The Hackett Group, Inc. Price & Performance (HCKT)

They involve risks, uncertainties and assumptions that are difficult to predict and which may not be accurate. Actual results may vary. These forward looking statements should be considered only in conjunction with the detailed information particularly the risk factors that are contained in our SEC filings. This point, I would like to turn it over to Ted. Thank you, Rob, and welcome everyone to our fourth quarter earnings call. As we normally do, I'll open the call with some overview comments on the The, I will then turn it back over to Rob to comment on detailed operating results cash flow and guidance. We will then review our market and strategy related comments after which we will open it up to Q and A. This afternoon, we reported total revenues of $79,200,000 and adjusted earnings per share of $0.47 both exceeded our quarterly guidance. Our results were driven by the overperformance of our SAP segment and the strong performance of our GSPT segment, which continue to see increased revenue growth from our Gen AI engagements. GenAI revenues have a higher margin than our traditional consulting implementation revenues and are driven by highly differentiated capabilities, of our AI Explorer XPLR platform and our recently acquired [indiscernible] as well as the Leeway Hertz implementation team.

Are seeing clients moving from awareness and education to budgeted projects and we saw that really towards the end of the fourth quarter and we're also seeing it in the beginning of this quarter. Total GSPT segment revenues, which were up 4% were partially offset by the weakness in our e procurement practice We believe GenAI enabled transformation is a generational opportunity that will fundamentally change the way companies operate as well as the way consulting services are sold and delivered. The Gen AI platform capabilities of AI Explorer, have now been extended with zBrains ability to orchestrate and build complex multi agent workflows which should allow us to compete strongly in this rapidly growing space. More importantly, what's most differentiating is the power of our combined end to end capability. AI explores capabilities to dynamically ideate, and evaluate Agentech Gen AI solutions with the advanced open source orchestration capabilities of Seabrain is very unique. This capability allows us to serve clients from ideation to implementation in one fully integrated platform. It also provides a client with a single platform that they can license to fully support their entire AI center of innovation or as we refer to it, our AI COI.

Although Oracle activity continues to be one of our large [indiscernible] We continue to see strong overall EPM activity resulting from Oracle's reestablishment of their dedicated EPM sales force. Our SAP Solutions segment overperformed for the fourth quarter in a row as it closed several significant value added reseller transactions which strongly benefited the quarter. This increased reseller activity is directly attributable to our decision to expand our sales force in that group we are also experiencing increasing demand from a market leading life sciences services group after several years of tempered spend in the sector. We continue to see Gen AI opportunities emerge. We conducted hundreds of meetings with Global 2,000 organizations from our introduction of AR Explore earlier in the year these demo meetings and conversations have provided us with valuable adoption insight along with the implementation and limitations of our prospects. These initial meetings are now starting to become new Gen AI enabled transformation opportunities that position us to serve our clients strategically [indiscernible] We also continue to innovate and make powerful improvements to AI Explorer In fact, we will release a new Version three during this first quarter. The most important of the enhancements in version three is our ability to dynamically simulate an organization's enterprise Gen AI solutions by leveraging Hackett's proprietary IP to identify automation opportunities and related data source requirements at a work step level.

This enables us to identify design and evaluate meaningful AI use cases and identify the related AI agents required to build these solutions. Given the strategic access and proprietary and expanding platform capabilities of AI Explore, it was natural for us to extend our AI implementation capabilities to be able to fully develop and implement NII solutions that we were identifying. This is what resulted in our acquisition of Leeway Hertz at the tail end of the third quarter a highly recognized provider of advanced Gen AI solutions. This acquisition also included a sophisticated GenAI orchestration platform ZBrains, which we agreed to contribute into a joint venture with the Leeway Hertz Founder, The JV, which is to be named ZBrains, brings together the AI Explorer and ZBrains software platforms and will focus on licensing the platforms and creating what we believe to be a first of [indiscernible] GenAI ideation through implementation software as a service [indiscernible] We believe this JV creates an entirely new value creation opportunity for our shareholders that should result from the growth of ARR or annual recurring licensing revenues, it would also allow the JV to have the opportunity to raise capital and achieve standalone valuations due to the JNAI The focus.

