Robert Half Q2 2025 Earnings Report

Robert Half EPS Results

• Actual EPS: $0.41
• Consensus EPS: $0.40
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.66

Robert Half Revenue Results

• Actual Revenue: $1.37 billion
• Expected Revenue: $1.35 billion
• Beat/Miss: Beat by +$16.04 million
• YoY Revenue Growth: -7.00%

Robert Half Announcement Details

• Quarter: Q2 2025
• Date: 7/23/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, July 23, 2025
• Conference Call Time: 5:00PM ET

Robert Half (NYSE:RHI) provides talent solutions and business consulting services in North America, South America, Europe, Asia, and Australia. The company operates through Contract Talent Solutions, Permanent Placement Talent Solutions, and Protiviti segments. The Contract Talent Solutions segment provides contract engagement professionals in the fields of finance and accounting, technology, marketing and creative, legal and administrative, and customer support. This segment markets its services to clients and employment candidates through both national and local advertising activities, including radio, digital advertising, job boards, alliance partners, and events. The Permanent Placement Talent Solutions segment engages in the placement of full-time accounting, finance, and tax and accounting operations personnel. The Protiviti segment offers consulting services in the areas of internal audit, technology consulting, risk, and compliance consulting. It offers it services under the Robert Half brand name. The company was formerly known as Robert Half International Inc. and changed its name to Robert Half Inc. in July 2023. Robert Half Inc. was founded in 1948 and is headquartered in Menlo Park, California.

Robert Half Q2 2025 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Global revenues $1.37 billion were down 7% year-over-year and earnings per share fell to $0.41 from $0.66 a year ago.
• Positive Sentiment: Cash flow from operations totaled $119 million, the dividend increased 11.3% year-over-year, and the company repurchased $20 million of shares with $6.2 million shares still available for buyback.
• Positive Sentiment: Protiviti revenues rose 2% year-over-year in Q2, underpinned by a strong pipeline and a significant increase in new opportunities.
• Negative Sentiment: Talent Solutions revenues declined 11% year-over-year in Q2 as economic uncertainty extended decision cycles and subdued hiring activity.
• Neutral Sentiment: Third-quarter guidance forecasts revenues of $1.31 billion to $1.41 billion (down about 8% YoY) and EPS of $0.37 to $0.47, with adjusted operating income expected to increase sequentially.

Presentation

[Operator]

Please standby. Hello, and welcome to the Robert Half Second Quarter twenty twenty five Conference Call. Today's conference call is being recorded. Our hosts for today's call are Mr. Keith Waddell, President and Chief Executive Officer of Robert Half and Mr. Michael Buckley, Chief Financial Officer. Mr. Waddell, you may begin.

[M. Keith Waddell, President & CEO at Robert Half]

Hello, everyone. We appreciate your time today.

[M. Keith Waddell, President & CEO at Robert Half]

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. These statements represent our current judgment of what the future holds. However, they're subject to the risks and uncertainties that could cause actual results to differ materially from the forward looking statements. These risks and uncertainties are described in today's press release and in our most recent 10 ks and 10 Q filed with the SEC. We assume no obligation to update the statements made on today's call.

[M. Keith Waddell, President & CEO at Robert Half]

During this presentation, we may mention some non GAAP financial measures and reference these figures as adjusted. Specifically, we present adjusted revenue growth rates, which remove the impact of 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 and 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. Reconciliations and further explanations of these measures are included in the supplemental schedule to our earnings press release.

[M. Keith Waddell, President & CEO at Robert Half]

For your convenience, our prepared remarks for today's call are available in the Investor Center of our website, roberthalf.com. For the second quarter of twenty twenty five, global enterprise revenues were $1,370,000,000 down 7% from last year's second quarter on both a reported basis and on an adjusted basis. Net income per share in the second quarter was $0.41 compared to $0.66 in the second quarter one year ago. Revenues and earnings were in line with the midpoint of our previous second quarter guidance. Elevated global economic uncertainty persisted throughout the quarter, extending client and job seeker caution, elongating decision cycles and subduing hiring activity and new project starts.

