Q2 2020 Robert Half International Inc Earnings Call
[music].
Thank you operator.
Hello, everyone. We appreciate your time today.
Before we get started I like to remind you that the comments made on todays call contain forward looking statements, including predictions estimates about future performance.
Statements represent our current judge woke up what the future holds however, there are subject to risks and uncertainties that could cause actual results to differ materially from the forward looking statements.
These risks and uncertainties are described in today's press release.
Our most recent 10-K intend to filed with the FCC, we assume no obligation to update the statements made on todays call.
During this presentation, we may mention some non-GAAP financial measures at a reference these figures as as adjusted Reconciliations controller explanations of these measures are included in our supplemental schedule to our earnings press release.
For your convenience our prepared remarks for today's call are available in the Investor Center of our website that Robert half Dot com.
I like to begin by acknowledging that these past few months have been unlike anything most of us have experienced in our lifetimes.
Both the global economic disruption caused by the covert 19 pending.
And the social unrest over racial and justice.
So proud about Robert half has responded to the circumstances, our employees and tenured management teams have worked together to effectively manage our cost and aggressively pursue rather new generation opportunities.
We remain committed to serving our clients candidates and partners since the start of the pandemic, we have prioritized to health and safety of our employees and virtually all our global staffing and Protiviti employees had been working remotely.
We have successfully maintained full operations, even where our physical locations have remained close [laughter] Robert half second quarter results were clearly affected by the economic crisis, resulting from the cobot 19 pandemic.
Most acutely and our staffing business.
Protiviti had an outstanding quarter and continues to benefit from strong solutions offerings and pipeline.
We're encouraged by recent signs of weak on week sequential growth and our staffing operations and although significant uncertainty continues we approach for third quarter for the optimism.
[noise] Dallas take a look at Robert half second quarter 2020 financial results company right wide revenues were 1.1 billion down 27% for the last year second quarter on a reported basis and down 26% on an as adjusted basis net income per share.
Here are the second quarter was 41 cents compared to 98 cents and the second quarter, one year ago [noise].
As announced in our last earnings call, we've implemented actions to reduce our overall cost structure by approximately 30% as compared to Q1 2020.
The timing of those actions, which occurred over the course of the quarter.
As well a certain employee compensation related items, such as severance and salary continuation.
Reduce the savings actually reported in the second quarter to 24%.
Cash flow from operations during the quarter was 301 million.
Capital expenditures were 8 million in June we distributed 34 cents per share a cash dividend to our shareholders of record for a total cash outlay of 38 million.
There were no repurchases during the second quarter, we anticipate repurchase activity to commence again in Q3 and out of reduced rate.
Now I'll turn the call over to our CFO, Mike Buckley.
Thank you Keith and Hello, everyone.
Let's start with revenues as Keith noted global revenues were 1.18 billion in the second quarter.
This is a decrease of 27% from the second quarter, one year ago on a reported basis and a decrease of 26% on in has adjusted basis.
On an as adjusted basis second quarter staffing revenues were down 33% year over year.
You asked staffing revenues were 640 million.
34% from the prior year.
Non U.S. staffing revenues were 184 million down 31% year over year on an as adjusted basis, we have 326 staffing locations worldwide, including 88 locations in 17 countries outside the United States.
In the second quarter, there were six to 63.4 billing days unchanged from the same quarter one year ago.
The current third quarter has 64.3 billing days compared to 64.1 billing days in the third quarter one year ago.
Currency exchange rate movements during the second quarter had the effect of decreasing reported year over year staffing revenues by 8 million.
<unk> decreased our year over year reported staffing revenue growth rate by 0.6 percentage points.
Now, let's take a closer look at results for Protiviti.
Global revenues in the second quarter were 284 million.
225 million of that is from business within the United States and 59 million is from operations outside the United States.
On an as adjusted basis Global second quarter, Protiviti revenues were up 4% versus the year ago period.
With U.S. Protiviti revenues up 6%.
Non U.S. revenues were down 2% on an has adjusted basis exchange rates had the effective decreasing year over year protiviti revenue by $1 million and decreasing its year over year reported growth rate by 0.5 percentage points.
Creativity in its independently owned member firms serve clients through a network of 86 locations in 28 countries.
