Q1 2022 Robert Half International Inc Earnings Call
Hello, and welcome to the Robert half first quarter 2022 conference calls Arco for today's call are Mr. Keith Waddell.
And Chief Executive Officer of Robert half and Mr. Michael Buckley, Chief Financial Officer.
Bill you may begin.
Hello, everyone. We appreciate your time today.
For we get started I'd like to remind you that the comments made on today's call contain forward looking statements, including predictions and estimates about our future performance. These statements represent our current judgment of what the future holds however, they are subject to risks and uncertainties that could cause actual results to.
To differ materially from the forward looking statements. These risks and uncertainties are described in today's press release and our most recent 10-K and 10-Q filed with the SEC, we assume no obligation to update the statements made on today's call during.
During this presentation, we may mention some non-GAAP financial measures and reference these figures as as adjusted reckon.
Reconciliations and further explanations of these measures are included in a supplemental schedule to our earnings press release.
We'd like to remind you that beginning this quarter, our financial disclosures for contract operations, formerly temporary and consulting staffing.
Based on functional specialization rather than our previously branded divisions, the functional specializations, our finance and accounting.
Administrative and customer support and technology.
Finance and accounting combined the former Accountemps and management resources administrative and customer support was previously office team and technology was formerly Robert half technology, Protiviti and our permanent placement operations continue to be reported separately.
Also what we previously referred to as staffing operations are now referred to as talent solutions.
No change to our underlying business operations organization.
Our presentation of revenues and the related growth rates for each of our contract functional specializations includes intersegment revenues from services provided to Protiviti in connection with the company's blended talent solutions and consulting operations. This is how we measure and man.
<unk> manage these businesses internally.
The combined amount of intersegment revenues with Protiviti is also separately disclosed that.
A supplemental schedule was just mentioned also include a revenue schedule showing this information for 'twenty 'twenty through 2022 .
For your convenience our prepared remarks for today's call are available in the Investor Center of our website <unk> com.
We are very pleased to report another very strong quarter, driven by robust demand environment across the globe.
First quarter revenues grew 30% and net income grew 52% on a year over year basis, our permanent placement talent solutions again led the way achieving year over year revenue growth up 67%.
Our contract talent solutions and Protiviti also continued to post very strong results growing year over year revenues by 30% and 19% respectively.
Our continued success would not be possible without the dedicated commitment of our entire global workforce, including talent solutions, Protiviti and corporate services professionals company.
Companywide revenues were 1.815 billion in the first quarter of 2022 up 30% from last year's first quarter on a reported basis and up 31% on an adjusted basis.
Net income per share in the first quarter was $1 52.
Creasing, 55% compared to 98 cents in the first quarter one year ago.
Cash flow from operations during the quarter was $69 million in March we distributed <unk> 43 per share cash dividend to our shareholders of record for a total cash outlay of 47 million.
Our per share dividend has grown.
1.7% annually since inception in 2000 and for.
The March 'twenty, two dividend was 13.2% higher than in 2021.
We also acquired approximately 475000, Robert half shares during the quarter for $55 million, we have six 7 million shares available for repurchase under our board approved stock repurchase plan return on invested capital for the company was 47% in the first quarter now I'll turn the.
Call over to our CFO , Mike Buckley.
Thank you Keith and Hello, everyone.
As Keith noted global revenues were 1.815 billion in the first quarter on.
On an as adjusted basis first quarter talent solutions revenue were up 35% year over year.
U S talent solutions revenue were 1.046 billion up 38% from the prior year non.
Non U S talent solutions revenue were $297 million up 28% Europe year over year on an as adjusted basis.
We have 317 talent solutions locations worldwide, including 83 locations in 17 countries outside of the United States.
In the first quarter, there were 62, four billing days compared to 62, three billing days in the first quarter of 2021.
The current second quarter has 63, four billing days unchanged from the same quarter one year ago.
Currency exchange rate movements during the first quarter had the effect of decreasing reported year over year talent solutions revenue by $13 million.
Negatively impacted our year over year reported talent solutions revenue growth rate by one three percentage points.
Contract talent solutions Bill rates for the quarter increased nine 1% compared to one year ago adjust.