[M. Keith Waddell, President & CEO at Robert Half]

Revenue levels fell modestly during the first two months of the quarter, then stabilized at lower levels in June, which continued post quarter into July. 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 $119,000,000 In June, we distributed a $0.59 per share cash dividend to our shareholders of record for a total cash outlay of $59,000,000 Our per share dividend has grown an average of 11.5% annually since its inception in 02/2004. The June 2025 dividend was 11.3 percent higher than in the prior year. We also acquired approximately 450,000 Robert Half shares during the quarter for $20,000,000 We have 6,200,000.0 shares available for repurchase under our Board approved stock repurchase plan.

[M. Keith Waddell, President & CEO at Robert Half]

Return on invested capital for the company was 12% in the second quarter. Now I'll turn the call over to our CFO, Mike Buckley.

[Michael Buckley, EVP & CFO at Robert Half]

Thank you, Keith, and hello, everyone. As Keith noted, global revenues were $1,370,000,000 in the second quarter. On an adjusted basis, second quarter Talent Solutions revenues were down 11% year over year.

[Michael Buckley, EVP & CFO at Robert Half]

U. S. Talent Solutions revenues were $668,000,000 down 11% from the prior year's second quarter. Non U. S.

[Michael Buckley, EVP & CFO at Robert Half]

Talent Solutions revenues were $2.00 $7,000,000 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 sixty three point two billing days compared to sixty three point five billing days in the same quarter one year ago. The 2025 had 64.2 billing days compared to sixty four point one billing days during the third quarter of twenty twenty four. Currency exchange rate movements during the second quarter had the effect of increasing reported year over year total revenues by $8,000,000 $4,000,000 for both Talent Solutions and Protiviti.

[Michael Buckley, EVP & CFO at Robert Half]

Contract Talent Solutions bill rates for the second quarter increased 3.8% compared to one year ago, adjusted for changes in the mix of revenues by functional specialization, currency and country. This rate for first quarter was 4.2%. Now let's take a closer look at results for Protiviti. Global revenues in the second quarter were $495,000,000 $396,000,000 of that is from The United States and $99,000,000 is from outside of The United States. On an adjusted basis, global second quarter Protiviti revenues were up 2% versus the year ago period.

[Michael Buckley, EVP & CFO at Robert Half]

U. S. Protiviti revenues were down 1%, while non U. S. Protiviti revenues were up 11% compared to one year ago.

[Michael Buckley, EVP & CFO at Robert Half]

Protiviti and its independently owned member firms serve clients through locations in The United States and 28 other countries. Turning now to gross margin. In Contract Talent Solutions, second quarter gross margin was 39.1% of applicable revenues versus 39.3% in the second quarter one year ago. Conversion or contract to hire revenues were 3.4% of contract revenues in both the current quarter and the second quarter of twenty twenty four. Our permanent placement revenues were 13.1% of consolidated talent solutions revenues in the current quarter and 13.3% in the second quarter of twenty twenty four.

[Michael Buckley, EVP & CFO at Robert Half]

When compared with Contract Talent Solutions gross margin, overall gross margin for Talent Solutions was 47.1% compared to 47.4% of applicable revenues in the second quarter one year ago. For Protiviti, gross margin was 19.7% of Protiviti revenues in the second quarter and twenty two point five percent in the second quarter one year ago. Adjusted gross margin for Protiviti was 22.3% for the quarter just ended compared to 23.2% last year. Enterprise SG and A costs were 37.1% of global revenues in the second quarter compared to 34% in the same quarter one year ago. Adjusted SG and A costs were 33.8% for the quarter just ended compared to 33.2% a year ago.

[Michael Buckley, EVP & CFO at Robert Half]

Talent Solutions SG and A costs were 49.2 percent of Talent Solutions revenues in the second quarter versus 43.1% in the second quarter of twenty twenty four. Adjusted Talent Solutions SG and A costs were 44.1% for the quarter just ended compared to 41.9% last year. Second quarter SG and A costs for Protiviti were 15.7% of Protiviti revenues compared to 15.6% of revenues for the same quarter one year ago. Operating income for the quarter was $2,000,000 Adjusted operating income was $59,000,000 in the second quarter or 4.3% of revenue. Second quarter adjusted operating income for our Talent Solutions division was $27,000,000 or 3.1% of revenue.

[Michael Buckley, EVP & CFO at Robert Half]

Adjusted operating income for Protiviti in the second quarter was $32,000,000 or 6.6 percent of revenue. Income from investments held in employee deferred compensation trust. Our second quarter income statement includes a $58,000,000 gain from investments held in employee deferred compensation trust. This is completely offset by an equal amount of higher employee deferred compensation costs, which are reflected in SG and A expenses and direct costs. As such, it has no effect on our reported net income.

