lawsuit and a release of all claims which is reflected in our Consolidated Statement of Operations for the year ended December 29, 2023. …”see in full comparison
“Net cash used in investing activities was $10.6 million in 2024, as compared to $4.1 million in 2023. During the third quarter of 2024, the Company acquired LeewayHertz for $6.5 million, net of cash acquired. See Note 1 , “Basis of Presentation and General Information”, to our consolidated financial statements included in this Annual Report on Form 10-K for more information. …”see in full comparison
“Net cash used in investing activities was $8.6 million in 2025, as compared to $10.6 million in 2024. During both 2025 and 2024, cash flows used in investing activities included investments made to the continued development of our Hackett Connect Applied Intelligence Advisory member platform and continued development of our Gen AI platforms, as well as acquisition related activities. …”see in full comparison
“Also, in connection with the acquisition, the Company and LeewayHertz’s founder are creating a joint venture whereby The Hackett Group will contribute its AI XPLR platform and LeewayHertz will contribute its ZBrain platform. The integration of AI XPLR and the ZBrain Gen AI orchestration solution will enable the joint venture to provide advanced and tailored Gen AI solutions to its clients. The joint venture is expected to be formed by the middle of the Company's 2025 fiscal year and we expect its results will be consolidated into our financial statements.”see in full comparison
Full comparison: every changed paragraph (49)
Hackett is a global IP platform-based GenAIGen AI strategic consulting and executive advisory digital transformation firm. strategic consulting and digital transformation firm. The Hackett Group provides dedicated expertise in Gen AI enabled enterprise transformation services across front, mid and back office areas, including its highly recognized Oracle, SAP, OneStream and CoupaeProcurement implementation offerings.
Determining revenue recognition requires management to exercise judgment on the interpretation of service contracts which may include one or multiple performance obligations. The judgementjudgments that management must make include determining whether the control of the goods and services provided are transferred to our customers at a point in time or over the course of the service period utilizing a proportionate performance approach.
Allowances for DoubtfulCredit AccountsLosses
On September 23, 2024, the Company acquired 100% of the equity of LeewayHertz Technologies Private Limited (“LeewayHertz”), a technology consulting company based in India, focused on AI technology solutions for a provisional purchase consideration of $7.8 million subject to a working capital achievement. LeewayHertz’s founder, one of LeewayHertz’s owners, was hired by the Company to serve as its executive vice president of the AI practice.
Since the acquisition was only recently completed, the allocation of the purchase price is preliminary and will likely change in future periods as fair value estimates of the assets acquired and liabilities assumed are finalized, including those primarily related to working capital, property and equipment, intangible assets, and taxes. The final determination of the fair values will be completed within the one-year measurement period.
The following table summarizes the provisional fair value of the assets acquired and liabilities assumed:
As a result, the provisional excess of the purchase price over the assets acquired resulted in goodwill of $5.9 million. Additionally, the Company recognized provisional intangible assets of $2.5 million, with a remaining weighted average useful life of 4.6 years. The fair values of identifiable intangible assets acquired were prepared by a third-party valuation specialist and incorporate significant unobservable inputs, judgment, and estimates, including the amount and timing of future cash flows. The intangible assets will be amortized in accordance with the Company’s accounting policies. The following table summarizes the provisional value of the intangible assets acquired:
Also, in connection with the acquisition, the Company and LeewayHertz’s founder are creating a joint venture whereby The Hackett Group will contribute its AI XPLR platform and LeewayHertz will contribute its ZBrain platform. The integration of AI XPLR and the ZBrain Gen AI orchestration solution will enable the joint venture to provide advanced and tailored Gen AI solutions to its clients. The joint venture is expected to be formed by the middle of the Company's 2025 fiscal year and we expect its results will be consolidated into our financial statements.
For acquisitions accounted for as a business combination, goodwill represents the excess of the cost over the fair value of the net assets acquired. The Company has organized its operating and internal reporting structure to align with its primary market solutions. In accordance with ASC 280, management made the determination to present three operating segments, three reportable segments and three reporting units as follows: (1) Global S&BT, (2) Oracle Solutions, and (3) SAP Solutions. A reporting unit is an operating segment or one level below an operating segment to which goodwill is assigned. The goodwill has been allocated to the reporting unit based on the reporting unit's relative fair value. The provisional goodwill related to LeewayHertz has been included in Global S&BT segment. The carrying amount of goodwill by reporting unit is as follows (in thousands):
Goodwill is tested at least annually for impairment at the reporting unit level utilizing the market approach. In assessing the recoverability of goodwill and intangible assets, thewe Company utilizesutilize the market approach and makes estimates based on assumptions regarding various factors to determine if impairment tests are met. The market approach utilizes valuation multiples based on operating data from publicly traded companies within the same industry. Multiples derived from guideline companies provide an indication of how much a market participant would be willing to pay for a company. These multiples are then applied to the Company’sour reporting units to arrive at an indication of value. This approach contains management’s judgment, using appropriate and customary assumptions available at the time.
