SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 10-Q

______________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED March 31, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM to .

Commission File Number 1-10427

ROBERT HALF INTERNATIONAL INC.

(Exact name of registrant as specified in its charter)


Delaware		94-1648752
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2884 Sand Hill Road
Suite 200
Menlo Park,	California	94025
(Address of principal executive offices)		(zip-code)

Registrant’s telephone number, including area code: (650) 234-6000


Securities registered pursuant to Section 12(b) of the Act
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	RHI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

~~Smaller reporting company~~

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of ~~March 31, 2021:~~April 30, 2022:

~~112,780,592~~110,513,568 shares of $.001 par value Common Stock

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(in thousands, except share amounts)


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	497,930	$	574,426	Cash and cash equivalents	$	550,330	$	619,001
Accounts receivable, net	Accounts receivable, net	799,673		714,163		Accounts receivable, net	1,071,608		984,691
Employee deferred compensation trust assets	Employee deferred compensation trust assets	424,037		406,634		Employee deferred compensation trust assets	476,826		494,991
Other current assets	Other current assets	152,280		147,515		Other current assets	173,273		169,864
Total current assets	Total current assets	1,873,920		1,842,738		Total current assets	2,272,037		2,268,547
Property and equipment, net	Property and equipment, net	103,701		109,817		Property and equipment, net	96,423		93,403
Right-of-use assets	Right-of-use assets	248,612		262,688		Right-of-use assets	226,418		228,793
Other intangible assets, net	Other intangible assets, net	4,997		5,594		Other intangible assets, net	2,917		3,334
Goodwill	Goodwill	223,046		223,055		Goodwill	222,858		222,855
Noncurrent deferred income taxes	Noncurrent deferred income taxes	110,893		113,532		Noncurrent deferred income taxes	130,113		135,427
Total assets	Total assets	$	2,565,169	$	2,557,424	Total assets	$	2,950,766	$	2,952,359
LIABILITIES	LIABILITIES					LIABILITIES
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	121,686	$	130,770	Accounts payable and accrued expenses	$	169,034	$	183,796
Accrued payroll and benefit costs	Accrued payroll and benefit costs	407,844		397,877		Accrued payroll and benefit costs	499,810		540,183
Employee deferred compensation plan obligations	Employee deferred compensation plan obligations	437,707		435,121		Employee deferred compensation plan obligations	495,300		535,276
Income taxes payable	Income taxes payable	29,957		4,015		Income taxes payable	38,608		15,631
Notes payable		181		239

Current operating lease liabilities	Current operating lease liabilities	79,211		78,604		Current operating lease liabilities	86,279		83,787
Total current liabilities	Total current liabilities	1,076,586		1,046,626		Total current liabilities	1,289,031		1,358,673

Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	208,194		223,869		Noncurrent operating lease liabilities	176,410		181,291
Other liabilities	Other liabilities	82,690		81,640		Other liabilities	32,557		31,344
Total liabilities	Total liabilities	1,367,470		1,352,135		Total liabilities	1,497,998		1,571,308
Commitments and Contingencies (Note J)	Commitments and Contingencies (Note J)	0		0		Commitments and Contingencies (Note J)	0		0
STOCKHOLDERS’ EQUITY	STOCKHOLDERS’ EQUITY					STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value; authorized 5,000,000 shares; NaN issued		0		0
Common stock, $0.001 par value; authorized 260,000,000 shares; issued and outstanding 112,681,758 shares and 113,127,501 shares		113		113
Preferred stock, $0.001 par value; authorized 5,000,000 shares; none issued						Preferred stock, $0.001 par value; authorized 5,000,000 shares; none issued	—		—
Common stock, $0.001 par value; authorized 260,000,000 shares; issued and outstanding 110,746,970 shares and 110,685,989 shares						Common stock, $0.001 par value; authorized 260,000,000 shares; issued and outstanding 110,746,970 shares and 110,685,989 shares	111		111
Additional paid-in capital	Additional paid-in capital	1,194,153		1,179,972		Additional paid-in capital	1,251,086		1,235,903
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(13,529)		(4,732)		Accumulated other comprehensive income (loss)	(23,574)		(22,622)
Retained earnings	Retained earnings	16,962		29,936		Retained earnings	225,145		167,659
Total stockholders’ equity	Total stockholders’ equity	1,197,699		1,205,289		Total stockholders’ equity	1,452,768		1,381,051
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	2,565,169	$	2,557,424	Total liabilities and stockholders’ equity	$	2,950,766	$	2,952,359

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020				2022		2021

Service revenues	Service revenues	$	1,398,380	$	1,506,691	Service revenues		$	1,814,834	$	1,398,380
Costs of services	Costs of services	836,669		892,303		Costs of services		1,042,988		836,669
Gross margin	Gross margin	561,711		614,388		Gross margin		771,846		561,711
Selling, general and administrative expenses	Selling, general and administrative expenses	423,062		442,868		Selling, general and administrative expenses		514,194		423,062
(Income) loss from investments held in employee deferred compensation trusts (which is completely offset by related costs and expenses - Notes A & I)	(Income) loss from investments held in employee deferred compensation trusts (which is completely offset by related costs and expenses - Notes A & I)	(11,988)		40,376		(Income) loss from investments held in employee deferred compensation trusts (which is completely offset by related costs and expenses - Notes A & I)		30,001		(11,988)
Amortization of intangible assets	Amortization of intangible assets	576		338		Amortization of intangible assets		417		576
Interest income, net	Interest income, net	(45)		(957)		Interest income, net		(166)		(45)
Income before income taxes	Income before income taxes	150,106		131,763		Income before income taxes		227,400		150,106
Provision for income taxes	Provision for income taxes	39,508		41,848		Provision for income taxes		59,161		39,508
Net income	Net income	$	110,598	$	89,915	Net income		$	168,239	$	110,598

Net income per share:	Net income per share:					Net income per share:
Basic	Basic	$	.99	$	.79	Basic		$	1.54	$	.99
Diluted	Diluted	$	.98	$	.79	Diluted		$	1.52	$	.98

Shares:	Shares:					Shares:
Basic	Basic	111,424		113,187		Basic		109,218		111,424
Diluted	Diluted	112,496		113,858		Diluted		110,591		112,496
Dividends declared per share	Dividends declared per share	$	.38	$	.34	Dividends declared per share		$	.43	$	.38

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(in thousands)


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020				2022		2021
COMPREHENSIVE INCOME (LOSS):	COMPREHENSIVE INCOME (LOSS):					COMPREHENSIVE INCOME (LOSS):
Net income	Net income	$	110,598	$	89,915	Net income		$	168,239	$	110,598
Other comprehensive income (loss):	Other comprehensive income (loss):					Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax	Foreign currency translation adjustments, net of tax	(8,837)		(13,700)		Foreign currency translation adjustments, net of tax		(968)		(8,837)

Foreign defined benefit plans, net of tax	Foreign defined benefit plans, net of tax	40		0		Foreign defined benefit plans, net of tax		16		40
Total other comprehensive income (loss)	Total other comprehensive income (loss)	(8,797)		(13,700)		Total other comprehensive income (loss)		(952)		(8,797)
Total comprehensive income (loss)	Total comprehensive income (loss)	$	101,801	$	76,215	Total comprehensive income (loss)		$	167,287	$	101,801

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in thousands, except per share amounts)
Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total
Shares Par Value
Balance at December 31, 2020 113,128 $ 113 $ 1,179,972 $ (4,732) $ 29,936 $ 1,205,289
Net income — — — — 110,598 110,598
Other comprehensive income (loss) — — — (8,797) — (8,797)
Dividends declared ($.38 per share) — — — — (43,300) (43,300)
Net issuances of restricted stock 602 1 (1) — — 0
Stock-based compensation — — 14,182 — — 14,182
Repurchases of common stock (1,048) (1) — — (80,272) (80,273)
Balance at March 31, 2021 112,682 $ 113 $ 1,194,153 $ (13,529) $ 16,962 $ 1,197,699


		Common Stock			Additional Paid-In Capital				Accumulated Other Comprehensive Income (Loss)			Retained Earnings				Total				Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total
		Shares	Par Value								Shares								Par Value
Balance at December 31, 2019		115,120	$	115			$	1,127,487						$	(19,986)			$	36,067		$	1,143,683
Balance at December 31, 2021																			Balance at December 31, 2021	110,686			$	111		$	1,235,903		$	(22,622)		$	167,659		$	1,381,051
Net income	Net income	—	—		—				—			89,915				89,915			Net income	—			—		—			—			168,239			168,239
Adoption of accounting pronouncement		—	—		—				—			(558)				(558)
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—				(13,700)			—				(13,700)			Other comprehensive income (loss)	—			—		—			(952)			—			(952)
Dividends declared ($.34 per share)		—	—		—				—			(39,441)				(39,441)
Dividends declared ($.43 per share)																			Dividends declared ($.43 per share)	—			—		—			—			(48,413)			(48,413)
Net issuances of restricted stock	Net issuances of restricted stock	745	1		(1)				—			—				0			Net issuances of restricted stock	598			1		(1)			—			—			—
Stock-based compensation	Stock-based compensation	—	—		13,525				—			—				13,525			Stock-based compensation	—			—		15,184			—			—			15,184
Repurchases of common stock	Repurchases of common stock	(1,263)	(1)		—				—			(63,498)				(63,499)			Repurchases of common stock	(537)			(1)		—			—			(62,340)			(62,341)
Balance at March 31, 2020		114,602	$	115	$	1,141,011			$	(33,686)		$	22,485			$	1,129,925
Balance at March 31, 2022																			Balance at March 31, 2022	110,747			$	111	$	1,251,086		$	(23,574)		$	225,145		$	1,452,768