[Michael Buckley, EVP & CFO at Robert Half]

Our second quarter tax rate was 33% compared to twenty nine percent one year ago. The higher tax rate in the current quarter is due to the increased impact of nondeductible expenses relative to lower pretax income. At the end of the second quarter, accounts receivable were $827,000,000 and implied days sales outstanding or DSO 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. Contract Account Solutions exited the second quarter with June revenues down 11% versus the prior year compared to an 11% increase for the full quarter.

[Michael Buckley, EVP & CFO at Robert Half]

Revenues for the July were down 10% compared to the same period last year. Permanent placement revenues in June were down 20% versus June. This compares to a 13% decrease for the full quarter. For the first three 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.

[Michael Buckley, EVP & CFO at Robert Half]

But as you know, these are very brief time periods, we caution reading too much into them. With that in mind, we offer the following third quarter guidance: Revenue $1,310,000,000 to $1,410,000,000 Income per share $0.37 to $0.47 Midpoint revenues of $1,360,000,000 are 8% lower than the same period in 2024 on an as adjusted basis. On a sequential basis, Midpoint estimated Q3 revenues are down 3%. For the most recent six week period ended July 11, weekly sequential revenues have remained essentially flat. Midpoint adjusted operating income dollars are expected to increase sequentially from Q2, the first sequential Q3 increase since 2021.

[Michael Buckley, EVP & CFO at Robert Half]

The major financial assumptions underlying the midpoint of these estimates are as follows: adjusted revenue growth year over year for Talent Solutions, down nine to 13% Protiviti, flat to down 4% overall, down 6% to 10% adjusted gross margin percentage for contract talent, 38 to 40% for Protiviti, 22% to 24% overall, 37% to 40% Adjusted SG and A as a percentage of revenue, Talent Solutions 43% to 45%, Protiviti 15% to 17%, overall 33% to 35%. Adjusted operating income as a percentage of revenue talent solutions 2% to 4% Protiviti 6% to 8% overall 3% to 6% tax rate, 31% to 35 shares, 100,000,000 to $101,000,020.25 capital expenditures and capitalized cloud computing costs, $75,000,000 to $90,000,000 with 15,000,000 to $25,000,000 in the third quarter. All estimates we provide on this call are subject to the risks mentioned in today's press release and in our SEC filings. Now I'll turn the call back over to Keith.

[M. Keith Waddell, President & CEO at Robert Half]

Thank you, Mike.

[M. Keith Waddell, President & CEO at Robert Half]

The fears of economic recession have eased as the worst case trade policy concerns have not materialized and proposed tax change tax changes have now become law. Small business confidence levels have also rebounded modestly from recent lows. The US job market remains resilient with the overall unemployment at 4.1%. 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 post COVID highs, job openings continue to be well above historical levels indicating strong pent up hiring demand.

[M. Keith Waddell, President & CEO at Robert Half]

As business confidence improves, there's a corresponding acceleration in hiring urgency, project demand, and the reprioritization of previously deferred initiatives. 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. Protiviti achieved year on year revenue growth for the fourth quarter in a row, though growth rates have moderated as a result of continued economic uncertainty. This has extended conversion time lines from opportunity identification to project start and reduced average project size. Despite the lengthening cycles, Protiviti's prospects, including the quality and diversity of its pipeline, remain very strong across all of its major solution areas.

[M. Keith Waddell, President & CEO at Robert Half]

The strategic integration of contract professionals sourced through our Talent Solutions divisions remains a powerful driver for Tivity's performance, reinforcing our distinctive enterprise wide competitive advantage. 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. We'd 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 one on Forbes list of America's best professional recruiting firms. We were also recognized by Forbes as one of America's best temporary staffing firms and one of America's best executive recruiting firms.

[M. Keith Waddell, President & CEO at Robert Half]

This is a credit to all of our employees and their incredible drive to deliver outstanding service to our clients and our channels. Now Mike and I'd be happy to answer your questions. Please ask just one question and a single follow-up is needed. If there's time, we'll come back to you for additional questions.

[Operator]

Thank you.

[Operator]

At this time, if you'd like to ask a question, please press star one on your touch tone telephone. If you're joining us today using a speakerphone, please make sure mute function is turned off to allow your signal And your first question will come from the line of Andrew Steinerman with JPMorgan.

