Q4 2023 Heidrick & Struggles International Inc Earnings Call

[music].

Operator: The Ultimate Parody Site! Hello and welcome to the Heidrick & Struggles Q4 2023 and Year-End Earnings Call. All lines have been placed on mute to prevent any background noise.

Hello, and welcome to the Heidrick <unk> struggles Q4, 2023 and year end earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session and if you'd like to ask a question. During this time simply press star one on your telephone keypad.

Operator: After the speaker's remarks, there will be a question and answer session, and if you would like to ask a question during this time, simply press star 1 on your telephone keypad. I will now turn the conference over to Stephen Horwitz, Interim Head of Investor Relations.

I'll now turn the conference over to Steven Horwitz interim head of Investor Relations. Please go ahead.

Stephen Horwitz: Thank you, and welcome to our 2023 fourth quarter conference call. As a reminder, Suzanne Rosenberg has been on leave, and thus, I am serving as the interim head of IR, having been placed through the On Demand Talent Group. Suzanne is rejoining the team this week, and we welcome her back.

Thank you and welcome to our 2023 fourth quarter Conference call. As a reminder, Suzanne Rosenberg has been on leave unless I am serving as the interim head of IR, having been placed through the on demand talent group Suzanne is rejoining the team this week and we welcomed her back let's.

Stephen Horwitz: Let's now proceed to today's call. Joining me is our president and CEO, Krishnan Rajagopalan, chief financial officer, Mark Harris, and our incoming CEO, Tom Monahan. We posted our accompanying slides on the IR homepage of our website at heidrick.com, and we encourage you to view these slides for additional context to our prepared remarks. Please note that in the materials presented today, we may refer to non-GAAP financial measures that we believe provide additional insight into underlying results. Reconciliations between these non-GAAP financial measures and the most comparable gap measures may be found in the earnings press release. Also, in our remarks, we may make certain forward-looking statements. We ask that you please refer to the Safe Harbor language also included in today's press release. Krishnan, I'll now turn the call over to you. Thank you, Steve. Good afternoon, everyone, and thank you for joining us today.

Let's now proceed to today's call joining me is our president and CEO Christian on radical Polen, Chief Financial Officer, Mark Harris, and our incoming CEO, Tom Monahan, we posted our accompanying slides on the IR homepage of our website at Heidrick Dot Com and we encourage you to view the slides for additional context to our prepared remarks.

<unk>.

Please note that in the materials presented today, we may refer to non-GAAP financial measures that we believe provide additional insight into underlying results reconciliations between these non-GAAP financial measures.

And the most comparable GAAP measures may be found in the earnings press release.

Also in our remarks, we may make certain forward looking statements. We ask that you. Please refer to the Safe Harbor language also included in today's press release Krishnan I'll now turn the call over to you.

Thank you Steve.

Afternoon, everyone and thank you for joining us today.

Krishnan Rajagopalan: We're very proud of how we performed in 2023, the year in which our executive search business faced significant headwinds, but we still delivered more than $1 billion in revenue by executing on our diversification strategy. One component of that execution was the successful integration of our strategic and accretive acquisitions. We accomplished all of this while remaining diligently focused on our operational profitability as we delivered more than 12% adjusted EBITDA margin and nearly $3 in adjusted diluted EPS for the full year of 2023. In fact, we capped off this impressive year with a strong finish, as evidenced by our fourth quarter results. Net revenue was over $253 million, more than 7% stronger than last year.

We're very proud of how we performed in 2023 and a year and with very executive search business faced significant headwinds, we still delivered plus $1 billion in revenue by executing on our diversification strategy.

One component of that execution was the successful integration of our strategic and accretive acquisitions.

We accomplished all of this while remaining diligently focused on our operational profitability as we delivered more than 12% adjusted EBITDA margin at nearly $3 and adjusted diluted EPS for the full year of 2023.

In fact, we capped off this impressive year with a strong finish as evidenced by our fourth quarter results.

Net revenue was over $253 million more than 7% stronger than last year.

Krishnan Rajagopalan: This is the second consecutive quarter where we've demonstrated solid year-over-year growth as we return to a more normalized cadence of systematic growth. We also achieved another quarter of double-digit adjusted EBITDA margin, which we've achieved almost every quarter for the last six years. Mark's going to provide more details on our financial performance in a few minutes. But before I drill down into the accomplishments of each of our businesses, let me expand a bit on our diversification, profitability, and some expectations about the coming year. As discussed, a key component of our long-term strategy is to meaningfully grow our diversified solutions while scaling our search business and thus delivering a more comprehensive set of leadership advisory services. Together, our diversified solutions grew north of 44% in 2023, which brings the contribution of our non-search business to 24%, compared to the 9% contribution in 2018, when we embarked upon this strategy.

This is the second consecutive quarter, where we've demonstrated solid year over year growth as we return to a more normalized cadence with systematic growth.

We also achieved another quarter of double digit adjusted EBITDA margin.

Between the peak almost every quarter for the last six years.

Mark's going to provide more details on our financial performance in a few minutes.

Okay.

Before I drill down into the accomplishments of each of our businesses let.

Let me expand a bit on our diversification profitability and some expectations about the coming year.

As we discussed a key component of our long term strategy used to meaningfully grow our diversified solutions, while scaling our search business, that's delivering a more comprehensive set of leadership advisory services.

Together, our diversified solutions grew north of 44% in 2023, which brings the contribution of our non search business to 24% compared to the 9% contribution in 2018, when we embarked upon this strategy.

We also made some important strides in our profitability front.

Krishnan Rajagopalan: We also made some important strides in our profitability. Our adjusted EBITDA margin improved by nearly 100 basis points during the year. In fact, we saw higher margins in our businesses, executives heard. On-Demand Talent and Heidrick Consulting, with On-Demand Talent achieving its first ever full year of positive, adjusted, even profits. As we look ahead to 2024, we will remain relentlessly focused on continuing this growth and profitability momentum, regardless of the economic environment. Not surprisingly, a major topic discussed in Davos last month was how leaders are preparing for a continued difficult economic environment leading to slower growth.

Our adjusted EBITDA margin improved by nearly 100 basis points during the year.

We saw higher margins in our businesses executive search.

On demand talent in heidrick consulting with on demand talent, achieving its first ever full year positive adjusted EBITDA.

As we look ahead to 2024, we will remain relentlessly focused on continuing this growth and profitability momentum regardless of economic environment.

Not surprisingly a major topic being discussed in Davos last month was how leaders are preparing for continued difficult economic environment, leading to slower growth.

Krishnan Rajagopalan: However, many expressed a more optimistic viewpoint than in recent months, despite the obvious geopolitical risks that exist. Many CEOs and world leaders in attendance suggested resilience in the economic outlook, pointing to China's re-emergence. Strengthening Global Supply Chains and an expectation that rate hikes could end by the middle of the year. Many in attendance also highlighted fast growing economies in Latin America. India and the Middle East as softeners to the declines that may be seen in advanced economies, as I reflect on the conversation from Davos and the Softening of the Inflation Indicators.

However, many expressed more optimistic viewpoint than in past months, despite the obvious geopolitical risk that exists.

Many Ceos and world leaders in attendance suggested resilience in the economic outlook pointing to China's reemergence.

Strengthening our global supply chain.

Dictation that rate hikes could end by the middle of the year.

Many in attendance also highlighted fast growing economies in Latin America.

And the middle East Softeners to the declines that may be seen in advanced economies.

As I reflect on the conversation from Davos and softening in the inflation indicators.

Krishnan Rajagopalan: I'd argue that there is an increasing probability of returning to a growth mindset in the second half of the year. So while these leaders continue to expect and prepare for some level of potential sluggishness, I was encouraged by their focus on topics important to us here at Heidrick, such as continued business transformation, sustainability, and the importance of having a strong management team. We met with more than 50 clients over a few days at the conference, and their appetite to engage with us and hear about our broader portfolio of offerings was incredibly strong. This is the type of direct feedback that drives our dedication to be a world-class leadership advisory firm.

I would argue that there is an increasing probability to return to a growth mindset in the second half of the year.

So while these leaders continue to expect and prepare for some level of potential sluggishness I was encouraged by their focus on topics important to us here at heidrick, such as continued business transformation sustainability and the importance of having a strong management team.

We met with more than 50 clients over a few days of the conference and their appetite to engage with us and hear about our broader portfolio of offerings was incredibly strong.

This is a type of direct feedback that drives our dedication to be a world class leadership advisory firm with.

Krishnan Rajagopalan: We pride ourselves on helping our clients find the world's best leaders, create diverse and inclusive cultures, and transform their teams to achieve the highest levels of profitability and performance. Given this interest from so many clients, coupled with some improving economic indicators, we believe that there should be less volatility in our business in 2024. With that as a backdrop, let me provide you some color on the fourth quarter performance in each of our businesses. Beginning with executive search, we saw continued stabilization this quarter with multiple trends painting a more optimistic picture. For example, confirmations increased 4% over last year's fourth quarter, with all practice groups exhibiting growth in confirmation. Retainers, an average fee on closed engagements, remain steady and improved in all geographies.

We pride ourselves on helping our clients find the world's best leaders create diverse and inclusive cultures and transform their teams to achieve the highest levels of profitability and performance.

Given this interest from so many clients coupled with some improving economic indicators, we believe that there should be less volatility in our business in 2024.

With that as a backdrop, let me provide you some color on the fourth quarter performance in each of our businesses.

Okay.

Beginning with executive search we saw continued stabilization this quarter with multiple trends painting, a more optimistic picture for.

For example, confirmations increased 4% over last year's fourth quarter with all practice groups exhibiting growth in confirmations.

Retainers and average fee on closed engagements remained steady improved in all geographies.

