Name: ROBERT HALF INC. Q2 2025 Earnings Call
Start: 2025-07-23T21:00:00.000Z

Executive Summary

Q2 2025 revenue was $1.370B and diluted EPS $0.41; both were broadly in line with the midpoint of Q1 guidance and modestly beat Wall Street consensus (Revenue: $1.3537B*, EPS: $0.4022*) as macro caution persisted and demand stabilized in June .
Talent Solutions revenue declined 11% YoY on an adjusted basis, while Protiviti grew modestly YoY (+2% adjusted); adjusted operating income improved sequentially to $59M from $19M in Q1 as cost actions flowed through .
Q3 2025 guidance: revenue $1.31–$1.41B, EPS $0.37–$0.47; midpoint implies ~3% sequential revenue decline but sequential adjusted OI expected to rise—first Q3 sequential increase since 2021—driven by SG&A efficiencies and seasonal SOX lift at Protiviti .
Potential stock catalysts: narrative of stabilization and sequential margin improvement, small beats vs consensus, and management’s commentary on improving client tone and robust Protiviti opportunity pipeline despite longer conversion cycles .

What Went Well and What Went Wrong

What Went Well

Adjusted operating income rose to $59M (4.3% of revenue) vs $19M in Q1, reflecting SG&A efficiencies and non‑GAAP reclassifications that have no impact on pretax income .
Protiviti revenue increased YoY to $495M (+2% adjusted), with strong non‑U.S. growth (+11%) and robust pipeline and new opportunities over the last 30 days; management sees reasonable chance of returning to growth by Q4 .
Technology solutions were the strongest Talent Solutions practice, supported by tech modernization, ERP upgrades, security/privacy and AI readiness; management emphasized competitive advantage from AI-driven matching and lead scoring .
Quote: “We’re very well-positioned to capitalize on emerging opportunities… through our industry‑leading brand, our people, our technology, and our unique business model” — M. Keith Waddell .

What Went Wrong

Enterprise revenue fell 7% YoY; Talent Solutions adjusted revenues down 11%, with administrative/customer support declining faster than finance and accounting; gross margin compressed YoY (37.2% vs 39.2%) .
Extended decision cycles, subdued hiring activity and new project starts; management cited elevated economic uncertainty and tariff rhetoric, with perm placement more volatile and down 20% in June (YoY) .
Protiviti margins moderated (reported GM 19.7%, adjusted 22.3%) vs prior year (22.5%/23.2%) and Q3 growth guide “flat to down 4%” given completion of a small number of large projects needing redeployment .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$1.382	$1.352	$1.370
Diluted EPS ($)	$0.53	$0.17	$0.41
Gross Margin (%)	38.8%	36.9%	37.2%
Adjusted Gross Margin (%)	38.9%	36.6%	38.1%
Operating Income ($USD Millions)	$38.9	$38.9	$1.5
Adjusted Operating Income ($USD Millions)	$—	$18.7	$59.2

Segment revenue breakdown:

Segment ($USD Millions)	Q2 2024	Q1 2025	Q2 2025
Contract Talent Solutions	$854.9	$763.2	$759.8
Permanent Placement	$131.1	$112.1	$114.7
Protiviti	$486.6	$476.6	$495.2
Total Service Revenues	$1,472.5	$1,351.9	$1,369.7

KPIs and margins:

KPI / Margin	Q2 2024	Q1 2025	Q2 2025
Contract Talent Solutions GM (%)	39.3%	38.9%	39.1%
Talent Solutions Overall GM (%)	47.4%	46.7%	47.1%
Protiviti GM (%) (reported)	22.5%	18.9%	19.7%
Protiviti GM (%) (adjusted)	23.2%	18.1%	22.3%
Enterprise SG&A (% of revenue)	34.0%	34.0%	37.1%
Adjusted Enterprise SG&A (%)	33.2%	35.2%	33.8%
Contract bill rate YoY change	—	+4.2%	+3.8%
Conversion (contract-to-hire) % of contract revenue	3.4%	3.2%	3.4%
Permanent placement as % of Talent Solutions revenue	13.3%	12.8%	13.1%
Cash and Cash Equivalents ($USD Millions)	$547.4	$342.5	$380.5

Versus estimates (Q2 2025):

Metric	Consensus	Actual	Surprise
Revenue ($USD Billions)	$1.3537*	$1.3697	+$0.0160 (≈+1.2%)*
Diluted EPS ($)	$0.4022*	$0.41	+$0.0078 (≈+1.9%)*

Values marked with * were retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Billions)	Q2 2025	$1.31–$1.41	Actual: $1.370	Achieved midpoint
Diluted EPS ($)	Q2 2025	$0.36–$0.46	Actual: $0.41	Achieved midpoint
Contract Talent Solutions GM (%) (adjusted)	Q2 2025	38–40	39.1	Within range
Protiviti GM (%) (adjusted)	Q2 2025	21–24	22.3	Within range
Enterprise SG&A (% adj)	Q2 2025	33–35	33.8	Within range
Tax rate (%)	Q2 2025	31–35	33	Within range
Revenue ($USD Billions)	Q3 2025	—	$1.31–$1.41	New
Diluted EPS ($)	Q3 2025	—	$0.37–$0.47	New
Talent Solutions adj OI margin (%)	Q3 2025	—	2–4	New
Protiviti adj OI margin (%)	Q3 2025	—	6–8	New
Contract Talent Solutions GM (%) (adjusted)	Q3 2025	—	38–40	New
Protiviti GM (%) (adjusted)	Q3 2025	—	22–24	New
Enterprise SG&A (% adj)	Q3 2025	—	33–35	New
Shares (MM)	Q3 2025	—	100–101	New
Capex + Cloud ($MM)	FY 2025	$75–95	$75–90; Q3 $15–25	Maintained (narrowed)
Dividend ($/share)	Q3/Q4 2025	$0.59 (Mar)	$0.59 payable Sep 15, 2025	Maintained

