Q2 2020 Heidrick & Struggles International Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the Heidrick <unk> struggles second quarter Twentytwenty earnings Conference call.
At this time, all participants are any listen only mode.
After the speakers presentation, there will be a question and answer session to ask a question. During the session. You want me to press Star one in your telephone.
Please be advised that today's conference is being recorded if you acquire any further assistance. Please press star zero.
I'd now like your hand, the conference over to your speaker today.
Dan Rosenberg Vice President Investor Relations. Thank you. Please go ahead.
Good afternoon, everyone and thank you for participating in Heidrick <unk> struggles 2022nd quarter Conference call. Joining me on today's call is our president and CEO Krishnan, Rajagopalan and Chief Financial Officer, Mark Harris.
We have posted our second quarter slides on the IR homepage of our web site at Heidrick Dot Com and we encourage you to view them for additional context, but we won't be referring to specific page numbers during her opening remarks.
Our materials, we refer to non-GAAP financial measures that we believe provides additional insight into our underlying results a reconciliation between GAAP and non-GAAP financial measures can be found in Alaska Edgewater really.
Also in our remarks, we'll be making forward looking statements and ask that you. Please refer to the safe Harbor language contained in our news release Krishnan I'll now turn the call Liberty.
Suzanne Thank you.
Afternoon, everyone and thank you for taking the time to join our call.
Since the onset of the pandemic, our first priority has been to ensure that health and safety around employees in assisting our clients.
Same time.
I've been carefully monitoring the external landscape as we continue to actively manage your business navigating through these unprecedented times.
He opportunities for growth.
Look this is an incredibly unusual cycle for our business and difficult to make predictions, but our teams done a tremendous job and maintaining our business momentum.
So proud of all of our colleagues who are demonstrating their dedication and resiliency all seamlessly embracing our new virtual world at work.
In June many of our offices around the world reopened.
Our team did a great job, creating and see work environment, keeping the safety of our employees in claims as our top priority.
Currently the vast majority where people continue to work from home.
And we couldn't be more capable of doing their critics.
Typically and we will continue to do so.
As you've heard me say before we believe we will emerge from these uncertain times in an even stronger position to help our clients recover and prepare for the future.
Today's call I'll comment on second quarter results and some of the cost savings actions. We're taking the third quarter, then I'll frame up our business continues to respond in current environment and how we are positioned and not only navigate today's economic uncertainties, but also emerge even stronger once market conditions improved.
Let me briefly touch on our second quarter results.
Given the current environment, we're pleased with net revenue of 145.6 million, which translated into adjusted operating margin of 6.2% in market performing adjusted EBITDA margin of 8.5%.
These results are adjusted for noncash impairment charge, which mark will detail later on the call.
Our second quarter results underscore continued demand for services and strong market performance by the Heidrick team in this challenging environment and the new normal begins to emerge.
Overall, we're pleased by the resiliency demonstrated by our business, particularly encouraged by growth in confirmations from May to June across all regions and executive search you might be consulting.
Confirmations, our key leading indicator for business and importantly, this positive trend is continuing into July.
Nevertheless, we're not out of the woods, yet we expect to see continued volatility until a medical solution to this endemic emerges.
Current global economic conditions are somewhat clearer now than when we spoke in April, but still quite fluid and we're taking appropriate actions, including workforce reductions to realign how we do our work and increase our efficiencies while also continuing to reduce and manage costs.
After gathering additional data and insights over the past few months, we're implementing new cost saving measures that will benefit our company over the long term.
Importantly, we've been prudent methodic one our approach.
<unk> any knee jerk reactions at the onset of the global pandemic.
Turning back to the second quarter, all economic uncertainty continues across the markets. We serve we do see in our business positive trends in healthcare and life Sciences, and initial geographic recovery markets such as China.
Germany.
Italy in Korea.
We're also seeing increased demand in service offerings, such as leadership assessments digital readiness and diversity and inclusion.
These indicators could more fully materialize later in calendar year.
We remain focused on working at the top of organization and her team has been create even responsive in finding new ways to convene with our clients and this virtual world as we build momentum and emerge from this crisis has a stronger Trump.
We also continue to align and enable cross enterprise collaboration between our executive search and Heidrick consulting businesses to ensure we are bringing the very best so I agree to our clients.
