Huron Consulting Group Inc. (HURN) Earnings Call Transcript & Summary

Good morning, my name is Hope Katz, General Counsel at Huron. I've been with Huron nearly 8 years in my role of Deputy General Counsel. It is my pleasure to welcome all of you here today [Technical Difficulty]. Let me remind here that some of the matters we will discuss in today's Investor Day including our business outlook are forward-looking and as such [Technical Difficulty] known and unknown risks and uncertainties, including but not limited to those factors set forth in Huron's Annual Report on Form 10-K [Technical Difficulty] investors and our analysts. You will be able to find material from today's session including a reconciliation of the non-GAAP to GAAP measures posted to the Investor Relations section of our website. Again, thank you for joining us today. As you can see from this agenda, you'll hear from a number of our business leaders about what has fueled our strong performance since our last Investor Day and why we are confident in our strategic and financial aspirations. With that, let's get the session started. [Presentation]

Well, good morning. I'd like to add my welcome to everyone today, both in person and virtually. Thank you for taking the time to join us. My name is Mark Hussey, CEO, and I've been -- maybe just as a way of introduction, I've been at Huron now coming up on 14 years. I joined as the CFO in 2011 and in 2014, I became COO as well. At the end of 2016, I handed the CFO reins over to John Kelly, who you'll hear from in just a moment, and stepped into our Healthcare practice for a couple of years until I -- Jim Gallas, we're going to hear from this morning as well to go over in 2019. And then served as President until about 3 years ago, we had our Investor Day. About that time, we announced the CEO transition. So I've been here now in this role, I guess, officially coming up, starting my third year. We're also very happy to have our senior leaders here. These are the leaders who actually are in the market speaking with our clients. I think it's a great opportunity for you to hear directly from them. And also, I'm here to -- would love to acknowledge our Board Chair, who is here with us today, Hugh Sawyer, who took over as Chair effective January 1. So we have a very simple goal for today, which is to share with you the basis for our confidence and continuing to deliver sustainable revenue growth and continued margin expansion for the next 5 years. We hope today provides you the opportunity to learn more about our businesses in detail in the markets from our senior leaders and along with their teams, they are the drivers of our real success in the marketplace. I also hope today gives you an opportunity to understand our strategy for revenue growth and margin expansion. Our capital deployment in the context of our updated medium-term financial goals. So I'm going to start my comments today by highlighting 4 primary factors underlying our confidence in our strategy and our business and our outlook. So first, let me start by looking back to 3 years ago when we started at our last Investor Day in March of 2022, almost 3 years to the day. Our medium-term financial targets shared back then were framed by a simple strategy that we believe would lead to strong financial performance and create significant shareholder value. Three years later, we've now market tested the strategy and through disciplined execution, we've achieved our financial targets and driven significant shareholder value. Second, we've strengthened and expanded our leading market positions in the Healthcare and Education industries. And that positions us very well to benefit from the tailwinds of solid demand in these end markets and to capitalizing the expertise, the capabilities, the substantial credentials and track record that we've built over many, many years. In addition, the ongoing digitization of organizations to remain competitive in their markets, whether it's in Healthcare or Education or across commercial industries remains a very core tailwind for growing digital capability. Third, we've demonstrated the ability to consistently expand our margins, and that's led to strong earnings, cash flows and a healthy balance sheet which gives us substantial flexibility to invest in growth opportunities while returning capital to our shareholders through share repurchases. And then finally, our unique collaborative culture, our integrated operating model and the incentive program that our language shareholder interests are working well together to drive growth, innovation and competitive differentiation. Together, we believe these are the 4 factors that position Huron to continue to drive strong revenue and earnings growth, free cash flow and significant shareholder returns. We shared our medium-term financial targets at our last Investor Day, and we've referred to them often on our investor calls. Our targets included low double-digit revenue growth, expansion of our adjusted EBITDA margins to mid-teens by 2025. High EPS -- high-teen EPS growth along with strong cash flows, effective capital deployment and a healthy balance sheet. And as you're going to hear today, this talented team has executed well against this strategy. And let me briefly comment on each of these 5 strategic pillars. First, revenue growth at our core strongholds in Healthcare and Education have increased at a 21% compound growth rate from 2022 to 2024. Second, we've expanded our presence in commercial industries, achieving a 5% compound growth rate despite a challenging economic environment during that time and at a time when our primary focus was getting our new operating model up and running at our core of Healthcare and Education. Next, our digital capability, which came together as part of our operating model, grew 21% compounded over this period and is very well positioned for continued growth as well as expansion into new solutions and continuing to build scale to effectively compete against larger competitors. Fourth, in terms of margins, we expanded our adjusted EBITDA margins by 270 basis points through a strong focus on driving efficiencies from our integrated operating model and by aligning a meaningful portion of our incentives to margin expansion for the enterprise. And then finally, as a strong result of top line growth, as a result of strong top line growth and expanded margins and cash flows have also been very strong. Our flow-through from adjusted EBITDA to free cash flow has enabled us to fund $367 million of share repurchases while maintaining very low leverage with our year-end leverage ratio at just 1.4x. So in summary, we've made significant progress against these goals and coming into today, we believe the time is right to update our financial aspirations for the next 5 years. So I hope it's apparent that we strongly believe in the power of simplicity and clear focus that are focused on the appropriate levers that are going to drive exceptional shareholder value. Value creation in our business starts with sustainable revenue growth, and that is the single most powerful lever to create value. Internally, we describe our strategy in a single word, it's growth. Our people understand that growth drives career, opportunities and compensation increases for them, opportunities to build an exciting career doing meaningful work and a strong culture, and that leads to highly engaged employees who satisfy and help retain our clients. Satisfied clients in turn are the foundation of a healthy revenue base, and that is, in turn, foundational to creating shareholder value. Our focused efforts and margin expansion have clearly driven value, but they've also driven growth. Expanding margins enable us to invest in organic growth and innovation while increasing returns for our shareholders through higher share -- earnings per share and cash flows. And while the model is quite simple, it's quite powerful and as we hope it sets up a virtuous growth cycle. So in summary, our revenue before reimbursable expenses, RBR, as we call it, has averaged an 18% compound growth rate from 2022 to 2024 as our adjusted EBITDA margins have expanded, as I said, by 270 basis points. Our adjusted EPS has increased 148% over this period, and our stock price has increased by a similar percentage. Now as we look ahead, I'd like to now share our updated medium-term financial targets, which are shown on the right hand of the slide. And I'll start by affirming our target of low double-digit revenue growth which we expect will be predominantly organic in the mid- to upper single-digit range. We also expect several points of contribution from programmatic M&A, which is very integral to our growth strategy. In terms of EBITDA margins, we see opportunities to expand into the upper mid-teen range of 15% to 17%, and we expect that we'll deliver margin increases each year in the range of 50 to 75 basis points. So along with continued effective capital deployment and careful management of the balance sheet, we're targeting our EPS to double by 2029 from our base year in 2024. And over this horizon, we expect to generate significant cash flow from our business model that converts about 75% of our adjusted EBITDA to free cash flow. We modestly updated the 5 pillars of our strategy, but they're largely consistent with the strategic pillars that we shared back with you in 2022. And in Healthcare and Education, we're focused on sustaining now the accelerated growth that we've been able to achieve in these 2 core industries of Healthcare and Education. In the Commercial segment, we expect to accelerate our efforts to strengthen our industry presence and expand our capabilities to drive greater value for clients and that focus will include both organic hiring as well as programmatic M&A, like our fourth quarter acquisition of AXIA Consulting, which added supply chain and logistics expertise to our portfolio. Our digital portfolio is quite solid to date. It's in and of itself a significant sized business, and we'll continue to expand both organically as well as through targeted M&A. And we're now at a scale where the range of our capabilities is competitive to many larger firms, but we have the agility and nimbleness of a much smaller company. We're going to continue to focus on driving efficiency into our business through scale and technology, expanding our margins as we build on this integrated operating model to drive growth, scale and differentiation. And finally, we'll continue to execute against this disciplined capital deployment strategy that we've been following, balancing returns to investors with investments in M&A. So in summary, we're very excited about the opportunities to take Huron to the next level of growth and value for our shareholders. Now the markets that we compete in. They're very large and I'm going to just share a few comments about them. Most of them are characterized by complexity, by regulatory change and many companies within them are facing disruption from rapidly changing competitive landscape. And these are the factors that often lead to healthy levels of spending on consulting, and that's in fact the case in the markets in which we compete. A right to win in each of these markets starts with our expertise and the client relationships that we've built within these industries. When clients are considering consultants, the first and foremost thing they want to know is whether we understand their business. And it's quickly followed by a second question. Do we have leading capabilities that are going to bring them the best solutions to address their challenges? And the issues for which we're engaged involve complex, the multifaceted issues and challenges that require an integrated team to effectively solve them. And that invariably includes expertise beyond just a single function or capability. So the best solutions are driven by bringing together the best team possible, regardless of our internal lines or silos to collaborate with the client at the center and bring them comprehensive, sustainable solutions. And that is exactly the model that Huron has built in the past 3 years when we launched our new operating model. It's worked extremely well, and I'd like to now share some of the results that underscore our confidence. Intuitively, we always believe that going to market is team Huron would result a more competitive solution for our clients and collaboration has been one of our core values for many, many years. But we also felt that collaboration could be more than just a value, could actually be a meaningful strategic advantage and a competitive differentiator for Huron. And so when we aligned our incentives across industry and capability that is a vertical and horizontal with the client at the center of our collective focus, we began to experience accelerated growth. Through jointly established goals and our budgets and aligned incentives that is coming together across industry and capability to set those goals, we took most of the friction out of going to market together. And what you see on this slide here are the 3-year growth rates of our 2 largest segments, Healthcare and Education. And in green, what you see is the growth rate of our specific offerings in the industry. So that's the core, essentially represents the results of our industry consulting teams. In blue, you see the accelerated growth rates of our intersectional offerings where industry and capabilities overlap. That is where the industry vertical and the horizontal capabilities come together. And just as a reminder, the horizontal competes in other industries, but -- so this actually accelerates their penetration into the market and gives them a strong competitive advantage. What these results tell us is that when we go to market together holistically on an integrated basis, our growth rates are significantly higher than the core, albeit on a much smaller revenue base. And overall, when you look at the total segment results, the collaborative approach has added between 170 and 250 basis points of incremental growth compared to the core offerings. And we think these benefits reflect the true opportunity for us of going to market as one company, as team Huron. And while our efforts are in the early stages of our Commercial segment, those engagements in which we've also taken an integrated approach have resulted in competitive wins and extensions and multiple occasions of the initial incidence that we've had. In summary, sorry about this. We've got something that came up here on the screen, hang on a second. That's what happens when you have a big finger in a small button. So in summary, we think the accelerated growth rate is the real power of the integrated operating model. And these results increase our confidence that client-focused collaboration as one firm will help us achieve our growth aspirations for sustainable low double-digit revenue growth. Now among our peers, our growth has been quite strong over this period. We've had solid demand in our end markets in Healthcare and Education for sure, have been a very important contributor. And we believe our collaborative culture and integrated operating model has helped us optimize our growth. And at the size and scale of Huron is a $1.6 billion company, we're a very small competitor compared to the GSIs and the Big 4's as an example. However, especially in the middle market size clients, and that is, I'll define that as clients that are, say, $5 billion to $15 billion in revenue. Our approach to the market is quite effective and we see considerable runway for growth against competitors who tend to be less agile and more siloed due to the size and less focused on these for them, smaller clients. Along with favorable end markets, we believe our company can continue to grow among the top quartile among our peers. And we see these growth opportunities extending outside of the Health and Education markets. In summary, we believe we're well positioned to be among the leaders in the market, both among professional service peers as well as IT services competitors. Now growth is certainly the most important measure of our performance, and that leads us to focus on client retention and satisfaction. Together, growth, client retention, new client acquisition and client satisfaction are all key indicators of the health of our revenue base. We always want to see our client retention close to 90%, which is an indicator of the impact that we have on our client. Our track record of real impact is what brings clients back to Huron and selling to your client relationships is also the most cost-effective way to grow revenue. And strong client retention leads us to a stream -- steady stream of referrals, which is the best way to acquire new clients. We've won many clients as key leaders and our clients have advanced to new levels of responsibility in their careers or move to -- and move to new organizations. And then in terms of client satisfaction, we measure Net Promoter Score or NPS for all of our clients. And we've achieved a very high Net Promoter Score of 72 across our company since 2022. And for those of you who are not familiar with NPS, that level of score is excellent. Some might even describe it as world-class. Now professional services at its core, it's a people business and success always comes down to attracting and retaining the most talented people. We're fortunate that we don't have anyone at Huron, who could not get a job at many other places tomorrow. But it's also worth mentioning that we do not have a star system in which the MD is the brand, it's really the company that's behind the growth. It's all about the team and delivering value to the client across many resources. And so we operate the company to create an outstanding culture, recognizing that our employees at Huron have many choices, and that is why we're so focused on building our employer brand in the market. Employees choose Huron because of our culture, our focus on serving clients, seeing the impact of their actions and a place candidly, where they're not one of hundreds of thousands of people. Our employee engagement scores are quite high at our voluntary attrition. It's quite low compared to the industry at less than 10% in 2024. And as you're going to hear later today, our compensation model is very different and highly aligned with the interests of shareholders. Stock-based compensation with 4-year restricted stock is a key part of our MDs compensation, and we see that as a huge advantage for Huron for many reasons. And as a result, our managing directors and principles are highly connected into our strategy and very interested in driving shareholder returns for the enterprise. So in summary, we feel our story represents a clear and compelling investment thesis for Huron. Our market strategy has been tested now, and it's working well, and we see multiple opportunities to take it to another level. Our end markets are favorable for continued spending on consultants and Huron is very well positioned to help clients navigate complexity, disruption and regulation as they strive to strengthen their own competitive positions and achieve their missions and goals. Our stronghold in Healthcare and Education, along with a strong competitive position and our digital capabilities sets the stage for continued growth in these end markets. Our distinctive integrated operating model, highly collaborative culture and aligned incentive program, all worked very well together to place the client at the center of what we do, and it distinguishes our go-to-market approach as a unified firm against a wide range of competitors. Guided by a clear set of -- a set of clear financial targets, we're going to continue to focus on driving exceptional value. And so with that, I'm going to now welcome John Kelly, our CFO and Treasurer.

