Heidrick & Struggles(HSII) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis of the company's financial performance and condition ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS This section presents unaudited condensed consolidated financial statements, including balance sheets, income statements, equity changes, cash flows, and detailed notes on accounting policies and segment information Condensed Consolidated Balance Sheets The company's total assets decreased by 4.45% to $1,141,045 thousand at June 30, 2025, from December 31, 2024. Total liabilities decreased by 12.52%, while total stockholders' equity increased by 8.76% over the same period. Cash and cash equivalents saw a significant decrease, offset by an increase in marketable securities | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | Total Assets | $1,141,045 | $1,194,188 | $(53,143) | -4.45% | | Total Liabilities | $648,554 | $741,371 | $(92,817) | -12.52% | | Total Stockholders' Equity | $492,491 | $452,817 | $39,674 | 8.76% | | Cash and Cash Equivalents | $211,172 | $515,627 | $(304,455) | -59.04% | | Marketable Securities | $188,355 | $47,896 | $140,459 | 293.25% | Condensed Consolidated Statements of Comprehensive Income (Loss) The company reported a significant turnaround from a net loss in Q2 2024 to net income in Q2 2025, with net income reaching $21,073 thousand. For the six months ended June 30, 2025, net income increased substantially by 287.38% to $34,379 thousand, driven by strong revenue growth and improved operating income | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | :--------- | | Net Income (Loss) | $21,073 | $(5,157) | $26,230 | Turnaround | | Revenue before reimbursements | $317,248 | $278,626 | $38,622 | 13.86% | | Operating Income (Loss) | $25,230 | $(4,183) | $29,413 | Turnaround | | Diluted EPS | $0.99 | $(0.25) | $1.24 | Turnaround | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | :--------- | | Net Income (Loss) | $34,379 | $8,875 | $25,504 | 287.38% | | Diluted EPS | $1.61 | $0.42 | $1.19 | 283.33% | Condensed Consolidated Statements of Changes in Stockholders' Equity Total stockholders' equity increased by $39,674 thousand to $492,491 thousand at June 30, 2025, from $452,817 thousand at December 31, 2024. This increase was primarily driven by net income and other comprehensive income, partially offset by cash dividends declared and dividend equivalents on restricted stock units | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :------------------------------- | :--------------------------- | :-------------------- | :--------- | | Total Stockholders' Equity | $452,817 | $492,491 | $39,674 | 8.76% | | Net Income (Six Months) | N/A | $34,379 | N/A | N/A | | Other Comprehensive Income (Six Months) | N/A | $9,021 | N/A | N/A | | Cash Dividends Declared (Six Months) | N/A | $(6,188) | N/A | N/A | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, the company experienced a net decrease in cash, cash equivalents, and restricted cash of $304,371 thousand. This was primarily due to increased cash outflows from operating activities ($163,614 thousand) and investing activities ($150,415 thousand), partially offset by a positive effect from exchange rate fluctuations | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | :--------- | | Net Cash Used in Operating Activities | $(163,614) | $(140,902) | $(22,712) | 16.12% | | Net Cash Used in Investing Activities | $(150,415) | $(65,226) | $(85,189) | 130.61% | | Net Cash Used in Financing Activities | $(10,583) | $(10,145) | $(438) | 4.32% | | Effect of Exchange Rate Fluctuations | $20,241 | $(6,423) | $26,664 | Turnaround | | Net Decrease in Cash, Cash Equivalents and Restricted Cash | $(304,371) | $(222,696) | $(81,675) | 36.68% | Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations and disclosures for the condensed consolidated financial statements, covering accounting policies, revenue, credit losses, leases, financial instruments, goodwill, stock compensation, and segment information Note 1. Basis of Presentation of Interim Financial Information The unaudited interim financial statements are prepared in accordance with SEC rules and GAAP, requiring management estimates and assumptions. These statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - Interim financial statements are unaudited and prepared under SEC rules and GAAP, requiring management estimates and assumptions[18] - Estimates are subject to uncertainty, and actual results could differ; statements should be read with the 2024 Form 10-K[18] Note 2. Summary of Significant Accounting Policies This note outlines key accounting policies, including the reconciliation of restricted cash, the computation of basic and diluted earnings per share, lease accounting practices, and the methodology for goodwill impairment testing. It also highlights recently issued FASB Accounting Standards Updates (ASUs) related to income tax and expense disclosures Restricted Cash Reconciliation (June 30, 2025) | Item | Amount (in thousands) | | :------------------------------------------ | :-------------------- | | Cash and cash equivalents | $211,172 | | Restricted cash included within other non-current assets | $270 | | Total cash, cash equivalents and restricted cash | $211,442 | Diluted EPS (Three Months Ended June 30, 2025) | Metric | Amount | | :-------------------------- | :----- | | Net income (loss) | $21,073 | | Diluted weighted average shares outstanding | 21,215 | | Diluted earnings (loss) per share | $0.99 | - Goodwill impairment tests are performed at least annually or when triggering events occur, comparing the fair value of reporting units (Americas, Europe, Asia Pacific, On-Demand Talent, Heidrick Consulting) to their carrying amounts using a discounted cash flow methodology[31][32] - The company is evaluating the impact of ASU No. 2023-09 (Income Taxes) and ASU No. 2024-03 (Expense Disaggregation Disclosures), effective for annual periods beginning after December 15, 2024, and December 15, 2026, respectively[33][34] Note 3. Revenue Revenue is recognized as performance obligations are satisfied across Executive Search, On-Demand Talent, and Heidrick Consulting segments. Executive Search revenue is recognized over approximately six months, On-Demand Talent revenue is recognized based on invoicing rights, and Heidrick Consulting revenue is recognized over time using input methods. Contract assets and liabilities are generally classified as current - Executive Search revenue is recognized over time, typically six months, based on estimated personnel time, including fixed retainers and variable 'uptick' revenue[35][37] - On-Demand