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What changed in HACKETT GROUP, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of HACKETT GROUP, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+177 added−181 removedSource: 10-K (2024-03-01) vs 10-K (2023-03-03)

Top changes in HACKETT GROUP, INC.'s 2023 10-K

177 paragraphs added · 181 removed · 149 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

54 edited+13 added−5 removed49 unchanged
Biggest changeThe Hackett DTP accelerates the speed to value realization by helping organizations achieve their performance targets through a combination of benchmark metrics, best practices and software configuration and process flow accelerators delivered in a fully automated platform. • Launched in early 2023 our new Hackett Connect platform that will support all of our Executive and Market Intelligence offerings including our syndicated research channel relationships. • Expanded our IPaaS – leveraging our QL and DTP platforms we are attracting new alliance partners that can leverage our unique enterprise performance benchmarking and best practices solutioning IP to help them differentiate and sell their software or services solutions.
Biggest changeThe Hackett DTP accelerates the speed to value realization by helping organizations achieve their performance targets through a combination of benchmark metrics, best practices and software configuration and process flow accelerators delivered in a fully automated platform. • Hackett Connect – launched in October of 2023, is our Executive Advisory and Market Intelligence membership platform which allows our clients to avail themselves of our expert advisors, syndicated research, benchmarking and best practices IP.
In regard to SAP, we were an early provider of S4 HANA which allowed us to quickly transition our implementation skills and benefit from the SAP migration to the Cloud. • Expanded Smart Automation Capabilities – We expanded our ability to help clients assess and implement the rapidly emerging Workflow Automation, Process Mining and related smart automation technologies. • Launched the Hackett Institute and acquired the joint venture interest of our Certified Global Business Services (“CGBS”) Program – and moved our training content to a state-of-the-art learning management platform.
In regard to SAP, we were an early provider of S4 HANA which allowed us to quickly transition our implementation skills and benefit from the SAP migration to the Cloud. • Expanded Smart Automation Capabilities – We expanded our ability to help clients assess and implement the rapidly emerging Workflow Automation, Process Mining and related smart automation technologies. • Launched the Hackett Institute and acquired the joint venture interest of our Certified Global Business Services (“CGBS”) Program – we moved our training content to a state-of-the-art learning management platform.
These core values are: • Continuous development of our associates, our unique content business model and our knowledge base; • Diversity of backgrounds, skills and experiences; • Knowledge capture, contribution and utilization; and • Collaboration with one another, our partners and our clients. 10 Our human resources staff includes seasoned professionals in North America, Europe, India and South America who support our groups by, among other things, administering our benefit programs, facilitating the hiring process and coordinating training activities.
These core values are: • Continuous development of our associates, our unique content business model and our knowledge base; • Diversity of backgrounds, skills and experiences; • Knowledge capture, contribution and utilization; and • Collaboration with one another, our partners and our clients Our human resources staff includes seasoned professionals in North America, Europe, India and South America who support our groups by, among other things, administering our benefit programs, facilitating the hiring process and coordinating training activities.
These services include post-implementation support for select business application and infrastructure platforms. Our SAP Solutions group also includes a division responsible for the sale of the SAP suite of applications. CLIENTS We focus on developing long-term client relationships with Global 2000 firms and other sophisticated buyers of business and IT consulting services.
These services include post-implementation support for select business application and infrastructure platforms. Our SAP Solutions group also includes a division responsible for the sale of the SAP suite of applications. 9 CLIENTS We focus on developing long-term client relationships with Global 2000 firms and other sophisticated buyers of business and IT consulting services.
Our Hackett DTP leverages our inventory of Hackett-Certified best practices, observed through benchmark and other business transformation engagements, which correlate best practices with superior performance levels. We utilize Capability Maturity Models to better understand our clients’ capabilities and organizational maturity so that we can determine the level of performance that they can realistically pursue.
Our Hackett DTP leverages our inventory of Hackett-Certified best practices, observed through benchmark and other business transformation engagements, which correlate best practices with superior performance levels. We utilize Capability Maturity Models to better understand our clients’ capabilities and organizational maturity so that we can determine the level of performance that they 5 can realistically pursue.
Depending upon where our clients are in their assessment or implementation of performance improvement initiatives, we provide them a combination of actionable offerings that support their efforts. We believe that clients that leverage our IP are more likely to allow us to serve them more broadly. IP-based services enhance our opportunities to serve clients remotely, continuously and more profitably.
Depending upon where our clients are in their assessment or implementation of performance improvement initiatives, we provide them with a combination of actionable offerings that support their efforts. We believe that clients that leverage our IP are more likely to allow us to serve them more broadly. IP-based services enhance our opportunities to serve clients remotely, continuously and more profitably.
By building a series of highly 6 complementary market intelligence and implementation offerings that allow our clients access to our IP, which is based on our performance metrics, best practice process and technology value realization insight, we are able to build trusted strategic relationships with our clients.
By building a series of highly complementary market intelligence and implementation offerings that allow our clients access to our IP, which is based on our performance metrics, best practice process and technology value realization insight, we are able to build trusted strategic relationships with our clients.
We also maintain our award winning procurement (Coupa and Ariba) functionally led groups and our OneStream CPM teams within this group. 8 ORACLE SOLUTIONS SEGMENT Our Oracle Solutions Segment helps clients choose and deploy Oracle applications that best meet their needs and objectives. In 2017, we acquired Oracle ERP and Cloud implementation capabilities.
We also maintain our award winning procurement (Coupa and Ariba) functionally led groups and our OneStream CPM teams within this group. ORACLE SOLUTIONS SEGMENT Our Oracle Solutions Segment helps clients choose and deploy Oracle applications that best meet their needs and objectives. In 2017, we acquired Oracle ERP and Cloud implementation capabilities.
The combination of Hackett benchmark data, along with deep expertise and knowledge in evaluating, designing and implementing business transformation strategies leveraging our proprietary Best Practices Repository and other accelerators within DTP, delivers a powerful and distinct value proposition to our clients.
The combination of Hackett 6 benchmark data, along with deep expertise and knowledge in evaluating, designing and implementing business transformation strategies leveraging our proprietary Best Practices Repository and other accelerators within DTP, delivers a powerful and distinct value proposition to our clients.
We have developed a series of offerings that allow us to efficiently help our clients without regard to where they are in their respective performance improvement lifecycle. COMPETITION The strategic executive advisory and technology consulting marketplace continues to be extremely competitive. The marketplace will remain competitive as companies continue to look for ways to improve their organizational effectiveness.
We have developed a series of offerings that allow us to efficiently help our clients without regard to where they are in their respective performance improvement lifecycle. COMPETITION The strategic executive advisory, business transformation and technology consulting marketplace continues to be extremely competitive. The marketplace will remain competitive as companies continue to look for ways to improve their organizational effectiveness.
Benchmarks are used by our clients to objectively establish priorities, generate organizational consensus, align compensation to establish performance goals and develop the required business case for business and technology investments. • Business Transformation Group Our Business Transformation group help our clients develop a coordinated digital transformation strategy that allows our clients to achieve meaningful performance improvements across the enterprise.
Benchmarks are used by our clients to objectively establish priorities, generate organizational consensus, align compensation to establish performance goals and develop the required business case for business and technology investments. • Business Transformation Group Our Business Transformation group helps our clients develop a coordinated digital transformation strategy that allows our clients to achieve meaningful performance improvements across the enterprise.
Our research provides detailed insights into the most significant proven approaches in use at world-class organizations that yield superior business results. • Peer Interaction: Regular member-led webcasts, annual Best Practice Conferences, annual Member Forums, membership performance surveys and client-submitted content provide ongoing peer learning and networking opportunities. • Introduction of New Vendor IP- centric Offerings : We are continuing to seek new opportunities through strategic alliances and channels to use our IP to help others sell and deliver their products, such as our IP-as-a-Service offerings and Hackett Institute programs.
Our research provides detailed insights into the most significant proven approaches in use at world-class organizations that yield superior business results. • Peer Interaction: Regular member-led webcasts, annual Best Practice Conferences, annual Member Forums, membership performance surveys and client-submitted content provide ongoing peer learning and networking opportunities. • Introduction of New Gen AI Content and Vendor IP- centric Offerings : We are continuing to seek new opportunities through strategic alliances and channels to use our IP to help others sell and deliver their products, such as our IPaaS offerings and Hackett Institute programs.
Our expertise is focused on SAP ERP, with primary focus on Life Sciences and Consumer Goods. The group offers comprehensive services from planning, architecture, and vendor evaluation and selection through implementation, customization, testing and integration. Comprehensive fit-gap analyses of all major packages against Hackett Best Practices are utilized by our SAP Solutions teams.
Our expertise is focused on SAP ERP, with primary focus on Life Sciences and Consumer Goods. The group offers comprehensive services from planning, architecture, and vendor evaluation and selection through implementation, customization, testing and integration. Comprehensive fit-gap analyses of all major packages against Hackett Best Practices, inclusive of imbedded Gen AI solutions, are utilized by our SAP Solutions teams.
Hackett has identified approximately 2,000 best practices for over 140 processes in these key functional areas and uses proprietary performance measurement tools and data collection processes that enable companies to complete the performance measurement cycle and identify and quantify improvement opportunities in as little as four weeks.
Hackett has identified approximately 2,050 best practices for over 550 processes in these key functional areas and uses proprietary performance measurement tools and data collection processes that enable companies to complete the performance measurement cycle and identify and quantify improvement opportunities in as little as four weeks.
The categories below define our business development resources. 9 BUSINESS DEVELOPMENT RESOURCES Although virtually all of our advisors and consultants are expected to contribute to new revenue opportunities, our primary internal business development resources are comprised of the following: • The Leadership Team, Principals and Senior Directors are comprised of our senior leaders who have a combination of executive, regional and anchor account responsibilities.
BUSINESS DEVELOPMENT RESOURCES Although virtually all of our advisors and consultants are expected to contribute to new revenue opportunities, our primary internal business development resources are comprised of the following: • The Leadership Team, Principals and Senior Directors are comprised of our senior leaders who have a combination of executive, regional and anchor account responsibilities.
The launch of QL, DTP and Hackett Connect should expand and attract new clients and alliance partners that can leverage our unique benchmarking and best practices, software configuration and process flow IP to help them differentiate and sell their software or services solutions.
The launch of QL, DTP, Hackett Connect and now AI XPLR should expand and attract new clients and alliance partners that can leverage our unique expertise, benchmarking and best practices, software configuration and process flow IP to help them differentiate and sell their software or services solutions.
As of December 30, 2022, we had 1,175 associates, excluding subcontractors, 81% of whom were billable professionals. We do not have any associates that are subject to collective bargaining arrangements, however, in France, our associates enjoy the benefit of certain government regulations based on industry classification. We have entered into nondisclosure and non-solicitation agreements with virtually all of our personnel.
As of December 29, 2023, we had 1,350 associates, excluding subcontractors, 82% of whom were billable professionals. We do not have any associates that are subject to collective bargaining arrangements, however, in France, our associates enjoy the benefit of certain government regulations based on industry classification. We have entered into nondisclosure and non-solicitation agreements with virtually all of our personnel.
Our compensation programs for our associates reflect an emphasis on optimizing our total revenue relationship with our clients. In our technology groups, we have continued to utilize our Hackett intellectual capital as a way to differentiate the relationships we have with the software providers and with our clients.
Our compensation programs for our associates reflect an emphasis on optimizing our total revenue relationship with our clients. In our technology groups, we have continued to utilize our Hackett intellectual capital as a way to differentiate the relationships we have with the software providers and with our clients. The categories below define our business development resources.
This is a critical component of our desire to emphasize the growth of high margin annualized recurring revenues. • Expanded executive research advisory and market intelligence programs and dedicated sales expertise to grow high margin annualized recurring revenues.
This is a critical component of our desire to emphasize the growth of high margin annualized recurring revenues. • Expanded Executive Research Advisory and Market Intelligence Programs - We expanded our IPaas programs and added dedicated sales expertise in an effort to grow high margin annualized recurring revenues.