All right. Thank you, Mark, and good morning, everyone. We really appreciate everyone who's here in person as well as all the participants that we know are participating virtually right now. For those of you that I've not met, I'm John Kelly, I'm the CFO here at Huron. I've been with Huron since 2006. I was initially a consultant in what is today our business advisory practice and I've been the CFO at Huron's since 2017. So that experience, having been in a variety of different roles that Huron has kind of given me the opportunity to experience our business from a variety of different angles and I hope to take that experience and both bring it to my role as CFO, but also to my remarks that are here today. So let me quickly touch on our 2024 performance to start. 2024 was another strong year for Huron consistent with the financial goals that we established at our 2022 Investor Day, which as Mark noted, was almost exactly 3 years ago today. In 2024, the execution of our strategy drove record revenue before reimbursable expenses or RBR, as we'll refer to it, and expanded our adjusted EBITDA margins for the fourth consecutive year. Collectively, these results created significant value for shareholders as our stock price increased 21% in 2024. These results were only possible because of our highly talented and dedicated team and our clients who continue to engage Huron as their trusted partner. Now let me put 2024 in context relative to the financial goals that we discussed at our 2022 Investor Day. From a financial model perspective, we described our aspirations as following back in 2022 using 2021 as the base year. Annual RBR growth in the low double-digit range with the large majority of that growth being organic. Adjusted EBITDA margin expansion to the mid-teen range by 2025 and deployment of 25% to 50% of our capital available for deployment to share repurchases, an annual adjusted EPS growth in the mid or the high teen range. So this hypothetical picture shows what those results might have looked like. Culminating in 2024 with revenues just over $1.2 billion, adjusted EBITDA just under $170 million and adjusted EPS just under $5. And we believe this scenario would have generated significant value for our shareholders compared to the valuation back in 2021. But the good news is that we've been able to significantly outperform those targets from 2022. The actual picture in 2024 and guided picture for 2025 which is based on our recently announced guidance from February, which we're reaffirming here today, looks significantly stronger than our 2022 model. In fact, for 2024, our RBR and adjusted EBITDA dollars are nearly 20% higher than what we modeled in 2022. And our adjusted EPS is over 50% higher. In many respects, we pulled the entire 5-year model forward to 3 years. Our broader team is very proud of this accomplishment. At the business unit level, our teams have proven to be nimble and responsive to the evolving needs of our clients and industries that are growing, both in terms of size as well as complexity. I'll talk about this more in a few moments, but the strong culture that our teams have created has proven to be a differentiator as we've been able to attract and retain market-leading talent. And at the enterprise level, we've realigned the way that we operate, starting in 2022 to make it easier to bring the full power of Huron's talent to market for clients and -- to our clients in ways that are differentiated and seamless compared to our competition. We've realigned our incentives to promote this collaboration and tie a significant portion of our incentives to the success of the entire company. And from a capital deployment perspective, we've been able to take advantage of our strong free cash flow model to repurchase shares that we believe significantly underestimated our value as well as to add talent to the team via strategic tuck-in acquisitions. As you can see, these results have culminated in strong value creation for our shareholders, we believe the collective talent of our team, our culture, and the changes that we've made to enhance incentive collaboration are lasting in nature and set us up for continued success as we move forward. And I'm excited to pride you now with more detail on how we envision this to unfold over the next 5-year horizon. So transitioning now to our medium-term aspirations that Mark laid out just a couple of minutes ago. I'd like to start with some commentary about our expected RBR growth. We heard from Mark a few moments ago, about our enterprise strategy for continued growth. And shortly, we're going to hear from our leaders of our Healthcare, Education and Digital businesses as well as further commentary from Mark on our Commercial segment positioning and strategy. These presentations are going to provide significant details on our growth potential and our differentiation and competitive positioning within each of these markets. So I'm not going to repeat all those details now. But in aggregate, we reaffirm here today our expectation of double-digit percentage RBR growth over the next 5-year time horizon. The core of this growth will continue to be organic expansion and we expect mid- to upper single-digit percentage organic RBR growth over the next 5 years, with an additional 2% to 4% of annual growth via contributions from strategic tuck-in acquisitions. Breaking this consolidated expected RBR growth down by segment, we expect mid- to upper single-digit percentage growth from our Healthcare business. The following attributes give us confidence in this growth rate. U.S. health care market is a very large and growing area of spending in the U.S. economy. We have significant competitive differentiation as a result of our leading performance improvement consulting business. We've expanded our addressable market in new growth areas of digital, strategy, financial advisory and revenue cycle managed services. We expect upper single-digit to lower double-digit growth in our Education segment. Another large industry going through significant amounts of disruption that create opportunities for us to assist our clients with their most pressing items. Our combination of enterprise-level strategy, operations, institutional resilience, research, digital and global philanthropy offerings are unmatched to market. And along with our credentials of delivering on the largest and most complex projects in the industry, serve a significant points of differentiation for us. We expect to grow in the low double-digit percentage range in the Commercial segment, based first on our mix of expanding digital capabilities and the magnitude of expected spend by our clients to modernize their digital infrastructure over the medium term. Second, our ability to bring the full breadth of Huron's capabilities to our middle enterprise clients, as Mark described, in a way that is more nimble and responsive than our larger competitors. And third, growing areas of industry differentiation within the Commercial segment. Mark is going to share more on our revolving commercial strategy in just a little bit. In terms of capability mix across all of our segments, we expect consulting and managed services to grow in the high single-digit percentage range and digital to be in the low double-digit percentage growth range over this horizon. Beyond our overall expectations for RBR growth and that by segment by capability view that I provided, I'd like to provide additional context on 3 additional attributes of our business that give us confidence in our growth trajectory moving forward. First, the secular drivers for demand in our key industries of Healthcare and education tend to be independent of the broader macro environment. And we built our portfolio to reflect a good balance between cyclical and contracyclical offerings. While the majority of other sectors in the economy, they've largely experienced growth with only periodic periods of caution or retraction over the past 8 years, with the exception of the COVID period in 2020 and 2021. There's been persistent financial strain and margin pressure characterized by escalating costs and revenue constraints in the Healthcare and Education industries. Our offerings are tailored to help clients operating in tight margin environments, either with offerings directly aligned to expanding margins or improving revenues or cash flows via performance improvement or offerings related to growth and innovation that often come with a very clear ROI proposition. And one of the most critical strategic shifts that we've made over the past 10 years has been to broaden our portfolio of offerings to reflect much better balance between contracyclical areas that are designed to help clients working through financial strain in pro-cyclical areas supporting clients investing in growth and innovation. This slide shows how that RBR mix gives us confidence in our ability to continue growth in a variety of different economic markets. As you can see from a consolidated perspective, contracyclical and neutral offerings make up about 60% of our portfolio, driven by our performance improvement offerings in Healthcare and Education and our restructuring and turnaround offerings in the commercial segment. I should note that most of our offerings are flexible in how they can meet clients in different financial situations, and can be tailored to meet market conditions in any given year. For example, a digital project that you might typically think of as a pro-cyclical investment can be tailored to prioritize business process efficiencies and savings in a constrained environment. This flexibility allows us to capture accelerated growth in a variety of market conditions. Second attribute is our people. And when discussing Huron's growth potential, we often rightfully focus on the demand trend lines in our key industries for our key capabilities. But beyond market demand, our growing and market-leading supply of talent also provides a strong foundation for growth. Huron's attractive culture and people platform provides steady development of leadership ready managing directors through internal promotions, an attractive platform for recruiting the very best talent from industry and other consultancies and also an attractive platform for M&A targets. We're a desirable landing spot for sellers who want the opportunity to still drive their business forward, but is part of a larger winning team. Our managing directors and principles are the key drivers of our business in terms of sales, delivery on projects and the growth and mentorship of our people. We exited 2024 with approximately 260 Managing Directors and Principal. We promoted approximately 20 new Managing Directors and Principals at the start of the year to start with a total of approximately 280 Managing Directors and Principals. In order to support the growth that I've discussed, we'll need to exit 2029 with approximately 450 Managing Directors and Principals. Our low Managing Director and Principal turnover rate, our steady pipeline of internally developed Managing Director level talent on average 20 to 25 promotes per year at our current size. Our ability to add leadership talent in new areas via experienced hires, group hires and strategic tuck-in acquisitions, gives us strong confidence in our ability to grow the leadership talent needed to meet the market demand. And the third attribute relates to our programmatic M&A capabilities. As it relates to that 2% to 4% of inorganic RBR growth per year from programmatic M&A, we consider this to be part of our talent acquisition strategy and have a robust capital allocation process supported by the Finance and Capital Allocation Committee of our Board of Directors, support allocating capital in a way that we believe maximizes shareholder value. From a financial perspective, we look for acquisitions that minimally either drive accelerated organic growth after the acquisition or enhance our consolidated adjusted EBITDA margin percentage. Ideally, we seek acquisitions that do both and minimally, we also expect all acquisitions to be adjusted EPS accretive in year 1. Our expectation is for tuck-in size acquisitions. So the type that fit into that 2% to 4% of annual RBR growth profile, we expect them to be aligned with our business strategies and our talent expansion plans. Elizabeth Entinghe, our Vice President of Corporate Development, will provide more detail on our M&A pipeline and strategy in just a little bit. So that covers our expectations as it relates to RBR growth. I'd now like to pivot to a discussion of our continued adjusted EBITDA margin expansion and the factors that give us confidence that we'll be able to continue this trend over the next 5 years. Over the medium term, we expect adjusted EBITDA margins in a range of 15% to 17%. Our 2024 actual adjusted EBITDA margin was 13.5% and our guidance for 2025 is to achieve adjusted EBITDA in a range of 14% to 14.5% of revenues. And our expectation is for 50 to 75 basis points of continued margin improvement over the next several years. Structurally, we believe there are several factors that leave us well positioned for the top end or even above that 15% to 17% range, partially offset by continued investment in organic growth and some mix pressure as our digital and managed services offerings grew at an above-average pace over the next 4 years. Drivers of margin improvement from the 13.5% levels in 2024 fall into 4 primary opportunities. First, improved pride level contribution margins. There are several operational levers that fall within this bucket, including continued expansion of our global India-based capabilities, the benefits of continued process automation and leveraging AI capabilities, careful management and optimization of third-party spend -- contractor spend and fully taking advantage of our leveraged staffing model to enhance project level economics. We've seen 330 basis points of improvement in our average project contribution margin, which also includes pricing since 2021 and anticipate these levers can contribute another 75 to 100 basis points of additional improvement over the medium term. Second, we see an opportunity to enhance utilization. Due to historically low attrition levels in 2024, we ended with blended utilization of around 75% versus our target in the 76% to 78% range. Each point of utilization represents over $10 million of margin uplift, which means it is a 60 to 180 basis point opportunity for us over the medium term. Third, we see margin expansion opportunity from continued pricing excellence. We continue to execute on initiatives that drive discipline in our pricing with the objective of realizing fees that effectively reflect the value that we're driving for our clients. Based on initiatives underway, we've captured over $30 million of value over the past 2 years and see 50 to 100 basis points of further improvement in coming years. And finally, there remain opportunities relating to the scaling of our corporate SG&A. While our margin expansion is not contingent upon double-digit RBR growth, as we grow into the medium term, we believe scaling of the fixed portions of our SG&A expense can reliably produce 25 to 50 basis points of margin scaling per year. While we believe that we have the ability to over solve our margin objectives with these levers, we're also conscious of the need to continue investing in the business, which may come in the form of hiring managing directors and principles with skills in new industries and new capabilities, growing the rest of our team in advance of anticipated demand or investing in tools and data that fuel our consulting services. We expect that we'll be investing at least 2% of our RBR growth -- RBR growth initiatives each year, consistent with what is embedded in our 2025 guidance. But that amount may vary time to time depending on the opportunities that we see the opportunity to add capabilities via M&A and our commitment to hitting our annual margin objectives for our shareholders. Another factor to consider is the above-average growth that is expected from our digital and managed services businesses over the coming years. We do expect this to be a modest mix headwind as these capabilities tend to have operating income profiles in the low 20% range versus consulting offerings that have operating income profiles in the mid- to upper 20% range. We expect growth across all of our capabilities within our portfolio over this time horizon, and as such, would expect the mix shift headwind to be in the 20 to 30 basis point range per year. The most important takeaway from our perspective is that we have multiple pathways to continue our margin expansion from the past 4 years and achieve our go-forward margin expansion goals. Everything doesn't have to go perfectly in order for us to hit our objectives. And over time, we believe that all the levers I just discussed are achievable and critically are tied to our team's incentives. I'd now like to spend a couple of minutes talking about capital allocation. From our perspective, there are 2 north stars to consider in terms of capacity to deploy capital, either is return to shareholders via share buybacks or accretive tuck-in M&A. The first is that we target ending every year with a bank definition leverage ratio in the 2 to 2.5x our trailing 12 months adjusted EBITDA range, or lower, for example, in 2025, we ended the year with leverage below 1.4x. While our senior credit facility allows for leverage up to 3.75x our bank covenant EBITDA, which was in excess of $250 million for the trailing 12 months ended 12/31, 2024, our preference is to maintain a conservative posture to maintain flexibility as well as a strong balance sheet. I'll note that we expect to have seasonally higher leverage in the first quarter of each year as a result of our annual incentive payouts, which occur in March. The second guiding principle is that we expect, as Mark noted earlier, that on average, 75% of our adjusted EBITDA will convert to free cash flow. The strong conversion of adjusted EBITDA to free cash flow reflects the strong cash nature of our business as well as the fact that we do not adjust stock-based compensation out of our reported adjusted EBITDA or adjusted EPS metrics as we believe these are real expenses of the business. However, this presentation may be different than how adjusted EBITDA is reported at other companies. So within these parameters, we expect to generate in total over $1.5 billion of capital to deploy over the next 5 years. And on average, and it could vary year-to-year depending on the opportunities we see and priorities, we would generally expect to allocate about half of our available capital to support programmatic tuck-in acquisitions and about half of our available capital to be deployed and return to shareholders, which at this time would expect it to be in the form of share repurchases. We think this formula for capital deployment provides sufficient capital to continue the growth and margin expansion of our business while presenting a compelling return opportunity for our shareholders, much like how it's worked over the past 3 years. So the compounding impact of this financial model, a simple model, as Mark described earlier, double-digit RBR growth, largely organic, adjusted EBITDA margins expanding to the 15% to 17% range. Strong free cash flow conversion and balanced allocation of our capital presents a highly compelling adjusted earnings per share growth story over the next 5 years. As Mark noted, our expectation is that we will double our adjusted earnings per share between 2024 and 2029. This doubling comes on top of a tripling of adjusted earnings per share in the period between 2020 and 2024. We expect the expansion of our earnings per share to be fairly ratable over the years, reflecting mid-teen percentage range annual increases in adjusted EPS growth. So as I prepare to wrap up the financial overview section, I wanted to quickly emphasize a key factor in our ability to achieve these financial goals. We believe our incentive programs are very effectively structured to drive alignment of our teams towards the accomplishment of these goals. 50% of our team's annual bonus funding formula is tied to annual team organic RBR growth, 25% of our team's incentive funding is tied to the team's operating income percentage targets, and 25% of everyone's annual bonus funding is tied to Huron's overall adjusted EBITDA margin percentage target. Now flowing from these goals, every managing director within Huron has individual targets that tie out to the broader team targets and are focused on the key operating metrics that will drive the company's desired financial outcomes. In addition, our executive team also has significant funding tied to long-term adjusted EPS goals. And finally, a significant component of our Executive Managing Director and Principal compensation is paid in the form of company stock with either a 3- or 4-year vesting period, which drives significant alignment to shareholders and create strong wealth creation and retention program for our key leaders. And the picture that we show here is that while the stock that's issued under those programs does increase our diluted share base, that's been more than offset by our share repurchases over the past 3 years. So in closing, we believe that we are well positioned in large and critical markets going through significant disruption to help our clients with the most pressing issues on their agendas. Our collaborative culture not only allows us to bring the very best of our capabilities seamlessly to our clients, accelerating our growth, but it also creates a vibrant environment for our growing team, it makes us an attractive platform to recruit talent into. We believe these factors will drive above-average growth. And on top of that growth, we believe that we have a number of tangible levers that will drive consistent margin expansion. The RBR growth, coupled with margin expansion and strong free cash flow conversion can create the opportunity to deploy capital to further grow our business and provide meaningful return to shareholders. We believe the compounding nature of this factors creates a highly compelling investment opportunity in our company, consistent with the returns that have been generated over the past 3 years. And so with that, I'm now going to turn it over to Jim Gallas, our Healthcare industry leader.

