Q2 2025 Robert Half International Inc Earnings Call
Please stand by.
Speaker Change: Hello and welcome to the Robert Half second quarter 2025 conference call. Today's conference call is being recorded if you'd like to ask a question during the Q&A portion of the call, please press star in the number 1, on your telephone keypad our host, for today's call are Mr. Keith wadell president and chief executive officer of Robert Half and Mr. Michael Buckley Chief Financial Officer. Mr. Wadell you may begin
Speaker Change: Hello everyone. We appreciate your time today.
Speaker Change: Before we get started, I'd like to remind you that the comments made on today's call contain forward-looking statements including predictions and estimates about our future performance.
Speaker Change: The statements represent, our current Judgment of what the future holds, however, their subject to their risks. And uncertainties, that could cause actual results to differ materially from the forward-looking statements,
Speaker Change: These risks and uncertainties are described in today's press release and in our most recent, 10K and 10, Q filed with the SEC, we assume no obligation to update the statements made on today's call.
Speaker Change: during this presentation,
Speaker Change: we may mention some non-gaap Financial measures and reference these figures as as adjusted.
Speaker Change: Specifically, we present adjusted Revenue growth rates, which remove the impacts of on reported revenues from the changes in the number of billing days and foreign currency exchange rates. Additionally, we present adjusted gross margin adjusted selling General administrative expenses and adjusted operating income by combining the gains and losses on investments held to fund the company's obligations under employee deferred compensation plans with the changes in the underlying deferred compensation obligations.
Since the gains and losses from Investments and the changes in deferred compensation, obligations completely offset.
There's no impact on our reported net income.
Call are available in the investor center of our website. Robert.com
Robert: for the second quarter of 2025 Global Enterprise revenues for 1.37 billion.
Robert: Down 7% from last year's second quarter on both a reported basis and on an adjusted basis.
Robert: Net income per share of the second quarter was 41 cents compared to 66 in the second quarter 1 year ago.
Robert: Revenues and earnings were in line with the midpoint of our previous second quarter guidance.
Robert: Elevated global economic uncertainty persisted throughout the quarter extending client and job Seeker caution.
Robert: Elongating decision, cycles, and subduing, hiring activity and new project starts.
Robert: Revenue levels fell modestly during the first 2 months of the quarter then stabilized at lower levels in June, which continued post quarter into July.
Robert: We're very well positioned to capitalize on emerging opportunities and support our clients future talent. And Consulting needs through the strength of our industry-leading brand. Our people, our technology and our unique business model that includes both, professional staffing, and business Consulting Services.
Cash flow provided by operations during the quarter was 119 million. In June. We distributed a 59 Cent per share cash, dividend, to our shareholders of record.
Robert: Total cash, outlay of 59 million.
Robert: Our per share dividend has grown an average of 11.5% annually since its Inception in 2004.
Robert: The June 2025 dividend was 11.3% higher than in the prior year.
We also acquired approximately 450,000, Robert have shares during the quarter for 20 million.
Robert: We have 6.2 million shares available for a purchase under our board approved stock for purchase plan.
Return on invested capital for the company was 12%. And the second quarter. Now I'll turn the call over to our CFO Mike Buckley.
Mike Buckley: Thank you Keith and hello everyone. As Keith noted Global revenues were 1.37 billion in the second quarter.
On an adjusted basis. Second quarter count Solutions revenues were down 11% year-over-year.
Mike Buckley: As Talent Solutions revenues were 668 million down 11% from the prior Year's second quarter.
Non-us Talent Solutions revenues were 207 million down 13% year-over-year.
We conduct Talent Solutions operations through offices in the United States and 18 other countries in the second quarter. There were 63.2 billing days compared to 63.5 billion days in the same quarter 1 year ago.
Mike Buckley: the third quarter of 2025 has 64.2 billion days compared to 64.1 billion days, during the third quarter of 2024
Currency exchange rate movements. During the second quarter had, the effect of increasing reported year-over-year total revenues by 8 million.
Mike Buckley: 4 million for both Talent Solutions and productivity.
Mike Buckley: Contract Talent Solutions bill rates for the second quarter increased 3.8% compared to 1 year ago.
Adjusted for changes in the mix of revenues by functional specialization currency and Country.
Mike Buckley: This rate for the SEC, for the first quarter was 4.2%.