We are winning great projects around the world and are continuing to identify significant opportunity.
Activity in the private equity World and cross border engagement.
One Great example is an assessment and organization transformational project for a multi billion dollar company in the middle East that we've been conducting the last several months.
Hi, good consulting our team is quickly pivoted to create new digital solutions across leadership assessment Predevelopment.
Team acceleration and organization and culture acceleration.
Can be delivered virtually to help shift away from a reliance on large physical gatherings.
Other examples include our John leadership potential tool team journey workshops.
Performance engine and culture transfer of competence just to name a few.
Looking ahead, considering the fits and starts in the marketplace certain rollbacks and global reopening plant and other concerns around the additional ways of coated we anticipate the second half the year will be sluggish.
In this environment.
Collaboration and winning with our digital offerings and capabilities are that much more important.
We will continue to focus on these areas.
The common theme now across both executive search and hybrid consulting is that we're seeing client conversations and engagements.
Have shifted from crisis management in pure learnings.
Post koby priorities, including years cheap scenario planning succession planning employee engagement.
In addition, as we all know diversity and inclusion or do you know why has become even more important and a significant area of focus in both the U.S. and around the world, particularly as we emerge from this crisis.
In April we launched our global deny practice that integrates our executive search and consulting capabilities to create comprehensive de nine strategies that are grounded in data and designed to deliver sustainable results.
We have a unique approach that differentiates us in the marketplace as we're able to bring not only our capabilities in search to help clients build diverse representation, but equally important we have integrated our consulting capabilities to help our clients build inclusive organizations.
We're applying an exciting and truly differentiated approach through what we call the TBC.
So do you know.
The age for accelerating the impact and the results of D. and I.
Be for building diverse leadership teams and talent pipeline.
And to see this for creating inclusive leadership behaviors and workplace cultures. He brings together the best of Heidrick in this offering.
Already we're gaining a lot of traction in the market. We're applying this methodology internally as well.
Together, we're doing more for our teams in our clients as one from dedicated to significantly moving the needle on diversity and inclusion.
Importantly.
As you know we already have a powerful digital storage platform that is an incredible assets and we continue to enhance it simply put.
This allows us to continue to operate effectively and efficiently in an increasingly digital and virtual world recently, we rolled out significant upgrades to our digital search platform to further improve collaboration allow greater flexibility increase productivity and helped deliver more insights to our clients.
The global pandemic will only accelerate client adoption of our distinctive data driven in technology enabled talent leadership and culture solutions to accelerate their performance.
Powered by digital platform is evident as clients hired over 800 executive in second quarter.
This is in line with a year ago levels.
With these assets are from is well positioned to address the many human capital growth opportunities you see in post koby world, including leadership teams in crisis acceleration at the top.
Restructuring activities PE growth increased M&A activity digital transformations major organization culture shifts and a widening racial social and economic divide which is driving a renewed focus and urgency on deal.
The conditions eventually improve our clients' needs for talent solutions will be more important than ever we are well positioned to emerge even stronger as Uh huh.
In summary.
Environment remains uncertain. However, we are as strong in Brazilian from both strategically and financially we're adjusting our cost structure and improving efficiencies will further promoting our long term ability to capitalize on our industry, leading platform strong balance sheet and compelling growth opportunities.
As we prepare for the future and operating in a new normal resetting the from up to be healthy.
And agile for 2021 and beyond.
Our focus remains on creating shareholder value through serving our clients as a trusted global advisor, especially during these unprecedented times.
Thank you for joining us and thank you to our global team for everything that you do.
Now, let me turn the call over to Mark to elaborate on quarter.
Thank you Christian on good afternoon, everyone and thank you for joining our call today.
Ill start off with review of our second quarter results, which were clearly impacted by the global pandemic, but reflects strong market performance compared to the publicly available data that we have seen through today and it's clearly an outstanding accomplishment by our team here at Heidrick and struggles.
After covering the second quarter results I will then take a closer look that's what we're saying at the beginning of the third quarter of 2020 and give you my insights going forward.
Turning to our second quarter results, we recorded net revenue of $145.6 million down 16% from the same quarter last year, but surpassing both our internal expectations and analysts' consensus due to better than expected demand for our services.