This includes 97% of the Dow Jones Industrials, 93% of the Fortune 100, 73% of the DAX 30 and 52% of the FTSE 100. Ongoing studies are conducted in a wide range of areas, including selling, general and administrative, finance, human resources, information technology, procurement, enterprise performance management and shared services.
This includes 97% of the Dow Jones Industrials, 89% of the Fortune 100, 70% of the DAX 40 and 55% of the FTSE 100. Ongoing studies are conducted in a wide range of areas, including selling, general and administrative, finance, human resources, information technology, procurement, enterprise performance management and shared services.
These accounts mostly include large prospects, past clients, existing medium-sized clients and mid-tier market accounts and are handled primarily on an opportunistic basis, except for active clients where delivery teams are focused on driving additional revenue. • Strategic Alliance Accounts are accounts that allow us to partner with organizations of greater scale or different skill sets or with software developers enabling all parties to jointly market their products and services to prospective clients.
These accounts mostly include large prospects, past clients, existing medium-sized clients and mid-tier market accounts and are handled primarily on an opportunistic basis, except for active clients where delivery teams are focused on driving additional revenue. • Strategic Alliance Accounts are accounts that allow us to partner with organizations of greater scale or different skill sets or with software developers enabling all parties to jointly market their products and services to prospective clients. 10 HUMAN CAPITAL MANAGEMENT We believe that our culture fosters intellectual creativity, collaboration and innovation.
INTELLECTUAL PROPERTY We have obtained trademark registrations for The Hackett Group, Hackett Best Practices, World Class Defined and Enabled, Quantum Leap, Digital Excelleration, Intellectual Property-As-A-Service and Book of Numbers, and own registrations for certain of our other trademarks in the United States and abroad that we use in our business and believe are important to protect.
INTELLECTUAL PROPERTY World Class Defined and Enabled, Quantum Leap, Digital Excelleration, Intellectual Property-As-A-Service, Digital World Class, Hackett Certified and Book of Numbers are registered trademarks of Hackett's and we own registrations for certain of our other trademarks in the United States and abroad that we use in our business and believe are important to protect.
Solution innovations have taken the group into areas such as big data, cloud technology data management and governance, and industry-specific analytic templates. SAP SOLUTIONS SEGMENT Our SAP Solutions segment helps clients choose and deploy S4 HANA Cloud applications that best meet their needs and objectives.
Solution innovations have taken the group into areas such as big data, cloud technology data management and governance, and industry-specific analytic templates. This will now extend to Oracle imbedded Gen AI solutions. SAP SOLUTIONS SEGMENT Our SAP Solutions segment helps clients choose and deploy S4 HANA Cloud applications that best meet their needs and objectives.
These studies drive our Digital Transformation Platform (“DTP” or “Hackett DTP”) which includes the firm's benchmarking metrics, best practices repository, and best practice configuration and process flow accelerators, which enables our clients and partners to achieve digital world-class performance.
These studies are executed utilizing our Quantum Leap platform which drives our Digital Transformation Platform (“DTP” or “Hackett DTP”). This includes the firm's benchmarking metrics, best practices repository, and best practice configuration and process flow accelerators, which enables our clients and partners to achieve digital world-class performance.
Utilizing the benchmarking metrics and repository of best practices, combined with the global strategy and implementation insight of our transformation and technology associates, Hackett has also created a series of organizational and technology accelerators that allow our clients to effect proven sustainable performance improvements.
Utilizing the benchmarking metrics and repository of best practices, combined with the global strategy and implementation insight of our transformation and technology associates, Hackett has also created a series of organizational and technology accelerators that allow our clients to effect proven sustainable performance improvements. These offerings are supported by our QL, DTP and Hackett Connect platforms.
These relationships are also currently responsible for over 40% of the downstream Hackett’s business transformation and technology consulting revenues. 4 • Expanded Cloud Capabilities - We expanded our Oracle Cloud applications addressable market from Enterprise Performance Management (“EPM”) to include Enterprise Resource Planning (“ERP”) and the entire Oracle Cloud applications suite through the acquisition of Jibe Consulting in 2017.
These relationships are also currently responsible for over 40% of Hackett’s business transformation and technology consulting revenue. • Expanded Cloud Capabilities - We expanded our Oracle Cloud applications addressable market from Enterprise Performance Management (“EPM”) to include Enterprise Resource Planning (“ERP”) and the entire Oracle Cloud application suite.
Leveraging our Quantum Leap and Hackett Digital Transformation Platforms, and soon to launch Hackett Connect, our engagements often begin with an assessment of a client’s performance, which is normally gained through benchmarking key processes and comparing the results to world-class levels and industry standards captured in the Hackett performance metrics database.
Leveraging our AI XPLR, QL, Hackett DTP and Hackett Connect platforms, our engagements often begin with an assessment of a client’s performance, which is normally gained through benchmarking key processes and comparing the results to world-class levels and industry standards captured in the Hackett performance metrics database.
During 2022, our ten most significant clients accounted for 24% of total revenue and during 2021 and 2020, our ten most significant clients accounted for 22% of total revenue in each year. In addition, during 2022, 2021 and 2020, our largest client generated 7%, 4% and 5% of total revenue, respectively.
During 2023, our ten most significant clients accounted for 23% of total revenue and during 2022 and 2021, our ten most significant clients accounted for 24% and 22% of total revenue, respectively. In addition, during 2023, 2022 and 2021, our largest client generated 6%, 7% and 4% of total revenue, respectively.
We continue to look for other potential programs through which to introduce new IP-centric offerings and expand the power and reach of our brand. • Benchmarking Services Our benchmarking group has measured and evaluated the efficiency and effectiveness of enterprise functions for over 8,800 organizations globally.
We continue to look for other potential programs through which to introduce new IP-centric offerings through our platforms and expand the power and reach of our brand. AI XPLR is an excellent example of this strategy. 8 • Benchmarking Services Our benchmarking group has measured and evaluated the efficiency and effectiveness of enterprise functions for over 9,100 organizations globally.
Without a coordinated strategy that addresses the seven key business components which include organization and governance, process design, process sourcing, service placement, information, enabling technology and skills and talent, we believe companies risk losing a significant portion of business case benefits with their investments.
Without a coordinated strategy that addresses the seven key business components which include organization and governance, process design, process sourcing, service placement, information, enabling technology, skills and talent, we believe companies risk losing a significant portion of business case benefits with their investments. We have designed detailed best practice process flows based on Hackett’s deep knowledge of world-class business performance.
Leveraging an offshore resource capability to support the delivery of our offerings has been a key strategy for our organization. Our facilities in Hyderabad, India and Montevideo, Uruguay allow us to increase operational efficiencies and build targeted key capabilities that can appropriately support the delivery of our offerings and internal functional teams.
Our facilities in Hyderabad, India and Montevideo, Uruguay allow us to increase operational efficiencies and build targeted key capabilities that can appropriately support the delivery of our offerings and internal functional teams. We continue to see our offshore capabilities increase as a percentage of our total delivery resources.
We have designed detailed best practice process flows based on Hackett’s deep knowledge of world-class business performance. This enables clients to 5 streamline and automate key processes and generate performance improvements quickly and efficiently at both the functional and enterprise levels. Similarly, we integrate Hackett-Certified best practices directly into technology solutions.
This enables clients to streamline and automate key processes and generate performance improvements quickly and efficiently at both the functional and enterprise levels. Similarly, we integrate Hackett-Certified, proven and emerging best practices directly into technology solutions.
This move quadrupled our Oracle Cloud addressable market and positioned us as a strategic Oracle Cloud applications consultancy. We have also expanded our alliance partners to include Coupa and Ariba in Procurement, as well as OneStream in EPM and Corporate Performance Management (“CPM”).
We have also expanded our alliance partners to include Coupa and Ariba in Procurement, as well as OneStream in EPM and Corporate Performance Management (“CPM”).
Despite our size relative to our competitor group, we believe our competitive position is distinct. With Hackett’s best practice intellectual capital and our QL and DTP platforms, we believe we can empirically and digitally assist our clients. Our ability to apply best practices and benchmarking metrics to client operations via proven techniques is at the core of our competitive standing.
Despite our size relative to our competitor group, we believe our competitive position is distinct. With Hackett’s best practice intellectual capital and our AI XPLR, QL and DTP platforms, we believe we can empirically and digitally assist our clients.
The Hackett Group also provides dedicated expertise in business strategy, operations, finance, human capital management, strategic sourcing, procurement, and information technology, including its highly recognized Oracle, SAP, OneStream and Coupa implementation offerings.
Hackett (NASDAQ: HCKT) is a global IP-based executive advisory, strategic consulting and digital transformation firm. The Hackett Group provides dedicated expertise in Generative Artificial Intelligence ("Gen AI") strategy, operations, finance, human capital management, strategic sourcing, procurement, and information technology, including its highly recognized Oracle, SAP, OneStream and Coupa implementation offerings.
We combine best practices knowledge with business expertise and broad technology capabilities, which we believe enables our programs to optimize return on client investments in people, process, technology and information.
We combine best practices knowledge with business expertise and broad technology capabilities, which we believe enables our programs to optimize return on client investments in people, process, technology and information. This group will lead our AI XPLR efforts with a clear objective of establishing our capability of becoming key architects of our clients’ Gen AI journey.
HUMAN CAPITAL MANAGEMENT We fully believe that our culture fosters intellectual creativity, collaboration and innovation. We believe in building relationships with both our associates and clients. We believe the best solutions come from teams of diverse individuals addressing problems collectively and from multiple dimensions, including the business, technological and human dimensions.
We believe in building relationships with both our associates and clients. We believe the best solutions come from teams of diverse individuals addressing problems collectively and from multiple dimensions, including the business, technological and human dimensions. We believe that the most effective working environment is one where everyone is encouraged to contribute and is rewarded for that contribution.
Many clients attribute their decision to employ us to our IP and accelerators. Our objective is to help our clients make smarter business process and software configuration decisions as a result of our methods and knowledge. We are continuously updating our content and tools through benchmarking, enterprise transformation and research activities.
For our clients, the end results are tangible cost, performance gains and improved returns on their organizational and technology investments. Many clients attribute their decision to employ us to our IP and accelerators. Our objective is to help our clients make smarter business process and software configuration decisions as a result of our methods and knowledge.
We have signed several multi-year relationships and continue to pursue and launch pilots with major software and services providers. • Continue to expand our QL/DTP Content and Technology . DTP incorporates Hackett's intellectual capital into our implementation tools and techniques. For our clients, the end results are tangible cost, performance gains and improved returns on their organizational and technology investments.
Our recently launched AI XPLR platform is an excellent example of this strategy. We have signed several multi-year relationships and continue to pursue and launch pilots with major software and services providers. • Continue to expand our QL/DTP Content and Technology . DTP incorporates Hackett's intellectual capital into our implementation tools and techniques.
We believe that the most effective working environment is one where everyone is encouraged to contribute and is rewarded for that contribution. Our core values are the strongest expression of our working style and represent what we stand for.
Our core values are the strongest expression of our working style and represent what we stand for.
Similarly, we believe that Hackett is the definitive source for best practice performance metrics and strategies. Hackett has conducted over 25,000 benchmark and performance studies over 29 years at over 8,800 clients, generating proprietary data sets spanning multiple performance metrics and correlating best practices with superior performance.
Hackett has conducted over 26,600 benchmark and performance studies over 30 years at over 9,100 clients, generating proprietary data sets spanning multiple performance metrics and correlating best practices with superior performance.
This digital transformation era is very attractive to our sector since we believe our clients will increasingly require organizational and technology market intelligence and implementation insight on how to digitize their businesses and what changes in business models are required to justify significant investments.
This environment is very attractive to our sector since we believe our clients will increasingly require organizational and technology market intelligence and implementation insight on how to leverage emerging technologies to help them digitize their businesses which requires organizational changes and significant investment to achieve operational breakthrough performance to remain competitive.
Our new platforms allow us to deliver objective and actionable insight and expertise in an efficient and continuous way. • Continue to position and grow Hackett as an IP-centric strategic advisory organization. We believe that the Hackett brand is widely recognized for its benchmarking metrics and best practice strategies.
Our new platforms AI XPLR and Hackett Connect Connect allow us to deliver objective and actionable insight in new and emerging areas, such as Gen AI, and expertise in a new efficient and powerful way. • Continue to position and grow Hackett as an IP-centric strategic advisory organization.
