Robert Half International Inc. Q4 FY2025 earnings call

• Fourth quarter global enterprise revenues: $1.302 billion, down 6% reported and 7% adjusted from prior year's fourth quarter. Talent solutions and enterprise revenues returned to positive sequential growth on a same-day constant currency basis for the first time in over 3 years. Weekly revenue trends showed positive momentum extending into January. Revenue and earnings exceeded previous fourth quarter guidance midpoint. Net income per share was $0.32 vs. $0.53 prior year. Cash flow from operations was $183 million, highest quarter of the year, up 18% from 2024 Q4. Dividend of $0.59 per share was distributed. ROIC was 10% in the fourth quarter. • CFO details: Global revenues $1.302 billion in Q4. Adjusted talent solutions revenues down 9% y-o-y. U.S. talent solutions $623 million, down 9%; non-U.S. $200 million, down 8%. Protiviti global revenues $479 million, $373M U.S., $106M non-U.S. Adjusted global Protiviti revenues down 3% y-o-y, U.S. down 6%, non-U.S. up 9%. Contract talent solutions gross margin 39.2% vs. 39.1% prior year. Permanent placement revenues 12.5% of talent solutions revenues vs. 12.1% prior year. Talent solutions overall gross margin 46.7% vs. 46.4% prior year. Protiviti gross margin 21.9% vs. 24.9% prior year; adjusted gross margin 22.8% vs. 25.1% last year. Enterprise SG&A costs 35.9% of global revenues vs. 34.1% prior year. Adjusted enterprise SG&A costs 34.6% vs. 33.8% prior year. Talent solutions SG&A costs 47.6% of talent solutions revenues vs. 44.4% prior year. Adjusted talent solutions SG&A costs 45.6% vs. 43.9% last year. Operating income $22 million; adjusted operating income $43 million, 3.3% of revenues. Talent solutions divisions adjusted operating income $9 million, 1.1% of revenues. Protiviti adjusted operating income $34 million, 7.1% of revenues. • Macro environment: Concerns around near-term economic downturn moderated. NFIB Small Business Optimism Index trended higher, job openings above historical averages. Uncertainty Index declined. SMB internal resource levels lean. AI impact on labor market negligible so far, but clients rely on company for navigating change, deploying talent. Protiviti pipeline strong across major solution areas. Company recognized as World's Most Admired Companies, Forbes' World's Top Companies for Women, etc.

Global enterprise revenues for the fourth quarter of 2025 were $1.302 billion, down 6% on a reported basis and 7% on an adjusted basis from the prior year's fourth quarter. Talent solutions: Adjusted fourth quarter revenues were down 9% year-over-year. U.S. talent solutions revenues were $623 million, down 9% from the prior year's fourth quarter; non-U.S. talent solutions revenues were $200 million, down 8% year-over-year. Protiviti: Global revenues in the fourth quarter were $479 million, with $373 million from the U.S. and $106 million from outside the U.S. Adjusted global fourth quarter revenues were down 3% year-over-year, with U.S. Protiviti revenues down 6% and non-U.S. Protiviti revenues up 9% year-over-year. Contract talent solutions gross margin was 39.2% of applicable revenues in the current quarter vs. 39.1% in the prior year's fourth quarter. Permanent placement revenues were 12.5% of consolidated talent solutions revenues in the current quarter vs. 12.1% in the prior year's fourth quarter. Overall talent solutions gross margin was 46.7% of applicable revenues in the current quarter vs. 46.4% in the prior year's fourth quarter. Protiviti gross margin was 21.9% of revenues in the fourth quarter vs. 24.9% in the prior year's fourth quarter; adjusted gross margin was 22.8% for the quarter just ended vs. 25.1% last year.

• First quarter guidance: Revenues $1.26 billion to $1.36 billion; income per share $0.08 to $0.18. Midpoint revenues $1.31 billion, down 5% adjusted y-o-y from same period 2025. • First quarter adjusted operating margin guidance declined sequentially by 1 percentage point, including Protiviti's 4 percentage point sequential decline. • Estimated midpoint tax rate for first quarter 56% to 58%, remainder of 2026 33% to 35%. • Major financial assumptions: Adjusted revenue growth year-over-year for talent solutions: -4% to 8%; Protiviti: flat to -4%; overall: -3% to 6%. Adjusted gross margin percentages: contract talent 38% to 40%; Protiviti 18% to 21%; overall 35% to 38%. Adjusted SG&A as a percentage of revenues: talent solutions 44% to 46%; Protiviti 15% to 17%; overall 33% to 36%. Adjusted operating income as a percentage of revenues: talent solutions 0% to 3%; Protiviti 2% to 5%; overall 1% to 3%. • 2026 capital expenditures and capitalized cloud computing costs: $70 million to $90 million with $10 million to $20 million in the first quarter.

• Forward-looking statements subject to risks and uncertainties described in SEC files. • Economic environment changes could impact results. • Uncertainty regarding the impact of AI on the labor market and business operations.

Q: Mark Marcon asked about the top line long-term perspective and steps for efficiency.

A: Keith said on the top line, if current sequential revenue trend continues, positive year-over-year growth in third quarter for talent solutions, Protiviti and enterprise. For efficiency, held on to best producers, getting traction from own AI use.

Q: Andrew Steinerman asked about AI driving interest in flexible workers.

A: Keith said any time uncertainty declines, clients more willing to use contract help; uncertainty around full-time hiring due to AI adds potential, but not seeing current demand on full-time side by clients saying they're holding off due to AI.

Q: Trevor Romeo asked about Protiviti's headcount growth plans.

A: Keith said Protiviti has hidden capacity in full-time staff and contractor capacity, not concerned about having resources to scale up as revenue supports.

Q: John Ronan Kennedy asked about optimism and external indicators.

A: Keith said overall optimism from client discussions and weekly results, looks at multiple external indicators but nothing has high correlation, but industry trending upward, SMB lags mid-cap.

Q: Harold Antor asked about Protiviti U.S. vs international and pricing.

A: Keith said U.S. Protiviti has regulatory headwind, international stronger, technology consulting strong, pricing competitive with Big 4, early days on AI pricing.

Q: Jeffrey Silber asked about talent solutions internal headcount and international vs U.S.

A: Keith said talent solutions has unused capacity, can grow without adding heads, U.S. and international talent solutions growth rates not very different, Germany, U.K., Canada, Brazil doing well.

Q: Kevin McVeigh asked about charges and Q2 EPS.

A: Keith said no special charges in fourth quarter, Q2 EPS needs to consider tax rate and absence of prior quarter cost actions.

Q: Kartik Mehta asked about Protiviti pricing and AI upside.

A: Keith said industry getting cost of living increases, mix matters, AI making it harder for clients to hire, company's services more valuable as AI complicates hiring.

Q: Tobey Sommer asked about incremental margins and Protiviti industry verticals.

A: Keith said retrace path up similar to down, FSI is Protiviti's largest group with regulatory headwind offset by tech modernization, etc.

Q: Mark Marcon asked about margin improvement and revenue levels.

A: Keith said need to offset cumulative inflation and internal staff costs to get back to prior margins, positive year-over-year growth in third quarter expected with modest improvements.