• Revenue Before Reimbursable Expenses (RBR): $395.7 million, up 11.2% from $356 million in Q1 2024.
• Net Income: $24.5 million, a 36.3% increase from $18 million in Q1 2024.
• Adjusted EBITDA: $41.5 million, representing 10.5% of RBR, compared to $33.8 million or 9.5% of RBR in Q1 2024.
• Adjusted Net Income: $31.1 million or $1.68 per diluted share, a 36.6% increase from $23.3 million or $1.23 per diluted share in Q1 2024.
• Healthcare Segment RBR: $198.5 million, up 9.8% from Q1 2024.
• Education Segment RBR: $122.7 million, up $11.2 million from Q1 2024.
• Commercial Segment RBR: $74.5 million, up 17% from Q1 2024.
• Operating Income Margin - Healthcare: 28.4% in Q1 2025, up from 23.6% in Q1 2024.
• Operating Income Margin - Education: 18.8% in Q1 2025, down from 19.7% in Q1 2024.
• Operating Income Margin - Commercial: 15.2% in Q1 2025, down from 22.1% in Q1 2024.
• Cash Flow Used in Operations: $106.8 million in Q1 2025.
• Free Cash Flow: Negative $115.4 million in Q1 2025.
• Days Sales Outstanding (DSO): 79 days in Q1 2025, down from 91 days in Q1 2024.
• Total Debt: $576.3 million as of March 31, 2025.
• Net Debt: $552.9 million as of March 31, 2025.
• Leverage Ratio: 2.2x adjusted EBITDA as of March 31, 2025.
• Share Repurchases: $72.9 million used to repurchase approximately 509,000 shares in Q1 2025.
• Guidance for 2025: RBR in the range of $1.58 billion to $1.66 billion, adjusted EBITDA margin of 14% to 14.5%, and adjusted EPS of $6.80 to $7.60.

• Warning! GuruFocus has detected 4 Warning Signs with ROG.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Huron Consulting Group Inc (NASDAQ:HURN) reported an 11% increase in revenues before reimbursable expenses (RBR) over the first quarter of 2024, driven by strong growth across all three operating segments.
• The Healthcare segment saw a 10% growth in RBR, primarily due to strong demand for performance improvement and financial advisory offerings.
• The Education segment experienced a 10% increase in RBR, fueled by demand for strategy and operations, advancement offerings, and software products.
• The Commercial segment achieved a 17% growth in RBR, with significant contributions from the acquisition of AXIA and strong demand for digital offerings.
• Huron Consulting Group Inc (NASDAQ:HURN) reaffirmed its annual guidance for 2025, indicating confidence in its growth strategy and market positioning.

Negative Points

• Despite revenue growth, the Commercial segment's operating income margin decreased from 22.1% in Q1 2024 to 15.2% in Q1 2025, due to increased compensation costs and contractor expenses.
• The Education segment's operating income margin declined from 19.7% in Q1 2024 to 18.8% in Q1 2025, impacted by expenses related to leadership meetings and performance bonuses.
• The company faced increased operating expenses in the Healthcare segment, with many clients experiencing operating expenses outpacing reimbursements.
• Huron Consulting Group Inc (NASDAQ:HURN) reported a negative free cash flow of $115.4 million for the first quarter of 2025, reflecting annual incentive payments and capital expenditures.
• The leverage ratio increased to 2.2x adjusted EBITDA as of March 31, 2025, primarily due to annual bonus payments and share repurchases.

Q & A Highlights

Q: Could you speak more specifically to the pipeline for the Commercial segment and any changes to growth expectations? A: John Kelly, CFO, stated there are no changes to guidance at the segment level. The first quarter saw record levels of sales conversion, primarily driven by the digital business. The strategy part of the business is experiencing some impact from the macro environment, but the financial advisory part is seeing increased demand, particularly in the Commercial segment.

Q: How are you thinking about headcount growth in the current market environment? A: John Kelly, CFO, explained that headcount growth is expected to align with revenue growth throughout the year. The first quarter saw high utilization rates, but as growth continues, more talent will be added, particularly in the Healthcare business due to strong demand.

Q: How would you characterize new business and billings in Education and Healthcare during April? A: John Kelly, CFO, noted no significant changes in April compared to the first quarter. Sales conversion was strong in February and March, and there have been no cancellations of projects already sold.

Q: Have you seen any changes in projects with private universities affected by policy changes? A: C. Mark Hussey, CEO, mentioned that while the nature of work might shift slightly, there has been no dramatic effect on their business with these universities. Huron continues to be a trusted adviser for these clients.

Q: Is there any shift in customers' propensity to include performance fees in performance improvement projects? A: John Kelly, CFO, stated that the environment for assessment activity remains robust, driven by financial strain and regulatory changes. However, there has been no significant shift in the mix of contingent-based fees versus other fee structures.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.