Turning now to gross margin in our temporary and consulting staffing operations second quarter gross margin was 37.1% of applicable revenues compared to 38.2% of applicable revenues in the second quarter one year ago.
The year over year declining gross margin percentage is primarily due to lower conversion revenues.
Our permanent placement revenues in the second quarter were 8.6% have consolidated staffing revenues versus 11.3% of consolidated staffing revenues in the same quarter one year ago.
When combined with temporary and consulting gross margin overall staffing gross margin decreased 260 basis points compared compared to the year ago second quarter, 242.5%.
[laughter] for productivity gross margin was $73 million in the second quarter or 25.7% of Protiviti revenues.
One year ago gross margin for Protiviti was $76 million or 27.9% of Protiviti revenues.
Companywide selling general and administrative costs were 32.9% a global revenues in the second quarter compared to 31.5% in the second quarter one year ago.
Staffing has DNA costs were 39.1% of staffing revenues in the second quarter versus 34.6% in the second quarter of 2019.
The increase in staffing SDMA as a percentage of revenue was significantly impacted by negative leverage as revenue as revenues decreased.
In addition, as Keith noted earlier, the timing of our cost reduction actions, including compensation related cost associated with employee terminations impacted total SGN a expense for the quarter.
Second quarter SGN, a cost for Protiviti were 15.1% of Protiviti revenues compared to 17.3% of revenues in the year ago period.
Companywide operating income was $58 million in the second quarter operating margin was 5.3% second quarter operating income from our staffing divisions was $28 million and in Hopper with an operating margin of 3.4%.
Operating income for productivity in the second quarter was $30 million with an operating margin of 10.6% [noise].
Our second quarter tax rate was 20% compared to 28% a year ago.
The relatively low second quarter tax rate is a consequence of the lower anticipated full year tax rate compared to our full year estimate in the first quarter.
Our six month year to date rate of 28% is in line with what we expect for the full year.
Accounts receivable at the end of the second quarter accounts receivable was $665 million, an implied day sales outstanding or DSO was 54 days.
Before we moved to third quarter guidance, Let's review some of the monthly revenue trends, we saw in the second quarter in so far in July all adjusted for currency in billing days.
Our temporary and consulting staffing divisions exited the quarter with June revenues down 33.7% versus the prior year compared to 31.2% decrease for the full quarter.
Revenues for the first two weeks of July were down 33% compared to the same period one year ago.
On a sequential week over week basis, we saw revenue growth for the last three weeks of June and this has continued into July.
[noise] permanent placement revenues in June were 46.1% versus June of 2019.
This compares to a 49.1% decrease for the full quarter.
For the first three weeks of July permanent placement revenues were down 35% compared to the same period in 2019.
We provide this information so that you have insight into some of the trends we saw during the second quarter and into July.
But as you know these are very brief periods of time, and we talked in reading too much into them.
With that in mind, we offer the following third quarter guidance.
Revenue 1.09 billion to 1.20 billion.
Income per share 49 cents to 68 cents.
The midpoint of our guidance implies a year over year revenue decline of 26% on an as adjusted basis inclusive of crew too.
We limit our guidance to one quarter. All estimates we provide on this call are subject to the risk mentioned in today's press release and in our FCC filings now I'll turn the call back over to Keith.
Thanks, Mike.
Only a few short months ago, we discussed our operations and an unprecedented candidate constrained labor market.
One quarter's time, we're now operating in a labor market with unprecedented unemployment levels.
Experience of our tenured management team has driven a swift ship.
And strategic focus to embrace this new operating environment.
Hi employees have found innovative ways to maintain connections with candidates clients and each other at a remote environment.
We've seen opportunities for new success with virtual client visits and by connecting clients too deep expertise from positivity on a virtual basis.
We've seen new opportunities arise across all of our lines of business and supporting a wide range of companies and entities financial institutions state and local governments large school districts just to name a few.
The widespread global stay at home orders have accelerated trends in remote work with many companies, indicating a permanent shift and their staffing strategies.
We see increased demand as companies to upgrade their talent pools without regard to physical location of the candidate.
Likewise as remote work takes a more prominent position, we see new demand for changing skillsets larger companies that have temporarily furloughed employees are also seeking opportunities to upgrade or refined remote talent from lower cost areas.
And we see demand when furloughed employees are not able or ready to return to work.