That demand momentum continued into the early days of our third quarter, which makes us cautiously optimistic about the second half of the year something I will comment more on in my prepared remarks.
Looking at executive search net revenue was $134.2 million compared to $158.5 million in the same period last year or down 15%.
In the second quarter America Executive search revenue was $84.8 million compared to the same quarter last year was down 16% or 15% on a constant currency basis, you're up executive search revenue was $30.1 million down, 14% or 11% on a constant currency basis.
And Asia Pacific Executive search revenue was $19.2 million down, 17% or 15% on a constant currency basis.
These declines in revenue reflective of the global pandemic in the second quarter.
Turning to hydro consulting revenue was down $11.4 million compared to $14.6 million in last year's second quarter, but was also higher than we expected given the prevailing conditions and the leadership consulting market.
We saw two major drivers around this.
First a significant number of our clients are engaging us to assess their talent as they pivot their own companies into new operating models and second adoption and acceptance of our digital delivery services across multiple leadership advisory solutions resulted in larger client engagements.
With regards to salary and benefits this declined $15.9 million or 13% to $104.7 million compared to $120.6 million in last year's second quarter.
Fixed compensation decreased $2.2 million, primarily driven by lower talent acquisition and retention cost stock compensation expenses and other benefit expenses such as retirement.
This was partially offset by higher deferred compensation plan and base salaries and payroll taxes.
Variable compensation decreased $13.8 million to the lower revenue in the quarter.
General and administrative expenses reduced by $2.2 million or 7% year over year to $32 million.
There were savings achieved in several areas, but the biggest improvement wasn't travel and entertainment, partially offset by the increase in professional fees bad debt expense, then I'd see investments.
Given our new operating model, where more of our team will continue to work from home and has a material impact on our real estate strategy and our transformative digital strategy that will enable us to reduce travel we expect to see continued savings in China into the long term as we move to the new normal.
As Christian mentioned during the second quarter, we recorded a goodwill impairment charge of $33 million related to the write off of goodwill within our reporting units in Asia Pacific in Europe.
The impairment was noncash and did not affect our liquidity cash flows or operations, nor did it impact the debt covenants and borrowing capabilities under our credit agreement.
The impairment charge, primarily related to historical acquisitions from several years ago, then it's simply an accounting requirement to charge. These off on our exhaustion of shocks in the market such as Kelvin 19 make it difficult in the short term to carry those values.
Adjusting operating income removing the impact of the impairment charge and the second quarter was $9 million compared to $18.4 million last year.
Adjusted operating margin was 6.2% versus 10.6% in last year's second quarter and on a trailing 12 month basis, our operating margin was 8.8% compared to 9.8% in the trailing 12 month period before that.
This correspondent to an adjusted EBITDA, a $12.4 million and adjusted EBITDA margin of 8.5%, which was strong performance given the headwinds we've been seeing in our market due to depend on it.
Our adjusted net income in the second quarter of 2020 was $7.2 million compared to $14.3 million last year or adjusted diluted earnings per share of 37 cents versus 73 cents last year.
Now I'll turn to our balance sheet.
The end of our second quarter or cash and marketable securities was $287.8 million compared to $144 million at the end of last year's second quarter. However, this was inflated by $100 million of credit facility. We drew down in March thus, taking that out we finished the quarter at $187.8 million of on balance sheet liquidity an increase of three.
30% over the same period last year.
Much of this came from strong performance in our operating activities, which increased 22% to $40.8 million compared to $33.4 million than last year's second quarter.
This accomplishment was driven by our expense reductions and favorable working capital achievements in the period through proactive Treasury management, where we maintained strict DSO disciplines.
In terms of overall liquidity I'm very pleased to report that we finished the quarter with $360.3 million of liquidity again, demonstrating outstanding balance sheet strength for our future.
Now, let me turn to the third quarter and beyond.
Consider the continued uncertainty due to the pandemic new shelter in place orders in the U.S. and other international markets and other market uncertainties weighing on global businesses in the second half of 2020, where refraining from providing financial guidance in the third quarter consistent with last quarter.
Instead, let me give you some of the latest trends we're seeing.