Krishnan Rajagopalan: Demand has been most resilient for CEO and CHRO roles. Globally, we are growing search efficiently by optimizing our go-to-market strategy and deepening client relationships in all industries with a focus on our one Heidrick strategy. Regionally, we continue to assess white space opportunities in industry sectors and partner with our clients on burgeoning demand areas such as the implications of AI, sustainability, and DE&I. We're also partnering with clients on technology or digital hybrid roles that we continue to see emerging in every industry practice. As we take a longer-term view and a more comprehensive look at the growth patterns from the beginning of 2017 until now, we've delivered a very respectable 6% compound annual growth rate. Additionally, SEARCH has been meaningfully profitable, producing north of $50 million in adjusted EBITDA in eight of its last nine quarters, including nearly $55 million this quarter.

Demand has been most resilient with CEO and Chr overalls.

Globally, we are growing search efficiently by optimizing our go to market strategy and deepening client relationships and all industries with a focus on our one heidrick strategy.

Regionally, we continue to assess white space opportunities in industry sectors and partner with our clients on burgeoning demand areas such as the implications of AI sustainability and DNI.

We're also partnering with clients in technology digital hybrid roles that we continued to see emerging in every industry practice as.

As we take a longer term view and a more comprehensive look at the growth patterns from the beginning of 2017 until now we.

We delivered a very respectable 6% compound annual growth rate.

Additionally, search has been meaningfully profitable producing north of $50 million and adjusted EBITDA and eight of these last nine quarters, including nearly $55 million this quarter.

Krishnan Rajagopalan: This profitability is very important to us as it helps us drive investment into our diversified solutions. Turning to our diversified solutions In on-demand talent, we are very excited that we posted record fourth-quarter revenue with 84% year-over-year growth, along with positive adjusted EBITDA, as we continue to benefit from the Atreus acquisition. From an industry standpoint, there has been no surprise about the slowdowns in the banking and professional services sector, while our life sciences and consumer practices appear to be poised for a stronger year in 2024. In addition, we're seeing growth in demand for interim executives, driven in part by shifting needs and executive skills to weather a changing environment.

This profitability is very important to us as it helps us drive investments into our diversified solutions.

Turning to our diversified solutions.

<unk> talent, we're very excited that we posted record fourth quarter revenue was 84% year over year growth along with positive adjusted EBITDA as we continue to benefit from the <unk> acquisition.

From an industry standpoint, there has been no surprise to the slowdowns in the banking and professional services sectors while.

Our life Sciences, and consumer practices appear to be poised for a stronger year in 2024.

In addition, we're seeing growth in demand for interim executives driven in part by shifting needs and executive skills to weather a changing environment.

Krishnan Rajagopalan: We're also delivering continued growth from the Heidrick Search Channel, which tends to drive more interim needs, as it is a natural complement to search. Within the interim executive segment, we are achieving growth in the CFO office, for both interim CFOs and for placements within the CFO's office, such as FP&A, for example. These trends reflect the significant and changing pressures on the CFO office in this environment.

We're also delivering continued growth from the Heidrick search channel, which tends to drive more interim needs as it is a natural complement to search.

In the interim executive segment, we are achieving growth in the CFO office for both interim CFO and for placements within the Cfo's office.

Such as <unk> for example.

These trends reflect the significant in changing pressures on the CFO office in this environment.

As we look at the many opportunities ahead, we'd like to welcome Sunny Ackerman as our new global managing partner of OTT.

Krishnan Rajagopalan: As we look at the many opportunities ahead, we'd like to welcome Sonny Ackerman as our new Global Managing Partner of OGT. Her experience in technology, professional services, and human capital solutions will help drive the next phase of... Moving on to another key component of our diversified solutions offering, Heidrick Consulting also delivered a record revenue quarter after achieving approximately 36% year-over-year growth. This growth is driven by a combination of organic growth and the acquisition of B4-0.

Her experience in technology professional services and human capital solutions will help drive the next phase of growth.

Moving on to another key component of our diversified solutions offering heidrick consulting also delivered a record revenue quarter after achieving approximately 36% year over year growth.

This growth is driven by a combination of organic growth and the acquisition of <unk> four zero.

Krishnan Rajagopalan: Our consulting business also achieved positive adjusted EBITDA margins, reaching almost 4% this quarter as we begin to see the benefits of scale within this business. We've seen continued strength and demand for culture and leadership assessment projects. Clients appear to be acting more decisively as they learn to effectively operate through difficult conditions. This is having a positive impact on our business, with early first quarter demand patterns exhibiting more strength than we saw a year ago. Comparing the business to last year's fourth quarter, we increased our consultant's headcount from 70 to 89, and confirmations increased by about 3%, all positive signs. Finally, as part of the OneHydric strategy and similar to our on-demand talent business, more than 40% of these projects were referred by our search... evidence of the One-Hydric strategy. And finally, I want to discuss Heidrick Digital.

Our consulting business also achieved positive adjusted EBITDA margin, reaching almost 4% this quarter as we begin to see the benefits of scale within this business.

We've seen continued strength in demand for culture, and leadership assessment projects clients appear to be acting more decisively as they learn to effectively operate through difficult conditions.

This is having a positive impact on our business with early first quarter demand patterns exhibiting more strength than we saw a year ago comp.

Comparing the business for last year's fourth quarter, we increased our consultant head count from 70 to 89 and confirmations increased by about 3% all positive signs.

Finally, as part of the 100 strategy and similar to our on demand talent business more than 40% of these projects were referred by our search business evidence of the one heidrick strategy.

And finally, I want to discuss heidrick digital.

Krishnan Rajagopalan: As I shared last quarter, we converted one of our first early access partners from our Heidrick Navigator pilot program into a three-year subscription. I'm also happy to share that we recently signed another subscription customer directly without going through the beta process. The signing of this enterprise customer that has tens of thousands of employees and is approaching $20 billion in revenue is another early proof point of the digital opportunity ahead of us, and we have several more exciting potential customers in the pipeline. We continue to receive positive reactions from additional early adopters and are working with them to incorporate their feedback with the expectation that many of them will convert to subscription customers over time. Let me expand on one aspect of the Navigator platform, which is its history. Earlier this year, we surveyed several hundred non-H.R.

As I shared last quarter, we converted one of our first early access partners from our Heidrick Navigator pilot program into a three year subscription.

I'm also happy to share that we recently signed another subscription customer directly without going through the beta process. The signing of this enterprise customer that has tens of thousands of employees and is approaching $20 billion. In revenue is another early proof point in the digital opportunity ahead of us and we have several more exciting potential customers in the pipeline.

We continue to receive positive reactions from additional early adopters and are working with them to incorporate their feedback with the expectation that many of them will convert to subscription customers over time.

Let me expand on one aspect of the navigator platform, which is assessments.

Earlier this year, we surveyed several hundred non HR executives to determine how to make better use of assessments. There are several key insights derived from the survey, including that an effective assessment process improves team dynamics the promotion process.

Krishnan Rajagopalan: executives to determine how to make better use of assessors. There were several key insights derived from the survey, including that an effective assessment process improves team dynamics. The Promotion Process, and retention. Our Heidrick Navigator product can be a game changer when it comes to improving the assessment process. In fact, over a dozen clients are now leveraging our new digital assessment platform. Companies continue to move closer to understanding that they must treat their leadership pipeline and that our comprehensive suite of leadership advisory offerings helps them accomplish that. Now, let me share an example of a client taking advantage of our OneHydric strategy, which strategically links all our businesses together. This example is that of a large company that needed to split into two independent publicly traded companies.

And retention are.

Heidrick navigator product can be a game changer when it comes to improving the assessment process in fact over a dozen clients who are now leveraging our new digital assessment platform companies continue to move closer to understanding that they must treat their leadership pipelines as a strategic asset and that our comprehensive suite of leadership advisory offerings helps them accomplish that.

Cool.

Now let me share an example of a client taking advantage of our one heidrick strategy with strategically links all our businesses together.

This example is that of a large company that needed is split into two independent publicly traded companies.

Krishnan Rajagopalan: They needed support in making the best placement decisions, tapping into internal and external candidates. There was the added pressure of needing to fill important positions fast, but with an eye toward sophisticated talent who understood the challenges of operating in a public company environment. Our approach was to leverage our industry, functional, and leadership expertise to define forward-looking leadership success profiles. Additionally, our consulting teams needed to assess the current leaders to provide insights into fit and growth potential with market calibration. We also help the client retain key talent while closing critical gaps in our search. We were able to differentiate ourselves by blending our leadership advisory and search market perspectives, providing a digital platform that allowed for the real-time matching of talent and opportunity, plus a holistic framework that covers experience, growth potential, and culture.

They needed support in making the best placement decisions tapping into internal and external candidates.

There was the added pressure of needing to fill important positions fast, but with an eye towards sophisticated talent, who understood. The challenges of operating in a public company environment.

Our approach was to leverage our industry functional leadership expertise to defined forward looking leadership success profiles.

Additionally, our consulting teams needed to assess the current leaders to provide insights into fit and growth potential with market calibration. We also help the client retain key talent, while closing critical gaps to our search team.

We were able to differentiate ourselves by blending our leadership advisory and search market perspective, providing a digital platform that allowed for real time matching of talent and opportunity.

Just a holistic framework that covers experienced growth.

Growth potential and culture impact.

Krishnan Rajagopalan: This is really a great example of how the many facets of our One Hybrid strategy work together strategically to provide our clients with the best possible outcome. Now, before I conclude my remarks, I'll touch on the recent announcement of my planned retirement from Heidrick. I'll be stepping down as President and CEO from the board effective March 4th.

This is really a great example of how the many facets of our one hybrid strategy work together strategically to provide our clients with the best possible outcome.

Now before I conclude my remarks, let's touch on the recent announcement of my planned retirement from Heidrick I'll be stepping down as president and CEO from the board effective March 4th Com.

Krishnan Rajagopalan: Tom Monaghan would be stepping into the role of CEO and board member at that time, with Tom Murray, currently the global managing partner of our search business, stepping into the role of president. This was the culmination of a systematic, deliberate succession plan driven by our board meant to maximize the potential for continued success. The establishment of separate CEO and president roles will enable us to drive even greater focus on executing across our businesses and expanding our capabilities to deliver broader, more comprehensive offerings for talent and human capital challenges. All of this reflects our commitment to driving growth, profitability, and diversification in our business. With that in mind, let me share a few thoughts on Tom Monaghan, who I've known for nearly 20 years.