Our acquisition of Leeway Hertz resulted in accretive revenue growth in the fourth quarter and when combined with our AI Explorer and Gen AI Consulting capabilities, are expected to have a consequential impact on our 2025 results. There is no doubt that in just one year, our aggressive pivot to become the architects of our clients' Gen AI journey is being well received and has significant value creation potential for our organization. On the executive advisory front, we continue to invest in our growing growing our IP based programs We believe our move to fully integrate Gen AI content, which is now being further augmented by our Gen AI the content infused by the Leeway Hertz acquisition will be responsive to our clients' strong interest in this area. We experienced sequential and year over year revenue growth in the fourth quarter driven by improved advisory program sales and renewals. We are now working on launching a premium Gen AI solutioning advisory program to fully leverage our solutioning innovation and implementation knowledge from our platforms and clients engagements that will be directly targeted and the program will be directly targeted to AI leaders CIOs and CTOs who require this knowledge. On the balance sheet side, in the near term, you can expect us to use our strong cash flow from operations to continue our stock buyback program rather than just focus on paying down the remaining outstanding balance of our credit facility, while continuing to invest With that said, let me ask Rob to provide details on our operating results cash flow and also comment on outlook I will make additional comments on strategy and market conditions following Rob's comments.

Rob? Thank you, Ted. As I typically do, I'll cover the following topics during my portion of the call. I'll comment and make a commentary on an overview of our twenty twenty four fourth quarter results, along with an overview of related key operating statistics. I'll cover an overview of our cash flow activities during the [indiscernible] on our financial outlook for the first quarter of twenty twenty five. For purposes of this call, I will comment separately regarding the revenues of our global SMBT segment, our Oracle Solutions segment, our SAP Solutions segment, and the total company Our global SMBT segment includes the results [indiscernible] benchmarking and business transformation offerings, executive advisory, market intelligence and iPASS programs our OneStream and E procurement implementation offer. Our Oracle Solutions and RSFP Solutions segments include the results of our Oracle and SAP offerings respectively. Please note that we will be referencing both total revenues and revenue before reimbursements in our discussion. Reimbursable expenses are primarily project travel related expenses passed through to our clients that have no associated impact on our profitability. [indiscernible] our call today, we will also reference certain non GAAP financial measures, which we believe provide useful information to investors.

We have included reconciliations of GAAP to non GAAP financial measures in our press release filed earlier today we'll post any additional information based on the discussions from this call to the Investor Relations page of the company's website. Moving on, for the fourth quarter of twenty twenty four, total revenue was 79,200,000.0 Our revenues before reimbursements were 77,500,000.0 which was above the high end of our quarterly guidance. The fourth quarter of twenty twenty four reimbursable expense ratio on revenues before reimbursements was 2.3% as compared to 2.3% in the prior quarter and 1.7% in the same period in the prior year. Total revenues from our Global SNBT segment were $43,900,000 for the fourth quarter of twenty twenty four. Revenues before reimbursements for our global SMBT segment were $43,200,000 for the fourth quarter of twenty twenty four, an increase of 4% when compared to the same period in the prior year. The revenue growth from our Genaix Consulting and implementations in The segment was primarily offset by weakness in our e procurement and OneStream implementation. Offerings. Were $18,200,000 for the fourth quarter of twenty twenty four. Revenues before reimbursements for our Oracle Solutions segment were $17,400,000 for the fourth quarter of twenty twenty four, a decrease of The% when compared to the same period of the prior year, The decrease is primarily due to the post go live wind down of a large engagement which will also impact the Oracle momentum in the first quarter.