Thanks, John. Hello, everyone. I'm Jim Gallas. I am Huron's Healthcare Industry Leader. I've got 40 years, this is year 40 of serving the Healthcare industry. I've been with Huron, this is now year 14. So let me talk a little bit about Healthcare and our Healthcare team. So we've seen very, very strong growth within our core provider market, nearly doubling our health care revenue in the last 4 years. And we'll talk about how we did that over that time horizon. On average, we serve over 1,000 or about 1,000 clients per year. We're really acknowledged as a premier partner for a Healthcare provider, financial hub transformations. We've worked really with all different levels and shapes and sizes of health care organizations. But we've worked with 93 of the top 100 health systems over the years. We've got 2,600 dedicated plus health care professionals across consulting, digital and managed services, and this includes 100 clinicians, so that's doctors and nurses for the most part. We're a leading provider, full-service provider of consulting, digital and managed services to hospitals, health systems and physician groups. We continue to expand in adjacent markets, including payer and private equity and the like. We also serve a variety of other health care clients such as behavioral health and post-acute organizations as well. We're very strong, and we've seen strong growth in EHR. So that's Epic, Cerner, now Oracle Health and Meditech, also ERP with Oracle and Workday, and digital overall. We've seen recognition, we've received recognition from several industry organizations regarding the quality actually of our digital health care solutions. So we have a very intense focus on delivering value to our clients in terms of ROI and with sustainability. So once you kind of go through a Huron financial health transformation, it's enduring. That creates strong client relationships with very high NPS and high repeat revenue, also strong referenceability going forward. Our NPS, the metric Mark mentioned, the average for the last 3 years is 73, so quite strong, but we've actually improved upon that. We ended 2024 at 77, and we've started '25 strong with a score of 80 year-to-date. As I mentioned before, we have full service capabilities across consulting, digital and managed services. The breadth of our capabilities really allows us to be trusted partners to our clients, serving many of them for a decade or more, starting maybe in one solution or one capability area, proving up, providing value and then the next and so on. We really serve kind of both ends of the market, too. So we're well adapted. We can serve those that are in growth and investment mode as well as those that are financially distressed as well. Several years ago, we unlocked further growth, really through improved incentive alignment, weaving in our digital, our [FAS] and our strategy capabilities into what we do and deliver in health care. In 2024, all but one of our top 25 clients worked with more than 1 team within the health care industry. And 16 of those clients worked with more than 3 capability teams. Our clients' confidence really stems from our proven results. So we improved revenue when engaged between 5 and 15-plus percent, we reduced total operating costs by 10% to 20% and really turn organizations around. Over time, and if you go back really 2014 and before 2014, we were predominantly a performance improvement firm without the other strong capabilities that we built over time. So we invested organically, inorganically. We expanded our portfolio, adding strategy, financial advisory, revenue cycle managed services, digital managed services and digital capabilities overall to really complement and enhance our core performance improvement capabilities. We made investments throughout this whole time horizon, adding and up-leveling our talent, advancing our solutions and improving our solutions by leveraging -- better leveraging technology and increasing our value proposition to our clients. We started our automation journey really in 2019. We've leveraged AI to automate 100-plus client processes at this point. So a few examples of our solution growth. So we were long strong. We've been strong in our whole history in terms of revenue cycle consulting, but we only got into the revenue cycle managed services business in 2019. So really starting from scratch and that's now an $80-plus million business, really poised for growth as well. Financial Advisory, we've grown that to nearly $30 million in Healthcare in 2024. Strategy and Innovation. We purchased Innosight in 2017 and since that time through better integration, we've been able to deliver 37% compound revenue annual growth rate in strategy since 2021. The Perception Health acquisition has really been key towards expanding our market data and analytics and strengthen our care position and strategy and growth capabilities. So what we have now is really a balanced portfolio. Across financially distressed clients as well as those seeking to invest in digital modernization and optimize their businesses for growth. Because of what we can now deliver and bring to market as a unifying team, we've seen revenue per client almost double from '21 to '24. So how do we see such a nice growth trajectory. We really strengthen our core. We up the value we provide our clients. We diversified our portfolio. That led to more sustainable growth and margin expansion in our business. We delivered a [ 19% ] compound annual growth rate really nearly doubled RBR since '20 and have consistently delivered high contribution margins. So now I'm going to turn it to Andy Waldeck, who leads our Innosight Strategy Capability for a client impact story. Andy?

Thanks, Jim. Good morning. I'm Andy Waldeck, the Innosight Capability leader. I also lead our Healthcare strategy efforts. So as Jim said, I wanted to share a client story. It's one of these intersectional opportunities that Mark talked about. So the client story that I'm going to describe is a health system. They do about $5 billion in revenue, they operate 12 hospitals, 100 ambulatory sites of care. They will see in the last fiscal year about 100,000 inpatient admissions. They'll do 1.3 million ambulatory visits. They employ about 30,000 people. And within their community, they're well known for their quality in particular at their flagship hospital where they're known for delivering really excellent high-quality complex care. And so that client was dealing with some significant complexity and challenges that resulted in them losing about $1 million a day when we were engaged. They were on track to lose over $400 million in the course of the year. They faced a number of internal challenges. First and foremost, were labor costs, in particular, contract labor which has been a particular issue in the health care industry coming out of COVID, they were spending 4 to 8x per month what they had budgeted. Beyond that, they were feeling stagnant growth, they had convinced themselves that they had captured all of the incremental growth that existed in that market. Lastly, they felt that they were at capacity. So as they look to cost, their flagship hospital, they're community hospitals, they felt that they were doing all they could to maximize revenue, which was then making the growth in expense even more significant of an impact on the bottom line. Externally, the market is not standing still. One of their closest competitors at the time was engaged in a scaled combination with a significant system in the state adjacent to them. They also had to deal with the issue of the growth in the senior population. And as seniors start to age and the impact that, that's going to have on their care model, by 2030, half of the Medicare recipients are going to be over 75. That places tremendous stress on the care model that's required to deliver care in the community and the connectivity that those individuals require. The other external challenge that they had to deal with was continued pressure from the state and its complex regulatory environment. And then lastly, this is an organization that's dealing with tremendous burnout coming out of the COVID pandemic. And so tremendous fatigue across the institution. As well, there are a bunch of longer-term challenges that they have to wrestle with. Number one, they had their own questions of scale. How big do they actually need to be? What geographic footprint do they require in order to be successful and sustainable? I talked about some of the care model challenges that only get more complicated as the years go by. And lastly, they also have to deal with the question of how do they digitize this institution? How do they drive digital across their hospitals, across their ambulatory footprint? How do they bring digital to home for the people that they're entrusted with caring for? So as you can imagine, this is a tremendous amount of complexity that they have to deal with, internally, externally, near term and long term. So the approach that we followed, we call dual transformation, which is how do you help an organization to do 2 things at the same time. Number one, how do you help to arrest the near-term financial challenges? How do you optimize for financial viability? While at the same time, how do you redesign the entire system to create a long-term sustainable model? To be able to pull that off, we had to leverage every capability that Jim described. In the near term, our operations team went in, they redesigned the entire labor management system to help them deal with the challenge of contract labor. We went in around efficiencies in supply chain. We found efficiencies in purchased services. Our physician enterprise team went in, partner with the local physicians to find ways that they could see 1 more patient per day across all their sites of service, opening up access. Our strategy and growth teams took the idea of tiger teams that come out of NASA, create small teams, partnering with physician leaders, partnering with operations leaders to find ways that we could create growth in sooner than 120 days. We did that by doing things like turning on transfers. So out of market relationships, people who had complex needs who lived outside of the immediate geography, how could we get them into our system to drive more higher complexity care? We wrestled with the question of things like block utilization. How do we ensure that we're best taking advantage of the capacity that we have? And how do we optimize the OR suite? That drove near-term progress that drove near-term credibility that allowed us to then also work on problems of a longer duration. Our physician enterprise team really tackling the question of access. How do you go in? Redesign physician templates? How do you create more standardization? How do you create more capacity to bring patients into the system? Our strategy and growth teams partnered with their key service line leaders. How do we create strategies that create new growth? As well, how do we solve the capacity problem by decanting? Moving procedures that could be done closer to a patient's home whether it's a community hospital, whether it's an ambulatory side of care, those don't need to happen at the flagship institution. So how do we redistribute where the work happens, create more capacity for them to take on complex care at the flagship institution? And then lastly, we wrestled with the questions of how do you really establish the long-term trajectory that's required? How do we really innovate the care model to be able to deliver against the pressing needs that seniors have as they continue to age? How do we create distinctive clinical programs that draw volume not just locally? How do they draw volume regionally? And potentially how do they draw volume nationally? To make all of this possible, we had to reinvent the operating model. Moving from a hospital facility-based orientation to one that is market and one that is consumer. When you sum all of that up, the grand impact was we created over $0.5 billion of recurring annual benefit for our clients. We help them in 2 quarters to achieve breakeven. As you can imagine, with that level of complexity and financial distress, getting to breakeven in 2 quarters created tremendous confidence in the organization that allowed them to go faster and go deeper to make the $0.5 billion benefit target deal. And when you step back and you say, what's the power of an integrated approach? This couldn't have happened if we didn't bring our entire team. Our performance improvement team help to reduce the burn that then created the space and the ability for the institution to think about how to do things differently. Our physician enterprise team created tremendous access and standardization across their clinical programs. Our strategy team helped create new growth, convincing the organization of what they had convinced themselves was not possible. Our financial advisory team was essential in creating a cash-based culture so they could convert the improvement in operating income into an improved balance sheet and longer and better financial sustainability. And last and certainly not least, our digital team played a critical role. How do we help the organization to do a much better job around data management, data governance and also creating the capability to drive the necessary analytics to provide the insights across the rest of our teams to be able to do the work that we did. So when you step back and you look at our integrated set of capabilities that Jim described, it gives us confidence in our ability to be able to meet the challenges facing the industry over the next 5 years. Jim?