Mike Buckley: Now, let's take a closer look at results for productivity.
Mike Buckley: Global revenues in the second quarter were 495 million 396 million of. That is from the United States, and 99 million is from outside of the United States.
Mike Buckley: On an adjusted basis. Global second quarter protiviti revenues were up 2% versus the year ago period.
Mike Buckley: Us productivity revenues were down 1% while non-us productivity revenues were up 11% compared to 1 year ago.
Mike Buckley: Creativity and its independently owned member firms. Serve clients through locations in the United States and 28 other countries.
Mike Buckley: Turning now to gross margin.
Mike Buckley: In contract Talent Solutions, second quarter, gross margin was 39.1% of applicable revenues versus 39.3% in the second quarter 1 year ago.
in both the current quarter and the second quarter of 2024
Mike Buckley: our permanent placement revenues were 13.1% of Consolidated Talent Solutions revenues in the quarter in the current quarter and 13.3% in the second quarter of 2024,
Mike Buckley: When compared with contract Talent Solutions, gross margin overall, gross margin for Talent Solutions was 47.1% compared to 47.4% of applicable revenue's in the second quarter 1 year ago.
For productivity. Gross margin was 19.7% of fertility revenues in the second quarter in 22.5% in the second quarter 1 year ago.
Mike Buckley: Adjusted gross margin for productivity was 22.3% for the quarter. Just ended compared to 23.2% last year.
Mike Buckley: Enterprise sgna costs were 37.1% of global revenues in the second quarter compared to 34% in the same quarter 1 year ago.
Mike Buckley: Adjusted sgna costs were 33.8% for the quarter just ended compared to 33.2% a year ago.
Talent Solutions, sgna costs were 49.2% of Talent Solutions revenues in the second quarter versus 43.1% in the second quarter of 2024,
Mike Buckley: Adjusted Talent Solutions sgna costs were 44.1% for the quarter, just ended compared to 41.9% last year.
Mike Buckley: Second quarter sgna costs for productivity. We're, we're 15.7% of productivity revenues compared to 15.6% of revenues for the same quarter 1 year ago.
Mike Buckley: Operating income for the quarter was 2 million.
Adjusted operating income was 59 million in the second quarter or 4.3% of Revenue.
Mike Buckley: Second quarter, adjusted. Operating income for our town Solutions, divisions, was 27 million or 3.1% of Revenue?
Mike Buckley: Adjusted operating income for productivity. In the second quarter was 32 million or 6.6% of Revenue.
Mike Buckley: income from Investments held in employee deferred compensation, trusts
Mike Buckley: our second quarter income statement, includes a 58 million gain from Investments held in employee deferred compensation, trusts
Mike Buckley: This is completely offset by an equal amount of higher employee deferred compensation costs, which are reflected in sgna expenses and direct costs.
Mike Buckley: As such it has no effect on our reported net income.
Mike Buckley: Our second quarter tax rate was 33% compared to 29% 1 year ago.
The higher tax rate in the quarter in the current quarter is due to the increased impact of non-deductible expenses relative to lower pre-tax income.
Mike Buckley: At the end of the second quarter, the counts receivable were 827 million and implied Day sales outstanding or DSO was 54.4 days.
Mike Buckley: Before we move to third quarter guidance, let's review some of the monthly Revenue Trends we saw in the second quarter and so far in July all adjusted for currency and billing days.
Mike Buckley: Contract count Solutions exited the second quarter with June revenues down 11% versus the prior year compared to an 11% increase for the full quarter.
Mike Buckley: Revenues for the first 2 weeks of July were down, 10% compared to the same period last year.
Mike Buckley: Permanent placement revenues in June were down, 20% versus June of 2024.
This compares to a 13% decrease for the full quarter.
Mike Buckley: For the first 3 weeks in July permanent placement revenues were down 14% compared to the same period in 2024.
We provide this information so that you have insight into some of the trends we saw during the second quarter and into July.
Mike Buckley: But as you know, these are very brief time periods. We caution reading too much into them.
Mike Buckley: With that, in mind, we offer the following third quarter guidance.
Mike Buckley: Revenue 1.31 billion to 1.41 billion.
Mike Buckley: Income per share. 37 to 47 cents.