Total revenues from our SAP Solutions segment were $17,200,000 for the fourth quarter of twenty twenty four, Revenues before reimbursements for our SAP Solutions segment were $16,800,000 for the fourth quarter of twenty twenty four an increase of 51% when compared to the same period in the prior year. Primarily driven by strong software related sales in the quarter resulting from the increased sales investments we made in late twenty twenty three. Over performance in the fourth quarter will temper our first quarter outlook we expect demand for The services to be strong throughout the balance of the year. Approximately 22% of our total company revenues before reimbursement consist of recurring multiyear and subscription based revenues includes our Executive Advisory, IP as a service, application managed service contracts. [indiscernible] Total company adjusted cost of sales which excludes reimbursable expenses, non cash stock based compensation expense and all acquisition related cash and non cash compensation expense totaled $40,500,000 dollars or 52.3% of revenues before reimbursements in the fourth quarter of twenty twenty four. As compared to $40,400,000 or 56.7% of revenues before reimbursements the prior year Total consultant headcount was 12 was twelve eighty four at the end of the fourth quarter, as compared to twelve sixty two in the previous quarter and eleven sixty eight at the end of the fourth quarter of twenty twenty three, fourth quarter ending headcount was primarily driven by increases from our Gen AI acquisition and increasing hiring our Gen AI practices.

Total company adjusted gross margin on revenues before reimbursements which exclude reimbursable expenses and non cash stock based compensation expense, and all acquisition related cash and non cash compensation expense. Was 47.7% in the fourth quarter of twenty twenty four, compared to 43.3% in the prior year. Improvement in gross margin was primarily driven by higher value added reseller sales during the quarter and a higher margin Geniaq Consulting and Implementation revenue [indiscernible] Adjusted SG and A which excludes non cash stock based compensation expense and all acquisition related cash and non cash expenses amortization of intangible assets one time legal settlements was 18400000.023.7% of revenues before reimbursements in the fourth quarter of twenty twenty four. This is compared to $50,400,000 or 21.6% of revenues before reimbursements in the prior year. The year over year absolute dollar increase is primarily due to incremental commissions from increased SAP segment sales and increased incentive compensation expense commensurate with company performance. [indiscernible] Adjusted EBITDA, which excludes non cash stock based compensation expense, all acquisition related cash and non cash expenses, Amortization of intangible assets and one time legal settlements was $19,500,000 25.2% of revenues before reimbursements in the fourth quarter of twenty twenty four.

As compared to 16,300,000.0 or 23% of revenues before reimbursements in GAAP net income for the fourth quarter of twenty twenty four totaled $3,600,000 or diluted earnings per share of $0.12 as compared to GAAP net income of $7,900,000 The diluted earnings per share of $0.28 in the fourth quarter of the prior year Our 2024 GAAP net income includes non PAC stock compensation expense from our recently approved stock price award program of $5,100,000 and acquisition related cash and non cash compensation and related expenses of 2,300,000.0 in total impacted our Q4 twenty twenty four GAAP results by zero point two three dollars twenty twenty three GAAP net income includes the Gartner legal settlement and related costs of $1,200,000 or $0.03 per diluted earnings per share. Adjusted net income and diluted earnings per share which exclude non cash stock based compensation expense, all acquisition related cash and non cash expenses, amortization of intangible assets and one time legal settlements for the fourth quarter of twenty twenty four totaled $13,600,000 or adjusted diluted net income per common share of $0.47 which is above the top end of our earnings guidance range compares to prior year adjusted diluted net income per common share.

