UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 26, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 333-48123
The Hackett Group, Inc.
(Exact name of registrant as specified in its charter)
Florida
65-0750100
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1001 Brickell Bay Drive, Suite 3000
Miami, Florida
33131
(Address of principal executive offices)
(Zip Code)
(305) 375-8005
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $.001 per share
HCKT
NASDAQ Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-Accelerated Filer
Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of July 31, 2026 there were 24,877,873 shares of common stock outstanding.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
Item 1.
Financial Statements
Consolidated Balance Sheets as of June 26, 2026 (unaudited) and December 26, 2025
3
Consolidated Statements of Operations for the Three and Six Months Ended June 26, 2026, and June 27, 2025, (unaudited)
4
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 26, 2026, and June 27, 2025, (unaudited)
5
Consolidated Statements of Cash Flows for the Six Months Ended June 26, 2026, and June 27, 2025, (unaudited)
6
Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended June 26, 2026, and June 27, 2025, (unaudited)
7
Notes to Consolidated Financial Statements (unaudited)
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
21
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
26
Item 4.
Controls and Procedures
Item 5.
Other Information
PART II - OTHER INFORMATION
Legal Proceedings
27
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.
Exhibits
28
SIGNATURES
29
2
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
June 26,
December 26,
2026
2025
ASSETS
Current assets:
Cash
$
14,162
18,197
Accounts receivable and contract assets, net of allowance of $1,496 and $1,921 at June 26, 2026 and December 26, 2025, respectively
61,900
59,505
Prepaid expenses and other current assets
8,444
6,175
Total current assets
84,506
83,877
Property, software and equipment, net
26,584
24,011
Other assets
358
Intangible assets, net
2,572
3,252
Goodwill
90,080
90,659
Operating lease right-of-use assets
2,173
2,484
Deferred tax asset
2,336
1,806
Total assets
208,609
206,447
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
5,246
6,295
Accrued expenses and other liabilities
23,797
28,824
Contract liabilities
13,287
12,317
Income tax payable
-
74
Operating lease liabilities
1,292
1,259
Total current liabilities
43,622
48,769
Deferred tax liability, net
15,072
12,537
Long term debt, net
80,852
75,818
881
1,223
Total liabilities
140,427
138,347
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.001 par value, 1,250,000 shares authorized; none issued and outstanding
—
Common stock, $0.001 par value, 125,000,000 shares authorized; 62,254,534 and 61,886,232 shares issued at June 26, 2026 and December 26, 2025, respectively
62
Additional paid-in capital
358,353
352,588
Treasury stock, at cost, 37,377,576 and 36,793,733 shares June 26, 2026 and December 26, 2025, respectively
(357,065
)
(350,171
Retained earnings
81,053
78,363
Accumulated other comprehensive loss
(14,221
(12,742
Total shareholders' equity
68,182
68,100
Total liabilities and shareholders' equity
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Quarter Ended
Six Months Ended
June 27,
Revenue:
Revenue before reimbursements
68,342
77,629
136,185
153,860
Reimbursements
986
1,270
1,940
2,904
Total revenue
69,328
78,899
138,125
156,764
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses (includes $2,460 and $1,871 and $4,985 and $9,913 of non-cash stock based compensation expense in the three months and six months ended June 26, 2026 and June 27, 2025, respectively)
40,632
49,672
79,137
98,052
Reimbursable expenses
Total cost of service
41,618
50,942
81,077
100,956
Selling, general and administrative costs (includes $1,793 and $3,861 and $4,736 and $9,480 of non-cash stock based compensation expense in the three months and six months ended June 26, 2026 and June 27, 2025, respectively)
19,506
23,362
37,952
46,810
Restructuring costs
492
2,448
Total costs and operating expenses
61,616
74,304
121,477
147,766
Income from operations
7,712
4,595
16,648
8,998
Other expense, net:
Interest expense, net
(1,211
(366
(2,219
(568
Income before income taxes
6,501
4,229
14,429
8,430
Income tax expense
2,092
2,568
5,739
3,626
Net income
4,409
1,661
8,690
4,804
Basic net income per common share:
Income per common share
0.18
0.06
0.35
0.17
Weighted average common shares outstanding
25,064
27,602
25,115
27,595
Diluted net income per common share:
0.34
Weighted average common and common equivalent shares outstanding
25,166
28,482
25,212
28,433
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Foreign currency translation adjustment, net
(64
1,770
(1,479
2,722
Total comprehensive income
4,345
3,431
7,211
7,526
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense
2,313
2,059
Amortization expense
614
376
Amortization of debt issuance costs
47
45
Non-cash stock based compensation expense
5,732
19,394
Provision for (reversal of) doubtful accounts
170
(150
(Gain) loss on foreign currency translation
(574
776
Deferred income tax expense
1,995
838
Changes in assets and liabilities, net of acquisition:
Increase in accounts receivable and contract assets
(2,470
(5,208
Increase in prepaid expenses and other assets
(1,895
(4,039
Decrease in accounts payable
(1,049
(1,738
Decrease in accrued expenses and other liabilities
(4,373
(5,272
Increase in contract liabilities
969
1,281
Decrease in income tax payable
(75
(3,323
Net cash provided by operating activities
10,094
9,843
Cash flows from investing activities:
Purchases of property, software and equipment
(4,990
(3,454
Cash consideration paid for acquisition
(767
Net cash used in investing activities
(4,221
Cash flows from financing activities:
Debt proceeds
11,000
10,000
Repayment of debt
(6,000
Debt issuance costs
(13
(5
Proceeds from ESPP
544
670
Taxes paid to satisfy employee withholding tax obligations
(1,723
(5,603
Dividends paid
(6,034
(6,342
Repurchase of common stock
(6,894
(10,521
Net cash used in financing activities
(9,120
(11,801
Effect of exchange rate on cash
(19
(45
Net decrease in cash
(4,035
(6,224
Cash at beginning of period
16,366
Cash at end of period
10,142
Supplemental disclosure of cash flow information:
Cash paid for income taxes
5,525
8,782
Cash paid for interest
2,082
577
Supplemental disclosure of non-cash flow financing activities:
Dividend declared during the quarter and paid the following quarter
2,979
3,302
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Accumulated
Additional
Other
Total
Common Stock
Paid in
Treasury Stock
Retained
Comprehensive
Shareholders'
Shares
Amount
Capital
Earnings
Loss
Equity
Balance at December 26, 2025
61,886
(36,794
Issuance of common stock
301
(1,666
Treasury stock purchased
(212
(2,966
Amortization of restricted stock units and common stock subject to vesting requirements
2,699
Dividends declared
(3,021
4,281
Foreign currency translation
(1,415
Balance at March 27, 2026
62,187
353,621
(37,006
(353,137
79,623
(14,157
66,012
67
487
(372
(3,928
4,245
(2,979
Balance at June 26, 2026
62,254
(37,378
Balance at December 27, 2024
61,031
61
332,285
(33,540
(281,022
78,311
(14,061
115,574
364
(5,519
(206
(6,202
9,785
(3,318
3,143
952
Balance at March 28, 2025
61,395
336,551
(33,746
(287,224
78,136
(13,109
114,415
35
583
(177
(4,319
8,994
(3,302
Balance at June 27, 2025
61,430
346,128
(33,923
(291,543
76,495
(11,339
119,802
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and General Information
Basis of Presentation
The accompanying consolidated financial statements of The Hackett Group, Inc. (“Hackett” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the Company’s accounts and those of its wholly-owned subsidiaries which the Company is required to consolidate. All intercompany transactions and balances have been eliminated in the consolidation.