Tom Monahan, who will be stepping into the role of CEO and board member at that time with Tom Murry currently the global managing partner of our search business stepping into the role of President.

This was the culmination of a systematic deliberate succession plan driven by our board meant to maximize the potential for continued success.

The establishment of a separate CEO and president roles will enable us to drive even greater focus on executing across our businesses and expanding our capabilities to deliver a broader more comprehensive offerings for talent and human capital challenges.

All of this reflects our commitment to driving growth profitability and the diversification in our business.

With that let me share a few thoughts on Tom Monahan, who I've known for nearly 20 years.

Tom Monahan: Tom is a visionary executive with a deep passion for the leadership arena and a longtime Heidrick & Struggles client who understands and respects our culture and will bring a fresh perspective not only to build on our core strengths but also to steer our strategic course to unlock transformative growth and shareholder value. Tom's extensive background leading global companies with integrated services, technology, and analytics is perfectly suited to his role of shaping and executing our growth and diversification strategy as well as leading our Heidrick Digital Group. Tom, would you like to say a couple of words before I conclude my remarks? Thanks, Krishnan.

<unk> is a visionary executive with a deep passion for the leadership arena and a longtime heidrick <unk> struggles client understands and respects, our culture and will bring a fresh perspective, not only to build on our core strengths, but also steer our strategic course to unlock transformative growth and shareholder value.

Tom has extensive background, leading global companies with integrated services technology and analytics is perfectly suited to his role of shaping and executing our growth and diversification strategy as well as leading our heidrick digital business.

Tom would you like to say a couple of words before I conclude my remarks.

Thanks Christian.

Tom Monahan: I am very excited to join this incredible team of accomplished colleagues at Heidrick & Struggles and to take stewardship of the brand, culture, and community that have shaped the leadership advisory industry for decades. Our work for clients is the central component of their building successful companies. At its core, leadership is the most important performance lever.

I am very excited to join this incredible team have accomplished colleagues at heidrick <unk> struggles and it takes to ship the brand culture and community that have shaped the leadership advisory industry for decades.

Our work for clients is the central component of their building successful companies.

<unk> core leadership is the most important performance lever.

Tom Monahan: Having been a Heidrick client and candidate over the past 20 years, I have a first-hand understanding of our value today and the massive opportunity to expand our impact in the years ahead. By combining our global excellence in search with our growing portfolio of leadership solutions, we have a unique opportunity to diversify and deepen our value for clients, colleagues, and shareholders, and, most importantly, to change the world through leadership. Thanks, Tom.

Having been a heidrick clients in Canada for the past 20 years I have a firsthand understanding of our value today and the massive opportunity to expand our impact in the years ahead.

By combining our global excellence and search with our growing portfolio of leadership solutions, we have a unique opportunity to diversify and deepen our value for our clients colleagues and shareholders.

And most importantly to change the world through leadership.

Thanks, Tom.

Krishnan Rajagopalan: Since Tom's start date isn't until March 4th, we're giving him a hall pass for the Q&A session today, but I know that he's looking forward to leading our earnings call next quarter. So, in closing, we delivered another billion-dollar revenue year. We achieved record revenue quarters for both on-demand talent and Heidrick Consulting. We delivered improved adjusted EBITDA margin across the board, and we continue to deliver a broader, more comprehensive offering for talent and human capital challenges at the executive level. I'm confident that the company is well positioned to succeed in the coming year and beyond. And an even bigger thank you than usual to the Heidrick team for their continued hard work and incredible dedication to our clients over the past several years. Before I hand the call over to Mark, let me say I'm humbled to have served the company, its employees, clients, and investors in this role for the past seven years and for more than 23 years in total. I'm proud of what we've accomplished during that time.

Since Tom start date isn't until March the fourth we're giving them a hall pass for the Q&A session today.

I know that he is looking forward to leading our earnings call next quarter.

So in closing we delivered another $1 billion revenue year.

<unk> record revenue quarters for both on demand talent in Heidrick consulting we delivered improved adjusted EBITDA margin across the board and we continued to deliver a broader more comprehensive offerings for talented human capital challenges at the executive level.

I am confident that the company is well positioned to succeed in the coming year and beyond.

And even bigger thank you the unusual to the heidrick team for their continued hard work and incredible dedication to our clients over the past several years.

Before I hand, the call over to Mark Let me say Im humbled to have served the company and its employees.

Clients and investors in this role for the past seven years and for more than 23 years in total.

I am proud of what we've accomplished during that time, we diversified the product offering by meaningfully expanding the heidrick consulting business star.

Krishnan Rajagopalan: We diversified the product offering by meaningfully expanding the Heidrick Consulting business, starting the on-demand talent business, and investing in our digital platform with innovative products like Heidrick Navigator. And we accomplished all of this while also significantly scaling our search business and dramatically improving the bottom line. But most importantly, we've had a positive impact on our clients through building high-performance, diverse teams, and a strong culture. I look forward to seeing the continued success of Heidrick, with a strong management team in place to take it forward. Now, I'd like to turn the call over to Mark Harris.

Starting the on demand talent business and investing in our digital platform with innovative products like Heidrick navigator.

We accomplished all of this while also significantly scaling our search business and dramatically improving the bottom line.

But most importantly, we have had a positive impact on our clients through building high performance diverse teams and strong cultures.

Forward to seeing the continued success of heidrick with a strong management team in place to take it forward.

Now I'd like to turn the call over to Mark Harris.

Mark R Harris: Thank you, Krishnan, and good afternoon and evening to everyone on today's call. Let me also begin by welcoming Tom Monaghan to our Heidrick family and congratulating Tom Murray on his promotion. As Krishnan said, the company is being placed in great hands, and we look forward to working closely together to continue delivering value for our clients, our employees, and our shareholders. I'd also like to congratulate everyone here at Heidrick for their hard work and perseverance through a challenging year where our clients were unsure of the direction of their respective markets but successfully navigated them with Heidrick as their business partner. By remaining a close and reliable partner to our clients, we created meaningful value for our shareholders in a tough environment.

Thank you, Chris Sean and good afternoon, and evening to everyone on today's call.

Let me also begin by welcoming Tom Monahan, our hydro family and congratulate Tom Murray on his promotion as Christian said the company is being placed in great hands, and we look forward to working closely together to continue delivering value for our clients our employees and our shareholders.

I'd also like to congratulate everyone here at Heidrick for their hard work and perseverance through a challenging year, where our clients. We're unsure of the direction of the respective markets, but successfully navigated them with heidrick as their business partner by.

By remaining a close and reliable partner to our clients, we created meaningful value for our shareholders in a tough environment.

Mark R Harris: Our approach enabled us to continue our transformation, resulting in the third consecutive year of more than a billion dollars in revenue and $2.91 in adjusted EPS, the fourth highest annual achievement in nearly 20 years. The transformation of the business is predicated on delivering a more comprehensive, diversified set of solutions to our clients. In fact, our diversified solutions, which consists of our on-demand talent and Heidrick Consulting businesses, which will soon include Heidrick Digital Business, represented 24% of total revenue for the year and over 27% of revenue in the fourth quarter.

Our approach enabled us to continue our transformation, resulting in the third consecutive year of more than $1 billion in revenue and $2 91, and adjusted EPS. The fourth highest annual achievement in nearly 20 years.

The transformation of the business is predicated on delivering a more comprehensive diversified set of solutions to our clients.

In fact, our diversified solutions, which consists of our on demand talent and Heidrick consulting businesses will soon include Heidrick digital business represented 24% of total revenue for the year and over 27% of revenue in the fourth quarter.

Mark R Harris: This is a considerable change from the 9% when we embarked upon the journey in 2018. Our strategy will be to continue investing in these businesses, and we expect that they will become an increasing part of our bottom line profitability this year. Let me briefly share some full year highlights for 2023 before discussing our fourth quarter 2023 details. As I mentioned, we delivered $1.03 billion in revenue, mainly led by our executive search revenue of $780 million. While all geographies and most practices were down compared to last year and executive search, we did achieve annual growth in the social impact practice and industrial practice in terms of new engagement.

This is a considerable change from the 9% when we embarked upon that journey in 2018.

Our strategy will be to continue investing in these businesses and we expect that they will become an increasing part of our bottomline profitability. This year.

Let me briefly share some full year highlights for 2023 before discussing our fourth quarter 2023 details.

As I mentioned, we delivered $1 3 billion in revenue, mainly led by our executive search revenue of $780 million.

While all geographies and most practices were down compared to last year in executive search we did achieve annual growth in the social impact practice that industrial practice in terms of new engagements.

Mark R Harris: As we look ahead, I'm encouraged that confirmation trends are pointing upwards, essentially across the board. As always, the search business delivered phenomenal levels of profitability, including nearly $207 million in adjusted EBITDA, which improved our adjusted EBITDA margin to 26.5%. Moving to our on-demand talent segment, revenue grew just over $91 million in 2022 to a record $153 million in 2023, or 67%, on the strength of our Altria acquisition. Further, with regard to our annual on-demand platform, we were pleased with the adjusted EBITDA margin of 0.9%, whereas in 2022, we had a negative 0.4% margin. Thus, an improvement of 130 bases.

As we look ahead.

On the courage that confirmation trends are pointing upwards essentially across the board.

As always the search business delivered phenomenal levels of profitability, including nearly $207 million and adjusted EBITDA, which improved our adjusted EBITDA margin to 26, 5%.

Moving to our on demand talent segment revenue grew just over $91 million in 2022 to a record $153 million in 2023 or 67% off of the strength of our <unk> acquisition.

Further with regards to our annual on demand platform. We were pleased with the adjusted EBITDA margin of 9%, whereas in 2022, we had a negative 4% margin that's an improvement of 130 basis points.