Of $0.39 Acquisition related cash and non cash stock compensation expense relates to a portion of the purchase consideration for the LegalHairs acquisition completed in September 2024. The consideration contains either performance or service vesting requirements and as such is reflected as compensation expense under GAAP rather than purchase consideration. The company's cash balances were 6 quarter, as compared to $10,000,000 at the end of the previous quarter. Net [indiscernible] Activities. The order was $20,600,000 primarily driven by net income adjusted for non cash activity increases in accrued expenses and and decreases in accounts receivable. Our DSO or day sales outstanding was sixty six days at the end of the quarter, as compared to seventy days at the end of the previous quarter and sixty five days in the prior year. During the fourth quarter of twenty twenty four, the company paid down $7,000,000 on [indiscernible] balance of the company's total debt outstanding at the end of the fourth quarter of twenty twenty four was approximately $13,000,000 During the quarter, we repurchased 117,000 shares of the company's stock for an average of $30.95 per share at a total cost of approximately $3,600,000 Our remaining stock repurchase authorization at the end of the fourth quarter was $27,500,000 At its most recent meeting, the company's Board of Directors authorized a 9% increase in its annual dividend from $0.44 to $0.48 per share [indiscernible] declared the first quarterly dividend of $0.12 per share for its shareholders of record on March 21, 2025, to be paid on 04/04/2025.

Before I move to guidance for the first quarter of twenty twenty five, I'd like to remind everyone of the seasonality of our business relative to costs. As we move sequentially from Q4 to Q1. Specifically consistent with previous years, our first quarter guidance for 2025 will reflect sequential increase in U. S. Payroll related taxes and sequential buildup of our vacation pools. The estimates that total revenues before reimbursements for the first quarter of twenty twenty five to be in the range of $75,000,000 to $76,500,000 We expect global SMBT segment revenue before reimbursements to be up 5% to 10% when compared The the prior year driven by strong Gen AI revenue growth partially offset by declines in OneStream and RE for [indiscernible] We expect both Oracle Solutions and SAP Solutions segment revenue before reimbursements to be down when compared to the prior year. On a combined basis, we expect them to be down 8% to 10%. We estimate adjusted diluted net income per common share in the first quarter of twenty twenty five to be in the range of $0.39 to $0.41 which assumes a GAAP effective tax rate on adjusted earnings of 22%. We expect the adjusted gross margin as a percentage of revenues before reimbursements to be approximately 43% to 44%.

We expect adjusted SG and A and interest be approximately 18,800,000.0 expect first quarter adjusted EBITDA as a percentage of revenues before reimbursements to be in the range of approximately 21% to 22%. Lastly, we expect cash balances in the first quarter excluding the impact of share buyback activity, to be tempered primarily due to the payment of 2024 performance related bonuses. At this point, I'll turn it back over to Ted to review our market outlook and strategic priorities for the coming months. Thank you, Rob.

As we look forward, let me share our thoughts on the near and long term demand environment and the growth opportunity it offers our organization. Although the demand for digital transformation remains strong in traditional areas, it continues to be impacted by thoughtful decision making as organizations assess competing priorities due to economic concerns and the consideration of emerging Gen AI technologies. In 2025, we expect IT budgets to increase with increasing attention and allocations to the rapidly emerging Gen AI solutions and the related opportunities and threats it brings to all industries. While in 2024, Gen AI budgets will primarily focus on developing awareness of AI, in 2025, you will see increasing amount of IT budget specifically allocated to GenAI initiatives in high feasibility and high impact areas. We'd also expect to see an increasing investment in data quality and value initiatives that are critical to any Gen AI strategy. The unlimited potential of AI will define an entirely new level of Gen AI enabled world class performance standards driving all software and services providers to extend the value of their existing offerings with the introduction of AI agent extensions. We believe this will result in unprecedented innovations which all organizations will have to consider.