Additional updates are also driven by new software releases that drive innovation in business process automation. We continue to invest in the digitization and integration of our various metrics, best practices and best practice acceleration tools into our QL and DTP platforms. • Recruit and develop talent.
We continue to invest in the digitization and integration of our various metrics, best practices and best practice acceleration tools into our QL and DTP platforms. 7 • Recruit and develop talent. As we continue to grow and realize the potential of our business model, it is important to attract, retain, develop and motivate associates.
This is redefining entire industries at an accelerated pace, forcing organizations to fundamentally change and adopt new capabilities in order to remain competitive. Traditional sequential and linear-based business models are changing to fully networked and dynamic automated workflows and events with enhanced analytics.
Traditional sequential and linear-based business models are changing to fully networked and dynamic automated workflows and events with enhanced analytics.
OUR OFFERINGS We offer a comprehensive range of services, including IPaaS, executive advisory and market intelligence programs, benchmarking, business transformation and technology consulting services. With strategic and functional knowledge in finance, human resources, information technology, procurement, supply chain management, corporate services, customer service, and sales and marketing, our expertise extends across the enterprise.
With strategic and functional knowledge in finance, human resources, information technology, procurement, supply chain management, corporate services, customer service, and sales and marketing, our expertise extends across the enterprise. We have completed successful engagements in a variety of industries, including automotive, consumer goods, financial services, technology, life sciences, manufacturing, media and entertainment, retail, telecommunications, transportation and utilities.
The rapid development and move to cloud applications and infrastructure along with improving analytics, mobile functionality and enhanced user experience is dramatically influencing the way businesses compete and deliver their services. This was further accelerated by the necessity to work remotely as a direct result of the COVID-19 pandemic.
The rapid development and move to cloud applications and infrastructure along with improving analytics, mobile functionality and enhanced user experience is dramatically influencing the way businesses compete and deliver their services. This is redefining entire industries at an accelerated pace, forcing organizations to fundamentally change and adopt new capabilities in order to remain competitive.
We continue to see our offshore capabilities increase as a percentage of our total delivery resources. This increase has resulted in improved margins and competitiveness. • Seek out strategic acquisitions. We will continue to pursue strategic acquisitions that strengthen our ability to compete and expand our IP.
This increase has resulted in improved margins and competitiveness. • Seek out strategic acquisitions. We will continue to pursue strategic acquisitions that strengthen our ability to compete and expand our IP. We believe that our unique Hackett access and our QL/DTP approach, coupled with our strong balance sheet and infrastructure, can be utilized to support a larger organization.
As we continue to grow and realize the potential of our business model, it is important to attract, retain, develop and motivate associates. We continue to invest in associate development programs that are specifically targeted to improve our go-to-market and delivery execution. • Leverage our offshore capabilities.
We continue to invest in associate development programs that are specifically targeted to improve our go-to-market and delivery execution. • Leverage our offshore capabilities. Leveraging an offshore resource capability to support the delivery of our offerings has been a key strategy for our organization.
We have completed successful engagements in a variety of industries, including automotive, consumer goods, financial services, technology, life sciences, manufacturing, media and entertainment, retail, telecommunications, transportation and utilities. 7 The Hackett Group GLOBAL STRATEGY & BUSINESS TRANSFORMATION SEGMENT ("GLOBAL S&BT" SEGMENT) • Executive Advisory, IPaaS and Market Intelligence Programs Our Executive Advisory, IPaaS and Market Intelligence programs provide on-demand access to world-class performance metrics, peer-learning opportunities and best practice implementation advice.
GLOBAL STRATEGY & BUSINESS TRANSFORMATION SEGMENT ("GLOBAL S&BT" SEGMENT) • Executive Advisory, IPaaS and Market Intelligence Programs, including Gen AI Our Executive Advisory, IPaaS and Market Intelligence programs provide on-demand access to world-class performance metrics, peer-learning opportunities and best practice implementation advice including the rapidly emerging Gen AI use cases and related content from our AI XPLR platform.
We believe that our unique Hackett access and our QL/DTP approach, coupled with our strong balance sheet and infrastructure, can be utilized to support a larger organization. We plan to pursue acquisitions that are accretive or have strong growth prospects, and most importantly, have strong synergies with our best practice intellectual capital leverage and focus.
We plan to pursue acquisitions that are accretive or have strong growth prospects, and most importantly, have strong synergies with our best practice intellectual capital leverage and focus. OUR OFFERINGS We offer a comprehensive range of services, including IPaaS, executive advisory and market intelligence programs, benchmarking, business transformation and technology consulting services.
Correspondingly, we remain focused on executing the following strategies: • Expanding our IP, brand market permission to our offerings.
STRATEGY Our efforts in the last few years to fully digitize our IP and go-to-market through our QL and DTP platforms, now expanded by our AI XPLR and Hackett Connect platforms, are critical to our success. Correspondingly, we remain focused on executing the following strategies: • Expanding our IP and brand market permission to our offerings.
We continue to expect one of the key drivers for our growth to come from the growing leverage of our “wedge” or IP-as-a-Service offerings, which includes our Benchmarking, Executive Advisory and market intelligence, and our IP led offerings which are enabled by our QL and DTP platforms.
We expect AI XPLR and the rapidly emerging Gen AI services, to be one of the key drivers for our growth along with the growing leverage of our “wedge” or IP centric recurring revenue Executive Advisory and IPaaS offerings. Our QL, DTP, and Hackett Connect platforms resulted in a new way to share and leverage our IP across our offerings.
This also required us to change the way we go to market and engage clients, as well as added software implementation and market intelligence offerings and partners. For example, we have: • Launched Quantum Leap® (“QL”) – Our next generation benchmarking and continuous improvement software as a service solution.
We are also utilizing the AI XPLR platform as the vehicle to integrate the Gen AI impact and all Hackett IP across all of our offerings. • Launched Quantum Leap® (“QL”) – Our next generation benchmarking and continuous improvement software as a service solution.
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The Hackett Group is an intellectual property-based executive advisory, IP as-a-Service Revenue ("IPaaS"), market intelligence, digital transformation consultancy and leading enterprise benchmarking and best practices implementation firm serving global companies. Services include benchmarking, executive advisory, IPaaS, market intelligence, business transformation and cloud enterprise application implementation.
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The firm recently launched our AI XPLR offering which helps define an organizations’ Gen AI enablement opportunities.
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The Hackett Group has completed over 25,000 benchmarking and performance studies with major organizations, including 97% of the Dow Jones Industrials, 93% of the Fortune 100, 73% of the DAX 30 and 52% of the FTSE 100.
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Using AI XPLR, our artificial intelligence ("AI") assessment platform, our experienced professionals guide organizations to harness the power of Gen AI to digitally transform their operations and seek to achieve quantifiable, breakthrough results, allowing us to be key architects of our clients' Gen AI journey. The Hackett Group has completed over 26,600 benchmarking and performance studies with major organizations.
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We have repositioned all of our offerings to the emerging digital transformation opportunities which started by digitizing all of our benchmarking and best practices intellectual property (“IP”). We wanted to deliver our proprietary insights in new ways and to do so efficiently and whenever possible, virtually.
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Our expertise is grounded in best practices insights from benchmarking the world’s leading businesses – including 97% of the Dow Jones Industrials, 89% of the Fortune 100, 70% of the DAX 40 and 55% of the FTSE 100, which are delivered through our Hackett Connect, Quantum Leap ® and DTP platforms.
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OUR IP ENABLED QUANTUM LEAP, DIGITAL TRANSFORMATION AND HACKETT CONNECT PLATFORMS Our Quantum Leap, DTP, and Hackett Connect platforms resulted in a new way to share and leverage our IP across our offerings.
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The recent introduction of foundational models, such as Chat GPT, leverage fully integrated benefits of machine learning, deep learning neural networks further supported by natural language processing and other technologies supporting audio, video, text and motion technologies are now expected to redefine Digital World Class® performance standards.
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STRATEGY The COVID-19 pandemic significantly impacted the way we sell and deliver our services, as we quickly and successfully transitioned to a virtual and remote delivery model. Our efforts in the last few years to fully digitize our IP and go to market through our QL and DTP platforms proved to be critical to our success.
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We have repositioned all of our offerings to the emerging digital transformation opportunities and we recently launched our AI XPLR offering and are rapidly integrating our benchmarking and best practices IP, as well as, our vast and rapidly increasing AI Use Case Repository. These capabilities will allow us to quickly become key architects of our clients' Gen AI journey.
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We see this as an opportunity for our organization to provide an objective business perspective to what has primarily been a technology innovation story. The following are the keys to our strategy: • Launched AI XPLR - Our recently launched AI assessment platform allows us to measure and assess the impact of Gen AI technologies.
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We use our best practice process flows, benchmark database and use case repository to guide our detailed quantifiable assessment of the potential business benefits of Gen AI technologies, as well as an organization's readiness requirements. Further we use our vendor market intelligence research to assist with the key selection considerations of Gen AI solution providers.
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This detailed business and technology perspective is a powerful way to help guide our clients through the significant opportunities and critical considerations that they will have to evaluate and understand.
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We believe that this comprehensive perspective fully supported by our IP and our AI XPLR platform enables us to become valuable 4 architects, advisors and consultants of our clients’ Gen AI journeys.
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It also automates access to our inquiry support, webcasts, briefings and events. • Expanded our IPaaS – leveraging our QL and DTP platforms we are attracting new alliance partners that can leverage our unique enterprise performance benchmarking and best practices solutioning IP to help them differentiate and sell their software or services solutions.
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Our ability to apply best practices and benchmarking metrics to client operations via proven techniques is at the core of our competitive standing. Similarly, we believe that Hackett is the definitive source for best practice performance metrics and strategies.
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We believe that the Hackett brand is widely recognized for its benchmarking metrics and best practice strategies.
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We are continuously updating our content and tools through benchmarking, enterprise transformation and research activities. Additional updates are also driven by new software releases that drive innovation in business process automation.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, if we are unable to successfully anticipate the changing economic conditions, we may be unable to effectively plan for and respond to those changes, and our business could be negatively affected. 11 Our results of operations have been adversely affected and could in the future be materially impacted by macroeconomic conditions on our business.
Biggest changeFor example, the geopolitical disruption resulting from the conflicts between Russian and Ukraine and in the Middle East has created uncertainty in the global economy and could result in a reduction in spending on our services In addition, if we are unable to successfully anticipate the changing economic conditions, we may be unable to effectively plan for and respond to those changes, and our business could be negatively affected.
Because the techniques used to obtain unauthorized access to or sabotage security systems change frequently and are often not recognized until after an attack, we and our third-party service providers may be unable to anticipate the techniques or implement adequate preventative measures, thereby exposing us to material adverse effects on our business, financial condition, results of operations and growth prospects.
Because the techniques used to obtain unauthorized access to or sabotage security systems change frequently and are often not recognized until after an attack, we and our third-party service providers may be unable to anticipate the techniques or implement adequate preventative measures, thereby exposing us to material adverse effects on our business, financial condition, results of operations and growth prospects.
These provisions include the following: 16 • shareholders must comply with advance notice requirements before raising a matter at a meeting of shareholders or nominating a director for election; • our Board of Directors is staggered into three classes and the members may be removed only for cause upon the affirmative vote of holders of at least two-thirds of the shares entitled to vote; • we would not be required to hold a special meeting to consider a takeover proposal unless holders of more than a majority of the shares entitled to vote on the matter were to submit a written demand or demands for us to do so; and • our Board of Directors may, without obtaining shareholder approval, classify and issue up to 1,250,000 shares of preferred stock with powers, preferences, designations and rights that may make it more difficult for a third party to acquire us.
These provisions include the following: • shareholders must comply with advance notice requirements before raising a matter at a meeting of shareholders or nominating a director for election; • our Board of Directors is staggered into three classes and the members may be removed only for cause upon the affirmative vote of holders of at least two-thirds of the shares entitled to vote; • we would not be required to hold a special meeting to consider a takeover proposal unless holders of more than a majority of the shares entitled to vote on the matter were to submit a written demand or demands for us to do so; and • our Board of Directors may, without obtaining shareholder approval, classify and issue up to 1,250,000 shares of preferred stock with powers, preferences, designations and rights that may make it more difficult for a third party to acquire us.