Mark R Harris: In Hydra Consulting, we saw revenue increase nearly 18% to a record-breaking $94 million and continues to make progress towards achieving the necessary scale to make it profitable. With margin discipline and obvious key focus, we're proud that we have achieved an improvement in our enterprise-adjusted EBITDA to nearly $126 million, a 4% increase over 2022, and an adjusted EBITDA margin of 12.2%, nearly 100 basis points improvement over 20 Moving on to the fourth quarter results, on a consolidated basis, revenue is $253 million, or 7.4% above revenue for the fourth quarter of 2022. Adjusted EBITDA was $35.8 million compared to $25.9 million in the fourth quarter of 2022, a 37.9% improvement. As Krishnan mentioned, we recorded our 14th consecutive double-digit adjusted EBITDA margin at 14.1 percent, which was much stronger than the previous calendar quarter's performance of 11 percent. Now let me review each of the businesses in more detail that contributed to this performance. In executive search, revenue decreased 4.5% from Q4 2022 to $184 million.

In Heidrick consulting we saw revenue increased nearly 18% to a record breaking $94 million and continues to make progress towards achieving the necessary scale to make it profitable.

With margin disciplined and obvious key focus we're proud that we have achieved an improvement in our enterprise adjusted EBITDA to nearly $126 million.

A 4% increase over 2022, and adjusted EBITDA margin of 12, 2% nearly a 100 basis points improvement over 2022.

Moving onto the fourth quarter results on a consolidated basis revenue was $253 million or seven 4% above revenue for the fourth quarter of 2022 <unk>.

Adjusted EBITDA was $35 8 million compared to $25 9 million in the fourth quarter of 2022, a 37, 9% improvement.

As Christopher mentioned, we recorded our 14th consecutive double digit adjusted EBITDA margin at 14, 1%, which was much stronger than the previous calendar quarters performance of 11%.

Now, let me review each of the businesses in more detail.

That contributed to this performance.

An executive search revenue decreased four 5% from Q4, 2000 $22 million to $184 million looking.

Mark R Harris: Looking at our regional performance compared to the prior quarter, we saw America's search revenue was down just over 4%, Europe was essentially flat, and Asia-Pacific was down approximately 12%. Not surprisingly, we saw consultant productivity on a trilling 12-month basis in the fourth quarter of 2023 at $1.9 million, which compares to $2.3 million on a trilling 12-month basis in the year-ago quarter. This was expected, and right in the middle of the range we expect in a post-pandemic environment where technology has been enhanced, embraced, and accepted by the market. Irrespective of the revenue decrease, Executive Search remains very profitable, with an adjusted EBITDA of $54.7 million compared to $53.9 million in the fourth quarter of 2022, or a margin of 29.7% compared to 28%.

Looking at our regional performance compared to the prior quarter. We saw America search revenue was down just over 4% Europe was essentially flat and Asia Pacific was down approximately 12%.

Not surprisingly we saw consultant productivity on a trailing 12 month basis in the fourth quarter of 2023 at $1 9 million and compares to $2 $3 million in the trailing 12 months basis in the year ago quarter.

This was expected and right in the middle of the range. We expect in a post pandemic environment, where technology has been enhanced embraced and accepted by the market.

Irrespective of the revenue decreasing executive search remains very profitable with an adjusted EBITDA of $54 7 million compared to $53 9 million in the fourth quarter of 2022 or a margin of 29, 7% compared to 28%.

Mark R Harris: Turning to on-demand talent, revenue was $41.1 million, up nearly 83.7% compared to the fourth quarter of 2022. As we previously discussed, this growth was driven by the positive effects of our Atrius acquisition. We're also seeing some positive forward-looking indicators in our legacy on-demand talent business as well, including an increase in qualified leads, wins, and total contract values on a sequential basis. On-demand talent recorded an adjusted EBITDA profit of $0.8 million, or 1.9% margin versus a loss of $1.4 million and a negative 6.4% margin in the fourth quarter of 2022. Our goal is to continue to improve our margin profile to a longer-term run rate of 10-12% adjusted EBITDA margins. Hydra Consulting's fourth quarter revenue grew 35.8% year-over-year to $28.1 million, partially due to the acquisition of B4Z and our historical Hydra Consulting business.

Turning to on demand talent revenue was $41 $1 million up nearly 83, 7% compared to the fourth quarter of 2022.

As we've previously discussed this growth was driven by the positive effects of our <unk> acquisition.

We're also seeing some positive forward looking indicators in our legacy on demand talent business as well, including an increase in qualified leads wins and total contract values on a sequential basis.

On demand talent recorded adjusted EBITDA profit of $8 million or one 9% margin versus a loss of $1 $4 million and a negative six 4% margin in the fourth quarter of 2022.

Our goal is to continue to improve our margin profile to the longer term run rate of 10% to 12% adjusted EBITDA margins.

Heidrick consulting fourth quarter revenue grew 35, 8% year over year to $28 1 million, partially due to the acquisition of <unk> and our historical Heidrick consulting business.

Mark R Harris: Our business is benefiting from investment in both organic and inorganic growth, where one plus one equals three or greater. In addition to revenue growth, we delivered a 28% increase in confirmations from the previous quarter, which is expected to benefit the first half of 2024. Heidrick Consulting posted an adjusted EBIT of profit of $1,000,000, or a margin of 3.6% compared to $2.4 million loss or negative 11.5% in the same quarter last year.

Our business is benefiting from investment in both organic and inorganic growth, where one plus one equals three or greater.

In addition to revenue growth, we delivered a 28% increase in confirmation from the previous quarter, which is expected to benefit the first half of 2024.

Heidrick consulting posting adjusted EBIT profit of $1 million.

Or a margin of three 6% compared to $2 $4 million loss or negative 11, 5% in the same quarter last year.

Mark R Harris: While much work remains to increase the profitability of our consulting business, we're beginning to see the favorable impact of the scale that we're continuing to build, which should improve our margin profile to the longer-term run rate of 12 to 15% adjusted EBIT margin. Turning to operating expenses, including our recent acquisitions, we saw salaries and benefits decrease 3.7% from the fourth quarter of 2022. Variable compensation decreased $13.3 million year-over-year due to a decrease in production.

While much work remains to increase the profitability of our consulting business. They are beginning to see the favorable impact of the scale that we're continuing to build which should improve our margin profile to the longer term run rate of 12% to 15% adjusted EBITDA margin.

Turning to operating expenses, including our recent acquisitions, we saw salaries and benefits decreased three 7% from the fourth quarter of 2022.

Variable compensation decreased $13 $3 million year over year to the decrease in production.

Fixed compensation increased $7 5 million versus last year due to the number of employees compensation increases to remain competitive partially offset by decrease in RSV amortization and other costs.

Mark R Harris: Fixed compensation increased $7.5 million versus last year due to the number of employees. Compensation increases to remain competitive, partially offset by a decrease in RSU amortization and other costs. As a percentage of net revenue, salary and benefits was 59.7% versus 66.5% last year.

As a percentage of net revenue salary and benefits was 59, 7% versus 66, 5% last year.

With a full year of acquisitions, we expect to see our salary and benefits increase in 2024 by.

Mark R Harris: With a full year of acquisitions, we expect to see our salary and benefits increase in 2024 by 3 to 4% compared to 2023. General and administrative expenses increased to $8.6 million, or 17.4% of net revenue, compared to 15.1% of net revenue in the fourth quarter of 2022. This increase is due to the non-cash cost of our acquisitions. Office Occupancy Costs, and Marketing, Partially Offset by a Decrease in Sum over Other Components.

By 3% to 4% compared to 2023.

General and administrative expenses increased to $8 6 million or.

Or 17, 4% of net revenue compared to 15, 1% of net revenue in the fourth quarter of 2022.

This increase is due to the noncash cost of our acquisitions.

Office occupancy costs marketing, partially offset by a decrease in some of our other costs.

Please do note that we will have our global conference in the second quarter of 2024, thus along with our acquisitions in 2023, we would expect our G&A to rise in 2024 by around 5%.

Modulate back down in the outer years, as we focus on extending global conferences cadence and working in synergy with our acquisitions.

Mark R Harris: Please do note that we will have our global conference in the second quarter of 2024. Thus, along with our acquisitions in 2023, we would expect our G&A to rise in 2024 by around 5%. Modulate back down in the coming years as we focus on extending global conference cadence and working in synergy with our acquisition. Turning to our cost of services, we saw this increase to $30.2 million in the fourth quarter of 2023 versus $17.4 million in the previous year's quarter, a 73 percent increase.

Turning to our cost of services, we saw this increase to $32 million in the fourth quarter of 2023 versus $17 4 million in the previous year's quarter at 73% increase.

This increase was due to the expansion of our on demand talent business, whose revenue increased 84% in the same period in which typically has approximately 70% of the revenue and cost of services.

We would expect that to continue in 2024 as this business model has some pricing power, but competition keeps it within a tight band.

Lastly, we made progress on development of Heidrick navigator and numerous other digital assets that service all lines of business is for R&D spending.

R&D spending for the fourth quarter was $6 million or two 4% of net revenue versus $6 1 million or two 6% of net revenue in the fourth quarter of 2022.

Mark R Harris: This increase was due to the expansion of our on-demand talent business, whose revenue increased 84% in the same period and which typically has approximately 70% of its revenue in the cost of services. We would expect that to continue in 2024, as this business model has some pricing power, but competition keeps it within a tight band. Last, we made progress on the development of Hydric Navigator and numerous other digital assets that serve all lines of businesses through R&D spending. R&D spending for the fourth quarter was $6 million, or 2.4% of net revenue, versus $6.1 million, or 2.6% of net revenue, in the fourth quarter of 2022. We expect this to be in line with our expectations for 2024. Moving on to profitability, adjusted net income for the quarter was $14.9 million, and adjusted diluting earnings per share was $0.72, which is down from the $16 million and adjusted diluted EPS of $0.78 in the same quarter last year. The primary reason for this decline was a meaningfully higher tax rate in the quarter, just over 40%, compared to about 30% in the same quarter last year.

We expect this to be in line with our expectations for 2024.

Moving on to profitability adjusted net income for the quarter was $14 9 million and adjusted diluting earnings per share was <unk> 72.

Which is down from the $16 million and adjusted diluted EPS of <unk> 78 in the same quarter last year.