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
	Shares	Par Value
Balance at December 31, 2020	113,128	$	113	$	1,179,972	$	(4,732)	$	29,936	$	1,205,289
Net income	—	—		—		—		110,598		110,598
Other comprehensive income (loss)	—	—		—		(8,797)		—		(8,797)
Dividends declared ($0.38 per share)	—	—		—		—		(43,300)		(43,300)
Net issuances of restricted stock	602	1		(1)		—		—		—
Stock-based compensation	—	—		14,182		—		—		14,182
Repurchases of common stock	(1,048)	(1)		—		—		(80,272)		(80,273)
Balance at March 31, 2021	112,682	$	113	$	1,194,153	$	(13,529)	$	16,962	$	1,197,699

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	Net income	$	110,598	$	89,915	Net income	$	168,239	$	110,598
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Allowance for credit losses	Allowance for credit losses	3,157		4,690		Allowance for credit losses	2,065		3,157
Depreciation	Depreciation	13,962		15,913		Depreciation	11,080		13,962
Amortization of cloud computing implementation costs	Amortization of cloud computing implementation costs	9,957		3,288		Amortization of cloud computing implementation costs	7,113		9,957
Amortization of intangible assets	Amortization of intangible assets	576		338		Amortization of intangible assets	417		576
Realized and unrealized (gains) losses from investments held in employee deferred compensation trusts	Realized and unrealized (gains) losses from investments held in employee deferred compensation trusts	(11,694)		40,781		Realized and unrealized (gains) losses from investments held in employee deferred compensation trusts	30,296		(11,694)
Stock-based compensation	Stock-based compensation	14,182		13,525		Stock-based compensation	15,184		14,182
Deferred income taxes	Deferred income taxes	2,584		12,022		Deferred income taxes	5,493		2,584
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(95,024)		(36,700)		Accounts receivable	(89,597)		(95,024)
Capitalized cloud computing implementation costs	Capitalized cloud computing implementation costs	(8,488)		(10,379)		Capitalized cloud computing implementation costs	(9,464)		(8,488)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	(6,603)		18,193		Accounts payable and accrued expenses	(14,072)		(6,603)
Accrued payroll and benefit cost	Accrued payroll and benefit cost	13,009		2,978		Accrued payroll and benefit cost	(39,435)		13,009
Employee deferred compensation plan obligations	Employee deferred compensation plan obligations	2,586		(48,155)		Employee deferred compensation plan obligations	(39,976)		2,586
Income taxes payable	Income taxes payable	25,409		20,124		Income taxes payable	35,310		25,409
Other assets and liabilities, net	Other assets and liabilities, net	(6,155)		(1,607)		Other assets and liabilities, net	(13,491)		(6,155)
Net cash flows provided by operating activities	Net cash flows provided by operating activities	68,056		124,926		Net cash flows provided by operating activities	69,162		68,056

CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	Capital expenditures	(9,739)		(14,276)		Capital expenditures	(14,987)		(9,739)
Investments in employee deferred compensation trusts	Investments in employee deferred compensation trusts	(28,509)		(37,061)		Investments in employee deferred compensation trusts	(33,913)		(28,509)
Proceeds from employee deferred compensation trust redemptions	Proceeds from employee deferred compensation trust redemptions	22,799		22,987		Proceeds from employee deferred compensation trust redemptions	21,782		22,799
Net cash flows used in investing activities	Net cash flows used in investing activities	(15,449)		(28,350)		Net cash flows used in investing activities	(27,118)		(15,449)

CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable	Repayment of notes payable	(58)		(53)		Repayment of notes payable	—		(58)
Repurchases of common stock	Repurchases of common stock	(79,465)		(69,968)		Repurchases of common stock	(62,062)		(79,465)
Dividends paid	Dividends paid	(44,277)		(40,476)		Dividends paid	(47,498)		(44,277)
Net cash flows used in financing activities	Net cash flows used in financing activities	(123,800)		(110,497)		Net cash flows used in financing activities	(109,560)		(123,800)
Effect of exchange rate fluctuations	Effect of exchange rate fluctuations	(5,303)		(6,643)		Effect of exchange rate fluctuations	(1,155)		(5,303)
Change in cash and cash equivalents	Change in cash and cash equivalents	(76,496)		(20,564)		Change in cash and cash equivalents	(68,671)		(76,496)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	574,426		270,478		Cash and cash equivalents at beginning of period	619,001		574,426
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	497,930	$	249,914	Cash and cash equivalents at end of period	$	550,330	$	497,930

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:	SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:					SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Non-cash items:	Non-cash items:					Non-cash items:
Stock repurchases awaiting settlement	Stock repurchases awaiting settlement	$	3,912	$	0	Stock repurchases awaiting settlement	$	5,872	$	3,912
Fund exchanges within employee deferred compensation trusts	Fund exchanges within employee deferred compensation trusts	$	37,661	$	138,633	Fund exchanges within employee deferred compensation trusts	$	40,509	$	37,661

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, ~~2021~~2022

Note A—Summary of Significant Accounting Policies

Nature of Operations. Robert Half International Inc. (the “Company”) ~~provides specialized staffing and risk consulting services through such divisions as~~ ~~Accountemps~~®, ~~Robert Half~~® ~~Finance & Accounting~~, ~~OfficeTeam~~®, ~~Robert Half~~® ~~Technology~~, ~~Robert Half~~® ~~Management Resources~~, ~~Robert Half~~® ~~Legal~~, ~~The Creative Group~~®~~, and~~ ~~Protiviti~~®~~. The Company, through its~~ ~~Accountemps~~, ~~Robert Half Finance & Accounting, and~~ ~~Robert Half Management Resources~~ ~~divisions,~~ is a specialized ~~provider of contract, full-time,~~talent solutions and ~~senior-level project professionals in the fields of accounting and finance.~~ ~~OfficeTeam~~ ~~specializes in~~business consulting firm that connects opportunities at great companies with highly skilled ~~contract, administrative support professionals.~~job seekers. Robert ~~Half Technology~~Half® ~~provides project~~offers contract talent solutions and ~~full-time~~permanent placement talent solutions for finance and accounting, technology, ~~professionals.~~ marketing and creative, legal, administrative and customer support roles. Robert Half ~~Legal~~is also the parent company of ~~provides contract, project, and full-time staffing of lawyers, paralegals and legal support personnel.~~ Protiviti®~~The Creative Group~~ ~~provides creative, digital, marketing, advertising and public relations professionals.~~ ~~Protiviti~~ is, a global consulting firm that ~~helps companies solve problems in finance,~~provides internal audit, risk, business, and technology ~~operations, data, analytics, governance,~~consulting solutions.

The Company recently completed a multiyear process to unify its family of Robert Half endorsed divisional brands to a single brand, Robert Half. This simplifies the Company's go-to-market brand structure for clients and candidates and provides leverage for greater brand awareness and allows future flexibility to expand the Company's existing functional specializations. In connection with this process, the Company's current financial statement disclosures reflect new names for its reportable segments, including contract talent solutions (formerly temporary and consultant staffing), permanent placement talent solutions (formerly permanent placement staffing) and Protiviti (formerly risk consulting and internal audit services). What was previously referred to as staffing operations is now referred to as talent solutions.

The presentation of contract talent solutions includes functional specializations rather than the previously branded divisions. The functional specializations are: finance and ~~is a wholly-owned subsidiary~~accounting, which combines the former Accountemps® and Robert Half® Management Resources divisions; administrative and customer support, which consists of the ~~Company. Revenues are predominantly derived from specialized staffing services.~~ former OfficeTeam®; and technology, which includes the former Robert Half® Technology.

The Company operates in North America, South America, Europe, Asia and Australia. The Company is a Delaware corporation.

Basis of Presentation. The unaudited Condensed Consolidated Financial Statements (“Financial Statements”) of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”). The comparative year-end Condensed Consolidated Statement of Financial Position data presented was derived from audited financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) necessary for a fair statement of the financial position and results of operations for the periods presented have been included. These Financial Statements should be read in conjunction with the audited Consolidated Financial Statements of the Company for the year ended December 31, ~~2020,~~2021, included in its Annual Report on Form 10-K. The results of operations for any interim period are not necessarily indicative of, nor comparable to, the results of operations for a full year. Certain reclassifications have been made to prior year’s Condensed Consolidated Financial Statements to conform to the ~~2021~~2022 presentation.

Principles of Consolidation. The Financial Statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. As of March 31, ~~2021,~~2022, such estimates include allowances for credit losses, variable consideration, workers’ compensation losses, accrued medical expenses, income and other taxes, ~~and~~ assumptions used in the Company’s goodwill impairment assessment and in the valuation of stock grants subject to market conditions.

We continue to monitor the ~~significant~~ global economic uncertainty as a result of coronavirus (“COVID-19”) to assess the impact on the Company’s results of operations, financial condition, and liquidity. In light of the ongoing economic disruption, we continue to face a greater degree of uncertainty than normal in making the judgments and estimates needed to apply the Company’s significant accounting policies. As the situation continues to develop, we may make changes to these estimates and judgments over time, which could result in meaningful impacts to the Company’s financial statements in future periods. Actual results and outcomes may differ from management’s estimates and assumptions.

Service Revenues. The Company derives its revenues from 3 segments: ~~temporary and consultant staffing,~~contract talent solutions, permanent placement ~~staffing,~~talent solutions, and ~~risk consulting and internal audit services.~~Protiviti. Revenues are recognized when promised goods or services are delivered to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. See Note C for further discussion of the revenue recognition accounting policy.