Talent revenue is recognized over time as services are provided, corresponding directly with the value provided to the client for performance completed to date[39] - Heidrick Consulting revenue is primarily recognized over time using input methods, such as total cost or time incurred as a percentage of the total estimated engagement cost or time[40] Contract Balances (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change | | :------------------ | :------------ | :---------------- | :----- | | Total contract assets | $41,559 | $33,150 | $8,409 | | Deferred revenue | $58,859 | $51,085 | $7,774 | - During the six months ended June 30, 2025, the Company recognized $42.7 million in revenue that was included in the contract liabilities balance at the beginning of the period[46] Note 4. Credit Losses The company's allowance for credit losses on trade receivables increased to $8,426 thousand at June 30, 2025, from $7,296 thousand at December 31, 2024. This change reflects a provision for credit losses of $5,290 thousand, partially offset by write-offs of $4,426 thousand - The expected credit loss allowance methodology for accounts receivable is based on historical collection experience, current and future economic conditions, and specific client reviews[48] Allowance for Credit Losses on Trade Receivables (in thousands) | Item | Amount | | :-------------------------- | :----- | | Balance at December 31, 2024 | $7,296 | | Provision for credit losses | $5,290 | | Write-offs | $(4,426) | | Foreign currency translation | $266 | | Balance at June 30, 2025 | $8,426 | Note 5. Property and Equipment, net Net property and equipment increased by 5.81% to $54,687 thousand at June 30, 2025, from $51,685 thousand at December 31, 2024. Depreciation expense for the six months ended June 30, 2025, was $6.6 million, a 46.67% increase compared to the prior year Property and Equipment, net (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change | Change (%) | | :---------------------- | :------------ | :---------------- | :----- | :--------- | | Property and equipment, net | $54,687 | $51,685 | $3,002 | 5.81% | Depreciation Expense (Six Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $6.6 | | 2024 | $4.5 | Note 6. Leases The company's lease portfolio primarily consists of operating leases for office space and equipment. Total lease cost for the six months ended June 30, 2025, decreased by 6.75% to $16,207 thousand. As of June 30, 2025, the weighted average remaining lease term was 7.6 years, with a weighted average discount rate of 5.31% Total Lease Cost (Six Months Ended June 30, in thousands) | Year | Amount | | :--- | :----- | | 2025 | $16,207 | | 2024 | $17,381 | Operating Lease Metrics (June 30, 2025) | Metric | Value | | :-------------------------- | :-------- | | Weighted Average Remaining Lease Term | 7.6 years | | Weighted Average Discount Rate | 5.31% | Future Operating Lease Liabilities (June 30, 2025, in thousands) | Year | Operating Lease Maturity | | :--- | :----------------------- | | 2025 | $9,247 | | 2026 | $18,351 | | 2027 | $18,362 | | 2028 | $16,301 | | 2029 | $14,498 | | Thereafter | $53,970 | | Total lease payments | $130,729 | | Less: Interest | $25,590 | | Present value of lease liabilities | $105,139 | Note 7. Financial Instruments and Fair Value The company's financial instruments include cash, cash equivalents, and marketable securities (U.S. Treasury bills classified as available-for-sale), with fair value measurements categorized into Level 1 and Level 2 inputs. Investments in the U.S. non-qualified deferred compensation plan and the German pension plan are also detailed Cash, Cash Equivalents, and Marketable Securities (June 30, 2025, in thousands) | Item | Fair Value | | :---------------------- | :--------- | | Cash | $190,457 | | Money market funds | $20,715 | | U.S. Treasury securities | $188,355 | | Total | $399,527 | - Unrealized losses on U.S. Treasury securities at June 30, 2025, totaled $2 thousand, caused by fluctuations in market interest rates. The company does not intend to sell these investments before recovery of amortized cost[50][58] Investments and Pension Plan Assets/Liabilities (June 30, 2025, in thousands) | Item | Fair Value (Level) | | :------------------------------------------ | :----------------- | | U.S. non-qualified deferred compensation plan | $69,160 (Level 1) | | Retirement and pension plan assets | $12,654 (Level 2) | | Pension benefit obligation | $(14,126) (Level 2) | Note 8. Goodwill and Other Intangible Assets Total goodwill increased by 3.46% to $142,635 thousand at June 30, 2025, primarily due to foreign currency translation. Other intangible assets, net, decreased by 15.57% to $10,539 thousand. In Q2 2024, the company recorded $16.3 million in non-cash goodwill impairment charges for the On-Demand Talent and Europe reporting units Goodwill (in thousands) | Segment | June 30, 2025 | December 31, 2024 | Change | | :---------------- | :------------ | :---------------- | :----- | | Executive Search | $92,809 | $92,203 | $606 | | On-Demand Talent | $109,304 | $105,136 | $4,168 | | Heidrick Consulting | $7,246 | $7,246 | $0 | | Total Goodwill, gross | $209,359 | $204,585 | $4,774 | | Accumulated impairment | $(66,724) | $(66,724) | $0 | | Total Goodwill | $142,635 | $137,861 | $4,774 | - Goodwill impairment charges of $14.8 million for On-Demand Talent and $1.5 million for Europe were recorded in Q2 2024 due to a reduction in forecasted results. These were non-cash charges[69][149][197] Other Intangible Assets, net (in thousands) | Segment | June 30, 2025 | December 31, 2024 | Change | | :---------------- | :------------ | :---------------- | :----- | | Executive Search | $23 | $42 | $(19) | | On-Demand Talent | $8,980 | $10,592 | $(1,612) | | Heidrick Consulting | $1,536 | $1,849 | $(313) | | Total other intangible assets, net | $10,539 | $12,483 | $(1,944) | Intangible Asset Amortization Expense (Six Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $3.3 | | 2024 | $4.2 | Note 9. Other Current and Non-current Assets and Liabilities Other current assets increased by 20.69% to $48,200 thousand at June 30, 2025, primarily due to an increase in contract assets. Other current liabilities significantly increased by 208.39% to $65,898 thousand, mainly driven by the reclassification of earnout liability to current, which in turn caused a substantial decrease in other non-current liabilities Other Current Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change | Change (%) | | :------------------ | :------------ | :---------------- | :----- | :--------- | | Total other current assets | $48,200 | $39,935 | $8,265 | 20.69% | Other Current Liabilities (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change | Change (%) | | :-------------------- | :------------ | :---------------- | :----- | :--------- | | Total other current liabilities | $65,898 | $21,369 | $44,529 | 208.39% | Other Non-Current Liabilities (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change | Change (%) | | :---------------------- | :------------ | :---------------- | :----- | :--------- | | Total other non-current liabilities | $4,527 | $42,905 | $(38,378) | -89.45% | - The significant increase in other current liabilities and decrease in other non-current liabilities is primarily due to the reclassification of earnout liability to current[64][73] Note 10. Line of Credit The company amended its credit agreement on March 17, 2025, establishing a $100 million revolving credit facility with a $75 million expansion feature and extending the maturity to March 17, 2030. As of June 30, 2025, there were no outstanding borrowings, and the company remained in compliance with all financial covenants - The company entered into the Third Amendment to its Credit Agreement on March 17, 2025[74] - A committed revolving credit facility of $100 million is available, including sublimits for letters of credit and swingline loans, with a $75 million expansion feature[74] - The maturity date of the Amended Credit Agreement was extended to March 17, 2030[74] - As of June 30, 2025, and December 31, 2024, there were no outstanding borrowings, and the company was in compliance with all covenants[76] Note 11. Stock-Based Compensation and Common Stock Stockholders approved the Fifth A&R Program, increasing shares reserved for issuance, with 723,899 shares remaining available. For the six months ended June 30, 2025, stock-based compensation expense totaled $6.2 million for salaries and benefits and $1.1 million for G&A. Unrecognized compensation expense for various equity awards totals $21.4 million, and $20.8 million remains available for future common stock repurchases - The Fifth A&R Program was approved, increasing shares reserved for issuance by 649,000, with 723,899 shares remaining available for future awards[77][78] Stock-Based Compensation Expense (Six Months Ended June 30, 2025, in thousands) | Expense Category | Amount | | :-------------------------- | :----- | | Salaries and benefits | $6,235 | | General and administrative expenses | $1,050 | Unrecognized Compensation Expense (June 30, 2025, in millions) | Award Type | Unrecognized Expense | Weighted Average Recognition Period | | :-------------------- | :------------------- | :---------------------------------- | | Restricted Stock Units | $12.4 | 2.3 years | | Performance Stock Units | $7.6 | 2.2 years | | Phantom Stock Units | $1.4 | 2.1 years | - As of June 30, 2025, $20.8 million remains available for future common stock repurchases under the Repurchase Authorization[94] Note 12. Restructuring The company implemented a restructuring plan in 2024 involving a workforce reduction, incurring $6.9 million in employee-related charges. No new charges were incurred in the first six months of 2025, and the restructuring accrual balance decreased to $1,082 thousand at June 30, 2025, due to cash payments - The 2024 Plan was implemented to optimize future growth and profitability through a workforce reduction[95] - Restructuring charges incurred to date for the 2024 Plan totaled $6,939 thousand, all employee-related[96] Changes in Restructuring Accrual (Six Months Ended June 30, 2025, in thousands) | Item | Employee Related | | :--------------- | :--------------- | | Accrual balance at December 31, 2024 | $2,506 | | Cash payments | $(1,424) | | Accrual balance at June 30, 2025 | $1,082 | Note 13. Income Taxes The effective tax rate for the three months ended June 30, 2025, was 32.3%, a significant change from (798.4)% in the prior year, influenced by income mix and discrete items, including goodwill impairment in 2024. For the six months, the effective tax rate was 29.5% in 2025, down from 60.3% in 2024. New tax legislation (OBBBA) is not expected to have a material impact Effective Tax Rates | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30 | 32.3% | (798.4)% | | Six Months Ended June 30 | 29.5% | 60.3% | - The effective tax rate changes were impacted by the mix of income, tax effect on discrete items, and goodwill impairment in 2024[97][98] - The 'One Big Beautiful Bill Act' (OBBBA) signed on July 4, 2025, is not expected to have a material impact on the company's results of operations[99] Note 14. Changes in Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) improved from $(14,045) thousand at December 31, 2024, to $(5,024) thousand at June 30, 2025. This $9,021 thousand improvement was primarily driven by a positive foreign currency translation adjustment of $9,067 thousand Changes in AOCI (Six Months Ended June 30, 2025, in thousands) | Item | Amount | | :------------------------------------------ | :------- | | Balance at December 31, 2024 | $(14,045) | | Other comprehensive income (loss) before reclassification, net of tax | $9,021 | | Balance at June 30, 2025 | $(5,024) | - The primary driver of the AOCI improvement was a foreign currency translation adjustment of $9,067 thousand[101] Note 15. Segment Information The company operates in five segments: Executive Search (Americas, Europe, Asia Pacific), On-Demand Talent, and Heidrick Consulting, with performance evaluated by net revenue and Adjusted EBITDA. For the six months ended June 30, 2025, all segments except Heidrick Consulting reported positive Adjusted EBITDA, with Executive Search Americas being the largest contributor - The company's five operating segments are Executive Search (Americas, Europe, Asia Pacific), On-Demand Talent, and Heidrick Consulting[102] - Performance is evaluated based on net revenue and Adjusted EBITDA, which is a non-GAAP financial measure[105][106] Adjusted EBITDA by Segment (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change | Change (%) | | :-------------------- | :----- | :----- | :----- | :--------- | | Executive Search | $106,849 | $101,111 | $5,738 | 5.67% | | On-Demand Talent | $1,428 | $(2,550) | $3,978 | Turnaround | | Heidrick Consulting | $(1,541) | $(3,422) | $1,881 | Improvement | | Total segment Adjusted EBITDA | $106,736 | $95,139 | $11,597 | 12.19% | | Total Adjusted EBITDA | $62,974 | $54,679 | $8,295 | 15.17% | Revenue before reimbursements (net revenue) by Segment (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change | Change (%) | | :-------------------- | :----- | :----- | :----- | :--------- | | Executive