In September 2024, a stock price award program was offered to certain leaders. These equity awards were granted with both a market condition (three tranches, each with varying market share price thresholds) and service conditions. The CompanyWe measured these equity awards using the Monte Carlo valuation model to determine the fair value as of the grant date. The Monte Carlo valuation model, using different share price paths, calculated a derived service period which is the median share price path on which the market condition is satisfied for each tranche. The assumptions utilized in the model are as of a point in time and may differ from the actual value of the equity awards. The requisite service period was determined to be service conditions as the service conditions are greater than the derived service period. For each of the three tranches, stock compensation expense is recognized on a straight-line basis over the requisite service period. The Company hasWe elected to account for forfeitures as incurred. If an employee forfeits nonvested shares subsequent to meeting a service condition, the previously recognized expense is not reversed. See Note 10, "Stock Based Compensation," to our consolidated financial statements included in our Annual Report on Form 10-K for additional information.
Overview. For fiscal year 2025, total revenue decreased to $305.6 million, as compared to $313.9 million in 2024, primarily driven by decreased total revenue from our Oracle Solutions segment of $13.0 million, partially offset by increases in our SAP Solutions segment of $6.3 million. In addition, we recognized an incremental $11.1 million of non-cash compensation expense in 2025, as compared to 2024, related to the stock price award program. See Note 10, “Stock Based Compensation,” to our consolidated financial statements included in this Annual Report on Form 10-K for more information.
Overview. For fiscal year 2024, total revenue increased to $313.9 million, as compared to $296.6 million in 2023, primarily driven by increased total revenue from our SAP Solutions segment of $10.2 million and our Oracle Solutions segment of $7.9 million, as compared to 2023.
In 2025, one customer accounted for 6% of our total revenue and in 2024 one customer accounted for 11% of our total revenue.
In 2024, one customer accounted for 11% of our total revenue and in 2023 one customer accounted for 6% of our total revenue.
Segment revenue. We have three reportable segments: Global S&BT, Oracle Solutions and SAP Solutions. Global S&BT includes S&BT Consulting, Benchmarking, Advisory Services, IPASS, Gen AI Consulting and Implementation, OneStream and our CoupaeProcurement offerings. Oracle Solutions and SAP Solutions support the two fundamentally distinct ERP systems: Oracle and SAP.
Global S&BT total revenue decreased to $171.1$169.6 million in 2024,2025, as compared to $171.9$171.1 million in 2023.2024. The revenue decrease was primarily due to weakness in our eProcurement and OneStream implementation offerings. This was partially offset by growth infrom our Gen AI consulting and implementation offerings,offerings drivenin this segment was more than offset by weakness in our OneStream implementation offerings and the capabilitiesnon-renewal of oura AImeaningful XPLRIPaaS platformcontract andduring our recently acquired ZBrain platform and LeewayHertz consulting and implementation team.2025.
Oracle Solutions total revenue decreased to $72.7 million in 2025, as compared to $85.7 million in 2024. Although activity continues to be solid, extended client decision making has continued to make the revenue replacement of a large post go-live engagement at the end of last year take longer than we planned. This has adversely impacted this segment throughout 2025.
SAP Solutions total revenue increased to $63.4 million in 2025, as compared to $57.1 million in 2024. The increase in revenue during 2025 was primarily due to increased software sales in 2025 and implementation services related to S/4HANA cloud migrations.
Oracle Solutions total revenue increased to $85.7 million in 2024, as compared to $77.8 million in 2023. The segment has continued the momentum it has experienced since the second quarter of 2023, as we have continued to see strong overall EPM activity resulting from Oracle’s re-establishment of their dedicated EPM salesforce.
SAP Solutions total revenue increased to $57.1 million in 2024, from $46.9 million in 2023. The revenue growth in 2024 was due to the strong software-related sales resulting from the increased sales investments we made in late 2023.
Personnel costs before reimbursable expenses were $183.7 million in 2025, as compared to $183.8 million in 2024. Personnel costs as a percentage of total Company revenue were 60% in 2025 and 59% in 2024.
Personnel costs before reimbursable expenses, increased to $183.8 million in 2024, as compared to $174.9 million in 2023. The higher costs in 2024 were primarily a result of increased salaries relating to increased headcount, higher utilization of subcontractors and increases in non-cash stock compensation expense. Personnel costs as a percentage of total revenue were 59% in both 2024 and 2023.
Non-cash stock-based compensation expense, included in personnel costs before reimbursable expenses, was $14.6 million in 2025 and $10.5 million in 2024 and $6.2 million in 2023.2024. This increase was primarily related to the stock price award program and the acquisition related non-cash stock compensation expense related to LeewayHertz. See Notes 1 and 10, "Basis of Presentation and General Information” and “Stock Based CompensationCompensation,”, respectively, to our consolidated financial statements included in this Annual Report on Form 10-K for more information.
