Core Viewpoint - Robert Half's recent earnings report shows a mixed performance with earnings and revenues beating estimates, but significant year-over-year declines raise concerns about future performance [2][10]. Financial Performance - Q2 fiscal 2026 earnings were reported at 41 cents per share, exceeding the consensus estimate by 2.5%, but down 37.9% year-over-year [2]. - Revenues for the quarter reached $1.37 billion, surpassing the consensus by 1.4%, yet reflecting a 7% decline year-over-year [2]. Segment Performance - Talent Solutions revenues were $874.521 million, down 11.3% year-over-year and below the estimate of $914.2 million [3]. - U.S. Talent Solutions revenues were $668 million, a decrease of 11% year-over-year [3]. - Protiviti revenues were $495.2 million, up 2% year-over-year but below expectations [4]. - U.S. Protiviti revenues decreased by 1% year-over-year, while non-U.S. revenues increased by 11% [4]. Currency Impact - Currency exchange rate movements contributed an additional $8 million to total revenues year-over-year, with $4 million attributed to both Talent Solutions and Protiviti [5]. Profitability Metrics - Adjusted gross profit was $522.3 million, down 9.9% year-over-year, with a gross profit margin of 39.1%, declining by 210 basis points [6]. Balance Sheet and Cash Flow - The company ended the quarter with cash and cash equivalents of $380.6 million, down from $547.4 million in the same quarter of the previous year [7]. - Operating cash flow was $119 million, with capital expenditures of $15.2 million and $59 million paid out in dividends [7]. Future Guidance - For Q3 2025, Robert Half expects revenues between $1.31 billion and $1.41 billion, with EPS projected between 37 cents and 47 cents [8]. - Capital expenditures for 2025 are anticipated to be between $75 million and $90 million, with $15 million to $25 million expected in Q3 [9]. Estimate Trends - Since the earnings release, there has been a downward trend in estimates, with a consensus estimate shift of -20.19% [10][11]. VGM Scores - Robert Half holds a Growth Score of B, a Momentum Score of C, and a Value Score of A, placing it in the top 20% for value investment strategy [12]. Overall Outlook - The overall trend in estimates indicates a downward shift, leading to a Zacks Rank of 4 (Sell), suggesting below-average returns in the coming months [13].

Core Insights - Robert Half International Inc. (RHI) reported second-quarter fiscal 2026 results with earnings and revenues exceeding the Zacks Consensus Estimate, yet the market reaction was negative, leading to a 6.1% decline in stock price since the earnings release on July 23 [1] - Quarterly earnings were 41 cents per share, surpassing estimates by 2.5% but reflecting a year-over-year decline of 37.9% [1][7] - Revenues totaled $1.37 billion, exceeding the consensus by 1.4% but down 7% year over year [1][7] Financial Performance - Talent Solutions revenues were $874.521 million, down 11.3% year over year and below the estimate of $914.2 million; U.S. Talent Solutions revenues were $668 million, a decrease of 11% year over year [4] - Protiviti revenues reached $495.2 million, up 2% year over year but below expectations; U.S. Protiviti revenues decreased by 1% to $396 million, while non-U.S. revenues increased by 11% to $99 million [5] - The adjusted gross profit was $522.3 million, down 9.9% year over year, with a gross profit margin of 39.1%, a decline of 210 basis points [8] Market Comparison - RHI's shares have depreciated 37.2% over the past year, contrasting with a 28.4% decline in the Staffing Firms industry and a 17.4% rise in the Zacks S&P 500 composite [2] Guidance and Projections - For Q3 2025, RHI expects revenues between $1.31 billion and $1.41 billion, with an EPS forecast of 37 to 47 cents, below the current consensus estimate of 52 cents [10] - The company anticipates 64.2 billing days in Q3 2025, slightly up from 64.1 billing days in Q3 2024 [11] - Capital expenditures for Q3 are projected between $15 million and $25 million, with full-year estimates for 2025 ranging from $75 million to $90 million [11]

Financial Data and Key Metrics Changes - Global enterprise revenues for the second quarter of 2025 were $1,370 million, down 7% from the same period last year on both a reported and adjusted basis [6] - Net income per share decreased to $0.41 from $0.66 year-over-year [6] - Cash flow from operations was $119 million during the quarter [7] - Return on invested capital was 12% in the second quarter [9] Business Line Data and Key Metrics Changes - Talent Solutions revenues were down 11% year-over-year, with U.S. revenues at $668 million and non-U.S. revenues at $207 million [10][11] - Protiviti's global revenues were $495 million, with U.S. revenues down 1% and non-U.S. revenues up 11% year-over-year [12][13] - Contract Talent Solutions bill rates increased by 3.8% year-over-year, adjusted for revenue mix [12] Market Data and Key Metrics Changes - The unemployment rate for college-educated professionals remained low at 2.5%, indicating labor supply constraints [22] - Job openings are above historical levels, suggesting strong pent-up hiring demand despite subdued hiring activity [22] Company Strategy and Development Direction - The company aims to capitalize on emerging opportunities through its strong brand, technology, and unique business model that includes both professional staffing and business consulting services [7] - The strategic integration of contract professionals sourced through Talent Solutions is seen as a key driver for performance [24] - The company is committed to connecting people to meaningful work and providing clients with the necessary talent and consulting expertise [24] Management's Comments on Operating Environment and Future Outlook - Management noted that fears of economic recession have eased, and small business confidence has rebounded modestly [22] - The tone of client conversations has improved recently, indicating a potential uptick in demand [48] - Protiviti's pipeline remains strong, with new opportunities increasing significantly in the last thirty days [36] Other Important Information - The company distributed a cash dividend of $0.59 per share, totaling $59 million, with an average annual growth of 11.5% since 2004 [8] - The adjusted operating income for the second quarter was $59 million, or 4.3% of revenue [16] Q&A Session Summary Question: Inquiry about bill rate increases - Management indicated that unadjusted bill rates would be higher due to mix impacts, with historical increases of 100 to 200 basis points [28][30] Question: Clarification on Protiviti's project timelines - Management explained that the slight year-on-year revenue decline is due to extended conversion timelines and reduced average project sizes, but the pipeline remains strong [34][36] Question: Dynamics of the entry-level labor market - Management noted that AI has had little impact on revenues so far, and small business clients typically seek experienced staff rather than entry-level graduates [60][62] Question: Performance of financial services clients - Management stated that trends in Protiviti's financial services client base are consistent with overall business trends, with cost consciousness and extended decision cycles [70] Question: Competitive dynamics in Protiviti - Management clarified that competition from the Big Four has stabilized, and competitive dynamics are not a significant factor in the current revenue trends [92] Question: Non-U.S. productivity growth - Management highlighted that non-U.S. productivity growth was driven by favorable comparisons and successful joint projects in Germany and Canada [99]