Hackett Group, Inc. Q4 FY2025 Earnings Call

Welcome to The Hackett Group Fourth Quarter Earnings Conference Call. Please be advised the conference is being recorded. Hosting tonight's call are Mr. Ted Fernandez, Chairman and CEO; and Mr. Rob Ramirez, Chief Financial Officer. Mr. Ramirez, you may begin, sir.

Good afternoon, everyone, and thank you for joining us to discuss the Hackett Group's fourth-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, Rob Ramirez, Chief Financial Officer. A press announcement was released over the wires at 4:08 p.m. Eastern Time. For a copy of the release, please visit our website at www.thehackettgroup.com. We will also place any additional financial or statistical data that's discussed on 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 question-and-answer session, we will be making statements about expected future results, which may be forward-looking statements for the purposes of the federal securities laws. These statements relate to our current expectations, estimates, and projections and are not a guarantee of future performance. They involve risks, uncertainties, and are considered difficult to predict and which may not be accurate. 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 filings. At this point, I would like to turn it over to Ted.

Thank you, Rob, and welcome, everyone, to our fourth-quarter earnings call. As we normally do, I will open up the call by providing overview comments on the quarter. I will then turn it back over to Rob to comment on detailed operating results, cash flow, and guidance. We will then review our market and strategy-related comments, after which we will open it up to Q&A. This afternoon, we reported revenues before reimbursements of $74.8 million and adjusted earnings per share of $0.40, which were above and at the high of our quarterly guidance, respectively. While we cannot control the short-term market sentiment or demand volatility, we can control the intrinsic value we create. Over the past 2 years, we have been systematically expanding our suite of GenAI-enabled platforms to lead in the rapidly emerging Agentic enterprise era. By embedding our IP into our new platforms and models, we believe we will be able to generate new revenue with higher margins in entirely new ways that allow us to deliver breakthrough value to clients. Our quarterly results continue to reflect the market and our own disruptive effects given our aggressive AI transition. Our strategy has been to develop highly differentiated GenAI-enabled capability that leverages our unique expertise as well as our proprietary IP. The goal was to be able to accelerate and, more importantly, enhance the value of solutions we deliver to clients. Our AI leadership and relevance are being defined by our distinct capabilities to help clients identify, evaluate, design, and deploy high-impact AI solutions utilizing our AI XPLR platform. We are not surprised by the changes required by the AI transition. We were early adopters and anticipated the required changes. We started in January of 2024 when we first introduced AI XPLR version 1, and in September of 2024, when we acquired the globally recognized GenAI engineering capabilities of LeewayHertz to expand our agentic design and build capabilities and also enhance our platform innovation as well as licensing efforts. Our AI XPLR version 5 release is now licensable. AI XPLR is distinct due to its enterprise-wide solution simulation, ideation, and detailed process and agentic design capabilities, which are supported by solution-specific ROI. AI XPLR is uniquely ours because it is powered by our proprietary Hackett solution language model and informed by our globally recognized Hackett process benchmarks and best practices in process intelligence IP. Although we started with AI XPLR, we have now introduced new platforms, which include XT to support our business transformation engagements, and AIX to support our enterprise application implementation engagements, and Ask Hackett, which we rolled out last summer to support the delivery of our executive applied intelligence programs. As we recently announced, we now have a complete suite of GenAI-enabled platforms to support nearly all of our services. We believe we have been innovative leaders in our industry. As I mentioned, these platforms significantly accelerate and enhance the value of our services and should allow us to grow our revenues and realize meaningful margin increases as we move from labor-based delivery to labor-led services supported by our powerful GenAI delivery platforms and globally recognized IP. Our job is to make sure our clients understand the importance of their business process context and the critical role it plays in the successful adoption of AI. There is little to no value realization without a detailed understanding of a client's specific business process and reimagining those specific client requirements by assessing the AI-enablement opportunity of each work step. That is the critical foundational element of AI XPLR. We believe that our platform-enabled delivery strategy will provide significant new revenue growth opportunities with higher margins while helping clients capture this unprecedented transformative opportunity. We also believe that channel partners can help us accelerate our efforts by increasing client access, which should also result in revenue growth. We have spent nearly 6 months with a global technology and consulting company demonstrating and testing AI XPLR's powerful capabilities on global, highly complex client solutions that have resulted in our platform being described as game-changing. We expect to execute and launch a global go-to-market collaboration agreement that will allow us to jointly serve new and existing clients. We expect to finalize our agreement and launch our first client shortly. We also continue to believe that we can bring significant value to all organizations that utilize Celonis' software and other process mining software. Our ability to ingest their valuable volume and process execution detail into AI XPLR allows us to accelerate and better inform our ideation and solutioning recommendations, which allows customers to accelerate their transformation initiatives. We also plan to launch a go-to-market pilot initiative with ServiceNow this month. We have been pursuing this opportunity for several months and are eager to see the outcome from our joint pursuits. On the balance sheet side, we continue to generate strong cash flow from operations, which has allowed us to maintain our dividend and continue our strong buyback program. With that said, let me ask Rob to provide details on our operating results, cash flow, and also comment on the outlook.