SG&A costs increased to $90.5 million in 2025, as compared to $78.5 million in 2024. The increase in the costs during 2025 was primarily due to increased non-cash stock based compensation from the stock price award program issuances of $7.6 million, LeewayHertz acquisition related incremental SG&A of $1.0 million and increases in amortization expense of $0.9 million. See Note 10, “Stock Based Compensation,” and Note 1, "Basis of Presentation and General Information," to our consolidated financial statements included in this Annual Report on Form 10-K for more information. SG&A costs as a percentage of total Company revenue were 30% in 2025 and 25% in 2024.
SG&A costs increased 19%, to $78.5 million in 2024, as compared to $65.9 million in 2023. This increase in the costs during 2024 was primarily due to increased commissions and sales related expenses, increased incentive compensation commensurate with Company performance and increased non-cash stock based compensation related to the stock price award program. SG&A costs as a percentage of total revenue were 25% and 22% during 2024 and 2023, respectively.
Non-cash stock-basedstock based compensation expense, included in SG&A, was $9.0$16.0 million in 2024,2025, as compared to $4.5$9.0 million in 2023.2024. The increase in 20242025 primarily related to the non-cash stock compensation expense from the stock price award program. See Note 10, “Stock Based Compensation,” to our consolidated financial statements included in this Annual Report on Form 10-K for more information.
Amortization Expense. There was $148$1.0 thousandmillion of amortization expense in 2024.2025, Thereas wascompared noto amortization$148 expensethousand in 2024, which is also included in SG&A in 2023.A. The amortization expense was related to the amortization of the intangible assetassets acquired in our September 2024 acquisition of LeewayLeewayHertz Hertzand inMay September2025 2024.acquisition of Spend Matters. See Note 1, “Basis of Presentation and General Information,” to our consolidated financial statements included in this Annual Report on Form 10-K for more information.
Restructuring Costs. During the third quarter of 2025, we incurred restructuring costs of $3.1 million as a result of the continued pivot of our business to Gen AI. These costs were primarily employee related costs, as the Company reduced staff to be commensurate with current market demand and the leverage of our Gen AI delivery platforms are expected to have on our service offerings.
Global S&BT segment profit decreased to $50.8 million in 2025 from $51.6 million in 2024,2024. as compared to $54.4 million in 2023 primarily due to the revenueThe growth infrom our Gen AI consulting and implementation offerings,offerings whichin werethis segment was more than offset by weakness in our eProcurement and OneStream implementation offerings.offerings and the non-renewal of a meaningful IPaaS in during 2025, as mentioned above.
Oracle Solutions segment profit increaseddecreased to $12.4 million in 2025 from $19.1 million in 2024, asThe compareddecrease toduring $18.12025 million in 2023,was primarily due to higherdecreased revenue, as discussed above, partially offset by increaseddecreased headcountincentive andcompensation increasedaccruals usagerelated ofto subcontractors.performance.
SAP Solutions segment profit increased to $20.4 million in 2025 from $18.7 million in 2024, as compared to $11.9 million in 2023, primarily due to the value-added reseller activityincrease in theimplementation year,and license sales during 2025, partially offset by higher commissions and other sales related costs.
Interest Expense, Net. Interest expense, net was $1.7 million and $1.6 million during 2025 and 2024, respectively. As of December 26, 2025, we had outstanding debt of $76.0 million, excluding debt issuance costs, of which $40.0 million was borrowed in early December 2025 to fund the tender offer. As of December 27, 2024, we had outstanding debt of $13.0 million, excluding debt issuance costs. See Note 11, “Shareholders' Equity,” to our consolidated financial statements included in this Annual Report on Form 10-K for more information.
Legal Settlement and Related Costs. In May 2023, Gartner, Inc. ("Gartner") filed a lawsuit seeking a preliminary injunction and damages against the Company and two ex-Gartner employees that were hired by us. On February 17, 2024, we, Gartner and the two ex-Gartner employees entered into a settlement agreement whereby we made a settlement payment of $985,000 to Gartner in exchange for a dismissal of the lawsuit and a release of all claims which is reflected in our Consolidated Statement of Operations for the year ended December 29, 2023. In addition, we incurred incremental legal costs related to the settlement which were recorded as expenses in the period incurred.
As of December 27,26, 20242025 and December 29,27, 2023,2024, we had $16.4$18.2 million and $21.0$16.4 million, respectively, of cash, and $12.7$75.8 million and $32.7$12.7 million, respectively, outstanding under our Credit Facility, netinclusive of deferred debt costs. We currently believe that available funds, including the cash on hand and funds available for borrowing under our Credit Facility, and cash flows generated by operations will be enough to fund our cash requirements, including working capital, debt payments, lease obligations and capital expenditures for at least the next twelve months and beyond. We may decide to raise additional funds in order to fund expansion, to develop new or further enhance products and services, to respond to competitive pressures, or to acquire complementary businesses or technologies. There is no assurance that additional financing would be available when needed or desired.
