Huron Consulting Group Inc. (NASDAQ:HURN) Q4 2022 Earnings Call Transcript

John Kelly: Sure Andrew, this is John. First at the metrics that you asked about the headcount within our healthcare business that’s primarily our managed services headcount within healthcare where we’ve been continuing to scale up our personnel related to client interest in that area. That’s the primary driver behind that metric. But beyond that we’re absolutely also hiring from a performance improvement perspective just based on the demand that we see in the market. If you’ll recall, if you go back to earlier in the year that was an area where the utilization was a little bit lighter than our historical norms and that really ramped up as we got into the fourth quarter. So the step one was to make sure that we’re utilizing our current resources.

But now as we move forward we’re certainly in the market hiring from a headcount perspective in that part of the business. I’d say overall when you look at 2023, I think the general rule of thumb historically would be to say that head count tends to fluctuate in line with revenue. And while that’s true, I think we did do a lot of capacity building in 2022. So my expectation is that you’re going to see us use some of that capacity that we built in 2022 first and then we will be adding additional heads beyond that to hit our revenue goals. So I think the relationship will be that the headcount growth will likely outpace the headcount — the revenue growth will likely outpace the head count growth in 2023 for that reason.

Andrew Nicholas: Makes sense. I know that’s the way that you’ve been describing it the past couple of quarters, so I just wanted to make sure that was still the plan. And then my follow-up on commercial, really, really strong growth both sequentially and year-over-year. You touched on it a little bit, but I was hoping you could spend a bit more time on the puts and takes under the hood there. Was restructuring or the legacy business, advisory business especially strong in the quarter is the strategy capability weaker or strengthening a little bit? Just if you could unpack the pieces of growth a bit more in the fourth quarter and how you’re thinking about next year that would be helpful.

John Kelly: Sure Andrew. This is John again. I’d say that the primary areas of strength in that growth in the fourth quarter where our commercial digital offerings as well as the restructuring and turnaround/financial advisory offerings in the commercial industry starting with the latter one from a financial advisory perspective, things got very busy. I’d say starting really towards the end of the third quarter, but that continued at a very high pace in the fourth quarter. And so that team was very busy and surpassed really our expectations in terms of the revenue during the fourth quarter. The commercial digital team has really had a full year of tremendous growth and that — we saw that continue into the fourth quarter. From a strategy perspective, I’d say that that was more steady during the quarter and relatively steady with the prior year.

And I think as we look at that part of the business I think some of the uncertainty that we’ve seen in the macro has probably been a little bit of a headwind for that business throughout 2022 and into the fourth quarter. But as we look towards 2023 we’re actually feeling good about the pipeline for that business as well and for their ability to add to our growth in 2023.

Andrew Nicholas: Great. Thank you. I’ll get back in the queue.

Operator: Thank you. Our next question comes from the line of Bill Sutherland of Benchmark. Please go ahead, Bill.

Bill Sutherland: Thank you. Hi, Mark. Hi, John. I wanted to just follow-up on that Commercial segment question with — just wanted to see how Innosight’s doing that was you think the only case in the puzzle that was having a little bit of a headwind?