Mike Buckley: Midpoint revenues of 1.36 billion are 8% lower than the same period in 2024 on an as adjusted basis.
For the most recent 6-week period, ended July 11th, weekly sequential revenues have remained essentially flat.
Mike Buckley: Midpoint adjusted, operating income dollars are expected to increase sequentially from Q2, the first sequential Q3 increase since 2021.
Mike Buckley: The major Financial assumptions, underlying the midpoint of these estimates are as follows.
Mike Buckley: Adjusted Revenue growth year-over-year for Talent Solutions, down 9 to 13%.
Mike Buckley: Creativity flat to down 4%.
Overall down 6 to 10%.
Mike Buckley: Adjusted gross margin percentage.
Mike Buckley: For contract Talent 38 to 40%.
Mike Buckley: For fertility. 22 to 24%.
Mike Buckley: Overall 37 to 40%.
Mike Buckley: Adjusted sgna as a percentage of Revenue Talent Solutions 43 to 45%.
Mike Buckley: Productivity 15 to 17% overall 33 to 35%.
Mike Buckley: Adjusted operating income as a percentage of Revenue Talent Solutions 2 to 4% productivity, 6 to 8% overall 3 to 6%.
Mike Buckley: Tax rate, 31 to 35%.
Mike Buckley: Shares 100 to 101 million.
Mike Buckley: 2025, Capital expenditures, and capitalized, cloud and cloud computing costs, 75 million to 90 million with 15 to 25 million in the third quarter.
Mike Buckley: All estimates, we provide on this. Call are subject to the risks. Mentioned in today's press release and in our SEC filings.
Keith Waddell: Now, I'll turn the call back over to Keith.
Keith Waddell: Thank you, Mike.
Keith Waddell: The fears of economic recession have eased as a worst case trade, policy concerns have not materialized and proposed. Tax change, tax changes have now become law.
Keith Waddell: Small business confidence levels. Have also rebounded modestly from recent lows.
Keith Waddell: The US job market remains resilient but the overall employment at 4.1%.
Keith Waddell: Labor Supply constraints remain. Particularly noteworthy, is that the unemployment rate for college educated professionals is holding steady at just 2.5%
With even lower rates, prevailing among specialized accounting, finance and Technology roles.
Although current hiring and quit rates remain subdued and well below postco highs job openings continue to be well above historical levels. Indicating strong pit up hiring demand
Keith Waddell: As business confidence improves, there's a corresponding acceleration and hiring urgency project demand, and the rep prioritization of previously deferred initiatives.
Keith Waddell: This natural progression typically places increased demands on client resources that are already operating at or near capacity creating the hiring and Consulting environment that has historically driven substantial growth for our business during the early phases of economic expansion Cycles.
Keith Waddell: Creativity achieved, year-on-year Revenue growth for the fourth quarter in a row.
Keith Waddell: Their growth rates have moderated as a result of continued economic uncertainty.
Keith Waddell: This has extended conversion timelines from opportunity. Identification to project start and reduced average project size.
Keith Waddell: Despite the lengthening Cycles, creativity's prospects, including the quality and diversity of its pipeline remain, very strong across, all of its major solution areas.
Keith Waddell: Strategic integration of contract professionals Source through our Talent Solutions, divisions remains a powerful driver for activities of performance reinforcing. Our distinctive enterprise-wide competitive advantage.
Keith Waddell: We remain committed to our time-tested, corporate purpose to connect people, to meaningful, and exciting work and provide clients with the talent and Consulting expertise. They need to confidently, compete and grow.
Keith Waddell: We like to thank our employees. Who are our greatest asset? And what differentiates Us in the marketplace for the significant company recognition. We received in the second quarter.
We are proud to have ranked number 1 on Forbes list of America's best, professional recruiting firms.
As 1 of America's best, temporary staffing firms and 1 of the America's best executive recruiting firms.
Keith Waddell: This is a credit to all of our employees and their incredible drive to deliver outstanding service to our clients and our candidates.
Now, Mike and I'd be happy to answer your questions. Please ask just 1 question and a single follow-up is needed. If there's time we'll come back to you for additional questions.
Speaker Change: Thank you at this time. If you'd like to ask a question, please press star 1 on your touchtone, telephone. If you're joining us today, use a speaker-phone, please make sure your mute function is turned off to allow your signal to reach our equipment. If you would like to withdraw your question, please press star 2 on your touchtone telephone and your first question will come from the line of Andrew Steiner with JP Morgan.