~~Costs of Services.~~ Direct costs of temporary and consultant staffing consist of payroll, payroll taxes and benefit costs for the Company’s engagement professionals, as well as reimbursable expenses. Direct costs of permanent placement staffing

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, ~~2021~~2022

~~services~~Costs of Services. Direct costs of contract talent solutions consist of professional staff payroll, payroll taxes and benefit costs for the Company’s engagement professionals, as well as reimbursable expenses. Direct costs of permanent placement talent solutions consist of reimbursable expenses. ~~Risk consulting and internal audit~~Protiviti direct costs of services include professional staff ~~payroll, contract labor~~ payroll, payroll taxes and benefit costs, as well as reimbursable expenses.

Advertising Costs. The Company expenses all advertising costs as incurred. Advertising costs were ~~$8.4~~$14.2 million and ~~$14.5~~$8.4 million for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

(Income) Loss from Investments Held in Employee Deferred Compensation Trusts. Under the Company’s employee deferred compensation plans, employees direct the investment of their account balances, and the Company invests amounts held in the associated investment trusts consistent with these directions. As realized and unrealized investment gains and losses occur, the Company’s deferred compensation obligation to employees changes accordingly. Changes in the Company’s deferred compensation obligations remain in selling, general and administrative expenses or, in the case of ~~risk consulting and internal audit services,~~Protiviti, costs of services. The value of the related investment trust assets also changes by an equal and offsetting amount, leaving no net cost to the Company. The Company’s ~~income~~(income) loss from investments held in employee deferred compensation trusts consists primarily of unrealized and realized gains and losses and dividend income from trust investments.

The following table presents the Company’s (income) loss from investments held in employee deferred compensation trusts (in thousands):


		Three Months Ended March 31,						Three Months Ended March 31,
			2021		2020				2022		2021
Dividend income	Dividend income		$	(294)	$	(405)	Dividend income		$	(295)	$	(294)
Realized and unrealized (gains) losses	Realized and unrealized (gains) losses		(11,694)		40,781		Realized and unrealized (gains) losses		30,296		(11,694)
(Income) loss from investments held in employee deferred compensation trusts	(Income) loss from investments held in employee deferred compensation trusts		$	(11,988)	$	40,376	(Income) loss from investments held in employee deferred compensation trusts		$	30,001	$	(11,988)

Comprehensive Income (Loss). Comprehensive income (loss) includes net income and certain other items that are recorded directly to stockholders’ equity. The Company’s only sources of other comprehensive income (loss) are foreign currency translation and foreign defined benefit plan adjustments.

Fair Value of Financial Instruments. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market to measure fair value, summarized as follows:

Level 1: observable inputs for identical assets or liabilities, such as quoted prices in active markets

Level 2: inputs other than the quoted prices in active markets that are observable either directly or indirectly

Level 3: unobservable inputs in which there is little or no market data, which requires management’s best

estimates and assumptions that market participants would use in pricing the asset or liability

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates fair value because of their short-term nature. The Company holds mutual funds and money market funds to

satisfy its obligations under its employee deferred compensation plans, which are carried at fair value based on quoted market prices in active markets for identical assets (level 1).

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, ~~2021~~2022

The following table sets forth the composition of the underlying assets which comprise the Company’s deferred compensation trust assets (in thousands):


		Fair Value Measurements Using							Fair Value Measurements Using
		Balance at March 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Balance at March 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets	Assets							Assets
Money market funds	Money market funds	$	64,655	$	64,655	0	0	Money market funds	$	71,511	$	71,511	—	—
Mutual funds - bond	Mutual funds - bond	28,719		28,719		0	0	Mutual funds - bond	29,442		29,442		—	—
Mutual funds - stock	Mutual funds - stock	250,163		250,163		0	0	Mutual funds - stock	285,364		285,364		—	—
Mutual funds - blend	Mutual funds - blend	80,500		80,500		0	0	Mutual funds - blend	90,509		90,509		—	—
		$	424,037	$	424,037	0	0		$	476,826	$	476,826	—	—

		Fair Value Measurements Using							Fair Value Measurements Using
		Balance at December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Balance at December 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets	Assets							Assets
Money market funds	Money market funds	$	69,681	$	69,681	0	0	Money market funds	$	66,700	$	66,700	—	—
Mutual funds - bond	Mutual funds - bond	27,282		27,282		0	0	Mutual funds - bond	30,750		30,750		—	—
Mutual funds - stock	Mutual funds - stock	234,667		234,667		0	0	Mutual funds - stock	303,277		303,277		—	—
Mutual funds - blend	Mutual funds - blend	75,004		75,004		0	0	Mutual funds - blend	94,264		94,264		—	—
		$	406,634	$	406,634	0	0		$	494,991	$	494,991	—	—

Certain items such as goodwill and other intangible assets are recognized or disclosed at fair value on a non-recurring basis. The Company determines the fair value of these items using level 3 inputs. There are inherent limitations when estimating the fair value of financial instruments, and the fair values reported are not necessarily indicative of the amounts that would be realized in current market transactions.

Allowance for Credit Losses. The Company is exposed to credit losses resulting from the inability of its customers to make required payments. The Company establishes an allowance for these potential credit losses based on its review of customers’ credit profiles, historical loss statistics, prepayments, recoveries, age of customer receivable balances, current business conditions and macro-economic trends. The Company considers risk characteristics of trade receivables based on asset type ~~size, term,~~ and geographical locations to evaluate trade receivables on a collective basis. The Company applies credit loss estimates to these pooled receivables to determine expected credit losses.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, ~~2021~~2022

The following table sets forth the activity in the allowance for credit losses from December 31, ~~2019,~~2021 through March 31, ~~2021~~2022 (in thousands):


	Allowance for Credit Losses
~~Balance as of December 31, 2019~~	$	~~22,885~~
~~Adoption of accounting pronouncement~~	~~558~~


Balance as of ~~January 1, 2020~~December 31, 2021	$	~~23,443~~21,530
Charges to expense	~~4,200~~2,065
Deductions	~~(7,906)~~(1,005)
Other, including translation adjustments	~~(120)~~
~~Balance as of December 31, 2020~~	$	~~19,617~~
~~Charges to expense~~	~~3,157~~
~~Deductions~~	~~(1,482)~~
~~Other, including translation adjustments~~	~~(973)~~(123)
Balance as of March 31, ~~2021~~2022	$	~~20,319~~22,467

~~Internal-use Software.~~ The Company capitalizes direct costs incurred in the development of internal-use software. Cloud computing implementation costs incurred in hosting arrangements are capitalized and reported as a component of other assets. All other internal-use software development costs are capitalized and reported as a component of computer software within property and equipment on the unaudited Condensed Consolidated Statements of Financial Position. Capitalized internal-use software development costs were ~~$10.4 million and $13.0 million for the three months ended March 31, 2021 and 2020, respectively.~~

~~Goodwill and Intangible Assets~~. Goodwill and intangible assets primarily consist of the cost of acquired companies in excess of the fair market value of their net tangible assets at the date of acquisition. Identifiable intangible assets are amortized over their lives, typically ranging from ~~two~~ ~~to five years. Goodwill is not amortized, but is tested at least annually for impairment, or on an as needed interim basis.~~

Note B—New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

~~Reference Rate Reform.~~Government Assistance. In ~~March 2020,~~November 2021, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ~~ASU 2020-04, “Reference Rate Reform~~Accounting Standards Update ("ASU") 2021-10, "Government Assistance (Topic ~~848)~~832): ~~Facilitation~~Disclosures by Business Entities about Government Assistance" to increase the transparency of government assistance including the disclosure of the ~~Effects~~types of ~~Reference Rate Reform~~assistance an entity receives, an entity’s method of accounting for government assistance and the effect of the assistance on ~~Financial Reporting.”~~an entity’s financial statements. This standard is effective for annual periods beginning after December 15, 2021. The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and mayshould be applied either (1) prospectively to ~~contract modifications made~~all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and ~~hedging relationships~~new transactions that are entered into after the date of initial application, or ~~evaluated on or before December 31,~~(2) retrospectively to those transactions. The Company adopted this ASU in January 2022. The ~~application~~adoption of this guidance did not have a material impact on ~~the Company's~~its financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

None.

~~ROBERT HALF INTERNATIONAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)~~

~~March 31, 2021~~

Note C—Revenue Recognition

The Company derives its revenues from 3 segments: ~~temporary and consultant staffing,~~contract talent solutions, permanent placement ~~staffing,~~talent solutions, and ~~risk consulting and internal audit services.~~Protiviti. Revenues are recognized when promised goods or services are delivered to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Service revenues as presented in the unaudited Condensed Consolidated Statements of Operations represent services rendered to customers less variable consideration, such as sales adjustments and allowances. Reimbursements, including those related to travel and out-of-pocket expenses, are also included in service revenues, and equivalent amounts of reimbursable expenses are included in costs of services.

Contract talent solutions

~~Temporary and consultant staffing~~ revenues. ~~Temporary and consultant staffing~~Contract talent solutions revenues ~~from contracts with customers~~ are recognized in the amount to which the Company has a right to invoice when the services are rendered by the Company’s engagement professionals. The substantial majority of engagement professionals placed on assignment by the Company are the Company’s legal employees while they are working on assignments. The Company pays all related costs of employment, including workers’ compensation insurance, state and federal unemployment taxes, social security, and certain fringe benefits. The Company assumes the risk of acceptability of its employees to its customers.