In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 26, 2025, included in the Annual Report on Form 10-K filed by the Company with the SEC on February 28, 2026. The consolidated results of operations for the quarter and six months ended June 26, 2026, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Business Combination
Spend Matters
On May 15, 2025, Hackett acquired certain assets and liabilities of Spend Matters LLC (“Spend Matters”), a leading provider of data-backed technology and solutions intelligence in the procurement and supply chain sectors. At closing, Hackett paid cash consideration of $767 thousand.
As a result of the acquisition, the Company recognized intangible assets of $2.0 million, with a remaining weighted average useful life of 2.0 years.
Segment Reporting
Segments are defined as components of a company that engage in business activities from which they earn revenue and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company assessed its operating segments under the management approach in accordance with ASC 280, Segment Reporting (ASC 280), and has determined that it has three operating segments: Global S&BT, Oracle Solutions and SAP Solutions which are also its reportable segments. See Note 11 “Segment Information and Geographical Data” for detailed segment information.
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. Global S&BT includes the results of the Company’s Gen AI and strategic business consulting practices; Oracle Solutions includes the results of the Company’s Oracle EPM/ERP and AI Enablement practices; SAP Solutions includes the Company’s SAP applications and related SAP service offerings. A reporting unit is an operating segment or one level below an operating segment to which goodwill is assigned. The goodwill was allocated to the reporting unit based on the reporting unit's relative fair value. The carrying amount of goodwill by reporting unit is as follows (in thousands):
1. Basis of Presentation and General Information (continued)
Foreign
Additions/
Currency
Adjustments
Translation
Global S&BT
63,967
(579
63,388
Oracle Solutions
16,699
SAP Solutions
9,993
Revenue Recognition
The Company primarily generates its revenue from providing professional services to its clients. The Company also generates revenue from software-related sales, software maintenance and support and subscriptions to its executive and best practices advisory programs. A single contract could include one or multiple performance obligations. For those contracts that have multiple performance obligations, the Company allocates the total transaction price to each performance obligation based on its relative standalone selling price. The Company determines the standalone selling price based on the respective selling price of the individual elements when sold separately.
Revenue is recognized when control of the goods and services provided are transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods and services using the following steps: 1) identify the contract, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue as or when the Company satisfies the performance obligations.
The Company typically satisfies its performance obligations for professional services over time as the related services are provided. The performance obligations related to software maintenance and support and subscriptions to its executive and best practice advisory programs are typically satisfied evenly over the course of the service period. Other performance obligations, such as software-related sales, are satisfied at a point in time.
The Company generates revenue under four types of billing arrangements: fixed-fee; time-and-materials; executive and best practice advisory services; and software-related sales and software maintenance and support.
In fixed-fee billing arrangements, which would also include contracts with capped fees, the Company agrees to a pre-established fee or fee cap in exchange for a predetermined set of professional services. The Company sets the fees based on its estimates of the costs and timing for completing the engagements. The Company generally recognizes revenue under fixed-fee or capped fee arrangements using a proportionate performance approach, which is based on work completed to-date as compared to estimates of the total services to be provided under the engagement. Estimates of total engagement revenue and cost of services are monitored regularly during the term of the engagement. If the Company’s estimates indicate a potential loss, such a loss is recognized in the period in which the loss first becomes probable and reasonably estimable. The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or milestone driven, with net thirty or sixty-day terms, however client terms are subject to change.
Time-and-material billing arrangements require the client to pay based on the number of hours worked by the Company’s consultants at agreed hourly rates. The Company recognizes revenue under time-and-material arrangements as the related services or goods are provided, using the right to invoice practical expedient which allows it to recognize revenue in the amount based on the number of hours worked and the agreed upon hourly rates. The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or milestone driven, with net thirty or sixty-day terms, however client terms are subject to change.
Advisory services contracts are typically in the form of a subscription agreement which allows the customer access to the Company’s executive and best practice advisory programs. There is typically a single performance obligation and the transaction price is the contractual amount of the subscription agreement. Revenue from advisory services contracts is recognized ratably over the life of the agreements. Customers are typically invoiced at the inception of the contract, with net thirty or sixty-day terms, however client terms are subject to change.
The resale of on-premise software, cloud software and maintenance contracts are in the form of SAP America ("SAP") software or maintenance agreements provided by SAP. SAP is the principal and the Company is the agent in these transactions as the Company does not obtain title to the software and maintenance which is sold simultaneously. The transaction price is the Company’s agreed-upon percentage of the software-related sale for either on-premise software or cloud software or maintenance amount in the contract with the vendor. Revenue for the resale of software is recognized upon contract execution and customer’s receipt of the software. The Company also provides software maintenance on other ERP systems, primarily Oracle. Revenue from maintenance contracts is recognized ratably over the life of the agreements. The customer is typically invoiced at contract inception, with net thirty or sixty-day terms, however client terms are subject to change.