[laughter], we've managed through this crisis, we'll have a solid foundation for thriving in the new normal.
I'm proud of the resilience our employees demonstrated and arguably the most unique period and the company's history.
We aggressively cut costs in the quarter, achieving our targeted reductions these reductions coupled with a talent and driven team that is backed by industry, leading technology position us to fully participate in any economic recovery.
Now, Mike and I'll be happy to answer your questions. Please ask just one question and a single follow up as needed. If there's time, we'll come back to you for additional questions.
[noise] at this time.
Asking question Press Star one Cowen your telephone.
Your question press the pound.
[noise]. Your first question comes from the line of Mark Hahn with Baird.
Hi, good afternoon, Keith and Mike and.
Congratulations on the excellent cost management, but you executed during the quarter I'm wondering if you can talk are you have one short term question about the trends in terms of what you're seeing and then one longer term question in terms of the short term question can you just described the the percentage.
<unk> of revenue that you're getting from different verticals across the U.S. and you know to what extent or you are impacted by you know some of the areas that are going to be more permanently impacted whether its hospitality retail and then what are you seeing from a geographic.
Active as it relates to you know as though as the virus has moved around the country is the northeast coming back and sunbelt being impacted or how should we think about that that's a short term and then the long term is if you could.
Describe a little bit more about how you think the the ability to source talent virtually will end up impacting the recovery when it eventually comes to what extent you know could we end up seeing or even faster snapped back then what we normally see as you're able to leverage.
Your your jury huge network across the country. Thank you.
Okay.
So.
Mix of revenues from an industry perspective.
If you look at those.
Industries, where were over indexed.
I'd call out professional services.
And financial services, and I'm talking to relative to their contribution to GDP.
And the industries are where were under indexed.
Would be real estate government.
And hospitality.
And so from the standpoint of impact of hospitality, particularly we don't have much exposure to that and financial services is actually a good place to be kind of relative to covert impacts.
As far as geographies and so we track this week by week office by office state by state et cetera.
And there's not as much correlation as you would think if you look at Florida, Texas, Arizona, California, The last six weeks out by and large they've consistently growing sequentially. We call on week just have has our other operate.
Patients have that we're talking small single digit percentage, but they're not.
Significantly out of line with what we're seeing otherwise.
Interestingly if you look at for example, the entire quarter, our revenue performance in New York and our revenue performance in California from a percentage standpoint was very similar even though clearly.
Active co, but it was quite different.
So on your long term question about.
Our ability to tap a larger labor pool by going outside of local geographies.
I'd say clearly it will help a short and long term.
Hey, it'll it'll give us the ability to get even more pinpoint it skills relative to what clients want and need and to it'll allow us to tap into lower cost areas, which would be for the financial benefit of our clients as well, which should also help.
Demand. So we see this shift to remote work at least on a hybrid basis as a positive for us and that and for the industry frankly.
Terrific. Thank you.
Your next question, Andrew Steinerman with JP Morgan.
I know the guide includes Protiviti the 26%.
So my question is you know what's your assumption around productivity in the third quarter and could you also my second question. It could you just gave us some different of thinking at the low end of the revenue range versus the high end of the revenue range for question say reasonably broad range.
Okay and so.
Let me talk about the Guy generally then I'll come back more specifically.
And so that at the midpoint of our guide not to low not to high at the midpoint.
In the staffing side it assumed that we have small single digit sequential growth from June levels, which is what we've seen by the way for the last six weeks consecutively.
On the Protiviti, Oh, we're talking low to mid single digit growth.
Where.
Solutia their solutions offerings, primarily technology consulting and risk and compliance regulatory for financial institutions are leading the way.
The gross margin, we're talking about down 50 to 70 basis points sequentially, primarily with lower conversions.
Protiviti.
Down one and a half to one in three quarter percentage points on slightly lower utilization in the internal audit practice.
From an SG at Ace standpoint, staffing, we get the full impact of the 30% savings less some modest increases to step tech spending that we plan plus the.
Smaller more experienced internal staff is gonna be more bonus eligible.
As revenues rise so you'll give back some of a modest amount not a large amount of under 30%.
In the quarter.
[noise] Protiviti third quarter SGN, a ah that's their big quarter to bring on campus hires so they have training costs associated with that.
Further, they're making their aggressively hiring laterally at a higher skill sets that they need so at protiviti they should be a.