The Company records ~~temporary and consultant staffing revenue~~contract talent solutions revenues on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded that gross reporting is appropriate because the Company (i) has the risk of identifying and hiring qualified employees, (ii) has the discretion to select the employees and establish their price and duties, and (iii) bears the risk for services that are not fully paid for by customers. Fees paid to Time Management or Vendor Management service providers selected by clients are recorded as a reduction of revenues, as the Company is not the primary obligor with respect to those services.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2022

Permanent placement ~~staffing~~talent solutions revenues. Permanent placement ~~staffing~~talent solutions revenues ~~from contracts with customers~~ are primarily recognized when employment candidates accept offers of permanent employment. The Company has a substantial history of estimating the financial impact of permanent placement candidates who do not remain with its clients through the 90-day guarantee period. These amounts are established based primarily on historical data and are recorded as ~~contract~~ liabilities. Fees to clients are generally calculated as a percentage of the new employee’s annual compensation. No fees for permanent placement talent solution services are charged to employment candidates.

~~Risk consulting and internal audit services~~Protiviti revenues. ~~Risk~~Protiviti's consulting ~~and internal audit~~ services are generally provided on a time-and-material basis or fixed-fee basis. Revenues earned under time-and-material arrangements and fixed-fee arrangements are recognized using a proportional performance method. Revenue is measured using cost incurred relative to total estimated cost for the engagement to measure progress towards satisfying the Company’s performance obligations. Cost incurred represents work performed and thereby best depicts the transfer of control to the customer. ~~Risk~~Protiviti's consulting ~~and internal audit~~ services generally contain one or more performance obligation(s) which are satisfied over a period of time. Revenues are recognized over time as the performance obligations are satisfied because the services provided do not have any alternative use to the Company and contracts generally include language giving the Company an enforceable right to payment for services provided to date.

The Company periodically evaluates the need to provide for any losses on these projects, and losses are recognized when it is probable that a loss will be incurred.

~~ROBERT HALF INTERNATIONAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)~~

~~March 31, 2021~~

The following table presents the Company’s service revenues disaggregated by ~~line of business~~functional specialization and segment (in thousands):
Three Months Ended
March 31,
2021 2020
Accountemps $ 417,116 $ 489,884
OfficeTeam 220,467 239,979
Robert Half Technology 172,239 196,652
Robert Half Management Resources 183,271 211,878
Elimination of intersegment revenues (a) (103,818) (46,273)
Temporary and consultant staffing 889,275 1,092,120
Permanent placement staffing 111,703 120,489
Risk consulting and internal audit services 397,402 294,082
Service revenues $ 1,398,380 $ 1,506,691


	Three Months Ended March 31,
		2022		2021
Contract talent solutions
Finance and accounting		$	801,690	$	600,387
Administrative and customer support		284,906		220,467
Technology		213,327		172,239
Elimination of intersegment revenues (a)		(144,200)		(103,818)
Total contract talent solutions		1,155,723		889,275
Permanent placement talent solutions		186,782		111,703
Protiviti		472,329		397,402
Total service revenues		$	1,814,834	$	1,398,380

(a) Service revenues for ~~Accountemps, OfficeTeam, Robert Half Technology~~finance and ~~Robert Half Management Resources~~accounting, administrative and customer support, and technology include intersegment revenues, which represent revenues from services provided to the Company’s ~~risk consulting and internal audit services~~Protiviti segment in connection with the Company’s blended business solutions. Intersegment revenues for each ~~line of business~~functional specialization are aggregated and then eliminated as a single line.

Payment terms in the Company’s contracts vary by the type ~~and location~~ of the Company’s customer and the services offered. The term between invoicing and when payment is due is not significant.

Contracts with multiple performance obligations are recognized as performance obligations are delivered, and contract value is allocated based on relative stand-alone selling values of the services and products in the arrangement. As of March 31, 2022, aggregate transaction price allocated to the performance obligations that were unsatisfied for contracts with an expected duration of greater than one year was $147.7 million. Of this amount, $133.6 million is expected to be recognized within the next twelve months. As of March 31, 2021, aggregate transaction price allocated to the performance obligations that ~~are~~were unsatisfied for contracts with an expected duration of greater than one year was $170.0 million. Of this amount, $157.3 million is expected to be recognized within the next twelve months. As of March 31, 2020, aggregate transaction price allocated to the performance obligations that are unsatisfied for contracts with an expected duration of greater than one year was $112.0 million.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2022

Contract liabilities are recorded when cash payments are received or due in advance of performance and are reflected in accounts payable and accrued expenses on the unaudited Condensed Consolidated Statements of Financial Position. The following table sets forth the activity in contract liabilities from December 31, ~~2019,~~2021 through March 31, ~~2021~~2022 (in thousands):

Contract Liabilities

Balance as of December 31, ~~2019~~2021

~~12,948~~25,601

Payments in advance of satisfaction of performance obligations

~~25,614~~18,345

Revenue recognized

~~(20,687)~~(24,046)

Other, including translation adjustments

~~377~~ (278)

Balance as of ~~December~~March 31, ~~2020~~2022

~~18,252~~19,622

~~Payments in advance of satisfaction of performance obligations~~

~~12,888~~

~~Revenue recognized~~

~~(16,510)~~

~~Other, including translation adjustments~~

~~717~~

~~Balance as of March 31, 2021~~

~~15,347~~

Note D—Other Current Assets

Other current assets consisted of the following (in thousands):


	March 31, 2022		December 31, 2021
Prepaid expenses	$	83,906	$	69,526
Unamortized cloud computing implementation costs	47,040		44,692
Other	42,327		55,646
Other current assets	$	173,273	$	169,864

Note E—Property and Equipment, Net

Property and equipment consisted of the following (in thousands):


	March 31, 2022		December 31, 2021
Computer hardware	$	161,382	$	157,408
Computer software	247,964		246,013
Furniture and equipment	94,028		93,144
Leasehold improvements	165,949		165,153

Property and equipment, cost	669,323		661,718
Accumulated depreciation	(572,900)		(568,315)
Property and equipment, net	$	96,423	$	93,403

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, ~~2021~~2022

~~Note D—Other Current Assets~~

~~Other current assets consisted of the following (in thousands):~~
March 31,
2021 December 31, 2020
Prepaid expenses 101,846 97,674
Other 50,434 49,841
Other current assets $ 152,280 $ 147,515

~~Note E—Property and Equipment, Net~~

~~Property and equipment consisted of the following (in thousands):~~
March 31,
2021 December 31, 2020
Computer hardware $ 160,685 $ 159,180
Computer software 251,477 250,585
Furniture and equipment 91,345 91,112
Leasehold improvements 163,090 164,807
Property and equipment, cost 666,597 665,684
Accumulated depreciation (562,896) (555,867)
Property and equipment, net $ 103,701 $ 109,817

Note F—Leases

The Company has operating leases for corporate and field offices, and certain equipment. The Company’s leases have remaining lease terms of less than 1 ~~month~~year to 98 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year. Operating lease expenses were $22.6 million and $21.5 million for the three months ended March 31, 2022 and 2021, ~~and 2020, were $21.5 million and $19.9 million,~~ respectively.

Supplemental cash flow information related to leases consisted of the following (in thousands):


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash paid for operating lease liabilities	Cash paid for operating lease liabilities	$	22,225	$	20,554	Cash paid for operating lease liabilities	$	22,986	$	22,225
Right-of-use assets obtained in exchange for new operating lease liabilities		$	3,501	$	14,547
Right-of-use assets obtained in exchange for operating lease liabilities from new leases						Right-of-use assets obtained in exchange for operating lease liabilities from new leases	$	12,805	$	3,501
Right-of-use assets obtained in exchange for operating lease liabilities from lease modifications or reassessments						Right-of-use assets obtained in exchange for operating lease liabilities from lease modifications or reassessments	$	7,584	$	4,221

Supplemental balance sheet information related to leases consisted of the following:

March 31,
2021

December 31,
2020

March 31,
2022

December 31,
2021

Weighted average remaining lease term for operating leases

4.4 years

4.5 years

Weighted average remaining lease term for operating leases

3.8 years

3.9 years

Weighted average discount rate for operating leases

2.6

Weighted average discount rate for operating leases

2.3

~~ROBERT HALF INTERNATIONAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)~~

~~March 31, 2021~~

Future minimum lease payments under non-cancellable leases as of March 31, ~~2021,~~2022 were as follows (in thousands):

2021 (excluding the three months ended March 31, 2021) $ 65,666
2022 73,205
2023 59,476
2024 47,524
2025 29,095
Thereafter 29,371
Less: Imputed interest (16,932)
Present value of operating lease liabilities (a) $ 287,405


2022 (excluding the three months ended March 31, 2022)	$	69,535
2023	74,748
2024	57,197
2025	35,631
2026	22,860
Thereafter	14,247
Less: Imputed interest	(11,529)
Present value of operating lease liabilities (a)	$	262,689

(a) Includes current portion of ~~$79.2~~$86.3 million for operating leases.

As of March 31, ~~2021,~~2022, the Company had additional future minimum lease obligations totaling ~~$4.0~~$6.0 million under executed operating ~~leases~~lease contracts that had not yet commenced. These operating leases include agreements for corporate and field office facilities with lease terms of 1 to 86 years.

~~Note G—Goodwill~~

~~The following table sets forth the activity in goodwill from December 31, 2020, through March 31, 2021 (in thousands):~~
Goodwill

Temporary and consultant staffing Permanent placement staffing Risk consulting and internal audit services Total
Balance as of December 31, 2020 $ 134,511 $ 26,180 $ 62,364 $ 223,055
Foreign currency translation adjustments (46) (14) 51 (9)
Balance as of March 31, 2021 $ 134,465 $ 26,166 $ 62,415 $ 223,046

~~Note H—Accrued Payroll and Benefit Costs~~

~~Accrued payroll and benefit costs consisted of the following (in thousands):~~
March 31,
2021 December 31, 2020
Payroll and benefits 306,178 311,169
Payroll taxes 81,742 67,712
Workers’ compensation 19,924 18,996
Accrued payroll and benefit costs $ 407,844 $ 397,877

The Company, under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, deferred paying $102.2 million of applicable payroll taxes as of March 31, 2021, of which $51.1 million is expected to be paid during the next 12 months and is included in accrued payroll and benefit costs and the remaining $51.1 million is included in other liabilities on the unaudited Condensed Consolidated Statements of Financial Position.