However, those balances are generally available in the local jurisdiction without legal restrictions to fund ordinary business operations. Any fluctuations in foreign currency exchange rates could materially impact the availability and amount of these funds available for transfer. Legal, Regulatory and Compliance Risks Our corporate governance provisions may deter a financially attractive takeover attempt.
However, those balances are generally available in the local jurisdiction without legal restrictions to fund ordinary business operations. Any fluctuations in foreign currency exchange rates could materially impact the availability and amount of these funds available for transfer. 16 Legal, Regulatory and Compliance Risks Our corporate governance provisions may deter a financially attractive takeover attempt.
If we fail to make these estimates accurately, we could be forced to devote additional resources to these engagements for which we will not receive additional compensation. To the extent that an expenditure of additional resources is required on an engagement, this could reduce the profitability of, or result in a loss on, the engagement.
If we fail to make these estimates accurately, we could be forced to devote additional resources to these engagements for which we will not receive additional compensation. To the extent that an expenditure of additional 13 resources is required on an engagement, this could reduce the profitability of, or result in a loss on, the engagement.
These include: • general economic and business conditions; • interest rate and inflation rate trends and fluctuations; • overall demand for services; and • currency exchange rate fluctuations. Our results of operations have been adversely affected and could in the future be materially adversely impacted by the COVID-19 pandemic.
These include: • general economic and business conditions; • interest rate and inflation rate trends and fluctuations; • overall demand for services; and • currency exchange rate fluctuations. Our results of operations have been adversely affected and could in the future be materially adversely impacted by pandemics.
We have derived, and believe that we will continue to derive, a significant portion of our revenue from a limited number of clients for which we perform large projects. In 2022, our ten largest clients accounted for 24% of our aggregate revenue.
We have derived, and believe that we will continue to derive, a significant portion of our revenue from a limited number of clients for which we perform large projects. In 2023, our ten largest clients accounted for 23% of our aggregate revenue.
We also rely on a number of third-party service providers to host, store or otherwise process information for us, or to provide other facilities or infrastructure that we make use of, including “cloud-based” providers of corporate infrastructure services relating to, among other things, human resources, communication services, and some financial functions, and we are therefore dependent on the security systems of these providers.
We also rely on a number of third-party service providers to host, store or otherwise process information for us, or to provide other facilities or infrastructure that we make use of, including “cloud-based” providers of corporate infrastructure services relating to, among other things, human resources, communication services, financial functions, as well as proprietary digital technology platforms, and we are therefore dependent on the security systems of these providers.
Our cash position includes amounts denominated in foreign currencies. We manage our worldwide cash requirements considering available funds from our subsidiaries and the cost effectiveness with which these funds can be accessed. The repatriation of cash balances from certain of our subsidiaries outside the U.S. could have adverse tax consequences and be limited by foreign currency exchange controls.
We manage our worldwide cash requirements considering available funds from our subsidiaries and the cost effectiveness with which these funds can be accessed. The repatriation of cash balances from certain of our subsidiaries outside the U.S. could have adverse tax consequences and be limited by foreign currency exchange controls.
In addition, in 2020 several states introduced varying comprehensive privacy laws modeled to some degree on the CCPA and/or the GDPR. Compliance with multiple country and state laws containing varying requirements could be complicated and costly.
Several states have enacted or introduced varying comprehensive privacy laws modeled to some degree on the CCPA and/or the GDPR. Compliance with multiple country and state laws containing varying requirements could be complicated and costly.
Many factors can cause fluctuations in our financial results, including: • number, size, timing and scope of client engagements; • customer concentration; • long and unpredictable sales cycles; • contract terms of client engagements; • degrees of completion of client engagements; • client engagement delays or cancellations; • competition for and utilization of employees; • how well we estimate the resources and effort we need to complete client engagements; • the integration of acquired businesses; • pricing changes in the industry; • foreign currency changes; • foreign laws and regulatory requirements; • natural disasters, pandemics and other catastrophic events; • economic conditions specific to business and information technology consulting; and • global economic conditions. 12 A high percentage of our operating expenses, particularly personnel and rent, are fixed in advance of any particular quarter.
Many factors can cause fluctuations in our financial results, including: • number, size, timing and scope of client engagements; • customer concentration; • long and unpredictable sales cycles; • contract terms of client engagements; • degrees of completion of client engagements; • client engagement delays or cancellations; • competition for and utilization of employees; • how well we estimate the resources and effort we need to complete client engagements; • the integration of acquired businesses; • pricing changes in the industry; 12 • foreign currency changes; • foreign laws and regulatory requirements; • natural disasters, pandemics and other catastrophic events; • economic conditions specific to business and information technology consulting; and • global economic conditions.
In addition, we are also subject to and affected by new state privacy and data security laws such as the recently implemented California Consumer Privacy Act (“CCPA”). The CCPA became effective January 1, 2020 and imposes additional data privacy requirements on many businesses operating in the state, including, potentially, with respect to employee data.
In addition, we are also subject to and affected by new state privacy and data security laws such as the California Consumer Privacy Act (“CCPA”). The CCPA imposes additional data privacy requirements on many businesses operating in the state, including, potentially, with respect to employee data.
The extent to which the COVD-19 pandemic or another pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration, severity and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic on economic activity and actions taken in response; the effect on our clients and client demand for our services and solutions; the ability of our clients to pay for our services and solutions; and any closures of our clients’ offices and facilities.
The extent to which a pandemic could impact our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration, severity and scope of the pandemic; governmental, business and individuals’ actions that are taken in response to a pandemic; the impact of the pandemic on economic activity and actions taken in response; the effect on our clients and client demand for our services and solutions; the ability of our clients to pay for our services and solutions; and any closures of our clients’ offices and facilities.
Any actual or perceived cybersecurity incident or significant disruption may also interfere with our ability to comply with financial reporting requirements and harm our reputation and market position, especially given that we handle sensitive customer information.
Any actual or perceived cybersecurity incident or significant disruption may also interfere with our ability to 15 comply with financial reporting requirements and harm our reputation and market position, especially given that we handle sensitive customer information. Any of the foregoing matters could harm our operating results and financial condition.
Certain foreign currency exposures are naturally offset within an international business unit, because revenue and costs are denominated in the same foreign currency, and certain cash balances are held in U.S. Dollar denominated accounts. However, due to the increasing size and importance of our international operations, fluctuations in foreign currency exchange rates could materially impact our results.
Certain foreign currency exposures are naturally offset within an international business unit, because revenue and costs are denominated in the same foreign currency, and certain cash balances are held in U.S. Dollar denominated accounts. Fluctuations in foreign currency exchange rates could materially impact our results. Our cash position includes amounts denominated in foreign currencies.
As a result, our competitors may be in a stronger position to respond more quickly to new or emerging technologies and changes in client requirements and to devote greater resources than we can to the development, promotion and sale of their services. Competitors could lower their prices, potentially forcing us to lower our prices and suffer reduced operating margins.
As a result, our competitors may be in a stronger position to respond more quickly to new or emerging technologies, such as artificial intelligence, and changes in client requirements and to devote greater resources than we can to the development, promotion and sale of their services.
Any prolonged economic downturn as a result of weak or uncertain economic conditions or similar factors could adversely affect our clients' financial condition which may further reduce the clients' demand for our services.
Our results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence. Any prolonged economic downturn as a result of weak or uncertain economic conditions or similar factors could adversely affect our clients' financial condition which may further reduce the clients' demand for our services.
We protect ourselves by entering into detailed written contracts with our clients covering the terms and contingencies of the client engagement. In some cases, however, consistent with what we believe to be industry practice, work is performed for clients on the basis of a limited statement of work or verbal agreement before a detailed written contract can be finalized.
In some cases, however, consistent with what we believe to be industry practice, work is performed for clients on the basis of a limited statement of work or verbal agreement before a detailed written contract can be finalized.
We use information technology and security systems to protect proprietary and confidential information, including that of our customers, suppliers and employees.
A breach of our information technology and security systems could materially adversely affect our business. We use information technology and security systems to protect proprietary and confidential information, including that of our customers, suppliers and employees.
In addition, if solutions we provide have defects, critical business functions of our clients may fail, and we could suffer adverse publicity as well as economic liability. We depend heavily on a limited number of clients.
If clients do not perceive our solutions to be effective or of high quality, our brand name and reputation will suffer. In addition, if solutions we provide have defects, critical business functions of our clients may fail, and we could suffer adverse publicity as well as economic liability. We depend heavily on a limited number of clients.
We face competition from international accounting firms; international, national and regional strategic consulting and systems implementation firms; and the IT services divisions of application software firms. In addition, there are relatively low barriers for entry into the business consulting and IT services market.
Competitors could lower their prices, potentially forcing us to lower our prices and suffer reduced operating margins. We face competition from international accounting firms; international, national and regional strategic consulting and systems implementation firms; and the IT services divisions of application software firms. In addition, there are relatively low barriers for entry into the business consulting and IT services market.
Also, acquisitions may involve a number of risks, including: • diversion of management’s attention; • failure to retain key personnel; • failure to retain existing clients; • unanticipated events or circumstances; • unknown claims or liabilities; • amortization of certain acquired intangible assets; and • operating in new or unfamiliar geographies. 14 Client dissatisfaction or performance problems at a single acquired business could have a material adverse impact on our reputation as a whole.
Also, acquisitions may involve a number of risks, including: • diversion of management’s attention; • failure to retain key personnel; • failure to retain existing clients; • unanticipated events or circumstances; 14 • unknown claims or liabilities; • amortization of certain acquired intangible assets; and • operating in new or unfamiliar geographies.
The level of revenue we achieve is based on our ability to deliver market leading services and solutions and to deploy skilled teams of professionals quickly. Our results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence.
Our results of operations have been adversely affected and could in the future be materially impacted by macroeconomic conditions on our business. The level of revenue we achieve is based on our ability to deliver market leading services and solutions and to deploy skilled teams of professionals quickly.
ITEM 1A. RI SK FACTORS Our business is subject to risks. The following important factors could cause actual results to differ materially from those contained in forward-looking statements made in this Annual Report on Form 10-K or our other publicly filed documents.
The following important factors could cause actual results to differ materially from those contained in forward-looking statements made in this Annual Report on Form 10-K or our other publicly filed documents. 11 Business, Market and Strategy Risks Our results of operations could be negatively affected by global and regional economic conditions.
In integrating acquired businesses, we may not achieve expected economies of scale or profitability or realize sufficient revenue to justify our investment.
Integrating businesses that we acquire in the future may involve unanticipated delays, costs and/or other operational and financial problems. In integrating acquired businesses, we may not achieve expected economies of scale or profitability or realize sufficient revenue to justify our investment.
To the extent we do not sufficiently communicate to our clients, or our clients fail to adequately appreciate the nature and extent of any of these types of changes to an engagement, our reputation may be harmed, and we may suffer losses on an engagement. 13 Lack of detailed written contracts could impair our ability to recognize revenue for services performed, collect fees, protect our IP and protect ourselves from liability to others.
To the extent we do not sufficiently communicate to our clients, or our clients fail to adequately appreciate the nature and extent of any of these types of changes to an engagement, our reputation may be harmed, and we may suffer losses on an engagement.
We also believe that the importance of reputation and name recognition will continue to increase due to the number of providers of business consulting and IT services. If our reputation is damaged or if potential clients are not familiar with us or with the solutions we provide, we may be unable to attract new, or retain existing, clients and employees.
If our reputation is damaged or if potential clients are not familiar with us or with the solutions we provide, we may be unable to attract new, or retain existing, clients and employees. Promotion and enhancement of our name will depend largely on our success in continuing to provide effective solutions.
Further, we cannot assure you that our future acquired businesses will generate anticipated revenue or earnings. Difficulties in integrating businesses we acquire in the future may demand time and attention from our senior management. Integrating businesses that we acquire in the future may involve unanticipated delays, costs and/or other operational and financial problems.
