Harte Hanks Reports First Quarter 2025 Results

Rhea-AI Summary

Harte Hanks (NASDAQ:HHS) reported its Q1 2025 financial results, showing mixed performance. Total revenue decreased 8.6% to $41.6 million compared to $45.4 million in Q1 2024. The company reported an operating loss of $0.04 million and a net loss of $0.4 million ($0.05 per share). EBITDA was $1.0 million, down from $1.4 million year-over-year. Segment performance varied: Customer Care revenue grew 4.5% to $13.0 million, Fulfillment & Logistics Services increased 1.8% to $19.8 million, while Marketing Services declined 35.3% to $8.8 million. The company secured new client engagements across healthcare, technology, hospitality, and automotive services sectors. Harte Hanks maintains a strong balance sheet with $9.0 million in cash, no debt, and $24.0 million available credit line capacity.

Positive

• Strong balance sheet with $9.0 million cash and no debt
• Customer Care segment revenue increased 4.5% YoY
• Fulfillment & Logistics Services revenue grew 1.8% YoY
• Secured new strategic client wins across multiple industries
• Reorganized sales structure showing early positive results

Negative

• Total revenue declined 8.6% YoY to $41.6 million
• Operating loss of $0.04 million vs income of $0.4 million in Q1 2024
• Net loss increased to $0.4 million from $0.2 million YoY
• Marketing Services revenue dropped significantly by 35.3%
• EBITDA decreased to $1.0 million from $1.4 million YoY

Insights

Financial Analyst

Harte Hanks reports mixed Q1 results with revenue down 8.6% YoY, but shows operational improvements and maintains positive EBITDA despite challenges.

Harte Hanks' Q1 2025 results reveal a company in transition, working to offset revenue challenges through operational improvements. The 8.6% year-over-year revenue decline to $41.6 million is concerning, particularly in the Marketing Services segment which saw a substantial 35.3% drop. This significant contraction in Marketing Services stems from reduced project work in financial services and the planned expiration of certain client contracts.

The company's shift to an operating loss of $0.04 million from a $0.4 million operating income in Q1 2024 indicates margin pressure, though the 7.7% reduction in operating expenses demonstrates management's efforts to align costs with revenue reality. Despite these challenges, Harte Hanks maintained positive EBITDA of $1.0 million and Adjusted EBITDA of $1.8 million, though both metrics declined year-over-year.

The segment performance tells an important story: Customer Care and Fulfillment & Logistics Services showed revenue growth (4.5% and 1.8% respectively), while Marketing Services declined sharply. This segment divergence suggests the company's traditional marketing business faces structural challenges, while its operational services segments demonstrate resilience.

From a balance sheet perspective, Harte Hanks maintains financial stability with $9.0 million in cash, no debt, and $24.0 million in available credit. This strong liquidity position provides runway for the company to execute its turnaround strategy.

The reorganization of the sales structure to align directly with business segments rather than using a centralized model represents a strategic pivot that management believes is already yielding positive results. The new business wins across healthcare, technology, hospitality, and automotive services demonstrate cross-industry appeal, though the materiality of these wins remains to be seen in future quarters' revenue.

Enhanced Leadership and Revamped Sales Organization Drive Improved Sales Efficiency and Customer Retention

CHELMSFORD, MA / ACCESS Newswire / May 14, 2025 / Harte Hanks, Inc. (NASDAQ:HHS), a leading global customer experience company focused on bringing companies closer to customers for over 100 years, today announced financial results for the first quarter ended March 31, 2025. Despite revenue pressure in the first quarter, the Company continued to drive operational progress and secure strategic new business wins across key industries. Harte Hanks ended the quarter with a strong balance sheet, no debt, and a healthy cash balance, positioning the Company to execute on its long-term growth strategy, build momentum, and deliver positive EBITDA each quarter in 2025.