Andrew Steiner: Hi. Um this this might be um, not as timely, it's kind of a long-term Trend question.
Andrew Steiner: I was curious about the bill rate increases you know the 3.8% year-over-year. Uh that is adjusted for mix. I know it's adjusted for other things like FX as well, but what I'm curious about is if you did it to just for Max, you know how much uh is is, um, um, Bill rates up? And I really am asking because I feel like there's been kind of a long-term move up. The skill sets over many years.
Andrew Steiner: That's sort of like, is underappreciated when you you just give the mixed adjusted number.
Andrew Steiner: Right. And so, since mix positively impacts, Bill rate increases for reasons, you just mentioned unadjusted, they'd be higher. And so uh, that's been a progression that's been in place for years and 1. We're happy, um, to have continue into the future.
Speaker Change: Whom, but could you just give us a sense of, you know, how much your bill rates have increased because of mixed shifts over the years?
Uh, I mean, it's it's not unusual for it to be 1 to 200 basis points difference. I mean, I don't remember the numbers right off the top of my head, um, but clearly it's part of our story.
Speaker Change: Okay, I appreciate that. Keith, thank you.
Speaker Change: And the next question will come from Marc Maron with beard.
Speaker Change: Hey, good afternoon Keith and and Michael wondering about productivity. Um,
Speaker Change: You did mention, you know, that the that there's an extension in terms of conversion timelines and that the project, you know, in terms of the project starts and that there's reduced average project size, could you dimensional that a little bit more? Um, you know, obviously we're going up against a tougher comp uh, here in the
Speaker Change: Third quarter. Then we we had in the second quarter so you're basically uh, projecting to, you know, a year-over-year revenue decline in in productivity. And I'm wondering like how much of that seems like it's a temporary function or how long lasting do you think that Trend could end up being
Speaker Change: Around here decline. Um, next I would say that
Speaker Change: in the third quarter, there's a small number of very large, jobs that completed in the second and given the, the overall cautious environment, take a little bit of time to replace. And so that in addition to or as part of, um, the economic environment trend is impacting quarter 3, creativity revenues while it's seeing in quarter 3, it's typical sarbane Oxley, compliance lift seasonally that it always does. The other Solutions are somewhat lower uh for this large project.
Speaker Change: Phenomenon that I just talked about.
Speaker Change: Temporary versus longer term. If you look at their pipeline, their pipeline is still up year on year. And I think the thing that they're most excited about
Speaker Change: Is that their new opportunities in the last 30 days are up substantially.
Speaker Change: And as you look back over the last year, uh the increase of that last 30 days is substantially higher. Uh both sequentially and year on year that they've seen in a long time. So we're very encouraged by that.
Speaker Change: should should that just to stay on this should that translate to you know likely growth by the fourth quarter if we have kind of a normal conversion rate
Speaker Change: again, because the
Speaker Change: We're so close to year-on-year growth. Um, you know, it doesn't take that much revenue to swing it 1 way or the other. And so clearly with that kind of opportunity, growth new opportunity, growth,
Speaker Change: Um, by the fourth quarter, there's a there's a reasonable chance that we return to growth again.
Speaker Change: But again, we're talking really, really small. Negative Andor positive growth rates.
Speaker Change: generally speaking creativity has been very resilient uh, during this
Uh you know, more challenge economic period of the last 2 or 3 years and that is expected to continue and whether they uh have negative growth of 2% or a positive growth or 2%. It isn't a huge swing, captivity is doing very well.
Great. And then you you mentioned with regards to town Solutions, you know, the fears of economic recession of East, worst trade, worst case on the trade policy, concerns haven't materialized, and we've seen uh, small business conference. Um, Rebound in terms when we take a look at your Talent Solutions business, we did see a pickup, particularly with regards to Technology Solutions. I'm just wondering how you're thinking about, um, Tech Solutions, um, you know, progressing and should that eventually spill over to, um, you know, Finance and Accounting as well.
And text.
Speaker Change: Text text Solutions are clearly the strongest part of our practice groups, um, Tech modernization. Uh,
Speaker Change: Erp upgrades.