Consist the percent of revenue.
Staffing should be 36, 36, and a half as a percent of revenue.
Which means from an operating income standpoint, you got staffing all of this said is that midpoint staffing, 5% to 6% operating income Protiviti 11 to 14 overall six to nine tax rate 28 shares 113 million now more specific to your question.
[noise], so low point of our guide me frankly, Andrew what we did was way we spent most of our time on mid point that at the top we said plus or minus 5%, 5% on the bottom side, 5% on the top and then we built up the PNM valves.
Based on those 5% lower 5% higher revenue levels okay.
Makes sense. Thank you.
Your next question comes from Jeff Silber.
Okay.
Thanks, So much wanted to focus on the Perms side first I'm just wondering.
The rate of new assignments, how that's been tracking how attracted in the quarter and I know it's early in this quarter.
Also from a deal closing perspective are you seeing any delays because some of your clients want to meet the candidates physically before they closed the deal. Thanks.
So on Perm, we've been we've been pretty pleased with the new job order or front as well as the deals closed front.
I'd say pre Cove. It video interviewing was pretty broadly accepted.
And that has continued and grown from there such that we pretty routinely close pattern deals where clients interact primarily via video with the candidate.
Okay.
And I know you have.
Visible exposure to the small and midsize business Love I'm. Just wondering if you can talk about what's going on from a trend perspective did you see some clients close up that didn't come back any color would be great. Thanks.
Hi.
So our SMB.
Practice, which is.
80% of our total.
While clearly we saw.
Hesitancy.
We saw.
Some pull back and what their resource requirements were they we didnt see a lot of closings per se as we've talked before our typical clients between 50 and 100 employees, it's not sub 10.
And so, particularly with the P. P. P loans that most of them got it certainly sustain their existence for the quarter.
And that's IB publishes quite a bit it claims that most of the PPP money has been spent by the recipients and frankly all that remains that they're now at the moment is for them to apply for the total forgiveness.
Okay, Great. That's helpful. Thanks, so much.
[laughter].
Your next question is from Gary Bisbee with Bank of America sticky.
Hi, Good afternoon, I guess I just.
Any color you can provide on the on the commentary around the last six we see.
Some week to week improvement in staffing revenue.
What's driving that are there are there are pockets within that said are stronger and weaker and I guess, how do you think about.
The sustainability of that trend.
From here.
[noise], well clearly as more and more states open and that different degrees.
That has an impact a positive impact on our revenue trends.
Sequential improvements we've talked about are pretty broad in fact, almost universal across the U.S., even in a hot spots that we talked about earlier that said in our guidance is pretty conservative because we do think there are going to be new flare ups there.
I want to be roll backs.
There will be uncertainty created by that and I think thats the new normal at least until there are therapeutics or a vaccine.
Okay.
Right.
Good.
<unk> follow up then just on on the trends internationally versus the U.S.
I know your business.
Different than the commercial staffing companies, but.
We've seen from some others and even from some of the market data stronger performance or.
Men moderation of declines if you will in a lot of European markets and then maybe we've seen in the U.S. or are you are you seeing any major differences the growth rate for the quarter weren't.
Dramatically different so anything you'd call out thank you.
Yep.
Arc dramatically different if you kind of look at the countries I would say that France.
It was harder hit probably than any other country, you had Belgium, Germany, Australia.
At were a little less hit than the average and then you had.
UK.
Kind of in the middle but overall I thought I thought it was remarkable how similar.
The impacts were to us between international countries in the U.S., maybe they were only couple of three percentage points a different.
Thank you.
[noise] [noise]. Your next question is from Tobey Sommer Suntrust.
Hey, good afternoon. This is jasper bed home and per Tobey I was wondering about any demand impact you might be seeing from per load workers with customers, maybe first looking burning back their own staff before hiring comps.
[laughter] furloughs or an interesting and complicated situation.
So let me just ramble for a little bit.
So I'd say first of all furloughs are more prevalent at mid cap and large cap companies than they are at SMB is not that they don't exist at SMB.
I'd say further the tax subsidy, which is this 50% retention and credit yet.
For the cost of furloughed employees to which for many companies they've continued the benefits, including medical for those they furloughed such that those people are eligible for unemployment plus there's still getting.
Their medical costs covered by their employer.