1413

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2022

Note G—Goodwill

The following table sets forth the activity in goodwill from December 31, 2021 through March 31, 2022 (in thousands):


	Goodwill
	Contract talent solutions		Permanent placement talent solutions		Protiviti		Total
Balance as of December 31, 2021	$	134,584	$	26,189	$	62,082	$	222,855

Foreign currency translation adjustments	(61)		(12)		76		3
Balance as of March 31, 2022	$	134,523	$	26,177	$	62,158	$	222,858

Note H—Accrued Payroll and Benefit Costs

Accrued payroll and benefit costs consisted of the following (in thousands):


	March 31, 2022		December 31, 2021
Payroll and benefits	$	414,580	$	449,246
Payroll taxes	67,458		74,117
Workers’ compensation	17,772		16,820
Accrued payroll and benefit costs	$	499,810	$	540,183

The Company, under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, deferred paying $51.1 million of applicable payroll taxes as of both March 31, 2022 and December 31, 2021, which is expected to be paid during the next 12 months and is included in payroll taxes.

Note I—Employee Deferred Compensation Plan Obligations

The Company provides various qualified defined contribution 401(k) plans covering eligible employees. The plans offer a savings feature with the Company matching employee contributions. Assets of this plan are held by an independent trustee for the sole benefit of participating employees. Nonqualified plans are provided for employees on a discretionary basis, including those not eligible for the qualified plans. These plans include provisions for salary deferrals and ~~Company matching and~~ discretionary contributions. The asset value of the nonqualified plans was ~~$424.0~~$476.8 million and ~~$406.6~~$495.0 million as of March 31, ~~2021,~~2022 and December 31, ~~2020,~~2021, respectively. The Company holds these assets to satisfy the Company’s liabilities under its deferred compensation plans.

The liability value for the nonqualified plans was ~~$437.7~~$495.3 million and ~~$435.1~~$535.3 million as of March 31, ~~2021,~~2022 and December 31, ~~2020,~~2021, respectively.

The following table presents the Company’s compensation expense related to its qualified defined contribution plans and nonqualified plans (in thousands):


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020				2022		2021
Contribution expense	Contribution expense	$	9,554	$	8,485	Contribution expense		$	12,202	$	9,554
Increase (decrease) in employee deferred compensation expense related to changes in the fair value of trust assets	Increase (decrease) in employee deferred compensation expense related to changes in the fair value of trust assets	11,988		(40,376)		Increase (decrease) in employee deferred compensation expense related to changes in the fair value of trust assets		(30,001)		11,988
		$	21,542	$	(31,891)			$	(17,799)	$	21,542

The Company has statutory defined contribution plans and defined benefit plans outside the U.S., which are not material.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2022

Note J—Commitments and Contingencies

On March 23, 2015, Plaintiff Jessica Gentry, on her own behalf and on behalf of a putative class of allegedly similarly situated individuals, filed a complaint against the Company in the Superior Court of California, San Francisco County, which was subsequently amended on October 23, 2015. The complaint alleges that a putative class of current and former employees of the Company working in California since March 13, 2010 were denied compensation for the time they spent interviewing “for temporary and permanent employment opportunities” as well as performing activities related to the interview process. Gentry seeks recovery on her own behalf and on behalf of the putative class in an unspecified amount for this allegedly unpaid compensation. Gentry also seeks recovery of an unspecified amount for the alleged failure of the Company to provide her and the putative class with accurate wage statements. Gentry also seeks an unspecified amount of other damages, attorneys’ fees, and statutory penalties, including penalties for allegedly not paying all wages due upon separation to former employees and statutory penalties on behalf of herself and other allegedly “aggrieved employees” as defined by California’s Labor Code Private Attorney General Act (“PAGA”). On January 4, 2016, the Court denied a motion by the Company to compel all of Gentry’s claims, except the PAGA claim, to individual arbitration. At this stage of the litigation, it is not feasible to predict the outcome of or a range of loss, should a loss occur, from this proceeding and, accordingly, no amounts have been provided in the Company’s Financial Statements. The Company believes it has meritorious defenses to the allegations and the Company intends to continue to vigorously defend against the litigation.

On April 6, 2018, Plaintiff Shari Dorff, on her own behalf and on behalf of a putative class of allegedly similarly situated individuals, filed a complaint against the Company in the Superior Court of California, County of Los Angeles. In addition to certain claims individual to Plaintiff Dorff, the complaint alleges that salaried recruiters based in California have been misclassified as exempt employees and seeks an unspecified amount for: unpaid wages resulting from such alleged misclassification; alleged failure to provide a reasonable opportunity to take meal periods and rest breaks; alleged failure to pay wages on a timely basis both during employment and upon separation; alleged failure to comply with California requirements regarding wage statements and record-keeping; and alleged improper denial of expense reimbursement. Plaintiff Dorff also seeks an unspecified amount of other damages, attorneys’ fees, and penalties, including but not limited to statutory penalties on behalf of herself and other allegedly “aggrieved employees” as defined by PAGA. At this stage of the litigation, it is not

~~ROBERT HALF INTERNATIONAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)~~

~~March 31, 2021~~

feasible to predict the outcome of or a range of loss, should a loss occur, from this proceeding and, accordingly, 0no amounts have been provided in the Company’s Financial Statements. The Company believes it has meritorious defenses to the allegations and the Company intends to continue to vigorously defend against the litigation.

The Company is involved in a number of other lawsuits arising in the ordinary course of business. While management does not expect any of these other matters to have a material adverse effect on the Company’s results of operations, financial position or cash flows, litigation is subject to certain inherent uncertainties.

Legal costs associated with the resolution of claims, lawsuits and other contingencies are expensed as incurred.

In May ~~2020,~~2021, the Company entered into ~~a new~~an amendment to extend the maturity of its $100 million unsecured revolving credit facility (the ~~“364-Day Credit~~“Credit Agreement”). to May 2024. Borrowings under the ~~364-Day~~ Credit Agreement will bear interest in accordance with the terms of the borrowing, which typically will be calculated according to the LIBOR, or an alternative base rate, plus an applicable margin. The ~~364-Day~~ Credit Agreement is subject to certain financial covenants and the Company was in compliance with these covenants as of March 31, ~~2021.~~2022. There were 0no borrowings under the ~~364-Day~~ Credit Agreement as of March 31, ~~2021.~~2022.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2022

Note K—Stockholders’ Equity

Stock Repurchase Program. As of March 31, ~~2021,~~2022, the Company is authorized to repurchase, from time to time, up to ~~9.2~~6.7 million additional shares of the Company’s common stock on the open market or in privately negotiated transactions, depending on market conditions. The number and the cost of common stock shares repurchased during the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021 are reflected in the following table (in thousands):


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
Common stock repurchased (in shares)	Common stock repurchased (in shares)	797		983		Common stock repurchased (in shares)	475		797
Common stock repurchased	Common stock repurchased	$	60,860	$	51,477	Common stock repurchased	$	54,913	$	60,860

Additional stock repurchases were made in connection with employee stock plans, whereby Company shares were tendered by employees for the payment of applicable statutory withholding taxes. The number and the cost of ~~repurchases related to~~ employee stock ~~plans~~plan repurchases made during the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021 are reflected in the following table (in thousands):


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
Repurchases related to employee stock plans (in shares)	Repurchases related to employee stock plans (in shares)	251		280		Repurchases related to employee stock plans (in shares)	62		251
Repurchases related to employee stock plans	Repurchases related to employee stock plans	$	19,413	$	12,022	Repurchases related to employee stock plans	$	7,428	$	19,413

The repurchased shares are held in treasury and are presented as if constructively retired. Treasury stock is accounted for using the cost method. ~~Repurchase~~Treasury stock activity for the three months ended March 31, 2022 and 2021 ~~and 2020,~~(consisting of purchase of shares for the treasury) is presented in the unaudited Condensed Consolidated Statements of Stockholders’ Equity.

Repurchases of shares and issuances of dividends are applied first to the extent of retained earnings and any remaining amounts are applied to additional paid-in capital.

Note L—Net Income Per Share

The calculation of net income per share for the three months ended March 31, 2022 and 2021 is reflected in the following table (in thousands, except per share amounts):


	Three Months Ended March 31,
		2022		2021
Net income		$	168,239	$	110,598
Basic:
Weighted average shares		109,218		111,424
Diluted:
Weighted average shares		109,218		111,424
Dilutive effect of potential common shares		1,373		1,072
Diluted weighted average shares		110,591		112,496
Net income per share:
Basic		$	1.54	$	.99
Diluted		$	1.52	$	.98

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, ~~2021~~2022

~~Note L—Net Income Per Share~~

~~The calculation of net income per share for the three months ended March 31, 2021 and 2020, is reflected in the following table (in thousands, except per share amounts):~~
Three Months Ended
March 31,
2021 2020
Net income $ 110,598 $ 89,915
Basic:
Weighted average shares 111,424 113,187
Diluted:
Weighted average shares 111,424 113,187
Dilutive effect of potential common shares 1,072 671
Diluted weighted average shares 112,496 113,858
Net income per share:
Basic $ .99 $ .79
Diluted $ .98 $ .79

Note M—Business Segments

The Company has 3 reportable segments: ~~temporary and consultant staffing,~~contract talent solutions, permanent placement ~~staffing,~~talent solutions, and ~~risk consulting and internal audit services.~~Protiviti. Operating segments are defined as components of the Company for which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assess performance. The ~~temporary and consultant staffing~~contract talent solutions segment provides specialized ~~staffing~~engagement professionals in the accounting and finance, administrative and office, information technology, legal, advertising, marketing and web design fields. The permanent placement ~~staffing~~talent solutions segment provides full-time personnel in the accounting, finance, administrative and office, legal, and information technology fields. The ~~risk consulting and internal audit services~~Protiviti segment provides business and technology risk consulting and internal audit services.