9
Revenue before reimbursements excludes reimbursable expenses charged to clients. Reimbursements, which include travel and out-of-pocket expenses, are included in revenue, and an equivalent amount of reimbursable expenses is included in the cost of service.
Expense reimbursements that are billable to clients are included in total revenue and are substantially all billed as time-and-material billing arrangements. Therefore, the Company recognizes all reimbursable expenses as revenue as the related services are provided, using the right to invoice practical expedient. Reimbursable expenses are recognized as expenses in the period in which the expense is incurred. Any expense reimbursements that are billable to clients under fixed-fee billing arrangements are recognized in line with the proportionate performance approach.
The payment terms and conditions in the Company’s customer contracts vary. The agreements entered into in connection with a project, whether time and materials-based or fixed-fee or capped-fee based, typically allow clients to terminate early due to breach or for convenience with 30 days’ notice. In the event of termination, the client is contractually required to pay for all time, materials and expenses incurred by the Company through the effective date of the termination. In addition, from time to time the Company enters into agreements with its clients that limit its right to enter into business relationships with specific competitors of that client for a specific time period. These provisions typically prohibit the Company from performing a defined range of services which it might otherwise be willing to perform for potential clients. These provisions are generally limited to six months to twelve months and usually apply only to specific employees or the specific project team.
Differences between the timing of billings and the recognition of revenue are recognized as either contract assets or contract liabilities in the accompanying consolidated balance sheets. Revenue recognized for services performed but not yet billed to clients is recorded as contract assets and is included within accounts receivable and contract assets. Services not yet performed, however billed to the client and uncollected at period end, are recorded as contract assets and are included within accounts receivable and contract assets. Client prepayments are classified as contract liabilities and recognized over future periods as earned in accordance with the applicable engagement agreement. See Note 3 for the accounts receivable and contract asset balances. During the quarter and six months ended June 26, 2026, the Company recognized $1.0 million and $2.3 million, respectively, of revenue as a result of changes in the contract liability balance, as compared to $1.9 million and $6.2 million, respectively, for the quarter and six months ended June 27, 2025. As of December 27, 2024, the Company had $11.1 million of contract liabilities.
Based on the information that management reviews internally for evaluating operating segment performance and nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors, the Company disaggregates revenue as follows for the quarter and six months ended June 26, 2026 and June 27, 2025 (in thousands):
Global S&BT:
North America Consulting
27,957
34,115
57,016
67,262
International Consulting
8,079
10,090
15,795
20,300
Total Global S&BT
36,036
44,205
72,811
87,562
Oracle Solutions:
Consulting and software support and maintenance
15,481
20,801
31,166
41,887
Total Oracle Solutions
SAP Solutions:
13,644
12,336
26,419
22,268
Software-related sales
4,167
1,557
7,729
5,047
Total SAP Solutions
17,811
13,893
34,148
27,315
Total segment revenue
10
The total revenue (excluding reimbursable expenses) from the Global S&BT segment, the Oracle Solutions segment and the SAP Solutions segment's consulting and software support and maintenance services is all recognized over time. The software-related sales revenue included in the SAP Solutions segment is recognized at a point in time.
Capitalized Sales Commissions
Sales commissions earned by the Company’s sales force are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized as project revenue is recognized. The Company determined the period of amortization by taking into consideration the customer contract period, which is generally less than 12 months. Commission expenses are included in the Selling, general and administrative costs in the accompanying consolidated statements of operations. As of December 26, 2025 and December 27, 2024, the Company had $1.3 million and $1.8 million, respectively, of deferred commissions, of which approximately $0.6 million and $1.0 million was amortized during both the quarter and six months ended June 26, 2026, and June 27, 2025, respectively. No impairment loss was recognized relating to the capitalization of deferred commissions.
Stock Based Compensation
We recognize compensation expense for awards of equity and liability instruments, which have only a service condition, to employees based on the grant-date fair value of those awards, over the requisite service period, with limited exceptions.In September 2024, a stock price award program was offered to certain leaders. These equity awards were granted with both amarket condition (three tranches, each with varying market share price thresholds) and service conditions. The Company 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 a service condition 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 has 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. If an employee forfeits nonvested shares prior to meeting a service condition, the previously recognized expense is reversed. See Note 7 for additional information.
Practical Expedients
The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be less than one year.
Sales tax collected from customers and remitted to the applicable taxing authorities is accounted for on a net basis, with no impact on revenue.
Fair Value
The Company’s financial instruments consist of cash, accounts receivable and contract assets, accounts payable, accrued expenses and other liabilities, contract liabilities and long-term debt. As of June 26, 2026 and December 26, 2025, the carrying amount of each financial instrument approximated the instrument’s respective fair value due to either the short-term nature or the maturity of these instruments.
The Company uses significant other observable market data or assumptions (Level 2 inputs as defined in accounting guidance) that it believes market participants would use in pricing debt. The fair value of the debt approximated the carrying amount, using Level 2 inputs, due to the short-term variable interest rates based on market rates.
11
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03 Expense Disaggregation Disclosures (Subtopic 220-40) to require public business entities to disclose disaggregated information about expenses to help investors better understand an entity's performance, better assess the entity's prospects for future cash flows, and compare an entity's performance over time and with that of other entities. The amendments in this ASU are effective for fiscal years beginning after December 15, 2026, and interim periods with annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.
In September 2025, the FASB issued ASU 2025‑06, Intangibles—Goodwill and Other—Internal‑Use Software (Subtopic 350‑40): Targeted Improvements to the Accounting for Internal‑Use Software. The ASU modernizes the accounting model for internal‑use software by removing references to software development project stages and replacing them with a principles‑based capitalization threshold that is intended to better align with current, including iterative and agile, software development practices. Under the updated guidance, internal‑use software development costs are capitalized when management has authorized and committed funding for the project and it is probable that the project will be completed and the software will be used to perform its intended function. The ASU also supersedes existing guidance on website development costs and incorporates that guidance into Subtopic 350‑40. The amendments do not change the accounting for software to be sold, leased, or marketed, nor do they change which costs are eligible for capitalization or when capitalization ceases. The guidance is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements
2. Net Income per Common Share
Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. With regard to common stock subject to vesting requirements and restricted stock units issued to the Company’s employees and non-employee members of its Board of Directors, the calculation includes only the vested portion of such stock and units.
