Harte Hanks (HHS) Q1 2025 earnings summary

Executive summary

• Revenue declined 8.6% year-over-year to $41.6 million for Q1 2025, mainly due to planned contract expirations in Marketing Services.

• Net loss was $0.4 million (EPS: -$0.05), compared to a $0.2 million net loss (EPS: -$0.02) in Q1 2024.

• Operating loss was $0.04 million, down from $0.4 million operating income in the prior year quarter.

• Project Elevate transformation program continued, with $0.8 million in restructuring charges in Q1 2025 and estimated total savings of $16 million through 2026.

• Operational progress included new client wins in healthcare, technology, hospitality, and automotive, and a revamped sales organization.

Financial highlights

• Revenue decreased by $3.9 million year-over-year, primarily due to a 35.3% drop in Marketing Services segment revenue.

• EBITDA for Q1 2025 was $1.0 million, down from $1.4 million in Q1 2024; Adjusted EBITDA was $1.8 million, down from $2.8 million.

• Adjusted operating margin declined to 1.8% from 3.9% in the prior year.

• Operating expenses fell 7.7%, mainly from a 15.7% reduction in labor costs.

• Cash and cash equivalents were $9.0 million at March 31, 2025, with $24.0 million available under the credit facility.

Outlook and guidance

• Management expects to meet liquidity needs in the short and medium term, with no substantial doubt about going concern for the next twelve months.

• Project Elevate is expected to deliver $16 million in cost savings from 2024 to 2026, with $10.1 million in total restructuring charges anticipated through 2025.

• Management expects to deliver positive EBITDA in each quarter of 2025 and is focused on long-term growth strategies.