Huron Consulting Group (HURN) Sidoti September Small-Cap Virtual Conference summary

Key business highlights

• Healthcare and education are the largest segments, representing about 50% and 33% of revenue, respectively, with commercial making up the remainder and showing growth opportunities.

• Digital consulting now accounts for 43% of revenue, up from nearly zero a decade ago, reflecting a major strategic shift.

• 2023 saw 20% revenue growth, 70 basis points margin expansion, and 43% EPS growth, with healthcare up 26%, education up nearly 20%, and commercial up 9%.

• Q2 2024 revenue grew 7% year-over-year, with full-year guidance of 7%-10% growth, nearly all organic.

• Adjusted EBITDA margin expanded 100 basis points to 15% in Q2 2024, with full-year guidance matching this improvement.

Market trends and demand drivers

• Demand in healthcare is driven by financial strain among not-for-profit providers, leading to strong performance improvement and advisory work.

• Education segment grew 11% in the quarter, with broad-based demand across offerings.

• Commercial segment declined 6% due to slower digital project conversions, impacted by interest rates and economic uncertainty, but the pipeline remains robust.

• Clients are increasingly seeking integrated projects that combine operational, digital, and strategy consulting.

Strategic initiatives and growth outlook

• Continued investment in digital capabilities, with expectations that most future projects will be digitally enabled.

• Expanding offerings in healthcare and education, and replicating successful strategies in the commercial segment.

• Margin expansion is supported by scale, improved utilization, pricing, and a growing global workforce, especially in India.

• Recurring revenue, primarily from managed services and SaaS products, is 11% and expected to grow.