ROBERT HALF INC. (RHI)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 results were soft but stable: revenue $1.382B and EPS $0.53, down ~6% YoY and below Q2–Q3 levels; management characterized results as largely in line with expectations, with Protiviti delivering a second consecutive quarter of YoY growth .
• Protiviti continued to be the bright spot (Q4 revenue $488.8M; as‑adjusted YoY +5%), while Contract Talent Solutions remained under pressure but stabilized (23 consecutive weeks flat into the holidays; bill rates +3.4% YoY) .
• Q1 2025 guidance implies modest revenue range of $1.35–$1.45B and EPS $0.31–$0.41; midpoint assumes TS down 7–10% YoY (as‑adjusted) and Protiviti up 8–10%, with margins pressured seasonally at Protiviti and higher tax rate in Q1 due to equity vesting .
• Dividend held at $0.53 per share (paid Dec 13, 2024), signaling continued capital returns despite cyclical headwinds .

What Went Well and What Went Wrong

• What Went Well

  • Protiviti momentum: “Protiviti… reported year‑on‑year revenue growth for the second straight quarter,” with broad-based strength and standout regulatory risk & compliance; Q4 as‑adjusted revenue +5% YoY; Q1 guide +9% revenue and +20% earnings at midpoint .
  • Stabilizing staffing revenue run-rate: “Contract revenues remained stable… for 23 consecutive weeks prior to the holidays,” with TS bill rates +3.4% YoY in Q4 (vs. +3.2% Q3; +3.1% Q2) .
  • Improving macro tone: Management noted “significant rise in U.S. business confidence” post-election (NFIB index strength), improving client engagement and pipeline conversations (though not yet converting to starts) .

• What Went Wrong

  • Continued revenue and margin pressure in Talent Solutions: Q4 TS segment income margin 2.1% (vs. 3.1% Q3; 4.5% Q2), reflecting lower volumes and negative operating leverage; Enterprise combined segment margin compressed to 5.1% (vs. 6.2% Q3; 6.2% Q2) .
  • Seasonal/holiday impacts at Protiviti: Holidays and client soft closes weighed on Q4 revenue recognition and margins; management flagged typical Q1 seasonal margin downdraft from Jan 1 comp increases and internal audit seasonality .
  • International lagging: Management described international demand as “modestly softer” than the U.S. across both TS and Protiviti; Q4 Protiviti non‑U.S. flat YoY (U.S. +6%) .

Financial Results

Summary financials by quarter (oldest → newest)

Q4 YoY comparison

Segment revenue breakdown (oldest → newest)

KPIs and operating drivers (oldest → newest)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Revenues and earnings for the fourth quarter were largely in line with our expectations, led by Protiviti, which reported year‑on‑year revenue growth for the second straight quarter… Contract revenues remained stable… for 23 consecutive weeks… We are very encouraged by the significant rise in U.S. business confidence that followed the recent elections.” – CEO Keith Waddell .
• “On an as‑adjusted basis, global fourth quarter Protiviti revenues were up 5%… U.S. Protiviti revenues were up 6%” – CFO Mike Buckley .
• “Protiviti’s overall revenues grew ~4.5%… revenues from contractors sourced through Talent Solutions were up 18%… still well above 40% of hours worked at Protiviti” – CEO Waddell .
• “We offer the following first quarter guidance: revenues, $1.35–$1.45 billion; income per share, $0.31–$0.41… TS down 7%–10% YoY (as‑adjusted); Protiviti up 8%–10% YoY” – CFO Buckley .

Q&A Highlights

• Protiviti seasonality and visibility: Holidays/soft closes weighed on Q4; pipeline strong; Q1 seasonally lower margins due to annual comp increases and internal audit seasonality; full‑year Protiviti margins expected to increase and target “double‑double” (double‑digit growth and margins) .
• Macro tone vs orders: Post‑election business confidence improved and client engagement strengthened, but starts/placements lag; Q1 guidance prudently assumes flat per‑day contract trends; fewer days and FX are a ~$40M revenue headwind vs prior year .
• International: Demand modestly softer than U.S.; comps play a role; no drastic falloff expected .
• Tax rate: Higher in Q1 due to equity vest timing and lower share price; ~+$0.02 EPS headwind; expected to normalize after Q1 .
• End‑market/M&A: Financial services robust for Protiviti (AML, internal audit); potential M&A/IPO recovery would be a meaningful tailwind; low federal exposure, mostly state/local in public sector .

Estimates Context

• S&P Global (Capital IQ) consensus EPS and revenue estimates for Q4 2024 could not be retrieved during this session due to an API request limit; as a result, we cannot provide vs‑consensus comparisons for Q4, Q3, or Q2. Management noted Q4 results were “largely in line with our expectations,” but this is not a proxy for Street consensus .
• Given the above limitation, near‑term estimate revisions are most likely to center on: (i) Q1 2025 TS declines (as‑adjusted) and Protiviti growth ranges, (ii) Q1 margin mix/seasonality, and (iii) tax rate normalization after Q1 .

Key Takeaways for Investors

• Protiviti is the primary growth engine (as‑adjusted +5% YoY; Q1 guide +8%–10%), supported by AML/regulatory demand and scalable contractor leverage from Talent Solutions—key to margin recovery as volumes return .
• Core staffing remains cyclical but has stabilized (23 weeks flat; bill rates +3.4% YoY), positioning RHI to benefit if improving business confidence converts into hiring intent in 1H25 .
• Q1 2025 will be margin‑noisy: fewer billing days, seasonal Protiviti pressure, and a higher tax rate; normalization should follow post‑Q1, with Protiviti margins expected to improve for the year .
• International demand trails the U.S. and may weigh on aggregate recovery pace, though comps and pipeline dynamics suggest no drastic deterioration .
• Dividend maintained at $0.53/share, signaling balance sheet and cash flow resilience through the cycle .
• Upside catalysts: accelerating M&A/IPO activity (Protiviti leverage), conversion of improved NFIB sentiment into starts/placements, and continued mix shift toward higher‑skill assignments .
• Watch items: pace of TS volume inflection, Protiviti utilization amidst pricing competition, and the speed at which client engagement turns into bookings and revenue .