Adjusted for changes in the mix of revenue by functional specialization currency and country.
This rate for the fourth quarter of 2021 was eight 5%.
Now, let's take a closer look at the results for Protiviti.
Global revenues in the first quarter were $472 million.
$369 million of that is from business within the United States and $103 million is from operations outside of the United States.
On an as adjusted basis Global first quarter, Protiviti revenues were up 20% versus the year ago period.
With U S protiviti revenues up 17%.
Non U S revenues were up 32% on an as adjusted basis.
Exchange rates had the effect of decreasing year over year, Protiviti revenues by $5 million and decreasing its year over year reported growth rate by one three percentage points.
Protiviti and its independently owned member firms serve clients through a network of 88 locations in 29 countries.
Turning now to gross margin.
In contract talent solutions first quarter gross margin was 40% of applicable revenues compared to 38, 8% of applicable revenues in the first quarter one year ago.
Gross margins were positively impacted by expanding pay bill spreads and higher conversion revenues or contract to hire.
Which were 4% of revenues in the quarter as compared to three 1% of revenues in the same quarter one year ago.
Our permanent placement revenues in the first quarter were 13, 9% of consolidated talent solutions revenues versus 11, 2% of consolidated challenge solutions revenues in the same quarter one year ago.
When combined with contract talent solutions gross margin overall talent solutions gross margin was 48, 3% an increase of two seven percentage points compared to the year ago first quarter.
For Protiviti gross margin was 26, 2% of Protiviti revenues compared to 26, 5% of Protiviti revenues, one year ago <unk>.
Adjusted for deferred compensation related classification impacts gross margin for Protiviti was 25, 3% for the quarter just ended.
Impaired to 26, 9% one year ago.
Gross margin in the current period was impacted by higher staff resource costs, including a significant expansion of head count during the quarter.
Enterprise selling general and administrative costs were 28, 3% of global revenues in the first quarter compared to 33% in the same quarter one year ago.
Adjusted for deferred compensation related classification impacts enterprise SG&A costs were 29, 8% for the quarter just ended compared to 29, 5% one year ago.
Talent solutions SG&A costs were 33, 6% of talent solutions revenues in the first quarter.
<unk> 37, 3% in the first quarter of 2021 <unk>.
Adjusted for deferred compensation related classification impacts talent solutions SG&A costs were 35, 6% for the quarter just ended compared to 36, 3% one year ago.
Higher mix of permanent placement revenues this quarter versus one year ago had the effective adding one five percentage points to the quarter's adjusted SG&A ratio.
First quarter SG&A costs for Protiviti were 13, 3% of Protiviti revenues compared to 12, 5% of revenues revenues in the year ago period.
Operating income for the quarter was $258 million.
Adjusted for deferred compensation related classification impacts combined segment income was $228 million in the first quarter.
Combined segment margin was 12, 5% first quarter segment income from our talent solutions divisions was $171 million.
With a segment margin of 12, 7%.
Segment income for Protiviti in the first quarter was $57 million with a segment margin of 12, 1%.
Our first quarter tax rate was 26% the same as it was one year ago.
At the end of the first quarter accounts receivable were 1.072 billion and implied days sales outstanding or DSO was 53 days.
Before we move on to second quarter guidance.
Let's review some of the monthly revenue trends, we saw in the first quarter and so far in April all adjusted for currency and billing days.
Contract talent solutions exited the first quarter with March revenues up 28% versus the prior year compared to a 31% increase for the full quarter.
Revenue for the first three weeks of April were up 29% compared to the same period one year ago.
Permanent placement revenues in March were up 63% versus March of 2021.
This compares to a 69% increase for the full quarter.
For the first for the first four weeks of April permanent placement revenues were up 30% compared to the same period in 2021.
We remind you that the comparative period of 2021.
In 2021 experienced extraordinary growth with permanent placement, achieving 154% growth rates in the first three weeks of April 2021, and 97% for the full quarter.
We provide this information so that you have insight into some of the trends we saw during the first quarter and into the month of April .
But as you know these are very brief time periods, we caution against reading too much into that.