Thank you, Ted. As I typically do, I'll cover the following topics during this portion of the call. I'll cover an overview of the fourth-quarter results for 2025, along with an overview of related key operating statistics, an overview of our cash flow activities during the quarter, and I'll then conclude with a discussion on our financial outlook for the first quarter of 2026. For the purposes of this call, I will comment separately regarding the revenues of our Global S&BT segment, our Oracle Solutions segment, our SAP Solutions segment, and the total company. Our Global S&BT segment includes the results of our North America and International GenAI consulting and implementation licensing revenues, benchmarking and business transformation offerings, Executive Applied Intelligence Advisory Programs, and our OneStream and eProcurement implementation offerings. Our Oracle Solutions and SAP Solutions segments include results of our Oracle and SAP offerings, respectively. Please note that we will be referencing both total revenues and revenue before reimbursements in our discussion. Reimbursable expenses are primarily project travel-related expenses passed through to our clients that have no associated impact on our profitability. During our call today, we will also reference certain non-GAAP financial measures, which we believe provide useful information to investors. Specifically, all references to adjusted financial measures will exclude reimbursable expenses, noncash stock-based compensation expense, all acquisition-related cash and noncash expenses, amortization of intangible assets and other nonrecurring items, and AI transition charges related to headcount reductions. 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 on the Investor Relations page of our company's website. For the fourth quarter of 2025, our total revenues before reimbursements were $74.8 million, which exceeded the high end of our guidance. The fourth-quarter reimbursable expense ratio on revenues before reimbursements was 1.2% as compared to 1.3% in the prior quarter and 2.3% when compared to the same period in the prior year. Total revenues before reimbursements from our Global S&BT segment were $38.6 million for the fourth quarter of 2025, a decrease of 11% when compared to the same period in the prior year. As Ted mentioned, the market is moving to AI-enabled services. AI is becoming an increasing percentage of all of our client engagements as the convergence of traditional and new AI-oriented services is occurring at an accelerated rate. Given our expanded platform delivery capabilities, we can accelerate value realization and realize productivity improvements utilizing our XT and AI XPLR platforms. We expect Q1 revenue to be up sequentially and gross margin to be up on a year-over-year basis and both to continue to increase throughout the year. Total revenues before reimbursements from our Oracle Solutions segment were $14 million for the fourth quarter of 2025, a decrease of 20% when compared to the same period in the prior year. With the recent introduction of our AIX platform, which supports the delivery of our Oracle implementation engagements, we have started to realize delivery productivity improvements. Correspondingly, we expect both revenue and gross margin improvement in Q1 on a sequential basis, and we expect those improvements to continue to increase throughout the year. Total revenues before reimbursements from our SAP Solutions segment were $22.2 million for the fourth quarter of 2025, an increase of 32% when compared to the same period in the prior year. This was primarily driven by strong software-related sales in the quarter, resulting from the increased sales investments we have made and the SAP success driving S/4HANA cloud migrations. The strong software sales were coupled with significant implementation fees, and therefore, we expect demand for our SAP services to be strong throughout the year. Approximately 22% of our total company revenues before reimbursements consist of recurring multiyear and subscription-based revenues, which include our Executive Advisory, Application Managed Services, and GenAI license contracts. We are seeing the natural migration of IPaaS requests to transition to the Hackett Intelligence IP capabilities embedded in Ask Hackett, AI XPLR, and ZBrain related recurring revenue opportunities. Total company adjusted cost of sales totaled $40 million or 53.4% of revenues before reimbursements in the fourth quarter of 2025 as compared to $40.5 million or 52.3% of revenues before reimbursements in the prior year. Total company consultant headcount was 1,301 at the end of the fourth quarter as compared to total company consultant headcount of 1,317 in the previous quarter and 1,284 at the end of the fourth quarter of 2024. Total company adjusted gross margin on revenues before reimbursements was 46.6% in the fourth quarter of 2025 as compared to 47.7% in the prior year. Adjusted SG&A was $20 million or 26.7% of revenues before reimbursements in the fourth quarter of 2025. This is compared to $18.4 million or 23.7% of revenues before reimbursements in the prior year. The year-over-year increase is primarily due to incremental commissions from increased license sales in the SAP segment. Adjusted EBITDA was $15.9 million or 21.3% of revenues before reimbursements in the fourth quarter of 2025 as compared to $19.5 million or 25.2% of revenues before reimbursements in the prior year. GAAP net income for the fourth quarter of 2025 totaled $5.6 million or diluted earnings per share of $0.21 as compared to GAAP net income of $3.6 million or diluted earnings per share of $0.12 in the fourth quarter of the previous year. Fourth quarter 2025 GAAP net income includes noncash stock compensation expense from our stock price award program of $1.8 million or $0.08 per diluted share and acquisition-related cash and noncash compensation expense of $1.1 million or $0.04 per diluted share. 