Client dissatisfaction or performance problems at a single acquired business could have a material adverse impact on our reputation as a whole. Further, we cannot assure you that our future acquired businesses will generate anticipated revenue or earnings. Difficulties in integrating businesses we acquire in the future may demand time and attention from our senior management.
As a result, if we experience unanticipated changes in client engagements or in consultant utilization rates, we could experience large variations in quarterly operating results and losses in any particular quarter. Due to these factors, we believe our quarter-to-quarter operating results should not be used to predict future performance.
A high percentage of our operating expenses, particularly personnel and rent, are fixed in advance of any particular quarter. As a result, if we experience unanticipated changes in client engagements or in consultant utilization rates, we could experience large variations in quarterly operating results and losses in any particular quarter.
Business, Market and Strategy Risks Our results of operations could be negatively affected by global and regional economic conditions. Global and regional economic conditions may affect our clients’ businesses and the markets they serve.
Global and regional economic conditions may affect our clients’ businesses and the markets they serve.
If we are unable to maintain our reputation and expand our brand name recognition, we may have difficulty attracting new business and retaining current clients and employees. We believe that establishing and maintaining a good reputation and name recognition are critical for attracting and retaining clients and employees in our industry.
Due to these factors, we believe our quarter-to-quarter operating results should not be used to predict future performance. If we are unable to maintain our reputation and expand our brand name recognition, we may have difficulty attracting new business and retaining current clients and employees.
The global spread of the COVID-19 pandemic created significant volatility, uncertainty and economic disruption. Our clients, and therefore our business and revenues, are sensitive to negative changes in general economic conditions and business confidence arising from pandemics. We continue to work with our clients and employees to responsibly address the COVID-19 pandemic.
Our clients, and therefore our business and revenues, are sensitive to negative changes in general economic conditions and business confidence arising from pandemics.
Moreover, as cyber-attacks increase in frequency and magnitude, we may be unable to obtain cybersecurity insurance in amounts and on terms we view as adequate for our operations. A breach of our information technology and security systems could materially adversely affect our business.
While we have purchased cybersecurity insurance, there are no assurances that the coverage would be adequate in relation to any incurred losses. Moreover, as cyber-attacks increase in frequency and magnitude, we may be unable to obtain cybersecurity insurance in amounts and on terms we view as adequate for our operations.
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For example, COVID-19 pandemic has created uncertainty in the global economy and could result in a reduction in spending on our services and the geopolitical disruption resulting from the Russian and Ukraine conflict.
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ITEM 1A. RI SK FACTORS Our business is subject to risks.
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Promotion and enhancement of our name will depend largely on our success in continuing to provide effective solutions. If clients do not perceive our solutions to be effective or of high quality, our brand name and reputation will suffer.
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We believe that establishing and maintaining a good reputation and name recognition are critical for attracting and retaining clients and employees in our industry. We also believe that the importance of reputation and name recognition will continue to increase due to the number of providers of business consulting and IT services.
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Any of the foregoing matters could harm our operating results and financial condition. 15 While we have purchased cybersecurity insurance, there are no assurances that the coverage would be adequate in relation to any incurred losses.
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Lack of detailed written contracts could impair our ability to recognize revenue for services performed, collect fees, protect our IP and protect ourselves from liability to others. We protect ourselves by entering into detailed written contracts with our clients covering the terms and contingencies of the client engagement.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. P ROPERTIES Our principal executive office is currently located at 1001 Brickell Bay Drive, Floor 30, Miami, Florida 33131. As of December 30, 2022, we had operating leases that expire on various dates through June 2024 .
Biggest changeITEM 2. P ROPERTIES Our principal executive office is currently located at 1001 Brickell Bay Drive, Floor 30, Miami, Florida 33131. As of December 29, 2023, we had operating leases that expire on various dates through July 2028. We do not own real estate and do not intend to invest in real estate or real estate-related assets.
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During the fourth quarter of 2020, as a result of and in consideration of the COVID-19 pandemic, and the changing nature of the Company’s use of office space for its workforce, the Company evaluated its existing office space leases as part of its transformation initiatives related to real estate.
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This evaluation resulted in the complete and partial abandonment of certain leased office spaces and an asset impairment charge for certain lease right-of-use assets and certain property, equipment and leasehold improvements for impairment. We do not own real estate and do not intend to invest in real estate or real estate-related assets.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEG AL PROCEEDINGS 17 We are involved in legal proceedings, claims, and litigation arising in the ordinary course of business not specifically discussed herein. In the opinion of management, the final disposition of such matters will not have a material adverse effect on our consolidated financial position, cash flows or results of operations. ITEM 4.
Biggest changeITEM 3. LEG AL PROCEEDINGS We are involved in legal proceedings, claims, and litigation arising in the ordinary course of business not specifically discussed herein. In the opinion of management, the final disposition of such matters will not have a material adverse effect on our consolidated financial position, cash flows or results of operations. ITEM 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table summarizes our share repurchases during the year ended December 30, 2022 under this authorization: Total Number Maximum Dollar of Shares Purchased Value of Shares That Total Number Average as Part of Publicly May Yet Be Purchased of Shares Price Paid Announced Under the Period Purchased per Share Program Program Balance as of December 31, 2021 $ 11,244,241 January 1, 2022 to April 1, 2022 30,999 $ 20.50 30,999 $ 10,608,761 April 2, 2022 to July 1, 2022 — $ — — $ 10,608,761 July 2, 2022 to September 30, 2022 — $ — — $ 10,608,761 October 1, 2022 to December 30, 2022 4,889,315 $ 23.71 4,889,315 $ 14,672,248 * 4,920,314 $ 23.69 4,920,314 * During 2022, the Company’s Board of Directors approved an additional share repurchase authorization of $120.0 million.
Biggest changeThe following table summarizes our share repurchases during the year ended December 29, 2023 under this authorization: Total Number Maximum Dollar of Shares Purchased Value of Shares That Total Number Average as Part of Publicly May Yet Be Purchased of Shares Price Paid Announced Under the Period Purchased per Share Program Program Balance as of December 30, 2022 $ 14,672,248 December 31, 2022 to March 31, 2023 37,467 $ 18.96 37,467 $ 13,961,293 April 1, 2023 to June 30, 2023 — $ — — $ 13,937,978 * July 1, 2023 to September 29, 2023 — $ — — $ 13,937,978 September 30, 2023 to December 29, 2023 — $ — — $ 13,937,978 37,467 $ 18.96 37,467 * The decrease in the repurchase plan authorization related to additional transaction related fees for the tender offer which occurred in December 2022 .
During the year ended December 30, 2022, the Company repurchased 4.9 million shares of its common stock under the repurchase plan approved by the Company's Board of Directors, inclusive of transaction related fees, for $115.9 million at an average share price of $23.71, under its tender offer transaction.
During the year ended December 30, 2022, under its tender offer transaction, the Company repurchased 4.9 million shares of its common stock under the repurchase plan approved by the Company's Board of Directors, inclusive of transaction related fees, for $116.0 million at an average share price of $23.72.
Performance Graph The following graph compares our cumulative total shareholder return since December 29, 2017, with the Russell 2000 and a peer group index composed of other companies with similar business models identified below.
Performance Graph The following graph compares our cumulative total shareholder return since December 28, 2018, with the Russell 2000 and a peer group index composed of other companies with similar business models identified below.
In 2022, 164 thousand shares were withheld and not issued for a cost of $3.2 million, bringing the total cumulative cash used to repurchase stock in 2022 to $119.8 million, which includes the tender offer transaction.
In 2022, 164 thousand shares were withheld and not issued for a cost of $3.2 million, bringing the total cumulative cash used to repurchase stock in 2022 to $119.8 million, which included the tender offer transaction. ITEM 6. [RE SERVED] 20
During fiscal 2022, we paid the quarterly dividend to shareholders of record on March 25, 2022, June 24, 2022, September 23, 2022, and December 23, 2022, totaling $13.4 million, which includes the fourth quarter of 2022 dividend paid in January 2023, of $3.0 million. Our credit agreement contains restrictions on our ability to declare dividends and repurchase shares.
During fiscal 2023, we paid the quarterly dividend to shareholders of record on March 24, 2023, June 23, 2023, September 22, 2023, and December 22, 2023, totaling $12.0 million, which included the fourth quarter of 2023 dividend paid in January 2024 of $3.0 million. Our credit agreement contains restrictions on our ability to declare dividends and repurchase shares.
As of February 28, 2023, there were 262 holders of record of our common stock and 27,175,505 shares of common stock outstanding. Securities Authorized for Issuance under Equity Compensation Plans The information required by this section is set forth under Item 12 of this Annual Report on Form 10-K and is herein incorporated by reference.
As of February 26, 2024, there were 234 holders of record of our common stock and 27,597,191 shares of common stock outstanding. Securities Authorized for Issuance under Equity Compensation Plans The information required by this section is set forth under Item 12 of this Annual Report on Form 10-K and is herein incorporated by reference.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, R ELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded under the Nasdaq Stock Market symbol, "HCKT". The closing sale price for the common stock on February 28, 2023, was $18.64.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, R ELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded under the Nasdaq Stock Market symbol, "HCKT". The closing sale price for the common stock on February 26, 2024, was $25.13.
Subsequent to fiscal year end, the Board of Directors declared the first quarterly dividend of 2023 for shareholders of record as of March 24, 2023, to be paid on April 7, 2023.
Subsequent to fiscal year end, the Board of Directors declared the first quarterly dividend of 2024 for shareholders of record as of March 22, 2024, to be paid on April 5, 2024.
Subsequent to fiscal year end, we repurchased 37 thousand shares of the Company’s common stock from members of our Board of Directors for a total of $0.7 million, or $18.96 per share. Including these subsequent purchases, we have approximately $14.0 million available for future purchases under the plan.
Subsequent to fiscal year end, we repurchased 43 thousand shares of the Company’s common stock from members of our Board of Directors for a total of $1.1 million, or $24.34 per share. Including these subsequent purchases, we have approximately $12.9 million available for future purchases under the plan.
In addition, the Company repurchased 31 thousand shares of the Company’s common stock from members of its Board of Directors for a total of $0.6 million, or $20.50 per share.
In addition, the Company repurchased 31 thousand shares of the Company’s common stock from members of its Board of Directors for a total of $0.6 million, or $20.50 per share. Shares purchased under the repurchase plan do not include shares withheld to satisfy withholding tax obligations.
As of December 30, 2022, the Company’s Board of Directors had approved a cumulative authorization of $287.2 million with cumulative purchases under the plan of $272.5 million, leaving $14.7 million available for future purchases.
As of December 29, 2023, the Company’s Board of Directors had approved a cumulative authorization of $287.2 million with cumulative purchases under the plan of $273.3 million, leaving $13.9 million available for future purchases.
The graph assumes that the value of the investment in our common stock and each index (including reinvestment of dividends) was $100 on December 29, 2017. 12/28/18 12/27/19 1/1/21 12/31/21 12/30/22 The Hackett Group, Inc. $ 103.45 $ 105.64 $ 97.72 $ 142.50 $ 144.59 Russell 2000 $ 88.99 $ 111.70 $ 134.00 $ 153.85 $ 122.41 2022 Peer Group $ 117.67 $ 145.05 $ 128.63 $ 131.00 $ 151.76 The 2022 Peer Group includes Alithya Group Inc., Huron Consulting Group, Inc. and Information Services Group, Inc. 19 Company Dividend Policy In December 2012, we announced an annual dividend of $0.10 per share.
The graph assumes that the value of the investment in our common stock and each index (including reinvestment of dividends) was $100 on December 28, 2018. 12/28/2018 12/27/2019 1/1/2021 12/31/2021 12/30/2022 12/29/2023 The Hackett Group, Inc. $ 100.00 $ 102.11 $ 94.46 $ 137.74 $ 139.76 $ 159.53 Russell 2000 $ 100.00 $ 125.52 $ 150.58 $ 172.90 $ 137.56 $ 160.85 2022 Peer Group $ 100.00 $ 123.27 $ 109.32 $ 111.34 $ 128.98 $ 171.70 The 2023 Peer Group includes Alithya Group Inc., Huron Consulting Group, Inc. and Information Services Group, Inc. 19 Company Dividend Policy In December 2012, we announced an annual dividend of $0.10 per share.