This is really just a mixture of what we're seeing in the market, right? And if you look the workforce challenges, the disruption that we had from COVID really that started in the COVID period 2021 and the like really kind of continued for most of our client set on into '23 and '24. So we saw a very strong performance improvement, financial health transformation market for sure. If you look forward now, right, the pharmaceutical, high pharmaceutical costs, high supply chain cost, still workforce disruptions, those really still continue on into 2025. And then if you page forward to now what we're seeing on the regulatory front, while everything isn't fully baked yet, there's high, high probability with looming cuts to Medicare, Medicaid and the like and also cuts to research and administrative cost recovery for our AMC client set. There's going to be increased financial pressure, intense financial pressure on our main client set, which is large health systems going forward, all right? So we really believe that we're very, very strong and well suited to be able to meet that need and that capture that growth. And really all types of the market, not only those, again, that have severe financial distress and needs, but also those that are poised for growth and need digital modernization as well. All right. You can page forward. So internally, kind of we're focused on portfolio enhancement. We're always trying to continually improve and up our value proposition by upping our talent, improving our methodologies, improving really what we do and what we take to market. We see tremendous opportunity to grow our revenue cycle managed services business going forward. We saw 19%, actually 18% compounded annual growth rate in that service capability, but we see, really, in a financially distressed market, a high need for revenue cycle managed services going forward. We're going to continue to invest in emerging technologies, including automation, analytics and AI, really as the performance improvement leaders are one of the leaders in the industry, I think we have every opportunity to do that. And then we're going to go into adjacent markets even further. We've got a strong and viable presence in the payer market, we're looking to expand that as well. You can page forward, all right. So just a few key takeaways. If you look at what we built in terms of reputation, the value that we can provide to our Healthcare provider clients and health systems, it's really hard to replicate with 2,600 dedicated health care professionals, very, very seasoned individuals, many times they've sat on the client side and they have joined Huron and have strong credibility with our clients. The proven consistent track record of results, when you can deliver $500 million plus in annual operating income improvements for an organization like Andy described, it's really, really compelling and that begets them more business, friends talk to others, executives talk to others and we're able to grow. And then it's really a story of sustainable growth. We continue to invest. We continue to expand and look for adjacent markets and the like. And we see no opportunity that we shouldn't be able to really follow that growth trajectory that John added his slides that I showed earlier going forward. All right. So now I'm going to turn it over to Mark Finlan, who's going to talk a little bit about our Education Industry. And [Ali], this is -- I think the battery may have gone on this click, we might want to switch it.

Broken clicker as I come up here. Hi, everyone. I'm Mark Finlan, I'm the Head of our Education Industry team. I'm just going to flip through a bunch here. I have been with Huron for about 8 years, and I've been in the consulting industry for over 25. Our Healthcare team is a hard act to follow, but I think you're actually going to hear a lot of similarities between the growth story and success we've had in higher education, very similar to what Jim and Andy talked about in Healthcare, there we go. So just to kick us off, there are a few things I wanted to set up that I want you all to take away today. First is just to talk about the amazing leadership position that we have in the market. And a lot of that's been driven by our client relationships as well as our broad and deep expertise offerings we provide. Second is our proven growth strategy. Again, this can be very similar to what Jim described. Some of this is continuing to maintain the relevance of our core offering, but also expanding into new offerings and clients as well. And that's really been a repeatable formula for us. Third is to talk some about the market trends in higher education, including the dynamic regulatory environment. I'm sure there are going to be zero questions from all of you about the dynamic regulatory environment before the day is over, but we do believe these complexities and challenges, which have been compounding some of the complexities and challenges in the industry are going to continue to drive need for partners like Huron. And lastly, just shared a high level of how all of those factors together we really think is going to allow us to maintain our growth trajectory going forward. So first, I want to share a little bit about what differentiates our team. We have served nearly 600 clients per year since 2022, partnering with over 700 institutions in 2024 alone. Our primary focus is with traditional large research universities, but we work with all different types of institutions. Over here on the left, you can see we work with about 40% of our revenue comes from 4-year public institutions and 30% come from 4-year private institutions. The majority of those are the large research institutions. We also do have significant work with stand-alone economic medical centers, research institutes, university system offices and states that have system offices as well as community colleges. Some other things that I think help reinforce our strong client relationships. You've seen some of these metrics for other parts of our business already. A very strong Net Promoter Score, 75 on average over the last 3 years. Also, over 90% of our revenue comes from repeat clients. I think one of the things that's helpful to emphasize here is 24 of our top 25 clients last year bought multiple services and products from Huron. So they're not just coming to us for one thing, they're coming to us and buying our entire breadth of services. And then you also just noticed on the top left, we've worked with all of the top 100 comprehensive research institutions as well as all of the 71 members of the AEU. So a very strong client base that we work with. Second, before I dive into our expertise, there's 2 important distinctions I want to talk about for our practice. The first, if you think about the mission of these large research universities, they generally can be talked about in a few broad brush categories. First is their academic mission. Second is the research mission. In the case of some of them, the academic medical centers, it's their clinical mission where we partner very closely with Jim's Healthcare team to work with them. And then that underlying foundational administration of the institution, we're the only firm that is able to cover all of those different aspects of their mission as well as the underlying administration of the institutions. And I think that's a really important point of distinction for where they come to us. We're the only ones who can help them across all of those areas. Secondarily, if you look at our competitors, a lot of them have their higher education practice tucked into a larger public sector practice. We're the only firm of our size and scale and breadth that has a dedicated higher education practice and really messages to the industry, how much we focus on this area and these clients. The other thing I did want to talk about is just overall look, let's just illustrate one of the clients' challenges. And I think that really helps you understand how the breadth of our services is so valuable and important. I want to pick one that hopefully everyone can relate to. So if you think about an athletic director, and what they're facing in the industry right now, whether it's conference realignment, name, image and likeness or what you might hear called NIL pay-for-play for athletes, Title 9. These are lots of different complex challenges on their own, let alone all of those together. We're one of the only firms that you can go to that can support them across all of those challenges. Now extrapolate that and walk in the room with the President and their entire cabinet so that's not just the athletic director, that's the CFO, the CIO, the CHRO, the Head of facilities, enrollment, research, student affairs, fundraising, the entire leadership team, running a university is like running a small city. We're the only firm that can come in for each one of those individuals and help them address all of their challenges individually as well as help them as a collective leadership team address all their challenges across the institution. And I think that depth and breadth of services really highlights why we have attained our market leadership position. All right. Next beyond that, I wanted to talk about our proven repeatable growth strategy. The first element of that strategy, very similar to what Jim mentioned for health care is our core. What we've traditionally been known for in the market are things like research administration, performance improvement, ERP implementation and these continue to fuel our growth. Now some of those are being driven by market dynamics. We'll talk about, as you can imagine, right now, performance improvement over the last few years has been something we've talked to our clients a lot about because there's been financial instability in the industry. But I also think it's helpful to talk about where we've invested to maintain a leadership position. Mario is going to come up and talk about our digital portfolio in a little bit. But I think ERP implementation is a perfect example of how Huron has maintained its leadership position through investment. If we rewind back about a decade, what did clients have, they had on-premise systems like PeopleSoft they're using to manage their finances and their HR enterprise. Now everyone is making a move to the cloud. Huron still is a leader in providing ERP implementation. Now the primary vendors are Workday and Oracle Cloud. How we maintain that position? If you look at the complex financials of the university, what do you need to understand? Well, you have to understand research and research grants and how those finances work to help clients successfully implement these systems. When you look at their people, it's not just their staff, it's their faculty, in some cases, clinicians and economic medical and researchers. How do you understand those workforces to help them implement those systems and there's also industry-specific systems like the student information systems that bolt on to these ERP systems? And obviously, we understand the education industry better than our competitors. So technology has changed over that decade, but the one thing that hasn't changed is Huron's leadership position driven by our expertise. I think that's helpful to understand when we say strength and invest in the core, what does that mean? Second element of our strategy is how we've gained share by offering new areas or adjacent areas. We've done this both organically and inorganically. One of the most recent examples, which will dovetail nicely to when Elizabeth talks about our programmatic M&A strategy is fundraising or what we call our global philanthropy team. What we did, we took our existing position in CRM implementation, largely Salesforce, which helps in lots of areas, helps in enrollment, it helps in alumina engagement, it also helps in fundraising. That business alone came via an acquisition we did a number of years ago called Cloud 62 to build that CRM business as an adjacent offering. We've now added on to that GG+A which was the industry-leading provider of fundraising consulting and now Advancement Resources, which is the industry-leading provider of learning and training for fundraising professionals and have brought that together into a single industry-leading team. It's the perfect time to describe. So these were smaller acquisitions, but how did the small acquisitions been brought into Huron? How is that going to provide us differential growth? And again, Elizabeth will talk about this some more, but I think this is just one of the great examples of that. So first, you can imagine, you just heard Jim talk about how we're in over 1,000 Healthcare organizations. I just said we're in over 700 education institutions, we now have access with these services to all of those different parts of the market in the way that these small firms didn't on their own. Secondarily, it's a very fragmented market. There was no firm that any institution could go to the head of fundraising could say, "I want digital services, I want consulting services, I want learning and training." We're the only firm that now provides those services together. And these services fit nicely into the other core services we offer. When we're going in and doing a performance improvement engagement, whether it's in Healthcare or Education, one of the levers they want to pull is how do we increase our fundraising as part of balancing our budget or as you're setting a new growth strategy for them, one of the ways they execute on that growth strategy is going and tapping into the constituents in alumina base and driving philanthropy to invest in those growth pillars. We now can fit that directly into the strategic work that we're doing. So that's really how we take 1 plus 1 and make it 3 in these programmatic acquisitions that we do. The third piece of this, well, actually, within the gain share, there's also the organic piece. I did mention athletics. There's other areas we've built up as well, enterprise risk management. You can imagine a lot of institutions are thinking a lot about risk management across their enterprise right now. Campus health and wellness. If you go and talk to a president, the mental health of their faculty staff and students is always one of the top 5 priorities that they're focused on. These are other areas we've built up organically, and that's largely by hiring experts from the industry into our team. Bringing those proven experts who have driven change within the industry onto our team gives us a lot of credibility with our clients and makes our offerings a lot more market relevant well. We'll move forward here at some point, maybe, maybe not. So then the last piece is growing our addressable market. This is really twofold. It's growing the institutions that we serve as well as growing to a lesser extent, the geographies that we serve. With regards to the institutions, I mentioned this before, we've diversified more into private label arts colleges, community colleges and university systems. In addition, we're doing our digital implementation work with what our vendor would refer to as middle enterprise institutions. Those are still in our core market, but tend to be more of the midsized universities and colleges that we work with. Related to that organic growth strategy that I mentioned, expansion to fundraising has opened up new verticals for us that includes independent schools, boarding and day schools as well as nonprofits like arts and culture organizations. We also disclosed another acquisition in the advancement space, help in that has expanded our reach, particularly into the U.K. and Canada as well. That's going to not just strengthen our ability to deliver fundraising those geographies, it gives us a foothold to pull through our other services and our education practice as well to those universities and other nonprofits in the U.K. So if you kind of wrap that up at the bottom and then we'll go into the financing on the last slide. This formula over the last 4 years has really balanced out our portfolio and provided sustained strong top line growth. A slide similar to what Jim showed, you'll see our overall revenue growth has been about 25% over that time period as well as sustained strong margin expansion as well. And part of what we're going to talk about now coming up is why we believe we can continue to sustain this growth going forward. So now what everyone has been waiting for and talk about the market dynamics. I think one of the things that's important. Well, first of all, we've seen more articles and discussions and higher education in the last 2 months than we probably have in the last 2 years. And I think that's making people forget that higher education was already an industry facing some challenges. One of the ones we pointed out in here on the top left is really the struggles that institutions are facing with enrollment, they're facing with financial instability, they're facing with leadership turnover. These have all already existed. So a lot of what we're now just seeing this year exacerbating some of those challenges. A number of the other trends that I've already mentioned, migration to the cloud, the prevalence of AI. These are things that the industry was already experiencing. I do think some of that are worth pointing out is around the academic portfolio, institutions are being expected by the consumers to provide more workforce ready graduates. We're actually seeing changes in some of the major rankings where some of the rankings criteria are pointing more toward salary upon graduation than it has in the past. So a lot of institutions are thinking about what are the market relevant academic portfolio offerings we're providing to the students coming in. The talent challenges are also something the institution is facing. We just went through a tumultuous time at all university campuses with COVID and now it feels like there might be some significant disruption again. Can we actually retain and attract a leader as to an industry that's already been challenged to maintain competitive compensation given some of the turmoil leaders are facing as well. So the last piece to mention here is just some of the recent changes we're seeing in the regulatory environment. This is from research dollars to federal funding being cut to impacts on the Department of Education. These are all just putting more pressure on some of those different areas I mentioned. On the financials of the institution, on the enrollment of the institutions, on the leadership of the institutions. One of those big pressure points is research right now. As I mentioned before, we have the leading research practice in the industry. So we think this is all just going to create more changes for our clients and challenges for our clients means they're going to need more help from us. That's part of the dynamic we've seen over the last 3 years, and we think that dynamic is going to persist forward. Okay. So going forward, and this is just starting to wrap up some of the points I made. In terms of the repeatable formula, we're going to continue to strengthen our core. This is a large market, much like Healthcare is a large market. That's going to include how we partner together in those academic medical centers, between our Healthcare team and our Education team to bring -- I mentioned this before, our clinical, our research and our academic solutions altogether to the market in a way that no one else can. Second, we're going to continue to diversify our portfolio. Digital continues to be a big opportunity for the industry and for us, whether this is AI, analytics or strengthening our position in the student and academic space. And then also, as I mentioned before, continue to expand our portfolio and continue to grow our share with new end markets and geographies. So the 4 points I shared at the beginning, we have a clear differentiation in the market, and that's really driven by the breadth of our services and the reach and relationships we have with our clients. We have a proven growth strategy over the last number of years. It's a dynamic market, and it continues to be a dynamic and challenging market. I really feel like all those factors together are going to sustain our growth trajectory. With that, I actually get to transition you to a break instead of to someone else. So we'll take a 10-minute break or maybe closer to a 15-minute break, and then we'll all come back together. [Break]