2024 GAAP net income includes noncash stock compensation expense from our stock price award program of $5.1 million and acquisition-related cash and noncash compensation and related expenses of $2.3 million, which in total impacted our Q4 2024 GAAP results by $0.23. Acquisition-related cash and noncash stock compensation items related to purchase consideration for the LeewayHertz acquisition. This consideration paid to the sellers contains service vesting requirements, and as such, is reflected as compensation expense under GAAP rather than purchase consideration. Adjusted net income and diluted earnings per share for the fourth quarter of 2025 totaled $10.9 million or adjusted diluted net income per common share of $0.40, which is at the high end of our earnings guidance range and compares to prior year adjusted diluted net income per share of $0.47. The company's cash balances were $18.2 million at the end of the fourth quarter of 2025 as compared to $13.9 million at the end of the previous quarter. Net cash provided from operating activities in the quarter was $19.1 million, primarily driven by net income adjusted for noncash activity and increases in accounts payable and accrued expenses, partially offset by an increase in accounts receivable. Our DSO or days sales outstanding was 71 days at the end of the fourth quarter as well as in the previous quarter and 66 days in the prior year. As Ted mentioned, we were pleased that during the fourth quarter of 2025, we were able to utilize our strong balance sheet and cash flow to return capital to our shareholders. By leveraging our credit facility, we completed our stock tender offer, which resulted in the repurchase of 2 million shares of the company's stock at a price of $20.29 per share, including transaction-related fees. In total, including purchases from employees to satisfy income tax withholding triggered by the vesting of restricted shares, the company acquired 2.1 million of the company's stock at an average of $20.30 per share for a total cost of approximately $42 million. Our remaining stock repurchase authorization at the end of the quarter was $11.4 million. At its most recent meeting subsequent to quarter-end, the company's Board of Directors authorized a $13.6 million increase in the company's share repurchase authorization, bringing it to a total of $25 million. Additionally, the Board declared the first quarter dividend of $0.12 per share for its shareholders of record on March 20, 2026, to be paid on April 3, 2026. During the quarter, the company borrowed a net of $32 million from its credit facility to fund the tender offer. The balance of the company's outstanding debt at the end of the fourth quarter was $76 million. Before I move to guidance for the first quarter of 2026, I would like to remind everyone of the seasonality of our business relative to costs as we move sequentially from Q4 to Q1. Specifically, consistent with first quarter guidance provided in previous years, our first quarter guidance for 2026 will reflect the sequential increase in U.S. payroll-related taxes and the sequential buildup of our vacation accruals. The company estimates total revenues before reimbursements for the first quarter of 2026 to be in the range of $70.5 million to $72 million. We expect both Global S&BT and Oracle Solutions segments to be down when compared to the prior year but sequentially up from Q4. We expect SAP Solutions segment revenue before reimbursements to continue to be up on a year-over-year basis. As a result of the continuing pivot of our business to generative AI, the company will incur AI transition charges in the first quarter of approximately $1 million to $1.5 million. These charges primarily relate to severance costs due to headcount reductions and the leverage of our AI delivery platforms. The company may continue to incur additional charges during 2026. These charges will be excluded from adjusted results. We estimate adjusted diluted net income per common share in the first quarter of 2026 to be in the range of $0.34 to $0.36, which assumes a GAAP effective tax rate on adjusted earnings of 26.3% as compared to GAAP effective tax rate of 20.1% in the first quarter of the prior year, an unfavorable increase in taxes of approximately $0.04 per diluted share. We expect the adjusted gross margin as a percentage of revenues before reimbursements to be approximately 44% to 45%. We expect adjusted SG&A and interest expense for the first quarter to be approximately $20 million. We expect first-quarter adjusted EBITDA as a percentage of revenues before reimbursements to be in the range of approximately 19.5% to 20.5%. Lastly, we expect cash balances, excluding the impact of share buyback activity, to be tempered due to the payment of 2025 performance-related bonuses and the payment of employee income tax withholding triggered by the net vesting of restricted shares.