Before reflecting on the current trends, it's important to comment that our backlog coming into the third quarter is weaker than this time last year due to the second quarter, having less volume and the same period the year before.
What this means is we expect our revenue recognition to be impacted by this and while we expect to volume to pick up in the third quarter and beyond our revenue will have a lag. Therefore, we will likely see a decrease in revenue in the third quarter from the second quarter by anywhere from 10% to 15%.
It may not be reflective of the pickup in activity.
Yes that pickup in activity comes to fruition, then we would see our fourth quarter revenue rebound sequentially.
Regarding confirmations as Christian mentioned, we saw confirmations began to improve in June and we are encouraged that utilize off to a good start we're expecting continued improvement in the third and fourth quarters as more countries open back up for business and business rebounds.
Looking at our average fees overall, we're seeing our aggregate fees hold up during the pandemic, but we will expect some pressure on this given the geographical mix and increase the nonstandard assignments, we saw in the second quarter.
Turning to our on hold assignments, we did see our on hold rate increased significantly in the second quarter, but this trend has slowed with July trending lower than June at this time, while on holds have started to come off in the late second early third quarters, we do not see a meaningful trend as of now to report on.
The backlog on the old on hold assignments continues to support our view that the third and fourth quarters will likely have activity picking back up compared to that the second quarter.
Turning to hydro consulting, which has some offerings that historically have leveraged in personally gatherings to deliver the service. We are starting to see a number of on hold engagements restart using our virtual capabilities.
While others remain on hold we've seen no increases in cancellations.
With the distributed workforce due to the coded and the sharpened lens on racial and social disparities, we expect our clients will need more support to help them keep employees engaged around the purpose and values create and maintain inclusive cultures and understand leadership capabilities, which should also help our DNA offering.
Importantly, as we deliver virtually and continue to educate the mark on the effectiveness of digital delivery. We're encouraged that the runway that's in front of us.
Finally, as we have disclosed in our press release on 10-Q, we have begun the process in the third quarter of implementing a restructuring plan to optimize future growth and profitability.
These actions will enable the firm to be an even stronger position to continue navigating through the ongoing market uncertainties, while accelerating our business growth and future opportunities.
In connection with this restructuring plan the company expects to record a onetime charge in the third quarter, ranging from approximately $30 million to $40 million and that will generate initial savings of $30 million to $40 million.
The total charge 15 to 20 million relate to workforce reductions.
The other $15 million to $20 million total charge reflects additional components, the restructuring plan, including a reduction in our realistic level footprint professional fees and elimination of certain programs from much we expect future savings that are difficult to quantify at this time.
In summary, our second quarter performance certainly reflects the impact the pandemic. Our team continues to win in a difficult market and provide a relative strong return to our shareholders.
With continued focus on strong execution long term planning and adding value to our clients. We look forward to what hydro can achieve in the future.
With that we'd be glad to take your questions operator over to you.
As a reminder to ask a question you will need to press star one and your telephone.
You withdraw your question please press the pound key.
And your first question comes from a line of Josh Vogel from Sidoti and company. Your line is open.
Thanks, Good evening guys.
I guess my first question Mark I, just talking about the.
The restructuring.
How soon should we expect to see some of those benefits or would it be by Q4 is it more by Maury at 2021 event.
And we'll see the savings obviously start working their way through in Q3.
Imagine is absolutely see bigger impact into 2021.
Some of its spillover to Q4, but obviously, we're still putting those charges through as we continue to look at our real estate footprint in some other other facets of the workforce reduction will.
Savings will be offset the cost if you both breakeven point is.
So we would expect to starts in Q4 and onward from there.
Okay, great and.
You've done a great job over the years in.
Bringing down DNA as a percentage of that revenue and given these.
Initiatives, you're taking here do you think that you can get sub 19% longer term.
So.
Right now as you know we finished at 32, we came down from the first quarter. We expect that to continue some of that Josh is the fact that we covered environments I can imagine or travel entertainment is very minimal.
And that's going into a function of when that starts to return that will put some pressure on it I do think working from home has been.
Except that across the board within the organization.
We expect that trend to continue to a good extent.