This shift is consistent which we believe positions a generation a generational value creation opportunity for our organization. Strategically, we continue to focus on recurring high margin IP related services. But what is new is the accelerated focus and investments we are making in all of our Gen AI capabilities the most significant investments have been in the development of our AI Explorer platform and the training and development of our associates, our strategic acquisition of Leeway Hertz further expanded and accelerated all of efforts This will further accelerate as we fund the expansion of our joint venture We are utilizing the aiXpora platform as the vehicle to integrate the Gen AI capabilities and impact across all of our offerings. We also continue to hire and upgrade our skills in critical data and technology architecture resources to further support our efforts. These efforts are rapidly allowing us to become key architects advisors and consultants of our clients' Gen AI journey. We now believe that AI Explore will be our primary strategic entry point to clients that we will use to position our traditionally strong benchmarking digital transformation and executive advisory offerings. And the platforms that result our latest digital transformation and cloud application consulting relationships.

The halo or downstream revenue impact of these offerings has traditionally been around 40% over the last several years We believe this will only be expanded by our AI Explorer offering and the enterprise wide strategic access it provides Axtolor significantly enhances the value of our IP and fully aligns it with emerging Gen AI world class performance standards. Another critical investment that we have made is to is to build our own GenAI assisted knowledge based solution called Ask Hackett AI. We expect the integration of our valuable IP and content that leverages Gen AI to significantly enhance the delivery of our insight, that we are asked to provide to our clients every day but much faster and with significantly more personalized insight. We are ingesting proprietary IP including benchmarking best practice the myriads of queries that we're required to support our executive advisory, consulting We have also embarked on a new initiative called Accelerator, It intends to address The efficiency and quality The the of our technology implementation related services. All these initiatives are harnessing the power of Gen AI to improve and accelerate the delivery of our solutions and services with the intent of differentiating our capabilities and resulted in improved revenue growth and margins.

We also see the potential commercial value of these innovations beyond our internal use. On the talent side, competition for experienced executives with high technology agility continues. Overall, we saw turnover we expect that trend to continue. We also continue to support strategic partnerships and acquisitions that will allow us to [indiscernible] and sell our IP through new channels that will allow us to reach beyond our current Global 1,000 focus an efficient manner.

We are continuing to add videos on the Investor Relations page of our website that investors can review to become more familiar with our new capabilities. Lastly, even though we believe we have the client base and the offerings to grow our business, we continue to look for acquisitions and alliances that strategically leverage our RIP and add scope, scale and capability which can accelerate our growth. As always, let me close by congratulating our associates on our performance and by thanking them for their tireless efforts and always ask them to remain to stay focused on our clients and our people no matter what challenges we may encounter. The conclude my comments.

Let me turn it over to the operator The will move us into the Q and A section of our call.

Operator? Yes. The phone lines are now open for questions. The first question in the queue is from George Sutton with Craig Hallum. Your line is open.

Thank you. Chad, it was nice to hear you call out some revenues and the influence that Gen AI had in the fourth quarter and will have in Q1 wondered if you could give us a little more detail on the breadth of what you're working on give us a sense of what the pipeline might look like Well, let me say at the highest level, let's just say that both the our client entry points or meetings that we're having and even the content which are executive advisory and market intelligence clients are leveraging being significantly skewed to Gen AI related questions and comments and interest. So that really drives our meeting counts it drives our client engagements, And look George, you know we've worked really hard to get out in front of this by launching a iX4 at the beginning of last year. All of that work we did in 2024 when you bring that together with the acquisition of Leeway Herds and the fact that they bring not only great engineering capability, but an orchestration, an agenetic workflow orchestration platform really allows us to be incredibly competitive. We believe we're at the tip of the spear on these opportunities.

So look, whether it's meeting counts, whether it's discussion with clients, and and or revenue The we booked and saw on a sequential basis look, the opportunities are expanding for us. And I think we're just if you look back just The year, very dramatically different organizations with we believe very unique capabilities which we've assembled throughout 2024. And so hopefully The provides some context to your question.