Earnings Call Themes & Trends

Topic	Q4 2024 (Previous-2)	Q1 2025 (Previous-1)	Q2 2025 (Current)	Trend
Macro tone and demand	Post-election confidence rose; contract revenues stable for 23 weeks	Confidence moderated on trade policy; cost actions announced; weekly revenues stabilized at lower level	Modest decline first two months; stabilized in June and into July; client tone improving past few weeks	Stabilizing, cautiously improving
AI/Technology initiatives	Recognition and brand strength; tech as differentiator	Internal AI matching/lead scoring; limited AI displacement so far	Tech solutions strongest practice; AI readiness driving modernization work; AI a share-gain lever vs smaller rivals	Positive momentum
Protiviti performance	Second straight YoY growth; margin stronger	Third straight YoY growth; margin impacted by cost actions; strong pipeline	Fourth straight YoY growth; margins moderated; Q3 guide flat to down 4% due to project completions; pipeline/new opps strong	Near-term moderation, medium-term constructive
SMB vs enterprise	Encouraged by confidence; mix not detailed	SMB cautious, enterprise more resilient; cost actions targeted at admin, not revenue roles	Enterprise more resilient; SMB 70% exposure, later AI adopters	Enterprise holding better
Perm vs contract	—	Perm more volatile; early Q2 April perm uptick vs contract	Perm down 20% YoY in June; volatility normal; contract steadier	Perm volatility persists
Regulatory/SOX seasonality	—	Protiviti savings and margin normalization expected	Q3 SOX lift to margins, smaller than usual due to replacement of large projects	Seasonal lift, tempered

Management Commentary

Prepared remarks emphasized stabilization: “Revenue levels fell modestly during the first two months… then stabilized at lower levels in June, which continued post‑quarter into July” .
On positioning: “We are very well‑positioned to capitalize on emerging opportunities… through our brand, our people, our technology, and our unique model” .
On AI and competitive advantage: “We believe in technology… award‑winning matching, lead scoring engines… we should be able to take share from local and regional staffing firms” .
On Protiviti near term: “Small number of very large jobs completed in Q2… taking time to replace… reasonable chance that we return to growth again by the fourth quarter” .

Q&A Highlights

Bill rate dynamics: Mix shift toward higher‑skill tech roles supports bill rates; unadjusted increases would be higher due to mix; adjusted bill rates +3.8% YoY in Q2 vs +4.2% in Q1 .
Protiviti cadence: Q3 guide reflects completion of several large projects; pipeline and new opportunities up substantially over last 30 days; potential return to growth by Q4 .
Macro sequential vs YoY: Sequentially revenues stabilized; management focuses on sequential trends given volatile comps and tariff rhetoric; client tone improving .
Margin drivers/guidance: Talent Solutions SG&A leverage abating; Q3 adjusted OI expected to rise sequentially; Protiviti seasonal SOX uplift on margins though revenue lift smaller than typical .
Structure and capacity: Company retained revenue producers, expects to ramp quickly with “digital labor” (AI tools) boosting productivity; FT engagement professionals ~20% of contract hours .

Estimates Context

Q2 2025 results modestly beat consensus on both revenue and EPS (Revenue: $1.3537B* vs $1.3697B actual; EPS: $0.4022* vs $0.41 actual). The beat was driven by stabilization in June, SG&A efficiencies, and steady contract margins within guided ranges .
Q3 2025 guidance midpoints (Revenue $1.36B, EPS ~$0.42) broadly align with current Street expectations; Protiviti’s flat to down 4% guide may temper revenue expectations, but adjusted operating income is guided to increase sequentially, supporting potential EPS resilience .
Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

Sequential improvement: Adjusted operating income and margins improved from Q1; Q3 guide calls for further sequential adjusted OI growth despite ~3% revenue decline at midpoint—a constructive inflection for earnings quality .
Demand stabilization: After early‑quarter softness, June stabilized and the improved client tone continued into July; technology solutions and AI readiness projects are leading within Talent Solutions .
Protiviti path: Near‑term moderation due to project completions, but strong pipeline and seasonal SOX work underpin margin recovery; watch for reacceleration by Q4 .
Limited AI displacement risk: Company data and external surveys indicate minimal revenue impact from AI thus far; management expects share gains vs smaller competitors due to proprietary AI tools .
Capital returns intact: Quarterly dividend maintained at $0.59/share (payable Sep 15, 2025); buybacks continued (~450k shares, $20M in Q2) .
Estimate calibration: Modest Q2 beat and aligned Q3 guidance suggest limited near‑term estimate changes; focus shifts to conversion of pipeline and stabilization of perm trends .
Risk watch: Macro and tariff uncertainty, elongated decision cycles, and perm volatility remain headwinds; monitoring Protiviti project replenishment is key for H2 trajectory .

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