Welcome back everybody. I appreciate it. My name is Mario Desiderio, I'm the Huron Digital Capability Leader. I've been with the organization approaching 10 years now, came through an acquisition of ADI strategy roughly about 10 years ago. My background, I've worked at Big 4. I've started my career there but then took very much entrepreneurial route, starting 3 consulting firms recently exiting the third one at Huron and I always comment that sometimes it takes me 3 times to get something right. So the third time has been a fantastic experience. I say that because it does reinforce the culture of the organization. One of the key points of our strategy has been doing some tuck-ins and many of those leaders, are still here. So that tells you about reinforcing the start-up at scale, embracing that culture and not only embracing it, but providing a platform for entrepreneurs to really grow their business here. So I thought it was very, very positive. So as we look at a couple of things as we move forward. Of course, there we go. I also want to mention a couple of things. I had the privilege of leading a team where I received some individual awards, but obviously, they are very much team awards were in 2024 Consulting Magazine, Top Consultant and then a top 25 Leader in Technology for 2 years. Also, I'm recognized by E&Y as entrepreneur of the year. So that goes back to the entrepreneurial nature of the individuals that ultimately I lead. So I'm excited to share how the Digital business has grown here at Huron. And but more importantly, how do we make sure that we continue that growth as we move forward. Okay. As we've scaled, we've now achieved a really nice balanced portfolio. I mean, you heard from Jim and Mark around Healthcare and Higher Education. But also as you look at the Commercial industries, its portfolio between our 3 major industries. We are becoming a larger and larger player as it pertains to the digital capabilities as we move forward. Our growth in has been recognized by the industry but also by our channel partners. Those channel partners includes the likes of Oracle, Workday, Salesforce, AWS, Microsoft, Epic, it goes on and on. I think it's very key in our industry is to have a tight relationship with those vendors. And as we look at orchestrating abilities from all those technology software really providing the end-to-end solution. We've also been recognized with various industry awards. In 2024, won the Innovation Partner of the Year from Workday, North America Partner of the Year for Informatica and in 2022 and 2024, this one is very important, Informatica is one of those leading vendors in enterprise data management and data quality and then the advent of AI, data quality, data management is very important to fuel a lot of the models that are out there. In 2022, our Education group won the Salesforce Innovation Partner of the Year also. And then many of our clients have been recognized for the innovation and the leveraging technologies and the innovations they've served. Last year at Oracle, 5 of our clients got recognized for their innovation with our partnership with them. Okay. Those recognitions reflect the strength across all our industries. Since 2022, our Net Promoter Score has increased from 72 to 79 last year. It is a reflection of the quality of services and the impact we're making to our customers. The elevated Net Promoter Score is really a dedication of our steadfast dedication to our client satisfaction and the agility we provide. If you look at our customers, we've achieved an 86% repeat business from our customer base, very, very healthy. Okay. As you can see, we've built a nice comprehensive portfolio. It ultimately starts with strategy and advisory consulting. A large part of that component is some of the premier services we do have an enterprise data management and providing insights very important in today's world as it pertains to AI and the enablement of AI within businesses. The people and operational transformation models. With technology and as you look at disruption, it's not just the technology that has to be successful. You have to look at the organizational model. How do you now create new learning paths? How do you organize differently? How do you reduce friction within our organization that technology ultimately allows you to make happen? Performance management, we've always been a firm that has been focused on improving performance and efficiencies in the back offices. You've heard strengths in ERP, enterprise performance management, most recently with AXIA and the addition of our supply chain capabilities. Supply chain disruption has been around since COVID with the recent tariffs, it's going to be more and more disruptive. So we're really, really happy about having that team on board as we now have expanded our solution offerings. We continue to serve the core of Higher Education and Healthcare in the commercial industries through those distinct industry solutions. We mentioned a lot of these broad platforms as it pertains to Oracle and Workday and Salesforce. But it really is what makes us different around research, Epic, Cerner around the EHR, student in financial services, financial crime and compliance. So a lot of these edge solutions that complement our core brings us industry differentiation and that connected tissue that exists within the digital footprint is a very, very key strategy for us that allows us to serve a broad persona-based with our customer base. So if you look at it from a CFO lens, CHRO, Chief Marketing Officer, the CIO, Chief Revenue Officer, the ability to go broad within an organization just proves that our portfolio of capabilities are really, really resonating with our customers. Huron has demonstrated both organic and inorganic through acquisitions. Over the last 10 years, we've been able to deploy $250 million in capital, but that has built a $622 million digital consulting firm roughly making up about 42% of the total revenue with Huron. What I think is really key about that stat, though, is if you look at the portfolio 10 years ago, Mark Finlan alluded to it, we're doing a lot on-prem work, PeopleSoft. These are technologies that -- and capabilities that are no longer relevant today. Many of the portfolio and technology every, let's call it, 5 to 7 years, you have to reinvent yourself. So what is relevant 5 to 7 years ago aren't capabilities that are relevant now. Everybody has moved to a SaaS platform, modern data platforms have come into mix, AI, intelligent automation. So not only have we been able to grow organically, we've had to reinvent ourselves every time we do that. So this team is well capable of dealing with those changing environments and then continue to grow that platform very, very, very proud of what that team -- our team has been able to do. Okay. As you look at the inorganic side, we had mentioned the acquisition of AXIA, it's going to strengthen our position in industrial as well in supply chain. We had mentioned Perception Health around the Healthcare analytics side, being able to aggregate and harmonize data externally and internally and providing insight really unlocks the value that we can when we talk about monetizing data in the future and really enabling our consultants moving forward. Most recently, our growing partnership with Microsoft, not only from the business application side, whether it be finance, supply chain, manufacturing but if you look at what Microsoft is doing in their relationship with Open AI and their analytic fabric solution, their power automate solution, we're taking a lot of the technology capabilities that our large leading vendors are innovating, and we're now applying it to our customers. So when we look at how we're leveraging these advanced platforms, there are organizations that are spending a lot of money creating platforms, we're taking an approach where we're partnering with our vendors. So when it comes to AI, we can stay leading edge by partnering with AWS, by partnering with Microsoft, in Salesforce, you name the vendor. We've had tremendous amount of success in deploying their technologies in our customer base, okay? This combination of organic and inorganic really position us well as we move forward, okay? Let me talk to you a little bit about the technology disruption and the advancements in AI. Jim had commented that 100-plus use cases that we've deployed within Healthcare. If you look at across the industries, we have really deployed hundreds of scenarios there. I do want to give you maybe an example of that is outside of some of our core Healthcare and Higher Education. And let's talk a little bit about industrials. One of our clients came to us with a problem where they were spending millions of dollars around machine outages and break fixes. They had asked us to take a look at how do we leverage IoT and predictive modeling in helping us with some of these outages. So as we now started to connect to their machinery through an IoT environment and look at it from a preventive maintenance standpoint to more of a predictive maintenance standpoint, we've saved that organization $20 million and just providing connection with their machinery and look at it through a machine learning perspective and an AI perspective. So these are perfect use cases of leveraging our vendor technology clients, but really bringing them into the real world. Okay. Cloud platforms. The increasing M&A activities of a lot of these vendors are really looking to provide those end-to-end solutions. And we're well positioned in working with them to go from the front office, to the mid office, to the back office. The concept of hyper-personalization is becoming very, very relevant. The days of doing mass campaigns, hoping that I service my customers are long gone. The ability to leverage data, to leverage journeys, to better meet the customer where they want to be met, when they want to be met. Hyper-personalization is a very key theme that's been around for a while, but it also is now really accelerating with the advent of AI to drive loyalty as well as additional revenue models. The other key trend that we've seen is hyper personal -- or hyper-automation. So as you look at automating back office as you look at driving efficiencies, as you look at reducing cost, hyper-automation has been a theme now in our organizations that we've adopted, what 6, 7 years ago when we first started this journey, and we're really seeing the realization of those capabilities being delivered across all our industries, okay? Financial pressures. That's going to be a theme from now until quite frankly, forever. A lot of our organizations are dealing with the macro trends. One of the key things that if look at our portfolio we do really, really well in those highly regulated industries, okay? One of the advantages of working in highly regulated industries is that there is must spend that we can, in essence, help our organizations as they deal with the regulatory uncertainty. As well as just the operational efficiencies and the operational efficiencies of organizations through greater analytics and insights. Tariffs have become as well as supply chain disruptions ever since COVID has been a trend that we've been working through. The most recent acquisition of AXIA really allows us to faster innovate and deliver more cost efficiencies and make sure that supply chain resiliency is top of mind for our organizations. Okay. If you look at just some of the evolving agile type of approach, a lot of our clients are dealing with speed, quality and innovation all at the same time. How do we accelerate those outcomes within organizations? No longer are they the 2-year, 24-month, 36-month programs, we have to be able to deliver time to value on that expedited timeframe. So the rise of data analytics, the convergence of the physical as well as the digital world has become something that has been very, very relevant for our customers. And when we talk about the physical and digital world, physical is upskilling individuals, making them more productive. You can imagine in the digital world, the advent of AI agents that exist within the enterprise is becoming more and more disruptive. How do we make sure that as we're supervising and we understand what individual are doing, what are those AI agents in the enterprise also doing? So as we're bringing together skill sets, making sure that we're balancing the physical and digital world is a trend as well as the checks and balances that need to be in place for that to operate efficiently. Okay. So how are we positioning ourselves for the future. So there's 3 components to that. And you've heard this time and time again, whether it was from Mark, whether it's from Mark Finlan, whether it's been from Jim. And it really is around advancing the current portfolio. How do we make sure that we're driving sustainable growth by identifying new opportunities, new products and services to engage our customers in new operating models, too. Now within technology, that's great. We've got a disruptive factor. There's always new technology being introduced. So when it comes to disruption, sustainable opportunities, that is a path that is being driven by the market. And quite frankly, we've had experience and been very successful in following that market. If you look at expanding the portfolio, when -- if you look at it through that commercial lens, many of our customers are international. So a lot of the expansion that we've been able to achieve on an international basis has really been customer driven. We had one deployment with one of our customers where we deployed a CRM transformation over 56 different countries, okay? So as we move forward, globalization is a key theme, specifically in our commercial markets. It's something that we are very, very excited about. Being able to work and leverage our team in India, our teams in Singapore, our teams in Europe now to be able to deliver on a global basis, okay? Okay. As we look at growing our portfolio and driving it through sustainable growth, it is new markets, it's new opportunities for fostering new products. If we look at it through the product lens, we've got a leading product in our research organization. Our Healthcare analytics, product and accelerators are a key part of how we create repeatability and find additional revenue streams, right? So it's not just a consulting revenue stream we have. We have reoccurring revenue as it pertains to products as well as accelerators, which ultimately makes us very sticky with our clients. It allows us to provide that long-term value for them. Okay. And then finally is the portfolio enhancement. As we deliver and identify new opportunities. We've got a great team in India as we look at incubating new offerings, creating new products, new accelerators 6, 7 years ago when we ventured into a global delivery model, that team has added tremendous value and continues to add tremendous value for us. So being able to deliver at a global but also to be able to innovate globally is a key part of our enhancement of our portfolio. Okay. A couple of takeaways, if you look at enhancing the market position, our digital has had strengthened, and we do have a differentiating partnership ecosystem that continues to grow. As we look at gaining the market share, we've captured and expanding our total addressable market, both on an organic and inorganic standpoint. Those are trends that will continue as we move forward. Navigating an evolving market, you look at the ability to adopt technology at scale at an expedited pace. That is always a trend that's going to continue as we move forward with our clients. And this sustainable growth. Through the investments, both organically and inorganically, we do see a competitive advantage because of our size. We've got those partnerships that extend broad within the ecosystem. But our size allows us to move much more quicker in a more nimbler approach and be able to compete at scale, and we've proven that we've been able to do that over the past 10 years, too. Okay. So Mark, let me turn it over to you and talk a little bit about Commercial. There you go. Thank you.