Net cash provided by operating activities was $40.3 million in 2025, as compared to $47.7 million in 2024. In 2025, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items, partially offset by increases in accounts receivable and contract assets and prepaid income taxes and decreases in income tax liabilities. In 2024, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items, partially offset by increases in accounts receivable and contract assets.
Net cash provided by operating activities was $47.7 million in 2024, as compared to $37.4 million in 2023. In 2024, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items, partially offset by increases in accounts receivable and contract assets. In 2023, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items, partially offset by increases in accounts receivable and contract assets and decreases in accrued liabilities, other accruals and income taxes payable.
Net cash used in investing activities was $8.6 million in 2025, as compared to $10.6 million in 2024. During both 2025 and 2024, cash flows used in investing activities included investments made to the continued development of our Hackett Connect Applied Intelligence Advisory member platform and continued development of our Gen AI platforms, as well as acquisition related activities. Cash flows used in investing activities during 2025 included $0.8 million of cash consideration paid for our acquisition of Spend Matters and in 2024 included $6.5 million relating to the acquisition of LeewayHertz.
Net cash used in investing activities was $10.6 million in 2024, as compared to $4.1 million in 2023. During the third quarter of 2024, the Company acquired LeewayHertz for $6.5 million, net of cash acquired. See Note 1 , “Basis of Presentation and General Information”, to our consolidated financial statements included in this Annual Report on Form 10-K for more information. During both periods, cash flows used in investing activities primarily related to investments for the development of our Hackett Connect Executive Advisory member platform and continued development of our QL benchmark, DTP technologies and our Gen AI platform, AI XPLR.
Net cash used in financing activities was $41.7$29.8 million in 2024,2025, as compared to $42.6$41.7 million in 2023.2024. The usage of cash in 2025 primarily related to the employee net vesting related tax withholding requirements of $11.9 million, the repurchase of $69.1 million of the Company's common stock and dividend payments of $12.9 million, partially offset by a net $63.0 million drawdown on our Credit Facility. The usage of cash in 2024, primarily related to the repayment of borrowings of $20.0 million related to our Credit Facility, dividend payments of $12.1 million, employee net vesting related tax withholding requirements of $4.1 million and the repurchase of $6.4 million of the Company's common stock. The usage of cash in 2023 was primarily related to the net pay down of our Credit Facility $27.0 million, dividend payments of $12.0 million and employee net vesting related tax withholding requirements of $3.8 million.
On November 7, 2022, we amended and restated our credit agreement in order to extend the maturity date of our Credit Facility and provide the Company with an additional $55.0 million in borrowing capacity, for an aggregate amount of up to $100 million. See Note 8, “Credit Facility,” to our consolidated financial statements included in this Annual Report on Form 10-K for more information. As of December 26, 2025, we had $76.0 million of outstanding borrowings, excluding deferred debt issuance costs, under our revolving line of credit, leaving us with borrowing capacity of approximately $24.0 million. See Note 8, “Credit Facility,” to our consolidated financial statements included in this Annual Report on Form 10-K for more information.
As of December 27, 2024, we had $13.0 million of outstanding borrowings, excluding deferred debt costs, under our revolving line of credit, leaving us with borrowing capacity of approximately $87.0 million. See Note 8, “Credit Facility,” to our consolidated financial statements included in this Annual Report on Form 10-K for more information.
(1) Excludes interest charges on borrowings, the fee on the amount of any unused commitment that we may be obligated to pay under our revolving Credit Facility as such amounts vary and the deferred debt issuance costs. See Note 8, “Credit Facility”, to our consolidated financial statements included in this Annual Report on Form 10-K for more information
As part of the LeewayHertz acquisition, the Company has committed to fund up to $10.0 million of development costs related to ZBrain AI subject to the business plans approved by the JV Board of Directors. Our capital expenditures primarily consist of investments related to the continued development of our Hackett Connect ExecutiveApplied Intelligence Advisory member platform, our QL benchmark, Digital Transformation technologiesplatform and our Gen AI platform,related AI XPLR.platforms. During the years ended December 27,26, 2024,2025 and December 29,27, 2023,2024, our capital expenditures were $4.1$7.9 million forand both$4.1 years.million, respectively. We expect an increase in capital expenditures related to the continued development of the ZBrain AI orchestration platform and the integration of AI XPLR.platform.
During the fiscal year 2024,2025, our Board of Directors approved four quarterly dividends payments of $0.11$0.12 per share totaling $12.1$12.9 million. Subsequent to December 27, 2024, our Board of Directors approved a 9% increase in the dividend, increasing the annual dividend amount to $0.48 per share. We expect dividend payments in 20252026 to be approximately $13.2$12.0 million.
We have an ongoing authorization from our Board of Directors to repurchase shares of our common stock. During 2025, we repurchased 50 thousand shares of common stock from our Chief Financial Officer and members of our Board of Directors at an average price per share of $30.78, for a total cost of $1.6 million. In addition, we repurchased 3.2 million shares of common stock on the open market at an average price per share of $21.11, for a cost of $67.6 million, which includes the tender offer in December 2025. As of December 26, 2025, we had $11.4 million share repurchase authorization remaining. Subsequent to fiscal year end, our Board of Directors increased the authorization by $13.6 million, leaving $25.0 million share repurchase authorization remaining. See Note 11, “Shareholders' Equity,” to our consolidated financial statements included in this Annual Report on Form 10-K for more information.
