Huron Consulting Group (HURN) Q2 FY26 earnings call: guidance and Q&A

Given high utilization rates, what are the company's plans for hiring to manage capacity over the next couple of quarters?

Management confirmed active hiring, especially in high-utilization areas, with the goal of bringing utilization back down to the upper 70% range (77%-79%) from its current level above 80%.

“Yes, we're definitely still in market hiring right now. You're right, once we get over the 80% threshold, that's typically when we're doing more hiring in order to help ease that a little bit.”

asked by Andrew Nicholas · answered by John Kelly

Can the company provide guidance on headcount growth, excluding managed services?

Headcount growth for consulting is expected to be less than revenue growth, likely in the high single-digit percentage range for the full year.

“I probably think of the headcount growth for the full year landing somewhere less than that. So think of it as probably high single-digit percentage headcount growth in consulting.”

asked by Andrew Nicholas · answered by John Kelly

How is AI driving demand for digital services, and what is the go-to-market strategy for these offerings?

The strategy is client-centric, adapting to each segment's AI journey. Opportunities range from stand-alone AI projects (strategy/governance) to embedded initiatives within larger digital transformations, flowing naturally from existing market approaches.

“It starts with clients and the business units that have the relationships in the markets to understand the unique needs and aspects of what -- where each of those particular segments are in their AI journey.”

asked by Andrew Nicholas · answered by C. Hussey

What are the key differentiators driving the strong growth in managed services, and is the company growing as fast as possible?

The outcomes-based model, deep consulting knowledge, and point solutions are key differentiators. Management is pleased with the 43% organic growth rate, noting strong client retention and the extension of this approach through the RelateCare acquisition.

“At 43%, that's -- we're pretty happy with that growth rate right now, it's a lot to digest. But -- and we've had, as I said, outstanding client retention along the way.”

asked by Tobey Sommer · answered by C. Hussey

What is the steady-state, optimized utilization range for the company, given current high levels?

The optimal steady-state utilization range is the upper 70s percent (77%-79%), which accommodates the current business mix. Current utilization above 80% triggers additional hiring to return to this target range.

“I think, Tobey, in a steady state, the current mix of the business, I think it is that upper 70s percent range is probably the baseline you expect. So I want to say that somewhere between 77% and 79%, I think, would be a good baseline.”

asked by Tobey Sommer · answered by John Kelly

Is the demand driven by AI incremental to the Investor Day growth targets, or is it replacing other technology work, potentially pushing organic growth towards the upper end of the target?

While some budget shifts occur, AI is opening new opportunities due to Huron's expertise and trusted relationships. No material price compression or headwinds have been observed, and long-term investment in AI is expected to continue driving value and growth.

“But what we've seen is that for us, our ability to understand their businesses and with the trusted relationships that we have, then on the commercial side, bringing that innovation as the challenger brand in some respects and some of the areas that we compete in, it is opening up new opportunities.”

asked by Kevin Steinke · answered by C. Hussey

How is AI being leveraged internally to drive efficiencies and margin expansion across the Commercial, Education, and Healthcare segments?

Healthcare assessments are a prime area for AI-enabled tools to reduce low-margin revenue and compress delivery time. Cross-business unit teams with engineers leverage proprietary data for insights. AI also improves internal processes like contracting, billing, and sales research, and is embedded into managed services and software products.

“I mean I think probably the most straightforward one is our health care assessments, which we talked about for a long period of time that often precede our performance improvement engagements... That's very just appropriate for the AI labeled tools.”

asked by Steven Wahrhaftig · answered by C. Hussey