With that in mind, we offer the following second quarter guidance revenues $1 $85 5 billion to $1 93 5 billion.
Income per share $1 53.
Two $1 63.
Midpoint revenues of 1.8 dollars 95 billion or 22% higher than the same period in 2021 on an as adjusted basis.
Midpoint EPS of $1 58 is 19% higher than 2021.
Note that in the prior year Q2, 2021 revenues and EPS had very strong year over year growth rates of 40% in 227% respectively.
The major financial assumptions underlying the midpoint of these estimates are as follows.
Revenue growth revenue growth on a year over year basis.
Talent solutions up 25% to 27% Protiviti up 9% to 11%.
Overall up 21% to 23%.
Gross margin percentages con.
Contract talent, 39% to 40% Protiviti, 27% to 28% overall, 41% to 43%.
SG&A as a percentage of revenues, excluding deferred compensation classification impacts talent solutions, 36% to 37% <unk>.
Protiviti, 14% to 15%.
Overall, 30% to 31%.
For segment income talent solutions, 12% to 13%.
Protiviti <unk>.
14% to 14% overall, 12% to 13%.
Our tax rate, 26% to 27% shares outstanding $109 million to $110 million.
Second quarter capital expenditures and capitalized cloud computing cost $25 million to $30 million.
We limit our guidance to one quarter. All estimates we provide on this call are subject to the risks mentioned in today's press release and in our SEC filings now I'll turn the call back over to Keith.
Thank you Mike.
The future work continues to evolve as remote and hybrid work models gain wider acceptance and the swift recovery across global Labor markets has significantly increased the demand for our services.
More than ever before clients are willing to recruit from outside their geographic region and to access <unk>.
<unk> talent pools at lower price points than may be available locally.
Job candidates also benefit from the broader experiences and wider selection of jobs derived from out of market engagements.
This remote work environment increasingly plays to our strengths and presents an unparalleled opportunity to capitalize on a structural shift in how companies source talent.
Additionally, our global brand Office network candidate database and advanced AI, driven technologies allow us to successfully recruit the necessary talent for our clients to thrive and grow.
The great reshuffle as professionals continue to change jobs at record levels and companies across the globe struggled to navigate unprecedented employee turnover.
Global Labor markets remained very robust in the U S. This is seen in the elevated levels of job openings and quits rates as well as low initial unemployment claims and a low unemployment rate, particularly those with a college degree.
Where their rate is 2%.
For small businesses the National Federation of independent businesses. The NFIB recently reported that 92% of those hiring are trying to hire had few or no qualified applicants for open positions and 47% of all small business owners had job openings that cannot be.
Filled.
As a result of this very strong demand environment, coupled with our unique ability to successfully secure hard to find candidates for our clients. We continue to see our talent solutions results recovering at a faster pace than we've experienced in the past.
Our permanent placement and contract talent solutions segments included blended solutions with Protiviti have achieved cumulative sequential growth of 163% and 64% respectively. During the seven quarters since the pandemic trough similar numbers for <unk>.
Actual crisis, and dotcom recovers or 83% and 30%.
87% and 41% respectively.
Protiviti again reported double digit revenue gains, which it has achieved for each of the last four years internal audit and blended solutions with contract talent solutions reported the strongest growth.
The growth in technology consulting and risk and compliance solutions was impacted by the wind down of a very large regulatory remediation project during the quarter.
While replacement projects have already largely been secured.
The second quarter, we will also be impacted as the wind down completes and the new projects start on a staggered basis.
Protiviti is pipeline continues to be very strong and the aggressive hiring that took place during the first quarter was in support of anticipated additional resource requirements.
First quarter public sector revenues exceeded expectations grew 34% year over year to a total of $90 million of which $72 million was reported by opportunity and the balance reported by catalyst solutions has always expected work directly related to stimulus programs moderates.
In the quarter and we began to realize revenues from new work that leverages their credentials and deep relationships. We've developed with this new client base.
Educational institutions and government entities at all levels are experiencing talent shortage across their organizational structures, creating opportunities for us to provide contract talent consulting services and managed solutions as their needs dictate.