Subsequent to fiscal year end, we repurchased 7 thousand shares of the Company’s common stock from members of our Board of Directors for a total of $0.1 million, or $15.22 per share. Including these repurchases, we had approximately $24.9 million available for future repurchases under the plan.
We have an ongoing authorization from our Board of Directors to repurchase shares of our common stock. During 2024, we repurchased 43 thousand shares of common stock from members of our Board of Directors at an average price per share of $24.34, for a total cost of $1.1 million. In addition, we repurchased 182 thousand shares of common stock on the open market at an average price per share of $29.46, for a total cost of $5.4 million. As of December 27, 2024, we had $27.5 million share repurchase authorization remaining. Subsequent to fiscal year end, we repurchased 50 thousand shares of the Company’s common stock from our Chief Financial Officer and members of our Board of Directors for a total of $1.6 million, or $30.78 per share. Including these repurchases, we had approximately $26.0 million available for future repurchases under the plan.
Shares purchased under the repurchase plan do not include shares withheld to satisfy withholding tax obligations. These withheld shares are never issued and in lieu of issuing the shares, taxes were paid on our employee’semployees' behalf. In 2025, 0.5 million shares were withheld and not issued for a cost of $11.9 million, bringing the total cumulative cash used to repurchase stock in 2025 to $81.0 million. In 2024, 0.2 million shares were withheld and not issued for a cost of $4.1 million, bringing the total cumulative cash used to repurchase stock in 2024 to $10.5 million. In 2023, 0.2 million shares were withheld and not issued for a cost of $3.8 million, bringing the total cumulative cash used to repurchase stock in 2023 to $4.5 million.
What changed in the latest 10-Q
Risk Factors
For a discussion of our potential risks and uncertainties, see the risk factor below and the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 26, 2025.
There have been no material changes to any of the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 26, 2025.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
“Global S&BT total revenue was $36.0 million and $72.8 million during the second quarter and first six months of 2026, respectively, as compared to $44.2 million and $87.6 million in the same periods of 2025, respectively. Elongated client decision marking still persists, as clients continue to question the underlying value of Gen AI and are also confused by the return of investment of Gen AI first adoption strategies.”see in full comparison
“Global S&BT total revenue was $36.8 million and $43.4 million during the first three months of 2026 and 2025, respectively. Although we continued to see an increasing number of clients utilizing our Gen AI delivery platforms, that was more than offset by elongated client decision cycles that persisted throughout the quarter as clients are evaluating their Gen AI return on investments.”see in full comparison
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. All statements regarding our expected financial position and operating results, our business strategy, our financing plans and forecasted demographic and economic trends relating to our industry are forward-looking statements. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. We cannot promise you that our expectations reflected in such forward-looking statements will turn out to be correct. Factors that could impact such forward-looking statements include, among others, changes in worldwide and U.S. economic conditions that impact business confidence and the demand for our products and services, our ability to transition our capabilities to support generative artificial intelligence ("Gen AI")-related consulting services and solutions, the adoption of Gen AI technologies by our clients and the timing thereof, the rapid change in Gen AI technologies and our ability to support new or changing technologies, our ability to effectively integrate acquisitions, including the LeewayHertz and Spend Matters acquisitions, into our operations, our ability to manage joint ventures and successfully cooperate with our joint venture partners, our ability to retain existing business, our ability to attract additional business, our ability to effectively market and sell our product offerings and other services, the timing of projects and the potential for contract cancellation by our customers, changes in expectations regarding the business consulting and information technology industries, our ability to attract and retain skilled employees, possible changes in collections of accounts receivable due to the bankruptcy or financial difficulties of our customers, risks of competition, price and margin trends, foreign currency fluctuations, the impact of the geopolitical conflict involving Russia and Ukraine and in the Middle East on our business and changes in general economic conditions, interest rates, tariffs and trade barriers and our ability to obtain additional debt financing if needed.see in full comparison
“As of June 26, 2026, we had $81.0 million of outstanding borrowings under our Credit Facility, excluding deferred debt costs, leaving us with a capacity of approximately $19.0 million. On August 3, 2026, we amended and restated our credit agreement in order to extend the maturity date of the Credit Facility and provide the Company with an additional $25 million in borrowing capacity resulting in aggregate borrowing capacity of up to $125 million. See Note 6, “Credit Facility,” to our consolidated financial statements included in this Quarterly Report on Form 10-Q for more information”see in full comparison
Income Taxes. During the second quarter and firstsee in full comparisonthreesix months of 2026, we recorded$3.6$2.1 million and $5.7 million of income tax expense, respectively, related to certain federal, foreign and state taxes which reflected an effective tax rate of46.0%.32.2% and 39.8%, respectively. The increase in the effective tax rate for the first six months of the year as compared to the second quarter 2026 tax rate is primarily due to the vesting fair value for restricted stock unit awards being lower than the grant date fair value for such awards. During the second quarter and firstthreesix months of 2025, we recorded$1.1$2.6 million and $3.6 million of income taxexpenseexpense, respectively, related to certain federal, foreign and state taxes which reflected an effective tax rate of25.2%.60.7% and 43.0%, respectively. The increase in the effective tax rate in 2025 was primarily due to the limitation of executive compensation deductions related to executive compensation, primarily driven by the stock price award program (See Note 7).
