Q1 2024 The Hackett Group Inc Earnings Call

Operator: Welcome to the Hackett Group First Quarter Earnings Conference Call. Your lines have been placed on a listen-only mode until the question and answer session begins.

Welcome to the Hackett Group first quarter earnings Conference call. Your lines have been placed on a listen only mode until the question and answer session. Please be advised the conference is being recorded hosting tonight's call are Mr. Ted Fernandez, Chairman and CEO and Mr. Rob Ramirez, Chief Financial Officer Mr.

Operator: Please be advised that the conference is being recorded. Hosting tonight's call are Mr. Ted Fernandez, Chairman and CEO, and Mr. Rob Ramirez, Chief Financial Officer. Mr. Ramirez, you may begin.

Robert A. Ramirez: Ramirez you may begin.

Robert A. Ramirez: Good afternoon everyone, and thank you for joining us to discuss the Hackett Group's first quarter results. Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and CEO of the Hackett Group, and myself, Robert Ramirez, Chief Financial Officer. A press hatchet was released over the wires at 4.05 p.m. Eastern Time.

Robert A. Ramirez: Good afternoon, everyone and thank you for joining us to discuss the Hackett group's first quarter results.

Testing Mendes: With me on the call today and here to answer your questions are testing Mendes chairman and CEO of the Hackett group and myself, Rob Ramirez Chief Financial Officer.

Robert A. Ramirez: A press announcement was released over the wires at four Oclock P M Eastern time.

Robert A. Ramirez: For a copy of the release, please visit our website at www.thehackettgroup.com, which will also place any additional financial or statistical data discussed in this call that is not contained in the release on the Investor Relations page of our website. Before we begin, I would like to remind you that in the following comments and in the Q&A session, we will be making statements about expected future results, which may be forward-looking statements, for the purposes of the federal securities laws.

Robert A. Ramirez: For a copy of the release please visit our website at Www Dot the Hackett group Dot com.

Robert A. Ramirez: Will also place any additional financial or statistical data discussed on this call is not contained in the release.

Robert A. Ramirez: This page of our website.

Robert A. Ramirez: Before we begin I would like to remind you that in the following comments and in the Q&A session. We will be making statements about expected future results, which may be forward looking statements for the purposes of the federal Securities laws.

Robert A. Ramirez: These statements relate to our current expectations, estimates, and projections and are not a guarantee of future performance. They involve risks, uncertainties, and assumptions that are difficult to predict and which may not be accurate. The actual results may vary. These forward-looking statements should be considered only in conjunction with the detailed information, particularly the risk factors that are contained in our SEC filing. At this point, I would like to turn it over to Ted.

Robert A. Ramirez: These statements relate to our current expectations.

Ted: What's your projections and are not again T of future performance.

Ted: Involve risks uncertainties and assumptions that are difficult to predict and which.

Ted: May not be accurate.

Ted: Actual results may vary.

Ted: These forward looking statements should be considered only in conjunction with the detailed information, particularly the risk factors that are contained in our SEC filings at this point I would like to know what is that.

Ted A. Fernandez: Thank you, Rob, and welcome everyone to our first quarter earnings call. As we normally do, I will open the call with some general comments on the quarter. I will then turn it back over to Rob to comment on detailed operating results, cash flow, as well as comment on outlook. We will then review our market and strategy-related comments, after which we will open it up to Q&A. This afternoon, we reported total revenues of $77.2 million and revenues before reimbursements of $75.7 million, which is above the high end of our guidance and adjusted earnings per share of $0.39, which was at the high end of our guidance.

Ted: Thank you, Rob and welcome everyone to our first quarter earnings call as we normally do I'll open the call with some overview comments on the quarter I will then turn it back over to Rob to comment on detailed operating results cash flow as well as comments on outlook. We will then review our market strategy related comments after which we will open it up to Q&A.

Ted A. Fernandez: Our results were driven by the overperformance of both our Oracle and SAP segments, which were up strongly. Oracle's overperformance is consistent with the momentum that we have experienced since the second quarter of last year. A new important development is the notable increase in the demand that we're experiencing for our historically strong enterprise performance management (or EPM) offerings. Oracle has re-emphasized its sales commitment to this area, and we are clear beneficiaries of this strategy.

Ted A. Fernandez: Our SAP solution segment also performed above our expectations as it closed several value-added reseller transactions which strongly benefited the quarter. We have started to see some of the sales and investments we made in this segment last year start to pay off. However, our global SBT segment was down 3% compared to last year, as we've seen economic headwinds continue to result in extended decision-making.

Ted A. Fernandez: This afternoon, we reported total revenues of $77 $2 million in revenues before reimbursements of $75 7 million, which is above the high end of our guidance and adjusted earnings per share up 39, which was at the high end of our guidance. Our results were driven by the over performance.

Ted A. Fernandez: Formats are both Oracle and SAP segments, which were up strongly.

Ted A. Fernandez: Oracle's over performance is consistent with the momentum that we have experienced since the second quarter of last year.

Ted A. Fernandez: A new important development is a notable increase in the demand that we're experiencing in our historically strong enterprise performance management or APM offerings.

Ted A. Fernandez: Kohl's has re emphasizing sales commitment to this area and we are clear beneficiaries of this strategy.

Ted A. Fernandez: If he solutions segment also performed above our expectations as it closed several value added reseller transactions, which strongly benefited the quarter.

Ted A. Fernandez: We have started to see some of the sales investments. We've made in this segment last year start to pay off.

Ted A. Fernandez: Global LPG segment was down 3% when compared to last year as we see economic headwinds continue to result in extended decision, making this has been particularly noticeable in the E procurement area, although the second half.

Ted A. Fernandez: This has been particularly noticeable in the e-procurement area. Although the segment was impacted by market conditions and new Gen-AI investment considerations, we are experiencing the significant opportunity that comes from the unlimited transformational use cases that Gen-AI initiatives will offer. More importantly, our recently launched Gen-AI assessment platform, AI Explorer, and that is XPLR, continues to receive very favorable feedback. AI Explorer uses AI-assisted functionality which leverages our world-class business process IP and the task automation opportunities of AI to ideate as well as assess the feasibility and financial benefit potential of client-specific use cases. This has led to over 170 client demo meetings, with many more scheduled.

Ted A. Fernandez: Although segment was impacted by market conditions, and new Gen. AI investment considerations, we are experiencing the significant opportunity that comes from the unlimited transformational use cases that journey.

Ted A. Fernandez: Initiatives will offer more importantly.

Ted A. Fernandez: Our recently launched Jenny I assessment platform AI explore and that is ex PDL are continues to receive very favorable feedback.

Ted A. Fernandez: Explore uses AI assistant functionality, which leverages, our world class business process, IP and that task automation opportunities of AI to ideate as well as assess the feasibility and financial benefit potential of client specific use cases.

