Robert Half International Inc. Q2 FY2025 earnings call

• Elevated global economic uncertainty persisted during the quarter, causing client and job seeker caution, elongated decision cycles, and subdued hiring activity. • Global enterprise revenues were $1.37 billion, down 7% year-over-year. Net income per share was $0.41 vs. $0.66 in the prior year's second quarter. • Protiviti achieved year-over-year revenue growth for the fourth quarter in a row, though growth rates moderated due to economic uncertainty, extending conversion timelines and reducing average project size. • The U.S. job market remains resilient with overall unemployment at 4.1%, though labor supply constraints exist, especially for college-educated professionals. • Business confidence improvement leads to acceleration in hiring urgency, project demand, and reprioritization of deferred initiatives.

Global enterprise revenues for the second quarter of 2025 were $1.37 billion, down 7% from the prior year. Talent solutions revenues were down 11% year-over-year on an adjusted basis. Global Protiviti revenues were $495 million, with $396 million from the United States and $99 million from outside the United States. On an adjusted basis, global Protiviti revenues were up 2% year-over-year, with U.S. Protiviti revenues down 1% and non-U.S. Protiviti revenues up 11%. Contract talent solutions gross margin was 39.1% of applicable revenues vs. 39.3% in the prior year. Overall talent solutions gross margin was 47.1% vs. 47.4% in the prior year. Protiviti gross margin was 19.7% of revenues vs. 22.5% in the prior year.

• Third-quarter revenue guidance: $1.31 billion to $1.41 billion. • Income per share guidance: $0.37 to $0.47. • Adjusted revenue growth year-over-year for talent solutions: down 9% to 13%; for Protiviti: flat to down 4%. • Adjusted gross margin percentage for contract talent: 38% to 40%; for Protiviti: 22% to 24%. • Adjusted SG&A as a percentage of revenue: talent solutions 43% to 45%; Protiviti 15% to 17%. • Adjusted operating income as a percentage of revenue: talent solutions 2% to 4%; Protiviti 6% to 8%. • Tax rate: 31% to 35%. • Shares: 100 million to 101 million. • 2025 capital expenditures and capitalized cloud computing costs: $75 million to $90 million, with $15 million to $25 million in the third quarter.

• Elevated global economic uncertainty could continue to impact client and job seeker caution, elongate decision cycles, and subdue hiring activity. • Trade policy concerns and proposed tax changes, while now law, could still have unforeseen impacts. • Competition and market dynamics could affect Protiviti's revenue growth and market share.

Q: About bill rate increases, how much is due to mix shifts?

A: Unadjusted bill rates would be higher, with mix positively impacting, typically a difference of 100-200 basis points.

Q: Clarify macro drivers and revenue trends in June and July?

A: Sequential trends show first 2 months fell modestly, then leveled off. Tone of client conversations improved in recent weeks, but year-over-year comparisons consider prior year's sequential trends.

Q: Tech solutions progress and spillover to finance and accounting?

A: Tech solutions are strong, with trickle into finance and accounting expected, especially at higher management levels, tying in with Protiviti's technology consulting group.

Q: Entry-level white collar labor market?

A: AI has had little impact on revenues so far. SMBs are later adopters of AI, but Robert Half is prepared to take share from local/regional competitors with technology and data advantages.

Q: Protiviti's financial services customer set?

A: FSI clients are cost-conscious, selective, with extended decision cycles, impacting Protiviti's Q3 forecast.

Q: Positioning to take share post-recovery?

A: Robert Half's technology, brands, and bench of full-time engagement professionals position it to take share from local/regional competitors, especially with AI and data advantages.