We expect second quarter 2022, public sector revenues to be $95 million to $105 million and we continue to expect full year 2022 public sector revenues to be at least flat to up 10% for the year.
To aid with prior year comparisons we have included a table on our web site and the supplemental financial information section of the Investor Center, showing our quarterly public sector revenues for 2021.
For both talent solutions and Protiviti were very optimistic about the year ahead, as we draw strength from our people our technology, our brands and our business model.
We remain steadfastly focused on our time tested corporate purpose to connect people to meaningful and exciting work and provide clients with the talent and deep subject matter expertise they need to constantly compete and grow.
We are proud to be recently named one of only a few select companies by fortune.
As a most admired company for 25 consecutive years. In addition to making Barron's annual list of the 100, most sustainable companies and Forbes list of America's best employers for diversity.
This recognition would not be possible without the dedication and exemplary efforts of our employees across the globe.
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 is time, we'll come back to you for additional questions.
At this time, if you would like to ask a question Chris power one on your phone.
Draw your question Pete.
Your first question will come from Andrew Steinman with J P. Morgan.
Hey, Keith I Hope. This question is okay, I'm going to ask you.
How long do you think productivity.
Sustained double digit revenue growth you know, obviously you emphasized that it would be.
You have achieved that for years and you also were very specific about how you think public public sector will do.
This year within within within productivity is this going to be a double digit meaning 10 plus percent growth year for Protiviti I surely see.
The second quarter is calling for about 10% at the midpoint.
Alright, so Andrew the fact that we started up 20%.
Even with some of the short term challenges, we talked about for the second quarter, we're projecting up 10%. We would expect for the full year that protiviti for 2022 would grow.
Double digits.
Double digits up to mid double digits. So we're bullish on Protiviti, It's Scott this.
One large client that has decided to take many of the requirements in house, which ended the engagement of more quickly than we expected.
The good news is if that were going to happen there is not a better market to that to happened in because we've essentially already redeployed to people. It's just a matter of timing.
So notwithstanding that notwithstanding some of the headwinds that protiviti alone has with public sector work.
As we talked about when you put when you take an enterprise level view public sector. We're quite bullish in fact, we feel the best we felt in a long time about its prospects, but even if you just focus on protiviti public sector.
We still think for the year, we can get double digit revenue growth.
Excellent. Thank you.
Your next question will come from Mark Marcon with Baird Your.
Your line is open.
Hey, good afternoon, keeping Mike a couple of questions one would basically be the topic du jour, which is.
You know obviously there is some concerns out there with regards to the potential for cyclical slowing all of your results. Thus far seem to belie that are you seeing any signs anywhere.
Within your within your.
Your book of business that would suggest that you know there are some signs of slowing or any chatter from any of your clients along those lines.
The simple answer Mark is no we have not seen signs of slowing that demand environment remains very very strong not only in the U S, but globally as well and so we sit here today just as optimistic as we were 90 day.
Days ago in fact, maybe even more.
That's great.
Ben.
The follow up is you've made a lot of investments in terms of tools and technology.
Can't be help but be struck by the margin improvement.
Youre seeing both on the talent side and on the Perm side in terms of the margins and the efficiency.
It's coming through I'm wondering if you could take this opportunity to discuss a little bit about what you've done to make the.
The process more efficient, how you're actually taking advantage of.
Virtual work and all the work that you've done on AI and systems like that to improve.
Improve your efficiency as well as your reach and to continue to gain share.
So we have made a bunch of investments in technology.
We've seen meaningful benefit from those.
We.
Leverage our database.
From the standpoint of previous candidate engagements to determine.
How they compare to our elite candidates.
We use AI to compare a client's requirements to the profile of resume of the candidates.
We're adding.
So many exciting dimensions to what's already working very well and that we're now looking at how contract.
<unk> is a given candidate based on have we place them before.
Have we vetted them before and how far up the vetting ladder did they make it.
Does our AI indicate they have been placed on a contract basis by another firm again.
Can all getting to how proven is that given candidate on a contract basis, we're adding that dimension to our AI next month.
Very excited about that.
We're also.
Improving.
How we view a candidates.
The likelihood to respond to our <unk>.