Ted A. Fernandez: This has led to over a 175 demo meetings with many more.

Ted A. Fernandez: These meetings have now resulted in a number of new enterprise or functional domain-specific AI engagements. Although the revenue impact in Q1 from AI Explorer was nominal, we expect these engagements to increase in number and scope throughout the second quarter. These engagements also leverage our rapidly growing use case library, which can be used to establish Gen-AI roadmaps with related benefit case analysis using our highly recognized benchmark database. The use case library allows us to promote embedded and recently created capabilities of other software and services providers.

Ted A. Fernandez: These meetings have resulted in a number of new enterprise or functional domain specific AI engagements, although the revenue impact in Q1 from AI explore was nominal we expect these engagements to increase the number and scope throughout the second quarter.

Ted A. Fernandez: These engagements also leverage our rapidly growing use case library, which can be used to establish Jenny I roadmaps with related benefit case analysis using our highly recognized benchmark database. They use case library allows us to promote embedded and recently created capabilities of other software and services providers.

Ted A. Fernandez: Our market intelligence programs are playing a significant role in this endeavor. The rapidly emerging Gen. AI interest is creating an entirely new way to engage clients broadly and strategically. AI Explorers is creating a unique opportunity to expand our performance improvement access and aggressively pivot to become strategic architects of our client's Gen AI journey. We also continue to invest in growing our IP-based programs. Specifically, we are quickly acknowledging the power of Gen-AI thought leadership will have on the value of the research and expert advice we deliver in our Executive Advisory and Market Intelligence programs.

Ted A. Fernandez: Market intelligence programs are playing a significant role in this endeavor.

Ted A. Fernandez: The rapidly emerging journey, our interest is creating an entirely new way to engage clients broadly and strategically.

Ted A. Fernandez: Explore is creating a unique opportunity to expand our performance improvement access.

Ted A. Fernandez: To aggressively pivot to become strategic architects of our clients and AI journey.

Ted A. Fernandez: We also continue to invest in growing our IP based programs specifically, we are quickly acknowledging the power of Gen. AI thought leadership will have on the value of the research expert advice, we deliver and our executive advisory and market intelligence programs.

Ted A. Fernandez: While our pipeline for these offerings continues to increase, our conversion rates are lower than planned. We believe our move to fully integrate Gen-AI content, which we began in April, will be responsive to this market shift. We also believe that our ability to launch our app Hackett AI platform later this year that will incorporate our AI Explorer, Hackett IP, and research to support the move to increase GNI-led content as well as advice. On the balance sheet side, in the short term, you can expect us to use our strong cash flow from operations to continue to pay down our outstanding balance of our credit facility.

Ted A. Fernandez: Our pipeline for these offerings continues to increase our conversion rates are lower than planned we believe our move to a fully integrate Jenny I contact we began in April will be responsive to this market shifts. We also believe that our ability to launch our app packet AI platform. Later this year that will incorporate our AI explore hackett.

Ted A. Fernandez: He and research.

Ted A. Fernandez: To support the move to increase Gen AI led content as well as advice on the balance sheet side in the short term you can expect us to use our strong cash flow from operations.

Ted A. Fernandez: We continue to pay down our outstanding balance of our credit facility longer term, we plan to use our balance sheet to fund acquisitions and to buy back stock while continuing to invest in our business with that said, let me ask Rob to provide details on our operating results cash flow and also comment on outlook I will make additional comments on strategy.

Ted A. Fernandez: Longer term, we plan to use our balance sheet to fund acquisitions and to buy back stock while continuing to invest in our business. With that said, let me ask Rob to provide details on our operating results, cash flow, and also comment on our outlook. I will make additional comments on strategy and market conditions following Rob's comments.

Ted A. Fernandez: Market conditions following Rob's comments, Rob. Thank you Chad as I typically do I'll cover the following topics. During this portion of the call I'll cover an overview over 'twenty 'twenty four first quarter results along with an overview of related key operating statistics I'll cover an overview of our cash flow activity during the quarter.

Robert A. Ramirez: Thank you, Ted. As I typically do, I'll cover the following topics during this portion of the call. I'll give an overview of our 2024 first-quarter results, along with an overview of related key operating statistics, and go over your cash flow activities during the quarter. I'll then conclude with a discussion of our financial outlook for the second quarter of fiscal 2024. For the purpose of this call, I will comment separately regarding the revenues of our Global SMBP Segment, our Oracle Solutions Segment, our SAP Solutions Segment, and the total company. Our global SMBT segment includes the results of our North America and international benchmarking and business transformation offerings, executive advisory, and IPAS programs, and our One Stream and Klupa implementation offers.

Robert A. Ramirez: Our Oracle Solutions and our SAP Solution Sectors include the results of our Oracle and SAP offerings. Please note that we will be referencing both total revenues and revenue before reimbursements in this portion of the discussion. Reimversible expenses are primarily project travel-related expenses for past mutual clients that have no associated impact on our profitability.

Robert A. Ramirez: I'll, then conclude with a discussion on our financial outlook for the second quarter of fiscal 'twenty four.

Robert A. Ramirez: For the purpose of this call I will comment separately regarding the revenues of our global SMB to segment, our Oracle solution segment.

Robert A. Ramirez: S T solutions segment and the total company.

Robert A. Ramirez: Our global SMB segment includes the results of our north.

Robert A. Ramirez: With America, and international benchmarking, it and business transformation offerings executive advisory and Ipass programs, and our one stream and coupon implementation offerings.

Robert A. Ramirez: All of our solutions and our S&P. So we should start to include the results of our Oracle and SUV offerings, respectively.

Robert A. Ramirez: Please note that we'll be referencing both total revenues and revenue before reimbursements and this portion of the discussion.

Robert A. Ramirez: Reimbursable expenses are primarily project travel.

Robert A. Ramirez: Related expenses passed through to our clients that have no associated impact on our profitability.

Robert A. Ramirez: We will also reference certain non-GAAP financial measures which we believe provide useful information to investors. We have included reconciliations of GAAP to non-GAAP financial measures in our press release filed earlier today, and we'll post any additional information based on the discussions from this call on the investor relations page of the company's website. For the first quarter of 2024, as Ted mentioned, our total revenue was $77.2 million, up 8% over the prior year.

Robert A. Ramirez: During our call today, we will also reference certain non-GAAP financial measures, which we believe provide useful information to investors.

Robert A. Ramirez: We have included reconciliations of GAAP to non-GAAP financial measures in our press release filed earlier today and will post any additional information based on the discussions from this call to the Investor Relations page.

Robert A. Ramirez: Website.

Robert A. Ramirez: For the first quarter of 2024 as Ted mentioned, our total revenue was $77 2 million up 8% over the prior year or.