[Andrew Steinerman, Equity Research Analyst - Business & Info Services at JP Morgan]

This might be not as timely. It's kind of a long term trend question. I was curious about the bill rate increases, the 3.8% year over year that is adjusted for mix.

[Andrew Steinerman, Equity Research Analyst - Business & Info Services at JP Morgan]

I know it's adjusted for other things like FX as well. But what I'm curious about is if you didn't adjust for mix, you know, how much is is bill rates up? And I really I'm asking because I feel like there's been kind of a long term move up the skill set over many years that sort of, like, is underappreciated when you you just give the mix adjusted number.

[M. Keith Waddell, President & CEO at Robert Half]

Right. And so since mix positively impacts bill rate increases for reasons you just mentioned, unadjusted, they'd be higher.

[M. Keith Waddell, President & CEO at Robert Half]

And so that's been a progression that's been in place for years and one we're happy to have continue into the future.

[Andrew Steinerman, Equity Research Analyst - Business & Info Services at JP Morgan]

Mhmm. But could you just give us a a sense of, you know, how much your bill rates have increased because of mix shift over the years?

[M. Keith Waddell, President & CEO at Robert Half]

I mean, it's it's not unusual for it to be one to 200 basis I I don't remember the numbers right off But the top of my clearly, it's part of our story.

[Andrew Steinerman, Equity Research Analyst - Business & Info Services at JP Morgan]

Okay. I appreciate that, Keith. Thank you.

[Operator]

And the next question comes from Mark Marcon with Baird.

[Mark Marcon, Senior Research Analyst at Robert W. Baird & Co]

Hey.

[Mark Marcon, Senior Research Analyst at Robert W. Baird & Co]

Good afternoon, Keith and Michael. Wondering about Protiviti. You did mention, you know, that the that there's an extension in terms of conversion time lines and that the project, you know, in terms of the project starts and that there's reduced average project size. Could you dimensionalize that a little bit more? Obviously, we're going up against a tougher comp here in the third quarter than we had in the second quarter.

[Mark Marcon, Senior Research Analyst at Robert W. Baird & Co]

So you're basically projecting to 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?

[M. Keith Waddell, President & CEO at Robert Half]

Well, first of all, it's a slight year on year decline. Next, I would say that 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.

[M. Keith Waddell, President & CEO at Robert Half]

And so that, in addition to or as part of the economic environment trend is impacting quarter three Protiviti revenues. While it's seeing in quarter three, it's typical, it's having vastly compliance lift seasonally than it always does. The other solutions are somewhat lower for this large project phenomenon that I just talked about. 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 is that their new opportunities in the last thirty days are up substantially.

[M. Keith Waddell, President & CEO at Robert Half]

And as you look back over the last year, the increase of that last thirty days is substantially higher, both sequentially and year on year that they've seen in a long time. So we're very encouraged by that.

[Mark Marcon, Senior Research Analyst at Robert W. Baird & Co]

Should should that just to 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?

[M. Keith Waddell, President & CEO at Robert Half]

Again, because the we're so close to year on year growth, You know, it doesn't take that much revenue to swing it one way or the other. And so clearly, with that kind of opportunity growth, new opportunity growth, by the fourth quarter, there's a there's a reasonable chance that we return to growth again.

[M. Keith Waddell, President & CEO at Robert Half]

But again, we're talking really, really small negative and or positive growth rates. Generally speaking, Protiviti has been very resilient during this, you know, more challenged economic period of the last two or three years, and that is expected to continue. And whether they have negative growth of 2% or positive growth of 2%, it isn't a huge swing. Opportunity is doing very well.

[Mark Marcon, Senior Research Analyst at Robert W. Baird & Co]

Great.

[Mark Marcon, Senior Research Analyst at Robert W. Baird & Co]

And then you you mentioned with regards to Talent Solutions, you know, the fears of economic recession have eased, worst trade worst case on the trade policy concerns haven't materialized, and we've seen small business conference rebound. In terms when we take a look at your account solutions business, we did see a a pickup, particularly with regards to technology solutions. I'm just wondering how you're thinking about tech solutions, you know, progressing. And should that eventually spill over to, you know, finance and accounting as well?

[M. Keith Waddell, President & CEO at Robert Half]

Well, tech tech solutions are clearly the strongest part of our practice groups.

