Sign in
H&

HEIDRICK & STRUGGLES INTERNATIONAL INC (HSII)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 net revenue grew 6.9% YoY to $283.6M, exceeding the high end of the company’s prior outlook; adjusted EBITDA rose to $29.1M (10.3% margin) and adjusted diluted EPS was $0.67, consistent with Q1 2024 .
  • Topline beat consensus: revenue of $283.6M vs S&P Global consensus $267.4M; EPS was in line at $0.67 vs $0.67 consensus (3 estimates each)*. Management guided Q2 2025 revenue to $285–$305M, above Q2 2024 actuals of $278.6M .
  • All segments contributed to growth: Executive Search +5.9% YoY to $213.4M, On-Demand Talent +12.4% to $42.6M (EBITDA turned positive), Consulting +6.8% to $27.6M (continued losses) .
  • Potential catalysts: revenue beat vs guidance and consensus, Q2 outlook above prior-year levels, On-Demand profitability inflection, and sustained $0.15 dividend declaration .

What Went Well and What Went Wrong

What Went Well

  • “Our first quarter results exceeded the high end of our outlook,” with strong topline and profitability despite macro uncertainty (CEO Tom Monahan) .
  • Executive Search delivered broad-based regional growth: Americas +5.7%, Europe +9.4%, APAC +1.2%; adjusted EBITDA improved to $52.3M and margin to 24.5% .
  • On-Demand Talent revenue +12.4% YoY; EBITDA improved from a loss to +$0.4M, reflecting increased wins and project extensions (CFO commentary) .

What Went Wrong

  • GAAP diluted EPS declined YoY to $0.62 (vs $0.67), impacted by a $1.3M fair value adjustment to On-Demand earnout/contingent compensation; adjusted EPS held flat at $0.67 .
  • Consulting remained loss-making with adjusted EBITDA of -$2.1M; management cited onetime items (reorganization charge) and efforts to simplify offerings to improve profitability .
  • Operating margin compressed to 5.7% from 6.1% YoY; salaries and benefits rose to 66.8% of net revenue (65.5% excluding $3.7M reorg charge), though management reiterated normalized run-rate ≈65% .

Financial Results

Quarterly progression

MetricQ3 2024Q4 2024Q1 2025
Net Revenue ($USD Millions)$278.6 $276.2 $283.6
Adjusted EBITDA ($USD Millions)$30.4 $26.1 $29.1
Adjusted EBITDA Margin %10.9% 9.5% 10.3%
Adjusted Diluted EPS ($)$0.72 $1.08 $0.67

YoY snapshot (Q1 2025 vs Q1 2024)

MetricQ1 2024Q1 2025
Net Revenue ($USD Millions)$265.2 $283.6
Adjusted EBITDA ($USD Millions)$25.9 $29.1
Adjusted EBITDA Margin %9.8% 10.3%
Adjusted Diluted EPS ($)$0.67 $0.67
Diluted EPS GAAP ($)$0.67 $0.62
Net Income ($USD Millions)$14.0 $13.3
Operating Margin %6.1% 5.7%

Segment breakdown (Q1; YoY)

Segment / RegionQ1 2024 Net Rev ($USD Millions)Q1 2025 Net Rev ($USD Millions)
Executive Search – Americas$136.7 $144.4
Executive Search – Europe$41.5 $45.4
Executive Search – APAC$23.3 $23.6
Executive Search – Total$201.5 $213.4
On-Demand Talent$37.9 $42.6
Heidrick Consulting$25.9 $27.6

KPIs (Executive Search)

KPIQ1 2024Q1 2025
Ending Consultants (#)424 427
Consultant Productivity ($USD Millions)$1.9 $2.0
Avg Revenue per Search ($USD Thousands)$136 $137
Confirmations (% Δ YoY)-3.2% +5.3%

Estimates vs Actuals (S&P Global)

MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD Millions)267.4*283.6
EPS ($)0.67*0.67
Revenue – # of Estimates3*—
EPS – # of Estimates3*—

*Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Net RevenueQ2 2025N/A$285–$305M New
Consolidated Net RevenueQ1 2025$263–$273M (guided 3/3/25) Actual $283.6M Exceeded
Dividend per ShareQ1 2025$0.15 (Q4 2024 declaration) $0.15 (Q1 2025 declaration) Maintained
Salaries & Benefits (% of net revenue)FY 2025 (run-rate)≈65% normalized Reaffirmed ≈65% normalized Maintained
Long-term targetsThrough-cycleMid- to high-single digit organic revenue growth; 5–8% organic adj. EBITDA growth per year Reaffirmed Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 2024)Current Period (Q1 2025)Trend
AI/technology initiativesOngoing R&D spend; digital product portfolio referenced (Q3/Q4) Emphasis on linking people strategies to AI; building at-scale digital tooling for “always-on” leadership decisions Increasing strategic focus
Supply chain resilienceNot explicit in Q3/Q4 PRsProviding toolkits to adapt leadership strategies to changing supply chain networks (CEO) Elevated focus
Macro/interest ratesFluid macro; FX and inflation cited in outlook Management monitoring client caution; interest rate cycle shaping talent needs (CEO) Watchful; resilient demand
Regional trends – EuropeExec Search down YoY in Q3; up in Q4 Q1 revenue up ~9% in Europe; strong EBITDA expansion (near 50%) Improving
On-Demand Talent profitabilityQ3 positive EBITDA; Q4 negative Q1 EBITDA turned positive; focus on interim talent growth Improving near-term
R&D executionR&D ~$5.7M in Q3; $6.1M in Q4 R&D $6.4M in Q1 (2.3% of net revenue) Continued investment
M&A-driven demandNot highlighted in Q3/Q4 materialsM&A creates leadership/culture assessment opportunities; demand tailwind (CEO) Supportive

Management Commentary

  • CEO framing: “Our first quarter results exceeded the high end of our outlook… we remain committed to serving as a highly strategic advisor, helping organizations turn complexity into opportunity” .
  • Strategy: Build “differentiated, deep and durable” client relationships; be the most trusted leadership partner to C-suite/Boards; emphasize Chief People Officer role and “always-on” leadership decisions enabled by digital tools .
  • Business attributes: Diversified revenue, variable cost structure, low CapEx, zero debt; targets mid- to high-single-digit organic revenue growth and 5–8% organic adjusted EBITDA growth per year .
  • CFO cost outlook: Salaries & benefits 66.8% of net revenue in Q1 (65.5% excluding $3.7M reorg charge); normalized ≈65% expected for full year .

Q&A Highlights

  • Downturn resilience: Management not yet seeing slowdown; highlighted zero debt, low CapEx, variable costs, fast ROI for clients vs large transformations .
  • Cash and M&A: Cash managed for 2026 earnouts; priority on organic investments; some organic hiring evolves into acquisitions/lift-outs (boutiques) .
  • Europe drivers: Broad-based performance across sectors (tech, FS, industrials, consumer); stimulative policy and sector focus (aerospace & defense) supporting activity .
  • Segment profitability trajectory: On-Demand turned profitable; both On-Demand and Consulting focused on marching toward long-term margin targets (7–9% On-Demand; 11–13% Consulting) .
  • End-market demand: Broad-based across FS, tech/services, industrials, consumer; interest-rate environment shaping CFO/CEO profiles and skill sets .

Estimates Context

  • Revenue beat: $283.6M actual vs $267.4M consensus; +6.1% surprise on topline*. EPS matched: $0.67 actual vs $0.67 consensus* .
  • Coverage: 3 estimates each for revenue and EPS; estimates likely to shift higher on revenue run-rate and Q2 guide of $285–$305M*.
  • Adjusted numbers: Non-GAAP adjustments include $1.3M earnout/contingent comp fair value, $4.2M acquisition contingent consideration, and $4.2M reorganization costs in Q1, underpinning adjusted EPS stability .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Broad-based growth with revenue exceeding guidance and consensus, while adjusted EPS held flat YoY—suggesting operating leverage despite macro noise .
  • Q2 2025 revenue outlook ($285–$305M) implies continued momentum vs Q2 2024 actuals ($278.6M), supporting near-term topline resilience .
  • Executive Search remains the profit engine (Q1 adj. EBITDA $52.3M; margin 24.5%) with improving Europe and solid Americas/APAC breadth .
  • On-Demand Talent showed positive EBITDA and double-digit growth; a potential margin inflection area if execution sustains .
  • Consulting is growing but still loss-making; management expects normalization as reorganization charges subside and offerings are simplified .
  • Cost discipline: normalized salaries & benefits ≈65% of net revenue; watch execution vs run-rate to preserve margins through FY25 .
  • Balance sheet strength with sizable liquidity (cash $211.9M; marketable securities $112.7M at quarter-end) provides flexibility for organic investments and dividends .
Notes on non-GAAP:
- Adjusted EPS excludes earnout and contingent comp fair value adjustments and restructuring; see reconciliations for details **[1066605_20250505LA79470:2]** **[1066605_20250505LA79470:7]** **[1066605_20250505LA79470:9]**.