Security privacy, they're all strong. Uh, much of that relates to AI Readiness if you will.
Speaker Change: and,
Speaker Change: it's been, it's been doing um,
Very well for multiple quarters now, and we would expect to see some of that, uh, trickle in to Finance and Accounting, particularly at our higher management, resource levels, and further, it ties in well with fertility, technology Consulting. Uh,
Group such that uh, together or higher level Finance, and Accounting Consulting, uh Solutions our Tech Solutions, and we've been moving up the skill curve there and Technology at pivot. They all fit very well together.
Speaker Change: Great. Thank you.
Manav Potnick: And your next question will come from the line of manav potnick, with Barclays.
Manav Potnick: Hi, how are you? This is Ronan. Kennedy, I'm from manado. Thank you for taking my questions. I just wanted to clarify some of the the statements with regards to macro drivers and demands and the Tre the trends that you've seen out of June and the first 3 weeks in July, I think you understandably, highlighted that elevated, global economic uncertainty, consistent, what we're hearing from other companies, but I think they had pointed out to activity, slowed, once the Tariff rhetoric again, ramped up approximately a month ago, I think you had indicated Revenue levels fell for during the first 2 months and then stabilized in June. But per placement revenues in June were down 20%. Um, and I think they were down in contract as well. Just wondering how that kind of all reconciles and if there's any specific drivers there to be mindful of
Manav Potnick: Well, part of this is, is year on year versus sequential. And when we're talking current trends, we're talking sequential
Manav Potnick: And um so what we said was the first 2 months, so quintili, uh, we fell modestly and then sequentially that level off. I could also say that, um, for the past few weeks on the talent solution side part particularly uh, the tone of our of the conversations, we've had with clients has improved and we feel good about that.
Manav Potnick: but the year on year comparisons, um,
Manav Potnick: Uh client conversations has definitely gotten better in the last few weeks.
Manav Potnick: if you take our current run rate and Talent Solutions, uh, through mid July and you, um,
Manav Potnick: Apply that to the full quarter. Uh, we're about 2% down sequentially.
Manav Potnick: And our guidance is that we would be down 4% sequentially. So we've added a little conservative to our guidance relative to where we are at the moment and again, everything sequentially.
Speaker Change: Thank you for the clarification, appreciate it. And then on, uh, if I may have a follow-up, can you just talk about the Dynamics of margin drivers that puts and takes to guided margins. Whether that's mixed conversion, wage rate, inflation bill pay spreads, Etc.
Manav Potnick: For the guided margin, please for 3 Q.
Manav Potnick: Uh, sure on the talent solution side, uh, gross margins pretty consistent on nothing new there. Uh, on the sgna side, we've pretty much abated. The negative operating leverage, we've gotten from any quarters in a row and so that there's not much change in Talent Solutions sgna as a percent of Revenue in our Q3 guidance. And as we said in our remarks
Manav Potnick: On a uh, progression from Q2 to Q3.
Talent Solutions has had 1 of the best is have will have 1 of the best quarters that's had at the operating line that it's adding 4 years.
Manav Potnick: and so, we feel good about
Manav Potnick: Where we are cost-wise and margin wise relative to the last 3 or 4 years frankly on Talent Solutions.
In particular we get an uptick in gross margin and segment income sequentially. Um that's largely driven by the seasonal lift they get from serving Oxley compliance work which they anticipate getting again.
Manav Potnick: however, because of the the completion of those small number of large projects,
Manav Potnick: They're not going to get as much revenue lift as they typically do in the third quarter. And all of that Revenue lift is almost uh completely um segment income or margin and therefore the gross margin and segment. Margin lift you typically get in the third quarter if they're not going to get as much of this year, still be up but it won't be up as much. It has has been traditionally and again, it's principally related to um, those those handful of small Pro, uh, large.
Projects.
That they're having to uh, redeploy for.
Manav Potnick: Thank you very much, appreciate it.
Trevor Romeo: and the next question comes from Trevor Romeo with William Blair,
Trevor Romeo: Hey, good afternoon. Uh Keith and Mike, thanks for taking the questions. I had another um kind of macro related question to start, you know you talked about the conversations improving for C solution or so I guess the question I have is, you know, does it feel like the confidence and the the tone of conversations are back to where they were maybe a couple quarters ago? I guess coming into the year. You did see the you know the post-election increasing confidence? Metrics are we back there yet? And and if not I guess what do you think? Will it take to get back to those types of levels of confidence?