Search | $451,564 | $411,448 | $40,116 | 9.75% | | On-Demand Talent | $90,430 | $79,752 | $10,678 | 13.39% | | Heidrick Consulting | $58,832 | $52,623 | $6,209 | 11.80% | | Total Net Revenue | $600,826 | $543,823 | $57,003 | 10.48% | Note 16. Guarantees The company has utilized letters of credit, primarily for office lease agreements, with a maximum undiscounted payment obligation of approximately $4.7 million as of June 30, 2025. No event of default currently exists or is expected - The company has letters of credit supporting obligations, primarily for office lease agreements[113] - The maximum amount of undiscounted payments required in the event of default on all outstanding letters of credit is approximately $4.7 million as of June 30, 2025[113] - No event of default exists or is expected, so no accrual has been made for these arrangements[113] Note 17. Commitments and Contingencies The company faces contingent liabilities from various pending claims and litigation arising in the ordinary course of business. Management believes the ultimate resolution of these matters will not have a material adverse effect on its financial condition, results of operations, or liquidity - The company has contingent liabilities from various pending claims and litigation matters in the ordinary course of business[114] - Management believes the ultimate resolution of these matters will not have a material adverse effect on the company's financial condition, results of operations, or liquidity[114] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on the company's financial performance and condition, including an executive overview of its business, key performance indicators, compensation model, and detailed analysis of results of operations for the three and six months ended June 30, 2025, compared to the prior year. It also covers liquidity, capital resources, critical accounting policies, and recently issued accounting standards Executive Overview Heidrick & Struggles International, Inc. is a global human capital leadership advisory firm offering executive search, consulting, and on-demand talent services. With over 500 consultants worldwide, the company has been a leadership advisor for more than 70 years, focusing on improving leadership team effectiveness for clients - Heidrick & Struggles International, Inc. is a human capital leadership advisory firm[117] - The company provides executive search, consulting, and on-demand talent services globally[117] - It operates with over 500 consultants in major cities worldwide and has over 70 years of experience as a leadership advisor[117] Our Business The company's core services include Executive Search, which focuses on placing top-level senior executives using data-driven tools like the Heidrick Leadership Framework and Heidrick Connect. On-Demand Talent provides independent professionals for interim and project-based roles, while Heidrick Consulting offers solutions for leadership assessment, team acceleration, and culture shaping. A key strategic focus is expanding revenue streams beyond executive search - Executive Search focuses on placing top-level senior executives, utilizing a relationship-based, data-driven approach with tools like the Heidrick Leadership Framework and Heidrick Connect[118][120] - On-Demand Talent provides clients with access to top independent talent for interim leadership roles and critical project-based initiatives[122] - Heidrick Consulting partners with organizations to enhance human capital development and organizational design through solutions such as leadership assessment, team and organization acceleration, and culture shaping[123][125] - The company is focused on expanding revenue streams beyond its executive search business through product diversification and strategic investments[127] Key Performance Indicators The company assesses its performance using primary financial measures such as net revenue, Adjusted EBITDA, and Adjusted EBITDA margin, alongside operational metrics like consultant headcount, confirmed search trends, consultant productivity, and average revenue per search. These non-GAAP measures are considered supplemental for understanding ongoing operating results and facilitating period-to-period comparisons - Primary financial performance measures include net revenue, Adjusted EBITDA, and Adjusted EBITDA margin[128] - Operational measures for performance assessment include consultant headcount, confirmed search trends, consultant productivity, and average revenue per search[128] - Non-GAAP financial measures are used by management for decision-making and comparison, providing supplemental information to GAAP results[133] Our Compensation Model Consultant compensation comprises fixed and variable components, with the variable portion directly linked to net revenue generation and individual performance against non-financial measures. The total variable compensation is discretionary, based on company-wide financial targets approved by the Human Resources and Compensation Committee, and paid annually in the first half of the year following when it was earned - Consultant compensation includes both fixed and variable components[134] - The variable portion of compensation is directly tied to net revenue generated and individual performance against non-financial measures[134] - Total variable compensation is discretionary, based on company-wide financial targets approved by the Human Resources and Compensation Committee[135] Results of Operations This section details the company's financial performance for the three and six months ended June 30, 2025, compared to the prior year. It covers consolidated revenue, operating expenses, non-operating income, and segment-specific performance, highlighting significant increases in net revenue and Adjusted EBITDA, and a turnaround from net loss to net income Consolidated Financial Highlights (Three Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Total Revenue | $321.9 | $282.9 | $39.0 | 13.8% | | Net Revenue | $317.2 | $278.6 | $38.6 | 13.9% | | Operating Income (Loss) | $25.2 | $(4.2) | $29.4 | Turnaround | | Adjusted EBITDA | $33.9 | $28.8 | $5.0 | 17.5% | | Adjusted EBITDA Margin | 10.7% | 10.3% | 0.4 pp | N/A | Three Months Ended June 30, 2025, Compared to the Three Months Ended June 30, 2024 For Q2 2025, consolidated total revenue increased by 13.8% to $321.9 million, with net revenue up 13.9% to $317.2 million, driven by growth across all segments. Operating income turned around from a loss to a profit, and Adjusted EBITDA increased by 17.5% to $33.9 million, improving the margin to 10.7% Total revenue