At this point, I would like to turn it back over to Ted to review our market outlook and strategic priorities for the coming months. Thank you, Rob. Thank you, Rob. 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 solid in traditional areas, it continues to be impacted by thoughtful decision-making as organizations assess competing priorities partly due to economic concerns and also partly due to the consideration and also confusion of emerging GenAI technologies and what they offer. We have not been surprised by the powerful potential to the compute and inference power of the large language models to drive transformative change, but rather the confusion created by the frequent introductions of new technology, primarily build capabilities, is where we believe the confusion lies. What requires greater understanding is what is necessary to realize high returns from the deployment of the available emerging capabilities. To assess and design high ROI solutions requires client-specific process knowledge in order to reimagine and enhance the new workflows to determine Agentic workflows, which should be designed and deployed, which can provide targeted returns. That is where our process knowledge, expertise, benchmarks, and the powerful capability of our Hackett solution language model, which powers all our platforms are distinct. The rapidly emerging build capabilities which are being introduced by the client providers like Anthropic and OpenAI are only accelerating and reducing the cost to build agents and Agentic workflows. However, they do not eliminate the need to fully understand the exact client-specific business process requirements, the client's existing automation footprint and the need to assess existing and potential data sources necessary to fully optimize the value of AI in the design, build, and deployment of solution. This is without even considering what it takes to fully then execute a high-impact, high productivity solution, which impacts both the number of people that support that activity as well as the new cognitive capabilities that are going to be utilized and how. We believe we are entering the greatest automation expansion area of our lifetime, which will dramatically increase the enterprise automation footprint of every organization. The opportunity of all technology players to provide the underlying application and infrastructure solutions is obviously massive and therefore, their marketing is understandable. But no one should underestimate the incumbent enterprise application providers' ability to thrive in this hyper-growth automation environment. Based on our estimates, the automation expansion opportunity is somewhere between 3x to 5x the existing automation footprint which exists today. Imagine all of the change that was to happen if you really were transitioning an organization from what is primarily static and rule-based automation to fully cognitive automation, which allows for the deployment of digital labor. Again, do not underestimate the opportunity for software and services companies to be able to grow in this environment given the significant amount of automation, which will and can be deployed and the help they will need to affect those changes. One of the critical questions that AI XPLR answers is what automation is required by a proposed AI solution which already exists in the client's enterprise application footprint. Clients have no desire to duplicate any automation they have worked so hard to deploy. So is the transition as disruptive as software and services companies and as the current stock market volatility of that sector suggests? The answer is yes, yes. But again, at the same time, what has not been equally or properly reported is the total addressable market increase for enterprise automation that will be delivered when and as existing automation footprints extend into the cognitive and Agentic workflows and therefore, who will provide it. Increasing automation opportunity should more than offset any disruption that software and services providers experience if they expand their current application footprint and related services capability to capture the significant growth. All organizations will need to understand the potential productivity and intelligence force multiplier that will emerge when existing static rule-based automation starts to transition to cognitive automation. We expect IT budgets to increase with increasing attention and allocations to the rapidly emerging GenAI solutions and the related opportunities and threats that it brings. Eliminating confusion, as I say, will be key to accelerating the adoption. The unlimited potential of GenAI will define an entirely new level of AI world-class performance standards, driving all software and services providers to extend the value of their existing offerings with the introduction of Agentic AI capability. We believe this will result in unprecedented innovations, which all organizations will have to consider. This shift is consistent with our aggressive pivot to GenAI-enabled transformation, which we believe creates a unique value creation opportunity for our organizations. We believe that the platforms that we have deployed and the unique capabilities of AI XPLR have already significantly expanded our opportunity to help clients address areas and opportunities that we were not previously pursuing. Another critical investment that we have made is to also build our own GenAI-assisted knowledge-based solution, which I previously shared is called Ask Hackett AI. Ask Hackett leverages our proprietary Hackett benchmarking, executive advisory business transformation intelligence, which allows us to define and enable digital world-class performance for clients. Our IP will also be increasingly leveraged across all of our market-facing service delivery platforms. We are continually ingesting and indexing all IP in order to make sure that it is available to support our clients as well as our associates. On the talent side, competition for experienced executives with high technology agility continues. Overall turnover continued at acceptable levels during the quarter, and we expect that trend to continue. Lastly, even though we believe that we have the client base and offerings to grow our business, we continue to look for acquisitions and alliances that strategically leverage our IP, platforms, and transformation expertise, and can add scope, scale, or capability, which can accelerate our growth. As always, let me close by congratulating our associates on our innovation and performance and by thanking them for their tireless efforts and always urgent to stay highly focused on our clients and our people no matter what challenges we may encounter. Those conclude my comments. Let me turn it over to our operator, and let us move on to the Q&A section of our call.