[M. Keith Waddell, President & CEO at Robert Half]

Tech modernization, ERP upgrades, you know, security privacy, they're all strong. Much of that relates to AI readiness, if you will, And it's been it's been doing very well for multiple quarters now. And we would expect to see some of that trickle into finance and accounting, particularly at our higher management resource levels. And further, it ties in well with Protiviti's technology consulting group such that together, our higher level finance and accounting consulting solutions, our tech solutions, and we've been moving up the skill curve there, and technology has Protiviti, they all fit very well together.

[Mark Marcon, Senior Research Analyst at Robert W. Baird & Co]

Great. Thank you.

[Operator]

And your next question will come from the line of Manav Patnaik with Barclays.

[Ronan Kennedy, Vice President at Barclays Investment Bank]

Jorge. This is Ronan Kennedy on for Manav. 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 trends that you've seen out of June and first three weeks in July. I think you understandably highlighted that elevated global economic uncertainty, consistent with we're hearing from other companies.

[Ronan Kennedy, Vice President at Barclays Investment Bank]

But I think they had pointed out that 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 two months, then stabilized in June. But firm placement revenues in June were down 20%. 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.

[M. Keith Waddell, President & CEO at Robert Half]

Well, part of this is is year on year versus sequential. And when we're talking current trends, we're talking sequential. And Right. So what we said was the first two months sequentially, we fell modestly, and then sequentially, that leveled off. I can also say that for the past few weeks on the Talent Solutions side, particularly, the tone of our of the conversations we've had with clients has improved, and we feel good about that.

[M. Keith Waddell, President & CEO at Robert Half]

But the year on year comparisons also consider what happened sequentially a year ago. And in in a times like these, we tend to more focus more on sequential than year on year, and that's how we describe the trends. And so sequentially on the Protiviti side, a a nice surge in new opportunities last thirty days, talent solution side, the tone of client conversations has definitely gotten better in the last few weeks. If you take our current run rate in Talent Solutions through mid July and you apply that to the full quarter, we're about 2% down sequentially. And our guidance is that we would be down 4% sequentially.

[M. Keith Waddell, President & CEO at Robert Half]

So we've added a little conservatism to our guidance relative to where we are at the moment, and again, everything sequentially.

[Ronan Kennedy, Vice President at Barclays Investment Bank]

Thank you for the clarification. Appreciate it. And then on if I may, as a follow-up. Can you just talk about the dynamics of margin drivers, the puts and takes to guided margins, whether that's mix conversion, wage rate, inflation, bill pay spreads, etcetera, for the guided margin, please, for 3Q?

[M. Keith Waddell, President & CEO at Robert Half]

Sure. On Talent Solutions side, gross margin's pretty consistent. Nothing new there. On the SG and A side, we've pretty much abated the negative operating leverage we've gotten for many quarters in a row, and such there's not much change in Talent Solutions SG and A as a percent of revenue in our q three guidance. And as we said in our remarks, on a progression from q two to q three, Talent Solutions has had one of the best it have will have one of the best quarters it's had at the operating line that it's had in four years.

[M. Keith Waddell, President & CEO at Robert Half]

And so we feel good about where we are cost wise and margin wise relative to the last three or four years, frankly, on talent solutions. In Protiviti, we get an uptick in gross margin and segment income sequentially. That's largely driven by the seasonal lift they get from Sarbanes Oxley compliance work, which they anticipate getting in the end. However, because of the the completion of those small number of large projects, they're not gonna get as much revenue lift as they typically do in the third quarter. And all of that revenue lift is almost completely segment income or margin.

[M. Keith Waddell, President & CEO at Robert Half]

And therefore, the gross margin and segment margin lift you typically get in the third quarter, they're not gonna get as much of this year. Still be up, but won't be up as much as it has been traditionally. And, again, it's principally related to those those handful of small large projects that they're having to redeploy for.

[Ronan Kennedy, Vice President at Barclays Investment Bank]

Thanks very much. Appreciate it.

[Operator]

And the next question comes from Trevor Romeo with William Blair.

[Trevor Romeo, Research Analyst at William Blair]

Hey. Good afternoon, Keith and Mike. Thanks for taking the questions. I had another kind of macro related question to start.