Robert A. Ramirez: Our revenues before reimbursements were $75.7 million, which was above the high end of our quarterly guidance and also up by 8% over the prior year. For the first quarter, the reimbursable expense ratio on revenues before reimbursements was 1.9 percent as compared to 1.7 percent in the prior quarter and 2 percent when compared to the same period in the prior year. Total revenues from our global SMBT segment were $40.9 million for the first quarter of 2024; revenues before reimbursements for our global SWBT segment were 40.3 million for the first quarter of 2024, a decrease of 3% compared to the same period in the prior year. This segment has been impacted by extended client decision making and increased market volatility in our business transformation engagements, particularly impacting our E-Payment offering.

Robert A. Ramirez: Our revenues before reimbursements were $75 7 million, which was above the high end of our quarterly guidance also up about 8% over the prior year.

Robert A. Ramirez: The first quarter Reimbursable expenses for sure on revenues before reimbursements was one 9% as compared to one 7% in the prior quarter.

Robert A. Ramirez: 2% when compared to the same period in the prior year.

Robert A. Ramirez: Total revenues from our global SMB segment were $40 9 million for the first quarter of 2020 for.

Robert A. Ramirez: Revenues before reimbursements for a global beauty segments were $40 3 million for the first quarter of 2024.

Robert A. Ramirez: Decrease of 3% when compared to the same period of the prior year.

Robert A. Ramirez: This segment has been impacted by extended client decision, making and increased market volatility in our business first of all forget engagements, particularly impacting our <unk> service offerings.

Robert A. Ramirez: Total revenues from our Oracle solution segment with $21 7 million for the first quarter of 'twenty four.

Robert A. Ramirez: Total revenues from our Oracle Solutions segment were $21.7 million for the first quarter of 2015. Revenues before reimbursements for our Oracle Solutions segment were $21.1 million for the first quarter of 2024, a higher than expected increase of 26% compared to the same period in the prior year. These results continue the momentum we've experienced since the second quarter of 2023, with strong double-digit growth over the last three quarters when compared to the prior year periods.

Robert A. Ramirez: Revenues before reimbursements for Oracle solutions segment were $21 1 million for the first quarter of 2024 are higher than expected increase of 26% when compared to the same periods of the prior year.

Robert A. Ramirez: These results continued the momentum we've experienced since the second quarter of 2023 with strong double digit growth over the last three quarters when compared to prior year periods.

Robert A. Ramirez: Total revenues from our SAP Solutions segment were $14.6 million for the first quarter of 2015. Revenues before reimbursements for our S&P solution segment were $14.4 million for the first quarter of 2024, with a higher than expected increase of 26% when compared to the same period in the prior year. This was primarily due to very strong value-added resource activity in the quarter.

Robert A. Ramirez: Total revenues from our SVP solutions segment were $14 6 million for the first quarter of 'twenty four.

Robert A. Ramirez: Revenues before reimbursements for SMT solutions segment were $14 4 million for the first quarter of 'twenty four with a higher than expected increase of 26% when compared to the same period of the prior year. This was primarily due to a very strong value added reseller activity in the quarter.

Robert A. Ramirez: Approximately 21% of our total company revenues before reimbursements consist of recurring, multi-year, and subscription-based revenues, which include our research advisory, IP as a service, multi-year benchmarks, and application-made services contracts. Total company-adjusted cost of sales, which excludes reimbursable expenses and non-cash stock-based compensation expense, totaled $44.4 million, or 58.6% of revenues before reimbursements in the first quarter of 2024, as compared to $41.6 million, or 59.6% of revenues before reimbursements in the prior year.

Robert A. Ramirez: Approximately 21% or total company revenues before reimbursements consists of recurring multiyear and subscription based revenues, which includes our research advisory appears a service multiyear benchmarks and application managed services contracts.

Robert A. Ramirez: Total company adjusted cost of sales, which exclude reimbursable expenses and noncash stock based compensation expense.

Robert A. Ramirez: $44 4 million or 58, 6% of revenues before reimbursements in the first quarter of 'twenty four as compared to 41 6 million or 59, 6% of revenues before reimbursements in the prior year.

Robert A. Ramirez: This increase is primarily due to increased headcount and subcontractors in our Oracle segment to support revenue growth, as well as severance costs related to selected headcount reductions in global SBT due to the market volatility discussed. Total company consultant headcount was 1,154 at the end of the first quarter as compared to 1,168 in the previous quarter and 1,128 at the end of the first quarter of 23. Total company adjusted gross margin on revenues before reimbursements, which excludes reimbursable expenses and non-cash stock-based compensation expense, was 41.4% in the first quarter of 24 as compared to 40.4% in the prior year. The 100 Basis Point Gross Margin Improvement was primarily driven by higher-margin value-added resource sales during the quarter.

Robert A. Ramirez: This increase is primarily due to increased head count and some contractors in our Oracle second to support revenue growth as well as severance costs related to selected head count reductions in global SVT due to market volatility discussed.

Robert A. Ramirez: Total company consultant headcount was 1154 at the end of the first quarter as compared to total company consultant headcount of 1168 in the previous quarter and 1128 at the end of the first quarter of 'twenty three.

Robert A. Ramirez: Total company adjusted gross margin on our revenues before reimbursements, which excludes reimbursable expenses and noncash stock based compensation expense was 41, 4% in the first quarter of 24 as compared to 44% in the prior year.

Robert A. Ramirez: 100 basis point gross margin improvement was primarily driven by the higher margin value added reseller sales during the quarter.

Robert A. Ramirez: Adjusted SG&A, which excludes non-cash stock-based compensation expense and one-time legal settlement-related costs, was $17.1 million, or 22.6% of revenues before reimbursements in the first quarter of 2014. This is compared to $14.5 million, or 20.8% of revenues before reimbursements in the prior year. The year-over-year absolute dollar increase is primarily due to incremental investments we are making in dedicated sales resources in executive advisory and in other targeted practices, as well as higher commissions associated with the increased SAP value-added reseller sales and incentive compensation accruals commensurate with company performance.

Robert A. Ramirez: Adjusted SG&A, which excludes noncash stock based compensation expense and one time legal settlement related cost was $17 1 million or 22, 6% of revenues before reimbursements in the first quarter of 'twenty for.

Robert A. Ramirez: This is compared to $14 5 million or 28% of revenues before reimbursements in the prior year.

Robert A. Ramirez: The year over year absolute dollar increase primarily due to incremental investments, we're making in dedicated sales resources in executive advisory and other targeted practices as well as higher commissions associated with the increased S. A P value add reseller sales and incentive compensation accruals commensurate with the puppy.

Robert A. Ramirez: Performance.