The primary reason for this decline was a meaningfully higher tax rate in the quarter, just over 40% compared to about 30% in the same quarter last year.

The two items that drove the tax rate in the fourth quarter, where the non deductibility of our acquisition costs in the two jurisdictions of the United Kingdom, and Germany, coupled with closing one of our overseas offices that required a tax charge.

We expect both 2024 and 2025 will be impacted by the acquisition difference that will increase our rate temporarily to around 38%, but once these costs run off we would expect that to go back down to the low 30% range, assuming no other statutory tax changes.

Now I'll turn to the balance sheet at the end of the fourth quarter, our cash and marketable securities increased sequentially by $144 2 million to.

It's a $478 2 million in the previous quarter, but were down $143 5 million from the same quarter last year.

The year over year decrease is due to the earn out payments related to <unk>, <unk> and <unk> acquisitions, along with our executive search expansions in Finland, South Africa, and South America.

Mark R Harris: The two items that drove the tax rate in the fourth quarter were the non-deductibility of our acquisition costs in the two jurisdictions of the United Kingdom and Germany, coupled with the closing of one of our overseas offices that required a tax charge. We expect both 2024 and 2025 will be impacted by the acquisition difference that will temporarily increase our rate temporarily to around 38%, but once these costs run off, we would expect that to go back down to the low 30% range, assuming no other statutory tax changes. Now I'll turn to the balance sheet. At the end of the fourth quarter, our cash and marketable securities increased sequentially by $144.2 million to $478.2 million in the previous quarter, but were down $143.5 million from the same quarter last year. The year-over-year decrease is due to the earn-out payments related to the BGG, B4Z, and Atrius acquisitions, along with our executive search expansions in Finland, South Africa, and South America. I will affirm that our capital allocation priorities have not changed.

I will affirm that our capital allocation priorities have not changed when we first take care of our strategic investments in our current operations. Then we believe our next greatest shareholder returns will come from investing in inorganic opportunities that affirm and accelerate our strategy, which we believe are accretive to our results.

When we believe we have discretionary cash that isn't needed for the previous mentioned priorities. We will then review our dividend policies and potential stock repurchases accordingly.

Turning to our outlook.

We continue to see improvement demand signals with strong fundamental supporting all businesses. Therefore, we expect the fourth quarter to land in the range of 245 million to $265 million.

This would compare to $239 3 million in Q1 of 2023, representing another quarter of solid growth.

To conclude I'm very proud of our many accomplishments last year, including more than $1 billion in revenue our diversified solutions.

Existing the year, but contributing 27% of revenue in the fourth quarter.

<unk> adjusted EBITDA in all businesses of executive search on demand talent in heidrick consulting and confirming our second SaaS customer for Heidrick navigator and protecting our bottomline profitability just to name a few while.

Mark R Harris: We will first take care of our strategic investments in our current operations. Then, we believe our next greatest shareholder returns will come from investing in inorganic opportunities that affirm and accelerate our strategy, which we believe are accretive to our results. When we believe we have discretionary cash that isn't needed for the previous-mentioned priorities, we will then review our dividend policies and potential stock repurchases accordingly.

While there is always much work to do we are encouraged by improving economic indicators improving forward looking data for our businesses and increasing the scale. We are building in our diversified solutions and believe we are well positioned to deliver on our priorities of prudent topline growth and increasing profitability through margin discipline.

Finally, before I turn the call over to the operator and take questions I'd like to take a moment to thank Christian on and wish him well as this will be his last call with us.

Mark R Harris: Turning to our Outlook, we continue to see improvement demand signals with strong fundamentals supporting all businesses. Therefore, we expect the fourth quarter to land in the range of $245 million to $265 million.

Chris on his 23 year dedication to our company is unparalleled so it may be less visible as his leadership within the organization, including his mentorship and coaching to sell many of us.

Mark R Harris: This would compare to $239.3 million in Q1 of 2023, representing another quarter of solid growth. To conclude, I'm very proud of our many accomplishments last year, including more than $1 billion in revenue, our diversified solutions, exiting the year by contributing 27% of revenue in the fourth quarter, increasing adjusted EBITDA in all businesses of executive search, on-demand talent, and Heidrick Consulting, and confirming our second SAS customer for Heidrick Navigator, and protecting our bottom line profitability, just to name a few. While there is always much work to do, we are encouraged by improving economic indicators, improving forward-looking data for our businesses, and increasing the scale we are building in our diversified solutions. We believe we are well positioned to deliver on our priorities of prudent top-line growth and increasing profitability through margin discipline. Finally, before I turn the call over to the operator and ask questions, I'd like to take a moment to thank Krishnan and wish him well, as this will be his last call with us. Krishnan's 23-year dedication to our company is unparalleled.

Well Christian as always quick to point out that the company success. During his tenure as due to the entire team's effort. There is no doubt that his steadfast determination and vision were the driving force behind it.

You'll be missed by the hydro family and we look forward to continuing our journey with you as our trusted advisor, but for me personally my friend.

Operator happy to take your questions.

Thank you if you have a question. Please press star one on your telephone keypad, if you have queued up and wish to withdraw your question simply press Star one again.

One moment. Please for your first question.

Your first question comes from the line of Kevin Steinke with Barrington Research. Your line is open.

Hey, good afternoon first off I'd like to.

Say congratulations Krishna on all your success at Heidrick over the years and best wishes in your retirement, although it.

Sounds like Youre going to spill.

According to press release via an adviser.

Working with clients. So maybe just can you give us a sense as to.

What you see your role being going forward.

Sure Kevin Thank you for some Ips.

Good luck.

Mark R Harris: What may be less visible is his leadership within the organization, including his mentorship and coaching to so many of us. While Krishnan is always quick to point out that the company's success during his tenure is due to the entire team's effort, there is no doubt that his steadfast determination and vision were the driving force behind it. Krishnan, you'll be missed by the Heidrick family, and we look forward to continuing our journey with you as our trusted advisor, but, for me personally, my friend. Operator, happy to take your questions. If you have a question, please press star 1 on your telephone keypad. If you have queued up and wish to withdraw your question, simply press star 1 again.

I'm going to return back to some of the passion that I have got.

Which is in.

Helping our clients I've had the privilege of working with the team globally. So working with a lot of our larger strategic accounts.

Working with <unk>.

Clients in Asia Middle East across the World just helping our teams.

Tell the one heidrick.

Story as well, that's what I'm looking forward to that.

Great. Thank you.

So in talking about the <unk>.

Demand environment.

You referenced improving market conditions and it sounds like.

Operator: One moment, please, for your first question. Your first question comes from the line of Kevin Steinke with Barrington Research. Your line is open. Hey, good afternoon.

Maybe some of the slower client decision, making you've seen in 2023, it's started to abate in the fourth quarter.

Kevin Mark Steinke: First off, I'd like to, you know, say congratulations, Krishnan, on all your success at Heidrick over the years and best wishes in your retirement. Although it, you know, sounds like you're going to still, according to the press release, be an advisor, working with clients. So maybe just can you give us a sense as to, you know, what your role will be going forward? Here, Kevin, thank you so much.

So just any more commentary on that.

You also referenced.

Perhaps clients returning to more of a growth mindset in the second half of 2024 so.

Yes, I guess.

How much more room is there do you think to.

For the market to improve.

If you think clients can change that mindset versus what they're thinking about right now.

Krishnan Rajagopalan: Yeah. I'm going to return to some of the passions that I've got, which is in helping our clients. I've had the privilege of working with the team globally, so working with a lot of our larger strategic accounts, working with clients in Asia, the Middle East, across the world, just helping our teams tell the one Heidrick story as well. That's what I'm looking forward to doing. Great, thank you.

Yes, let me, let me start with that and Mark if you want to.

Jump into that as well look theres always comparison points, one when I talk about improvements and.

And so it doesn't feel like 'twenty, one and 'twenty.

'twenty, one and parts of <unk> 22 in terms of growth, but it also doesn't feel like.

Large contraction is going on and people are beginning to to talk about their business through a different lens of transformation and are continuing.

Krishnan Rajagopalan: So, in talking about the demand environment, you referenced improving market conditions, and it sounds like maybe some of the slower client decision making you've seen in 2023, it started to abate in the fourth quarter. So, you know, any more commentary on that. And you also mentioned

To make moves and we're optimistic.

Debt.

On the conversations we've had with clients that theyre going to continue down that path. There are larger large forces such as AI and things like that that are driving companies to.

Krishnan Rajagopalan: Perhaps clients returning to more of a growth mindset in the second half of 2024 or so. Yeah, I guess. How much more room is there, do you think, for the market to improve this? You know, do you think clients can change that mindset versus what they're, you know, thinking about right now? Yeah, let me start with that. And Mark, if you want to jump into that as well. Look, there are always comparison points when I talk about improvements.

I think through management think through business model as a whole host of stuff, there's topics such as sustainability, which is still large and out there as well. So so we see some fuel for growth.

If the rate environment continues to improve and actually something happens on that in the second half of the year I think that'll be a bit of an accelerator to that growth as well and thats what I meant by that comment that if we could couple all of that to occur and I think we'll be in a very positive environment.

Krishnan Rajagopalan: And so it doesn't feel like 21 and parts of 22 in terms of growth, but it also doesn't feel like a large contraction is going on, and people are beginning to talk about their business through a different lens of transformation and are continuing to make moves. And we're optimistic that, based on the conversations we've had with clients, they're going to continue down that path. There are large, large forces such as AI and things like that driving companies to think through management, think through business models, a whole host of stuff. There are topics such as sustainability, which are still large and out there as well.

The only part that I'll overlay on that Kevin is as you've been reading about where the hard landing seems to be a taken rollbacks Z from peoples line of vision. It seems that no landing a soft landing is kind of coming through in that market forces are still looking pretty decent Europe has a little bit more headwinds in terms of unpredictability to it seems like it's kind of working its way through.

True.

The way that I would articulate that is that again in terms of 24 expectations, probably similar to that of what we saw in 2023.

