Robert Half(RHI) - 2025 Q2 - Quarterly Results

Executive Summary & Company Overview Robert Half reported a decline in Q2 2025 financial results due to global economic uncertainty, while highlighting its position as a leading talent solutions firm and outlining key business risks Q2 2025 Financial Highlights Robert Half reported a decline in net income and revenues for both the second quarter and the first six months of 2025 compared to the same periods in 2024, reflecting challenging economic conditions | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income | $41 million | $68 million | $58 million | $132 million | | Diluted EPS | $0.41 | $0.66 | $0.58 | $1.27 | | Revenues | $1.370 billion | $1.473 billion | $2.722 billion | $2.948 billion | CEO Commentary The CEO noted a 7% decline in global enterprise revenues for Q2 2025, attributed to persistent global economic uncertainty, which led to client and job seeker caution, elongated decision cycles, and subdued hiring. Revenues stabilized in June and continued post-quarter - Global enterprise revenues for Q2 2025 were $1.370 billion, down 7% from last year's second quarter on both reported and adjusted bases[3] - The decline was due to elevated global economic uncertainty, extending client and job seeker caution, elongating decision cycles, and subduing hiring activity and new project starts[3] - Revenue levels fell modestly during the first two months of the quarter, then stabilized at lower levels in June, continuing into July[3] - Robert Half was recognized as number one on Forbes' list of America's Best Professional Recruiting Firms, and also as one of America's Best Temporary Staffing Firms and Best Executive Recruiting Firms[4] Company Description & Recognition Robert Half is a leading specialized talent solutions and business consulting firm, offering contract talent and permanent placement in various professional fields, and is the parent company of Protiviti, a global consulting firm. The company has received recognition as one of Fortune's World's Most Admired Companies and 100 Best Companies to Work For - Robert Half is the world's first and largest specialized talent solutions and business consulting firm[7] - Services include contract talent and permanent placement in finance and accounting, technology, marketing and creative, legal, and administrative and customer support, as well as executive search[7] - Robert Half is the parent company of Protiviti, a global consulting firm specializing in internal audit, risk, business, and technology consulting[7] - In the past 12 months, Robert Half, including Protiviti, was named one of the Fortune World's Most Admired Companies™ and 100 Best Companies to Work For®[7] Forward-Looking Statements & Risk Factors The report contains forward-looking statements that are estimates based on management's current expectations and involve known and unknown risks and uncertainties. Key risks include changes in tax regulations, global economic conditions, unemployment levels, competition, ability to attract and retain talent and clients, impact of AI, regulatory compliance, and cybersecurity breaches - Forward-looking statements are estimates based on management's current expectations and involve known and unknown risks, uncertainties, and assumptions[7][8] - Key risks include changes in U.S. or international tax regulations, global financial and economic situations, changes in unemployment levels, reduction in candidate supply, development and adoption of AI, new competitors, ability to maintain client relationships, competitive pressures, and potential liabilities[9] - Specific risks for Protiviti include retaining employees, attracting clients, ongoing demand for consulting services, and potential litigation[10] GAAP Financial Results This section details Robert Half's GAAP financial performance, including income statement, balance sheet, and cash flow, highlighting significant year-over-year declines in revenues and net income Summary of Operations (Income Statement) Robert Half's income statement shows a significant decrease in service revenues, gross margin, operating income, and net income for both the three and six months ended June 30, 2025, compared to the prior year | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service revenues | $1,369,743 | $1,472,524 | $2,721,650 | $2,948,461 | | Gross margin | $509,474 | $576,679 | $1,008,519 | $1,139,476 | | Operating income | $1,540 | $75,543 | $40,422 | $116,441 | | Net income | $40,968 | $68,156 | $58,318 | $131,857 | | Diluted net income per share | $0.41 | $0.66 | $0.58 | $1.27 | Supplemental Financial Information This section provides a detailed breakdown of service revenues by segment, along with key balance sheet and cash flow items, highlighting changes year-over-year Service Revenues by Segment Contract talent solutions, particularly Finance and Accounting and Administrative and Customer Support, experienced revenue declines. Technology contract talent solutions showed slight growth in Q2 2025, while Protiviti maintained modest growth | Service Revenues (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Contract talent solutions: | | | | | | Finance and accounting | $555,626 | $623,120 | $1,118,559 | $1,265,090 | | Administrative and customer support | $165,591 | $190,344 | $331,218 | $390,276 | | Technology | $158,403 | $157,899 | $310,945 | $315,869 | | Total contract talent solutions | $759,808 | $854,897 | $1,523,013 | $1,741,955 | | Permanent placement talent solutions | $114,713 | $131,063 | $226,804 | $255,830 | | Protiviti | $495,222 | $486,564 | $971,833 | $950,676 | | Total service revenues | $1,369,743 | $1,472,524 | $2,721,650 | $2,948,461 | Selected Balance Sheet Information As of June 30, 2025, Robert Half reported decreases in cash and cash equivalents, accounts receivable, total assets, and total stockholders' equity compared to June 30, 2024, while total current liabilities increased | Balance Sheet Item (in thousands) | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Cash and cash equivalents | $380,547 | $547,370 | | Accounts receivable, net | $826,872 | $893,467 | | Total assets | $2,832,196 | $2,937,749 | | Total current liabilities | $1,322,626 | $1,263,264 | | Total stockholders' equity | $1,311,918 | $1,480,155 | Selected Cash Flow Information For the six months ended June 30, 2025, capital expenditures increased, while capitalized cloud computing implementation costs and open market repurchases of common stock decreased compared to the prior year | Cash Flow Item (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------- | :----------------------------- | :----------------------------- | | Depreciation | $25,608 | $25,520 | | Capitalized cloud computing implementation costs | $13,217 | $15,557 | | Capital expenditures | $27,573 | $24,174 | | Open market repurchases of common stock (shares) | 1,128 | 1,660 | Non-GAAP Financial Measures This section explains Robert Half's non-GAAP financial measures, including adjustments for deferred compensation investment income, billing days, and foreign currency, to provide a clearer view of underlying operational performance and revenue trends Overview of Non-GAAP Measures Robert Half supplements its GAAP financial results with non-GAAP measures, including adjusted gross margin, adjusted selling, general and administrative expenses, adjusted operating income, and adjusted revenue growth rates. These adjustments primarily reclassify investment income from employee deferred compensation trusts and account for impacts of billing days and foreign currency exchange rates to provide a clearer view of operational performance and revenue trends - Non-GAAP measures include adjusted gross margin, adjusted selling, general and administrative expenses, adjusted operating income, and adjusted revenue growth rates[20] - Adjusted gross margin, SG&A, and operating income include gains and losses on investments held to fund employee deferred compensation plans, used by management to review operational results[21] - Adjusted revenue growth rates remove the impacts of changes in billing days and foreign currency exchange rates to focus on growth attributable to operating activities[22] - Billing days impact is calculated by normalizing revenues to a per billing day amount. Foreign currency impact is calculated by retranslating current period international revenues using prior year's exchange rates[22] Adjusted Gross Margin The adjusted gross margin for Protiviti shows an increase compared to the reported figures, reflecting the reclassification of investment income from employee deferred compensation trusts. Total adjusted gross margin for the