Our request for them to apply to jobs.
By evaluating.
Their activities with us as well as activities with with other firms in our ecosystem from the standpoint of how active are they in the job market and based on the nature of that engagement make a prediction about how likely they are to respond. So we have.
A profile based dimension to our AI, we have a interaction with our recruiters how proven argue dimension to our AI and we have a how active are you in the job market, which enables us to better predict.
Whether youll respond to our outreach all three of which are important when you are trying to make placements.
Today's market.
Embedded that technology, and our mobile App I am happy to report that we have the highest placement rate of any source from those candidates that apply via our mobile app has been very successful.
Further we use our AI and our marketing recommendations program or every time, we get an order we match those requirements to our database and we proactively at.
Proactively reach out to every matching candidate and ask them to apply very effective even in this tight labor market getting them to apply to our jobs and in this market. The candidate side is everything so all of that considered.
Our people are the most productive they've ever been part of that's because on average they're more experienced.
Part of that's because we've got to lease turnover excuse me we've ever had.
<unk> been very flexible with our people and letting them completely decide when and where they work they're very pleased with that that's worked out very well for them. That's worked out very well from us so all across many dimensions and for many reasons or people are more productive, they're making more money.
We're sharing our success broadly with all of our employees all of which comes together to make them more productive and make us continue to be effective managing the candidate side of the equation, which as I just said.
The key portion as we speak.
Okay.
So that's a long winded answer I don't know whether I missed anything.
Got it.
Last time, we talked to you you mentioned you wished somebody had asked you about that so I had to bring it up but I mean, it's pretty clear that youre being very effective in terms of raising margins and the productivity is going up.
It seems like you're you're not done with those improvements.
How much further do you have.
To go or how long is the journey in terms of optimization.
Well first of all just the <unk>.
Adoption rates of what we already has has upside.
You put on top of that the improvements that I just talked about that's further upside and so it's it's mid innings.
At best.
Terrific. Thank you.
Your next question will come from Heather <unk> with Bank of America.
Hi, Thanks for taking my question.
Talk about the productivity.
Margins the EBIT margins during the quarter.
Gary given take there there is some commentary regarding head count just curious what's going on.
And also you mentioned earlier that you had lost one large customer I was wondering if that was a headwind to the margins during the quarter.
Yes.
Okay, and so we did aggressively add to head count.
High single digits, just in the quarter.
They also do their annual reviews salary wise promotion wise and so those costs are effectively front ended every year.
Both of those were planned and embedded in our guidance.
What was different than our guidance was that.
On the one hand internal audit.
Significantly exceeded plan.
And because our people there are totally utilized we had to go and get more contractors to do that work that was new direct cost.
On the other hand there.
This large regulatory remediation client we didn't lose it I mean, the work wound down.
Theres other work streams, we're confident we'll get but the biggest ones.
Or winding down slowly the client decided to take the function in house, which accelerated the wind down but for that sector. They were below plan on revenues.
Cause the cost where our internal full time people there was no cost savings. So when you put the.
Above revenue internal audit with the below revenue regulatory or compliance together revenues came out at plan. However, you've got your risk and compliance cost at plan, you've got your internal audit costs because of the contractors above plan.
That resulted in margin compression.
But again as I said, we think this is a one or two quarter.
Challenge headwind that we can manage around it's just the nature of any consulting business that sometimes youre going to have large projects that end that you then it takes some time to replace the good news is as I said earlier.
These have largely already been replaced.
So we feel good about that but the margins for the first quarter were impacted and the margins for the second quarter will be impacted but not as much and in fact on a sequential basis, the margins will improve and by the way on a sequential basis.
<unk> revenues are up four 5%, which is pretty much on trend. If you look back for several years notwithstanding the large project that I just talked about.
So that's good.
That's really helpful. Thank you.
One follow up on that.
Thanks Keith.
Just curious.
I guess, how do you feel about especially given the recent hiring how you feel about your recruiter base and are you do you expect to continue to grow it from here.
I guess for the rest of the year.
Just curious what's going on there.
I will say when you say recruiter base I assume now we're talking about talent solutions rather than protiviti.