So I thought about you immediately when I really understood what DeepSeq had done, which was dramatically reduced the power of compute and or the cost of compute. And it seemed right down central to really accelerate the application side of AI, which I thought you would be a direct beneficiary. Can you give us a sense of how that news might have affected things in your pipeline? Well, the capability of these foundational large language models is key and central to this Gen AI revolution. And it powers the Gen AI solutions, which we identify, evaluate and are working with our clients with So want to see capabilities expand Supposedly, the price points relative to those capabilities go down in my mind is very positive for the end user. It infers that you're going to get greater you're going to get access to this knowledge base with all of this GPU power and now with growing capability on its ability to infer reason and help you and assist you in many ways. For us, For us, our capability, we have focused and believe we are experts at solutioning a Gen AI opportunity from ideation all the way through a fully deployed solution at scale.

So, I can tell you that the innovation that we've had in developing our capability every version of AX4 that we've released with the third one coming out this quarter. And now the addition, I can't tell you how capable this Leeway Hertz team its founder is an incredibly talented individual. And the ZBrank platform that they bring. But look, The capabilities are improving across all dimensions. Of GenAI deployment and the deep seek I'll call it, wake up call I think it's great news for end users and people that plan to adopt Gen AI. Capabilities throughout these next few years.

One other question if I could.

SAP is typically fairly lumpy business for you. It sounds like [indiscernible] really picked up this past quarter. Can you just give us a duration expectation? Is this a This is a new level for the SAP business given the investments you've made or is are these more onetime projects? Look, we strongly benefited from the sale of software at the at the tail end of the year. It was the highest level we've ever achieved. In fact, unfortunately, I can't say that we can continue at that pace from Q4 to Q1. Primarily because one is end of year activity. And the other is first quarter.

But our SAP demand when we look throughout 2025, We're expecting it to be a very strong and that's before we see some of the SAP AgenTec capabilities that it's now starting to count. So We hope it's a strong year for SAP and our SAP group.

The next question in the queue is from Jeff Martin with ROTH Capital Partners. The line is open. Good evening, Ted and Robert. How are you?

Hey, Jeff. Good job.

At 100 drill in a little bit more on your meetings in the past quarter or two.

Specific to AI Explorer are you seeing those convert into implement contracts and what kind of visibility do you have on pipeline conversion over the next couple of quarters here? We see increasing activity but more importantly, we see clients with budgeted twenty twenty five initiatives planned, which really changed changes the engagement for us. So it's a combination of both we're better prepared and than when we were a year ago.

And clients don't need to be convinced about the Gen AI opportunity, what it means to their industry of them So We think that we're just going to see velocity in the pipeline and we're also hoping that entry points are just that entry points in a client that learns how to leverage the Gen AI capabilities that we have to develop and build and deploy [indiscernible] Will be spending will increase their spend throughout the year with us. So we're hoping for a combination of both a better budgeted client We're significantly, I'll call it, more twelve months ago. And the fact that an entry point is just Once you're able to demonstrate value with a select or a few use cases or solutions as we refer to them.

We believe that clients will continue to increase their spend in the category. So Look, it's very promising.

And then wanted to to get your perspective on implementation projects both in terms of scale and scope, what kind of duration are we looking at, what kind of average implementation projects are you doing today and where could that go one to two years out from here?

Well, if you really think through the 2024 cadence right? And then the fact that we didn't close Leeway Hertz until the September The. So consider The as you think of the progress that we've made capabilities today versus what was at the beginning, mid and now, at the beginning of twenty twenty five. Both our capabilities and the opportunity are just better defined. Our clients are better prepared to have a conversation on how to prioritize And to give you some examples, Look, we go all the way from offering a client something we call a fast start program, so they have a chance to become familiar with our platforms our capabilities And The have resulted in licensing agreements that have been as long as three years.

But know that all of these contracts and all of this activity kind of happened in the pale end and towards the second half of the year. So Just know I'm just adding context to how they're building and how they built for us, but I can't tell you the difference between budgeted clients with knowledge of Gen AI versus educating clients trying to understand and assess their opportunities in twenty twenty twenty four without having meaningful budgeted dollars last year. I think it's a significant difference. And we'll have a significant difference in the number of clients that we bring on board The the way clients scale throughout the year.