During the year ended December 31, 2021, the Company repurchased 749 thousand shares of its common stock under the repurchase plan approved by the Company's Board of Directors for $13.0 million at an average share price of $17.41, which included 24 thousand shares of the Company’s common stock from members of our Board of Directors for a total of $0.4 million, or $16.05 per share.
During the year ended December 29, 2023, the Company repurchased 37 thousand shares of the Company’s common stock from members of its Board of Directors for a total of $0.7 million, or $18.96 per share.
All shares repurchased from members of the Board of Directors were approved by the Audit Committee. Shares purchased under the repurchase plan do not include shares withheld to satisfy withholding tax obligations. These withheld shares are never issued and in lieu of issuing the shares, taxes were paid on our employee’s behalf.
These withheld shares are never issued and in lieu of issuing the shares, taxes were paid on our employee’s behalf. In 2023, 174 thousand shares were withheld and not issued for a cost of $3.8 million, bringing the total cumulative cash used to repurchase stock in 2023 to $4.5 million.
Removed
In 2021, 1.1 million shares were withheld and not issued for a cost of $21.6 million, bringing the total cumulative cash used to repurchase stock in 2021 to $34.6 million, which includes the net settlement of 2.9 million SARs, for a cost of $19.7 million. 20 ITEM 6. [RE SERVED] 21

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

42 edited+12 added−21 removed20 unchanged
Biggest changeReferences to a year included in this document refer to a fiscal year rather than a calendar year. 23 The following table sets forth, for the periods indicated, our results of operations (in thousands): Year Ended December 30, December 31, 2022 2021 Revenue: Revenue before reimbursements $ 289,688 $ 277,583 Reimbursements 4,054 1,226 Total revenue 293,742 278,809 Costs and expenses: Cost of service: Personnel costs before reimbursable expenses (includes $6,201 and $6,766 of stock compensation expense in 2022 and 2021, respectively) 174,112 171,920 Reimbursable expenses 4,054 1,226 Total cost of service 178,166 173,146 Selling, general and administrative costs (includes $4,066 and $3,356 of stock compensation expense in 2022 and 2021, respectively) 60,979 59,187 Restructuring and asset impairment settlement (651 ) — Total costs and operating expenses 238,494 232,333 Operating income 55,248 46,476 Other expense, net: Interest expense, net (144 ) (95 ) Income from continuing operations before income taxes 55,104 46,381 Income tax expense 14,302 4,829 Income from continuing operations 40,802 41,552 Loss from discontinued operations (net of taxes) — (7 ) Net income $ 40,802 $ 41,545 Comparison of 2022 to 2021 Overview.
Biggest changeReferences to a year included in this document refer to a fiscal year rather than a calendar year. 22 The following table sets forth, for the periods indicated, our results of operations (in thousands): Year Ended December 29, December 30, 2023 2022 Revenue: Revenue before reimbursements $ 291,273 $ 289,688 Reimbursements 5,317 4,054 Total revenue 296,590 293,742 Costs and expenses: Cost of service: Personnel costs before reimbursable expenses (includes $6,238 and $6,201 of stock compensation expense in 2023 and 2022, respectively) 174,891 174,112 Reimbursable expenses 5,317 4,054 Total cost of service 180,208 178,166 Selling, general and administrative costs (includes $4,486 and $4,066 of stock compensation expense in 2023 and 2022, respectively) 65,942 60,979 Restructuring and asset impairment settlement — (651 ) Legal settlement and related costs 1,178 — Total costs and operating expenses 247,328 238,494 Operating income 49,262 55,248 Other expense, net: Interest expense, net (3,235 ) (144 ) Income from continuing operations before income taxes 46,027 55,104 Income tax expense 11,876 14,302 Net income $ 34,151 $ 40,802 Comparison of 2023 to 2022 Overview.
The usage of cash in 2022 was primarily related to the repurchase of Company common stock under our share repurchase program of $116.6 million, inclusive of the transaction related costs, employee net vesting related tax withholding requirements of $3.2 million, and dividend payments of $10.4 million, partially offset by the $60.0 million drawdown of our credit facility.
The usage of cash in 2022 was primarily related to the repurchase of Company common stock under our share repurchase program of $116.6 million, inclusive of the tender offer transaction related costs, employee net vesting related tax withholding requirements of $3.2 million, and dividend payments of $10.4 million, partially offset by the $60.0 million drawdown of our Credit Facility.
If our estimates indicate a potential loss, such loss is recognized in the period in which the loss first becomes probable and reasonably estimable. Allowances for Doubtful Accounts Periodically, we review accounts receivable to assess our estimates of collectability.
If our estimates indicate a potential loss, such loss is recognized in the period in which the loss first becomes probable and reasonably estimable. Allowances for Doubtful Accounts We review accounts receivable to assess our estimates of collectability regularly.
We have omitted discussion of fiscal 2020 items and year-to-year comparisons between fiscal years 2021 and 2020 where it would be redundant with the discussion previously included in Part II, Item 7 (MD&A) of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
We have omitted discussion of fiscal 2021 items and year-to-year comparisons between fiscal years 2022 and 2021 where it would be redundant with the discussion previously included in Part II, Item 7 (MD&A) of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2022.
Results of Operations Our fiscal year generally consists of a 52-week period and periodically consists of a 53-week period as each fiscal year ends on the Friday closest to December 31. Fiscal years 2022 and 2021 ended on December 30, 2022 and December 31, 2021, respectively.
Results of Operations Our fiscal year generally consists of a 52-week period and periodically consists of a 53-week period as each fiscal year ends on the Friday closest to December 31. Fiscal years 2023 and 2022 ended on December 29, 2023 and December 30, 2022, respectively, each consisted of a 52-week period.
See Note 8, “Credit Facility,” to our consolidated financial statements included in this Annual Report on Form 10-K for more information. As of December 30, 2022, we had $59.7 million of outstanding borrowings, net of deferred debt costs, under our revolving line of credit, leaving us with borrowing capacity of approximately $40.0 million. See Note 8 for more information.
See Note 8, “Credit Facility,” to our consolidated financial statements included in this Annual Report on Form 10-K for more information. As of December 29, 2023, we had $32.7 million of outstanding borrowings, net of deferred debt costs, under our revolving line of credit, leaving us with borrowing capacity of approximately $67.0 million.
SG&A primarily consists of salaries, benefits and incentive compensation for the selling, marketing, administrative and executive employees, non-cash compensation expense, amortization of intangible assets, acquisition related costs and various other overhead expenses. SG&A costs increased 3%, to $61.0 million in 2022, as compared to $59.2 million in 2021.
SG&A primarily consists of salaries, benefits and incentive compensation for the selling, marketing, administrative and executive employees, non-cash compensation expense, amortization of intangible assets, acquisition related costs and various other overhead expenses. SG&A costs increased 8%, to $65.9 million in 2023, as compared to $61.0 million in 2022.
In 2022 , the net cash provided by operating activities was primarily due to net income adjusted for non-cash items, a decrease in the income tax receivable and an increase in income tax liabilities, partially offset by the decrease in accrued liabilities and other accruals primarily due to payments to vendors and the 2021 incentive compensation payments.
In 2022, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items and an increase in the income tax liabilities, partially offset by the decrease in accrued liabilities and other accruals.
The following table summarizes our future principal payments under our future Credit Facility and lease commitments under our non-cancelable operating leases as of December 30, 2022 (in thousands): Contractual Obligations Total Less Than 1 Year More Than 1 Year 4-5 Years More Than 5 Years Operating lease obligations $ 1,600 $ 1,037 $ 563 $ — $ — Long-term debt obligations (1) — — — 60,000 — Total $ 1,600 $ 1,037 $ 563 $ 60,000 $ — (1) Excludes interest charges on borrowings, the fee on the amount of any unused commitment that we may be obligated to pay under our revolving credit facility as such amounts vary and the deferred debt costs.
The following table summarizes our future principal payments under our future Credit Facility and lease commitments under our non-cancelable operating leases as of December 29, 2023 (in thousands): Contractual Obligations Total Less Than 1 Year 1-3 Years 4-5 Years More Than 5 Years Operating lease obligations $ 1,930 $ 1,083 $ 482 $ 365 $ — Long-term debt obligations (1) 33,000 — — 33,000 — Total $ 34,930 $ 1,083 $ 482 $ 33,365 $ — (1) Excludes interest charges on borrowings, the fee on the amount of any unused commitment that we may be obligated to pay under our revolving Credit Facility as such amounts vary and the deferred debt costs.
During the years ended December 30, 2022, and December 31, 2021, our capital expenditures were $4.7 million and $3.2 million, respectively. We expect capital expenditures for the year ended December 29, 2023, to approximate the capital expenditures in 2022.
During the years ended December 29, 2023, and December 30, 2022, our capital expenditures were $4.1 million and $4.7 million, respectively. We expect capital expenditures for the year ended December 27, 2024, to approximate the capital expenditures in 2023.
Dollar, British Pound and Euro, and as a result is affected by currency exchange rate fluctuations. The impact of the currency fluctuation did not have a significant impact on comparisons between 2022 and 2021. Revenue is analyzed based on geographic location of engagement team personnel.
Our revenue is denominated in multiple currencies, primarily the U.S. Dollar, British Pound and Euro, and as a result is affected by currency exchange rate fluctuations. The impact of the currency fluctuation did not have a significant impact on comparisons between 2023 and 2022. Revenue is analyzed based on geographic location of engagement team personnel.
These administrative function costs include corporate general and administrative expenses, non-cash compensation, depreciation and amortization expense, interest expense and the restructuring charges and reversals. Global S&BT segment profit increased to $61.3 million in 2022, as compared to $49.3 million in 2021.
These administrative function costs include corporate general and administrative expenses, non-cash compensation, depreciation and amortization expense, interest expense and the restructuring and asset impairment reversals. Global S&BT segment profit decreased to $54.4 million in 2023, as compared to $61.3 million in 2022.
The following table summarizes our cash flow activity (in thousands): Year Ended December 30, December 31, 2022 2021 Cash flows provided by operating activities $ 58,904 $ 46,353 Cash flows used in investing activities $ (4,656 ) $ (3,242 ) Cash flows used in financing activities $ (69,736 ) $ (46,739 ) Cash Flows from Operating Activities Net cash provided by operating activities was $58.9 million in 2022, as compared to $46.4 million in 2021.
The following table summarizes our cash flow activity (in thousands): Year Ended December 29, December 30, 2023 2022 Cash flows provided by operating activities $ 37,401 $ 58,904 Cash flows used in investing activities $ (4,101 ) $ (4,656 ) Cash flows used in financing activities $ (42,565 ) $ (69,736 ) Cash Flows from Operating Activities Net cash provided by operating activities was $37.4 million in 2023, as compared to $58.9 million in 2022.
Due to the reorganization and in accordance with ASC 280, management made the determination to present three operating segments, three reportable segments and three reporting units as follows: (1) Global S&BT, (2) Oracle Solutions, and (3) SAP Solutions.
The Company has organized its operating and internal reporting structure to align with its primary market solutions. In accordance with ASC 280, management made the determination to present three operating segments, three reportable segments and three reporting units as follows: (1) Global S&BT, (2) Oracle Solutions, and (3) SAP Solutions.
See Note 8, in the notes to consolidated financial statements for additional information. Capital Expenditures There were no material commitments for capital expenditures as of December 30, 2022. Our capital expenditures primarily consist of investments related to the continued development of our Quantum Leap benchmark technologies and laptop purchases.
See Note 8, in the notes to consolidated financial statements for additional information. Capital Expenditures There were no material commitments for capital expenditures as of December 29, 2023. Our capital expenditures primarily consist of investments related to the continued development of our QL, DTP and Hackett Connect platforms and laptop purchases.
The amortization expense related to the amortization of the intangible asset acquired in our acquisitions and the buyout of our partner’s joint venture interest in the CGBS Training and Certification Programs in 2017. The intangible assets related to the acquisitions have been fully amortized as of the second quarter of 2022. Segment Profit.