Our first caller is George Sutton with Craig-Hallum.

Ted, you threw out a couple of big nuggets there, so I wanted to bite. First, on the 6-month demonstration and testing work that you've been doing with what sounds like an international potential reseller and partner. Can you just talk a little bit more about what the ultimate outcome you're looking for from that specific relationship would be?

Yes, I would have preferred to announce the agreement during this call, but we expect to do so soon. The capabilities of AI XPLR are truly unique. I know this may sound repetitive, but I want to emphasize the extreme capability we possess, which remains very distinct. We can simulate AI opportunities across 26 industries, and the way we do this with AI XPLR is unique. We also have the ability to capture a client’s automation footprint to understand any automation considerations they want to explore, which we believe is another distinct feature. While evaluating the return on investment for any AI solution a client asks us to analyze may not be exclusively unique, our intellectual property on performance intelligence is as strong or stronger than anyone else's. As you know, our acquisition from LeewayHertz has significantly enhanced the solution design module of AI XPLR, allowing us to create an 80% solution based on specific client input. The ability to develop detailed functional designs and soon extend that capability to technical designs within ZBrain is expected to be highly distinct as well. These capabilities enable us to gather the necessary information from partners, whether they are looking to explore specific business areas or assess performance. Our use of AI XPLR allows us to deliver valuable productivity ideas, backed by detailed workflows and a well-prepared return on investment. I believe those organizations exploring strategic alliances with us do so because of our brand's credibility and the unique capabilities of AI XPLR. I see our relationship and leveraging these aspects for current and potential clients as our initial focus.

Just to be clear on this relationship, if you do get this signed, that would be something you would announce intra-quarter, hypothetically?

Yes. If we get it signed, they would like to announce it as we do, but they obviously want to share that relationship as well.

Okay. And then separately, you actually mentioned ServiceNow and going forward with that partnership. Can you just give us a sense of how you'd be going to market with them? And any more details on that plan?

We were trying to do something with them for months and they were looking for specific go-to-market areas to use, again, this unique capability we have and to see what the impact is in introducing their existing platform capabilities. So it's a pilot to target. We've recommended and we've discussed a specific industry that, again, the hope is to be able to launch that before the end of the month.

Got you. And just one final question. You mentioned transition costs from GenAI, meaning your headcount can actually now be reduced in certain areas due to GenAI. So that's interesting because, obviously, the other parts we're talking about are go-to-market strategies with AI. This would be your costs are actually starting to come down because of GenAI. Can you just give us a better sense there?