SAP Solutions segment contribution wassee in full comparison$5.0$5.6 million and$4.3$10.6 million during the second quarter and firstthreesix months of20262026, respectively, as compared to $3.9 million and $8.1 million for the same periods in 2025, respectively. The increase in segment profit in the second quarter and firstthreesix months of 2026, as compared to the sameperiodperiods in 2025, was primarily due to increased implementation services from increased volume of software salesoverthat are coupled with significant implementation fees. This was primarily due to thepastincreasedseveralsalesquartersinvestmentsaswementionedhaveabove.made with SAP and SAP’s success driving S4 HANA Cloud migrations.
Full comparison: every changed paragraph (25)
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. All statements regarding our expected financial position and operating results, our business strategy, our financing plans and forecasted demographic and economic trends relating to our industry are forward-looking statements. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. We cannot promise you that our expectations reflected in such forward-looking statements will turn out to be correct. Factors that could impact such forward-looking statements include, among others, changes in worldwide and U.S. economic conditions that impact business confidence and the demand for our products and services, our ability to transition our capabilities to support generative artificial intelligence ("Gen AI")-related consulting services and solutions, the adoption of Gen AI technologies by our clients and the timing thereof, the rapid change in Gen AI technologies and our ability to support new or changing technologies, our ability to effectively integrate acquisitions, including the LeewayHertz and Spend Matters acquisitions, into our operations, our ability to manage joint ventures and successfully cooperate with our joint venture partners, our ability to retain existing business, our ability to attract additional business, our ability to effectively market and sell our product offerings and other services, the timing of projects and the potential for contract cancellation by our customers, changes in expectations regarding the business consulting and information technology industries, our ability to attract and retain skilled employees, possible changes in collections of accounts receivable due to the bankruptcy or financial difficulties of our customers, risks of competition, price and margin trends, foreign currency fluctuations, the impact of the geopolitical conflict involving Russia and Ukraine and in the Middle East on our business and changes in general economic conditions, interest rates, tariffs and trade barriers and our ability to obtain additional debt financing if needed.
Revenue. We are a global Company with operations in our primary markets located in the United States and Western Europe. Our revenue is denominated in multiple currencies, primarily the U.S. Dollar, British Pound and Euro, and as a result is affected by currency exchange rate fluctuations. The impact of currency fluctuations did not have a significant impact on comparisons between the threequarter and six months ended MarchJune 27,26, 2026 and the threesame monthscomparable endedperiods March 28,of 2025. In this MD&A, we discuss revenue based on geographical location of engagement team personnel.
Our Company total revenue was $68.8$69.3 million and $138.1 million during the second quarter and first threesix months of 20262026, respectively, as compared to $77.9$78.9 million and $156.8 million in the same periodperiods in 2025.2025, respectively. In the second quarter and first threesix months of 2026, one customer accounted for 4%3% and 4%, respectively, of our Company total revenue. In the second quarter and first threesix months of 2025, one customer accounted for 9%7% and 8%, respectively, of our Company total revenue.
Global S&BT total revenue was $36.0 million and $72.8 million during the second quarter and first six months of 2026, respectively, as compared to $44.2 million and $87.6 million in the same periods of 2025, respectively. Elongated client decision marking still persists, as clients continue to question the underlying value of Gen AI and are also confused by the return of investment of Gen AI first adoption strategies.
Global S&BT total revenue was $36.8 million and $43.4 million during the first three months of 2026 and 2025, respectively. Although we continued to see an increasing number of clients utilizing our Gen AI delivery platforms, that was more than offset by elongated client decision cycles that persisted throughout the quarter as clients are evaluating their Gen AI return on investments.
Oracle Solutions total revenue was $15.7$15.5 million and $21.1$31.2 million during the second quarter and first threesix months of 20262026, respectively, as compared to $20.8 million and $41.9 million in the same periods of 2025, respectively. Oracle Solutions has stabilized from the completion of a large client engagement which primarily explains the decreases on a year over year comparison.
SAP Solutions total revenue was $16.3$17.8 million and $13.4$34.1 million during the second quarter and first threesix months of 20262026, respectively, as compared to $13.9 million and $27.3 million in the same periods of 2025, respectively. The increase in revenue during the second quarter and first threesix months of 2026, as compared to the same periods in 2025, was primarily driven by implementation services that correspond to the increased volume of software sales from the last several quarters that wereare coupled with significant implementation fees. This was primarily due to the increased sales investments we have made with SAP and SAP’s success driving S4 HANA Cloud migrations.
