ROBERT HALF INC. Q4 FY2024 earnings call

• Global enterprise revenues for Q4 2024 were $1.382 billion, down 6% as-reported and 7% as-adjusted. - Protiviti reported year-on-year revenue growth for the second straight quarter. - Contract revenues remained stable for 23 consecutive weeks prior to the holidays. - U.S. business confidence rose post-elections, positioning the company to capitalize on opportunities. - Cash flow from operations during the quarter was $155 million. - Distributed a $0.53 per share cash dividend in December. - Acquired approximately 1 million Robert Half shares for $77 million. - Return on invested capital was 15% in Q4. - Talent Solutions revenues down 12% as-adjusted in Q4; Protiviti global revenues up 5% as-adjusted. - Billing days and currency exchange rate impacts discussed. - Gross margin and SG&A details for Talent Solutions and Protiviti provided. - Monthly revenue trends in Q4 and January noted, with caution on reading too much into short-term trends.

Global enterprise revenues for the fourth quarter of 2024 were $1.382 billion, down 6% as-reported and 7% as-adjusted from the prior year. Talent Solutions: U.S. revenues were $686 million, down 11% year-over-year; Non-U.S. Talent Solutions revenues were $208 million, down 14% year-over-year. Protiviti: global revenues in the fourth quarter were $488 million, with $396 million from the U.S. and $92 million from outside the U.S. On an as-adjusted basis, global fourth quarter Protiviti revenues were up 5% year-over-year. Contract Talent Solutions gross margin in the fourth quarter was 39.1% of applicable revenues versus 39.7% in the prior year's fourth quarter. Protiviti's gross margin was 24.9% of its revenues compared to 23.9% in the prior year's fourth quarter.

• First quarter 2025 guidance: Revenues $1.35 billion to $1.45 billion, income per share $0.31 to $0.41. Midpoint revenues $1.4 billion, 3% lower than Q1 2024 as-adjusted. - Talent solutions expected to be down 7% to 10% year-over-year on as-adjusted basis; Protiviti up 8% to 10%, overall down 1% to down 4%. - Contract margin percentages: Contract talent 38% to 40%; Protiviti (adjusted) 20% to 22%, overall 36% to 39%. - SG&A as percentage of revenues adjusted for deferred compensation investment income offsets: Talent solutions 43% to 45%; Protiviti 15% to 16%, overall 33% to 35%. - Segment income: Talent Solutions 1% to 4%; Protiviti 4% to 7%, overall 2% to 5%. - Tax rate range 31% to 35%; shares 101 million to 102 million. - 2025 capital expenditures and capitalized cloud computing costs $75 million to $95 million, with $20 million to $25 million in Q1. - Protiviti's first quarter segment income guidance includes seasonal impact of staff promotions and compensation increases.

• Risks mentioned in today's press release and SEC filings that could cause actual results to differ from forward-looking statements, including factors related to economic conditions, market dynamics, currency exchange rates, and regulatory changes.

Q: Mark Marcon with Baird asked about Protiviti's revenue growth deceleration in Q4 and first quarter guidance.

A: Michael Buckley responded that holidays had an impact on Q4, but Protiviti's solution growth was strong and momentum continues into Q1.

Q: Andrew Steinerman with JPMorgan asked about contract revenues and tech vs F&A.

A: Keith Waddell said early January had holiday noise, but tone is better; tech has performed better lately.

Q: Trevor Romeo with William Blair asked about international business and Protiviti's full-year margins.

A: Keith Waddell said international business is modestly softer, and Protiviti's full-year operating margins are expected to increase.

Q: Manav Patnaik with Barclays asked about Protiviti's use of staffing and business confidence.

A: Keith Waddell said Protiviti's usage of contractors from Talent Solutions is rising.

Q: Unidentified Analyst with Jefferies asked about hiring recruiters and candidate behavior.

A: Keith Waddell said they would hire recruiters as confidence increases and candidate caution reduces.

Q: George Tong with Goldman Sachs asked about temp vs firm placement revenues.

A: Keith Waddell discussed short-term volatility and holiday impacts.

Q: Kevin Mcveigh with UBS asked about client hesitancy and tax rate.

A: Keith Waddell said clients are in a 'show me' state, and tax rate is affected by restricted stock incentive shares.

Q: Jeff Silber with BMO Capital Markets asked about federal government exposure.

A: Keith Waddell said exposure to federal government is very low.

Q: Kartik Mehta with Northcoast Research asked about Protiviti capacity and FX impact.

A: Keith Waddell discussed Protiviti's capacity and Michael Buckley addressed FX impact not being made up.

Q: Tobey Sommer with Truist Securities asked about small business optimism and M&A.

A: Keith Waddell discussed importance of less regulation, M&A friendliness, and tax rates; Protiviti impacted by M&A/IPO.