Consolidated total revenue increased by $39.0 million, or 13.8%, to $321.9 million for the three months ended June 30, 2025, primarily due to the increase in revenue before reimbursements (net revenue) Consolidated Total Revenue (Three Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $321.9 | | 2024 | $282.9 | - Total revenue increased by $39.0 million (+13.8%) primarily due to higher net revenue[139] Revenue before reimbursements (net revenue) Consolidated net revenue increased by 13.9% to $317.2 million, with positive foreign exchange impact of $4.1 million. Executive Search net revenue grew by 13.4% due to a 5.2% increase in confirmations. On-Demand Talent and Heidrick Consulting net revenues increased by 14.3% and 16.6% respectively, driven by higher project volumes and leadership assessment engagements Net Revenue by Segment (Three Months Ended June 30, in millions) | Segment | 2025 | 2024 | Change | Change (%) | | :------------------ | :--- | :--- | :----- | :--------- | | Executive Search | $238.2 | $209.9 | $28.2 | 13.4% | | On-Demand Talent | $47.9 | $41.9 | $6.0 | 14.3% | | Heidrick Consulting | $31.2 | $26.8 | $4.4 | 16.6% | | Consolidated Net Revenue | $317.2 | $278.6 | $38.6 | 13.9% | - Foreign exchange rate fluctuations positively impacted results by $4.1 million, or 1.5%[140] Executive Search Productivity (Three Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------------ | :--------- | :--------- | | Annualized net Executive Search revenue per consultant | $2.3 million | $2.0 million | | Average revenue per executive search | $162,000 | $151,000 | Salaries and benefits Consolidated salaries and benefits expense increased by 17.6% to $209.2 million, primarily due to a $14.1 million increase in fixed compensation and a $17.2 million increase in variable compensation driven by higher consultant productivity. As a percentage of net revenue, it rose to 65.9% from 63.8% Consolidated Salaries and Benefits Expense (Three Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $209.2 | | 2024 | $177.9 | - Fixed compensation increased by $14.1 million, and variable compensation increased by $17.2 million due to higher bonus accruals related to increased consultant productivity[142] - As a percentage of net revenue, salaries and benefits expense was 65.9% in 2025, up from 63.8% in 2024[143] General and administrative expenses Consolidated general and administrative expenses decreased by 9.2% to $42.2 million, mainly due to a $3.4 million decrease in the Atreus earnout accrual and reduced Global Partner Conference costs. As a percentage of net revenue, it decreased to 13.3% from 16.7% Consolidated General and Administrative Expenses (Three Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $42.2 | | 2024 | $46.5 | - The decrease was primarily due to a $3.4 million adjustment to decrease the Atreus earnout accrual and decreased costs associated with the 2024 Global Partner Conference[144][145] - As a percentage of net revenue, general and administrative expenses were 13.3% in 2025, down from 16.7% in 2024[145] Cost of services Consolidated cost of services increased by 16.5% to $34.6 million, primarily driven by an increased volume of On-Demand Talent and consulting projects. As a percentage of net revenue, it slightly increased to 10.9% from 10.7% Consolidated Cost of Services (Three Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $34.6 | | 2024 | $29.7 | - The increase was primarily due to an increase in the volume of On-Demand Talent and consulting projects[146] - As a percentage of net revenue, cost of services was 10.9% in 2025, compared to 10.7% in 2024[147] Research and development Consolidated R&D expense increased by 7.7% to $6.0 million, reflecting the company's ongoing focus on developing new technology-enabled products and services to enhance competitiveness across its Executive Search, Heidrick Consulting, and On-Demand Talent offerings Consolidated R&D Expense (Three Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $6.0 | | 2024 | $5.6 | - The company is focused on developing new technologies to enhance existing products and services and expand its offerings across all segments[148] Impairment charges No impairment charges were recorded in Q2 2025. In Q2 2024, the company recorded $14.8 million in goodwill impairment for On-Demand Talent and $1.5 million for Europe, totaling $16.3 million, due to a reduction in forecasted results. These were non-cash charges - No impairment charges were recorded for the three months ended June 30, 2025[11] Goodwill Impairment Charges (Three Months Ended June 30, 2024, in millions) | Segment | Amount | | :---------------- | :----- | | On-Demand Talent | $14.8 | | Europe | $1.5 | | Total | $16.3 | - The impairment charges were non-cash in nature and did not affect liquidity, cash flows, borrowing capability, or debt covenants[149] Restructuring charges No restructuring charges were incurred in Q2 2025. In Q2 2024, the company incurred $6.9 million in restructuring charges related to a workforce reduction - No restructuring charges were incurred for the three months ended June 30, 2025[11] - The company incurred $6.9 million in restructuring charges during the three months ended June 30, 2024, related to a workforce reduction[150] Adjusted EBITDA Consolidated Adjusted EBITDA increased by 17.5% to $33.9 million, with the Adjusted EBITDA margin improving to 10.7% from 10.3% in Q2 2024 Consolidated Adjusted EBITDA (Three Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $33.9 | | 2024 | $28.8 | - Adjusted EBITDA increased by $5.0 million (+17.5%)[151] - Adjusted EBITDA margin improved to 10.7% in 2025 from 10.3% in 2024[151] Net non-operating income Net non-operating income increased to $5.9 million from $3.6 million in Q2 2024, primarily driven by higher 'Other, net' income due to unrealized gains on the deferred compensation plan Net Non-Operating Income (Three Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $5.9 | | 2024 | $3.6 | - 'Other, net' income was $3.3 million in 2025, up from $1.0 million in 2024, primarily due to unrealized gains on the deferred compensation plan[153] Income taxes The income tax provision for Q2 2025 was $10.1 million on income before taxes of $31.1 million, resulting in an effective tax rate of 32.3%. This contrasts with Q2 2024, which had a provision of $4.6 million on a loss before taxes of $0.6 million, leading to a negative effective tax rate Income Taxes (Three Months Ended June 30, in millions) | Metric | 2025 | 2024 | | :-------------------- | :--- | :--- | | Income (Loss) before taxes | $31.1 | $(0.6) | | Provision for income taxes | $10.1 | $4.6 | | Effective