Trevor Romeo: It's subjective, but I would say, we're, we're not there. We're not back there yet but we're headed there.
Trevor Romeo: Um, and I just, I'll tell you, the last few weeks on the Talent Solutions side, particularly and as represented by the new opportunities in creativity tone is definitely better.
Trevor Romeo: It's not.
Trevor Romeo: Euphoric, like, it was post election, um, but it's certainly going in the right direction.
Trevor Romeo: Which is a nice change from 90 days ago, when we didn't feel this way. I'd say we we definitely feel better today than we thought 90 days ago.
Trevor Romeo: Okay, thanks. That makes a lot of sense.
Trevor Romeo: and then I had a follow-up about, um,
Speaker Change: Labor market. Um, you know, is it just economic uncertainty? Are you seeing any pressure from maybe advancements in AI or or anything like that?
Trevor Romeo: Well.
Trevor Romeo: first of all,
Trevor Romeo: our small business clients typically expect
Trevor Romeo: Experienced staff. When they come to us for contractors.
Trevor Romeo: And so we don't really have that many right out of college graduates that we place on the contract side.
You know, on AI we could talk forever. Um,
Trevor Romeo: Let me make a few comments. First of all.
Trevor Romeo: We, we know definitively that so far AI has had very little impact.
Trevor Romeo: On our revenues.
Trevor Romeo: We did a deep dive. We took it all. We took all the roles that were identified by the world economic Forum. As most vulnerable
Trevor Romeo: Uh, they would include things like data, entry bookkeeping customer service. The ones you always read about and our data says that so far they haven't performed any differently than the other roles.
Trevor Romeo: Interestingly, the nfib just did a technology survey of its constituents.
98% reported that AI had no impact to their number of employees.
Trevor Romeo: Um, there are other studies that have come out recently. The National Bureau of economic research being 1 of them that has concluded so far.
Trevor Romeo: Um, no association between Ai and jobs growth with a possible exception of tech companies that you read a lot about.
Trevor Romeo: But part of that, they're selling their own book.
Trevor Romeo: And so at least so far when you look at the Staffing industry and Robert Half specifically, we can say AI has not impacted, uh, how we've performed.
Trevor Romeo: now, as to the Future,
Trevor Romeo: Their opinions all over the lot. Uh we would say that historically the Staffing industry has been great about being very fluid and pivoting to where the jobs and the skills are.
Trevor Romeo: To own in.
Trevor Romeo: There we operate in the spot Market every day and you have to go where the jobs and skills are to survive.
Trevor Romeo: I'd say further with every technology cycle, there's a lot of transition work and we're seeing that as well. We talked already about tech modernization, and you have pretty flat. Uh, platform upgrades
Data Etc. And so that's that's positive.
The other thing I would say is, and this was confirmed and is in FIV survey.
Trevor Romeo: That smbs are always later adopters.
Trevor Romeo: And we're 70% S&B, you know, they have less budget, they don't have large volumes of people performing repetitive tasks, there's less structure to the data, they need more proof of Roi and so they're always later adopters and they're expected to be later. Adopters with AI
that said,
Speaker Change: We at Robert, have we believe in technology? We believe in AI. As you know, we've got award-winning matching and Lead scoring engines, uh, that are very effective.
Speaker Change: And if anything we think, if the world gets more AI Centric more technology Centric, we should be able to take share from our true competitors, which are local and Regional staffing firms. They don't have the resources, they don't have the proprietary data at scale to compete and so, whatever you think about AI,
Speaker Change: We think an offset to what some believe uh, will be a net. Negative was the fact that we'll take more share. Because we're much more prepared to take advantage of which we've already shown relative to our small and Regional competitors.
Speaker Change: Okay, thanks a lot. I appreciate it.
Speaker Change: And take you'll take a question from Toby summer with trust.
Speaker Change: Thank you. Um, within, uh, proximity in your financial services, sort of Industry, customer set. What, what, what's your experience been and is it, is that part of the business and that customer set performing any differently than the uh, the business as a whole.