New Business Momentum with Strategic Client Wins Across Key Industries
In early 2025, Harte Hanks secured several significant new client engagements across key verticals, including healthcare, technology, hospitality, and automotive services. These wins reflect the strength of our solutions and the trust clients place in our expertise. Highlights include a national fulfillment program for a leading healthcare provider; an exclusive agreement to supply Harte Hanks' proprietary, opted-in health data to a professional healthcare engagement platform; sales enablement support for a major enterprise IT company; a national logistics partnership supporting a private equity-backed car wash platform; and a data licensing agreement with a real estate rental client to improve the quality and conversion of customer leads. While our sales efforts in late 2024 did not meet expectations, we have taken meaningful steps in 2025 to strengthen our pipeline and improve deal conversions that will contribute to future revenue growth. Reorganizing our sales structure to align directly with the business segments they support, rather than operating under a centralized model has already begun to yield positive results. We remain committed to aggressively building on this momentum by expanding our lead generation activities and focusing on strategic wins that align with our core capabilities.

First Quarter Highlights

• The Company ended the quarter with a cash balance of $9.0 million at March 31, 2025.

• Total revenues for Q1 2025 were $41.6 million, down 8.6% compared to $45.4 million in Q1 2024.

• Operating loss was $0.04 million compared to operating income of $0.4 million in the same quarter in the prior year.

• Net loss was $0.4 million, or $0.05 per basic and diluted share, compared to net loss of $0.2 million, or $0.02 per basic and diluted share, in the prior year quarter.

• The first quarter of 2025 had EBITDA of $1.0 million compared to EBITDA of $1.4 million in the same period in the prior year. Adjusted EBITDA, which excludes stock-based compensation, severance and restructuring charges, was $1.8 million for Q1 2025 and $2.8 million for the same quarter in 2024.

Segment Highlights

• Customer Care, $13.0 million in revenue, 31% of total - Segment revenue for the quarter increased $0.6 million or 4.5% versus the prior year and EBITDA totaled $2.1 million for the quarter, a decline of 16.1% compared to the same period in the prior year. The decrease in profitability is due to an increase in technology costs during the period.

• Fulfillment & Logistics Services, $19.8 million in revenue, 48% of total - Segment revenue for the quarter increased $0.4 million or 1.8% versus the prior year quarter and EBITDA totaled $1.7 million, an increase of 7.0%. The increase in EBITDA relates to higher volumes of more profitable projects, offset slightly by the mutual agreement to terminate a low-margin Logistics client account during the quarter.

• Marketing Services, $8.8 million in revenue, 21% of total - Segment revenue for the quarter decreased $4.8 million or 35.3% compared to the prior year quarter and EBITDA for the first quarter totaled $1.1 million vs. $2.1 million for the first quarter of 2024. The decrease in revenue was attributable to reduced project work in the financial services sector, and the expected and planned expiration of certain client contracts utilizing our inside sales outsourcing services.

Consolidated First Quarter 2025 Results
First quarter revenues were $41.6 million, a decline of 8.6% from $45.4 million in the first quarter of 2024 due to decreased revenue attributable to planned and expected expiring customer contracts in one of the Company's operating segments.

First quarter operating loss was $0.04 million, compared to operating income of $0.4 million in the first quarter of 2024. The 7.7% decrease in operating expenses was less the percentage decline in revenues as management adjusts variable operational costs to match the decrease in revenues.

Net loss for the quarter was $0.4 million, or $0.05 per basic and diluted share, compared to net loss of $0.2 million, or $0.02 per basic and diluted share, in the first quarter of the prior year.

Balance Sheet and Liquidity
Harte Hanks ended the quarter with $9.0 million in cash and cash equivalents and $24.0 million of capacity on its credit line. The Company has no outstanding debt as of March 31, 2025. The Company's financial position continues to be strong, and it is well-positioned to execute on its long-term growth strategies in 2025 and beyond.

About Harte Hanks:
Harte Hanks (NASDAQ:HHS) is a leading global customer experience company whose mission is to partner with clients to provide them with CX strategy, data-driven analytics and actionable insights combined with seamless program execution to better understand, attract and engage their customers.