[Trevor Romeo, Research Analyst at William Blair]

You know, you talked about the conversations improving. So I guess, like, the question I have is, you know, does it feel like confidence and the the tone of conversations are back to where they were maybe a couple of quarters ago? I guess, coming into the year, you can see the, you know, the post election decreasing in 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?

[M. Keith Waddell, President & CEO at Robert Half]

It's subjective, but I would say we're we're not there. We're not back there yet, but we're headed there. 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 Protiviti, tone is definitely better. It's not euphoric like it was post election, but it's certainly going in the right direction, which is a nice change from ninety days ago when we didn't feel this way. I'd say we we definitely feel better today than we felt ninety days ago.

[Trevor Romeo, Research Analyst at William Blair]

Mhmm. Okay. Thanks. That makes a lot of sense. And then I had a follow-up about the entry level sort of the college grad labor market. I've seen a lot of press lately about some incremental weakness in that area. So just given, I guess, your perspective, would would love to hear your thoughts on what's going on in the entry level white collar labor market. You know, is it just economic uncertainty? Are you seeing any pressure from any of the advancements in AI or or anything like that?

[M. Keith Waddell, President & CEO at Robert Half]

Well, first of all, our small business clients typically expect experienced staff when they come to us for contractors. And so we don't really have that many right out of college graduates that we place on the contract side. Yeah. On AI, we could talk forever. But let me make a few comments.

[M. Keith Waddell, President & CEO at Robert Half]

First of all, we we know definitively that so far AI has had very little impact on our revenues. 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. They would include things like data entry, bookkeeping, customer service, the ones you always read about.

[M. Keith Waddell, President & CEO at Robert Half]

And our data says that so far, they haven't performed any differently than the other roles. Interestingly, NFIB just did a technology survey of its constituents. 98% reported that AI had no impact to their number of employees. There are other studies that have come out recently, the National Bureau of Economic Research being one of them, that has concluded so far no association between AI job growth with the possible exception of tech companies that you read a lot about. But part of that, they're selling their own book.

[M. Keith Waddell, President & CEO at Robert Half]

And so at least so far, when you look at the staffing industry and Robert Half specifically, we can say AI has not impacted how we performed. Now as to the future, there are opinions all over the lot. 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. The old and new. We operate in the spot market every day, and you have to go where the jobs and skills are to survive.

[M. Keith Waddell, President & CEO at Robert Half]

I'd 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, EFP flat platform upgrades, data, etcetera. And so that's that's positive. The other thing I would say is, and this was confirmed in this NFIB survey, that SMBs are always later adopters. And we're 70% SMB.

[M. Keith Waddell, President & CEO at Robert Half]

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.

[M. Keith Waddell, President & CEO at Robert Half]

That said, we at Robert Half, we believe in technology. We believe in AI. As you know, we've got award winning matching, lead scoring engines that are very effective. 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 to compete.

[M. Keith Waddell, President & CEO at Robert Half]

And so whatever you think about AI, we think an offset to what some believe 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 smaller regional competitors.

[Trevor Romeo, Research Analyst at William Blair]

Okay. Thanks a lot. I appreciate it.

[Operator]

And take we'll take a question from Toby Summer with Truist.

[Tobey Sommer, Managing Director at Truist Securities]

Thank you. Within Protiviti, in your financial services or 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 the business as a whole?

[M. Keith Waddell, President & CEO at Robert Half]

Well, since it's so large a portion of Protiviti, it's, you know, it's almost half its revenue between 4050% typically, you can almost correctly assume that any Protiviti trend is gonna be true of its financial services client base.

[M. Keith Waddell, President & CEO at Robert Half]

And in this case, that would be true again. And those large projects that completed, FSI is is represented there. And so that impacts their their particularly their q three forecast for their revenues. So FSI definitely are very cost conscious, very selective. The the decision cycle has been extended. Everything we've said would definitely include FSI clients.

[Tobey Sommer, Managing Director at Truist Securities]

And and what's the internal posture at the company as far as adding internal resources versus, you know, sort of being in the restraining and the the cutting of internal resources? Say you feel better than you did ninety days ago.

[Tobey Sommer, Managing Director at Truist Securities]

So how is that reflected in your decision making there?

[M. Keith Waddell, President & CEO at Robert Half]

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 recruiters and salespeople than revenues would dictate. We think we have a nice buffer and that we can participate strongly in the up cycle without adding the current hit. So at the moment, while we always performance manage on an individual basis, other than that, we're holding the line. And we think we have adequate staff to participate.