Krishnan Rajagopalan: So we see some fuel for growth. If the rate environment continues to improve and actually something happens on that in the second half of the year, I think that'll be a bit of an accelerator for that growth as well. And that's what I meant by that comment that if we could couple all of that, then I think we'll be in a very positive environment. Yeah, the only part that I'll overlay on that, Kevin, is as you've been reading about where the hard landing seems to be a tick and roll backseat from people's line of vision, it seems that no landing, a soft landing is kind of coming through, and the market forces Europe has a little bit more headwinds in terms of unpredictability.

Plus or minus very minor I would imagine at least as of right now where we're sitting keep.

Keep in mind, winning searches still are much more competitive them back in the days of 2021 in the first half of 2022. So our teams in all industries are pitching more we will increase some lead time.

I think it's a much more competitive market in that sense and there is some capacity now in the system that allows them to take on that work were in 'twenty. One a lot of US were just out of capacity. So that was kind of where we're coming at this at least right now what we're saying is when you think about it from the search side, it's very akin.

Two what we saw last year versus now.

Either going down significantly or raging back like 'twenty, one so to speak I don't think thats not in the cards at least not as of today.

Mark R Harris: The U.S. seems like it's kind of working its way through. The way that I would articulate that is that, again, in terms of 24 expectations, probably similar to that of what we saw in 2023, plus or minus, very minor, I would imagine, at least as of right now where we're sitting. Keep in mind, winning searches are still much more competitive than back in the days of 2021 and the first half of 2022. So our teams in all industries are pitching more, which will increase some lead time. I think it's a much more competitive market in that sense, and there's some capacity now in the system that allows them to take on that work. We're in the 21st century.

Yeah.

Okay, Thanks, Brian and say that I also wanted to ask about.

Heidrick consulting.

You know really strong sequential revenue increase in the fourth quarter and as far as I can tell it looks like maybe the strongest quarterly revenue for that business.

In its history, but.

Just trying to think about the sustainability of that I think you talked about some positive growth in the confirmation trends there and.

Also is there any kind of larger projects or.

Something more one off said that really helped the quarter there.

Mark R Harris: A lot of us were just out of capacity. So that was kind of where we're coming at this, at least right now. What we're seeing is, when I think about it from the search side, it's very akin to what we saw last year versus now, either going down significantly or raging back by 21, so to speak. I don't think that's in the cards, at least not as of today.

Yes, nothing nothing one off that I can really think of I think what we began to see is.

Some of our.

Just not only organic growth, but also the integration of <unk> and what we're beginning.

We're beginning to see nice growth in the culture side of our business. So I think those are the kinds of things.

Kevin Mark Steinke: Okay, thanks for your insight on that. I also wanted to ask about Hydra Consulting and the really strong sequential revenue increase in the fourth quarter. And as far as I can tell, Alex, maybe the strongest quarterly revenue for that business in its history. But, you know, just trying to think about the sustainability of that. I think you talked about some positive growth in the confirmation trends there. And, you know, also, was there any kind of larger projects or, you know, something more one-off that really helped the quarter there? Yeah, nothing one-off that I can really think of.

We're looking forward to the the kind of future ready leaders, our assessment business and helping leaders develop that continues to be robust and we think we are in an environment where.

The demand signals for this are going to continue so we're optimistic on being able to grow that business.

Chris on everything he may comments around I would also supplement that with to keep in mind, we had the business for zero acquisition.

In the quarter. It did very well in addition to what we had prior to the acquisition. So I think it's just a tale of two businesses doing very very well in the quarter. So there's nothing that stood out in terms of any specific one off client event I just think that we had two things kind of merge together. One is we had the right products and two we had good demand.

Krishnan Rajagopalan: I think what we're beginning to see is some of our, you know, just not only organic growth but also the integration of B4Z and what we're beginning to do together. We're beginning to see nice growth in the culture side of our business. So I think those are the kinds of things that we're looking forward to. The kind of future-ready leaders, our assessment business, and helping leaders develop that continues to be robust.

It kind of came out of that and hopefully that will continue and we can capitalize that but thank you for that recognition I think that is important.

Sure.

Okay, great. Thank you.

Krishnan Rajagopalan: And we think we're in an environment where the demand signals for this are going to continue. So we're optimistic about being able to grow that business. Yeah, I would agree with Krishnan on everything he made comments about.

So wanted to.

Ask about Heidrick navigator.

The digital pipeline you mentioned.

The direct sign of a client that wasn't.

Mark R Harris: I would also supplement that with, do keep in mind, we had the Business 4.0 acquisition in the quarter. It did very well in addition to what we had prior to the acquisition. So I think it's just a tale of two businesses doing very, very well in the quarter. There's nothing that stood out in terms of any specific one-off client event.

<unk> clients I believe.

So can you just talk about the process that led to that.

And.

That may be happen kind of in line with how you expected or.

And maybe what the pipeline looks like there in terms of you mentioned early adopters and how large the pipeline of.

Early adopters might be.

Yes so.

Mark R Harris: I just think that we kind of merged together. One is we had the right products, and two, we had good demand that kind of came out of that. And hopefully, that'll continue and we can capitalize on it. But thank you for that recognition.

What happened in that case was identified.

<unk> identified eight a several large clients that we would consider in the in the beta category and this client was a very large client, where we were chatting with them about Sears.

A series of business issues that they had and and navigator appeared to be the perfect solution to it so.

Kevin Mark Steinke: I think that is important to observe. Okay, great. Thank you.

The teams recognize that and now this is part of what we're optimistic about is as this is gaining traction and our teams are becoming more and more aware about our capabilities as well how we are able to bring that together. So this ended up becoming an opportunity.

Krishnan Rajagopalan: Also wanted to ask about Heidrick Navigator and, you know, the digital pipeline you mentioned, the direct signing of a client that wasn't a beta client, I believe. So, can you just talk about the process that led to that? And, you know, that maybe happened kind of in line with how you expected or, and, you know, maybe what the pipeline looks like there in terms of, you know, you mentioned early adopters and how large the pipeline of early adopters might be. Yeah, so, in that case, what happened was, you know, we identified several large clients that we would consider in the beta category. And this client was a very large client where we were chatting with them about a series of business issues that they had, and Navigator appeared to be the perfect solution for them.

To showcase navigator and put it in front of them and.

We're very very excited about it so that's kind of what happened in that case, and we've got more and more examples like that have ongoing dialogue with companies as a result of processes that are now.

Just happening inside of inside of Heidrick.

<unk> got a strong funnel.

Does that come through in that funnel is only going to grow.

As a result of that there is.

It's a it's a tech products. So it takes a little bit of time to actually go through all the checks and balances.

Krishnan Rajagopalan: So the teams recognize that, and now this is part of what we're optimistic about as this is gaining traction, and our teams are becoming more and more aware of our capabilities as well, how we're able to bring that together. So this ended up becoming an opportunity to showcase Navigator and put it in front of them. And they're very, very excited about it. So that's kind of what happened in that case.

The legal ramifications et cetera.

To be able to actually sign up fee.

Clients. So we're going through that with several of them. We've got numerous clients that are in the sort of a beta in and looking at it from an assessment perspective and multiple different perspective. So we've got a strong pipeline there and we we hope to.

Continue to close more clients over the coming quarters.

Krishnan Rajagopalan: And we've got more and more examples like that of ongoing dialogue with companies as a result of processes that are now just happening inside of Heidrick. We have a strong funnel that comes through, and that funnel is only gonna grow as a result of that. It's a tech product, so it takes a little bit of time to actually go through all the checks and balances, the legal ramifications, et cetera, to be able to actually sign up the client.

Okay. Thanks, and then.

Mark I wanted to ask about.

The G&A.

You finished the full year 2023, right around 15% of revenue G&A as a percent of revenue, although it spiked up to around about 17% in the fourth quarter or do you think that.

I think you mentioned G&A.

Growing about 5% in 2024.

Krishnan Rajagopalan: So we're going through that with several of them. We've got numerous clients that are in the sort of beta and looking at it from an assessment perspective and multiple different perspectives. So we've got a strong pipeline there, and we hope to continue to close more clients over the coming quarters. Okay, thanks.

Do you think that.

Roughly 15% of revenue still the right target to think about.

As we look to.

Yes.

Or the full year 2024.

Yes, I think.

It's interesting I think 15%, 16% is absolutely the right target line to kind of be thinking about it.

Kevin Mark Steinke: Mark, I wanted to ask about, uh... G&A. You finished the full year, 2023, right around 15% of revenue. G&A is a percent of revenue, although it spiked up around, you know, about 17% in the fourth quarter. Do you think that, um, I think you mentioned G&A growing about 5% in 2024. Do you think that...

Sure.

Will you have the global conference right, which is something that I wanted to make sure to make in my prepared remarks, because it doesn't happen every year. So I think that'll be an.

An anomaly in that year that puts a little bit of pressure on G&A side of it <unk> got the amortization of the intangibles you've got some earn out expenses again that we mark to market in terms of how they're performing and what that math looks like that will create some variability so somewhat a little bit less predictable depending on obviously the performance of the assets.

Mark R Harris: Roughly 15% of revenue is still the right target to think about as we look to..., you know, the rest of or the full year 2024. Yeah, I think that it's interesting. I think 15-16% is absolutely the right target line to kind of be thinking about it. You know, you have the global conference, which is something that I wanted to make sure to bring up in my prepared remarks because it doesn't happen every year. So I think that'll be an anomaly in that year that puts a little bit of pressure on G&A's side of things. You've got the amortization of the intangibles.

And so I think there's just a little bit of that right now so I would expect that to go up obviously after three years to five years when that starts and working itself off and there was no further acquisitions behind it you'll see our G&A as a percentage of revenue kind of tail itself back down to that 12, 13% category that we've been having.

Having back in 2021, and 2022, but right now that's why I wanted to make sure, especially because we have partial acquisitions. This year to really give everybody a fair understanding of what that run rate is kind of going to be about next year and that's why I wanted to give you the comment about the 5%.

