• Global Enterprise Revenues: $1.352 billion, down 8% year-over-year on a reported basis, down 6% on an adjusted basis.
• Net Income Per Share: $0.17, compared to $0.61 in the prior year.
• Cash Flow Used in Operations: $59 million.
• Cash Dividend: $0.59 per share, total cash outlay of $61 million.
• Share Repurchase: Approximately 650,000 shares acquired for $39 million.
• Return on Invested Capital: 5% in the first quarter.
• US Talent Solutions Revenues: $676 million, down 10% year-over-year.
• Non-US Talent Solutions Revenues: $199 million, down 15% year-over-year.
• Protiviti Global Revenues: $477 million, up 5% year-over-year.
• Contract Talent Solutions Gross Margin: 38.9% of applicable revenues, down from 39.5% last year.
• Overall Gross Margin for Talent Solutions: 46.7%, down from 47% last year.
• Protiviti Gross Margin: 18.9% of revenues, unchanged from last year.
• Enterprise SG&A Costs: 34% of global revenues, down from 35.4% last year.
• Operating Income: $39 million; Adjusted Operating Income: $19 million.
• First Quarter Tax Rate: 22%, down from 30% last year.
• Accounts Receivable: $787 million; Days Sales Outstanding: 52.4 days.
• Second Quarter Revenue Guidance: $1.31 billion to $1.41 billion.
• Second Quarter Income Per Share Guidance: $0.36 to $0.46.

• Warning! GuruFocus has detected 3 Warning Sign with RHI.

Release Date: April 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Protiviti achieved year-over-year revenue growth for the third consecutive quarter, indicating resilience in a challenging economic environment.
• Robert Half Inc (NYSE:RHI) distributed a $0.59 per share cash dividend, marking an 11.3% increase from the previous year, demonstrating a commitment to returning value to shareholders.
• The company has implemented cost-saving measures expected to result in annual savings of $80 million, which will improve profitability levels.
• Contract Talent Solutions bill rates increased by 4.2% compared to the previous year, reflecting strong demand for skilled professionals.
• Robert Half Inc (NYSE:RHI) has a strong brand and unique business model that positions it well to capitalize on emerging opportunities and support clients' talent and consulting needs.

Negative Points

• Global Enterprise revenues were down 8% from the previous year's first quarter, indicating a decline in business activity.
• Net income per share dropped significantly to $0.17 from $0.61 in the same quarter last year, reflecting reduced profitability.
• Business confidence levels have moderated due to heightened economic uncertainty, leading to elongated decision cycles and subdued hiring activity.
• Cash flow used in operations was $59 million, with cash outflows typically elevated in the first quarter due to annual payment cycles.
• Adjusted gross margin for Protiviti decreased to 18.1% from 20.7% the previous year, impacted by onetime charges related to cost reductions.

Q & A Highlights

Q: Keith, regarding Protiviti, how much of its business is recurring versus discretionary, and how do you see this affecting margins if conditions worsen? A: Keith Waddell, CEO: We haven't officially broken it out, but risk and compliance is not discretionary, technology consulting is mixed, internal audit in financial services is not discretionary, and business process improvement is more discretionary. Protiviti has had revenue growth for three consecutive quarters, and we expect sequential growth in all major solutions into the second quarter. Despite some revenue shortfall, we anticipate better utilization of full-time staff and cost savings from swapping full-time staff with contract staff, leading to improved profitability.

Q: What is the priority of dividends in your capital allocation strategy, and could you envision a scenario where the dividend would be cut? A: Keith Waddell, CEO: We have a long-term commitment to return excess cash flow to shareholders, historically about 50% dividends and 50% repurchases. We are committed to raising the dividend, as we did last quarter, and intend to keep increasing it. The first quarter cash flow was seasonally low, but we expect it to rebound. There is no change in our capital allocation strategy.

Q: Can you elaborate on the efficiencies in administrative cost structures in Talent Solutions and Protiviti? A: Keith Waddell, CEO: We've had negative leverage on administrative costs for a few years. With lower volumes and technology improvements, we can operate more efficiently. Most reductions were in corporate services, with minimal impact on revenue-producing roles. Field reductions were more in management positions, not sales support.

Q: What prompted the recent cost actions, and have you noticed any change in client behavior? A: Keith Waddell, CEO: The cautiousness we observed improved post-election but changed due to trade policy uncertainty. We hadn't adjusted corporate overhead costs in a couple of years, and with renewed economic uncertainty, it seemed prudent to take cost actions, not impacting revenue producers.

Q: Can you discuss the pipeline and demand environment for Protiviti, and have any projects been paused or delayed? A: Keith Waddell, CEO: The pipeline is up year-on-year, but we did see some delays and pauses, particularly in financial services. This has been factored into our second-quarter guidance. Despite macroeconomic uncertainty, Protiviti managed to grow year-on-year.

Q: How quickly could you ramp up if economic conditions improve, and how would that impact margins? A: Keith Waddell, CEO: We could ramp up quickly as we haven't impacted revenue producers with cost actions. We have 20% to 30% upside based on prior productivity levels. Our AI technology helps direct recruiters to clients with the best conversion probability, enhancing our capacity beyond human labor.

Q: How is technology impacting your business, especially with small business customers? A: Keith Waddell, CEO: Job boards, aggregators, and LinkedIn have been around for a long time. They are frenemies, as we compete and use their technologies. They haven't significantly changed the calculus for small business owners deciding to use recruiting firms like Robert Half.

Q: How are client and job seeker caution reflected in weekly sequential revenue trends? A: Keith Waddell, CEO: Weekly revenues started to drift down in early February but flattened by March. On a weekly sequential basis, March and the first two weeks of April were flat, about 1.5% lower than the prior quarter. Our guidance assumes a 4% decline.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.