Diluted net income per common share is computed by dividing net income by the weighted average number of common shares outstanding, increased by the assumed conversion of other potentially dilutive securities during the period.
The following table reconciles basic and dilutive weighted average common shares:
Basic weighted average common shares outstanding
25,064,082
27,602,030
25,114,936
27,594,678
Effect of dilutive securities:
Unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees
102,052
879,523
96,960
838,582
Dilutive weighted average common shares outstanding
25,166,134
28,481,553
25,211,896
28,433,260
Approximately 375 thousand shares and 294 thousand shares of common stock equivalents were excluded from the computations of diluted net income per common share for the quarter and six months ended June 26, 2026, respectively, as compared to 3 thousand shares and 2 thousand shares for the same periods in 2025, respectively, as inclusion would have had an anti-dilutive effect on diluted net income per common share. In addition, 1.2 million restricted stock units in the quarter and six months ended June 26, 2026, were excluded from the computations of diluted net income per common share as they are contingently issuable shares with market-related conditions that have not been satisfied. Please see Note 7 for further information.
12
3. Accounts Receivable and Contract Assets, Net
Accounts receivable and contract assets, net, consisted of the following (in thousands):
Accounts receivable
29,120
32,433
Contract assets (unbilled revenue)
34,276
28,993
Allowance for doubtful accounts
(1,496
(1,921
Accounts receivable and contract assets, net
Accounts receivable as of June 26, 2026 and December 26, 2025, is net of uncollected advanced billings. Contract assets as of June 26, 2026 and December 26, 2025, includes recognized recoverable costs and accrued profits on contracts for which billings had not been presented to clients. As of December 27, 2024, the Company had accounts receivable and contract assets of $35.9 million and $23.5 million, respectively. The allowance for doubtful accounts includes reserves related to client collection concerns and aged receivables. The Company has included $17.0 million and $11.9 million as of June 26, 2026 and December 26, 2025, respectively, in accounts receivable for certain software-related contract assets (unbilled revenue) that are multi-year in nature.
4. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (in thousands):
Accrued compensation and benefits
13,464
13,414
Accrued bonuses
359
4,243
Dividend payable
3,013
Accrued sales, use, franchise and VAT tax
2,544
2,543
Restructuring reserves
1,753
883
Non-cash stock based compensation accrual
141
Acquisition-related liabilities
245
1,895
Other accrued expenses
2,444
2,692
Total accrued expenses and other liabilities
5. Lease Commitments
The Company has operating leases for office space and, to a much lesser extent, operating leases for equipment. The Company’s office leases are between terms of 1 year and 5 years. Rents usually increase annually in accordance with defined rent steps or are based on current year consumer price index adjustments. Some of the lease agreements contain one or more of the following provisions: tenant allowances, rent holidays, lease premiums, and rent escalation clauses. There are typically no purchase options, residual value guarantees or restrictive covenants. When renewal options exist, the Company generally does not deem them to be reasonably certain to be exercised, and therefore the amounts are not recognized as part of the lease liability nor the right of use asset. The Company has certain leases that have terms that are a year or less and are accounted on a straight-line basis over the term of the lease. The Company recognized $24 thousand and $48 thousand of lease expense in the quarter and six months ended June 26, 2026, respectively, on these leases, as compared to $39 thousand and $78 thousand, respectively, for the same periods in 2025.
The components of lease expense were as follows for the six months ended June 26, 2026 (in thousands):
Operating lease cost
659
Total net lease costs
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5. Lease Commitments (continued)
The weighted average remaining lease term is 2.1 years. The weighted average discount rate utilized is 6.0%. For the quarter and six months ended June 26, 2026, the Company paid $0.4 million and $0.7 million, respectively, from operating cash flows for its operating leases.
Future minimum lease commitments under non-cancellable operating leases as of June 26, 2026, were as follows (in thousands):
2026 (excluding the six months ended June 26, 2026)
715
2027
1,041
2028
475
2029
174
2030 and thereafter
Total lease payments
2,405
Less imputed interest
(232
As of June 26, 2026, the Company does not have any additional material operating leases that have not yet commenced.
6. Credit Facility
The Company had a credit agreement with Bank of America, N.A. (the "Credit Agreement"), which provided for borrowings up to $100.0 million pursuant to a revolving line of credit which had a maturity date of November 7, 2027 (the "Existing Credit Facility").
As of June 26, 2026, the Company had $81.0 million of outstanding debt, excluding $0.1 million of deferred debt costs, which will be amortized over the remaining life of the Existing Credit Facility. As of December 26, 2025, the Company had $76.0 million of outstanding debt, excluding $0.2 million of deferred debt costs.
As of June 26, 2026, the applicable margin percentage was 1.75% per annum for the Secured Overnight Financing Rate ("SOFR"), and 1.0% per annum, for the base rate. As of June 26, 2026, the interest rate on the Company's outstanding debt was utilizing the SOFR margin percentage. As of June 26, 2026, the interest rate on the Company's outstanding debt was 5.5%, utilizing the SOFR margin percentage. The interest rate of the commitment fee as of June 26, 2026 was 0.250%. Interest payments are made monthly.
The Company is subject to certain covenants, including total consolidated leverage, fixed cost coverage and liquidity requirements, each as set forth in the Credit Agreement, subject to certain exceptions. As of June 26, 2026, the Company was in compliance with all covenants.
The obligations of the Company under the Amended Credit Agreement are guaranteed by existing and future wholly-owned material domestic subsidiaries of the Company (the "Guarantors") and are secured by substantially all of the existing and future property and assets of the Company and the Guarantors.
The interest rates per annum applicable to loans under the Credit Facility will be, at the Company's option, equal to either a base rate or a Term SOFR rate, in each case, plus an applicable margin percentage. The applicable margin percentage is determined from time to time under the Amended Credit Agreement based on a consolidated leverage ratio, and ranges from 1.375% to 2.250% per annum in the case of Term SOFR advances and from 0.375% to 1.250% per annum in the case of base rate advances. The initial applicable margin percentage is 1.625% per annum in the case of Term SOFR rate advances, and 0.625% per annum in the case of base rate advances. A commitment fee is also payable on unused commitments of the Credit Facility, and varies between 0.125% and 0.375% per annum depending on a consolidated leverage ratio, with the initial level being 0.225% per annum.
