Robert Half International ((RHI)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Robert Half International painted a picture of cautious optimism amid a challenging economic environment. While the company faced significant hurdles, such as a decline in global revenues and net income, increased SG&A costs, and a higher tax rate, there were also positive developments. Notably, the company reported an increase in cash dividends and strong performance in non-U.S. Protiviti revenues. Overall, the sentiment was one of caution, with more challenges than triumphs, reflecting ongoing economic difficulties.
Cash Dividend Increase
In June, Robert Half International continued its tradition of rewarding shareholders by distributing a $0.59 per share cash dividend. This represents an 11.3% increase from the previous year, maintaining an impressive average annual dividend growth of 11.5% since 2004. This move underscores the company’s commitment to returning value to its shareholders despite the broader economic challenges.
Protiviti Non-U.S. Revenue Growth
The non-U.S. segment of Protiviti showed robust growth, with revenues up 11% compared to the previous year. This growth was primarily driven by strong performance in Europe, particularly in Germany, and large joint go-to-market projects with talent solutions. This segment’s success highlights the potential for international markets to bolster the company’s overall performance.
Technology Solutions Performance
Technology solutions emerged as a standout performer among Robert Half’s practice groups. The segment continued to show strength in areas such as tech modernization, ERP upgrades, and security privacy, partly fueled by the increasing demand for AI readiness. This performance underscores the importance of technology solutions in the company’s strategic growth plans.
Decline in Global Revenues
Global enterprise revenues for the second quarter stood at $1.37 billion, marking a 7% decline from the previous year. Adjusted talent solutions revenues were down 11% year-over-year, reflecting the challenging market conditions that the company is navigating.
Decrease in Net Income and Earnings Per Share
The second quarter saw a significant decline in net income per share, which fell to $0.41 from $0.66 in the same quarter of the previous year. This decrease highlights the financial pressures the company is facing amid a challenging economic landscape.
Protiviti U.S. Revenue Decline
In the U.S., Protiviti revenues experienced a slight decline of 1% year-over-year. This was attributed to a reduction in average project size and extended conversion timelines, indicating some challenges in the domestic market.
Increased SG&A Costs
The company’s SG&A costs rose to 37.1% of global revenues, up from 34% a year ago. This increase reflects higher operational expenses, which are impacting the company’s overall profitability.
Tax Rate Increase
The second-quarter tax rate increased to 33% from 29% a year ago. This rise was due to higher non-deductible expenses relative to lower pre-tax income, adding another layer of financial strain.
Permanent Placement Revenue Decline
Permanent placement revenues saw a notable decline, down 20% in June compared to the same month in 2024, and down 14% for the first three weeks in July. This trend indicates ongoing challenges in the permanent placement market.
Forward-Looking Guidance
Looking ahead, Robert Half International provided guidance for the third quarter, projecting revenues between $1.31 billion and $1.41 billion, with income per share ranging from $0.37 to $0.47. The company anticipates a midpoint revenue of $1.36 billion, representing an 8% year-over-year decline on an adjusted basis but only a 3% sequential decline. Adjusted revenue growth is expected to decrease year-over-year for talent solutions by 9% to 13%, remain flat to down 4% for Protiviti, and overall decline by 6% to 10%. Adjusted gross margin percentages are expected to range from 38% to 40% for contract talent and 22% to 24% for Protiviti.
In conclusion, Robert Half International’s earnings call reflected a cautious outlook amid ongoing economic challenges. While the company faces significant hurdles, such as declining revenues and increased costs, there are positive signs, including strong international performance and continued dividend growth. Investors and stakeholders will be closely monitoring the company’s strategic initiatives and market conditions as they navigate this challenging landscape.