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HEIDRICK & STRUGGLES INTERNATIONAL INC (HSII)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 net revenue was $317.2M, up 13.9% year over year, exceeding the high end of the company’s outlook; adjusted diluted EPS was $0.85 and adjusted EBITDA was $33.9M with a 10.7% margin . Versus S&P Global consensus, HSII delivered a revenue beat ($317.2M vs $292.9M*) and an EPS beat ($0.85 vs $0.74*) (Values retrieved from S&P Global).
  • All segments grew: Executive Search +13.4% to $238.2M, On-Demand Talent +14.3% to $47.9M, and Heidrick Consulting +16.6% to $31.2M; Europe was a standout within Executive Search at +30.9% y/y .
  • Q3 2025 revenue guidance is $295–$315M (midpoint ~10% y/y growth vs $278.6M in Q3 2024), with management flagging normal summer seasonality and macro uncertainty; the Board declared a $0.15 cash dividend payable Aug 28, 2025 .
  • Management emphasized continued investment and hiring to capture “white space,” noting margins may ebb sequentially in H2 as new hires come online, while still targeting annual margin progress .

What Went Well and What Went Wrong

What Went Well

  • Executive Search productivity and pricing improved: annualized consultant productivity rose to $2.3M (from $2.0M y/y), average revenue per search increased to $162K, and confirmations grew 5.2% y/y .
  • Europe outperformed within Executive Search (+30.9% y/y), contributing to consolidated growth and demonstrating scaling benefits in non-U.S. regions .
  • G&A efficiency improved: general & administrative expenses fell to 13.3% of net revenue (vs 16.7% y/y), supporting adjusted EBITDA margin expansion to 10.7% (+40bps y/y) .
  • “We had a strong first half in 2025 highlighted by second quarter results that exceeded the high end of our outlook” — Tom Monahan, CEO .

What Went Wrong

  • Salary & benefits intensity increased vs prior year: 65.9% of net revenue in Q2 (vs 63.8% y/y); management noted normalized full-year run-rate ~65% and flagged H2 margin pressure from hiring .
  • Executive Search margin in the Americas contracted y/y (29.1% vs 32.7%) largely due to production tiers/bonuses hitting earlier; management doesn’t see structural changes but flagged quarterly variability .
  • Management reiterated macro risks (tariffs, tax policy, FX, geopolitical uncertainty) that can delay project starts and introduce pockets of hesitance despite underlying demand .

Financial Results

Consolidated Performance (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Net Revenue ($USD Millions)$276.2 $283.6 $317.2
Adjusted EBITDA ($USD Millions)$26.1 $29.1 $33.9
Adjusted EBITDA Margin %9.5% 10.3% 10.7%
Adjusted Diluted EPS ($USD)$1.08 $0.67 $0.85
GAAP Diluted EPS ($USD)$(0.73) $0.62 $0.99
Operating Margin %(8.6)% 5.7% 8.0%
Salaries & Benefits / Net Revenue %65.3% 66.8% 65.9%
G&A / Net Revenue %14.3% 14.6% 13.3%
Revenue Consensus Mean ($USD Millions)$263.3*$267.4*$292.9*
Primary EPS Consensus Mean ($USD)$0.63*$0.67*$0.74*

Values retrieved from S&P Global.
Note: Consensus values marked with *.

Segment and Regional Breakdown (Q2 2024 → Q2 2025)

Segment/RegionQ2 2024 Net Revenue ($USD Millions)Q2 2025 Net Revenue ($USD Millions)YoY Change
Executive Search – Americas$147.1 $160.2 +8.9%
Executive Search – Europe$40.1 $52.5 +30.9%
Executive Search – Asia Pacific$22.8 $25.6 +12.0%
Total Executive Search$210.0 $238.2 +13.4%
On-Demand Talent$41.9 $47.9 +14.3%
Heidrick Consulting$26.8 $31.2 +16.6%
Consolidated Net Revenue$278.6 $317.2 +13.9%

Segment Profitability (Q2 2024 → Q2 2025)

SegmentQ2 2024 Adjusted EBITDA ($USD Millions)Q2 2025 Adjusted EBITDA ($USD Millions)Margin Q2 2024Margin Q2 2025
Executive Search$52.7 $54.6 25.1% 22.9%
On-Demand Talent$(1.6) $1.0 (3.9)% 2.1%
Heidrick Consulting$(1.4) $0.6 (5.2)% 1.8%
Total Adjusted EBITDA$28.8 $33.9 10.3% 10.7%

KPIs (oldest → newest)

KPIQ4 2024Q1 2025Q2 2025
Executive Search – Ending Consultants418 427 420
Executive Search – Annualized Consultant Productivity ($USD Millions)$2.0 $2.0 $2.3
Executive Search – Avg Revenue per Search ($USD Thousands)$151 $137 $162
Executive Search – Confirmations (% change)+0.5% +5.3% +5.2%
Heidrick Consulting – Ending Consultants85 91 90