Robert A. Ramirez: Adjusted EBITDA, which excludes non-cash stock-based comp expense and one-time legal settlement related costs, was $15.2 million, or 20% of revenues before reimbursements in the first quarter of 2024, as compared to $14.5 million, or 20.8% of revenues before reimbursements in the prior year. Gap in net income for the first quarter of 24 totaled $8.7 million, or diluted earnings per share of $0.32, as compared to gap in net income of $8.2 million, or diluted earnings per share of $0.30 in the first quarter of the prior year.

Robert A. Ramirez: Adjusted EBITDA, which excludes noncash stock based comp expense and one time legal settlement related cost was $15 2 million or 20% of revenues before reimbursements in the first quarter of <unk> 24, as compared to $14 5 billion or 28% of revenues before.

Robert A. Ramirez: Reimbursements in the prior year.

Robert A. Ramirez: GAAP net income for the first quarter of 'twenty four totaled $8 7 million or diluted earnings per share of 32 cents as compared to GAAP net income of $8 2 million or diluted earnings per share of <unk> 30 cents in the first quarter of the prior year.

Robert A. Ramirez: Adjusted net income, which excludes non-cash stock-based comp expense and one-time legal settlement costs for the first quarter of 24, totaled $10.7 million, or adjusted diluted net income per common share of $0.39, which is at the top end of our earnings guidance range for the quarter. This compares to adjusted net income of $10 million, or adjusted diluted net income per common share of $0.37, in the first quarter of the prior year.

Robert A. Ramirez: Adjusted net income, which excludes noncash stock based comp expense and one time legal related settlement costs for the first quarter of 'twenty four totaled $10 7 million or adjusted diluted net income per common share of <unk> 39 States, which is at the top end of our earnings guidance range for the quarter.

Robert A. Ramirez: This compares to adjusted net income of 10 million or adjusted diluted net income per common share of <unk> 37.

Robert A. Ramirez: In the first quarter of the prior year.

Robert A. Ramirez: The company's cash balances were $13 million in the first quarter as compared to $21 million at the end of the previous quarter. Net cash provided from operating activities in the quarter was $2.8 million, primarily driven by net income adjusted for non-cash activity but was partially offset by decreases in accrued expenses due to the payment of 2023 performance bonuses and increases in accounts receivable. Our DSO, or days sales outstanding at the end of the quarter, was 68 days as compared to 65 days at the end of the previous quarter.

Robert A. Ramirez: The company's cash balances were 13 million at end of the first quarter as compared to 41 billion at the end of the previous quarter.

Robert A. Ramirez: Net cash provided from operating activities in the quarter was $2 8 million.

Robert A. Ramirez: That is really driven by net income adjusted for noncash activity, but was partially offset by decreases in accrued expenses due to the payment of 2023 performance bonuses and increases in accounts receivable.

Robert A. Ramirez: Our DSO or days sales outstanding at the end of the quarter was 68 days as compared to 65 days at the end of the previous quarter.

Robert A. Ramirez: During the quarter, we repurchased 205,000 shares of the company's stock for an average of $23.57 per share at a total cost of approximately $4.8 million. This was driven by purchases from employees to satisfy income tax withholding triggered by the vesting of restricted shares, as well as shares repurchased from our board.

Robert A. Ramirez: During the quarter, we repurchased 205000 shares of the company's stock for an average of $23 57 per share at a total cost of approximately $4 8 million. This was driven by purchases from employees to satisfy income tax withholding triggered by the vesting of restricted shares.

Robert A. Ramirez: Ours as well as shares repurchased from our board.

Robert A. Ramirez: Our remaining stock repurchase authorization at the end of the quarter was $12.9 million. During the quarter, the company paid down $2 billion on its credit facility. The balance of the company's total debt outstanding at the end of the first quarter was $31 million.

Robert A. Ramirez: Our remaining stock repurchase authorization at the end of the quarter was $12 9 million.

Robert A. Ramirez: During the quarter the company paid down $2 billion on our credit facility.

Robert A. Ramirez: The balance of the company's total debt outstanding at the end of the first quarter was $31 million.

Robert A. Ramirez: At its most recent meeting subsequent quarter-end, the company's board of directors declared the second quarter of a dividend of 11 cents per share for the shareholders of record on June 21, 2024, to be paid on July 5th, 24. I'm now going to move to the guidance for the second quarter of 2024. The company estimates total revenue before reimbursements for the second quarter to be in the range of $73.5 to $75 million. We expect global SABT segment revenue before reimbursements to be down slightly when compared to the prior year, but up on a sequential basis.

Robert A. Ramirez: It is supposed to we shouldn't be getting subsequent to quarter end. The Companys board of directors declared a second quarter dividend of 11 <unk> per share for shareholders of record on June 21, 2024 to be paid on July 5th 2024.

Robert A. Ramirez: We expect Oracle Solutions segment revenue before reimbursements to be up both sequentially and year over year. We expect SAP Solutions segment revenue before reimbursements to be down on a year-over-year basis. We estimate adjusted diluted net income per common share in the second quarter of 24 to be in the range of 36 to 39 cents, which assumes a gap effective tax rate on adjusted earnings of 27.2%.

Robert A. Ramirez: I'm not going to move to the guidance for our second quarter of 2024.

Robert A. Ramirez: The company estimates total revenue before reimbursements for the second quarter to be in the range of $73 $5 million to $75 million.

Robert A. Ramirez: We expect global SUV segment revenue before reimbursements to be down slightly when compared to the prior year, but up on a sequential basis, we expect Oracle solution segment revenue before reimbursements to be up both sequentially and year over year.

Robert A. Ramirez: We expect S&P solutions segment revenue before reimbursements to be down on a year over year basis.

Robert A. Ramirez: We estimate adjusted diluted net income per common share in the second quarter of 24 to be in the range of $36 39.

Robert A. Ramirez: Which assumes a GAAP effective tax rate on adjusted earnings of 27, 2%.

Ted A. Fernandez: We expect the adjusted gross margin as a percentage of revenues before reimbursements to be approximately 42 to 43 percent. We expect adjusted SG&A and interest expense for the second quarter to be approximately $17.1 million. We expect second-quarter adjusted EBITDA, as a percentage of revenues before reimbursements, to be in the range of approximately 21 to 22 percent. Lastly, we expect cash flow from operations to be up on a sequential basis. At this point, I'll turn it back over to Ted to review our market outlook and strategic priorities for the coming months.

Robert A. Ramirez: We expect the adjusted gross margin as a percentage of revenues before reimbursements to be approximately 42% to 43%.

Ted A. Fernandez: We expect adjusted SG&A and interest expense for the second quarter to be approximately $17 1 million.

Ted A. Fernandez: We expect second quarter adjusted EBITDA as a percentage of revenues before reimbursements to be in the range of approximately 21% to 22%.

Ted: Lastly, we expect cash flow from operations to be up on a sequential basis.

Ted A. Fernandez: At this point I'll turn it back over to Ted to review, our market outlook and strategic priorities for the coming months.