And with Rethinking our business, how we deliver to clients et cetera, and what kind of efficiency, that's going to give us I want to be a little bit careful I think we can be somewhere we work, but I also want to make it feels like it could be a material.
Discount if you will from the 18% that we were trying to achieve and we were achieving before covet. So what we'll see where it comes out but I definitely think theres some interesting savings on that.
Okay, great and.
When we think about the delivery model and the percentage of business, that's being done a virtually or digitally today. How much do you think can continued to be delivered through that type of format going forward, even when we get back to normal. So I know you talk about reducing reliance on real estate footprint and whatnot, but how when we.
I think longer term, how much of your business could be virtual or digital.
Yes, Josh Seide Christian thanks.
Yeah look I think this trend is going to continue.
I think clients are accepting it.
We're converting more and more offerings into a digital virtual offering and dies and clients.
There are also living in that same world. So I think it's going to continue down that path. So.
Expected to increase.
Okay and.
Long term goal here is to get to that 50, 50 split between searching consulting and knowing that it will take.
Some M&A activity to get there on the consulting front can you talk about the pipeline on this front you know Howard valuations trending and whether you you have an appetite.
Today.
To deploy some of that capital on this front or is this something more targeted for 2021 or beyond.
Sure.
So you comment I think pipeline continued to improve.
And in terms of what we're saying out there.
The other comment that I would make Josh is with the increase in pipeline I think theres, a reality coming back to the pipeline time in terms of people really having a good understanding.
What's going on in the market the valuation expectations coming back down I'm et cetera.
Of course, the cost of capital has increased a lot t. accessibility to capital time is obviously been very problematic. So I think those kind of storms of tool are really helping us out we're very much interested contending with our strategy I don't think anything's going to make us at the pause button on that that's very important to us for a long term vision. So we'll.
Turning to focus on and try to see what's what's available from a partnership from an acquisition et cetera point of view.
Things for the long term value at the company.
Thanks for the insights or just last week at sort of a housekeeping one.
Can you provide what the adjusted operating margin was for Europe, and APAC outside of the.
Goodwill impairment.
Yes go grab that freaks I don't think I'm actually calculated on that basis, but one thing we did do in there. Josh is you do have the goodwill broken out by each the respective regions, So Europe and Asia and broken out you can add that kind of adjustment back into it and you can kind of come up with that margin.
Okay, great. Thank you guys for taking my questions. Okay, well. Thank you guys.
Your next question comes from a line of Tobey Sommer from Suntrust. Your line is open.
Thank you.
I'm curious how does this experience in the performance of the business informed your perspectives on a which is helping or the most resilient and.
Has it changed your perspective on where you would desire to deploy capital when you can ramp up M&A.
Yes, Hey, Toby how are you.
Let me just take the answer on consulting look I think what.
This is unprecedented times and I think what we've shown is that we can transition.
Almost all of our offerings to a digital virtual platform and that in this new market that we see some of those are are really really.
Critical needs I mean, you talked a little bit about.
D. and I envy divided crossed.
All dimensions growing and the need for that so there's tons of demand.
It's coming out of that digital transformation in digital readiness.
I mean, if ever there was moments where companies are questioning whether they are ready or not what they need to do that's right. There then on.
Driving cultures and resilience I mean sort of it's interesting probably this far into it whether you want to call. It seven months for five months.
Into this club and pandemic period here.
Clients are really asking themselves as tough questions now about cultures. So I think that's there as well and then we're definitely seeing on truly the leadership side.
The need for a lot more help on assessments.
Oh, because people can't meet people easily face to face Hill.
Being able to do that in a systematic scientific way in some of the tools that we've got a car out tool that we talked about before on things like that or.
Our really really important so I think attention I think.
Consulting has been.
It started off.
Down, but I think it's beginning to bounce back and.
Collaboration with search is terrific. So we're seeing lots of opportunities over there I'll, let mark talk a little bit about some of the opportunities in the second part of your question Okay.
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And then they come to that makes up in the second part obviously searches.
One of our bread and butter and we'll continue to look at it opportunistically less so on the strategic side in terms of things that we would look out from search would be geographic expansion, maybe some of our industrial industries extensions excuse me a specific but.
That's what we're looking on the search side I think the two buckets that really want to put my pipeline. We're really focused in on one is obviously in terms of hybrid consulting and the continued expansion that we certainly feel is the next best steps to position us but also the the.