The accounting policies of the segments are set forth in Note A—“Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. The Company evaluates performance based on income before net interest income, intangible assets amortization expense, and income taxes.

~~ROBERT HALF INTERNATIONAL INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)~~

~~March 31, 2021~~

The following table provides a reconciliation of service revenues and segment income by reportable segment to consolidated results for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 (in thousands):


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020				2022		2021
Service revenues	Service revenues					Service revenues
Temporary and consultant staffing		$	889,275	$	1,092,120
Permanent placement staffing		111,703		120,489
Risk consulting and internal audit services		397,402		294,082
Contract talent solutions						Contract talent solutions		$	1,155,723	$	889,275
Permanent placement talent solutions						Permanent placement talent solutions		186,782		111,703
Protiviti						Protiviti		472,329		397,402
		$	1,398,380	$	1,506,691			$	1,814,834	$	1,398,380
Segment income	Segment income					Segment income
Temporary and consultant staffing		$	75,535	$	93,764
Permanent placement staffing		17,780		10,911
Risk consulting and internal audit services		57,322		26,469
Contract talent solutions						Contract talent solutions		$	133,246	$	75,535
Permanent placement talent solutions						Permanent placement talent solutions		37,328		17,780
Protiviti						Protiviti		57,077		57,322
Combined segment income	Combined segment income	150,637		131,144		Combined segment income		227,651		150,637

Amortization of intangible assets	Amortization of intangible assets	576		338		Amortization of intangible assets		417		576
Interest income, net	Interest income, net	(45)		(957)		Interest income, net		(166)		(45)
Income before income taxes	Income before income taxes	$	150,106	$	131,763	Income before income taxes		$	227,400	$	150,106

Service revenues presented above are shown net of eliminations of intersegment revenues. Intersegment revenues

between ~~temporary and consultant staffing~~the contract talent solutions segment and ~~risk consulting and internal audit services~~Protiviti segment were $144.2 million and $103.8 million

~~and $46.3 million for the~~ three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

Revenue and direct costs related to the intersegment activity are reflected in the Protiviti segment, including the costs of candidate payroll, fringe benefits and incremental recruiter compensation.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2022

Note N—Subsequent Events

On ~~April 29, 2021,~~May 3, 2022, the Company announced the following:


Quarterly dividend per share			$~~.38~~.43
Declaration date			~~April 29, 2021~~May 3, 2022
Record date			May 25, ~~2021~~2022
Payment date			June 15, ~~2021~~2022

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain information contained in Management’s Discussion and Analysis and in other parts of this report may be deemed forward-looking statements regarding events and financial trends that may affect the ~~Company’s~~ future operating results or financial ~~positions.~~positions of Robert Half International Inc. (the "Company"). These statements may be identified by words such as ~~“estimate”, “forecast”, “project”, “plan”, “intend”, “believe”, “expect”, “anticipate”,~~“estimate,” “forecast,” “project,” “plan,” “intend,” “believe,” “expect,” “anticipate,” or variations or negatives thereof or by similar or comparable words or phrases. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. These risks and uncertainties include, but are not limited to, the following: changes to or new interpretations of U.S. or international tax regulations, the global financial and economic situation; the duration and impact of the COVID-19 pandemic and efforts to mitigate its spread; changes in levels of unemployment and other economic conditions in the United States or foreign countries where the Company does business, or in particular regions or industries; reduction in the supply of candidates for contract employment or the Company’s ability to attract candidates; the entry of new competitors into the marketplace or expansion by existing competitors; the ability of the Company to maintain existing client relationships and attract new clients in the context of changing economic or competitive conditions; the impact of competitive pressures, including any change in the demand for the Company’s services, on the Company’s ability to maintain its margins; the possibility of the Company incurring liability for its activities, including the activities of its engagement professionals, or for events impacting its engagement professionals on clients’ premises; the possibility that adverse publicity could impact the Company’s ability to attract and retain clients and candidates; the success of the Company in attracting, training, and retaining qualified management personnel and other staff employees; the Company’s ability to comply with governmental regulations affecting personnel services businesses in particular or employer/employee relationships in general; whether there will be ongoing demand for Sarbanes-Oxley or other regulatory compliance services; the Company’s reliance on short-term contracts for a significant percentage of its business; litigation relating to prior or current transactions or activities, including litigation that may be disclosed from time to time in the Company’s Securities and Exchange Commission (“SEC”) filings; the ability of the Company to manage its international operations and comply with foreign laws and regulations; the impact of fluctuations in foreign currency exchange rates; the possibility that the additional costs the Company will incur as a result of health care or other reform legislation may adversely affect the Company’s profit margins or the demand for the Company’s services; the possibility that the Company’s computer and communications hardware and software systems could be damaged or their service interrupted or the Company could experience a cybersecurity breach; and the possibility that the Company may fail to maintain adequate financial and management controls and as a result suffer errors in its financial reporting. Additionally, with respect to Protiviti, other risks and uncertainties include the fact that future success will depend on its ability to retain employees and attract clients; there can be no assurance that there will be ongoing demand for ~~Sarbanes-Oxley~~broad based consulting, regulatory compliance, technology services, public sector or other ~~regulatory compliance~~high demand advisory services; failure to produce projected revenues could adversely affect financial results; and there is the possibility of involvement in litigation relating to prior or current transactions or activities. Because long-term contracts are not a significant part of the Company’s business, future results cannot be reliably predicted by considering past trends or extrapolating past results.

Executive Overview

The ~~Company’s financial results during the first quarter~~Company recently completed a multiyear process to unify its family of 2021 reflect continued early-cycle recovery from the economic crisis resulting from the COVID-19 pandemic, with accelerating growth during the quarter in the Company’s staffing business. Our investments in advanced AI technologies and retention of our tenured employees has allowed us to adapt quicklyRobert Half endorsed divisional brands to a single brand, Robert Half. This simplifies the Company's go-to-market brand structure for clients and candidates and provides leverage for greater brand awareness and allows future flexibility to expand the Company's existing functional specializations. In connection with this process, the Company's current financial statement disclosures reflect new ~~marketplace, where remote~~names for its reportable segments, including contract talent solutions (formerly temporary and ~~hybrid work has become commonplace.~~consultant staffing), permanent placement talent solutions (formerly permanent placement staffing) and Protiviti (formerly risk consulting and internal audit services). What was previously referred to as staffing operations is now referred to as talent solutions.

The presentation of contract talent solutions includes functional specializations rather than the previously branded divisions. The functional specializations are: finance and accounting, which combines the former Accountemps® and Robert Half® Management Resources divisions; administrative and customer support, which consists of the former OfficeTeam®; and technology, which includes the former Robert Half® Technology.

The Company reported another very strong quarter driven by a robust demand environment across the globe. During the first quarter of ~~2021,~~2022, service revenues were ~~$1.40~~$1.81 billion, ~~a decrease~~an increase of ~~7.2%~~29.8% from the prior year. Net income ~~for the quarter was $111~~increased 52.1% to $168 million and diluted net income per share ~~was $.98.~~increased 55.1% to $1.52.

The Company's ~~staffing operations significantly outperformed their historical sequential trends, led by small and medium-size businesses and~~ permanent placement ~~which grew 22% sequentially. Protiviti's revenues grew 35% year-on-year, reflecting~~talent solutions led the way, achieving year-over-year revenue growth of 67 percent. Contract talent solutions and Protiviti also continued ~~momentum across its wide array of service offerings, including~~to post very strong results, growing year-over-year revenues by 30 percent and 19 percent, respectively.

The future of work continues to evolve as remote and hybrid work models gain wider acceptance, and the swift recovery across global labor markets has significantly increased the demand for ~~managed solutions with staffing.~~the Company's services. More than ever before, clients are willing to recruit from outside their geographic region to access deeper talent pools and lower price points than may be available locally. Job candidates also benefit from the broader experiences and wider selection of jobs derived from out-of-market engagements. This ~~is Protiviti's 14th consecutive quarter of year-on-year~~remote work environment increasingly plays to the Company's strengths and presents an unparalleled opportunity to capitalize on a structural shift in how companies source talent.

Protiviti reported double-digit revenue gains. ~~The Company’s~~Internal audit and blended solutions ~~complementing Protiviti's offerings~~ with contract talent ~~allow~~solutions reported the strongest growth. The Company continues to see positive results in the collaboration between Protiviti and contract talent, which pairs Protiviti's world-class consulting talent with contract talent solutions's deep operational resources to provide a cost-effective solution to clients' skills and scalability needs. Protiviti's pipeline continues to be ~~extremely nimble and cost effective in response to client needs, and we expect this offering to be an increasing part of our business going forward.~~very strong.

Demand for the Company’s ~~temporary and consultant staffing,~~contract talent solutions, permanent placement ~~staffing,~~talent solutions, and ~~risk~~ consulting ~~and internal audit services~~talent is largely dependent upon general economic and labor trends both domestically and ~~abroad, which may continue to be impacted by COVID-19.~~

abroad. The United States economic backdrop ~~as we ended~~and labor trends for the first quarter of ~~2021 showed early signs of economic recovery~~2022 remained conducive to growth for the Company as ~~real gross domestic product (“GDP”) increased 6.4%, while~~ the unemployment rate decreased from ~~6.7%~~3.9% in December ~~2020~~2021 to ~~6.0%~~3.6% at the end of the first quarter of ~~2021.~~2022. In the United States, the number of job openings exceeded the number of hires at the end of ~~February 2021,~~March 2022, creating competition for skilled talent that increases the Company's value to clients. The U.S. labor market remains robust, with significant demand due to talent shortages across ~~our~~ professional disciplines.