Ted A. Fernandez: As we look forward, let me share our thoughts on the near and long-term demand environment and the growth opportunity it offers our organization. Although demand for digital transformation remains strong, it continues to be impacted by extended decision-making as organizations assess competing priorities created by high interest rates and the demand disruption it is intended to affect.

Ted: As we look forward, let me share our thoughts on the near and long term demand environment and the growth opportunity. It offers our organization.

Ted A. Fernandez: All of the demand for digital transformation remains strong it continues to be impacted by extended decision, making as organizations SaaS competing priorities created by high interest rates.

Ted A. Fernandez: The demand disruption it is intended to effect.

Ted A. Fernandez: Digital innovation and enterprise cloud applications, analytics, and AI workflow automation are dramatically influencing the way businesses compete and deliver their services. But, as I mentioned on our first call, the major change has been the rapidly emerging demand for Gen-AI solutions. Its unlimited potential will define an entirely new level of digital world-class performance standards, driving all software and services providers to extend the value of their existing offerings. We believe this will result in unprecedented innovations, which all organizations will have to consider.

Ted A. Fernandez: Digital innovation and enterprise cloud applications analytics, and AI workflow automation are dramatically influencing the way businesses compete and deliver their services, but as I mentioned on our fourth quarter call. The major change has been the rapidly emerging demand for AI solutions.

Ted A. Fernandez: It's unlimited potential will define an entirely new level of digital World class performance standards, driving all software and services providers to extend the value of their existing offerings. We believe this will result at unprecedented innovations, which all organizations will have to consider.

Ted A. Fernandez: Strategically, we continue our focus on recurring high-margin IP-related services by increasing the development of new programs and the sales and marketing resources dedicated to this area. We also continue our investment in our new Hackett Connect member platform. But what is new is the accelerated focus and investment we're making in our Gen-AI capabilities. The most significant investments have been the development of our AI Explorer platform and then the training and development of our associates.

Ted A. Fernandez: <unk>, we continue our focus on recurring high margin IP related services by increasing the development of new programs in the sales and marketing resources dedicated to this area. We also continue our investment on our new Hackett connect network platform.

Ted A. Fernandez: But what is new is the accelerated focus and investments we're making in our gen. AI capabilities. The most significant investments have been the development of our AI explore platform and then the training and development of our associates, we are utilizing the AI explore platform as the vehicle to integrate.

Ted A. Fernandez: We are utilizing the AI Explorer platform as the vehicle to integrate the Gen AI impact across all of our offerings. We have also hired critical data and technology architecture resources to further support our efforts. These efforts will allow us to become critical architects, advisors, and consultants on our clients' Gen AI journeys. Our ability to measure and assess the impact of Gen AI utilizing AI Explorer is powerful.

Ted A. Fernandez: Jenny I impact across all of our offerings. We have also hired critical data and technology architectural resources to further support our efforts.

Ted A. Fernandez: First of all allow us to become critical architects advisors and consultants of our clients jet AI journey.

Ted A. Fernandez: Our ability to measure and assess the impact of getting a utilizing AI explorer is powerful. Additionally, our growing use case repository, which integrates our market intelligence perspective on the specific strengths of Gen. AI solution providers is another powerful way to help guide our clients through the unlimited opportunities they will have to consider.

Ted A. Fernandez: Additionally, our growing use case repository, which integrates our market intelligence perspective on the specific strengths of GenAI solution providers, is another powerful way to help guide our clients through the unlimited opportunities they will have to consider. We see this as an opportunity for our organization to provide an objective and unique perspective on what has so far been primarily a use case innovation story. We continue to see strong downstream revenues from our benchmarking and executive advisory clients for our business transformation and cloud application consulting services. This halo effect, as we describe it, has been approximately 40% over the last several years and will continue to be such.

Ted A. Fernandez: <unk>.

Ted A. Fernandez: We see this as an opportunity for our organization to provide an objective and unique perspective, thus far has been primarily a use case innovation story.

Ted A. Fernandez: We continue to see strong downstream revenues from our benchmarking and executive advisory.

Ted A. Fernandez: Next to our business transformation and cloud application consulting services. This halo effect as we describe it has been approximately 40% over the last several several years and continues as such we believe this will only be expanded by the AI explore offering because of its broad strategic access that it provides organizations who.

Ted A. Fernandez: We believe this will only be expanded by the AI Explorer offering because of the broad and strategic access that it provides. Businesses who rely on our AI assessment, solutioning, and market intelligence platforms are more likely to utilize our advisory and consulting services. We also continue to publish our market intelligence reports. We have started to publish our research reports on Gen AI and key solution providers, which are important content for AI Explorer, as well as our executive advisory program.

Ted A. Fernandez: Rely on our AI assessment solutions and market intelligence platforms are more likely to utilize our advisory and consulting services.

Ted A. Fernandez: We also continue to publish our market intelligence reports, we have started to publish our research reports on jet AI, a key solution providers, which are important content for AI explorer as well as our executive advisory programs are.

Ted A. Fernandez: Our market intelligence reports represent critical value to the providers. The companies learn how they compare to competitors as well as measure the measurable impact their solutions deliver. Large benchmarking and consulting, and executive advisory customer bases can also acquire the market intelligence reports to inform software and service purchasing decisions. On the talent side, competition for experienced executives continues. Overall, we saw turnover continue to moderate and remain low during the quarter.

Ted A. Fernandez: Our market intelligence reports represent a critical value to the providers the companies learn how they compared to competitors as well as measure their measurable impact our solutions deliver.

Ted A. Fernandez: Our expense marketing and consulting and executive advisory customer base can also acquire the market intelligence reports to inform software and service purchasing decisions on.

Ted A. Fernandez: On the talent side competition for experienced executives continues overall, we saw turnover continue to moderate and remained low during the quarter. We expect the trend to continue longer term, we have transitioned to a hybrid sales and delivery model, which provides us with the effective access to our clients and their respective teams. This hybrid model provides our <unk>.

Ted A. Fernandez: We expect the trend to continue. In the longer term, we have transitioned to a hybrid sales and delivery model that provides us with effective access to our clients and their respective teams. This hybrid model provides our associates with greater personal flexibility to perform their defined responsibilities remotely, which is very valuable to them. This should allow us to attract as well as retain talent.

Ted A. Fernandez: With greater personal flexibility to perform their defined responsibilities remotely which is very valuable to Deb. This should allow us to attract as well as retain talent.

Ted A. Fernandez: We are also exploring strategic partnerships that will allow us to extend our AI capabilities and sell our IP through new channels that will allow us to reach beyond our current Global 1000 focus in an efficient manner. We will also continue to redefine our global benchmarking leadership through enhancements in Quantum Leap as well as our digital transformation platforms. This allows us to deliver more information with significantly less client effort. It also allows clients to leverage our IP to create compelling benefit case assessments, accelerate process flow and software considerations decisions, and track value realization of their transformation initiatives.