And then last question for me is you mentioned EPO procurement in OneStream were headwinds to the fourth quarter. I was just curious if you could quantify that and then also give us a sense of what your outlook is for those two areas for the balance of this year?

Well, there is no doubt that the let's call it the Gen AI I'll call it opportunities are somewhat or can be disruptive to the enterprise app [indiscernible] So as you've seen, just in recent weeks, I'm not even going to say months, virtually every enterprise application company has announced some form of extended AI and their first introduction of AI agents or Agentic workflows that The the value of their existing enterprise applications. So that will be disruptive. The person who I'll say moved earliest to capture the Power of foundational model which was sales force and you look at kind of momentum that they're seeing both in their new [indiscernible] as well as what it's meant to The, I'll call it, traditional cloud application sales, I think you get a feel for both the opportunity which I think Salesforce is starting to harvest But if you go back and look at Salesforce, maybe six months earlier as it was building out its Einstein capability, They had some disruption as well as they were looking at what Gen AI meant to them. So are we surprised that it's creating a little bit of a pause when people think of their technology the answer is no.

Are the enterprise applications quickly responding to the challenge? The answer is yes. And you're going to see it's The fight for I'll call it, a genetic workflow and the delivery of [indiscernible] utilizing and leveraging foundational models either through an enterprise application or through I'll call them independently built solutions is just going to be fun to watch. Our clients are going to have significant opportunities to improve they're going to have technologies available to them. They didn't have eighteen months ago. But that does not come without some disruption. So I'm not surprised The We're seeing that happen and we'll see that happen as people integrate AgenTec capabilities into their current cloud apps. And then are you able to quantify the headwind from e book here, Mann and OneStream? In the fourth quarter?

Well, they were meaningful enough for us to mention So for us to say that Our GSAT group 4% let's just say that without that disruption that GSBT group would have been up meaningfully higher. Just to give you some reference. But it was meaningful enough to affect the reported growth of the segment.

Fair enough. Thank Thank you. That's helpful.

And the next question in the queue is from Vincent Colicchio with Barrington Research. Your line is open. Yes. Good afternoon, Ted. So what is your what are your thoughts on the outlook for Oracle as we move beyond Q1?

Oracle activity remains [indiscernible] On the EPM side, which we've strongly benefited from here over the last twenty four months with them probably stronger than on the ERP side.

But what We expect the enterprise application in this extended AI capabilities delivered through agents. I think Salesforce has proven that. I expect Oracle, SAP, OneStream, all others to to benefit in similar ways. They'll have to explain the additional value that comes from these new capabilities clients and look, it may impact some of the velocity in their pipeline. For some, it may not for others. And do you need to ramp your Gen AI labor capabilities to meet your demand expectations for '25?

Well, you saw that you saw the headcount increase both year on year and quarter on quarter. And I think Rob mentioned that most of that headcount increase was in our Gen AI groups.

And are you seeing any incremental interest in the joint venture?

Any update there would be helpful. I can report that it's starting to sign life We are working through the details The the final I'll call it, agreement. [indiscernible] will be both reside inside of the joint venture. It will allow us to fully leverage explore use some of The ZBrains infrastructure capabilities are going to be very valuable to explore And we will offer the clients three options, the ability to again, we offer both facilitated full consulting engagement or licensing which attaches a rate card to the to the license. But we give the client a chance to either license these capabilities or have a consulting facilitated engagement be part of it. And so we expect the licensing activity to increase throughout the year. Thank you, Vince. At this time, I show no further questions. I will turn the call back over to Mr. Fernandez. Well, thank you everyone for participating in our fourth quarter earnings call. As you can see 2025 is is expected to be a very exciting year. So we look forward to updating you when we report the We'll see you in a few months.

May disconnect at this time.