And we've had questions from investors in the past that said, why are you even in this business? And I want to spend a few minutes giving a little bit of history and perspective as what has brought us into this business and the opportunities that we see for us ahead. So if we look back, say, over the last 10 or more years, the investments that we've made have really expanded our capabilities in our core businesses in Healthcare and Education for the most part. But at the same time, they've built greater scale in many commercial industries. The majority of the M&A transactions that we've done have been acquisition of digital capabilities that have been across a pretty broad spectrum of technologies and solutions. And those transactions are often as capability focused. They often include a multi-industry presence. And that's really important for us for 2 reasons. One is it's important for employees in those businesses who specialize in the skills, and they want to continue to pursue them after the acquisitions, not only in just one industry, but in multiple industries. And so collectively, the other reason -- or the other reason I want to mention is those industries in the commercial side of the -- are often several years ahead of what you see in Healthcare and Education. And that gives us the opportunity to deploy some of the technologies that Mario has talked about and through those learnings and focus, turn them into opportunities that we can bring leading practices into Healthcare and Education. And those clients, in fact, ask us often what have you done outside the industry? They want to know where else have you done this and they're talking specifically about the things that have happened in commercial industries. So collectively, these acquisitions have really propelled organic growth that cumulatively now has created a pretty sizable business in the Healthcare segment. And if you were to go back and look at the company's 2012 10-K, what you would see is the origins of what the Commercial industry is today, it was the financial advisory business that we had back at that time and it was $22 million. It was on a $626 million base, it was 3% of the company's revenue. And so through M&A and organic growth over time, this commercial segment today has grown to over $0.25 billion, and it's 17% of our RBR through 2024. And if you take the outlook that we have for 2025 where we take the AXIA acquisition and we look ahead, it annualizes to about a $300 million acquisition. So it's big and it's grown quite a bit. And now our focus is on how do we continue to scale it in the context integrated go-to-market strategy and operating model. And then -- and so where do we go from here to create more value? So let me share just first of all, a few more details about the Commercial segment today. The portfolio is diversified from an industry perspective, and it reflects the fact that these technologies have a broad applicability across multiple sectors within the industry. So the industries of focus are financial services, utilities, industrials and manufacturing. And I'll mention the public sector as well, which today is very small, it's a small percentage of our commercial portfolio. It is a portion of our Healthcare practice that has done well through some of the regulatory reviews and the like. But these industries are facing significant disruption or regulatory change, and that is, again, as I've mentioned earlier, conducive to spend for consulting. In terms of capability mix today, you see that the segment is about 2/3 digital and focus with the other 1/3 focused in consulting across restructuring, strategy and innovation and a small but growing presence in financial institution advisory, which we've built organically. And so we've continued to grow our Commercial segment a 5% compound annual growth over the past 3 years despite a more challenging economic backdrop. Obviously, this year, we're outlooking to accelerate that. But based on that foundation, we're going to build on the scale that we've achieved to date in the digital capability, and we'll continue to selectively add advisory capabilities through programmatic M&A as well as through ongoing organic hires. Now we shared the success we've experienced when we've collaborated together across the full range of capabilities and gone to market as a unified firm in Healthcare and Education segments. And our experience to date in the Commercial segment, as I mentioned, it's a much smaller scale than we've seen in the other segments, but it also gives us confidence that this integrated approach to going to market will effectively propel our growth. In fact, if you recall the video at the beginning, the last speaker on that video was from Grab, which happens to be the Uber of Singapore. And that's a perfect example where our strategy and innovation capabilities together with digital differentiate themselves against what was a client owned by one of the big players, and we were able to go in and basically win that client through a differentiated story. And that's the kind of power of going to market together that we've experienced. So while we're earlier in the maturity of our efforts to build out this integrated model, again I've mentioned our focus has been on getting the Health and Education part of our business is right. We'll continue to advance these. So acquisitions like AXIA Consulting, which Mario talked about, they're bringing the kind of capabilities of growth that we think are important building blocks of our strategy and our success going forward. And so as we not only expand our digital portfolio, as I mentioned, we'll continue to expand our advisory capabilities today. So for as an example, our strategy and innovation capability, which is much more of a longer-term focus of strategy today, we'll focus on adding more near-term operational consulting like the balance that Andy described in Healthcare that will increase our near-term impact and value to clients. So in summary, we've built a pretty sizable Commercial segment over the past decade from a very small base. And so with the favorable end markets that we're in today and these dynamic markets, we think offers continuing significant growth potential for Huron. And in particular, we think we can build on this integrated approach that we've seen over time. So this -- these learnings, we feel, are pretty fully applicable to what we're going to see in commercial. Now while the Commercial segment may not be the headline story about Huron growth potential today, we think we're going to continue to see this advance. And I think as the proven track record of doing M&A transactions that we've been able to build on and accrete in a broader portfolio context, we'll continue to see those moving ahead. And so that's good opportunity for me to welcome Elizabeth Entinghe to the stage, and she's going to talk a little bit more about how we approach programmatic M&A.

Thank you Mark and thanks for being here everyone. We're happy to have all the [indiscernible] on the phone. I joined Huron 12 years ago as a member of the corporate development team, and after a few years of that, I joined the executive team as their Chief of Staff and held dual responsibilities as the Chief of Staff and also supporting Huron's M&A strategy for the second half of that. And given my responsibilities at Huron, I've had -- I worked closely with all of our business leaders since I've joined the firm, providing me with a really strong understanding of our businesses, their strategies as well as a deep understanding of our enterprise strategy, having helped shaped it with the leaders that are here today. And this experience provides with a unique perspective in my M&A seat, really understanding the strategic goals, having strong internal relationships, and understanding the distinct nuances of a specific acquisition and how that can have an impact on our business and also as we think about integration to make sure we're maximizing the results of that opportunity. Acquisitions have played a key role in shaping Huron since almost day 1 of our firm. We've consistently demonstrated the impact of M&A on our growth strategy over time, which has largely been driven by smaller tuck-in acquisitions, which you can see here. But let me give a couple of examples to highlight this. The foundation of our Healthcare segment, which is rooted in 2 acquisitions, one in 2007 called Wellspring, one in 2008 called Stockamp. Those then came together and grew from some smaller additional tuck-ins, but largely grew organically into the business that Jim described today. Second, the Digital business, as Mario just mentioned. Over the last 10 years, we've successfully deployed $250 million of capital, while organically building that investment into a $600 million-plus RBR business today. And beyond financial growth, we've also gained significant talent via acquisitions including 3 out of our 6 business leaders and our Chief Operating Officer. So we always use M&A also as a tool to shape our portfolio, not just adding but also divesting assets to drive focus and investment in the areas of the business we believe have the greatest returns for our shareholders. So leveraging the foundation of these acquisitions and then building on them organically has been one of our key strengths. M&A has had a profound impact on shaping our portfolio, fueling our growth while also strengthening our bench of talent and our collaborative culture, which, as you heard, is really important to our business. So as you heard from the leaders say, M&A has and will continue to be a critical role in strengthening our competitive advantage while also supporting our strong growth trajectory. It's important to note that our inorganic strategy largely focuses on filling white space. So adding in those adjacencies like advancement resources that Mark Finlan touched on, we're adding that new offerings that help us move into new markets, new channels or new capabilities like Innosight. We have a proven M&A approach, which starts with really deep alignment to our enterprise and business strategies. And when we're working together, the leaders and I, we're working on our refining the strategic priorities, especially evaluating build partner buy opportunities to ensure we're deploying capital in the right areas. So while corporate development takes the lead in our deal sourcing process, we work really close with our business leaders to identify and build relationships with targets as most of the deals we ultimately close are proprietary. Many of our deals are where we're already partnering together in the market, proving the theory of the case in advance of an acquisition. And so what does this kind of look like from a pipeline perspective. In 2024, we looked at nearly 200 opportunities. We issued 8 offers, including in several led banker processes, and we closed on 3, 2 of which came through relationships in the market and 1 which came through a market scan from corporate development alongside with our team. Going forward, we'll continue to leverage our proprietary deal sourcing, our market relationships and our investment banking partners to help identify opportunities that can continue to help us fuel the growth that you saw here in our discussion earlier today. So now let me touch on our deal criteria. We're continuously learning through and after each acquisition. These lessons learned to help us shape our deal criteria when evaluating our build, buy strategy for a new focus area while also helping us shape our analysis of a specific target and planning for integration. On each acquisition, we review these deal criteria not only with our business sponsors but also our executive team and the Finance and Capital Allocation Committee of the Board, leading to strong governance and decision-making as we think about deploying capital. And as you can see, financial alignment is only table stakes as we're moving an opportunity forward. Equally, if not more important are the strategic and go-to-market alignment as well as cultural aspects of a deal. And we focus heavily on those areas in our evaluation of a target, the actual due diligence and the integration planning to ensure our deal thesis is sound and that we're gaining a business leaders and team who can thrive while also driving greater impact once they're part of Huron. Our strong culture is one of our greatest competitive advantages. You've heard it a couple of times today, and we make cultural fit one of our greatest priorities in deal reviews, pre and post the acquisition itself to ensure we are bringing the right teams to bear and growing and fostering that culture going forward. So while our track record isn't perfect, we do have a strong track record of successful acquisitions. And here are just a few from the last several years to bring this to life. I won't go into all of them, but I do want to touch on one Perception Health, which is what Jim mentioned earlier. Our Healthcare team has been partnering with Perception Health in the market for a few years, bringing their proprietary tools and data sets together with our consulting offerings to successfully deliver for clients. We came to a point where we were working together so well that we knew that we needed to take our partnership to the next level in order to achieve the strategic vision that lay in front of us based on the market demand. So in 2021, we closed the acquisition and have not only grown the stand-alone Perception RBR at a CAGR of 48%, we've also embedded them into our performance improvement, strategy and innovation and CRM work to bolster our go-to-market approach and further differentiate our business in the market. This has led to an additional multimillion dollar RBR of our business outside of the stand-alone Perception RBR. So let me just close and say that M&A has and will continue to play an important role in our growth strategy. And while we have a strong track record, we don't take it up for granted. We continue to refine our approach and evaluate criteria to identify the right opportunities for our business, ensuring we're deploying capital in the areas of greatest return for our business while driving further value creation for our shareholders. So before I turn it back to Mark, I do want to make a comment about Q&A very quickly. So Mark is going to close. And afterwards, we'll have a Q&A session. I encourage everyone on the phone to type your questions in the chat, and then we'll also take questions from those in the audience here as well. With that, I'll turn it back to Mark.