Mark R Harris: You've got some earn-out expenses, again, that we mark to market in terms of how they're performing and what that math looks like. That will create some variability, so it will be somewhat less predictable, depending on, obviously, the performance of the assets. And so I think there's just a little bit of that right now, so I would expect that to go up. Obviously, after three to five years when that starts amortizing itself off, and there are no further acquisitions behind it, you'll see our G&A's percentage revenue kind of tail itself back down to that 12-13% category that we had back in 2021 and in 2022. But right now, that's why I wanted to make sure, especially because we had partial acquisitions this year, to really give everybody a fair understanding of what that run rate is kind of going to be about next year. And that's why I wanted to give you the comment about the 5%. Okay, yeah, thanks for the insight. I will turn it over.

Okay, Yeah, thanks for the insight.

Turn it over thanks for taking our questions.

Thanks, Kevin Thanks, Kevin.

Your next question comes from the line of Tobey Sommer with <unk>. Your line is helpful.

Thanks, I was wondering if you could expand on what you're hearing from customers.

Which verticals are yielding.

Well sort of most optimistic and upbeat.

Business trends as you look into 'twenty, four and think that things could be better I heard your comment on the geographic mix, but maybe the industry verticals. If you could elaborate there that'd be helpful.

Sure Yeah, So look I think inside.

Industrial we continue to see continued.

Tobey O'Brien Sommer: Thanks for taking the questions. Thanks, everyone. Your next question comes from the line of Tobey Sommer with Truist. Your line is open.

Continued momentum.

There is the intersection of industrial and technology transformation that continues to occur inside that industry. So that's fueling some of our our growth.

Krishnan Rajagopalan: Thanks. I was wondering if you could expand on what you're hearing from customers in which verticals are yielding the sort of most optimistic and upbeat business trends as you look into 24 and think that things could be better. I've heard you comment on the geographic mix, but maybe the industry verticals, if you could elaborate there. Sure.

Zinc.

Inside of that.

But we call GTS, our technology and services group were seeing big Tech beginning to come back.

We fully expect the services side is going to lag that a bit but big tech is coming back.

Krishnan Rajagopalan: Yeah, so look, I think inside the industrial sector, we continue to see continued momentum. There's an intersection of industry and technology transformation that continues to occur inside that industry. So that's fueling some of our growth. I think inside of what we call GTS, our technology and services group, we're seeing big tech beginning to come back. We fully expect the services side is going to lag behind that a bit, but big tech is coming back. In healthcare and life sciences, biopharma is a bit down, but med devices and the rest of that sector appear poised a little bit for growth. Coming out of J.P. Morgan, there were some deals that were finally announced, so that's a good sign for that industry as well. Consumer electronics seems to be holding its own for us.

In healthcare and life Sciences.

Biopharma is a bit down but.

Med devices.

And the rest of that sector.

It appears poised.

A little bit for for growth.

Coming out of J P. Morgan there were some deals that were finally announced so that's a good sign for.

For that industry as well.

The consumer seems to be.

Holding its own for us and <unk>.

In financial services.

<unk> hiring that we're finally seeing in the banking sector, which we really didn't see before.

And we're seeing.

A lot of risk based hiring that's happening across.

Other segments inside of.

Krishnan Rajagopalan: And in financial services, you know, there's episodic hiring that we're finally seeing in the banking sector, which we really didn't see before. And we're seeing a lot of risk-based hiring that's happening across other segments inside of financial services. But overall, if we take a step back, you know, what we continue to see volume on is CEO turnover and hiring of CEOs. So that number is a little bit higher than it has run historically for us as well. And Krishnan, what sort of lag time do you generally have and observe in your business as you place a CEO before that individual starts providing further business to the firm by replacing their direct reports, at least in part? Yeah, you know, pretty quickly.

Our financial services, but overall, we take a step back while we continue to see volume on us.

CEO turnover.

And hiring of Ceos so.

Debt.

That number is a little bit higher than it has historically for us as well.

Yes Christian.

What sort of lag time do you generally have.

Do you observe in your business as you place the CEO before that individual.

Start providing further business to the firm.

Replacing their direct reports at least in part.

Yes.

Quickly I mean, I would think that.

Mark R Harris: I mean, I think that, you know, sort of call it within a 60 to 90 day window of getting to know the company, the team, and understanding, you know, what assets they've got. We often engage with them on a series of projects. I'd like to ask you a couple of questions about your smaller, non-executive search businesses, on-demand, and consulting. Where are you, do you think, as you look into this year, in terms of the profitability ramping up in those businesses? Is there sort of clear momentum? or is there, you know, wood to chop to achieve the required, I should say, results you're looking for? Let me try to take that one for you, Tobey.

It's sort of call it within a 60 to 90 day window of getting to know the company the team in understanding what assets that they've got we often are engaging with them on a.

A series of projects.

I'd like to ask you a couple of questions about your smaller non executive search businesses on demand in consulting.

Where are you do you think as you as you look into this year.

In terms of the profitability ramping in those businesses is there.

Clear momentum.

Or is there.

Wood to chop to achieve.

The required I should say to achieve the results you're looking for.

Let me try to take that one for HIV.

Mark R Harris: So in terms of, again, Heidrick Consulting, we've always talked about trying to get to that break-even point of, you know, $80 million in revenue and where we can kind of take that up to. And again, some of that costs, unfortunately. And the current one has the acquisition-related costs in there.

In terms of again Heidrick consulting we've always talked about trying to get to that breakeven point of $80 million in revenue and where we can kind of take that up to and again some of that cost. Unfortunately in the current one has the acquisition related costs in there if you strip that out that's precisely where we're at with the business. So our view is again now.

Mark R Harris: If you strip that out, that's precisely where we're at with the business. So our view is, again, to now try to get that into double-digit revenue. Our belief is that it needs to kind of come into that $150 million to $200 million type revenue range that would really allow us to achieve that. And what's going to unlock that for us is, I think, kind of two different angles. One is taking the organic side of what we have today and continuing to build that with our people, adding more in places where we need to do it in Europe, in America, Latin America, and certainly in Asia Pacific. The other element is some inorganic in terms of tuck-ins on the core of what we do today.

Try to get that into the double digit revenue our belief is that needs to kind of come into that 150 to 200 million type revenue range that would really allow us to achieve that and what's going to unlock that for us is any kind of two different angles. One is taking the organic side of what we have today and continuing to build out with our people.

Adding more in places, where we need to do it in Europe and Americas.

Latin America, and certainly in Asia Pacific the.

The other element is some inorganic in terms of tuck ins on the core of what we do today.

Mark R Harris: And to get those to accelerate faster and probably be less expensive overall is going to be an inorganic opportunity set that we'll have to take a look at to try to really drive that, so to speak, and get ourselves up to that next level, as I like to call it. If on-demand talent is what you're looking for, you know, we still have, I think, a lot of work to do in Europe in terms of getting a true continental European platform. Again, some will be organic and some will be inorganic.

Get those to accelerate faster and probably less expensive overall is going to be an inorganic opportunity set that we will have to take a look at to try to really drive that so to speak and get ourselves up to that next level as I'd like to call. It.

On demand talent.

We still have I think a lot of.

A lot of work to do in Europe in terms of getting a true European Continental European platform again, some will be organic some will be inorganic I think in terms of the United Kingdom. We've got a very good floating there in terms of our performance in Americas I think we've got a very good footing with some interesting opportunity sets, but again that will <unk>.

Mark R Harris: I think in terms of the United Kingdom, we've got a very good footing there in terms of our performance. In America, I think we've got a very good footing with some interesting opportunity sets. But again, that will probably be, and we've talked about the ranges of around, call it 10 to 12 percent, potentially, but a margin in on-demand talent when it gets its final scale. We still have some work to do on the technology element of it that we want to spend money on that we think is going to benefit down the road in terms of margin expansion. So I would still see it very much in its early cycle. And once we kind of have it in terms of where our footprint needs to be and ensuring that we've got the technology footprint that covers all, like we do today in search with latitude, then I think we'll be in a really interesting position in terms of seeing where those margins kind of come out. Thanks. Last one for me.

<unk> and we've talked about the ranges of around call it 10% to 12% potentially but our margins and on demand talent. When it gets its final scale in we still have some work to do on the technology element of it that we want to spend.

We spend money on that we think is going to benefit down the road in terms of margin expansion.

I would still see it very much in its early cycle.

Once we kind of have it in terms of our footprint needs to be and ensuring that we've got the technology footprint that covers all like we do today and search with latitude and I think we'll be in a really interesting position in terms of seeing where those margins kind of come out across.

Okay last one from me any changes in your expectations for.

Tobey O'Brien Sommer: Any changes in your expectations for annual revenue per search consultant based on what you think? You know, a good operating tempo is for your biggest producer. Yeah, I think, well, as you rightly just said, it is definitely a mix.

Annual revenue per search consultants about what you think.

Good operating tempo is for.

Your your biggest producers.

Yes, I think you're.

You really just said it is definitely a mix our range is still very very strong in the one $8 million to $2 million revenue per consultant range is the perfect balance to have in terms of the workload ability to service our clients with great satisfaction and to making sure that we have opportunity sets that we have capacity to take on and consult with our view.

Mark R Harris: Our range is still very, very strong in the 1.8 to 2 million revenue per consultant range. It is the perfect balance to have in terms of the workload, the ability to service our clients with great satisfaction, and to make sure that we have opportunity sets that we have the capacity to take on and consult with. Our view is, you know, we explained when we used to be 2.3, 2.6, which really drains the capacity out of the system and causes a lot of stresses in terms of, you know, what we were able to achieve and also continue to take on. And obviously, we don't think we're going to go back to the old 2018, 2019 levels, or even previous to that.

As we explained when we used to be $2 $32 six really drained the capacity out of the system caused a lot of stresses on in terms of what we were able to achieve and also continued to take on time and obviously, we don't think we're going to go back to the old 2018 2019 levels.

Previous to that so it's definitely still a balance of I would imagine and Chris John can correct me as to now re unlock that and maybe go more north on that range would have to be some type of development be it a process development of our technology development or something to really unlocked up because I think at the end of the day the process. We go.