Yes. At the end of the year, we launched two new platforms: XT, which supports our transformation professionals in operational modeling and creating transformation roadmaps for clients, and AIX, formerly known as AIXelerator, which aids in delivering our technology implementation solutions. We have successfully applied this new capability with ten clients, yielding productivity improvements that may exceed 25%. As we discussed, we focus on outcomes rather than rates, placing a value on those outcomes that clients can compare with others. If we deliver better results, we expect to see margin expansion, which we are beginning to experience in Q1. The AIXelerator platform was first introduced through our OneStream group and is now expanding into Oracle. A noteworthy success involved stepping into a significant OneStream opportunity late in the process within an industry where we had limited experience. Our platform's ability to execute and deliver was compelling enough to help us secure the win against stiff competition. We anticipate achieving similar results with two or three additional opportunities. Our initial capabilities aim to reduce costs associated with production, data gathering, or execution that would typically involve our junior consultants. It's important to highlight that we have fewer of them in our enterprise model. Our enhanced ability to deliver superior results without the new AIX capabilities is clear and significant. If we can demonstrate this improved capability confidently, leveraging our intellectual property and the trusted Hackett brand, we are poised to capture substantial gains. Clients will achieve better outcomes and faster execution, supported by our team during implementations and backed by these new platforms. As we roll out these services, we've recognized that with productivity gains, we may not require as many personnel in certain areas. Therefore, we want the market to understand how these productivity improvements are affecting our operating results.

Our next caller is Jeff Martin with ROTH Capital Partners.

Ted, I wanted to dive in. You mentioned at the start of the call that your products are all licensable now. Just curious how things are progressing on the licensing front.

Like we said, we announced that, I believe it was the first week of January. So we expect to start licensing the product here as we progress throughout the year. The product has been utilized in the version 4 capabilities to assist the delivery of a consulting engagement. But after a consulting engagement, once the client is exposed to the platform, now if they would like to continue to either ideate, discover opportunities on their own, because the module now resulted in 2 modules, an ideation explorer module and a solutioning module, the client has the option to license either one or both depending on how they want to avail themselves to that capability. So we expect to expose clients to version 5 as we are on any and all of the engagements that we're launching. And then we expect clients to decide how they would like to avail themselves to those platforms. So they'll make that determination.

Got it. And then you mentioned that you're not quoting on rate anymore, you're quoting on outcome. I was curious if you could elaborate on that, so we can understand that from a financial model point of view.

We assess each job and respond to the client's needs. We provide a fee based on the completion details outlined in the client's request. If the client is interested in discussing rates, we address the licensing aspects of the platform during the engagement. Most clients prefer to concentrate on specific deliverables and the outcomes associated with them, so we quote a fee accordingly. It's important to clarify that while we recognize we are in a transition phase, we are not offering our platform to clients for free. We believe this approach leads to a quicker deployment, which clients find valuable, and promotes realization of value in our engagements, whether involving AI discovery and solutioning with XPLR, business transformation with XT, or implementations for Oracle or OneStream using AIX.

Great. And then I was curious on this large international channel partner, would that be a relationship where you could leverage some of their implementation? Or would you need to continue to staff up additional implementation resources as you go along?

Entirely up to them. They obviously have been exposed and understand the capability of our engineering capabilities. So it will be determined on an engagement basis.

Our next caller is Vincent Colicchio with Barrington Research.

Ted, can you give us an update on the pieces within the S&BT business, how they're trending?

Specifically, which ones are you thinking about, Vince? Is there something specific you have in mind or...

No, nothing specific, just to get a sense for how things are trending. You talked about AI, the AI piece.

The number of clients incorporating AI is expected to significantly increase throughout the year. The advisory business has performed well under the current circumstances. The introduction of our GenAI program, along with providing our members access to the ideation capabilities of AI XPLR for actionable AI opportunity identification, has contributed positively. Overall, we have performed well compared to others. OneStream has seen a sequential increase, and as Rob mentioned, S&BT is also expected to grow from Q4 to Q1, similar to Oracle and SAP. SAP is in a strong year-on-year position, though not necessarily sequentially. In 2025, we experienced demand disruption and some confusion. We believe that new capabilities and a clearer understanding of adoption will benefit us. If technology providers articulate their capabilities more clearly, it will help everyone in the industry. Did you need more specific details, Vince?

That's helpful. And then with SAP and Oracle improving and expected to improve throughout the year, I assume we'll still see a mix shift towards AI for the next 12 months. Is that accurate?

Yes, certainly. The performance of SAP has been strong for several quarters, as they have effectively encouraged clients to migrate to S/4HANA, which is reflected in our business. The sequential decline in Oracle is significant for us. We remain optimistic that with this increase and the rollout of the AIXelerator capability within that practice, our Oracle group will have the opportunity to regain growth in 2026.

At this time, I show no further questions. I would now turn the call back over to Mr. Fernandez.

I'd like to thank everyone for participating in our fourth-quarter earnings call. Look forward to updating everyone again when we report the first quarter. Thank you, everyone.

Thank you. This concludes today's conference call. You may go ahead and disconnect at this time.