Well, thank you so much for the opportunity to be here today with you. I would like to just touch briefly, I guess to recap some of the key points that we had. When you look at what we've tried to build at Huron over the last 3 years, it's just pretty simple, it's pretty clear. It's about building on their strongholds at our core end markets, driving organic growth, complementing that with very focused M&A on an integrated basis, having aligned incentives that help us work together to unlock the greater value, not only from going to market, but at scale and creating the margin opportunity and synergies from an integrated company as opposed to a federation of practices that you often see in other firms. And based on that, we see -- we're very pleased with where we've got to today. The platform we built from our people perspective, if we look at the next one, the next slide becomes a place that all of these things come together. We are a premier global consultancy. We have no problem attracting some of the best talent in the marketplace. They're very, very pleased to come here and prosper in their careers. Our industry is with hearing from Jim, Mark, Mario and Andy, you hear in much greater detail some of the fundamental challenges that are propelling us for the future. So with these tailwinds of demand, we feel like we're very well positioned in the market to continue to have this as a core base as we continue to expand in areas like our commercial area. We're really -- before our operating model change in 2022, our digital capabilities were distributed across the company. And I used to say that one of our best-kept secrets was that we actually have a very sizable digital capability within IT services, the size of many competitors out there or larger. And the breadth of what we do is a tremendous asset because as you can hear today, digital solutions are integral to sustainable solutions for our clients over time. And so that combination of bringing advisory and consulting as well as managed services together creates a real differentiator for us in our marketplace. Our margins, we've made great progress and I would tell you, what I'm most pleased about is that we've gotten here not on the backs of just making our people work harder through higher utilization goals. What we've done is really taken value that we've been able to extract by working in a much more intelligent integrated basis and we're not done. We have plenty of runway ahead of us to continue to realize that value. And that's partially from the aligned incentive model that we have, which again, I think, really sets us apart tied into stock as a very important component of compensation, which is very, very attuned for shareholder and our leadership alignment. And then our balance sheet and cash flow. We are very pleased to have the kind of cash flow and liquidity that we have. It gives us great flexibility to create value. It's a very powerful engine to create growth as well as margin expansion and value through all of those levers. So I think we're really well positioned from a -- if you look at our thesis, a very simple story, but lots of things to like about it. And then finally, I'll just end with just a brief shout out to our people, 7,300 people around the world, 2,700 of them in India, as Mario alluded to and has grown tremendously over the last several years. We have growing opportunities across the world because of our clients who are multinational base in scope. The experiences we've had outside the U.S. also demonstrate that power but for us, again, it's a people-based business, it's people first. client second, shareholders third, all respectfully. You should just understand that you need happy people to have happy clients, and you need happy clients that have happy shareholders. So we start and end with people and we think that sets everybody up for success going forward. So I think that's a good way to end today and then invite our colleagues to come up for Q&A. But thank you very much.

All right. Thank you again for joining us, and we are going to start with current question, questions from our current analysts, and then we will transition to other questions that come in. And I'm going to start with a couple of questions from Andrew Nicholas from William Blair. And the first question is around the messaging around the potential regulatory impact on Healthcare and Higher Education segments remains quite positive. Can you please touch on the potential headwinds? Are there risks to client decision-making in the near-term?

Well, let me start by just framing that when we issued guidance, as John will remind everybody as well, we contemplated the range of scenarios as to what we thought these regulatory disruptions might mean, we're affirming that guidance today. So on the low and the high end, we do believe there is cases for more of a gray swan, if you will, and more black swan but also lots of potential for upside. So in that context, let me start with Jim and ask him to just comment on, again, just expand on how those regulatory changes might transpire and what you think it means for the business potentially?

Sure. So I mean, really, over the years, any time there's reimbursement cuts or any type of financial pressure on hospitals and health systems, it really swims kind of to our strong suit. So if you look at what's happening with [ DOGE ] and the like and coming cuts possibly to Medicare and Medicaid, also the research cuts that some of which have already happened. It's going to create intense financial pressure, which then turns to companies like Huron like us to be able to help people in other ways and in direct way reimbursement-wise revenue cycle improving, becoming more efficient and really find ways to be able to produce a positive operating margin going forward. So the second part of the question was, is there any potential negatives? I think on balance, it should be overwhelmingly positive for our business, given our strength again in financial health transformation and performance improvement. But you could conceivably see a client saying, well, maybe I'll wait a year to do my digital modernization or maybe this acquisition or merger maybe is a little bit too much right now as we sort through the regulatory changes. We haven't seen any of that yet, all right? But that could be a possibility, too.

Good. And Mark, one over to you.

I would think I would just add to Jim because a lot of what he said applies to education as well. I think the breadth of services here is important. So as you look at some of the changes to federal funding to research, clients are going to be struggling with some of the financial challenges Jim mentioned, but also strategic questions. So what does the future research look like from my institution? How do I attract and retain talent? How do I fund that? Do I need to turn more to corporate partnerships, more to fundraising and less go to federal funding than I have in the past. Those are strategic questions for them to answer. They also need to think about how am I going to leverage data? How am I going to leverage AI to both deliver that research as well as think about how I can change, how I deliver this in a more efficient manner administratively as well? So I do think the breadth of services there on top of some of the forces Jim mentioned, really put us in a position to be the partner that our clients are going to turn to for support.

Yes. And maybe just to round it out, Mario, from your perspective in the commercial markets as well?

Yes. Listen, I think we saw the disruption supply chain because of COVID, but more recently now in the tariffs and working in, whether it be manufacturing, industrial, supply chain resiliency need modernization, in-sourcing globalization, you accomplish that and drive efficiencies through digitalization of those channels. So we see a lot of organizations reaching out to us to drive some of those efficiencies and make sure that they're managing risk and doing a better job around demand planning and doing financial modeling as well as the logistics associated with that. So we have seen a pick up because of that. And I think with every disruption, the ability to provide greater insights and to drive operational efficiencies and make sure that its resiliency is there. Technology is a key enabler of that.

Excellent. Our next question from Andrew relates to AI. Can you discuss how you're thinking about the AI adoption timeline in Healthcare and Education. Are these end markets ready for AI at this stage? Or would you expect them to act on a bit of a lag to the commercial end markets as they have in other areas of digital transformation?

Mario, do you want to start? And then we just have Jim and Mark add perspective?

Yes. Listen, I think because of our broad portfolio, we're well positioned. There are some industries that are adopting AI at a very rare rapid pace. A lot of the intelligent automation that we've been doing over the years, have come out of the commercial industries, taking that technology and bringing them back into Healthcare and Higher Ed. I think what we're finding with AI is it's a bit of a supervised champion challenger approach. You're not letting AI just run wild. It is being supervised the ability to make sure that the biasness of those models are eliminated, the importance of data management becomes very, very key. So if you look at the use cases we're seeing in financial services, we're seeing in retail, they've been embracing that for the last 3 to 4 years, quite frankly. How does that then translate into some of the say, mid adopters or later adopters. The capability is here within Huron. So having that capability to ultimately meet the industry or meet the client where they're at, has been a hallmark of what our success has been in digital lately.

And Jim in Healthcare?

So as far as AI and Healthcare, it's critical. You're impacting people's lives, right? So understandably, most of the early action in AI and automation has been in the administrative function. So supply chain and revenue cycle and the like. But I see it advancing it in the very near future to really get into the kind of core clinical aspects of a health care provider, and in particular, reducing the administrative burden on physicians and nurses so that they can spend more time not on their computer, documenting, coding and the like but really be with patients and providing critical comprehensive care.

Mark?

I think one of the helpful things to point out here is one of the offerings we're providing to our clients right now is to help them answer that question. Advisory services around what is going on in the industry right now? What exit do you have through the tools you already have on campus to AI? Where are you on the maturity curve in terms of leveraging AI in your enterprise? But again, I'm going to go back to our breadth of expertise they're grappling with questions with their fundamental mission. How are people going to consume knowledge going forward? And how is AI going to impact the education environment? How is it going to impact discovery? How is it going to impact research? And how is that going to change as well as the administration of institution as well? I think where we feel like we really have a differentiated ability is to help them understand that entire ecosystem of AI and what's coming in through tools they have or what they can buy as well as what we can bring to the market. We do have data that no one else has. We have expertise in areas like research and philanthropy that no one else has. So we do think we can bring some products and services to the market specifically to the industry as well.

Excellent. Final question from Andrew, and then we'll move one. Both Elizabeth and John cited the requirement for acquisitions to be accretive to EPS and margins in year 1. How much does this limit your transaction pipeline? Would you be willing to be more flexible on this requirement for the right opportunities? And also, how should we think about the upper end of the size of the type of deal you'd be comfortable doing? Maybe I'll start with the last question for Mark and John can chime in.

Sure. When we described the -- you heard the overall framework. When we look at the tuck-in size acquisitions, we kind of think annually in that adding in that 2% to 4% of revenue sort of range. Is it -- with that said, we'll look at different things that come through or different opportunities. We're open-minded to what comes through. I would say, if you think about 5% of revenue, something like that, from that perspective, that's probably near the upper bounds depending on what type of things come through the -- what type of things come through the pipeline. In terms of the question about the priority on the acquisitions being margin accretive, the priority of the acquisitions being EPS accretive. I think from our perspective, we don't find that to be a limiting factor. I think it's important in our business that the targets that we're looking at have built credible businesses, have stability in the revenue base, have figured out on their own how to make money in the businesses that they're at. And then for us, as you've heard from Elizabeth, Mark, myself, and others talk about, it's really been about taking those businesses and how does it drive organic growth 2 years down the road. So outside the first year of acquisition, and so for us, we tend to heavily weight businesses that have already kind of proven it in the market, which I think coincides with some of that profitability day 1.

Yes. And the only other framing comment I would make is that we're paid to drive value, not just growth. Growth is a way of driving value. And so it's a matter of looking at what is the overall proposition of a larger deal. Inherently, they have higher risk because they're more capital involved. They tend to be higher price because they're often coming through processes. And it's not that we won't look at those, but I would just say we're pretty clear on the criteria. And I think with the Board's perspective as well, I would anticipate we'll focus a lot more on the tuck-ins. Not that we won't look at those, but we just have a higher degree of scrutiny because they need to work to create value in a very clear compelling way.

And just to hit the point that John made also the pipeline, that hasn't been an issue in finding the right opportunities for us, especially as you think about the revenue and margin profile that we're thinking and how it aligns with what we're looking at so we've been really fortunate, and I think it also demonstrates again the dynamics and the decision-making process that goes into this also with our business sponsors and making sure that we're thinking about the ultimate impact to the Huron financials as well. So our next question, I'm going to turn to Tyler Barishaw from Truist, who's with us here in the room. So grab the mic. Go head.

Thank you. With the velocity of change in the administrative state, is it causing any pause in consulting work as clients are kind of just pausing and saying, let's pick up in 6 months when we have some more certainty?

Jim and Mark, why don't you take those two.

Well, from a health perspective, if anything, it's accelerating needs and demands. So we're seeing a lot of clients that are trying to get out in front. They're anticipating severe financial pressures, as I mentioned before, reimbursement changes and the like. So they're seeking ways to address that and find other ways to improve operating income. So right now, it's actually sparking demand.

The thing I would add, and you can go back in history and look at some of this, when COVID was happening, some of the things we were helping institutions with was standing up and executing protocols on campus to get students and faculty back in the classroom. So I think some of this comes to Huron is nimble and can pivot to help our clients with what they need. So what we're seeing right now is a lot of needs thinking about cash management, how do we think through the different levers, we might need to pull to balance the budget, some of the financial pressures that Jim mentioned. So it might be a shift focus of existing resources what they specifically need but we haven't seen any pause or slowdown in the pipeline.

Then just one more. Talking about like current client engagements, are you mostly seeing new clients coming in or existing clients accelerating these resources? Just curious about the sense of current client engagements.

Yes. John, maybe you want to comment about the pipeline. And then again, Mark, Jim, Mario talk about new client acquisition.

Sure. From a pipeline perspective, you saw probably in some of the slides that we had up there, particularly when we talk about the health care industry and the education industry. The large majority of our work comes from repeat clients. And so that's really where the breadth of our capabilities come into play and the credentials that we've established at many of those clients come into play. We've been at certain clients in health care and education, some of them every year for 20 years now, doing different sorts of projects at those clients. So when we look at the pipeline, the majority does come from existing clients. With that said, we also see new clients every year too, where our reputation precedes us, our credentials and things that we've done at other places opens new doors for new opportunities at new clients. So it's a mix, but it's heavily weighted towards repeat clients.

I would just say through the digital lens, our commercial business is rapidly growing, and the more successes we're having in market with large organizations, we are becoming an alternative to the big 4 quite frankly with the breadth of services and the capabilities we have. So we're seeing acceleration in commercial, specifically in those highly regulated industries, whether it be financial services, whether it be energy, specifically. And then as we get into energy, you look at the asset-intensive industries where supply chain and manufacturing and asset management come into play. So I think the commercial market, a lot of them is net new just because the success we've had with our clients as well as the success we've had with our technology partners, too.

Okay. Our next question will come from Bill Sutherland from Benchmark. In the 2022 Investor Day presentation, India was beginning to add consulting to pure delivery. Can you share a little bit more about where that mix is today?

So at this point, our India headcount is up north of 35% of our total headcount. And they're primarily serving our digital clients and our global digital projects. So that's often times for North American clients where global delivery team is providing key resources and talent on those projects, as well as our managed services business within the health care business. So I'd say at this point, they probably touch overall, about 50% of our clients, if you think of the digital mix of our business plus the growing managed services business within our health care team.

All right. Second question from Bill. What is the percent of revenue on a tier contracts? Recurring revenue was identified as 15% in -- 15% of revenue in 2022. What is it today?