Ted A. Fernandez: We are also exploring strategic partnerships that will allow us to extend our AI capabilities and sell our IP through new channels that will allow us to reach beyond our current global 1000 focus in an efficient matter we continue.

Ted A. Fernandez: We also continue to redefine our global benchmarking leadership through enhancements in part of late as well.

Ted A. Fernandez: Our digital transformation platforms. This allows us to deliver more information with significantly less client effort. It also allows clients to leverage our IP to create compelling benefit case assessments accelerate process flow and software considerations decision and track value realization of their transformation initiatives.

Ted A. Fernandez: We believe the integration of these platforms with AI Explorer significantly enhances the value of RP and fully aligns our perspective on the new AI-driven digital world-class performance standards that we believe will be achieved as Gen AI technologies continue to take hold. As I mentioned on our previous call, we are adding videos of our platforms on our investor relations page of our website that investors can utilize to become more familiar with our new capabilities.

Ted A. Fernandez: We believe the integration of these platforms with AI explore significantly enhances the value of RP and fully aligns our perspective on the new AI driven digital World class performance standards that we.

Ted A. Fernandez: With that we believe will be achieved as jet AI technologies continues to take hold as I mentioned on our previous call. We are adding videos to our plants all of our platforms on our Investor Relations page of our website at investors can utilize to become more familiar with our new capabilities Lastly, even though we believe that we have the client base and the.

Ted A. Fernandez: Lastly, even though we believe that we have the client base and the offerings to grow our business, we continue to look for acquisitions and alliances that strategically leverage our IP and that scope, scale, and capability, which can accelerate our growth. As always, let me close by congratulating our associates on our performance and thanking them for their tireless efforts. I always urge them to stay highly focused on our clients and our people no matter what challenges they may encounter. That concludes my comments; let me turn it over to our operator, and let's move on to the Q&A section of our call. Operator?

Ted A. Fernandez: The offerings to grow our business, we continue to look for acquisitions and alliances that strategic.

Ted A. Fernandez: Level leverage our IP and add scope scale or capability, which can accelerate our growth as always let me close by congratulating our associates, our performance and thanking them for their tireless efforts and always our attempt to stay highly focused on our clients and our people no matter what challenges they may encounter.

Ted A. Fernandez: This conclude my comments, let me turn it over to our operator, and let's move on to the Q&A section of our call operator.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1, unmute your phone, and record your name clearly. If you need to withdraw your question, press star 2. Again, to ask a question, please press star 1. Our first question will come from Jeff Martin with Roth Capital Partners. Your line is open. Thanks, Gilles.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on mute your phones and record your name clearly if you need to withdraw your question Press Star Q again to ask a question. Please press star one.

Operator: Our first question will come from Jeff Martin with Roth Capital Partners. Your line is open.

Jeffrey Michael Martin: Thanks, Good afternoon.

Jeffrey Michael Martin: Ted, I was curious if you could quantify the level of investment you're making related to Gen AI and, specifically...

Jeffrey Michael Martin: Ted I was curious if you could quantify the level of investment you're making related to G&A line specifically explore.

Ted A. Fernandez: Believe it or not, the majority of the investment we're making is really reallocating and refocusing all of our senior executives on the initiative. We have hired a dedicated team that has built that AI Explorer, but we've done that, I believe, incredibly efficiently. That was primarily because we had the ability to leverage other capabilities we had built during the RPA development era that we've been able to leverage and build AI Explorer from. Incredible.

Jeffrey Michael Martin: Oh.

Jeffrey Michael Martin: I'll leave it or not the majority of the investment, we're making is really reallocating and refocusing.

Ted A. Fernandez: All of our senior executives to the initiative, we have hired a dedicated team that has built our they explore but we've done that I believe is incredibly efficiently.

Ted A. Fernandez: That that was primarily because we had the ability to leverage other capabilities we have built.

Ted A. Fernandez: During the RPI development ore that we've been able to leverage and build AI explore from.

Ted A. Fernandez: What's.

Ted A. Fernandez: Even though it's interesting, even though the revenue impact on the quarter was nominal, I can tell you that the amount of time and effort we're investing in building out Explorer, communicating the value to clients, booking, and responding to the demo meetings is like nothing we've ever done before. We've never launched a product like that that has received the kind of market response and has resulted in the number of meetings and the number of pursuits that we continue, discussions and pursuits we continue to have with those individuals who have seen our product.

Ted A. Fernandez: Incredible even though it's interesting even though the impact revenue impact on the quarter was nominal I can tell you that the amount of time and effort, we're expanding and building out explorer.

Ted A. Fernandez: <unk> the value to clients books.

Ted A. Fernandez: Booking and responding to the demo meetings.

Ted A. Fernandez: Is.

Ted A. Fernandez: Like nothing we've ever done before we've never launched a product like that that has received a kind of.

Ted A. Fernandez: Market response and has resulted in the number of meetings and the number of pursuits that we continue discussions of pursuits. We continue to have with those individuals who have seen our product. The feedback has been outstanding so for us.

Ted A. Fernandez: The feedback has been outstanding. So for us, even though Gen AI is to some extent somewhat of a moving target and a little bit of a distraction to our clients as they now try to understand how to reallocate their spend relative to the impact and the priorities they want to establish with or without Gen AI, the opportunity we believe is significant, and we believe that the launch of AI Explorer and the timing of it are going to pay off handsomely.

Ted A. Fernandez: Even though jet AI to some extent is somewhat of a moving target and a little bit of a distraction to our clients as they now try to understand how to reallocate their spend relative to the impact of the priorities they want establish with or without <unk>.

Ted A. Fernandez: The opportunity we believe is significant and we believe that the launch of AI explorer and the timing of it is going to pay off handsomely for us.

Ted A. Fernandez: I was just curious if you could give us an example or two about the types of client interactions you have, what parts of the organization these are targeting. I would imagine they start with one part of the organization and expand that over time. I just wanted to give you the opportunity to expand on that.

Speaker Change: I was just curious if you could give us an example, or two about the types of client interactions you had what parts of the organization. These are targeting I would imagine they start with one part of the organization and expand that over time.

Ted A. Fernandez: I just wanted to give you the opportunity to expand on that.

Ted A. Fernandez: We make the offer to the organization as we've reached out to our client base. It has been primarily through C-level officers. I will say that probably, oh, a third and maybe 40% of the time, it includes the CIO or somebody from the IT organization. But it really is across the board.

Ted A. Fernandez: We've made when you make the offer to the organization as we've reached out to our client base. It has been primarily through our C level officers I will say that probably.

Ted A. Fernandez: A third or maybe 40% of the time. It includes the CIL, where somebody up from the it organization, but it really is across the board and even though our primary offering has been functionally.