company was 38.1% for Q2 2025, up from 37.2% reported | Gross Margin (in thousands) | Q2 2025 As Reported | Q2 2025 As Adjusted | Q2 2024 As Reported | Q2 2024 As Adjusted | | :-------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | | Contract talent solutions | $297,367 (39.1%) | $297,367 (39.1%) | $336,161 (39.3%) | $336,161 (39.3%) | | Permanent placement talent solutions | $114,551 (99.9%) | $114,551 (99.9%) | $130,801 (99.8%) | $130,801 (99.8%) | | Protiviti | $97,556 (19.7%) | $110,357 (22.3%) | $109,717 (22.5%) | $112,947 (23.2%) | | Total | $509,474 (37.2%) | $522,275 (38.1%) | $576,679 (39.2%) | $579,909 (39.4%) | | Gross Margin (in thousands) | YTD 2025 As Reported | YTD 2025 As Adjusted | YTD 2024 As Reported | YTD 2024 As Adjusted | | :-------------------------- | :------------------- | :------------------- | :------------------- | :------------------- | | Contract talent solutions | $594,300 (39.0%) | $594,300 (39.0%) | $686,731 (39.4%) | $686,731 (39.4%) | | Permanent placement talent solutions | $226,412 (99.8%) | $226,412 (99.8%) | $255,349 (99.8%) | $255,349 (99.8%) | | Protiviti | $187,807 (19.3%) | $196,569 (20.2%) | $197,396 (20.8%) | $208,983 (22.0%) | | Total | $1,008,519 (37.1%) | $1,017,281 (37.4%) | $1,139,476 (38.6%) | $1,151,063 (39.0%) | Adjusted Selling, General and Administrative Expenses Adjusted selling, general and administrative (SG&A) expenses for talent solutions segments are lower than reported figures due to the reclassification of investment income from employee deferred compensation trusts. Total adjusted SG&A was $463.081 million (33.8% of revenue) for Q2 2025, compared to $507.934 million (37.1%) reported | SG&A Expenses (in thousands) | Q2 2025 As Reported | Q2 2025 As Adjusted | Q2 2024 As Reported | Q2 2024 As Adjusted | | :--------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | | Contract talent solutions | $318,871 (42.0%) | $278,944 (36.7%) | $308,886 (36.1%) | $298,015 (34.9%) | | Permanent placement talent solutions | $111,218 (97.0%) | $106,292 (92.7%) | $116,285 (88.7%) | $114,653 (87.5%) | | Protiviti | $77,845 (15.7%) | $77,845 (15.7%) | $75,965 (15.6%) | $75,965 (15.6%) | | Total | $507,934 (37.1%) | $463,081 (33.8%) | $501,136 (34.0%) | $488,633 (33.2%) | | SG&A Expenses (in thousands) | YTD 2025 As Reported | YTD 2025 As Adjusted | YTD 2024 As Reported | YTD 2024 As Adjusted | | :--------------------------- | :------------------- | :------------------- | :------------------- | :------------------- | | Contract talent solutions | $595,083 (39.1%) | $569,186 (37.4%) | $640,474 (36.8%) | $598,467 (34.4%) | | Permanent placement talent solutions | $217,353 (95.8%) | $214,529 (94.6%) | $232,861 (91.0%) | $227,346 (88.9%) | | Protiviti | $155,661 (16.0%) | $155,661 (16.0%) | $149,700 (15.7%) | $149,700 (15.7%) | | Total | $968,097 (35.6%) | $939,376 (34.5%) | $1,023,035 (34.7%) | $975,513 (33.1%) | Adjusted Operating Income Adjusted operating income for Q2 2025 significantly improved for talent solutions segments compared to reported figures, primarily due to the reclassification of deferred compensation investment income. Total adjusted operating income for Q2 2025 was $59.194 million (4.3% of revenue), substantially higher than the reported $1.540 million (0.1%) | Operating Income (in thousands) | Q2 2025 As Reported | Q2 2025 As Adjusted | Q2 2024 As Reported | Q2 2024 As Adjusted | | :------------------------------ | :------------------ | :------------------ | :------------------ | :------------------ | | Contract talent solutions | $(21,504) (-2.8%) | $18,423 (2.4%) | $27,275 (3.2%) | $38,146 (4.5%) | | Permanent placement talent solutions | $3,333 (2.9%) | $8,259 (7.2%) | $14,516 (11.1%) | $16,148 (12.3%) | | Protiviti | $19,711 (4.0%) | $32,512 (6.6%) | $33,752 (6.9%) | $36,982 (7.6%) | | Total | $1,540 (0.1%) | $59,194 (4.3%) | $75,543 (5.1%) | $91,276 (6.2%) | | Operating Income (in thousands) | YTD 2025 As Reported | YTD 2025 As Adjusted | YTD 2024 As Reported | YTD 2024 As Adjusted | | :------------------------------ | :------------------- | :------------------- | :------------------- | :------------------- | | Contract talent solutions | $(783) (-0.1%) | $25,114 (1.6%) | $46,257 (2.7%) | $88,264 (5.1%) | | Permanent placement talent solutions | $9,059 (4.0%) | $11,883 (5.2%) | $22,488 (8.8%) | $28,003 (10.9%) | | Protiviti | $32,146 (3.3%) | $40,908 (4.2%) | $47,696 (5.0%) | $59,283 (6.2%) | | Total | $40,422 (1.5%) | $77,905 (2.9%) | $116,441 (3.9%) | $175,550 (6.0%) | Revenue Growth Rates (As Reported vs. As Adjusted) This section presents year-over-year revenue growth rates, both as reported and adjusted for billing days and foreign currency impacts, across global, United States, and International operations for various talent solutions and Protiviti - The 'As Adjusted' growth rates remove the impact of different billing days and constant currency fluctuations from the revenue growth rate calculation[35] | Global Revenue Growth Rates (%) | Q2 2025 As Reported | Q2 2025 As Adjusted | Q2 2024 As Reported | Q2 2024 As Adjusted | | :------------------------------ | :------------------ | :------------------ | :------------------ | :------------------ | | Finance and accounting | -10.8 | -10.8 | -13.6 | -13.5 | | Administrative and customer support | -13.0 | -13.3 | -9.8 | -9.8 | | Technology | 0.3 | 0.4 | -13.1 | -13.1 | | Total contract talent solutions | -11.1 | -11.1 | -14.5 | -14.4 | | Permanent placement talent solutions | -12.5 | -12.6 | -12.2 | -12.0 | | Protiviti | 1.8 | 1.5 | -0.9 | -0.9 | | Total | -7.0 | -7.1 | -10.2 | -10.1 | | United States Revenue Growth Rates (%) | Q2 2025 As Reported | Q2 2025 As Adjusted | Q2 2024 As Reported | Q2 2024 As Adjusted | | :------------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | | Total talent solutions | -11.0 | -11.0 | -15.2 | -15.3 | | Protiviti | -0.7 | -0.7 | 3.3 | 3.1 | | Total | -7.4 | -7.4 | -9.6 | -9.7 | | International Revenue Growth Rates (%) | Q2 2025 As Reported | Q2 2025 As Adjusted | Q2 2024 As Reported | Q2 2024 As Adjusted | | :------------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | | Total talent solutions | -12.2 | -12.6 | -10.7 | -10.0 | | Protiviti | 13.1 | 10.7 | -16.2 | -15.9 | | Total | -5.3 | -6.3 | -12.2 | -11.6 | Global Revenue Growth Rate Reconciliation The reconciliation for global revenue growth rates shows that for Q2 2025, billing days had a positive impact (0.4% for total), while currency had a negative impact (-0.5% for total), resulting in a slightly higher adjusted decline compared to reported | Global Revenue Growth – Q2 2025 (%) | As Reported | Billing Days Impact | Currency Impact | As Adjusted | | :---------------------------------- | :---------- | :------------------ | :-------------- | :---------- | | Finance and accounting | -10.8 | 0.4 | -0.4 | -10.8 | | Administrative and customer support | -13.0 | 0.4 | -0.7 | -13.3 | | Technology | 0.3 | 0.5 | -0.4 | 0.4 | | Total contract talent solutions | -11.1 | 0.4 | -0.4 | -11.1 | | Permanent placement talent solutions | -12.5 | 0.5 | -0.6 | -12.6 | | Total talent solutions | -11.3 | 0.4 | -0.4 | -11.3 | | Protiviti | 1.8 | 0.4 | -0.7 | 1.5 | | Total | -7.0 | 0.4 | -0.5 | -7.1 | United States Revenue Growth Rate Reconciliation For the United States, the billing days impact was negligible (0.0% for total) in Q2 2025, and there was no currency impact, meaning reported and adjusted growth rates were identical for the quarter | US Revenue Growth – Q2 2025 (%) | As Reported | Billing Days Impact | Currency Impact | As Adjusted | | :------------------------------ | :---------- | :------------------ | :-------------- | :---------- | | Contract talent solutions | -10.7 | 0.0 | ― | -10.7 | | Permanent placement talent solutions | -13.2 | 0.0 | ― | -13.2 | | Total talent solutions | -11.0 | 0.0 | ― | -11.0 | | Protiviti | -0.7 | 0.0 | ― | -0.7 | | Total | -7.4 | 0.0 | ― | -7.4 | International Revenue Growth Rate Reconciliation International revenue growth rates for Q2 2025 show a positive impact from billing days (1.5% for total) but a more significant negative impact from currency (-2.5% for total), leading to a larger adjusted decline compared to the reported figures | International Revenue Growth – Q2 2025 (%) | As Reported | Billing Days Impact | Currency Impact | As Adjusted | | :----------------------------------------- | :---------- | :------------------ | :-------------- | :---------- | | Contract talent solutions | -12.5 | 1.4 | -1.8 | -12.9 | | Permanent placement talent solutions | -10.6 | 1.4 | -2.0 | -11.2 | | Total talent solutions | -12.2 | 1.4 | -1.8 | -12.6 | | Protiviti | 13.1 | 1.7 | -4.1 | 10.7 | | Total | -5.3 | 1.5 | -2.5 | -6.3 |