tax rate | 32.3% | (798.4)% | Executive Search - Americas Net revenue increased by 8.9% to $160.2 million, driven by a 3.7% rise in executive search confirmations. However, Adjusted EBITDA decreased by 3.0% to $46.7 million, and the margin declined to 29.1% due to a 19.7% increase in salaries and benefits, outpacing revenue growth Americas Segment Performance (Three Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Net Revenue | $160.2 | $147.1 | $13.1 | 8.9% | | Salaries and benefits expense | $100.4 | $86.8 | $13.6 | 15.7% | | Adjusted EBITDA | $46.7 | $48.1 | $(1.5) | -3.0% | | Adjusted EBITDA Margin | 29.1% | 32.7% | -3.6 pp | N/A | - The increase in net revenue was primarily due to a 3.7% increase in the number of executive search confirmations[155] Executive Search - Europe Net revenue surged by 30.9% to $52.5 million, driven by a 20.8% increase in executive search confirmations and positive foreign exchange impacts. Adjusted EBITDA significantly improved by 89.7% to $5.4 million, and the margin rose to 10.3%, despite a 32.9% increase in salaries and benefits Europe Segment Performance (Three Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Net Revenue | $52.5 | $40.1 | $12.4 | 30.9% | | Salaries and benefits expense | $38.6 | $29.0 | $9.6 | 32.9% | | Adjusted EBITDA | $5.4 | $2.8 | $2.5 | 89.7% | | Adjusted EBITDA Margin | 10.3% | 7.1% | 3.2 pp | N/A | - The increase in net revenue was primarily due to a 20.8% increase in executive search confirmations and a positive foreign exchange impact of $2.7 million (6.8%)[160] Executive Search - Asia Pacific Net revenue increased by 12.0% to $25.6 million, driven by a 10.6% increase in executive search confirmations. Adjusted EBITDA improved by 44.1% to $2.5 million, and the margin rose to 9.8%, despite a 15.2% increase in salaries and benefits Asia Pacific Segment Performance (Three Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Net Revenue | $25.6 | $22.8 | $2.8 | 12.0% | | Salaries and benefits expense | $19.3 | $16.8 | $2.5 | 15.2% | | Adjusted EBITDA | $2.5 | $1.7 | $0.8 | 44.1% | | Adjusted EBITDA Margin | 9.8% | 7.6% | 2.2 pp | N/A | - The increase in net revenue was primarily due to a 10.6% increase in the number of executive search confirmations[166] On-Demand Talent Net revenue increased by 14.3% to $47.9 million due to higher project volume. The segment reported an Adjusted EBITDA of $1.0 million, a significant turnaround from a $1.6 million loss in Q2 2024, with the margin turning positive to 2.1%. This improvement was aided by decreases in salaries and benefits and G&A expenses, including a fair value adjustment to the Atreus earnout accrual On-Demand Talent Segment Performance (Three Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Net Revenue | $47.9 | $41.9 | $6.0 | 14.3% | | Salaries and benefits expense | $11.2 | $14.0 | $(2.7) | -20.2% | | General and administrative expense | $4.6 | $9.3 | $(4.7) | -59.8% | | Adjusted EBITDA | $1.0 | $(1.6) | $2.7 | Turnaround | | Adjusted EBITDA Margin | 2.1% | (3.9)% | 6.0 pp | N/A | - The decrease in salaries and benefits was partly due to a fair value adjustment to reduce the Atreus contingent compensation accrual[172] - The decrease in general and administrative expense was partly due to a $3.4 million fair value adjustment to decrease the Atreus earnout accrual[173] Heidrick Consulting Net revenue increased by 16.6% to $31.2 million, driven by more leadership assessment consulting engagements. The segment reported an Adjusted EBITDA of $0.6 million, a significant improvement from a $1.4 million loss in Q2 2024, with the margin turning positive to 1.8% Heidrick Consulting Segment Performance (Three Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Net Revenue | $31.2 | $26.8 | $4.4 | 16.6% | | Salaries and benefits expense | $22.7 | $20.3 | $2.6 | 12.2% | | Adjusted EBITDA | $0.6 | $(1.4) | $2.0 | Turnaround | | Adjusted EBITDA Margin | 1.8% | (5.2)% | 7.0 pp | N/A | - The increase in net revenue was primarily due to increases in leadership assessment consulting engagements[177] Global Operations Support Global Operations Support reported an Adjusted EBITDA loss of $17.6 million, an increase in loss of 9.7% compared to Q2 2024. This was primarily due to increases in salaries and benefits (20.2%) and general and administrative expenses (7.1%) Global Operations Support Performance (Three Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Adjusted EBITDA Loss | $(17.6) | $(16.1) | $(1.6) | -9.7% | | Salaries and benefits expense | N/A | N/A | $1.9 | 20.2% | | General and administrative expenses | N/A | N/A | $0.5 | 7.1% | Six Months Ended June 30, 2025, Compared to the Six Months Ended June 30, 2024 For the first half of 2025, consolidated total revenue increased by 10.4% to $609.4 million, with net revenue up 10.5% to $600.8 million, driven by growth across all segments. Adjusted EBITDA increased by 15.2% to $63.0 million, improving the margin to 10.5% Consolidated Financial Highlights (Six Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Total Revenue | $609.4 | $552.0 | $57.4 | 10.4% | | Net Revenue | $600.8 | $543.8 | $57.0 | 10.5% | | Adjusted EBITDA | $63.0 | $54.7 | $8.3 | 15.2% | | Adjusted EBITDA Margin | 10.5% | 10.1% | 0.4 pp | N/A | Total revenue Consolidated total revenue increased by $57.4 million, or 10.4%, to $609.4 million for the six months ended June 30, 2025, primarily due to the increase in revenue before reimbursements (net revenue) Consolidated Total Revenue (Six Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $609.4 | | 2024 | $552.0 | - Total revenue increased by $57.4 million (+10.4%) primarily due to higher net revenue[186] Revenue before reimbursements (net revenue) Consolidated net revenue increased by 10.5% to $600.8 million, with a positive foreign exchange impact of $0.9 million. Executive Search net revenue grew by 9.7% due to a 5.2% increase in confirmations. On-Demand Talent and Heidrick Consulting net revenues increased by 13.4% and 11.8% respectively, driven by higher project volumes and leadership assessment engagements Net Revenue by Segment (Six Months Ended June 30, in millions) | Segment | 2025 | 2024 | Change | Change (%) | | :------------------ | :--- | :--- | :----- | :--------- | | Executive Search | $451.6 | $411.4 | $40.1 | 9.7% | | On-Demand Talent | $90.4 | $79.8 | $10.7 | 13.4% | | Heidrick Consulting | $58.8 | $52.6 | $6.2 | 11.8% | | Consolidated Net Revenue | $600.8 | $543.8 | $57.0 | 10.5% | - Foreign exchange rate fluctuations positively impacted results by $0.9 million, or 0.2%[187] Executive Search Productivity (Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------------ | :--------- | :--------- | | Annualized net Executive Search revenue per consultant | $2.1 million | $2.0 million | | Average revenue per executive search | $149,000 | $143,000 | Salaries and benefits Consolidated salaries and benefits expense increased by 13.2% to $398.7 million, primarily due to an $18.3 million increase in fixed compensation and a $28.1 million increase in variable compensation driven by higher consultant productivity. As a percentage of net revenue, it rose to 66.4% from 64.8% Consolidated Salaries and Benefits Expense (Six Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $398.7 | | 2024 | $352.3 | - Fixed compensation increased by $18.3 million, and variable compensation increased by $28.1 million due to higher bonus accruals related to increased consultant productivity[189] - As a percentage of net revenue, salaries and benefits expense was 66.4% in 2025, up from 64.8% in 2024[190] General and administrative expenses Consolidated general and administrative expenses decreased by 4.8% to $83.6 million, mainly due to a $2.5 million decrease in the Atreus earnout accrual and reduced Global Partner Conference costs. As a percentage of net revenue, it decreased to 13.9% from 16.1% Consolidated General and Administrative Expenses (Six Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $83.6 | | 2024 | $87.8 | - The decrease was primarily due to a $2.5 million fair value adjustment to decrease the Atreus earnout accrual and decreased costs associated with the 2024 Global Partner Conference[191] - As a percentage of net revenue, general and administrative expenses were 13.9% in 2025, down from 16.1% in 2024[192] Cost of services Consolidated cost of services increased by 13.2% to $64.7 million, primarily driven by an increased volume of On-Demand Talent and consulting projects. As a percentage of net revenue, it slightly increased to 10.8% from 10.5% Consolidated Cost of Services (Six Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $64.7 | | 2024 | $57.1 | - The increase was primarily due to an increase in the volume of On-Demand Talent and consulting projects[193] - As a percentage of net revenue, cost of services was 10.8% in 2025, compared to 10.5% in 2024[194] Research and development Consolidated R&D expense increased by 9.8% to $12.4 million, reflecting the company's continued investment in technology-enabled products and services to enhance competitiveness across its Executive Search, Heidrick Consulting, and On-Demand Talent offerings Consolidated R&D Expense (Six Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $12.4 | | 2024 | $11.3 | - The company is focused on developing new technologies to enhance existing products and services and expand its offerings across all segments[196] Impairment charges No impairment charges were recorded in H1 2025. In H1 2024, the company recorded $14.8 million in goodwill impairment for On-Demand Talent and $1.5 million for Europe, totaling $16.3 million, due to a reduction in forecasted results. These were non-cash charges - No impairment charges were recorded for the six months ended June 30, 2025[11] Goodwill Impairment Charges (Six Months Ended June 30, 2024, in millions) | Segment | Amount | | :---------------- | :----- | | On-Demand Talent | $14.8 | | Europe | $1.5 | | Total | $16.3 | - The impairment charges were non-cash in nature and did not affect liquidity, cash flows, borrowing capability, or debt covenants[197] Restructuring charges No restructuring charges were incurred in H1 2025. In H1 2024, the company incurred $6.9 million in restructuring charges related to a workforce reduction - No restructuring charges were incurred for the six months ended June 30, 2025[11] - The company incurred $6.9 million in restructuring charges during the six months ended June 30, 2024, related to a workforce reduction[198] Adjusted EBITDA Consolidated Adjusted EBITDA increased by 15.2% to $63.0 million, with the Adjusted EBITDA margin improving to 10.5% from 10.1% in H1 2024 Consolidated Adjusted EBITDA (Six Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $63.0 | | 2024 | $54.7 | - Adjusted EBITDA increased by $8.3 million (+15.2%)[199] - Adjusted EBITDA margin improved to 10.5% in 2025 from 10.1% in 2024[199] Net non-operating income Net non-operating income decreased to $7.3 million from $10.3 million in H1 2024, primarily due to a decrease in 'Other, net' income, despite stable net interest income Net Non-Operating Income (Six Months Ended June 30, in millions) | Year | Amount | | :--- | :----- | | 2025 | $7.3 | | 2024 | $10.3 | - Interest, net, was stable at approximately $6.6 million in 2025 and $6.7 million in 2024[200] - 'Other, net' income was $0.7 million in 2025, down from $3.6 million in 2024, mainly from unrealized gains on the deferred compensation plan, partially offset by foreign exchange losses[201] Income taxes The income tax provision for H1 2025 was $14.4 million on income before taxes of $48.8 million, resulting in an effective tax rate of 29.5%. This is a decrease from H1 2024, which had a provision of $13.5 million on income before taxes of $22.4 million, with an effective tax rate of 60.3% Income Taxes (Six Months Ended June 30, in millions) | Metric | 2025 | 2024 | | :-------------------- | :--- | :--- | | Income before taxes | $48.8 | $22.4 | | Provision for income taxes | $14.4 | $13.5 | | Effective tax rate | 29.5% | 60.3% | Executive Search - Americas Net revenue increased by 7.3% to $304.6 million, driven by increased average revenue per engagement and a 3.6% rise in confirmations. Adjusted EBITDA increased by 1.0% to $90.9 million, but the margin declined to 29.8% due to a 12.3% increase in salaries and benefits, outpacing revenue growth Americas Segment Performance (Six Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Net Revenue | $304.6 | $283.8 | $20.8 | 7.3% | | Salaries and benefits expense | $190.5 | $170.9 | $19.6 | 11.5% | | Adjusted EBITDA | $90.9 | $90.0 | $0.9 | 1.0% | | Adjusted EBITDA Margin | 29.8% | 31.7% | -1.9 pp | N/A | - The increase in net revenue was primarily due to an increase in the average revenue per engagement and a 3.6% increase in executive search confirmations[203] Executive Search - Europe Net revenue increased by 20.0% to $97.8 million, driven by increased average revenue per engagement and a 13.5% rise in confirmations, plus positive foreign exchange impacts. Adjusted EBITDA significantly improved by 68.4% to $10.4 million, and the margin rose to 10.7%, despite a 19.9% increase in salaries and benefits Europe Segment Performance (Six Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Net Revenue | $97.8 | $81.6 | $16.2 | 20.0% | | Salaries and benefits expense | $71.1 | $59.3 | $11.8 | 19.9% | | Adjusted EBITDA | $10.4 | $6.2 | $4.2 | 68.4% | | Adjusted EBITDA Margin | 10.7% | 7.6% | 3.1 pp | N/A | - The increase in net revenue was primarily due to an increase in the average revenue per engagement and a 13.5% increase in executive search confirmations, with a positive foreign exchange impact of $1.9 million (2.3%)[208] Executive Search - Asia Pacific Net revenue increased by 6.5% to $49.1 million, driven by an increase in average revenue per engagement. Adjusted EBITDA improved by 12.3% to $5.5 million, and the margin rose to 11.3%, despite an 11.0% increase in salaries and benefits Asia Pacific Segment Performance (Six Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Net Revenue | $49.1 | $46.1 | $3.0 | 6.5% | | Salaries and benefits expense | $36.1 | $33.0 | $3.1 | 9.4% | | Adjusted EBITDA | $5.5 | $4.9 | $0.6 | 12.3% | | Adjusted EBITDA Margin | 11.3% | 10.7% | 0.6 pp | N/A | - The increase in net revenue was primarily due to an increase in the average revenue per engagement[214] On-Demand Talent Net revenue increased by 13.4% to $90.4 million due to higher project volume and size. The segment reported an Adjusted EBITDA of $1.4 million, a significant turnaround from a $2.6 million loss in H1 2024, with the margin turning positive to 1.6%. This improvement was aided by decreases in salaries and benefits and G&A expenses, including a fair value adjustment to the Atreus earnout accrual On-Demand Talent Segment Performance (Six Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Net Revenue | $90.4 | $79.8 | $10.7 | 13.4% | | Salaries and benefits expense | $22.8 | $23.0 | $(0.2) | -0.9% | | General and administrative expense | $8.4 | $12.0 | $(3.6) | -26.8% | | Adjusted EBITDA | $1.4 | $(2.6) | $4.0 | Turnaround | | Adjusted EBITDA Margin | 1.6% | (3.2)% | 4.8 pp | N/A | - The decrease in salaries and benefits was primarily due to a reduction in the Atreus contingent compensation accrual[220] - The decrease in general and administrative expense was partly due to a $2.5 million fair value adjustment to decrease the Atreus earnout accrual[221] Heidrick Consulting Net revenue increased by 11.8% to $58.8 million, driven by more leadership assessment and development engagements. The segment reported an Adjusted EBITDA loss of $1.5 million, an improvement of $1.9 million from a $3.4 million loss in H1 2024, with the margin improving to (2.6)% Heidrick Consulting Segment Performance (Six Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Net Revenue | $58.8 | $52.6 | $6.2 | 11.8% | | Salaries and benefits expense | $44.3 | $39.2 | $5.1 | 13.0% | | Adjusted EBITDA | $(1.5) | $(3.4) | $1.9 | 55.0% | | Adjusted EBITDA Margin | (2.6)% | (6.5)% | 3.9 pp | N/A | - The increase in net revenue was primarily due to increases in leadership assessment and development consulting engagements[226] Global Operations Support Global Operations Support reported an Adjusted EBITDA loss of $34.5 million, an increase in loss of 12.2% compared to H1 2024. This was primarily due to increases in salaries and benefits (28.0%) and general and administrative expenses (6.0%) Global Operations Support Performance (Six Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :--- | :--- | :----- | :--------- | | Adjusted EBITDA Loss | $(34.5) | $(30.8) | $(3.7) | -12.2% | | Salaries and benefits expense | N/A | N/A | $5.2 | 28.0% | | General and administrative expenses | N/A | N/A | $0.8 | 6.0% | Liquidity and Capital Resources The company believes its available cash, operational funds, and revolving credit facility are sufficient for future operations. Cash, cash equivalents, and marketable securities decreased by 29.1% to $399.5 million at June 30, 2025, with $176.0 million held by foreign subsidiaries. Cash used in operating activities increased by 16.1% to $163.6 million, and cash used in investing activities increased by 130.6% to $150.4 million for the six months ended June 30, 2025 - The company believes its available cash balances, funds from operations, and committed revolving credit facility will be sufficient to finance operations, cash dividends, and stock repurchases for at least the next 12 months[235] Cash, Cash Equivalents and Marketable Securities (in millions) | Date | Amount | | :---------------- | :----- | | June 30, 2025 | $399.5 | | December 31, 2024 | $563.5 | | June 30, 2024 | $296.9 | - At June 30, 2025, $176.0 million of cash, cash equivalents, and marketable securities were held by foreign subsidiaries, a portion of which is considered permanently reinvested[240] Cash Flow Activities (Six Months Ended June 30, in millions) | Activity | 2025 | 2024 | Change | Change (%) | | :-------------------------- | :----- | :----- | :----- | :--------- | | Net cash used in operating activities | $(163.6) | $(140.9) | $(22.7) | 16.1% | | Net cash used in investing activities | $(150.4) | $(65.2) | $(85.2) | 130.6% | | Net cash used in financing activities | $(10.6) | $(10.1) | $(0.5) | 4.9% | Contractual Obligations (June 30, 2025, in millions) | Obligation | Total Amount | | :-------------------------- | :----------- | | Future lease payment obligations | $130.7 | | Asset retirement obligations | $3.7 | Application of Critical Accounting Policies and Estimates The preparation of financial statements requires management to make significant estimates and assumptions, particularly concerning revenue recognition, income taxes, interim effective tax rate, goodwill impairment, and contingent consideration. These estimates are based on uncertain matters, and actual results may differ materially from initial assumptions - Critical accounting policies involve significant estimates and assumptions about highly uncertain matters[251] - Key areas of critical accounting policies include revenue recognition, income taxes, interim effective tax rate, assessment of goodwill for impairment, and contingent consideration[251] - Actual results may differ from these estimates under different assumptions or conditions, potentially impacting financial statements materially[250][251] Recently Issued and Adopted Financial Accounting Standards This section refers to Note 2, 'Summary of Significant Accounting Policies,' within the Condensed Consolidated Financial Statements for detailed information on recently issued and adopted financial accounting standards - Information on recently issued and adopted financial accounting standards is incorporated by reference from Note 2 of the Condensed Consolidated Financial Statements[252] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company is ex