Ted A. Fernandez: And even though our primary offering has been domain-focused initiatives, because we believe that if one C-level officer is exposed to our capabilities, it'll quickly spread throughout the organizations, we are getting and seeing the opportunity to, in fact, engage and present the capabilities to executive management teams, and it's been an offer we're going to continue to pursue because we know the impact from that conversation is more impactful. In fact, one of the engagements that we closed was presented and sold to a C-level officer, and it's a very meaningful project.

Ted A. Fernandez: Domain focused initiatives, because we believe that if once the level officer is exposed to our capabilities that will quickly spread throughout the organization, we are getting and seeing and the opportunity to in fact engage and present the capabilities to executive management teams and it is.

Ted A. Fernandez: Been an offer and we're going to continue to pursue because we know the impact from that conversation becomes more impactful in fact, one of the engagements that we closed.

Ted A. Fernandez: Was presented and sold at the C level officer, and it's a very meaningful project.

Ted A. Fernandez: And then one more, if I could, on the global SMBT. You know, delayed decision making. If we back up two or three quarters, you thought that that had largely run its course. But it appears not to be the case.

Ted A. Fernandez: Okay, and then one more if I could on the global F&B team.

Ted A. Fernandez: Yeah delayed decision, making if we back up two or three quarters, you'll talk at that.

Ted A. Fernandez: Largely run its course appears not to be the case just curious if you have anything to add with respect to <unk>.

Ted A. Fernandez: Just curious if you have anything to add with respect to when we might see decision making kind of clear up. Is this something they can put off for an indefinite period of time? Or do you see there being a pinch point where they have to move forward? I believe that they will move.

Ted A. Fernandez: One we might see decision, making kind of corrupt and there's something that can put off.

Ted A. Fernandez: For an indefinite period of time or do you see that being a pinch point, where they have to move forward.

Ted A. Fernandez: I believe that they will move forward, but I also believe that the amount of budget that's being reallocated or identified as AI-specific will consume a significant amount of that attention. So, for us, let's call the Gen-AI diversion a temporary one, simply because the number of conversations we're having on broad initiatives, which have broad business transformation impact, should increase throughout the balance of the year.

Ted A. Fernandez: I believe that they will move forward, but I also believe that the amount of budget, that's being reallocated or or identified as AI specific will consume a significant amount of that attention. So for us let's call the agenda AI diversion.

Ted A. Fernandez: We believe to be temporary simply because the number of conversations we're having on broad.

Ted A. Fernandez: Initiatives with our broad business, which have broad business transformation impact.

Ted A. Fernandez: Should increase throughout the balance of the year.

Ted A. Fernandez: I think it's also probably important to note that when you look at the overall decrease that we have experienced over the last couple of quarters, the primary impact has come from our e-procurement area. So areas in Spendonelis, which we remember like Cuba, that were significant maybe 24 months ago, have seemed to struggle more than others. The other, if you want to call it, variances or decreases have really been nominal if you exclude that.

Ted A. Fernandez: I think it's also probably important to note that when you look at the overall decrease that we have experienced over the last couple of quarters.

Ted A. Fernandez: The primary impact has come from our E procurement area, so areas and spend on Dallas, which you remember like Cooper.

Ted A. Fernandez: That were significant maybe 24 months ago.

Ted A. Fernandez: <unk> seem to struggle more than others. The other if you want to call it.

Ted A. Fernandez: Various sis are decreases have really have been nominal.

Ted A. Fernandez: If you exclude that so we've been watching.

Ted A. Fernandez: So we've been watching that activity level off. If we think if that activity and e-procurement levels off, you will see the SBT segment level off as well. And then if we get the expected impact from the new engagements we're presenting, utilizing the AI Explorer demo, then you'll see that growth resume and resume with much longer-term opportunities because, I mean, the Gen A.I. opportunities. We're talking about very initial engagements that, if you have the right entry point and at the right level, could be significant over the multi-year.

Ted A. Fernandez: That activity level off will take up that actively in a procurement levels off you will see the SPT.

Ted A. Fernandez: It level.

Ted A. Fernandez: A level off as well and then if we get the expected.

Ted A. Fernandez: Impact from the new engagements where.

Ted A. Fernandez: Presenting utilizing the AI explore them all.

Ted A. Fernandez: Youll see that growth resume and resume with much longer term opportunities because I mean, the chat AI opportunities that we're talking about very initial engagements that if you have the right entry point and at the right level could be significant and multiyear.

Speaker Change: Thank you.

Operator: Thank you. And once again, if you would like to ask a question at this time, you can press star one and record your name when prompted. Our next question comes from George Sutton with Craig Hallam. You may proceed. George, we're not able to hear you in conference. Please check the mute feature on your phone.

Speaker Change: Thank you.

Ted A. Fernandez: Again, if you would like to ask a question at this time you can press star one and record your name when prompted our next question comes from George Sutton with Craig Hallum. You May proceed.

George Frederick Sutton: Hey, George we're not able to hear you in conference. Please check the mute feature on your phone.

Operator: Hey, good afternoon. This is Adam on behalf of George.

Operator: Hey, Good afternoon. This is Adam on for George Thanks for taking my questions. Ted you mentioned that Oracle's reemphasize sales a commitment I was hoping you can price a little more detail on that and as you know.

Adam: Thanks for taking my questions. Ted, you mentioned that Oracle has re-emphasized sales with commitment. I was hoping you could provide just a little more detail on that and, you know, what you expect to come from that effort.

Adam: What do you expect to come from that that effort.

Ted A. Fernandez: Well, the momentum that we've built through the balance, really over the last four quarters, has had quite a bit to do with the fact that they've really started to rebuild their dedicated EPM sales force, and it seems to have, you know, we have such a strong reputation in that space, not only in the space broadly, but in the installed base itself, that we've been significant beneficiaries of that activity. Those entry points and that success are also bleeding over into meaningful ERP opportunities for us as well. So the growth prospects, both the quarterly performance and the guidance we provided for it, were very strong.

Adam: Well the the momentum that we built.

Ted A. Fernandez: Through the balance out were really over the last four quarters.

Ted A. Fernandez: Has has had quite a bit to do with the fact that they've really started to rebuild their dedicated <unk> sales force and it seems to have.

Ted A. Fernandez: We have such a strong reputation in that space.

Ted A. Fernandez: Not only this space broadly, but in the installed base itself that we've been significant beneficiaries of that activity.

Ted A. Fernandez: Those entry points in that I'm going to call. It that success is also bleeding over into.

Ted A. Fernandez: I'm going to call it meaningful ERP opportunities.

Ted A. Fernandez: For us as well so.

Ted A. Fernandez: The growth prospects both of our quarterly performance and the guidance. We provided for Oracle is were very strong.