Outside of search.
Third line augmented whatever you want to call it but.
Companies that we really think are important in terms of augmenting what we're doing both search and consulting either bridging together or enhancing what to do together et cetera are obviously the other parts of the market that we're very much focused on in the pipeline.
Okay. Thank you.
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What sort of financial constraints. We did you have in mind when you decided to cut expenses or you are you managing to a margin, giving given an expectation for revenue decline sort of.
How did you go about this and and arrive at the right level. Thanks.
That's really good question Toby.
So here's what we did we worked with a lot of our leadership team.
Our practice theaters regional leaders, we talked to clients, we looked at outside market data.
Management team and the board of Directors really came together and so what is this what it's going to be in Where's the runway going both really 2020, but mostly 2021 way or focus was on we looked at that we had a real kind of consensus on where we think our growth was going to come back from.
And then the answer really became how do we reinvest ourselves and position ourselves.
When we get back to the old levels, hopefully, we get back with more margin. That's obviously with the attractive goal to be so we had to be balancing between and really focusing on the delivery focusing on our clients, making sure they get what they need.
And how that you know.
The bench, if you will to ensure that we can deliver and not lose market share that was a big you know.
Hi already from our point of view it was to ensure that we can maintain all the hard work. This team has worked so bloody hard to do over the last several years. So that was how we did it I'm the whether margins that fell from that absolutely that we look at it sure we do but we really looking at it very much down the road in terms of where we get back to et cetera, and what kind of business, we want to be and then it is what it.
He is in terms of 2020 or even the beginning of 2021 as long as we've reshaped that ship appropriately. We felt we could really be able to meet the mandate Christian I don't know if you Wanna add to that.
Yes, no. It's very much a forward look I think in terms of.
How we aligned we spend some time with clients and.
I'm glad we took the time because the answer in month, one would have been a different answer then.
The conclusions that you get when you have some data and you have.
Client insights and you can see.
What that begins to look like so that's what we did.
Okay. Thanks.
What.
Do you have a could you can you help us out on a revenue generating consultant kind of headcount what or how much was that cut or maybe it's suppressed a different way what kind of numbers should we be looking for in Threeq you.
Whichever way you are willing to answer.
So look I think if you're asking.
About headcount reductions you know it was less than 10% so.
That's probably the best way to.
To answer that question and say okay. So that's what you may expect to seeing the modeling view as you move ahead, if you're trying to model head count.
Okay perfect.
If I could just ask a couple more things about within the quarter. How does the the depth of the decline in confirmations compared to <unk> I assume it might have been April, but but I don't know if that was a bottom compared to what things look like in July.
And just kind of give a sense for the oscillation within the last several months.
So expectations look in April were as we talked about it on the call. We saw it kind of getting into the high Twentys My concern at the conference call. Toby was that we probably creep into into the 30 territory and we saw that and that's compared to the same period last year.
As we started to share away work through it I'd say may was similar.
Merging with that I would tell you that should we started start to pick up in.
In terms of July.
What we hope so I think our view is.
Again the.
We hope we seem awfully hope.
The recovery out of it and we hope that trend continues.
Yes.
Relative year over year decline and.
Thats sort of the June July timeframe versus this is the April.
As a percentage.
Yes.
We're not giving obviously that out but we don't want to give it out by month I think we kind of see it kind of coming through on the revenue side et cetera, I think you've got some of our our general market information that's in the queue, but we don't want to break it out by month.
Okay can.
Not even with a range or anything like that okay.
No.
Oh, Okay could could you give us a sense for that to the extent there weren't nuances geographically.
So did the rebound in confirmations track the reopening of economies as you because you do have a global footprint to have any perspective on that I'll get back into queue. After the specs.
None up until the time.
It was actually it was it was somewhat aligned to that obviously is what you would expect is able to be April may worker trough.
We saw some pretty good numbers in terms of compared ability to those previous months. So I think out was that was very good.
Into July we're starting to see similar trend that trend continue we hope that that keeps that it's a something right. So when we hope cuts mirroring globally, where we're seeing a people come back with the only comment that I'd make is we still saw anomalies. So for example in Italy, even when they were going through a tough part of that pandemic, we still feel very good number.