We monitor various economic indicators and business trends in all of the countries in which we operate to anticipate demand for the Company’s services. We evaluate these trends to determine the appropriate level of investment, including personnel, which will best position the Company for success in the current and future global macroeconomic environment. The Company’s investments in headcount are typically structured to proactively support and align with expected revenue growth trends and productivity metrics. We have limited visibility into future revenues not only due to the dependence on macroeconomic conditions noted above, but also because of the relatively short duration of the Company’s client engagements. Accordingly, we typically assess headcount and other investments on at least a quarterly basis. ~~We continue to focus on the productivity levels of tenured staff and believe we have aligned staffing levels to drive increased profitability.~~ During the first quarter of ~~2021,~~2022, the Company increased headcount ~~remained relatively flat in~~across all ~~three business~~ segments when compared to prior year-end levels.

Capital expenditures, including $8.5 million for cloud computing arrangements, for the three months ended March 31, 2021, totaled $18.2 million, approximately 89% of which represented investments in software initiatives and technology infrastructure, both of which are important to the Company’s sustainability and future growth opportunities. Capital expenditures for cloud computing arrangements are included in cash flows from operating activities on the Company’s Condensed Consolidated Statements of Cash Flows. Capital expenditures included amounts spent on tenant improvements and furniture and equipment in the Company’s leased offices. We currently expect that 2021 capital expenditures will range from $85 million to $95 million, of which $45 million to $55 million relates to software initiatives and technology infrastructure, including capitalized costs related to implementation of cloud computing arrangements.

Critical Accounting Policies and Estimates

The Company’s most critical accounting policies and estimates are those that involve subjective decisions or assessments and are included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. There were no material changes to the Company’s critical accounting policies or estimates for the three months ended March 31, ~~2021.~~2022.

Recent Accounting Pronouncements

See Note B—“New Accounting Pronouncements” to the Company’s Condensed Consolidated Financial Statements included under Part I—Item 1 of this report.

Results of Operations

The Company analyzes its operating results for three reportable segments: contract talent solutions, permanent placement talent solutions, and Protiviti. The contract talent solutions segment provides specialized engagement professionals in the accounting and finance, administrative and office, information technology, legal, advertising, marketing and web design fields. The permanent placement talent solutions segment provides full-time personnel in the accounting, finance, administrative and office, legal, and information technology fields. The Protiviti segment provides business and technology risk consulting and internal audit services.

Demand for the Company’s ~~temporary and consultant staffing,~~contract talent solutions, permanent placement ~~staffing~~talent solutions, and ~~risk~~ consulting ~~and internal audit services~~talent is largely dependent upon general economic and labor ~~market conditions~~trends both domestically and abroad. Because of the inherent difficulty in predicting economic trends, future demand for the Company’s services cannot be forecast with certainty. The Company's ~~technology investments have facilitated remote working models internally~~global brand, office network, candidate database and advanced AI-driven technologies allows the Company to successfully recruit the necessary talent for its clients to thrive and grow amid the Great Reshuffle, as professionals continue to change jobs at record levels and companies across the globe struggle to navigate unprecedented employee turnover. Global labor markets remain very robust. In the U.S., this is seen in the elevated levels of job openings and quits rates, as well as low initial unemployment claims and a low unemployment rate. As a result of this very strong demand environment, coupled with the Company's ~~advanced AI-driven capabilities, are providing~~unique ability to successfully secure hard-to-find candidates for its clients, ~~with real-time choices of candidates across broader resource pools. While uncertainty remains~~the Company continues to see its talent solutions results recovering at a faster pace than experienced in the overall economic environment, we are excited about our current momentum and the Company’s prospects for the balance of 2021 and beyond, buoyed by the strengths of the Company’s brands, people, technology and professional business model.past.

The Company’s ~~temporary and permanent placement staffing~~talent solutions business has ~~322~~317 offices in 4342 states, the District of Columbia and 17 foreign countries, while Protiviti has 6365 offices in 24 states and 1213 foreign countries.

2021

Non-GAAP Financial Measures

The financial results of ~~Robert Half International Inc. (the “Company”)~~the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the ~~U.S. Securities and Exchange Commission (“SEC”).~~SEC. To help readers understand the Company’s financial performance, the Company supplements its GAAP financial results with the following non-GAAP measures: as adjusted revenue growth rates; adjusted gross margin; adjusted selling, general and administrative expense; segment income and combined segment income.

Variations in the Company’s financial results include the impact of changes in foreign currency exchange rates and billing ~~days, and certain intercompany adjustments.~~days. The Company provides “as adjusted” revenue growth calculations to remove the impact of these items. These calculations show the year-over-year revenue growth rates for the Company’s ~~lines of business~~functional specializations and segments on both a reported basis and also on an ~~as-adjusted~~as adjusted basis for global, U.S., and international operations. ~~This information is presented for each of the six most recent quarters.~~ The Company has provided this data because it focuses on the Company’s revenue growth rates attributable to operating activities and aids in evaluating revenue trends over time. The Company expresses year-over-year revenue changes as calculated percentages using the same number of billing days and constant currency exchange rates.

In order to calculate constant currency revenue growth rates, as reported amounts are retranslated using foreign currency exchange rates from the prior year’s comparable period. Management then calculates a global, weighted-average number of billing days for each reporting period based upon input from all countries and ~~certain intercompany adjustments.~~all functional specializations and segments. In order to remove the fluctuations caused by comparable periods having different billing days, the Company calculates same billing day revenue growth rates by dividing each comparative period’s reported revenues by the calculated number of billing days for that period to arrive at a per billing day amount. Same billing day growth rates are then calculated based upon the per billing day amounts. The term “as adjusted” means that the impact of different billing days and currency fluctuations are removed from the revenue growth rate calculation.

The following measures: adjusted gross margin; adjusted selling, general and administrative expense; and segment income include gains and losses on investments held to fund the Company’s obligations under employee deferred compensation plans. The Company provides these measures because they are used by management to review its operational results.

Combined segment income is income before income taxes adjusted for interest income, net and amortization of intangible assets. The Company provides combined segment income because it is how ~~the Company~~management evaluates segment performance.

The non-GAAP financial measures provided herein may not provide information that is directly comparable to that provided by other companies in the Company’s industry, as other companies may calculate such financial results differently. The Company’s non-GAAP financial measures are not measurements of financial performance under GAAP and should not be considered as alternatives to amounts presented in accordance with GAAP. The Company does not consider these non-GAAP financial measures to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is provided on the following pages.

Refer to Item 3. “Quantitative and Qualitative Disclosures About Market Risk” for further discussion of the impact of foreign currency exchange rates on the Company’s results of operations and financial condition.

Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021

Revenues. The Company’s revenues were $1.81 billion for the three months ended March 31, 2022, increasing by 29.8% compared to $1.40 billion for the three months ended March 31, ~~2021, decreasing by 7.2% compared~~2021. Revenues from U.S. operations increased 31.7% to ~~$1.51~~$1.42 billion (78.0% of total revenue) for the three months ended March 31, ~~2020. Revenues from foreign operations represented 23%~~2022, compared to $1.07 billion (76.8% of total ~~revenues~~revenue) for the three months ended March 31, ~~2021, up~~2021. Revenues from ~~22%~~foreign operations increased 23.4% to $400 million (22.0% of total ~~revenues~~revenue) for the three months ended March 31, ~~2020.~~2022, compared to $324 million (23.2% of total revenue) for the three months ended March 31, 2021. The ~~Company analyzes its revenues~~economic recovery in the United States and abroad contributed to the broad-based demand for ~~three reportable segments: temporary~~the Company’s talent solutions and ~~consultant staffing, permanent placement staffing, and risk~~business consulting ~~and internal audit~~ services. Contributing factors for each reportable segment are discussed below in further detail.

~~Temporary and consultant staffing~~

Contract talent solutions revenues were $1.16 billion for the three months ended March 31, 2022, increasing by 30.0% compared to revenues of $889 million for the three months ended March 31, ~~2021, decreasing by 18.6% compared to revenues of $1.09 billion for the three months ended March 31, 2020.~~2021. Key drivers of ~~temporary and consultant staffing~~contract talent solutions revenues include average hourly bill rates and the number of hours worked by the Company’s engagement professionals on client engagements. On an as adjusted basis, ~~temporary and consultant staffing~~contract talent solutions revenues ~~decreased 18.9% for~~in the first quarter of ~~2021,~~2022 increased 31.0% compared to the first quarter of ~~2020,~~2021, primarily due ~~primarily~~ to ~~fewer~~an increase in the number of hours worked by the ~~Company’s~~Company's engagement professionals ~~on client engagements.~~and a 9.1% increase in weighted average bill rates, adjusted for changes in the mix of revenues by functional specialization, currency and country. In the U.S., revenues in the first quarter of ~~2021 decreased 20.3%~~2022 increased 33.4% on both an as reported basis and an as adjusted basis, compared to the first quarter of 2021. For the Company’s international operations, revenues for the first quarter of 2022 increased 18.5% on an as reported basis and ~~19.4%~~increased 23.5% on an as adjusted basis, compared to the first quarter of 2020. For the Company’s international operations, revenues for the first quarter of 2021 decreased 12.3% on an as reported basis and decreased 17.0% on an as adjusted basis, compared to the first quarter of 2020.

2021.