Using its unparalleled resources and award-winning talent in the areas of Customer Care, Fulfillment and Logistics, and Marketing Services, Harte Hanks has a proven track record of driving results for some of the world's premier brands, including GlaxoSmithKline, Unilever, Pfizer, Max, Volvo, Ford, FedEx, Midea, and IBM among others. Headquartered in Chelmsford, Massachusetts, Harte Hanks has over 2,000 employees in offices across the Americas, Europe, and Asia Pacific.

For more information, visit hartehanks.com

As used herein, "Harte Hanks" or "the Company" refers to Harte Hanks, Inc. and/or its applicable operating subsidiaries, as the context may require. Harte Hanks' logo and name are trademarks of Harte Hanks, Inc.

Cautionary Note Regarding Forward-Looking Statements:
Our press release and related earnings conference call contain "forward-looking statements" within the meaning of U.S. federal securities laws. All such statements are qualified by this cautionary note, provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements other than historical facts are forward-looking and may be identified by words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "seeks," "could," "intends," or words of similar meaning. These forward-looking statements are based on current information, expectations and estimates and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to vary materially from what is expressed in or indicated by the forward-looking statements. In that event, our business, financial condition, results of operations or liquidity could be materially adversely affected and investors in our securities could lose part or all of their investments. These risks, uncertainties, assumptions and other factors include: (a) local, national and international economic and business conditions, including (i) market conditions that may adversely impact marketing expenditures, and (ii) the impact of economic environments and competitive pressures on the financial condition, marketing expenditures and activities of our clients and prospects; (iii) the demand for our products and services by clients and prospective clients, including (iv) the willingness of existing clients to maintain or increase their spending on products and services that are or remain profitable for us, and (vi) our ability to predict changes in client needs and preferences; (b) economic and other business factors that impact the industry verticals we serve, including competition, inflation and consolidation of current and prospective clients, vendors and partners in these verticals; (c) our ability to manage and timely adjust our facilities, capacity, workforce and cost structure to effectively serve our clients; (d) our ability to improve our processes and to provide new products and services in a timely and cost-effective manner though development, license, partnership or acquisition; (e) our ability to protect our facilities against security breaches and other interruptions and to protect sensitive personal information of our clients and their customers; (f) our ability to respond to increasing concern, regulation and legal action over consumer privacy issues, including changing requirements for collection, processing and use of information; (g) the impact of privacy and other regulations, including restrictions on unsolicited marketing communications and other consumer protection laws; (h) fluctuations in fuel prices, paper prices, postal rates and postal delivery schedules; (i) the number of shares, if any, that we may repurchase in connection with our repurchase program; (j) unanticipated developments regarding litigation or other contingent liabilities; (k) our ability to complete reorganizations, including cost-saving initiatives; and (l) other factors discussed from time to time in our filings with the Securities and Exchange Commission, including under "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 which was filed on March 17, 2025. The forward-looking statements in this press release and our related earnings conference call are made only as of the date hereof, and we undertake no obligation to update publicly any forward-looking statement, even if new information becomes available or other events occur in the future.

Supplemental Non-GAAP Financial Measures:
The Company reports its financial results in accordance with generally accepted accounting principles ("GAAP"). However, the Company may use certain non-GAAP measures of financial performance in order to provide investors with a better understanding of operating results and underlying trends to assess the Company's performance and liquidity in this press release and our related earnings conference call. We have presented herein a reconciliation of these measures to the most directly comparable GAAP financial measure.

The Company presents the non-GAAP financial measure "Adjusted Operating Income" as a useful measure to both management and investors in their analysis of the Company's financial results because it facilitates a period-to-period comparison of Operating Income excluding stock-based compensation, severance, and restructuring. The most directly comparable measure for this non-GAAP financial measure is Operating Income.

The Company presents the non-GAAP financial measure "EBITDA" as a supplemental measure of operating performance in order to provide an improved understanding of underlying performance trends. The Company defines "EBITDA" as Net Income adjusted to exclude income tax expense, other expense (income), net, and depreciation and amortization expense. The Company defines "Adjusted EBITDA" as EBITDA adjusted to exclude stock-based compensation, severance, and restructuring. The most directly comparable measure for EBITDA and Adjusted EBITDA is Net Income. We believe EBITDA and Adjusted EBITDA are an important performance metric because it facilitates the analysis of our results, exclusive of certain non-cash items, including items which do not directly correlate to our business operations; however, we urge investors to review the reconciliation of non-GAAP EBITDA to the comparable GAAP Net Income, which is included in this press release, and not to rely on any single financial measure to evaluate the Company's financial performance.