The Amended Credit Agreement contains customary representations, warranties, indemnities and affirmative and negative covenants. The negative covenants include, among others, certain limitations on the ability to: incur liens and indebtedness; consummate mergers, consolidations or asset sales; make guarantees and investments; and pay dividends or distributions in respect of the Company's shares. In addition, the Amended Credit Agreement contains financial covenants that require the Company to
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6. Credit Facility (continued)
maintain, on a consolidated basis (i) a consolidated fixed charge coverage ratio of at least 1.50 to 1.00, and (ii) a consolidated leverage ratio of not more than 3.50 to 1.00, in each case as calculated in accordance with the Amended Credit Agreement.
The Amended Credit Agreement also includes customary events of default, including, among others, the failure to make payments under the Credit Facility when due, bankruptcy, certain judgments, breaches of representations and warranties, breaches of covenants and the occurrence of certain events, including cross default to other indebtedness of the Company and its subsidiaries.
7. Stock Based Compensation
Restricted Stock Units
On September 16 and September 17, 2024, the Company granted its Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and certain other Company leaders performance-based restricted stock units, in the amounts of 786,885, 413,115, 72,000, and 607,350, respectively. In connection with the awards, the annual equity incentive award opportunities for the recipients during the performance period of the awards will be reduced by 50% compared to the annual equity incentive award opportunities in the Company’s executive compensation program for 2024. The awards are split into three equal tranches with each tranche having its own market condition and service condition. The market condition is met when the Company’s stock price reaches a certain share price hurdle for twenty consecutive trading days during the performance period from the grant date through December 31, 2028. The share price hurdles are $30, $40, and $50 for the first, second, and third tranches, respectively. Additionally, the service condition is met if the employee is employed on the first, second, and third anniversary of the grant date for the first tranche, second tranche, and third tranche, respectively.
Furthermore, if the second or third tranches are not met during the performance period, and the volume weighted average of the Company’s stock price falls between two share price hurdles for over 20 consecutive trading days immediately prior to the end of the performance period, the employee will vest in an interpolated amount of the next tranche.
The Company used a Monte Carlo valuation model to determine the fair value of the three tranches as of the grant date. The Monte Carlo valuation model, using different share price paths, calculates a derived service period which is the median share price path on which the market condition is satisfied for each tranche. 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 has 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. If an employee forfeits nonvested shares prior to meeting the service condition, the previously recognized expense is reversed.
As of June 26, 2026 and June 27, 2025, the market and service conditions for the first tranche had been met and the service conditions were met and as such, the shares were vested and were included in the Company's basic shares outstanding for the period. The first tranche vested 626,450 shares in September 2025, which included shares that were withheld to satisfy tax obligations. As of December 26, 2025 and June 26, 2026, the market conditions for the second and third tranche had not been met and the shares had not vested, therefore shares were not included in the Company's basic or dilutive shares outstanding. The stock price award program non-cash stock compensation expense was $1.6 million and $2.7 million for the quarter and six months ended June 26, 2026, respectively. As of June 26, 2026, there was $3.4 million of total unrecognized non-cash stock based compensation expense which is expected to be recognized over a weighted average period of 1.0 year.
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7. Stock Based Compensation (continued)
The following tables summarize information about the Company’s stock price award program awards described above:
Award Summary
Tranche
Grant Date Fair Value
Share Price Vesting Conditions
Underlying Share #
Contractual Service Period
Derived Service Period
September 16, 2024
September 17, 2024
Both Grant Dates
1
21.26
22.85
>$30pershare
424,000
202,450
1 year
0.60 years
0.46 years
14.96
16.31
>$30to<$40pershare
2 years
2.00 years
1.86 years
9.93
11.03
>$40to<$50pershare
3 years
2.71 years
2.60 years
The following table summarizes the fair value assumption utilized in the Monte Carlo valuation model to calculate fair value:
Grant Date
Volatility
Risk Free Interest Rate
Dividend Yield
29.5
%
3.38
1.70
3.41
1.65
During the quarter and six months ended June 26, 2026, the Company issued 22,502 and 464,615 restricted stock units, respectively, at a weighted average grant date fair value of $11.11 and $13.67 per share, respectively. As of June 26, 2026, the Company had 2,256,004 restricted stock units outstanding at a weighted average grant date fair value of $23.65 per share. As of June 26, 2026, $19.8 million of total restricted stock unit non-cash stock based compensation expense related to unvested awards and including the stock price award program awards discussed above, had not been recognized and is expected to be recognized over a weighted average period of approximately 2.0 years.
Forfeitures for all of the Company’s outstanding equity awards are recognized as incurred.
8. Shareholders’ Equity
Treasury Stock and Tender Offer
On July 30, 2002, the Company announced that its Board of Directors approved the repurchase of the Company’s common stock through its share repurchase program. Since the inception of the repurchase plan, the Board of Directors has approved the repurchase of $373.8 million of the Company’s common stock. As of June 26, 2026, the Company had affected cumulative purchases under the plan of $355.7 million, leaving $18.1 million available for future purchases.
In December 2025, the Company completed a tender offer through which 2.0 million shares were accepted for purchase for a total cost, inclusive of transaction related fees, of $41.3 million, or $20.29 per share, which represented approximately 7% of the Company's issued and outstanding stock at the time. The Company used $40.0 million in borrowings from its Existing Credit Facility and cash on hand to fund the tender offer.
During the quarter and six months ended June 26, 2026, the Company repurchased 372 thousand shares and 584 thousand shares, respectively, on the open market and from members of the Company's Board of Directors at an average price per share of $10.56 and $11.81, respectively, for a total cost of $3.9 million and $6.9 million, respectively. This includes the Company's repurchase of 7 thousand shares from members of its Board of Directors at an average price per share of $15.22 for a total cost of $0.1 million during the six months ended June 26, 2026.
There is no expiration of the Company's repurchase authorization. Under the repurchase plan, the Company may buy back shares of its outstanding stock either on the open market or through privately negotiated transactions, subject to market conditions
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8. Shareholders’ Equity (continued)
and trading restrictions. The Company holds repurchased shares of its common stock as treasury stock and accounts for treasury stock under the cost method.