Krishnan Rajagopalan: So, it's definitely still a balance, I would imagine, and Krishnan can correct me, to now re-unlock that and maybe go more north on that range would have to be some type of development, be it a process development or a technology development or something to really unlock that. Because I think, at the end of the day, the process we go through is a very careful process, which, you know, again, is not just about candidates. It's about assessment for selection. It's about going through something that's a robust, high-touch human process that, unless you can really find ways to change that, the next phase is not going to be, you know, as incremental as it was, obviously, during the pandemic, which allowed people to embrace that technology a lot more, and nobody's going back to the old methodology in terms of using Zooms.

<unk> is a very careful process, which again is not just about candidates. It's not assessment for selection, it's about going through something thats, a robust human high touch human process that unless you can really find ways.

To change that the next phase is not going to be.

As incremental as it was obviously during the pandemic, which allowed people to embrace that technology, a lot more and nobody is going back to the old methodology in terms of using zones I don't know if its done if we've got a blue chip.

I think that number one eight to two is.

It is about right, where we are and where the business model is right now and we can tech enabled a little bit more we might be able to to increase that but I think we're thinking in that range right now for this year.

Krishnan Rajagopalan: I don't know, Krishnan, if you've got a view tip. No, look, I think that number 1.8 to 2 is about right for kind of where we are and where the business model is right now. And, you know, if we can tech enable a little bit more, we might be able to increase that. But I think we're thinking that range right now for this year. Thank you very much. Your next question comes from the line of Mark Riddick with Siddhoti. Your line is open. Hey, good evening, everyone.

Thank you very much.

Your next question comes from the line of Marc Riddick with Sidoti Your line is open.

Hi, good evening everyone.

Hey, Mark Timur.

I just wanted to add my congratulations for triangle moving forward in the.

The trials that you Havent plenty of adventures, you're having plenty of certainly wish you the best there.

Thank you.

I sort of wanted to shift.

Conversation toward the future use of cash and maybe you could talk a little bit about maybe what youre seeing out there as far as acquisition pipeline I know non executive searches have been more of a focus but I was wondering if you could maybe talk about maybe if there are any green shoots as to what youre seeing there.

Mark R Harris: So I just wanted to add my congratulations, Krishnan, on moving forward and on the trails that you have in front of you and the ventures you have in front of you. I certainly wish you the best. Thank you. I sort of wanted to shift the conversation toward the future use of cash and maybe you could talk a little bit about maybe what you're seeing out there as far as the acquisition pipeline goes. I know non-executive search has been more of the focus, but I was wondering if you could maybe talk about maybe if there are any green shoes as to what you're seeing there as to availability, valuation, and the like. No, thanks, Mark.

Availability valuation in the leg.

No. Thanks, Mark I'll tell I'll try to give you some context in terms of our inorganic pipeline.

We can always still remains very robust we have good contacts and cross all of our segments. Both led by our corporate development team and the general managers of each of those respective groups and we're always in constant contact with some of our competitors are some people that are actually maybe more excuse me.

Mark R Harris: I'll try to give you some context on that. In terms of our inorganic pipeline, again, it always remains very robust. We have good contacts across all of our segments, both led by our corporate development team and the general managers of each of those respective groups. And we're always in constant contact with some of our competitors or some people that are actually maybe more, excuse me, horizontal to us or vertical to us in terms of what we're doing within those respective groups. So we believe pretty strongly when you take a look at our current free cash flows. That's why I wanted to make that comment, the prior remark. Obviously, we're going to focus on our team and what we have today and our continued build out and focus on that, supplemented by the inorganic side of it when we think it makes a lot of sense. You know that we had two acquisitions in 2023 with Business 4.0 and Atreus.

Horizontal to us or vertical to us in terms of what we're doing within those respective groups. So we believe pretty strongly when you take a look at our current free cash flows and that's why I wanted to make that comment the prepared remarks.

Obviously, we're going to focus on our team and what we have today and our continued build out and focus on that supper.

Supplemental by the inorganic side of it and we think it makes a lot of sense.

We had two acquisitions in 2023 with business for Zoro and <unk>.

If we see and continue to see those types of opportunities that seem to make a lot of sense and both of those are doing absolutely.

Really well for us so to speak everything we would have expected and then some in terms of their performance has been great on their integration into our culture has been very strong and thats the kind of stuff. We look forward. When we look at these and I would say that our pipeline is showing there is still more of that can be done, but you, obviously need a willing buyer and a willing seller to come to them.

Mark R Harris: So if we see and continue to see those types of opportunities, that seem to make a lot of sense. And both of those are doing absolutely really well for us, so to speak. Everything we would have expected and then some in terms of their performance has been great.

Mutual agreement and sometimes depending on what's going on in the market that can be a little bit tougher, but it's not due to a lack of.

Mark R Harris: Their integration into our culture has been very strong. That's the kind of stuff we look for when we look at them. And I would say that our pipeline is showing there's still more that can be done. But you obviously need a willing buyer and a willing seller to come to a mutual agreement. And sometimes, depending on what's going on in the market, that can be a little bit tougher. But it's not due to a lack of understanding of what's out there, or at least knowing what's out there, so to speak.

Understanding of what's out there or at least knowing what's out there so to speak I think we've got a very good handle on it.

And then I was sort of curious as to when that might be a little early for this but I was wondering if youre getting a sense of.

As far as.

Client activity and expectations are you getting a sense that there will be maybe a pickup in our face.

Face to face.

Oh relationship work and we will see a pickup in travel and sort of getting out there to see folks are you get the sense that the clients and prospects are not necessarily ready for that and youre expecting a similar.

Mark R Harris: I think we've got a very good handle on it. And then I was sort of curious as to, and it might be a little early for this, but I was wondering if you're getting a sense of, as far as client activity and expectations are concerned, is there a sense that there will be maybe a pickup in face-to-face relationship work and, you know, we'll see a pickup in travel and sort of getting out there to see folks, or do you get the sense that the clients Yeah, Mark, I think we're definitely seeing a pick-up on that in a very strategic way. I think that, you know, searches are only getting closed where people meet each other.

Sort of cadence is to sort of how their activity comes about.

Yes.

Yes.

I think we're definitely seeing a pick up on it in a very strategic manner I think that.

And our searches are only getting closed where people meet each other so.

Just sort of like however, you dissect this process and I think.

While Mark said in our thinking about it is right now the early parts of this process can be pretty much done via zoom and then there are other parts of these processes that don't quite work so well like that I mean consulting is another thing, we do where you need to be in person often to be able to do some things, particularly senior level assessments et cetera work like that.

Krishnan Rajagopalan: So it's just sort of like how you dissect this process. And I think, you know, what Mark said and how we're thinking about it is right. You know, the early parts of this process can be pretty much done via Zoom. And then there are other parts of these processes that don't quite work so well like that.

Cultural workshops, so yes, I think we are definitely seeing.

More of that.

And I think we are.

Trying to be prudent in how we think about G&A and how to how.

Krishnan Rajagopalan: I mean, consulting is another thing we do where you need to be in person often to be able to do some things, particularly senior level assessments, et cetera, work like that, and culture workshops. So yeah, I think we are definitely seeing more of that. And I think, you know, we're trying to be prudent in how we think about DNA and how to budget for that in that context.

<unk> had a budget for that in that context.

And then last one for me and I know this might be a little early green shoots, but I'll ask anyway. It seems as though we're seeing a little bit more of a pickup in global M&A activity generally.

At the beginning of this year, we certainly seen a couple of large ones is why don't you talk a little bit about maybe.

Mark R Harris: And then last one for me, and I know this might be a little early green shoots, but I'll ask anyway. It seems as though we're seeing a little bit more of a pickup in global M&A activity generally. At the beginning of this year, we certainly saw a couple of large ones.

If you're getting a sense that thats, maybe accelerating some conversations or if you if you're if you're seeing anything on your end that makes you think that thats starting to shake some trees out at this point. Thanks.

Krishnan Rajagopalan: I was wondering if you could talk a little bit about maybe accelerating some conversations or if you're seeing anything on your end that makes you think that that's starting to shake some trees out at this point. Thanks. From your client's point of view, yes. Yeah, look, I think that, you know, if I just use JP Morgan and Davos as just two examples, there are far more conversations about engaging in those conversations and looking at assets globally and thinking about that. So I definitely think that there's an eagerness to do that, whether the valuations and the market support that or not. People are clearly leaning into that subject, is what I would say.

From our clients' point of view or from our point of view.

Yes, client's point of view, yes.

Yes look I think that.

No.

I, just use that JP Morgan and <unk>.

Two examples there is far more conversations.

Engaging in those conversations and looking at assets globally and thinking about that so.

I definitely think that there is an eagerness to do that.

The valuations in the market support that or not there is people clearly are leaning into that subject what I would say our clients are.

Great. Thank you very much.

You're welcome.

There are no further questions at this time I'll turn the call to Chris <unk> for closing remarks.

Krishnan Rajagopalan: Our clients are. Great, thank you very much. You're welcome. There are no further questions at this time. I'll turn the call over to Krishnan for closing remarks.

Thank you all for joining us today, we appreciate your ongoing support.

As I mentioned earlier look it has been a true privilege to lead heidrick <unk> struggles and I want to say a huge thank you to our employees in all of our investors as well.

Krishnan Rajagopalan: Thank you all for joining us today. We appreciate your ongoing support. Look, as I mentioned earlier, look, it has been a true privilege to lead Heidrick & Struggles, and I want to say a huge thank you to our employees and all our investors as well. I want you to know you're in great hands going forward. Tom and Mark will be leading the next call, and they look forward to engaging with you as well. Thank you very much. This concludes today's conference call. We thank you for joining us. You may now disconnect your lines.

I want you to know you are in great hands going forward.

Tom and Mark will be leading the next call and we look forward to engaging with you as well. Thank you very much.

This concludes today's conference call. We thank you for joining you may now disconnect your lines.

[music].

Yes.

Okay.

Okay.

[music].

Yeah.

Yes.

[music].

Yes.

Yes.