Speaker Change: Well.
a portion of productivity it's you know it's almost half its revenue between 40 and 50% typically
Speaker Change: you can almost
Correctly. Assume that any productivity trend is going to be true of its Financial Services client base. And in this case that would be true again and those large projects that completed. Um
Speaker Change: FSI is is represented there and so that impacts.
Their their, particularly, their Q3 forecast for their evidence. So FSI, definitely a very cost-conscious
Speaker Change: very,
Selective.
Uh uh, decision cycle has been extended everything. We've said, would definitely include FSI clients.
Speaker Change: and and and what's the internal posture um at the company as far as of
Speaker Change: Adding internal resources versus, you know, sort of being in the the restraining and the The Cutting of internal resources, there's uh, you say, you feel better than you did 90 days ago. So, how is that reflected in your decision making there?
Speaker Change: Well because we think we have a we have unused capacity which we've talked about for some time we've held on to more of our uh recruiters and salespeople and revenues with dictate. We think we have a nice buffer and that we could participate strongly in the upcycle without adding the current heads. So at the moment,
Speaker Change: While we always performance managed on an individual basis, other than that, we're holding the line.
Speaker Change: and we think we have uh, adequate staff to participate and the fact that we're getting
Speaker Change: Some productivity gains from some of these digital initiatives. We have including the lead scoring. Uh, we feel even more confident that we have. The capacity, we will need to participate nicely.
Speaker Change: Thank you.
Stephanie Moore: And our next question comes from Stephanie Moore with Jeffries.
Stephanie Moore: Hi, good afternoon, thank you. Um, I wanted to potent, you talked about, you talked about this a little bit, um, you know, you talked about Investments that you've been making in AI, um, you know, in particular and other Investments and, and maybe your positioning versus your smaller competitors and we eventually get out of the very sluggish environment. So could you talk a little bit about how you think your position to win and take share? You know, when we do eventually get out of out of this, you know, pretty slight Mission environment and maybe asked another way, given how prolonged this the sluggish environment is? And do you think that actually puts you in a better position for maybe smaller players? That have to struggle to compete and might not have the resources available to to take advantage of this recovery. Thank you.
Stephanie Moore: Well.
Stephanie Moore: As I said, for technology reasons alone, I think will be better positioned.
Um, to take share.
Stephanie Moore: in part, because at the end of the day, what clients care about is the quality of your candidates, and we can present better candidates, because of our AI,
Stephanie Moore: By the same token what candidates care about is the quality of your jobs and we can present better jobs, more relevant jobs to candidates because of the power of AI, neither of which are local and Regional competitors can do as well as we can do.
Stephanie Moore: And so, I feel great in that way further because we've made this commitment to these full-time engagement professionals.
Stephanie Moore: The quality of the talent, we can provide even in a very tight low unemployment Market. I think our clients are going to be very happy with and we can scale that quickly if need be as well.
Stephanie Moore: the committee even more to I think just adds
Stephanie Moore: and so,
Frankly. And by the way, that's the latter is very margin accretive. And so, I believe we're positioned to benefit, uh, relative to that competitor set.
Better today than we ever have.
Speaker Change: And our next question comes from George Tong, with Goldman Sachs.
George Tong: Hi, thanks. Good afternoon.
Speaker Change: Uh so per placement revenues during the quarter. And the first few weeks of July declined, more than 10 Staffing revenues. Can you talk a bit about what some of the factors are that may be contributing to this?
George Tong: So, George perm is.
Speaker Change: Been more volatile than contract forever.
Speaker Change: and so short-term differences 1 versus the other, um,
Speaker Change: Are.
Speaker Change: are normal frankly and
Speaker Change: Explanations. Don't really say much about trends.
Speaker Change: and I'd say perm in um, April uh
Didn't see the lift. We would typically see in the second quarter. Um, but at that lower level, we leveled out.
Speaker Change: Um, in May and June and so, so, and I was talking to sequentially again.
Speaker Change: and, and so,
Speaker Change: Perms fine. It's just, it's more volatile. It's always been more volatile. It always will be more volatile.
As we talked even on the last call, you know, we came out the gate hotter there in perm and when you looked at the full quarter and I wasn't very predictive of even 1 quarter. And so perms just more volatile.
Speaker Change: Got it, that's helpful. Um and then your admin and customer support business has been declining faster than Finance and Accounting. Now for 2 quarters in a row what may be causing this difference in the rate of decline.