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 the employee’s behalf. During the quarter and six months ended June 26, 2026, the Company withheld and did not issue 5 thousand shares and 125 thousand shares, respectively, for a cost of $57 thousand and $1.7 million, respectively. During the quarter and six months ended June 27, 2025, the Company withheld and did not issue 3 thousand shares and 177 thousand shares, respectively, for a cost of $88 thousand and $5.6 million, respectively. The shares withheld for taxes are included under issuance of common stock in the accompanying consolidated statements of shareholders’ equity.
Dividend Program
During the six months ended June 26, 2026, the Company declared two quarterly dividend to its shareholders for an aggregate of $6.0 million, which were paid in April 2026 and July 2026. These dividends were paid from U.S. domestic sources and are accounted for as a decrease to retained earnings. Subsequent to June 26, 2026, the Company declared its third quarter dividend in fiscal year 2026 to be paid in October 2026.
9. Transactions with Related Parties
During the six months ended June 26, 2026, the Company repurchased 7 thousand shares of its common stock from members of its Board of Directors for $0.1 million, or $15.22 per share.
10. Litigation
The Company is involved in legal proceedings, claims, and litigation arising in the ordinary course of business not specifically discussed herein. In the opinion of management, the final disposition of such matters will not have a material adverse effect on the Company’s financial position, cash flows or results of operations.
11. Segment Information and Geographical Data
The Company has organized its operating and internal reporting structure to align with its primary market solutions. In accordance with ASC 280, the Company determined it has three operating segments and three reportable segments: (1) Global S&BT, (2) Oracle Solutions, and (3) SAP Solutions. Global S&BT includes the results of the Company’s strategic business consulting practices; Oracle Solutions includes the results of the Company’s Oracle EPM/ERP and AI Enablement practices; SAP Solutions includes the Company’s SAP applications and related SAP service offerings. The SAP Solutions reportable segment is the only segment that contains software-related revenue.
The Company’s chief operating decision maker (“CODM”), its Chief Executive Officer ("CEO"), reviews the financial information presented for purposes of allocating resources and evaluating segment financial performance. The CODM primarily uses revenue before reimbursement generated by the segment, cost of sales, gross margin, selling, general and administrative costs and contribution margin as a measure of profitability for each of its segments as these measures provide a comprehensive view of the segments’ financial performance. The measurement criteria for segment contribution is substantially the same for each reportable segment, excluding any unusual or infrequent items, if any. Unallocated costs include corporate costs related to the administrative functions that are performed in a centralized manner and that are not attributable to a particular segment, depreciation and amortization expense, interest expense, non-cash compensation expense and any non-recurring transactions. Segment information related to assets has been omitted as the CODM does not receive discrete financial information regarding assets at the segment level. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.
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11. Segment Information and Geographical Data (continued)
The tables below set forth information about the Company’s operating segments for the quarter and six months ended June 26, 2026 and June 27, 2025, along with the items necessary to reconcile the segment information to the totals reported in the accompanying consolidated financial statements (in thousands):
Revenue before reimbursements*
35,589
43,611
71,959
86,253
Cost of sales
19,051
22,760
39,148
45,086
Gross margin
16,538
20,851
32,811
41,167
Selling, general and administrative costs
7,437
7,863
14,637
15,395
Segment contribution
9,101
12,988
18,174
25,772
15,317
20,494
30,765
40,890
9,551
13,931
20,149
27,626
5,766
6,563
10,616
13,264
1,575
2,112
2,862
4,447
4,191
4,451
7,754
8,817
17,436
13,524
33,461
26,717
9,563
7,713
18,415
14,851
7,873
5,811
15,046
11,866
2,285
1,919
4,495
3,723
5,588
3,892
10,551
8,143
Total Company:
Total segment contribution margin
18,880
21,331
36,479
42,732
Items not allocated to segment level:
Corporate general and administrative expenses**
4,976
5,248
8,788
10,902
Non-cash stock based compensation expense***
2,138
2,814
4,534
5,579
Stock price award program compensation expense***
1,643
5,142
2,739
10,285
Acquisition-related cash compensation (reversal) expense****
308
616
Acquisition-related non-cash stock based compensation (reversal) expense****
472
1,765
(1,541
3,530
Acquisition-related costs
194
387
Restructuring costs*****
1,148
1,034
299
231
1,211
366
2,219
568
Income before taxes
*Revenue before reimbursements excludes reimbursable expenses, which are project travel-related expenses passed through to a client with no associated operating margin.
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**Corporate general and administrative expenses primarily include costs related to business support functions including accounting and finance, human resources, legal, information technology and office administration, as well as any foreign currency gains and losses. Corporate general and administrative expenses exclude one-time, non-recurring expenses and benefits, which are disaggregated in the above table.
***See Note 7.
****Reversal of performance-based accruals related to the LeewayHertz acquisition.
*****Restructuring costs are not allocated to the segments. See Note 12.
The tables below set forth information on the Company's geographical data. Total revenue, which is primarily based on the country of the contracting entity, was attributed to the following geographical areas (in thousands):
United States
56,213
62,697
112,011
126,708
Europe (U.K., Germany, France, Switzerland and Spain)
7,311
8,858
15,145
17,213
Other (Australia, Canada, India and Uruguay)
5,804
7,344
10,969
12,843
Long-lived assets are attributable to the following geographic areas (in thousands):
Long-lived assets:
103,200
102,894
Europe (U.K., Germany, Spain and Netherlands)
15,813
15,848
2,754
2,022
Total long-lived assets
121,767
120,764
The domestic long-lived assets above include the LeewayHertz and Spend Matters intangible assets of $2.6 million. See Note 1 for additional information. As of June 26, 2026 and December 26, 2025, foreign assets included $14.8 million and $15.1 million, respectively, of goodwill related to acquisitions, of which $13.8 million and $14.1 million, respectively, were attributed to the U.K..
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12. Restructuring Costs
During the quarter and six months ended June 26, 2026, the Company incurred restructuring costs of $0.5 million and $2.4 million, respectively, as a result of its continued pivot of its business to Gen AI. The costs were employee related costs, as the Company reduced staff to be commensurate with current market demand and the leverage the Company’s Gen AI delivery platforms are expected to have on the Company's service offerings.