Reimbursements as a percentage of Company total revenue were 1% during both the second quarter and first six months of 2026, respectively, as compared to 2% during both the second quarter and first threesix months of 2026 and 2025, respectively.2025. Reimbursements are project travel-related expenses passed through to a client with no associated operating margin.
Personnel costs before reimbursable expenses decreased 20%,18% and 19%, to $38.5$40.6 million and $79.1 million for the second quarter and first threesix months of 2026, respectively, as compared to $48.4$49.7 million and $98.1 million in the same periodperiods of 2025.2025, respectively. The decrease in the second quarter and first quartersix months of 2026 was primarily related to the decrease of acquisition related non-cash stock based compensation expense relating to the LeewayHertz acquisition and to the non-cash stock based compensation expense relating to the stock price award program,program. In addition, the Company incurred headcount reductions from the leverage of our Gen AI delivery platforms and lower bonus accruals commensurate with performance. Personnel costs as a percentage of total Company total revenue were 56%59% and 62%57% during the second quarter and first threesix months of 20262026, respectively, as compared to 63% during both the second quarter and first six months of 2025, respectively.
Non-cash stock based compensation reversal of expense, included in personnel costs before reimbursable expenses, was $0.6$2.5 million and $1.9 million during the second quarter and first six months of 2026, respectively, as compared to $5.0 million and $9.9 million in the firstsame threeperiods monthsin of2025, 2026 and non-cash stock based compensation expense was $4.9 million during the first three months 2025.respectively. The decrease in the second quarter and first threesix months of 2026 was primarily related to a decrease in non-cash stock compensation from the stock price award program issuances (Note 7) and reversals of acquisition related non-cash stock compensation expense that were performance-related (Note 1 and Note 7).performance-related.
SG&A costs decreased 21%,17% and 19%, to $18.4$19.5 million and $38.0 million, for the second quarter and first threesix months of 2026, respectively, as compared to $23.4 million and $46.8 million for the same periodperiods in 2025.2025, respectively. The decrease in the costs during the second quarter and first threesix months of 2026 was primarily due to decreased non-cash stock based compensation from the stock price award program issuances (Note 7) and lower bonus accruals (Note 7).accruals. SG&A costs as a percentage of total Company revenue were 28% and 27% during the second quarter and first threesix months of 2026, as compared to 30% during the same periodperiods in 2025, respectively.
Non-cash stock based compensation expense, included in SG&A, was $2.1$1.8 million and $4.7$3.9 million during the second quarter and first threesix months of 20262026, respectively, as compared to $4.7 million and $9.5 million for the same periods in 2025, respectively. The decrease in the second quarter and first threesix months of 2026 primarily relates to the non-cash stock compensation expense from the stock price award program issuances (Note 7).
Amortization expense was $315$299 thousand and $145$614 thousand for the second quarter and first threesix months of 20262026, respectively, as compared to $231 thousand and $376 thousand for the same periods in 2025, respectively, which was related to the intangible assets acquired in our September 2024 acquisition of LeewayHertz and May 2025 acquisition of Spend Matters.
Restructuring Costs. During the second quarter and first quartersix months of 2026, we incurred restructuring costs of $1.9$492 thousand and $2.4 million as a result of the continued pivot of our business to Gen AI.AI, respectively. These costs were primarily employee-related costs, as the Company reduced staff to be commensurate with current market demand and the leverage of our Gen AI delivery platforms are expected to have on our service offerings.
Global S&BT segment contribution was $9.1 million and $18.2 million during the second quarter and first threesix months of 2026, respectively, as compared to $12.8$13.0 million and $25.8 million for the same periodperiods in 2025, respectively, primarily due to revenue decreases caused by elongated client decision making that persisted throughout the quarter as mentioned above.
Oracle Solutions segment contribution was $3.6$4.2 million and $7.8 million during the second quarter and first threesix months of 2026, respectively, as compared to $4.4$4.5 million and $8.8 million for the same periodperiods in 2025, respectively. The decrease during the second quarter and first threesix months of 2026 was primarily due to decreased revenue, as discussed above, partially offset by decreased incentive compensation accruals related to performance.
SAP Solutions segment contribution was $5.0$5.6 million and $4.3$10.6 million during the second quarter and first threesix months of 20262026, respectively, as compared to $3.9 million and $8.1 million for the same periods in 2025, respectively. The increase in segment profit in the second quarter and first threesix months of 2026, as compared to the same periodperiods in 2025, was primarily due to increased implementation services from increased volume of software sales overthat are coupled with significant implementation fees. This was primarily due to the pastincreased severalsales quartersinvestments aswe mentionedhave above.made with SAP and SAP’s success driving S4 HANA Cloud migrations.