The amortization expense related to the amortization of the intangible asset acquired in our acquisitions and the buyout of our partner’s joint venture interest in the CGBS Training and Certification Programs in 2017. The intangible assets related to the acquisitions were fully amortized as of the second quarter of 2022. Legal Settlement and Related Costs. In May 2023, Gartner, Inc.
Subsequent to fiscal year end, we repurchased 37 thousand shares of the Company’s common stock from members of our Board of Directors for a total of $0.7 million, or $18.96 per share. Including these repurchases, we had approximately $14.0 million available for future repurchases under the plan as of March 3, 2023.
Subsequent to fiscal year end, we repurchased 43 thousand shares of the Company’s common stock from members of our Board of Directors for a total of $1.1 million, or $24.34 per share. Including these repurchases, we had approximately $12.9 million available for future repurchases under the plan as of March 1, 2024.
The carrying amount of goodwill by the new reporting units are as follows (in thousands): Foreign December 31, Additions/ Currency December 30, 2021 Adjustments Translation 2022 Global S&BT $ 58,378 $ - $ (1,568 ) $ 56,810 Oracle Solutions 16,699 — — 16,699 SAP Solutions 9,993 — — 9,993 Goodwill $ 85,070 $ - $ (1,568 ) $ 83,502 Income Taxes Management’s judgement is required in the calculation of the income tax provision.
The carrying amount of goodwill by reporting unit is as follows (in thousands): Foreign December 30, Additions/ Currency December 29, 2022 Adjustments Translation 2023 Global S&BT $ 56,810 $ - $ 740 $ 57,550 Oracle Solutions 16,699 — — 16,699 SAP Solutions 9,993 — — 9,993 Goodwill $ 83,502 $ - $ 740 $ 84,242 Income Taxes Management’s judgement is required in the calculation of the income tax provision.
Segment Reporting Segments are defined as components of a company that engage in business activities from which they may earn revenues and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.
When establishing allowances for doubtful accounts, management must base their judgment on the information available at that point in time, which may include historical experiences, current economic trends and client credit worthiness, to determine the likelihood of collectability. 21 Segment Reporting Segments are defined as components of a company that engage in business activities from which they may earn revenues and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.
Liquidity and Capital Resources As of December 30, 2022 and December 31, 2021, we had $30.3 million and $45.8 million, respectively, of cash, and as of December 30, 2022 we had $59.7 million outstanding debt under our credit facility, net of deferred debt costs, and no balance outstanding in the prior year.
Liquidity and Capital Resources As of December 29, 2023 and December 30, 2022, we had $21.0 million and $30.3 million, respectively, of cash, and $32.7 million,and $59.7 million, respectively, outstanding under our Credit Facility, net of deferred debt costs.
Effective in the third quarter of 2022, the Company re-assessed its operating segments under the management approach in accordance with ASC 280, Segment Reporting (ASC 280) and has determined that effective in the third quarter of 2022, it has three operating segments: Global Strategy & 22 Business Transformation ("Global S&BT"), Oracle Solutions and SAP Solutions.
The Company assesses its operating segments under the management approach in accordance with ASC 280, Segment Reporting (ASC 280) and has determined that it has three operating segments: Global Strategy & Business Transformation ("Global S&BT"), Oracle Solutions and SAP Solutions. Global S&BT includes S&BT Consulting, Benchmarking, Executive Advisory Services, IPaaS, OneStream and Coupa.
Subsequent to our completion of the tender offer transaction, we expect dividend payments in 2023 to be approximately $12.0 million. We have an ongoing authorization from our Board of Directors to repurchase shares of our common stock.
Dividends and Share Repurchases During the fiscal year 2023, our Board of Directors approved four quarterly dividends payments of $0.11 per share totaling $12.0 million. We expect dividend payments in 2024 to be approximately $12.0 million. We have an ongoing authorization from our Board of Directors to repurchase shares of our common stock.
In 2021, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items, and an increase in contract liabilities and incentive compensation, partially offset by increased accounts receivable and contract assets. Cash Flows from Investing Activities Net cash used in investing activities was $4.7 million in 2022, as compared to $3.2 million in 2021.
In 2023, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items, partially offset by a decrease in the income tax liabilities and contract liabilities and an increase in accounts receivable.
In 2021, 1.1 million shares were withheld and not issued for a cost of $21.6 million, bringing the total cumulative cash used to repurchase stock in 2021 to $34.6 million, which included the net settlement of the 2.9 million SARs for a cost of $19.7 million.
In 2023, 0.2 million shares were withheld and not issued for a cost of $3.8 million, bringing the total cumulative cash used to repurchase stock in 2023 to $4.5 million.
Oracle Solutions and SAP Solutions support the two fundamentally distinct ERP systems: Oracle and SAP. 24 The following table sets forth total revenue by reportable operating segment, which includes reimbursable expenses related to project travel-related expenses passed through to a client with no associated operating margin (in thousands): Year Ended December 30, December 31, 2022 2021 Global S&BT $ 169,660 $ 146,224 Oracle Solutions 76,320 74,886 SAP Solutions 47,762 57,699 Total revenue $ 293,742 $ 278,809 Global S&BT total revenue increased 16% in 2022, to $169.7 million, as compared to $146.2 million in 2021 reflecting the continued sequential growth since the second quarter of 2020 and continuing demand for digital transformation investments.
The following table sets forth total revenue by reportable operating segment, which includes reimbursable expenses related to project travel-related expenses passed through to a client with no associated operating margin (in thousands): Year Ended December 29, December 30, 2023 2022 Global S&BT $ 171,927 $ 169,660 Oracle Solutions 77,772 76,320 SAP Solutions 46,891 47,762 Total revenue $ 296,590 $ 293,742 Global S&BT total revenue increased to $171.9 million in 2023, as compared to $169.7 million in 2022.
Taxes Cash paid for income taxes was $4.6 million and $9.1 million for the years ended December 30, 2022, and December 31, 2021, respectively.
Taxes Cash paid for income taxes was $13.3 million and $4.6 million for the years ended December 29, 2023, and December 30, 2022, respectively. The increase in the income tax payments related to the 2021 tax deduction for the exercise of the 2.9 million SARs.
During both periods, cash flows used in investing activities primarily related to investments for the development of our Hackett Connect Executive Advisory 26 Member Platform, Market Intelligence Programs, IPaaS and continued development of our Quantum Leap benchmark and Digital Transformation technologies. The investing activities in 2022 also included purchases of computer equipment.
Cash Flows from Investing Activities Net cash used in investing activities was $4.1 million in 2023, as compared to $4.7 million in 2022. During both periods, cash flows used in investing activities primarily related to investments for the development of our Hackett Connect Executive Advisory member platform and continued development of our QL benchmark and DTP technologies.
Personnel costs before reimbursable expenses, increased slightly to $174.1 million in 2022, as compared to $171.9 million in 2021. The higher costs in 2022 were primarily a result of hiring activities to support business growth. Personnel costs as a percentage of total revenue decreased to 59% in 2022 from 62% in 2021.
Personnel costs before reimbursable expenses, increased slightly to $174.9 million in 2023, as compared to $174.1 million in 2022. The higher costs in 2023 were primarily a result of increased utilization of subcontractors to support business growth, partially offset by lower incentive compensation accruals when compared to the prior year resulting from Company performance.
During 2021, we recorded $4.8 million of income tax expense related to certain federal, state and foreign taxes which reflected an effective tax rate of 10%. The lower tax rate in 2021 was primarily due to a $7.7 million tax benefit resulting from the exercise of 2.9 million SARs.
Income Taxes. During 2023, we recorded $11.9 million of income tax expense related to certain federal, state and foreign taxes which reflected an effective tax rate of 25.8%. During 2022, we recorded $14.3 million of income tax expense related to certain federal, state and foreign taxes which reflected an effective tax rate of 26.0%.
During 2022, we repurchased 4.9 million shares of common stock at an average price per share of $23.69, for a total cost of $116.6 million, including the shares repurchased under the tender offer transaction and transaction fees. As of December 30, 2022, we had $14.7 million share repurchase authorization remaining.
During 2023, we repurchased 37 thousand shares of common stock from members of our Board of Directors at an average price per share of $18.96, for a total cost of $0.7 million. As of December 29, 2023, we had $13.9 million share repurchase authorization remaining.
For fiscal year 2022, total revenue increased 5% to $293.7 million, as compared to fiscal year 2021, primarily driven by increased total revenue from our Global S&BT segment of 16%, or $23.4 million, as compared to 2021. Diluted earnings per share increased to $1.28 in 2022 from $1.26 in 2021.
For fiscal year 2023, total revenue increased to $296.6 million , as compared to $293.7 million in 2022, primarily driven by increased total revenue from our Global S&BT segment of $2.3 million and our Oracle Solutions segment of $1.5 million, as compared to 2022. Revenue. We are a global company with operations primarily in the United States and Western Europe.
There were no material capital commitments as of December 30, 2022.
See Note 8 for more information. 25 There were no material capital commitments as of December 29, 2023.
The success and market opportunity for our IP offerings highlight the reasons why we have accelerated our sales and product development investments in this area. Oracle Solutions total revenue increased to $76.3 million in 2022, as compared to $74.9 million in 2021.
In addition to solid performance from our transformation consulting groups, our IP-based higher-margin Executive Advisory and IPaaS offerings grew 7%. The success and market opportunity for our IP offerings highlight the reasons why we have accelerated our sales and product development investments in this area.
Non-cash stock-based compensation expense, included in personnel costs before reimbursable expenses, was $6.2 million in 2022, as compared to $6.4 million in 2021. Acquisition related non-cash stock-based compensation expense, included in personnel costs before reimbursable expenses, was $15 thousand in 2022, as compared to $406 thousand in 2021.
Personnel costs as a percentage of total revenue were 59% in both 2023 and 2022. Non-cash stock-based compensation expense, included in personnel costs before reimbursable expenses, was $6.2 million in both 2023 and 2022. Selling, General and Administrative Costs (“SG&A”) .
With the new reporting unit structure, the goodwill previously assigned to Hackett Technology Solutions and The Hackett Group has now been allocated based on the reporting unit's relative fair value.
A reporting unit is an operating segment or one level below an operating segment to which goodwill is assigned. The goodwill has been allocated to the reporting unit based on the reporting unit's relative fair value.
Global S&BT includes S&BT Consulting, Benchmarking, Executive Advisory Services, IPaaS and OneStream. Oracle Solutions and SAP Solutions support the two fundamentally distinct ERP systems: Oracle and SAP. See Note 15 “Segment Information and Geographic Data” for detailed segment information.
Oracle Solutions and SAP Solutions support the two fundamentally distinct ERP systems: Oracle and SAP. See Note 15 “Segment Information and Geographic Data” for detailed segment information. Goodwill and Other Intangible Assets For acquisitions accounted for as a business combination, goodwill represents the excess of the cost over the fair value of the net assets acquired.
The increase in the compensation expense in 2022 is due to higher incentive compensation expense commensurate with Company performance. 25 Amortization expense, included in SG&A, was $0.2 million in 2022, as compared to $1.0 million in 2021.
Non-cash stock-based compensation expense, included in SG&A, was $4.5 million in 2023, as compared to $4.1 million in 2022. There was no amortization expense included in SG&A in 2023, however, there was $0.2 million of amortization expense in 2022.
See Note 9, “Income Taxes” to our consolidated financial statements included in this Annual Report on Form 10-K for further information. Dividends and Share Repurchases During the fiscal year 2022, our Board of Directors approved four quarterly dividends payments of $0.11 per share totaling $13.4 million.
As a result of the transaction, the Company carried an income tax receivable on its Consolidated Balance Sheet in 2022 until the fourth quarter of 2022. See Note 9, “Income Taxes” to our consolidated financial statements included in this Annual Report on Form 10-K for further information.
The usage of cash in 2021 was primarily related to the repurchase of Company common stock under our share repurchase program of $13.0 million, employee net vesting related tax withholding requirements of $21.6 million, including the exercise of 2.9 million SARs, and dividend payments of $12.9 million.
Cash Flows from Financing Activities Net cash used in financing activities was $42.6 million in 2023, as compared to $69.7 million in 2022. The usage of cash in 2023 was primarily related to the net pay down of our Credit Facility $27.0 million, dividend payments of $12.0 million and employee net vesting related tax withholding requirements of $3.8 million.