Speaker Change: There's a fair amount of projects in ACS and large projects tend to impact that more. Uh, the comps have been tougher at times in ACS. Uh but again, you know, there are a couple of percentage points.
Different than Finance and Accounting, they're not, they're not hugely different. Um, you know, if you look at
Speaker Change: Uh, a year ago you'll find that the comps for ACS are tougher than the comps for accounting and that somewhat gets reflected in the year-on-year growth rates.
Speaker Change: I don't think there's a big story there, 1 way or the other and by the way, when we did that AI impact study, um, customer service administrative staff were definitely included and they hadn't performed any differently than other roles.
Very helpful. Thank you.
Speaker Change: And moving on to kartika with North Coast research.
Kartika: Keith. Um, I wanted to get your perspective, you know, we've had a couple starts or a couple of signs this year where it seemed as though the industry was going to be on a positive trend and unfortunately uh for
Kartika: A variety of reasons. It isn't able to hold a momentum and I'm wondering if there's anything different you're seeing this time, um, around especially with some of the sequential growth that you've talked about, uh, that you could point to, that might say this is, you know, this is going to last
well I think heightened uncertainty is certainly more accepted in The New Normal so I don't think
There are as.
Kartika: Strong of reactions to all the uh policy changes up and down that seems to happen daily. So it's it's
Kartika: More settled in that, these things are going to happen.
Kartika: And that's the new normal and deal with it and get on with it.
And so,
Kartika: I think with time um, clients particularly smbs.
Kartika: Have gotten a little numbed.
Kartika: and,
Kartika: Therefore it would it would take more to impact their confidence levels than it has in the last few quarters.
The tax, the tax the tax law is now has now been done, so that's behind us. Um,
Kartika: The tariffs.
Kartika: While not settled.
Kartika: The view is, I mean led to today, in fact, by Japan as you know, that are likely not to be.
Kartika: as significant as first feared
Kartika: Not that it's by any means settled.
But it seems to be settling at a lower level.
Kartika: and then just moving on to the protiviti business, any change in the competitive Dynamics in that business, especially as, you know, maybe there's just a couple headwinds here, uh, then maybe before
not, I mean, the the competition or the Big 4,
Kartika: And if anything is we've talked about in the recent quarters that that's that competition particularly as it relates to price has stabilized.
Kartika: And so, I don't think there's a competitive reason.
Kartika: Uh, that fitiv has gone to a small negative year-on-year growth rate.
Kartika: Um,
Kartika: I wouldn't say that's that's about competitive Dynamics at all.
Thank you very much, appreciate it.
Jeff Silver: And your next question comes from Jeff silver with BMO Capital markets.
Jeff Silver: Hey, thank you very much. This is Ryan on for Jeff, you mentioned that 70% of the business is SMB was just wondering how your larger Enterprise customers fared in April May, perhaps they're a little bit less sensitive, but I was just curious. Thank you.
Jeff Silver: Speaking, I would say the Enterprise our Enterprise clients have been a bit more resilient than our SMB clients for several quarters.
Jeff Silver: And you see that in pivot's results, where their client base is very different than Talent Solutions, where they're principally Enterprise clients.
Jeff Silver: So Enterprise a little better than SMB.
Speaker Change: Appreciate that. Just for the follow up on non-us productivity, the growth there was up quite a bit. This quarter was wondering if you could break down the drivers there, thank you.
Speaker Change: So first of all, the comps are dramatically different between us and non.
Speaker Change: Us a year ago us grew 3% and non us was down 16%. So the comps are dramatically different 0.1, but 0.2, um, creativity. In Germany and in Canada, have some very large joint go to market projects with Talent Solutions, and they're doing very well, and that's expected to continue. So we feel good about creativity's, International operations, particularly
Speaker Change: Uh Europe particularly Germany. And there's a lot of excitement about this defense and um
Speaker Change: Infrastructure spending coming hadn't happened yet but uh we feel good about creativity, non us.
Speaker Change: Okay, so that was our last question. So thank you very much for joining us.
Speaker Change: Thank you.
Speaker Change: This concludes today's teleconference. If you missed any part of the call, it will be archived in audio format in the investor Center of Robert hops. Website at Robert half.com. You can also log into the conference. Call replay details are contained in the company's press release issued earlier today.