Yes, correct sorry.
And so on the talent solutions side, we've been very actively adding to permanent placement head count.
Kind of low double digits less than the top line growth, but still low double digits on the contract talent solutions.
We've had more capacity in a cumulatively the growth rates haven't been as robust as permanent placement so the hiring hasn't been.
As rapid but we do plan to continue to add heads.
More aggressively in permanent placement for obvious reasons, but we're adding to ads on the contract side as well, we're very bullish demand environment at job order flow remains very strong.
It's all about getting the talent and as I explained earlier.
We've got experienced recruiters.
Sourcing talent, we've got our technology.
We have access to remote candidates that we've never had access to that broadens the pool and as we've also talked about on prior calls we have these full time engagement professionals that we engage on a full time basis and that we then put them out on contracts with <unk>.
Client.
It gives us access to a larger pool of people I E. The already fully employed and it also allows us to provide continuity to our clients.
Cross engagements because one of the challenges in this market is that our contractors get offered full time jobs and they leave assignments early that requires us to have to replace that doesn't happen. When the contractor is a full time engagement professional for Robert half.
So effectively taking productivity bench model, if you will and applying it to talent solutions, which we've done so very successfully.
Thanks for the color. Thank you.
Your next.
<unk> will come from Kevin Mcveigh with credit Suisse.
Great great. Thanks, so much.
You've been pretty clear on this I just wanted to make sure like.
The Delta in the Protiviti margins in Q1, and Q2 is that the timing of that contractors at increased capacity in anticipation of demand that's coming because I know, there's always a little bit of a timing mismatch between when people are on boarded and is there any way to think about what utilization is.
Typically don't give that but maybe productivity utilization just so we can get a sense of the flexibility in terms of delivery well. So there will be some of both.
So clearly with.
Enormous addition to heads in the first quarter.
We have a group of interns that come in.
Later in the summer.
So we haven't completely stopped hiring in protiviti, either and so there is some margin margin dilution as they get chargeable or utilized.
And in addition, as we talked about there is this large contract that also has an impact but the impact in Q2 shouldn't be as great. As it was in Q1 and by the way just to kind of frame the impact of that large client.
Yes.
If that large client would have been flat in Q2 versus a year ago, the topline growth would've been five to eight points higher so.
So it's meaningful.
Yes for sure any I mean, it seems like the client shifted pretty abruptly.
Any thoughts as to what drove that decision when it seems like the literally went 180 on yet is it funding or just.
No no no it's too it's a project that's been going on for three or four years, it's not been a recent thing.
It was a remediation project clearly as you remediate.
The client gets in better condition and Theres less remediation work to do also they decided to bring the compliance function in house.
Rather than use rather than outsource it or co source it and it was that latter decision on their part.
<unk> financial.
Savings reasons.
That accelerated the wind down of the project.
But we're still in very good standing with the client.
And as I said earlier there are various work streams, we're still proposing on and we're quite optimistic but it's.
It's just part of the consulting business that your project portfolio changes and sometimes you are large projects and and you have to replace them, but that's ordinary course of business. That's something they always had to deal with and as I said, if it were going to happen. It couldnt happen at a better time, given the underlying demand environment.
<unk>.
Understood makes sense. Thank you.
Again, if you would like to ask a question you May press one on your telephone.
And so let me just say one thing about public sector.
That were typically ask that hasnt, yet been asked but let me preempt debt yes.
Yes, so Q1 did exceed our expectations public sector grew 34% on an enterprise basis.
Our Q2 guide is only 3% below last year, which is a quarter where sequentially. It was up 45%. So from a public sector standpoint, Q2 is the toughest comp of the year.
We had many business as usual contract wins.
As we said in our script.
<unk> got state and local governments and educational institutions dealing with the same great reshuffle that commercial clients are which has given rise to a lot of requirements.
Is that are right in our wheelhouse, it's blocking and tackling for us.
And so frankly, we're doing a lot better from an enterprise point of view with public sector. Then we expect it to even 90 days ago.
The project pipeline that we've talked about it in the past does continue to Bill housing assistance in accounting modernization project management.