[M. Keith Waddell, President & CEO at Robert Half]

And the fact that we're getting some productivity gains from some of these digital initiatives we have, including the lead scoring, we feel even more confident that we have the capacity we'll need to participate nicely.

[Tobey Sommer, Managing Director at Truist Securities]

Thank you, Keith.

[M. Keith Waddell, President & CEO at Robert Half]

And our next question comes from Stephanie Moore with Jefferies.

[Stephanie Moore, SVP - Equity Research at Jefferies]

I wanted to you about you talked talked about this a little bit. You know, you talked about investments that you've been making in AI, you know, in particular, other investments and maybe your positioning versus your smaller competitors, and we eventually get out of this very sluggish environment. So could you talk a little bit about how you think you're positioned to win and take share when we do eventually get out of this pretty sluggish environment? And maybe asked another way, given how prolonged this sluggish environment is in, 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.

[M. Keith Waddell, President & CEO at Robert Half]

Well, as I said, for technology reasons alone, I think we'll be better positioned to take share in part because at the end of the day, what clients can care about is the quality of your candidates, and we can present better candidates because of our AI. 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 our local and regional competitors can do as well as we can do. And so I feel great in that way further because we've made this commitment to these full time engagement professionals, the quality of the talent we can provide even in a very tight, low unemployment market, I think our clients are gonna be very happy with, and we can scale that quickly if need be as well. And so the combination of our technology, our brands, which are better known than our local and regional competitors, The fact that we have this bench of full time engagement professionals that we're willing to commit even more to, I think, just adds. And so, frankly and by the way, that's the latter is very margin accretive.

[M. Keith Waddell, President & CEO at Robert Half]

And so I believe we're positioned to benefit relative to that competitor set better today than we ever have.

[Operator]

And our next question comes from George Tong with Goldman Sachs.

[George Tong, Senior Research Analyst - Equity Research & Business Services at Goldman Sachs]

Hi. Thanks. Good afternoon.

[George Tong, Senior Research Analyst - Equity Research & Business Services at Goldman Sachs]

So perm placement revenues during the quarter and the first few weeks of July declined more than temp staffing revenues. Can you talk a bit about what some of the factors are that may be contributing to this? So, George, perm has been more volatile than contract forever.

[M. Keith Waddell, President & CEO at Robert Half]

And so short term differences, one versus the other, are are normal, frankly, and explanations don't really say much about trends. And I say perm in April didn't see the lift we would typically see in the second quarter.

[M. Keith Waddell, President & CEO at Robert Half]

But at that lower level, we leveled out in May and June. And so so and I was talking sequentially again. And and so firm's fine. It's just it's more volatile. It's always been more volatile.

[M. Keith Waddell, President & CEO at Robert Half]

It always will be more volatile. As we talked even on the last call, you know, we came out the gate higher there in perm. And when you looked at the full quarter, that wasn't very predictive of even one quarter. And so perm is just more volatile.

[George Tong, Senior Research Analyst - Equity Research & Business Services at Goldman Sachs]

Got it.

[George Tong, Senior Research Analyst - Equity Research & Business Services at Goldman Sachs]

That's that's helpful. And then your admin and customer support business has been declining faster than finance and accounting now for two quarters in a row. What may be causing this difference in the rate of decline?

[M. Keith Waddell, President & CEO at Robert Half]

There's a fair amount of projects in ACS, and large projects tend to impact that more. The comps have been tougher at times in ACS.

[M. Keith Waddell, President & CEO at Robert Half]

But, again, you know, there are a couple of percentage points different than finance and accounting. They're not they're not hugely different. You know, if you look at 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. I don't think there's a big story there one way or the other. And by the way, when we did that AI impact study, customer service administrative staff were definitely included, and they hadn't performed any differently than other roles.

[George Tong, Senior Research Analyst - Equity Research & Business Services at Goldman Sachs]

Very helpful. Thank you.

[Operator]

And moving on to Kartik Mehta with Northcoast Research.

[Kartik Mehta, Executive Managing Director & Director - Research at Northcoast Research Partners LLC]

Keith, I wanted to get your perspective. You know, we've had a couple starts or a couple of times this year where it seems as though the industry was going to be on a positive trend. Unfortunately, for a variety of reasons, it isn't able to hold the momentum. And I'm wondering if there's anything different you're seeing this time around, especially with some of the sequential growth that you've talked about, that you could point to that might say this is you know, this is going to last?