But I believe that's highly motivated specifically motivated by the fact that half the cost is paid for by these retention credits.
Net net we believe more of those furloughs will be terminations that is generally thought to be the case spot saum.
As to reasons why the furloughs won't be the first back to some incurred some degree there are new skill requirements because of Cove, It, particularly tour to support remote work.
I'm companies will instead look to upgrade skills, which is a friendly your labor market then when they hired some of the people they furloughed.
Further there will be look into lower cost communities, such they get a lower price point with those new employees, rather than bringing back to furloughs.
And then further from the standpoint of a furloughed employees some may not want to come back.
First of all they've got concerns about Cove at and health risk second of all what their children out of school, who need child care. They can't come back because they have to provide that care.
Lot of discussion about the high level of unemployment benefits the 600 dollar federal.
Supplement I guess the news is today, that's kind of go down to 175 to 200.
Further the long the longer people are on furlough.
The more likely they'll look back to opportunities for other opportunities I guess the point being.
We're not sure that's a set to overhang that many perceived the furloughs to be on staffing demand. All in fact play out to the degree that it's assumed both from the standpoint of.
The companys going first of them as they have new requirements and secondly from the willingness of the furloughed employees to come back right now not just because of the higher unemployment, but importantly, because of the child care needs and the health care risk or the health risk. It every day.
Did you got a different risk profile in that way.
Sauce that I was going to rambling I did.
[laughter].
Thanks, Good all makes sense and then as a follow up I'm, hoping you could probably speak to how you expect cash flow to trend over the balance of the year and if you saw any impact in the quarter from payroll tax accruals.
Cash flow was unbelievable in the quarter I mean, we had $301 million of operating cash flow.
190 million of that was receivables.
We did give for about $38 million FICA.
That was a piece of that 300, but the good news is our receivables held up very well while at face value. It looks like we lost three days in our D.S. So if you just look at our tip business. We lost zero days, if you look at our Perm business.
But call. It was more back ended in the second quarter than the first you've had less time to collect those so that's pure timing and further the cost protiviti did so well, there's a mix shift to protiviti their collection period, because they deal with bigger companies as longer so that had an impact but net net.
At our receivables performed beautifully and how they were the lions share of that $190 million receivable reduction that went straight into cash.
So thought projection for the rest of year, meaning to the extent.
Revenues, a level off and continue to head up a little bit you would see some of that receivable reduction reverse but that wouldn't be a good.
We'll continue to have the FICA deferrals through the end of the year, which will help a little bit but from a balance sheet standpoint from a cash flow standpoint from a liquidity standpoint, we're rock solid.
Thanks for taking the questions Keith.
Your next question is from Ryan Leonard with Barclays.
Hey, guys. Thanks for taking the questions.
Just if you think about the quarter.
No, obviously really hard to think about current trends and forecasts, but when we spoke last you had kind of talked about some level of optimism that the decline again, the first quarter. There was a bottom there and you talk specifically about having some benefit from helping out with the TPP loans. So I'm just curious was there any onetime type revenue.
We still need to fall out after the last earnings call or anything.
More specifically to the trends that deteriorated throughout the quarter.
Well the.
We got some lift from helping clients.
Submit their PPP loan application.
We did not get much lift by clients using the proceeds of their PPP loans to use our staff and have that qualify as payroll which was necessary to get forgiveness.
I won't bore you with all the legato. These but they are worse there were different legal points of view as to whether Tipperary payroll counted as payroll.
For purposes of loan forgiveness.
But we did see some traction and helping prepare applications and we do expect to see some traction in helping clients fill out the forgiveness documentation as well.
Which is which is far from tray forward.
Got it makes sense and then on Protiviti, obviously, another great quarter.
Executed kind of above what your expectations were.
Is there still still ongoing demand for obviously the cross selling with the staffing services I guess how's the pipeline there, especially as people may be start to re examining budgets thinking that this has lasted longer than maybe initially anticipated.
Yes.
Joining solution offerings by Protiviti, and staffing or doing great. They continue to grow nicely during the quarter.
Up across Protiviti solutions, I talked earlier, FSRU regulatory technology cyber privacy cloud all that went great as we talked about last time internal audit was modestly impacted kinda down 910%.
They have some exposure to energy transportation hospitality that were hit.