The use of non-GAAP measures does not serve as a substitute and should not be construed as a substitute for GAAP performance but should provide supplemental information concerning our performance that our investors and we find useful. The Company evaluates its operating performance based on several measures, including these non-GAAP financial measures. The Company believes that the presentation of these non-GAAP financial measures in this press release and earnings conference call presentations are useful supplemental financial measures of operating performance for investors because they facilitate investors' ability to evaluate the operational strength of the Company's business. However, there are limitations to the use of these non-GAAP measures, including that they may not be calculated the same by other companies in our industry limiting their use as a tool to compare results. Any supplemental non-GAAP financial measures referred to herein are not calculated in accordance with GAAP and they should not be considered in isolation or as substitutes for the most comparable GAAP financial measures.

Investor Relations Contact:
David Garrison
Investor.Relations@hartehanks.com

Harte Hanks, Inc.
Consolidated Statements of Operations (Unaudited)

		Three Months Ended March 31,
In thousands, except per share amounts		2025				2024
Revenue		$	41,561			$	45,448
Operating expenses
Labor			19,799				23,485
Production and distribution			14,057				13,750
Advertising, selling, general and administrative			5,844				5,939
Restructuring expenses			838				853
Depreciation and amortization expense			1,063				1,046
Total operating expenses			41,601				45,073
Operating (loss) income			(40	)			375
Other expense, net
Interest expense, net			53				11
Other expense, net			514				606
Total other expense, net			567				617
Loss before income taxes			(607	)			(242	)
Income tax benefit			(215	)			(71	)
Net loss			(392	)			(171	)
Loss per common share
Basic and diluted		$	(0.05	)		$	(0.02	)
Weighted average shares used to compute loss per share
Basic and diluted			7,360				7,236
Comprehensive loss, net of tax:
Net loss		$	(392	)		$	(171	)
Adjustment to pension liability, net			165				344
Foreign currency translation adjustment			36				(533	)
Total other comprehensive income (loss), net of tax			201				(189	)
Comprehensive loss		$	(191	)		$	(360	)

Harte Hanks, Inc.
Condensed Consolidated Balance Sheets (Unaudited)

In thousands, except per share data		March 31, 2025				December 31, 2024
ASSETS
Current assets
Cash and cash equivalents		$	8,982			$	9,934
Accounts receivable, net			29,585				31,648
Contract assets and unbilled accounts receivable			10,775				8,215
Prepaid expenses			2,139				1,511
Prepaid income taxes and income tax receivable			938				938
Other current assets			1,297				1,368
Total current assets			53,716				53,614
Net property, plant and equipment			8,532				8,956
Right-of-use assets			21,730				22,460
Other assets			16,607				16,752
Total assets		$	100,585			$	101,782
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses		$	21,972			$	21,832
Accrued payroll and related expenses			3,569				3,210
Deferred revenue and customer advances			2,482				1,589
Customer postage and program deposits			1,642				1,625
Other current liabilities			2,529				3,145
Current portion of lease liabilities			3,895				3,736
Total current liabilities			36,089				35,137
Pension liabilities - Qualified plans			5,035				5,445
Pension liabilities - Nonqualified plan			16,885				17,103
Long-term lease liabilities, net of current portion			19,878				20,860
Other long-term liabilities			1,277				1,548
Total liabilities			79,164				80,093
Stockholders' equity
Common stock			12,221				12,221
Additional paid-in capital			121,792				124,194
Retained earnings			814,231				814,623
Less treasury stock			(913,427	)			(915,752	)
Accumulated other comprehensive loss			(13,396	)			(13,597	)
Total stockholders' equity			21,421				21,689
Total liabilities and stockholders' equity		$	100,585			$	101,782