The following table sets forth the activity in the restructuring expense accrual (in thousands):
Employee- Related
Costs
Accrual balance at December 27, 2024
3,112
Cash paid
(2,229
Accrual balance at December 26, 2025
1,956
(776
Accrual balance at March 27, 2026
2,063
(802
Accrual balance at June 26, 2026
13. Subsequent Event
On August 3, 2026, the Company amended and restated its 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 for more information.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
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.
An additional description of our risk factors is described in Part I – Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 26, 2025.
OVERVIEW
The following Management's Discussion and Analysis ("MD&A") is intended to help the reader understand the results of operations and financial condition of Hackett. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes to our consolidated financial statements included in this Quarterly Report on Form 10-Q.
Hackett is a global IP platform-based Gen AI strategic consulting and executive advisory 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 Coupa implementation offerings.
In early 2024, we launched our AI assessment platform, AI XPLR which helps clients identify, evaluate and design Gen AI enablement opportunities. Using AI XPLR, our experienced professionals guide organizations to harness the power of Gen AI solutions designed to digitally transform their operations to achieve quantifiable, breakthrough results, allowing us to be key architects of our clients' Gen AI journey.
We believe Gen AI will fundamentally change the way companies operate as well as the way consulting services are sold and delivered. We believe the Gen AI platform capabilities we have developed in AI XPLR which were expanded with ZBrain, which we acquired as part of the LeewayHertz acquisition, is highly differentiating and we expect will enable us to effectively compete in this emerging and important space.
The Hackett Group has completed over 28,400 benchmarking and performance studies with major organizations. These studies are executed utilizing our Quantum Leap platform which drives our Digital Transformation Platform (“DTP” or “Hackett DTP”). This includes the firm's benchmarking metrics, best practices repository, and best practice configuration and process flow accelerators, which enables our clients and partners to achieve digital world-class performance. We consider this, along with our recent innovations, our core Hackett Intellectual Property ("IP") which allows us to identify, design and evaluate transformation opportunities to be proprietary and key components of our Hackett Solutioning IP.
Our transformation expertise is grounded in best practices insights from benchmarking the world’s leading businesses – including 97% of the Dow Jones Industrials, 90% of the Fortune 100, 68% of the DAX 40 and 53% of the FTSE 100, which inform and are delivered by our platforms.
Impact of Macroeconomic Conditions on Our Business
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. Any deterioration in the current macroeconomic environment or economic downturn as a result of weak or uncertain economic conditions due to inflation, high interest rates, tariffs, national or geopolitical events or other factors impacting economic activity or business confidence could adversely affect our clients' financial condition or outlook which may reduce the clients' demand for our services.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, our results of operations (in thousands and unaudited):
Diluted net income per common share
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 quarter and six months ended June 26, 2026 and the same comparable periods of 2025. In this MD&A, we discuss revenue based on geographical location of engagement team personnel.
Our Company total revenue was $69.3 million and $138.1 million during the second quarter and first six months of 2026, respectively, as compared to $78.9 million and $156.8 million in the same periods in 2025, respectively. In the second quarter and first six months of 2026, one customer accounted for 3% and 4%, respectively, of our Company total revenue. In the second quarter and first six months of 2025, one customer accounted for 7% and 8%, respectively, of our Company total revenue.
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Segment revenue. The Company has three reportable segments: Global Strategy & Business Transformation (Global S&BT), Oracle Solutions and SAP Solutions. Global S&BT includes S&BT Gen AI and Business Transformation Consulting, Benchmarking, Business Advisory Services, Intellectual Property as-a-Service (IPASS) and OneStream offerings. Oracle Solutions and SAP Solutions support the two fundamentally distinct ERP systems: Oracle and SAP.
The following table sets forth total revenue by operating segment, which includes reimbursable expenses related to project travel-related expenses passed through to a client with no associated operating margin (in thousands):
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.
Oracle Solutions total revenue was $15.5 million and $31.2 million during the second quarter and first six months of 2026, 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 $17.8 million and $34.1 million during the second quarter and first six months of 2026, 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 six 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 that are 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 six months of 2025. Reimbursements are project travel-related expenses passed through to a client with no associated operating margin.
Cost of Service. Cost of service consists of personnel costs before reimbursable expenses, which includes salaries, benefits and incentive compensation for consultants and subcontractor fees, acquisition-related non-cash stock based compensation expense and non-cash stock based compensation expense, and reimbursable expenses which are travel and other expenses passed through to a client and are associated with projects.
Personnel costs before reimbursable expenses decreased 18% and 19%, to $40.6 million and $79.1 million for the second quarter and first six months of 2026, respectively, as compared to $49.7 million and $98.1 million in the same periods of 2025, respectively. The decrease in the second quarter and first six 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. 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 59% and 57% during the second quarter and first six months of 2026, respectively, as compared to 63% during both the second quarter and first six months of 2025, respectively.
Non-cash stock based compensation expense, included in personnel costs before reimbursable expenses, was $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 same periods in 2025, respectively. The decrease in the second quarter and first six 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.
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Selling, General and Administrative Costs (“SG&A”). SG&A primarily consists of salaries, benefits and incentive compensation for the selling, marketing, administrative and executive employees, non-cash stock based compensation expense and various other overhead expenses.
SG&A costs decreased 17% and 19%, to $19.5 million and $38.0 million, for the second quarter and first six months of 2026, respectively, as compared to $23.4 million and $46.8 million for the same periods in 2025, respectively. The decrease in the costs during the second quarter and first six 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. SG&A costs as a percentage of total Company revenue were 28% and 27% during the second quarter and first six months of 2026, as compared to 30% during the same periods in 2025, respectively.
Non-cash stock based compensation expense, included in SG&A, was $1.8 million and $3.9 million during the second quarter and first six months of 2026, 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 six months of 2026 primarily relates to the non-cash stock compensation expense from the stock price award program issuances (Note 7).
Amortization expense was $299 thousand and $614 thousand for the second quarter and first six months of 2026, 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 six months of 2026, we incurred restructuring costs of $492 thousand and $2.4 million as a result of the continued pivot of our business to Gen 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.
Segment Contribution. Segment contribution consists of the revenue generated by the segment, less the direct costs of revenue and selling, general and administrative expenses that are incurred directly by the segment. Items not allocated to the segment level include corporate costs related to the administrative functions that are performed in a centralized manner and that are not attributable to a particular segment. These administrative function costs include corporate general and administrative expenses, non-cash compensation, depreciation expense, interest expense and legal settlement and related costs.