Some of and talk through internal audit is driven by discretionary spending which was reduced a bit but overall protiviti had a wonderful quarter.
We couldn't be more pleased in fact, it's even better than what you see that caused the reported revenue grew by 4%.
Their fees actually grew by 8% and the difference is the reimbursable expenses, because it didnt travel as much Didnt get reported as revenue because those expenses were incurred but I would argue on a real basis. They grew 8% not 4% pipeline still strong activity is great.
As well as the Big Cross sell.
Activity using staffing hone engagements, where it's applicable and they continue to go to market together.
A lot of the government services work that we're doing Protiviti has is a G.S.A. schedules, so but for protiviti staffing wouldn't even participate in those engagements, but because of protiviti staffing and protiviti together can go to cities rates.
And service that demand is there.
Okay. Thank you.
[noise] [noise]. Your next question from Kevin Mcveigh with Credit Suisse [noise].
[noise], great Keith I Wonder if you listen you talk about.
Sourcing candidates from different areas Sunday geographically and then ultimately.
You know how do you think about that within the context of pricing and then just.
The ability to work remotely more structural does that impact one part of the business more than other obviously protiviti is probably lot more flexibility on that as opposed to other areas.
And just any thoughts on some of the.
She puts and takes you see good.
Well first of all let me say that because we have a single global instance of sales force.
Any office can access our candidate pool globally and in fact, it with our new AI.
We automatically provide to our internal staff, a shortlist of candidates that where the the.
Geography was opened up nationally what their without there even having to do anything so from a technology support standpoint, we're in a very strong position too.
Identify remote candidates for clients asked to pricing to the extent.
Hey, ultimately choose candidates that around lower cost areas.
Okay, all apply our margin to that we're quite happy to do that that's a win win for everybody, we still get our normal margins and the client gets a lower total price point.
As far as is remote.
More applicable to some of our lines of businesses and others clearly protiviti.
What.
It would be the most prevalent but management resources, Robert half technology, it's very prevalent accountemps prevalent not as prevalent in an office team but.
Certainly things like customer support our certainly.
Candidates for remote work as well.
That's helpful. Then just real quick on the margin side.
Any sense of where the conversion fee settlement, we just remind us said.
And that we think about gross profit just the range across the different segments. How much is kinda gross margin you don't want to get specific like just what would the range the for accountemps versus off the seen anything like that.
Rationally.
[noise] well.
Most of our gross margins for us for staffing Tipperary.
Have been better than certainly what we experienced in the last downturn last downturn peak to trough, we were down down 300 basis points.
We're not even halfway there so far so that's a positive conversions are always significantly impacted I think we're at 2.7 or 2.8% or revenue currently for conversion that's versus three and a half last quarter.
Settled out in the last downturn just under two so.
We're not that far from the bottom, but overall I would argue our staffing gross margins are temporary staffing gross margins have held up better. This time then.
Given the revenue impacts that I would have predicted and that's a good thing.
As far as the difference by segment.
[noise] the.
Management resources as always had the highest gross margins.
Accountemps is kind of mid point office seem a little lower and technology in the middle as well so.
There's not a huge huge difference by line of business I mean, clearly the bill rates are different so the dollar gross margin is different but if you're just looking at the gross margin percentage. There are orders of magnitude differences by line of business.
Super helpful. Thank you.
Yes.
Your next question each one.
<unk> with Jefferies.
I'd say merial quarter Lochee filling in for the.
Can you just give us a quick update on the bill pay spread and give us then.
How that trended throughout the quarter and I want to be able to give us an update what that looks like so far in this quarter and then just you guys also mentioned that as companies looking for talent in lower cost community. Just wondering does that impact the bill pay spread and your top line with potentially.
The lower wages being paid for candidates.
So first of all on the.
Pricing front.
Was there was such a disparity between how management resources and technology did versus accountemps Officeteam, if we mix adjust.
Pricing power.
Bill rates were up 4.8% for the quarter and that compares to 6.1 last quarter and on this business around with lower cost communities.
While the absolute dollar amount of our buildings would be impacted as a percentage gross margin shouldnt be significantly impacted if we have a higher mix of people coming from lower cost communities.
We would argue that what's that lower price point, our keep our clients can afford more.
[laughter].
Okay and then.
Just kind of looking at recruiters and.
[noise] have you started adding recruiters yet.
