Robert Half(RHI) - 2025 Q4 - Annual Report

Financial Performance - The Company's service revenues were $5.38 billion in 2025, a decrease of 7.2% from $5.80 billion in 2024[125] - Full-year 2025 net income decreased 47.1% to $133 million, with diluted net income per share decreasing 45.5% to $1.33[125] - Revenues from U.S. operations decreased 7.7% to $4.17 billion, while international revenues decreased 5.4% to $1.21 billion[144] - Contract talent solutions revenues were $2.99 billion, a decrease of 11.0% from $3.36 billion in 2024, driven by a 14.1% decrease in hours worked[145] - Permanent placement talent solutions revenues were $440 million, down 9.8% from $487 million in 2024, due to a 13.6% decrease in placements[146] - Protiviti revenues for 2025 were $1.95 billion, a decrease of 0.1% compared to 2024, driven by a 7.3% decrease in average hourly bill rate, partially offset by a 7.2% increase in billable hours[147] - The company's reported operating income for the year ended December 31, 2025, was $76 million, a decrease of 68.3% compared to $241 million in 2024, representing 1.4% of revenues[161] - Adjusted operating income for 2025 was $183 million, down 45.6% from $336 million in 2024, with a margin of 3.4% of revenues[161] Expenses and Margins - Gross margin dollars for the company were $2.00 billion in 2025, down 10.9% from $2.25 billion in 2024, with a gross margin percentage of 37.2% in 2025 compared to 38.8% in 2024[149][154] - Gross margin for contract talent solutions was $1.17 billion in 2025, down 11.4% from $1.32 billion in 2024, representing 39.0% of revenues[151][154] - Gross margin for Protiviti was $397 million in 2025, down 10.7% from $444 million in 2024, with a reported gross margin percentage of 20.4%[153][154] - Selling, general and administrative expenses were $1.93 billion in 2025, down 4.0% from $2.01 billion in 2024, representing 35.8% of revenues[156][159] - Selling, general and administrative expenses for contract talent solutions were $1.19 billion in 2025, decreasing 4.9% from $1.25 billion in 2024, with a percentage of revenues at 39.9%[157][159] - Selling, general and administrative expenses for permanent placement talent solutions were $426 million in 2025, down 5.2% from $449 million in 2024, with a percentage of revenues at 96.9%[158][159] - Adjusted selling, general and administrative expenses were $1.84 billion in 2025, down 4.5% from $1.93 billion in 2024, with a percentage of revenues at 34.3%[156][159] Cash Flow and Investments - Cash and cash equivalents decreased to $464 million in 2025 from $538 million in 2024, with operating activities providing $320 million in 2025[169] - Net cash used in investing activities for 2025 was $86 million, including capital expenditures of $53 million and investments in employee deferred compensation trusts of $80 million[171] - Cash used in financing activities for 2025 was $330 million, which included $92 million for stock repurchases and $238 million in dividends paid[173] - The company's income from investments held in employee deferred compensation trusts was $106 million in 2025, up from $94 million in 2024, due to positive market returns[164] - The provision for income taxes increased to 31.6% in 2025 from 29.7% in 2024, attributed to nondeductible expenses and fewer tax credits[165] - The company expects capital expenditures for 2026 to range from $70 million to $90 million, with $45 million to $60 million related to software initiatives and technology infrastructure[172] Operational Insights - The U.S. unemployment rate was 4.4% in December 2025, up from 4.1% in December 2024, with college-educated professionals at 2.8%[127] - The U.S. real GDP increased at an annual rate of 4.4% in Q3 2025, compared to 2.3% in 2024, indicating a more conducive macro environment[126] - The Company anticipates ongoing demand for its services, although visibility into future revenues is limited due to macroeconomic conditions[129] - The Company's headcount remained relatively flat in 2025 compared to prior year-end levels, with a decrease in administrative headcount[129] Balance Sheet and Obligations - The company's working capital included $464 million in cash and cash equivalents and $748 million in net accounts receivable as of December 31, 2025[175] - Employee deferred compensation plan obligations totaled $772 million as of December 31, 2025[183] - The Company reported current and long-term operating lease liabilities of $70 million and $176 million, respectively, as of December 31, 2025[180] - Contractual purchase obligations amounted to $221 million, with $127 million expected to be paid within the next 12 months[182] - The company has authorized the repurchase of up to 5.6 million additional shares of common stock, having repurchased 1.7 million shares at a cost of $80 million in 2025[174] - The company entered into a $100 million credit agreement in May 2025, with no borrowings outstanding as of December 31, 2025[177]