Interest Expense, Net. Interest expense, net was $1.0$1.2 million and $0.2$2.2 million during the second quarter and first threesix months of 20262026, respectively, as compared to $0.4 million and $0.6 million in the same periods in 2025, respectively. As of MarchJune 27,26, 2026, we had outstanding debt of $79.0$81.0 million, excluding debt issue costs. As of MarchJune 28,27, 2025, we had outstanding debt of $18.0$23.0 million, excluding debt issue costs.
Income Taxes. During the second quarter and first threesix months of 2026, we recorded $3.6$2.1 million and $5.7 million of income tax expense, respectively, related to certain federal, foreign and state taxes which reflected an effective tax rate of 46.0%.32.2% and 39.8%, respectively. The increase in the effective tax rate for the first six months of the year as compared to the second quarter 2026 tax rate is primarily due to the vesting fair value for restricted stock unit awards being lower than the grant date fair value for such awards. During the second quarter and first threesix months of 2025, we recorded $1.1$2.6 million and $3.6 million of income tax expenseexpense, respectively, related to certain federal, foreign and state taxes which reflected an effective tax rate of 25.2%.60.7% and 43.0%, respectively. The increase in the effective tax rate in 2025 was primarily due to the limitation of executive compensation deductions related to executive compensation, primarily driven by the stock price award program (See Note 7).
As of MarchJune 27,26, 2026 and December 26, 2025, we had $6.1$14.2 million and $18.2 million, respectively, classified as cash on the consolidated balance sheets. We currently believe that available funds (including the cash on hand and funds available for borrowing under our revolving line of credit the "Credit Facility") and cash flows generated by operations will be sufficient to fund our working capital requirements, including debt payments, lease obligations and capital expenditures for at least the next twelve months and beyond. We may decide to raise additional funds in order to fund expansion, to develop new or further enhance products and services, to respond to competitive pressures, or to acquire complementary businesses or technologies. There is no assurance that additional financing would be available when needed or desired. Our cash requirements have not changed materially from those disclosed in Item 7 included in Part II of our Annual Report on Form 10-K for the year ended December 26, 2025.
Net cash usedprovided inby operating activities was $5.1$10.1 million during the first threesix months of 2026, as compared to net cash provided by $4.2$9.8 million during the same period in 2025. In 2026, the net cash usedprovided inby operating activities was primarily due to increasesnet inincome accountsadjusted receivablefor andnon-cash items, partially offset by decreases in accrued liabilities primarily due to payments of the prior year earned incentive compensation liabilities and payments to vendors,vendors partiallyand offsetincreases byin netaccounts receivable and the timing of payments for income adjusted for non-cash items.taxes. In 2025, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items and increases in contract liabilities, partially offset by increases in accounts receivable,receivable and contract assets, decreases in accrued liabilities and other accruals primarily due to payments ofin the prior year of earned incentive compensation liabilities and the timing of payments for income taxes and to vendors.
Net cash used in investing activities was $2.4$5.0 million during the first threesix months of 2026, as compared to $1.5$4.2 million during the same period in 2025. During both the first threesix months periods of 2026 and 2025, cash flows used in investing activities primarily included investments made to the continued development of our Gen AI delivery platforms.
Net cash used in financing activities was $4.6$9.1 million during the first threesix months of 2026, as compared to $9.7$11.8 million during the same period in 2025. The usage of cash in 2026 primarily related to the repurchase of $4.6$8.6 million of the Company's common stock and dividend payments of $3.0$6.0 million, partially offset by a net $3.0$5.0 million drawdown on our revolving line of credit (the "Credit Facility.Facility"). The usage of cash in 2025 primarily related to the repurchase of $11.7$16.1 million of the Company's common stock and dividend payments of $3.0$6.3 million, partially offset by the $5.0$10.0 million drawdown on our Credit Facility.
As of June 26, 2026, we had $81.0 million of outstanding borrowings under our Credit Facility, excluding deferred debt costs, leaving us with a capacity of approximately $19.0 million. On August 3, 2026, we amended and restated our credit agreement in order to extend the maturity date of the Credit Facility and provide the Company with an additional $25 million in borrowing capacity resulting in aggregate borrowing capacity of up to $125 million. See Note 6, “Credit Facility,” to our consolidated financial statements included in this Quarterly Report on Form 10-Q for more information
As of March 27, 2026, we had $79.0 million of outstanding borrowings under our Credit Facility, excluding deferred debt costs, leaving us with a capacity of approximately $21.0 million.
HCKT insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding HCKT (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Millennium Management (Israel Englander) | 2026-06-30 | 907,670 | $9.8M | 0.01% | Added 153% |
| Renaissance Technologies | 2026-06-30 | 783,239 | $8.4M | 0.01% | Reduced 13% |
| Two Sigma Investments | 2026-06-30 | 573,374 | $6.2M | 0.0% | Reduced 28% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 220,778 | $2.4M | 0.0% | Added 92% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 59,621 | $642.1K | 0.0% | Reduced 22% |
| D. E. Shaw & Co. | 2026-06-30 | 31,712 | $341.5K | 0.0% | Added 71% |