Global S&BT segment contribution was $9.1 million and $18.2 million during the second quarter and first six months of 2026, respectively, as compared to $13.0 million and $25.8 million for the same periods 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 $4.2 million and $7.8 million during the second quarter and first six months of 2026, respectively, as compared to $4.5 million and $8.8 million for the same periods in 2025, respectively. The decrease during the second quarter and first six 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 $5.6 million and $10.6 million during the second quarter and first six months of 2026, 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 six months of 2026, as compared to the same periods in 2025, was primarily due to increased implementation services from increased volume of software sales that are 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.
Interest Expense, Net. Interest expense, net was $1.2 million and $2.2 million during the second quarter and first six months of 2026, respectively, as compared to $0.4 million and $0.6 million in the same periods in 2025, respectively. As of June 26, 2026, we had outstanding debt of $81.0 million, excluding debt issue costs. As of June 27, 2025, we had outstanding debt of $23.0 million, excluding debt issue costs.
Income Taxes. During the second quarter and first six months of 2026, we recorded $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 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 six months of 2025, we recorded $2.6 million and $3.6 million of income tax expense, respectively, related to certain federal, foreign and state taxes which reflected an effective tax rate of 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).
24
Liquidity and Capital Resources
As of June 26, 2026 and December 26, 2025, we had $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 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.
The following table summarizes our cash flow activity (in thousands):
Cash flows provided by operating activities
Cash flows used in investing activities
Cash flows used in financing activities
Cash Flows from Operating Activities
Net cash provided by operating activities was $10.1 million during the first six months of 2026, as compared to $9.8 million during the same period in 2025. In 2026, the net cash provided by operating activities was primarily due to net income adjusted for non-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 and increases in accounts receivable and the timing of payments for income 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 and contract assets, decreases in accrued liabilities and other accruals primarily due to payments in the prior year of earned incentive compensation liabilities and the timing of payments for income taxes and to vendors.
Cash Flows from Investing Activities
Net cash used in investing activities was $5.0 million during the first six months of 2026, as compared to $4.2 million during the same period in 2025. During both the first six 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.
Cash Flows from Financing Activities
Net cash used in financing activities was $9.1 million during the first six months of 2026, as compared to $11.8 million during the same period in 2025. The usage of cash in 2026 primarily related to the repurchase of $8.6 million of the Company's common stock and dividend payments of $6.0 million, partially offset by a net $5.0 million drawdown on our revolving line of credit (the "Credit Facility"). The usage of cash in 2025 primarily related to the repurchase of $16.1 million of the Company's common stock and dividend payments of $6.3 million, partially offset by the $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
25
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As of June 26, 2026, our exposure to market risk related primarily to changes in interest rates and foreign currency exchange rate risks.
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to the Credit Facility, which is subject to variable interest rates. Under our credit agreement, the interest rates per annum applicable to loans under the Credit Facility was, at our option, equal to a base rate for one-, two-, three- or nine-month interest periods chosen by us in each case, plus an applicable margin percentage. A 100-basis point increase in our interest rate under our Credit Facility would not have had a material impact on our results of operations for the second quarter and six months ended June 26, 2026.
Exchange Rate Sensitivity
We face exposure to adverse movements in foreign currency exchange rates as a portion of our revenue, expenses, assets and liabilities are denominated in currencies other than the U.S. Dollar, primarily the British Pound, the Euro, the Indian Rupee and the Australian Dollar. These exposures may change over time as business practices evolve.
Item 4. Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 5. Other Information.
Rule 10b5-1 Trading Arrangements
During the three months ended June 26, 2026, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
Item 1A. 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.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities
During the quarter ended June 26, 2026, the Company repurchased 372 thousand shares at an average price of $10.56 per share for a total cost of $3.9 million. As of June 26, 2026, the Company had $18.1 million of authorization remaining under the repurchase plan.
Total Number
Maximum Dollar
of Shares as Part
Value That May
of Publicly
Yet be Purchased
Average Price
Announced
Under the
Period(1)
of Shares
Paid per Share
Program
Balance as of March 27, 2026
22,033,756
March 28, 2026 to April 24, 2026
April 25, 2026 to May 22, 2026
203,727
10.24
19,947,271
May 23, 2026 to June 26, 2026
168,309
10.94
18,105,795
372,036
10.56
(1) On July 30, 2002, the Board of Directors approved and announced the repurchase program. As of June 26, 2026, the Board of Directors had approved a cumulative authorization of $373.8 million with cumulative purchases under the plan of $355.7 million, leaving $18.1 million available for future purchases as of June 26, 2026. There is no expiration date on the current authorization.
Shares repurchased during the second quarter and first six months ended June 26, 2026 under the repurchase plan do not include 5 thousand shares and 125 thousand shares for a cost of $57 thousand and $1.7 million, respectively, that the Company bought back to satisfy employee net vesting obligations.
Item 6. Exhibits
Exhibit No.
Exhibit Description
3.1
Second Amended and Restated Articles of Incorporation of the Registrant, as amended (incorporated herein by reference to the Registrant's Form 10-K for the year ended December 29, 2000).
3.2
Articles of Amendment of the Articles of Incorporation of the Registrant (incorporated herein by reference to the Registrant's Form 10-K for the year ended December 28, 2007).
3.3
Amended and Restated Bylaws of the Registrant, as amended (incorporated herein by reference to the Registrant's Form 10-K for the year ended December 29, 2000).
3.4
Amendment to Amended and Restated Bylaws of the Registrant (incorporated herein by reference to the Registrant's Form 8-K filed on March 31, 2008).
3.5
Amendment to Amended and Restated Bylaws of the Registrant (incorporated herein by reference to the Registrant's Form 8-K filed on January 21, 2015).
10.2
Amendment No. 5 to Registrant’s Employee Stock Purchase Plan (incorporated herein by reference to the Registrant’s Registration Statement on Form S-8 filed on May 6, 2026).
31.1*
Certification by CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*
Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.
101.SCH**
Inline XBRL Taxonomy Extension Schema with embedded Linkbases Document.
104**
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Filed herewith
** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 5, 2026
/s/ Robert A. Ramirez
Robert A. Ramirez
Executive Vice President, Finance and Chief Financial Officer