He is very strong numbers come from our team there, which was really incredible I'm, we've seen a similar things in China. So.
It's not a I think you can probably said from a macro trend, but we are seeing some micro cases, where we're actually performing quite well in places that have more shelter in place I think thats kudos to the digital platform that we have I think it resonates quite well that we can be very effective still in that market assuming the appetite in the demand is there we're ready to go so.
Hi, I think from that component of it was was very surprising but in a very good way.
Yeah I just I was just add look countries that are.
Being credited like Germany with.
Handling the crisis well.
We begin to see markets rebound, so I'm not necessarily say gets because of the timing of the open I.
I think it's how they are handling it all that's giving.
Businesses and and people confidence to.
In their markets so called that out.
Thank you very much.
Your next question comes from a line of Kevin Steinke. He from Barrington Research. Your line is open.
Good afternoon, everyone.
Okay.
Sure.
And the that your performance in the second quarter was strong relative to publicly.
Just wanted to get a sense who.
Oh.
What you think might be driving that.
If your comment on the competitive landscape.
Sure.
Yeah, I think I got that question it was a little bit choppy, but sort of what do I think is driving our success I think maybe I'll kick that off and.
If that was the question and then I'll turn to Mark what I think number one.
Momentum that we've had.
Coming into this and the brand we're building the platform. We're building all is very useful where we work at the top I think you're seeing that that's perhaps a little bit more resilient and then other segments. So number one is that number two.
I would also say that.
The actual digital platform that we built has allowed us to be incredibly productive clients have become used to it so.
There's a ability to start.
To conduct tend to be even closer to use as we've said, how we've been able to do that so hitting all of these things have a giving us a leg up in the market on the search side and then on the consulting side.
Quickly translating seems to be digital offerings has been advantage. So I think these are the kinds of things we've been doing that translate to.
While our view of wins and success I mean.
You guys, probably track the competitive markets better than we do [laughter].
And you probably can crunch studied on all that stuff yourself, but.
Between what we hear anecdotally in what we track.
We feel like we're winning in a difficult marketplace.
I don't know Mark you want to add to that.
I did really well so if that answers.
Okay. Thanks, No did that answer the question apologize for the Choppiness, there, but I'm not one other question and one other question.
So.
It's great to hear the clients acceptance of digital delivery and.
You know you're making moves to.
Reduce your real estate footprint and.
Maybe it sounds like have more your staff working remotely or virtually overtime.
You know, obviously cost benefits cost savings.
From that but I, just wonder longer term in a professional services from how you balance it out with.
The benefits of in person mentoring and knowledge transfer and all those.
Benefits of having people together in one place how you kind of balance it out as you think about.
The future and the new normal as you put it.
Yeah, well that's a great question I think that's really the question that's keeping up.
Most executives, who I talked to about.
Real estate at least in footprints and how they should be thinking about it I think those are two great points input.
Look I think Oh, you know there was some small offices that we're exiting but overall in our real estate strategy will need less but the offices will continue to be.
Important I believe in the future and this is evolving it'll continue to be quite important that'll be the center of collaborations.
We'll be center of some innovation.
People will be coming in and out of it in a different fashion than what we do today.
So I, just think thats going to change a little bit, but I I don't think the.
Office per se is going away, we're going to needed to be able to again, particularly innovate, particularly help develop and bring people together to be able to do things as well so will augment that.
Obviously virtual things, but yeah, I don't I don't think it's going to be the way, but it's also not disappearing as well.
Okay. That's that's very helpful. Thanks for taking the questions.
Hey, you're welcome.
And again, if you like to ask a question. Please press star one on your telephone.
And there are no further questions at this time I'll turn the call back over to Krishnan for some closing remarks.
Okay look thank you all for joining.
As we have mentioned before this environment certainly remains uncertain. However, look we've got a fantastic team and we continue to win in a very difficult market.
We're strong in resilient from strategically and financially.
We're adjusting our cost structure as we prepare for this new normal and we're setting the from up to be healthy an agile for 2021 and beyond.
Look we remain focused on creating shareholder value through serving our clients.
Thank you for your support and everybody. Please stay safe. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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