The pipeline builds the win rates are good.
Putting that all together.
And also as we talked about last quarter.
The work is becoming more talents centric talent solutions centric.
Because if you look at the risk profile. If you look at the sourcing credit if you look at the specific contract requirements.
All of that tends toward talent solutions.
We focus on enterprise wide because keep in mind, no matter, which entity reports at the vast majority of the work is done by contractors from talent solutions.
To some degree there is some arbitrary in this.
Tween the two.
And so we're very pleased at how we leverage these new relationships.
And there is another dimension that makes it even better.
And so during the quarter, we had 11 million in revenues on the contract side not talent solutions, where when people rolled off those talents those public sector assignments, we almost immediately put them on reeds.
Lloyd them on.
Commercial talent solutions engagements.
And so not only did we do better looking just at public sector from an enterprise point of view.
If you also credit.
That we had candidates that we placed on talent solutions that we wouldn't have had but for a public sector, it's even better.
So net net long winded.
We're extremely pleased with how public sectors, playing out if we talk last time, where we thought for the full year, we would be.
Same are up we would grow.
Even more convicted to that than ever.
So that was my question to myself.
Yes.
Okay.
Okay.
Thank you and your next question will come from Tobey Sommer from truly Securities. Your line is open.
Thanks, I was hoping to get your comments.
Bill rate growth wage inflation.
Where do you see that going it was pretty pretty strong high single digit.
We are we close to a peak and then just going to be a strong rates, how do you see that evolving in the coming quarters.
Well as you say I mean being up over 9% year on year is high.
<unk> historical standards, usually it's up 4% to 6% for an extended period of time.
How long it last I don't know.
There are $11 3 million job openings in this country.
Fewer than half of that and unemployed people. So the labor market remains very tight.
To what extent.
Rising rates slow down the economy, which impacts that I can't speak to.
I would say that our margin expansion.
<unk> come more from.
Contract to higher conversion.
Growth, we talked about it went from three to three 1% to 4% during the quarter.
Our margin expansion came more from adding these.
Full time.
Engagement professionals, where we get a higher margin than we get from our core contractor base. So we're getting more margin expansion there than we are on the.
Pay bill spread because when wages are up 78%, it's harder to put margin on top of that then if wages are up four 5% and putting margin on that we're not being diluted don't get me wrong.
We're slightly expanding pay bill spreads.
The big margin expansion is more about conversions and full time.
Engagement professionals.
Thanks, I appreciate that that was my follow up I wanted to see if you could comment on your European exposure.
We get questions about the impact on the war or any kind of.
So from there I know, it's a small representation, but it's still there's still a substantial player in several countries.
And so.
We are 78% U S 22% international.
And it'll Europe is 10%.
Of that 10%, its Germany, 4%, Belgium, 4%, France, one another one.
I would say at least to date, there certainly hasn't been an impact in Germany arguably.
Potentially would be the most impacted but Germany had a very good quarter. In fact, probably had the best quarter of any of our non U S countries in the first quarter and their outlook for Q2 was good.
Okay. Thank you very much.
Yes.
Our next question will come from Jeff Silber with BMO capital markets. Your line is open.
Thanks, So much I know, it's late I'll just ask one.
And looking at your technology revenues within talent solutions year over year growth accelerated compared to the prior quarter can you talk about what drove that and how sustainable that is going forward. Thanks.
Well I'd say it's.
About better execution.
I think it went from 21% to 24%.
Comps were pretty similar in the two quarters, but.
Technology.
<unk> talent solutions have been a focus for some time.
Again, the candidate is king we've focused a lot of the other initiatives candidate based initiatives that I talked about earlier also extend to technology and.
We've had good we've had good results and we're optimistic as we go forward.
Alright, great. Thanks, so much.
Okay, well I believe that is our last question. So we appreciate everyone joining the call today. Thank you very much.
This concludes today's teleconference. If you missed any part of the call. It will be archived in audio format in the Investor Center of Robert Half's website at Www Dot Robert Dot Com.
You can also dial the conference call replay.
Dial in details and the conference I'd are contained in the company's press release issued earlier today.
Thank you for participating you may now disconnect.
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