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Net RevenueQ2 2025$285–$305M Actual $317.2M Beat prior guidance (above high end)
Consolidated Net RevenueQ3 2025N/A$295–$315M New range provided
Dividend per ShareQ3 2025$0.15 (Q1 2025 declared) $0.15 payable Aug 28, 2025 Maintained
Salaries & Benefits / Net Revenue (normalized run rate)FY 2025“~65%” (prior commentary) “~65%” (reaffirmed) Maintained tone
Margin TrajectoryH2 2025N/AMargins to ebb sequentially as hiring comes online; annual margin progress still expected Qualitative guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
AI/technology initiativesLimited explicit in releases; focus was on execution and non-GAAP framework CEO: “New technologies continue to remake work. AI is the most obvious... our job is to be their partner… and leverage these technologies in our own organization.” Rising strategic emphasis on AI enablement
Macro/geopolitics/tariffsSafe harbor: FX, inflation, geopolitical instability repeatedly flagged Management: pockets of hesitancy; project start delays possible; complexity “is our friend” Persistent uncertainty; demand resilient
Hiring & capacity buildConsultant count grew; productivity at $2.0M TTM in Q1 Hiring ramps in H2 to capture “white space”; margins to ebb near-term Building capacity for 2026+
Segment profitability trajectoryODT and Consulting had losses in Q4; ODT modest profit in Q1 ODT turned +2.1% margin; Consulting +1.8% margin (y/y improvement) Improving non-Search profitability
Regional dynamics in Executive SearchQ1: broad-based growth across regions Q2: Europe strongest (+30.9% y/y); Americas margin contraction explained by bonus tiering Europe strengthening; Americas margins seasonally mixed

Management Commentary

  • Strategic priorities: build differentiated C-suite relationships; deepen client partnerships around transformation; embed solutions in client workflows to create durable relationships .
  • “We had a strong first half in 2025 highlighted by second quarter results that exceeded the high end of our outlook” — Tom Monahan, CEO .
  • Macro stance: “Even as our overall business remains strong, we can and do see intermittent pockets of hesitance as clients digest industry specific implications of, say, tariffs or tax policy.” .
  • Technology: “New technologies continue to remake work. AI is the most obvious… fully realizing the potential of AI requires rethinking leadership, organization, and work itself.” .
  • Margin framework: “As we look to the second half of the year, we expect to see quarterly margins cycle down as we make progress on our hiring plans… still anticipate making margin progress on an annual basis.” .

Q&A Highlights

  • Hiring cadence and margin impact: Management is adding talent across the firm (not a “huge” number), with cost impact smoothing through H2; this supports growth into 2026 and beyond .
  • Q3 guidance conservatism: Sequential revenue decline reflects normal summer seasonality; macro uncertainty factored into range, with demand acceleration possible if client needs arise .
  • Regional Executive Search margins: Europe and APAC margins benefited from scale and bonuses hitting earlier; Americas margin contraction due to earlier-tier bonuses; no structural change expected .
  • Industry demand/capital markets: Microclimates across sectors/geos; complexity drives new roles and leadership needs; teams focus on being “all-weather” advisors regardless of deal flow .
  • Consulting trajectory: Management affirmed durable improvement path, pleased with progress, and remains confident in long-term targets .

Estimates Context

  • Q2 2025: Actual revenue $317.2M vs consensus $292.9M*; adjusted diluted EPS $0.85 vs consensus $0.74* (Values retrieved from S&P Global).
  • Q1 2025: Actual revenue $283.6M vs consensus $267.4M*; adjusted diluted EPS $0.67 vs consensus $0.67* (in line) .
  • Q4 2024: Actual revenue $276.2M vs consensus $263.3M*; adjusted diluted EPS $1.08 vs consensus $0.63* .
  • Q3 2025 context: Guidance $295–$315M brackets consensus revenue $301.5M*; management flagged margin ebb due to hiring and seasonality .
    Values retrieved from S&P Global.
    Note: Consensus values marked with *.

Actual vs Consensus (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Revenue Actual ($USD Millions)$276.2 $283.6 $317.2
Revenue Consensus Mean ($USD Millions)$263.3*$267.4*$292.9*
Adjusted Diluted EPS Actual ($USD)$1.08 $0.67 $0.85
Primary EPS Consensus Mean ($USD)$0.63*$0.67*$0.74*

Values retrieved from S&P Global.
Note: Consensus values marked with *.

Key Takeaways for Investors

  • Broad-based top-line strength (+13.9% y/y) with beats vs both guidance and consensus, led by Executive Search and a notable acceleration in Europe .
  • Non-Search segments are improving: ODT turned profitable (2.1% margin) and Consulting swung to positive EBITDA (1.8%), signaling traction in portfolio diversification .
  • Operating discipline is visible: G&A as % of net revenue improved to 13.3% (vs 16.7% y/y), underpinning margin expansion despite elevated compensation intensity .
  • Near-term margin dynamics: Expect sequential margin ebb in H2 due to hiring, but management reaffirms annual margin progress; normalized salary & benefits ~65% of net revenue for FY .
  • Q3 setup: Guidance $295–$315M brackets consensus and reflects seasonality/macro prudence; watch for client demand acceleration or delays that can swing intra-quarter performance .
  • Strategic focus on AI-enabled leadership solutions and deeper client relationships should support medium-term growth and pricing power in Executive Search and Consulting .
  • Dividend maintained at $0.15/share, supported by strong liquidity (cash & equivalents $211.2M and marketable securities $188.4M at quarter-end) .