Harte Hanks, Inc.
Reconciliations of Non-GAAP Financial Measures (Unaudited)

		Three Months Ended March 31,
In thousands, except per share data		2025				2024
Net loss		$	(392	)		$	(171	)
Income tax benefit			(215	)			(71	)
Other expense, net			567				617
Depreciation and amortization expense			1,063				1,046
EBITDA		$	1,023			$	1,421
Stock-based compensation			(49	)			552
Restructuring expense			838				853
Adjusted EBITDA		$	1,812			$	2,826
Operating income		$	(40	)		$	375
Stock-based compensation			(49	)			552
Restructuring expense			838				853
Adjusted operating income		$	749			$	1,780
Adjusted operating margin (a)			1.8	%			3.9	%

1. Adjusted Operating Margin equals Adjusted Operating Income divided by Revenues.

Harte Hanks, Inc.
Statement of Operations by Segments (Unaudited)
In thousands

Three months ended March 31, 2025		Marketing Services				Customer Care				Fulfillment & Logistics				Restructuring Expense				Unallocated Corporate				Total
Revenue		$	8,782			$	13,001			$	19,778			$	-			$	-			$	41,561
Segment labor expense			4,487				8,016				4,562				-				2,734				19,799
Other segment operating expense			2,511				2,100				12,644				-				2,646				19,901
Restructuring expense			-				-				-				838				-				838
Contribution margin (loss)		$	1,784			$	2,885			$	2,572			$	(838	)		$	(5,380	)		$	1,023
Overhead allocation			711				826				882				-				(2,419	)			-
EBITDA		$	1,073			$	2,059			$	1,690			$	(838	)		$	(2,961	)		$	1,023
Depreciation and amortization			217				51				501				-				294				1,063
Operating income (loss)		$	856			$	2,008			$	1,189			$	(838	)		$	(3,255	)		$	(40	)

Three months ended March 31, 2024		Marketing Services				Customer Care				Fulfillment & Logistics				Restructuring Expense				Unallocated Corporate				Total
Revenue		$	13,583			$	12,442			$	19,423			$	-			$	-			$	45,448
Segment labor expense			7,274				8,099				4,500				-				3,612				23,485
Other segment operating expense			3,215				1,308				12,543				-				2,623				19,689
Restructuring expense			-				-				-				853				-				853
Contribution margin (loss)		$	3,094			$	3,035			$	2,380			$	(853	)		$	(6,235	)		$	1,421
Overhead allocation			1,000				582				801				-				(2,383	)			-
EBITDA		$	2,094			$	2,453			$	1,579			$	(853	)		$	(3,852	)		$	1,421
Depreciation and amortization			372				62				248				-				364				1,046
Operating income (loss)		$	1,722			$	2,391			$	1,331			$	(853	)		$	(4,216	)		$	375

SOURCE: Harte Hanks, Inc.

View the original press release on ACCESS Newswire

FAQ

What were Harte Hanks (HHS) key financial results for Q1 2025?

In Q1 2025, Harte Hanks reported revenue of $41.6 million (down 8.6% YoY), operating loss of $0.04 million, and net loss of $0.4 million ($0.05 per share). EBITDA was $1.0 million.

How did Harte Hanks (HHS) different business segments perform in Q1 2025?

Customer Care grew 4.5% to $13.0 million, Fulfillment & Logistics Services increased 1.8% to $19.8 million, while Marketing Services declined 35.3% to $8.8 million.

What is Harte Hanks (HHS) current financial position as of Q1 2025?

Harte Hanks maintains a strong balance sheet with $9.0 million in cash, no outstanding debt, and $24.0 million available on its credit line.

What new business wins did Harte Hanks (HHS) secure in early 2025?

Harte Hanks secured new clients across healthcare, technology, hospitality, and automotive services sectors, including a national fulfillment program for a healthcare provider and sales enablement support for an enterprise IT company.

How much did Harte Hanks (HHS) Marketing Services revenue decline in Q1 2025?

Marketing Services revenue decreased by 35.3% to $8.8 million, primarily due to reduced project work in financial services and planned expiration of certain client contracts.