Robert Half International Inc. Q2 FY2026 earnings call

Business & Hiring Trends

• Talent Solutions delivered its third consecutive quarter of sequential adjusted revenue growth, with permanent posting returning to positive YoY adjusted growth of 2.5%. Technology was the strongest-performing practice group, with 2.3% adjusted YoY revenue growth.
• Hiring demand is gradually improving, with growing job orders and project activity, particularly for technology modernization, data, cybersecurity, and IT infrastructure engagements. The labor market for specialized talent remains tight, with job openings still outpacing historical norms.

Generative AI Impact

• Generative AI adoption by job seekers has increased application volumes and made candidate evaluation more complex, reinforcing the value of Robert Half's specialized recruiting expertise and proprietary candidate screening capabilities. Growing client demand exists for candidates that combine deep domain expertise with AI fluency and responsible implementation judgment.

Protiviti Updates

• Protiviti results were in line with expectations, driven by ongoing shifts in the U.S. financial services regulatory environment that have reduced large-scale regulatory remediation work and increased demand for shorter-duration operational efficiency and technology transformation projects.
• Q2 2026 restructuring actions realigned Protiviti's resource base with current demand, resulting in a $7 million one-time charge ($0.04 per share) and $45 million in annualized cost savings. Non-financial services segments of Protiviti are already growing, with technology consulting delivering its strongest revenue quarter in history with no project delays reported.

Strategic Positioning

• Robert Half's combination of high-tech recruiting tools and specialized human expertise positions the company well to capture recovering hiring demand, with a diversified business model and trusted industry brand (ranked #1 on Forbes' America's Best Professional Recruiting Firms in 2026).

Consolidated global enterprise revenue for Q2 2026 was $1.336 billion, a 2% year-over-year decrease on a reported basis and 3% decrease on an adjusted basis. Reported operating income was negative $62 million, while adjusted operating income was $39 million, equal to 2.9% of total revenue.

1. Talent Solutions: Adjusted global revenue was down 2% year-over-year. U.S. Talent Solutions revenue was $660 million (down 1% YoY), accounting for 76.3% of segment revenue, while Non-U.S. Talent Solutions revenue was $205 million (down 4% YoY), accounting for 23.7% of segment revenue. Adjusted operating income for the segment was $29 million, equal to 3.3% of segment revenue. Permanent placement revenue made up 13.6% of consolidated Talent Solutions revenue in Q2 2026 (down from 19.7% YoY), and posted 2.5% adjusted YoY growth. Contract talent gross margin held steady at 39.1% year-over-year, and adjusted SG&A as a percentage of revenue was 44.1% year-over-year.

2. Protiviti: Global revenue was $471 million, with $373 million (79.2%) from the U.S. (down 6% YoY adjusted) and $98 million (20.8%) from non-U.S. markets (down 3% YoY adjusted). Adjusted global revenue was down 5% year-over-year. Adjusted operating income for the segment was $10 million, equal to 2.1% of segment revenue. Adjusted gross margin was 18.5% (down from 22.3% YoY), impacted by $7 million in one-time severance costs from Q2 restructuring.

• Q3 2026 Guidance: Total revenue is expected in a range of $1.31 billion to $1.41 billion, with adjusted EPS of 43 to 53 cents. The midpoint of revenue guidance is flat with Q3 2025 on an adjusted basis, with 3% YoY adjusted growth for Talent Solutions and 6% YoY adjusted decline for Protiviti.
  • Segment-level adjusted guidance ranges: Talent Solutions revenue growth 1% to 5% YoY, gross margin 38% to 40%, SG&A 42% to 44% of revenue, operating margin 3% to 5%; Protiviti revenue decline 4% to 8% YoY, gross margin 23% to 25%, SG&A 16% to 18% of revenue, operating margin 6% to 8%.
  • Full-year 2026 capital expenditures and capitalized cloud computing costs are expected to total $50 to $70 million, with $10 to $20 million spent in Q3.
• Q4 2026 Directional Guidance: Q4 2026 has 5% fewer billing days than Q3 2026 (61.1 vs 64.6), with an extra one billing day reduction vs typical seasonal calendar patterns. Historically, this reduction is partially offset by low single-digit seasonal growth in average daily billings, and Q4 operating margins are typically 0.5 to 1.5 percentage points lower sequentially than Q3 margins. The company is returning to normal seasonal patterns after multiple quarters of underperformance relative to seasonality.
• Longer-term, Talent Solutions is expected to have a mid-single-digit steady-state revenue growth rate in a normalized economic environment, with half of growth coming from wage/bill rate inflation and half from volume growth. Protiviti is expected to see easing regulatory headwinds starting in Q1 2027, with full relief expected by Q2 2027.

• Geopolitical uncertainty, including escalating tensions in the Middle East, and persistent inflation remain key macroeconomic concerns that could impact client hiring confidence and demand.
• Unexpected changes in the macroeconomic environment could derail the ongoing early-stage recovery in staffing demand.
• The protracted shift in U.S. financial services regulatory demand continues to pressure Protiviti's revenue and margins, with the impact expected to persist through Q4 2026.
• International macroeconomic weakness, particularly in Germany and Western Europe, has pressured Protiviti's international results as large completed public sector projects have been harder to backfill amid weak business sentiment.
• Pricing competition from large consulting firms remains persistent in the Protiviti segment, and has not intensified further in recent quarters.

Q: Analyst asks how Protiviti's regulatory risk and compliance business deteriorated in Q2, what share of Protiviti it makes up, and if there have been project delays in Protiviti's technology practice. / A: The Q2 restructuring charge increased from the previously guided $5 million to $7 million, with a corresponding proportional increase in annualized cost savings to $45 million. Management confirmed Protiviti's technology consulting practice had its best quarterly revenue in its history, and experienced no project delays during the quarter.

Q: Analyst asks how confident management is that Protiviti will return to growth, and if the bottom of the staffing cycle has passed for Talent Solutions barring a major macro shock. / A: Protiviti's total probability-weighted pipeline is up sequentially and year-over-year, with non-financial services lines already growing and the drag from financial services regulatory headwinds expected to fade over time. Management confirmed they expect Protiviti to return to growth in the near term. For Talent Solutions, three consecutive quarters of sequential growth continued into early July, and management believes the staffing recovery is underway barring major negative macro shocks, with a history of returning to and exceeding prior revenue peaks after every downturn.

Q: Analyst asks if there is any reason Robert Half cannot return to prior peak margins, and what drives potential upside. / A: Management stated there is no barrier to returning to and exceeding prior peak margins. Upside will primarily come from revenue mix shifts: the company now has a larger share of higher-margin senior-level positions than in prior cycles, and an increasing share of higher-margin full-time engagements. Additional upside is expected from technology-driven operational efficiencies over time.

Q: Analyst asks whether the current shift in U.S. financial services regulatory demand for Protiviti is cyclical or permanent. / A: Management noted the slowdown in anti-money laundering remediation work is tied to the current administration's lighter regulatory stance, not a permanent structural decline in demand. Less current scrutiny is expected to create pent-up demand for compliance work in the future, so the slowdown is cyclical rather than permanent.

Q: Analyst asks how the current early-stage staffing recovery compares to prior recoveries. / A: Management noted every downturn and recovery is unique, but current conditions are more favorable than prior early recoveries post-dot-com bust and post-global financial crisis. Unemployment is far lower than in prior recoveries, making it harder for clients to recruit directly, and job openings are higher than historical levels. Generative AI has also increased recruiting friction for clients, benefiting Robert Half's specialized services.