Ted A. Fernandez: And obviously, you know, clean data is key for Gen AI. I have to imagine that at some point, we may see an impact on, you know, EPM or ERP sales. We'd love to get your thoughts on it though.

Ted A. Fernandez: And obviously clean data is key for <unk> I have to imagine at some point, we may see an impact on your E. M E T M or ERP sales would love to get your thoughts on it though.

Ted A. Fernandez: Well, interesting. It really just reemphasizes the opportunities so that if you look at EPM or FPNA in general, the analytics opportunities within FPNA and in Gen AI are really very significant. So the software providers, I think, have been aggressively marketing their capabilities, their embedded capabilities, but the innovations and the use cases that we're starting to see that extend beyond embedded are very significant. So I believe that they will be significant beneficiaries of the Gen AI solutions, if you want to call them breakthroughs.

Speaker Change: Well interesting.

Ted A. Fernandez: It's really just reemphasize the opportunities so that if you look at APM or F. G&A in general.

Ted A. Fernandez: Analytics opportunities with an FPGA and in Gen. AI are really very significant so.

Ted A. Fernandez: The software providers, I think <unk> been aggressively marketing their capabilities their embedded capabilities, but the innovation and the use cases.

Ted A. Fernandez: That we're starting to see that extend beyond embedded are very significant so I believe that they will be significant beneficiaries of the journey.

Ted A. Fernandez: Solutions, if you will.

Ted A. Fernandez: Want to call it breakthrough.

Speaker Change: Great. Thank you.

Vincent Alexander Colicchio: Thank you. Next, we will hear from Vincent Colicchio with Barrington Research. Your line is open.

Ted A. Fernandez: Thank you next we will hear from Vincent Colicchio with Barrington Research. Your line is open.

Ted A. Fernandez: Yeah, Ted, with the strong AI consulting demand you're seeing, and you had mentioned your... training professionals internally. Do you need to do more hiring outside the organization to meet demand currently?

Vincent Alexander Colicchio: Yeah Ted.

Vincent Alexander Colicchio: Strong AI consulting demand, you're seeing and you had mentioned your.

Vincent Alexander Colicchio: Your training professionals internally.

Vincent Alexander Colicchio: Do you need to do more hiring outside the organization to meet demand currently.

Ted A. Fernandez: The answer is yes. We are going to continue to train and certify our associates. We have increased our hiring for dedicated expertise that extends beyond. And we're also looking at partnerships and alliances and even beyond that to extend our capabilities. So you can expect us to be aggressive across all dimensions.

Vincent Alexander Colicchio: The answer is yes, we are going to continue to train and certify.

Ted A. Fernandez: Our associates.

Ted A. Fernandez: We have increased our hiring for dedicated expert pizza looks that extends beyond and we're also looking at partnerships and alliances.

Ted A. Fernandez: Uh huh.

Ted A. Fernandez: And even beyond that to extend our capabilities. So you can expect that to be aggressive across all dimensions.

Vincent Alexander Colicchio: And I think that Robin mentioned that your SG&A was partly up on sales. Did you expand your sales force?

Ted A. Fernandez: And.

Ted A. Fernandez: I think that.

Vincent Alexander Colicchio: Robert mentioned that your SG&A was partly up on sales did you expand your sales force in the quarter.

Ted A. Fernandez: The answer is that the increase reflects a combination of sales increases that we made in some of the software segments, but it also reflects the year-over-year increases that we had that we made in the Executive Advisory Dedicated Team.

Speaker Change: The answer is the increase.

Speaker Change: Right as you know reflects a combination of sales increases we made in some of the and the software segments, but it also reflects the increase year over year increases that we had that.

Ted A. Fernandez: We've made and the executive advisory a dedicated team.

Vincent Alexander Colicchio: So the investments in the executive advisory team and the market intelligence investments you've made, do you expect them to help offset some softness in GSBT this year? Or, you know, in a meaningful way? Or what is your thinking there?

Ted A. Fernandez: So the investments in the executive advisory team in the market intelligence investments you've made.

Vincent Alexander Colicchio: Do you expect them to help offset.

Vincent Alexander Colicchio: Some softness in GSP T. This year or as you know.

Vincent Alexander Colicchio: Meaningful way or what are your what is your thinking there.

Vincent Alexander Colicchio: We see the same impact in advisory if you look at the.

Ted A. Fernandez: We see the same impact in advisory. If you look at the...

Ted A. Fernandez: I'll call it, Lower Growth Results Partner just reported. I would say that we see the advisory space being impacted exactly as the business transformation space is. With that said, that also means that the shift in demand for Gen-AI related content advice, specific capabilities that our clients are now requesting, the ability for us to do that, which we didn't start integrating until April because we were building the content, so we just started adding it to our program, is an important part of the growth of advisory.

Speaker Change: I'll call it.

Ted A. Fernandez: Lower growth results Gartner.

Ted A. Fernandez: Just reported I would say that.

Ted A. Fernandez: We see the advisory space being impacted exactly as the business transformation spaces with that said that also means that the shift in demand for G&A I related content advice.

Ted A. Fernandez: Specific capabilities that our clients are now requesting the ability for us to do that which we didn't start integrating until April.

Ted A. Fernandez: Because we were building the content. So we just started adding it to our program is an important part of the growth of advisory So we.

Ted A. Fernandez: So, we expect that change to impact the growth in executive advisory and market intelligence programs. But overall, the ability to position the organization and pivot, I believe, as strongly as we have and demonstrate unique capabilities with AI Explorer in the Gen-AI space will bode very well for us and will be the leading and most significant factor of revenue growth over the next three to five years. So, we're going to play that hand very aggressively.

Ted A. Fernandez: We expect that.

Ted A. Fernandez: That changed the impact.

Ted A. Fernandez: The growth in executive advisory and market intelligence programs.

Ted A. Fernandez: Overall, the ability to position the organization and pivot I believe as strongly as we have and demonstrate unique capabilities with AI explorer to the Gen. AI space space will bode very well for us and will be.

Ted A. Fernandez: The leading and most significant factor of revenue growth over the next three to five years. So we're going to play that hand very aggressively.

Speaker Change: Okay. Thank you.

Operator: Thank you. At this time, I have no further questions. I will now turn the call back over to Mr. Fernandez.

Ted A. Fernandez: Thank you at this time I show no further questions I will now turn the call back over to Mr. Fernandez.

Ted A. Fernandez: Thank you, operator. Let me thank everyone for participating in our first quarter earnings call. I look forward to updating you again when we report the second quarter. Thank you.

Ted A. Fernandez: Thank you operator, let me thank everyone for partners participating in our first quarter earnings call and look forward to updating you again, when we report the second quarter. Thank you.

Operator: Thank you. That just concludes today's conference. Thank you once again for your participation. You may disconnect at this time.

Speaker Change: Thank you that does conclude today's conference. Thank you once again for your participation you may disconnect at this time.