Demand picks up.
But were hiring pause come completely right now and just could you give us a sense for from the timing that you that you guys typically have with ramping recruiters as you see in employment start to come back ended by quarter and by a month.
Just kind of how far in advance starts around your own recruiter and salesforce in preparation for future demand.
[noise] well, we believe there is significant unused capacity with our existing recruiter base. So while we will clearly backfill turnover and we'll look first two furloughs to do that.
Well, we don't see for the near term the need to add recruiters for sales people internally because there are significant upside and frankly the success, we've had with the new technology tools over the last 24 months give us even more optimism that they have signal.
To get an unused capacity and we won't needing to be at adding to them on a net basis anytime soon.
Certainly not in the next quarter.
Great. Thank you so much.
Your next question is from Seth Weber with RBC capital markets.
Hi, This is only mclaughlin on for Seth.
On the question one positivity you've talked about the strong pipeline wondering how much visibility you have in the business and if you can find any color on the piece of new win or project and the ability to backfill work that's rolling off.
[noise] Protiviti is pipeline looks good they do have visibility unlike staffing when we talk to them each quarter about the coming quarter.
They have a.
Very high percentage of their forecasted revenues already staffed by client.
And so I would argue at least for one quarter out to have a lot of visibility two quarters out they have some visibility.
As far as pace of new wins.
Because the sales cycle is pretty long.
They had many things in the Hopper pre cove, it and they successfully concluded sick.
Some of those new engagements during coded where they did their orals via video and they had some.
Extremely impressive new wins.
But they were first started.
The sales process first started pre cove it.
And so.
Clearly, it's harder to start a brand new relationship be a video, but it's not impossible, but because the duration of their engagements is as long as it is they've got some runway here before that becomes a major concern.
Internal audit pipe by and large has renewed annually and while there are some discretionary spend around the total.
By enlarge it gets renewed annually.
Okay, and then just a quick follow up revenue in Robert half technology is a little softer than we were expecting when interest was different than how you're thinking about it internally just any more color on the earnings and weakness in how you expect it to perform relative to the others over the near and medium term.
Well from our perspective, Robert half technology, and Robert have management resources did much better than was the case with accountemps and office team. So we weren't disappointed we weren't surprised.
Generally speaking small businesses have been harder hit 10, mid mid cap and large cap companies and that's where we're positioned and so we weren't surprised nor where are we disappointed given the circumstances with down 15% and technology, which was about what we did it management resources is.
Well.
Okay. That's helpful. Thanks to the time.
Okay.
Your final question comes from Georgia.
With Goldman Sachs.
Hi, Thanks, good afternoon.
So temp staffing revenue in June and July were down 33% to 34% year over year, which worsened from down 31 person for the full quarter at the same time, you noted that you're seeing low single digit week over week growth in June and July.
Elaborate on whether those sequential trends are strengthening or weakening given the decelerating growth exiting the quarter.
Well, George the 33 versus 31.
These are already pretty close, but quite frankly, they're more about a year ago month or yearago quarter than anything and I would argue if there was ever a period of time when what we did a year ago wasn't particularly relevant I would argue it's just time.
As far as if you look at the last six weeks is there any.
Demonstrative trend there in these week on week improvements as I said earlier, they're all low single digit so there's not a lot of variation when you're talking low single digit, but we are encouraged that at the end of last quarter, we were talking how the pay.
Pace of declines was slowing.
And now at the end of this quarter were talking how we've now got sequential week over week improvements. So it's a heck of a lot better to talk about weak own week improvements that the pace of your declines of slowing.
Got it makes sense and then as a follow up your third quarter.
Guidance assumes would you say a continuation of July trends or does it assume some degree of improvement.
[noise] it assumes.
Early July trends continue again, we said sequential growth low single digits.
So a little bit of growth and again, that's premised on they're going to be flare ups, they're gonna be rollbacks.
There's got to be uncertainty around that and given that overall environment plus there is some uncertainty about.
The amount that type of the stimulus that's that's being discussed so given all that uncertainty it seem prudent to us that kind of.
Be conservative and and dial in a little bit of sequential growth, but not a significant amount.
We hope where we're surprised on the upside.
We have 5% upside at our high level.
Very helpful. Thank you.
[noise], Okay. I think that's all we have for today. Thank you very much for joining us.
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