Executive Summary

Q2 2025 revenue was $334.3M and diluted EPS was $0.59; results were largely consistent with expectations and essentially in line with S&P Global consensus (Revenue $334.3M vs $334.2M cons., EPS $0.59 vs $0.59 cons.) .
Sequential improvement: both Technology and Finance & Accounting (FA) Flex grew modestly; gross margin expanded 40 bps sequentially to 27.1% as payroll tax resets rolled off; operating margin improved to 4.5% from 3.5% in Q1 .
Q3 2025 guidance calls for revenue of $324–$332M and EPS of $0.53–$0.61; management emphasized guidance was impacted by late-quarter client-specific project ends/reallocations and does not reflect a deterioration in underlying tech demand, which they characterize as stable .
Strategic narrative: growing consulting-led mix, stable ~$90/hr tech bill rate, building AI/data/cloud pipelines; Workday implementation expected to yield ~100 bps operating margin benefit post go-live by 2027; continued capital return ($17.4M in Q2; dividend maintained at $0.39) .

What Went Well and What Went Wrong

What Went Well
- Sequential Flex growth in both Technology (+1.8% GAAP; +0.2% billing-day adjusted) and FA (+2.1% GAAP; +0.5% adjusted) with consolidated gross margin improving 40 bps q/q to 27.1% and operating margin +100 bps q/q to 4.5% .
- Consulting-oriented solutions remained a key driver, supporting above-peer tech resilience and margin stability; tech average bill rate around $90 remained stable over ~3 years .
- AI/data/digital/cloud pipelines building; concrete examples of agentic AI workflow engagements underscore opportunity; FA repositioning to higher-skilled roles showing sequential growth and higher bill rates .
What Went Wrong
- Year-over-year revenue (-6.2%) and EPS (-21.3%) declined; direct-hire revenue was softer and pressured gross margin year over year; healthcare costs were higher y/y .
- Q3 outlook implies modest sequential revenue decline, driven by late-quarter project ends and spend reallocations at a small number of clients, rather than broad demand erosion .
- Flex margins y/y were modestly lower in Technology due to healthcare costs; SG&A % delevered y/y amid lower revenue and ongoing enterprise investments (Workday, India development center) .

Financial Results

Revenue and EPS vs Estimates and Prior Periods

Metric	Q3 2024	Q4 2024	Q1 2025	Q2 2025
Revenue ($M)	353.3	343.8	330.0	334.3
Revenue Consensus ($M)*	351.2	342.1	333.8	334.2
Revenue Surprise ($M / %)	+2.1 / +0.61%	+1.7 / +0.49%	-3.8 / -1.14%	+0.1 / +0.03%
Diluted EPS ($)	0.75	0.60	0.45	0.59
EPS Consensus ($)*	0.688	0.594	0.469	0.594
EPS Surprise ($ / %)	+0.062 / +8.95%	+0.006 / +1.03%	-0.019 / -3.96%	-0.004 / -0.73%

Values retrieved from S&P Global.*

Profitability and Margins

Metric	Q2 2024	Q1 2025	Q2 2025
Gross Profit Margin %	27.8%	26.7%	27.1%
Flex GP %	26.2%	25.0%	25.8%
SG&A as % of Revenue	21.8% (77.7/356.3)	22.8%	22.2%
Operating Margin %	5.5% (19.7/356.3)	3.5%	4.5%
Net Income ($M)	14.2	8.1	10.4
Adjusted EBITDA ($M)	24.8	16.8	19.9
Diluted EPS ($)	0.75	0.45	0.59

Segment Breakdown

Segment	Q2 2024 Revenue ($M)	Q1 2025 Revenue ($M)	Q2 2025 Revenue ($M)	Q2 2024 Flex GP %	Q1 2025 Flex GP %	Q2 2025 Flex GP %
Technology	327.9	306.3	310.5	25.9%	24.9%	25.6%
Finance & Accounting	28.4	23.7	23.8	29.7%	27.2%	28.5%

KPIs

KPI	Q2 2024	Q1 2025	Q2 2025
Flex Hours (000s)	4,057	3,726	3,787
Direct Hire Revenue ($M)	7.5	7.5	5.9
Direct Hire Placements (#)	374	342	269
Avg Direct Hire Fee ($)	20,161	21,830	21,964
Tech Avg Bill Rate Commentary	Stable ~$90/hr over ~3 years	Stable ~$90/hr	Stable ~$90/hr