So I'll start with just -- again, a reminder about kind of the sticky nature of our client relationships. And this is something we talked about in the last Investor Day, and it dovetails what we just talked about. A lot of our revenue comes from repeat clients where we've done different types of works over the year. In the Healthcare and Education Industries, anyway, which covers 80% of our revenue, it's in that 80% to 90% range. So that's one layer in which our revenue is sticky. We also have projects where the scope of them go on for multiple quarters, multiple years, if you think about the example that Andy talked about earlier, that wasn't a quick project, right, that went over a longer period of time, which also gives us good visibility. To build specific question, we talked to that Investor Day in 2022 about 15% in that range being recurring revenue. So under multiple year contracts. That's actually gone since our 2022 Investor Day. The reason it's gone down though is kind of one of those good reasons. It's because we've had such strong growth on the consulting and digital side of our business that is actually outpaced the growth there. So in absolute terms, our revenue under those types of contracts has had nice healthy growth over the past 3 years. But as a percentage has been blended down just because of how strong the growth has been in other parts of the business.

Okay. Our next question comes from Kevin Steinke at Barrington. And Kevin asked, can you discuss further how Huron's culture and focus on collaboration are competitive differentiators? Also, can you discuss the financial incentives in place for collaboration and how much collaboration across practices has contributed to growth?

Yes. Let me start on that one. So in terms of the culture of collaboration, we've always had this opportunity to work together. And if you think about our business it makes sense because when you have academic medicine as the intersection of Healthcare and Education, you kind of already have inherently a connected ecosystem of a continuing of client relationships. You bring in digital, which is again pervasive across all we do. There's a very good ecosystem and opportunity to collaborate because of just the nature of not having things so completely siloed that it doesn't make any sense. Having said that, when you look at the financial incentives, it does come back to something different. I think when we plan together our annual operating budgets, you have the industry teams jointly collaborating with the capability teams to establish goals. So what are we going to go achieve this year? What is the opportunity in market for us to do? When you do that, what happens is that goal becomes distributed to the industry client relationships to help drive those as well as across the capability of relationships. And so that friction that many times is whose bucket is going to count in goes -- it gets diminished. I'm not saying it's perfect because you always have a human element in everything you do. Having said that, I think a lot of the growth that we've unlocked is really because we've taken -- if you look at the penetration and repeat revenue that Jim and Mark have had in their particular markets, the -- it's a penetration strategy. It's not new client acquisitions, so much repeat revenue, but our ability to serve a broader part of our clients' business is much, much broader. Now what we see and as Mario said, like about being an alternative to the Big 4, because of bringing that team together as one unified team, we differentiate ourselves versus the largest competitors. Do they have 10x, 20x, 30x, 40x, 50x our capabilities? Yes, they do. But when you talk about how do you actually deliver them at the client to get them to work in market shoulder to shoulder with the client at the center of what you do, that is hard for them to go do. I'm not saying they can't do it, and they all have -- we'll say they have matrix models. The power is not in the matrix. The power isn't the focus on the client and unlocking greater value because that's where you're focused. So that's for us where we see the differentiator from other competitors. And we think this is where our size and scale is a great advantage because we can be pretty nimble. Things get done quickly. Our focus is really we know who to talk to you to make decisions. We can get -- when you work across silos and collaboration, sometimes these large organizations, not even clear who you need to talk to, to get something approved or done in market. So we just feel like right now, we have a great advantage for how we're going to market. And while it's very soft in the eyes of many people, very real for us in terms of what we've experienced.

I think I would just add, you can't fake caring about our clients and all the clients, particularly the ones Jim and I work with hospitals, health academic medical centers, universities and colleges. Those employees are there because they genuinely care about what they're doing. That's faculty of physicians that are there because they care about it. People come to Huron the given practices because they care about the mission of institutions we work with. They feel that and they sense that when they work with us. And that translates over to the internal way we work together on our collaboration is that genuine caring about the missions of those sectors we work in, Jim.

Yes. I would just add like the magnitude of the challenge that we see oftentimes in Healthcare, turning organizations around by $300 million or $500 million or more, all right? We have to bring all of our talent to bear, all right? So we have to address all of the viable opportunity to increase revenue through growth. We bring on our strategy team and Andy and others, all right? We bring in our financial advisory team with Flint who's here today. It's all powered by digital, coupled with our strong performance improvement capabilities. So there's just an imperative that given the magnitude of the need, you have to architect in all of these different subject matter experts and solutions and capabilities in order to deliver what the client wants to achieve, all right? And that's been key for us. Now the other thing in terms of internally, how do we get people to work together. I think it was probably 2018, we went to an internal system within health care first to work it out where it incents individual managing directors from different parts of the practice or different parts of the industry to work together on the sale and then on an engagement. If they do, they get 200% credit, which then goes to their achievement of their goals. Since that time, I mean, magically, people started working much better together, all right? And it's been kind of a key driver of our growth. And then really, most recently, we've taken that same system and spread it throughout the company.

But the other thing I'll add is our clients are also forcing us to happen. You saw the individual from Grab and parting with Innosight, they were looking to go from servicing 1 out of every 10 customers in the ASEAN region to 1 out every 2. You've got to think very, very differently as to the future of engaging our customer. Innosight brings that future-back approach as to how do I now service the customer in the future. How do I reduce friction from engaging a customer to ultimately the fulfillment. Grab has also a bank around electronic payments and how do I then ultimately receive cash and process a payment automatically. So very much like an Amazon experience, right? So to be able to bring multiple capabilities is the only way we're going to meet the client where their problem solution needs to be. So it's being only driven internally through collaboration, but also through our clients asking for a broader, broader transformation.

All right. Our next question from Kevin. Are there any specific focus areas for tuck-in acquisitions that you can discuss in terms of capabilities? And do you see acquisition opportunities in each business segment?

Yes, I'll start there. I'd say the answer is the latter one, yes, we see opportunities across every single one of the segments. We have tremendous adjacencies within health care. We have new areas that we can definitely add into. And the same thing in education, which you've already seen, the addition of some of the philanthropy acquisitions that we've done. The commercial space is wide open. We see plenty of opportunities to really taken architecture of what we think is a model that really works well and find those organizations that plug in well. And we feel like just because we're at the size and scale that we are. Acquisition opportunities often are that we have a different value proposition for them. Because we're not just giving them capital like private equity and then you're kicking the can down the road for a transaction or you're going to a $50 billion acquisition -- strategic that wants to acquire and your firm is just going to get vaporized into their infrastructure. We're putting them into a role within the organization that fits and is different. And so that's one of the reasons where we're successful in getting our acquisition candidates to stay. And so I would just say the areas of focus will continue to be in digital in some of the advisory areas. I would say, in some of the selected industry areas of focus as well -- as well, as I said, in some -- even in some of the strategy and innovation in some areas that we think we can add some additional expertise that will be accretive to the overall model.

Okay. And our final question from Kevin is coming back to the regulatory component and talking specifically about tariffs, how have commercial clients been reacting to uncertainty in the macro environment around tariff policy specifically?

I'm sorry, can you repeat that?

How have commercial clients been reacting to uncertainty in the macro environment around tariff policy?

Listen, I think it started in COVID, there has been a lot of, again, looking at their supply chain, looking at manufacturing facilities, looking at logistics and distribution. So I think if anything, it's just been a continuation. Some of that has now been accelerated quite frankly. And we've seen a pickup in demand because of that acceleration. A lot of scenario modeling happening right now as we've been working with customers. And that's where some of the analytic capabilities that we've been able to bring to bear. Some of that enterprise performance management solutions so that we can do some simulation models to look at supply chain, supply chain disruptions, look at investment thesis, look at deploying capital. So as we look at bringing all our capabilities together, it's an exciting time for Huron right now.

Excellent. And we welcome questions from the audience as well.

You mentioned the commercial business grew 5% CAGR over the last couple of years, but the forward outlook has you had low double digits. Maybe you could just flesh out a bit further what's going to drive that acceleration? And maybe you could kind of talk about the M&A versus organic components.

John, do you want to take?

Yes, I can start. Ben, The trajectory for the commercial business was actually a lot higher entering 2024. 2024 with a more challenging year for our commercial business, largely just because it was a year of some macro uncertainty that really, particularly for digital projects, caused a little bit of a pause there. I think prior to that, we saw some pretty healthy double-digit growth in that area within the commercial industry. As we turn the corner into 2025, when we look at our pipeline, we look at our backlog, it feels like things have stabilized a little bit, at least for our client base in terms of returning to some of those investments, which our viewpoint has always been. They may be discretionary in the short term in terms of whether you're going to choose to do it this year or next year. But in the longer term, when we look at the investments that our clients are making that we think we're well positioned to help them with, they need to be done over the course of time. So I think that, that higher growth rate really reflects the expectation that over time, clients will need to make those investments.

Mario, maybe you talk about the client, clients in market?

Yes. If you look in market, a year ago, if not a little bit earlier, last year, a major focus was for us was financial services with SBB. And if you go back to the space, there was a lot of disruption, interest rate sensitivity. So people were holding back on some of these large digital deployment. We've seen an acceleration of that now. So probably a little bit more normalized versus some of the holdback debt that we saw. So financial services was a big component of some of that slowdown. But if you look at how we've been able to broaden the portfolio, there's been a lot of investments in the energy side. Last year was a really good year for renewables. So we got take advantage of that. So having that diverse commercial portfolio allows us to ebb and flow, and we still ultimately grew during that time period. So I think as things are becoming a little bit more normalized here, and we're starting to see financial services with the interest rate environment at now, and we're starting to see some more deployment of capital for modernization efforts.

M&A, you also asked about, Ben. Many of the deals that we look at, and especially it's been true in the digital space, in particular, have been people that we work with in market and gotten to know through just being in the same setting. In fact, one example we talked about with AXIA, we had a common client. And maybe, Mario, you can talk to our early experience there.

Yes. I think that's been maybe a recipe for our M&A environment in that digital portfolio is broad. There's a lot of what's called boutique firms that ultimately partner together to ultimately deliver an end-to-end solution. We happen to be working with AXIA at one of our industrial organizations. We knew the leadership team. Just by reputation, we were able to engage, got to know them very, very well and realized from a culture, from a synergy. We didn't want to do an acquisition to just scale resources. We want to make sure that's complementary offering. Quite frankly, now that we brought the 2 organizations together, we've seen clients award us work because now they can look at our organization to be more end-to-end versus just niche solution. So we've seen some nice healthy wins in the first half of this year because of that, too.

One other point that I'd make about commercial digital is we've seen that some of these acquisitions and even the organic growth on the commercial side within digital, that's oftentimes really where the cutting edge of some of the deployment of technology is. And it's been a great environment of innovation for us there on the commercial side, which then we kind of build out the capabilities that then are very helpful to redeploy back to the industries of education and the industries of Healthcare. So for us, it's been kind of a leading place to seed some of those capabilities that then turn around and nourish some of the growth we've seen from a digital perspective in the core industries as well.

My second question is given the expansion and breadth of services over the last several years, maybe you could just talk about how the average project size has evolved over the last 4 years or so?

Ben, the size of the projects has increased. So at this point, across our entire business, if you look at the average size of a typical consulting project, it's probably now in the -- think of it as the low single-digit millions of dollars versus before it was probably closer to $1 million. There are probably points in time in the past where was even -- that average was even below $1 million. So we have seen that go up. And I think a big part of why that's increased is the topics that we've already touched upon in terms of -- the integrated scope of those projects where we take our collective capabilities has gone up, too. So it's really pulling in some of those different disciplines that's driven that increase. And a stat that kind of relates to that, if you go back to maybe 2017 or that timeframe, if you looked at our revenue and said, how much of that revenue really was drawing in talent from print teams, different broader buckets across the organization, it was 10% or less. If you look at that same stat now in 2025, it's going to be over 50% of our projects have talent coming from different parts of the team, which just speaks to what all the different leaders have commented on. And with that does tend to come expanded scope and larger price sizes.

In the early days, especially in digital, I remember in the earlier stage when we had acquired, we had one up there for Bluestone. And then I think ADI saw the same thing. We used to count projects that were $1 million, and we had a handful of those. And then after a while, we were counting the ones that we had $5 million, and we were not so excited about the $1 million projects anymore. And we we're -- And so...

We're still excited about it.

But it's just the evolution that we've seen is that the ability to take those solutions create more value by upselling them. Sometimes there are multiple phases, but essentially, that to me is a good, healthy indicator of the effectiveness of our strategy because we should see and increasing project size over time.

But I think that's just the orchestration nature of these end-to-end solutions where in the past, we may have been a single vendor. We go in there with the Workday solution or Oracle solution or Salesforce. Now you've got to look at it an AI lens. You got to look at it through an intelligent automation lens. You got to look at it through an analytic lens, you have to look at it through an integration lens. And now that we've built out a portfolio of capabilities that allow us to do that end-to-end. Those project sizes have just gotten larger and they've got more material. So the need to always reinvent and expand our portfolio is really driven based upon the client needs and ability to orchestrate those solutions. Let alone innovation and change management, op model design, the advisory piece is, we're putting all those capabilities together to really, really make an impact for our clients.

Any other question? Okay. I will turn it back to you, Mark.

Well, again, thank you for spending so much time with us today. We really appreciate that you took the time to join us, and everything is recorded. If there's anything that happens there that you want to go back and look at, John and I am always available as well to follow up for your calls. We just appreciate the support that we've had today and look forward to continue to deliver value for you for the future. Thank you.