This increase in the costs was primarily due to increased non-client billable expenses and increased investments in sales and marketing and information technology. SG&A costs as a percentage of total revenue were 21% during both 2022 and 2021. Non-cash stock-based compensation expense, included in SG&A, was $4.1 million in 2022, as compared to $3.4 million in 2021.
This increase in the costs was primarily due to the increased investments in dedicated sales resources for our IP-based offerings in our Global S&BT segment, partially offset by lower incentive compensation commensurate with Company performance. SG&A costs as a percentage of total revenue were 22% and 21% during 2023 and 2022, respectively.
Reimbursements as a percentage of total revenue were 1.4% in 2022 and 0.4% in 2021. Reimbursements are project travel-related expenses passed through to a client with no associated operating margin. We have experienced increased client-related travel since the transition to a remote delivery model, however we do not expect reimbursements to return to pre-pandemic levels. Cost of Service.
Reimbursements are project travel-related expenses passed through to a client with no associated operating margin. Cost of Service.
Due to the reorganization, management made the determination to present three reportable segments: Global S&BT, Oracle Solutions and SAP Solutions. Global S&BT includes S&BT Consulting, Benchmarking, Advisory Services, Intellectual Property as-a-Service (IPASS) and OneStream.
In 2023 one customer accounted for 6% of our total revenue and in 2022 one customer accounted for 7% of our total revenue. Segment revenue. We have three reportable segments: Global S&BT, Oracle Solutions and SAP Solutions. Global S&BT includes S&BT Consulting, Benchmarking, Advisory Services, IPASS, OneStream and our Coupa offerings.
Removed
Hackett, originally incorporated on April 23, 1997, is a leading IP-based strategic advisory and technology consulting firm that enables companies to achieve world-class business performance.
Added
Hackett is a global IP-based executive advisory, strategic consulting and digital transformation firm. The Hackett Group provides dedicated expertise in Gen AI strategy, operations, finance, human capital management, strategic sourcing, procurement, and information technology, including its highly recognized Oracle, SAP, OneStream and Coupa implementation offerings.
Removed
By leveraging the comprehensive Hackett database, the world’s leading repository of enterprise business process performance metrics and best practice intellectual capital, our business and technology solutions help clients improve performance and maximize returns on technology investments.
Added
The firm recently launched our AI XPLR offering which helps define an organizations’ Gen AI enablement opportunities. Using AI XPLR, our AI assessment platform, our experienced professionals guide organizations to harness the power of Gen AI to digitally transform their operations and seek to achieve quantifiable, breakthrough results, allowing us to be key architects of our clients' Gen AI journey.
Removed
Only Hackett empirically defines world-class performance in sales, general and administrative and certain supply chain activities with analysis gained through over 25,000 benchmark and performance studies over 29 years at over 8,800 of the world’s leading companies. Hackett’s combined capabilities include executive advisory programs, IPaaS, market intelligence, benchmarking, business transformation and technology solutions, with corresponding offshore support.
Added
The Hackett Group has completed over 26,600 benchmarking and performance studies with major organizations. These studies are executed utilizing our Quantum Leap platform which drives our DTP. This includes the firm's benchmarking metrics, best practices repository, and best practice configuration and process flow accelerators, which enables our clients and partners to achieve digital world-class performance.
Removed
In addition, we are identifying new opportunities for our benchmarking and best practice intellectual property by leveraging new channels through strategic alliances to introduce new recurring revenue, high margin offerings that could redefine our organizational model that we have started to refer to as “IP-as-a-Service” business.
Added
Our expertise is grounded in best practices insights from benchmarking the world’s leading businesses – including 97% of the Dow Jones Industrials, 89% of the Fortune 100, 70% of the DAX 40 and 55% of the FTSE 100, which are delivered through our Hackett Connect, QL and DTP platforms.
Removed
When establishing allowances for doubtful accounts, management must base their judgment on the information available at that point in time, which may include historical experiences, current economic trends and client credit worthiness, to determine the likelihood of collectability.
Added
Oracle Solutions and SAP Solutions support the two fundamentally distinct ERP systems: Oracle and SAP.
Removed
Goodwill and Other Intangible Assets For acquisitions accounted for as a business combination, goodwill represents the excess of the cost over the fair value of the net assets acquired. Effective in the third quarter of fiscal year 2022, the Company reorganized its operating and internal reporting structure to better align with its primary market solutions.
Added
This segment has been impacted by slowing economic growth resulting in extended client decision making in our business transformation engagements. 23 Additionally, the prior periods comparisons were against the accelerated post pandemic demand that we experienced throughout the first half of 2022. Global S&BT represented 58% of the Company's total revenue.
Removed
Global S&BT includes the results of the Company’s strategic business consulting groups; Oracle Solutions includes the results of the Company’s Oracle EPM/ERP and AMS groups; SAP Solutions includes the Company’s SAP applications and related SAP service offerings. A reporting unit is an operating segment or one level below an operating segment to which goodwill is assigned.
Added
Oracle Solutions total revenue increased to $77.8 million in 2023, as compared to $76.3 million in 2022, primarily due to the segment's continued momentum that began in the second quarter of 2023, with strong double digit growth over the last two quarters of 2023, as compared to the prior year periods.
Removed
Fiscal year 2021 results included a $5.3 million software sale transaction which was recorded in the second quarter of 2021 and a tax benefit of $7.7 million for the exercise of 2.9 million SARs which was recorded in the fourth quarter of 2021.
Added
This is being driven by increasing activity across our EPM offerings within this segment. SAP Solutions total revenue decreased to $46.9 million in 2023, from $47.8 million in 2022, primarily due to lower sales of SAP cloud software, as compared to the prior year. Reimbursements as a percentage of total revenue were 1.8% in 2023 and 1.4% in 2022.
Removed
Together, these items positively impacted net income for 2021 by $13.0 million and dilutive earnings per share by $0.33. Revenue. We are a global company with operations primarily in the United States and Western Europe. Our revenue is denominated in multiple currencies, primarily the U.S.
Added
("Gartner") filed a lawsuit seeking a preliminary injunction and damages against the Company and two ex-Gartner employees that were hired by us.
Removed
Our total revenue from continuing operations increased 5%, to $293.7 million in 2022, as compared to $278.8 million in 2021. The 2021 revenue included a $5.3 million software sale transaction which was recorded in the second quarter of 2021 as mentioned above.
Added
On February 17, 2024, we, Gartner and the two ex-Gartner employees entered into a settlement agreement whereby we made a settlement payment of $985,000 to Gartner, Inc. in exchange for a dismissal of the lawsuit and a release of all claims. In addition, we incurred incremental legal costs related to the settlement. Segment Profit.
Removed
In 2022 one customer accounted for 7% of our total revenue and in 2021 no customer accounted for more than 5% of our total revenue. Segment revenue. Effective in the third quarter of 2022, the Company reorganized its operating and internal reporting structure to better align with its primary market solutions.
Added
This decrease was primarily a result of the incremental investments we are making in program development and additional dedicated sales resources for Benchmark, Executive Advisory, Market Intelligence and our other IPaaS offerings.
Removed
Global S&BT represented 58% of the Company's total revenue. In addition to solid performance from our transformation consulting groups, our IP-based higher-margin Executive Advisory, IPaaS and Market Intelligence offerings grew more than 20%. Our annualized contract value from the segment recurring revenues also grew over 20%.
Added
Oracle Solutions segment profit increased to $18.1 million in 2023, as compared to $15.3 million in 2022, primarily due to lower salaries and benefits and higher revenue, partially offset by the higher utilization of subcontractors. 24 SAP Solutions segment profit decreased to $11.9 million in 2023, as compared to $12.8 million in 2022, primarily due to the lower sales of SAP cloud software, as well as sales related investments made during the year .
Removed
Our Oracle Solutions segment revenues were slightly up for the year as the group struggled to maintain its early year momentum. Although client activity remains strong this was the segment where we experienced the most volatility in client decision in the second half of the year.
Removed
SAP Solutions total revenue decreased to $47.8 million in 2022, from $57.7 million in 2021. Total SAP Solutions revenue in 2021 included a $5.3 million software sale transaction which was recorded in the second quarter of 2021.
Removed
The decrease in revenue in 2022 as compared to 2021, excluding the software sale transaction, was primarily the result of strong 2021 results which benefitted from several large global engagements with larger than normal subcontractor levels, partially offset by strong software transaction activity in the third and fourth quarters of 2022.
Removed
This cost was related to equity issued in relation to acquisitions which has vested over the years resulting in lower compensation expense. Selling, General and Administrative Costs (“SG&A”) .
Removed
This increase was primarily a result of increased revenue from our higher margin executive advisory, IPaaS and market intelligence offerings, which grew more than 20%, as discussed above. Oracle Solutions segment profit decreased slightly to $15.3 million in 2022, as compared to $15.7 million in 2021.
Removed
On the operating side, we continued to expand the segment offshore leverage throughout the year and also added senior sales and practice leaders in the latter part of the year to strengthen our team. SAP Solutions segment profit decreased to $12.8 million in 2022, as compared to $18.8 million in 2021.
Removed
SAP Solutions segment profit in 2021 included a $5.3 million software sales transaction. Although total revenue was down, the segment reported solid segment profits for the year aided by increasing software activity. Income Taxes. During 2022, we recorded $14.3 million of income tax expense related to certain federal, state and foreign taxes which reflected an effective tax rate of 26%.
Removed
Cash Flows from Financing Activities Net cash used in financing activities was $69.7 million in 2022, as compared to $46.7 million in 2021.
Removed
As a result of a tax deduction related to the exercise of 2.9 million SARs in 2021, we recorded an income tax receivable 27 as of December 31, 2021, of $3.4 million, as compared to an income tax liability as of December 30, 2022 of $5.8 million.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed1 unchanged
Biggest changeDollar, primarily the British Pound, the Euro, the Canadian Dollar and the Australian Dollar. We recognized income related to foreign currency exchange of $1.4 million, $130 thousand, and $49 thousand in 2022, 2021 and 2020, respectively. These exposures may change over time as business practices evolve.
Biggest changeWe recognized losses related to foreign currency exchange of $0.4 million in 2023 and income of $1.4 million and $130 thousand in 2022 and 2021, respectively. These exposures may change over time as business practices evolve. Currently, we do not hold any derivative contracts that hedge our foreign currency risk, but we may adopt such strategies in the future.
A 100-basis point increase in our interest rate under our credit facility would not have had a material impact on our 2022 results of operations. Exchange Rate Sensitivity We face exposure to adverse movements in foreign currency exchange rates, as a portion of our revenue, expenses, assets and liabilities are denominated in currencies other than the U.S.
A 100-basis point increase in our interest rate under our Credit Facility would not have had a material impact on our 2023 results of operations. Exchange Rate Sensitivity We face exposure to adverse movements in foreign currency exchange rates, as a portion of our revenue, expenses, assets and liabilities are denominated in currencies other than the U.S. Dollar.
ITEM 7A. QUANTITATIVE AND QUAL ITATIVE DISCLOSURES ABOUT MARKET RISK As of December 30, 2022, our exposure to market risk related primarily to changes in interest rates and foreign currency exchange rate risks. Interest Rate Risk Our exposure to market risk for changes in interest rates relates primarily to the credit facility, which is subject to variable interest rates.
ITEM 7A. QUANTITATIVE AND QUAL ITATIVE DISCLOSURES ABOUT MARKET RISK As of December 29, 2023, our exposure to market risk related primarily to changes in interest rates and foreign currency exchange rate risks. 26 Interest Rate Risk Our exposure to market risk for changes in interest rates relates primarily to the Credit Facility, which is subject to variable interest rates.
Currently, we do not hold any derivative contracts that hedge our foreign currency risk, but we may adopt such strategies in the future. For a discussion of the risks we face as a result of foreign currency fluctuations, see “Item 1A. Risk Factors” in Part I of this report. 28
For a discussion of the risks we face as a result of foreign currency fluctuations, see “Item 1A. Risk Factors” in Part I of this report. 27

Other HCKT 10-K year-over-year comparisons