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q3 2025	N/A	324–332	N/A (new period)
Diluted EPS ($)	Q3 2025	N/A	0.53–0.61	N/A (new period)
Gross Profit Margin %	Q3 2025	N/A	27.0–27.2	N/A (new period)
Flex GP %	Q3 2025	N/A	25.7–25.9	N/A (new period)
SG&A as % of Revenue	Q3 2025	N/A	22.4–22.6	N/A (new period)
Operating Margin %	Q3 2025	N/A	4.0–4.4	N/A (new period)
WASO (M)	Q3 2025	N/A	17.7	N/A (new period)
Effective Tax Rate %	Q3 2025	N/A	21.0	N/A (new period)
Dividend per Share ($)	Q3 2025	0.39 (declared for Q2 record date)	0.39 (declared for Q3)	Maintained

Management noted Q3 guide was affected by “client-specific dynamics” (late project ends/reallocations) and not indicative of broader demand conditions, which remain stable in Technology .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
AI/Technology initiatives	Stabilized tech demand; strategic initiatives advancing	Consulting-led mix growing; AI/data/digital/cloud pipelines; agentic AI workflow use cases with market-leading tech clients	Improving pipeline; early-phase AI demand building
Macro/Trade/Policy	Ongoing uncertainty; cautious investment posture	“One Big Beautiful Bill” reduced tax uncertainty; global trade negotiations remain unsettled; demand-constrained environment persists	Mixed macro; cautious but stable
Mix & Margins	Gross margin y/y pressure from healthcare costs and mix	Sequential flex margin up 80 bps; y/y flex margin modestly lower on healthcare costs; overall spread stable/slightly better	Sequential improvement; y/y headwind from healthcare persists
Delivery model (near/offshore)	Building India development center	Near/offshore slightly accretive to margin; no meaningful impact on avg bill rate yet	Gradual, supportive
Internal transformation	Enterprise investment (e.g., Workday) ongoing	Workday go-live 2026; ~100 bps op margin benefit expected, annualized by 2027	Execution continues; benefits 2026–2027
FA business	Y/Y declines through 2024	Sequential growth; repositioned to higher-skill accountant/analyst roles; mid-$50/hr bill rate	Stabilizing with sequential improvement

Management Commentary

CEO framing: “We are pleased to have delivered sequential Flex revenue growth… Overall results were largely consistent with expectations… we are continuing to operate in a demand-constrained environment… third quarter guidance was affected by client-specific dynamics… not indicative of the current stable demand environment.”
COO strategic highlights: Consulting-led solutions driving relative outperformance and margin stability; stable tech bill rate (~$90); pipelines improving in data/AI/digital/cloud; examples of agentic AI workflows at leading tech clients; FA Flex expected to be up sequentially in Q3 on a billing-day basis mid-single digits .
CFO financial color: Sequential gross margin up 40 bps on seasonal payroll tax dynamics; y/y GM down 70 bps on higher healthcare costs and direct hire mix; SG&A % managed within expectations; Q3 guide (revenue $324–$332M; EPS $0.53–$0.61); effective tax rate was 24.6% in Q2 with lower rate expected in Q3 due to tax credit finalization; continued buybacks/dividend with net debt ~ $67.5M targeted .

Select quotes:

“Demand… remains stable… our third quarter guidance was affected by client specific dynamics… not indicative of the current stable demand environment.” — CEO
“Consulting-led offerings… key driver to our overall technology top-line outperformance… bill rate [~$90] has remained stable over the past three years.” — COO
“We expect Q3 revenues to be in the range of $324 million–$332 million and EPS to be between $0.53 and $0.61.” — CFO

Q&A Highlights

AI adoption timing: Most clients remain in foundational readiness (governance/data/cloud/security); a minority are deploying AI in products; significant long-term opportunity in data modernization and emerging AI roles .
Project ends/guide: Q3 guide reflects a few late project ends tied to client spend reallocations, not overall tech spend reductions; underlying new assignments/starts/attrition trends stable; pipeline remains strong .
Margin drivers: Y/Y gross margin pressure from healthcare cost inflation and lower direct hire mix; spreads stable to slightly improving; consulting mix supportive (400–600 bps higher gross margin) .
Near/offshore: Slightly accretive to margin; not materially impacting avg bill rates; supports blended delivery to meet client cost objectives .
Workday benefits: ~100 bps operating margin benefit expected, beginning to materialize post go-live in late 2026 with full annualization in 2027 .

Estimates Context

Q2 2025 printed essentially in line with consensus (Revenue $334.3M vs $334.2M*, EPS $0.59 vs $0.59*). Q1 2025 had modest misses (Revenue $330.0M vs $333.8M*, EPS $0.45 vs $0.469*). Q4 and Q3 2024 were slight beats on both metrics.*
Given Q3 2025 guidance ($324–$332M, $0.53–$0.61), Street models may drift lower for Q3 near-term; management attributes the outlook to client-specific reallocations rather than broad demand deterioration .