[M. Keith Waddell, President & CEO at Robert Half]

Well, I think heightened uncertainty is certainly more accepted than the new normal. So I don't think there are as strong of reactions to all the policy changes up and down that seems to happen daily. So it's it's more settled in that these these things are gonna happen, and that's the new normal, and deal with it and get on with it. And so I think with time, clients, particularly SMBs, have gotten a little numbed to that. And, therefore, it would it would take more to impact their confidence levels than it has in the last few quarters.

[M. Keith Waddell, President & CEO at Robert Half]

So And then The tax the tax the tax law is now has now been done, so that's behind us. The tariffs, while not settled, the view is, I mean, led today, in fact, by Japan, as you know, that are likely not to be as significant as first feared. Not that it's by any means settled, but it seems to be settling at a lower level.

[Kartik Mehta, Executive Managing Director & Director - Research at Northcoast Research Partners LLC]

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 of headwinds here than maybe before.

[M. Keith Waddell, President & CEO at Robert Half]

Not I mean, the the competition is a big four. And if anything, as we've talked about in the recent quarters, like, that's that competition, particularly as it relates to price, has stabilized. And so I I don't think there's a competitive reason that Protiviti has gone to a small negative year on year growth rate. I wouldn't say that's that's about competitive dynamics at all.

[Kartik Mehta, Executive Managing Director & Director - Research at Northcoast Research Partners LLC]

Thank you very much. Appreciate it.

[Operator]

And your next question comes from Jeff Silber with BMO Capital Markets.

[Ryan Griffin, Senior Equity Research Associate at BMO Capital Markets]

Hey, thank you very much. It's Ryan on for Jeff. You mentioned that 70% of the business is SMB. I'm just wondering how your larger enterprise customers fared in April and May.

[Ryan Griffin, Senior Equity Research Associate at BMO Capital Markets]

Perhaps they're a little bit less sensitive, I was just curious. Thank you.

[M. Keith Waddell, President & CEO at Robert Half]

Well, we don't typically quantitatively break out the difference. But generally speaking, I would say the enterprise our enterprise clients have been a bit more resilient than our SMB clients for several quarters. And you see that in Protiviti's results where their client base is very different than Talent Solutions where they're principally enterprise clients. So enterprise, a little better than SMB.

[Ryan Griffin, Senior Equity Research Associate at BMO Capital Markets]

Appreciate that. Just for the follow-up on non US productivity, the growth there was up quite a bit this quarter. I was wondering if you could break down the drivers there.

[M. Keith Waddell, President & CEO at Robert Half]

So first of all, the comps are dramatically different between U.

[M. Keith Waddell, President & CEO at Robert Half]

S. And non U. S. A year ago, U. S.

[M. Keith Waddell, President & CEO at Robert Half]

Grew 3% and non US was down 16%. So the comps are dramatically different, point one. But point two, activity 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. We feel good about Protiviti's international operations, particularly Europe, particularly Germany.

[M. Keith Waddell, President & CEO at Robert Half]

And there's a lot of excitement about this defense and infrastructure spending coming, hadn't happened yet. But we feel good about Protiviti, not in The US. Okay. So that was our last question. So thank you very much for joining us.

[Operator]

Thank you. This concludes today's teleconference. If you missed any part of the call, it will be archived in audio format in the Investor Center of Robert Half's website at roberthalf.com. You can also log in to the conference call replay. Details are contained in the company's press release issued earlier today.

Participants

Executives

• M. Keith Waddell, President & CEO
• Michael Buckley, EVP & CFO

Analysts

• Andrew Steinerman, Equity Research Analyst - Business & Info Services at JP Morgan
• Mark Marcon, Senior Research Analyst at Robert W. Baird & Co
• Ronan Kennedy, Vice President at Barclays Investment Bank
• Trevor Romeo, Research Analyst at William Blair
• Tobey Sommer, Managing Director at Truist Securities
• Stephanie Moore, SVP - Equity Research at Jefferies
• George Tong, Senior Research Analyst - Equity Research & Business Services at Goldman Sachs
• Kartik Mehta, Executive Managing Director & Director - Research at Northcoast Research Partners LLC
• Ryan Griffin, Senior Equity Research Associate at BMO Capital Markets