Permanent placement ~~staffing~~talent solutions revenues were $187 million for the three months ended March 31, 2022, increasing by 67.2% compared to revenues of $112 million for the three months ended March 31, ~~2021, decreasing by 7.3% compared to revenues of $120 million for the three months ended March 31, 2020.~~2021. Key drivers of permanent placement ~~staffing~~talent solutions revenues consist of the number of candidate placements and average fees earned per placement. On an as adjusted basis, permanent placement ~~staffing~~talent solutions revenues ~~decreased 8.1%~~increased 68.8% for the first quarter of ~~2021,~~2022, compared to the first quarter of ~~2020,~~2021, driven primarily by ~~a decrease~~an increase in the number of placements. In the U.S., revenues for the first quarter of ~~2021 decreased 12.4%~~2022 increased 78.3% on both an as reported basis and an as adjusted basis, compared to the first quarter of 2021. For the Company’s international operations, revenues for the first quarter of 2022 increased 44.7% on an as reported basis, and ~~11.4%~~increased 50.0% on an as adjusted basis, compared to the first quarter of 2020. For the Company’s international operations, revenues for the first quarter of 2021 increased 5.2% on an as reported basis and 0.3% on an as adjusted basis, compared to the first quarter of 2020.2021. Historically, demand for permanent placement ~~staffing~~talent solutions is even more sensitive to economic and labor market conditions than demand for ~~temporary and consultant staffing~~contract talent solutions and this is expected to continue.

~~Risk consulting and internal audit services~~Protiviti revenues were $472 million for the three months ended March 31, 2022, increasing by 18.9% compared to revenues of $397 million for the three months ended March 31, ~~2021, increasing by 35.1% compared to revenues of $294 million for the three months ended March 31, 2020.~~2021. Key drivers of ~~risk consulting and internal audit services~~Protiviti revenues are the billable hours worked by consultants on client engagements and average hourly bill rates. On an as adjusted basis, ~~risk consulting and internal audit services~~Protiviti revenues increased ~~34.7%~~20.0% for the first quarter of ~~2021,~~2022, compared to the first quarter of ~~2020,~~2021, due primarily to an increase in billable hours. In the U.S., revenues in the first quarter of ~~2021~~2022 increased ~~35.5%~~17.0% on both an as reported basis and an as adjusted basis, compared to the first quarter of 2021. For the Company’s international operations, revenues in the first quarter of 2022 increased 26.2% on an as reported basis, and ~~37.1%~~increased 32.3% on an as adjusted basis, compared to the first quarter of 2020. The Company’s risk consulting and internal audit services revenues for the first quarter of 2021 from international operations increased 33.8% on an as reported basis and 26.1% on an as adjusted basis, compared to the first quarter of 2020.2021.

A reconciliation of the non-GAAP year-over-year revenue growth rates to the as reported year-over-year revenue growth rates for the three months ended March 31, ~~2021,~~2022, is presented in the following table:


		Global		United States		International			Global		United States		International
Temporary and consultant staffing
Contract talent solutions								Contract talent solutions
As Reported	As Reported	-18.6	%	-20.3	%	-12.3	%	As Reported	30.0	%	33.4	%	18.5	%
Billing Days Impact	Billing Days Impact	1.0	%	0.9	%	1.4	%	Billing Days Impact	-0.2	%	0.0	%	-0.4	%
Currency Impact	Currency Impact	-1.3	%	―		-6.1	%	Currency Impact	1.2	%	―		5.4	%
As Adjusted	As Adjusted	-18.9	%	-19.4	%	-17.0	%	As Adjusted	31.0	%	33.4	%	23.5	%
Permanent placement staffing
Permanent placement talent solutions								Permanent placement talent solutions
As Reported	As Reported	-7.3	%	-12.4	%	5.2	%	As Reported	67.2	%	78.3	%	44.7	%
Billing Days Impact	Billing Days Impact	1.1	%	1.0	%	1.7	%	Billing Days Impact	-0.3	%	0.0	%	-0.5	%
Currency Impact	Currency Impact	-1.9	%	―		-6.6	%	Currency Impact	1.9	%	―		5.8	%
As Adjusted	As Adjusted	-8.1	%	-11.4	%	0.3	%	As Adjusted	68.8	%	78.3	%	50.0	%
Risk consulting and internal audit services
Protiviti								Protiviti
As Reported	As Reported	35.1	%	35.5	%	33.8	%	As Reported	18.9	%	17.0	%	26.2	%
Billing Days Impact	Billing Days Impact	1.6	%	1.6	%	2.1	%	Billing Days Impact	-0.2	%	0.0	%	-0.5	%
Currency Impact	Currency Impact	-2.0	%	―		-9.8	%	Currency Impact	1.3	%	―		6.6	%
As Adjusted	As Adjusted	34.7	%	37.1	%	26.1	%	As Adjusted	20.0	%	17.0	%	32.3	%

Gross Margin. The Company’s gross margin dollars were $772 million for the three months ended March 31, 2022, increasing by 37.4% compared to $562 million for the three months ended March 31, ~~2021, decreasing by 8.6% compared to $614 million for the three months ended March 31, 2020.~~2021. Contributing factors for each reportable segment are discussed below in further detail.

Gross margin dollars for ~~temporary and consultant staffing~~contract talent solutions represent revenues less costs of services, which consist of payroll, payroll taxes and benefit costs for engagement professionals, and reimbursable expenses. The key drivers of gross margin are: i) pay-bill spreads, which represent the differential between wages paid to engagement professionals and amounts billed to clients; ii) fringe costs, which are primarily composed of payroll taxes and benefit ~~costs for temporary and consultant staffing employees;~~costs; and iii) conversion revenues, which are earned when a ~~temporary~~contract talent solutions position converts to a permanent position with the Company’s client. Gross margin dollars for contract talent solutions were $462 million for the ~~Company’s temporary and consultant staffing division were~~three months ended March 31, 2022, increasing 33.9% compared to $345 million for the three months ended March 31, ~~2021, decreasing 16.5% compared to $413 million for the three months ended March 31, 2020.~~2021. As a percentage of revenues, gross margin for ~~temporary and consultant staffing~~contract talent solutions was 40.0% for the three months ended March 31, 2022, up from 38.8% for the three months ended March 31, ~~2021, up from 37.8% for the three months ended March 31, 2020.~~

2021. This year-over-year improvement in gross margin percentage was attributable to expanding pay-bill spreads and higher conversion revenues.

Gross margin dollars for permanent placement ~~staffing~~talent solutions represent revenues less reimbursable expenses. Gross margin dollars for ~~the Company’s~~ permanent placement ~~staffing division~~talent solutions were $186 million for the three months ended March 31, 2022, increasing 67.2% from $111 million for the three months ended March 31, ~~2021, decreasing 7.3% from $120 million for the three months ended March 31, 2020.~~2021. Because reimbursable expenses for permanent placement ~~staffing~~talent solutions are de minimis, gross margin dollars are substantially explained by revenues previously discussed.

Gross margin dollars for ~~risk consulting and internal audit services~~Protiviti represent revenues less costs of services, which consist primarily of professional staff payroll, payroll taxes, benefit costs and reimbursable expenses. The primary drivers of ~~risk consulting and internal audit services~~Protiviti's gross margin are: i) the relative composition of and number of professional staff and their respective pay and bill rates; and ii) staff utilization, which is the relationship of time spent on client engagements in proportion to the total time available for ~~the Company’s risk consulting and internal audit services~~Protiviti's staff. Gross margin dollars for Protiviti were $124 million for the ~~Company’s risk consulting and internal audit division were~~three months ended March 31, 2022, increasing 17.3% compared to $105 million for the three months ended March 31, ~~2021, increasing 29.8% compared to $81 million for the three months ended March 31, 2020.~~2021. As a percentage of revenues, reported gross margin for ~~risk consulting and internal audit services~~Protiviti in the first quarter of ~~2021~~2022 was ~~26.5%~~26.2%, down from ~~27.6%~~26.5% in the first quarter of ~~2020.~~2021. As a percentage of revenues, adjusted gross margin dollars for ~~risk consulting and internal audit services~~Protiviti were ~~26.9%~~25.3% the first quarter of ~~2021, up~~2022, down from ~~26.3%~~26.9% in the first quarter of ~~2020.~~2021. The year-over-year ~~increase~~decrease in adjusted gross margin percentage was due ~~primarily~~ to ~~higher~~lower staff utilization ~~rates.~~rates and a significant increase in headcount.

Selling, General and Administrative Expenses. The Company’s selling, general and administrative expenses consist primarily of staff compensation, advertising, variable overhead, depreciation, and occupancy costs. The Company’s selling, general and administrative expenses were $514 million for the three months ended March 31, 2022, increasing 21.5% from $423 million for the three months ended March 31, ~~2021, decreasing 4.5% from $443 million for the three months ended March 31, 2020.~~2021. As a percentage of revenues, the Company’s reported selling, general and administrative expenses were ~~30.3%~~28.3% for the first quarter of ~~2021, up~~2022, down from ~~29.4%~~30.3% the first quarter of ~~2020.~~2021. As a percentage of revenues, the Company’s adjusted selling, general and administrative expenses were 29.8% in the first quarter of 2022, up from 29.5% in the first quarter of 2021, ~~compared~~due primarily to ~~31.8% in~~ the ~~first quarter~~higher mix of ~~2020.~~permanent placement talent solutions revenues. Contributing factors for each reportable segment are discussed below in further detail.

Selling, general and administrative expenses for contract talent solutions were $305 million for the ~~Company’s temporary and consultant staffing division were~~three months ended March 31, 2022, increasing 9.6% from $279 million for the three months ended March 31, ~~2021, decreasing 2.7% from $286 million for the three months ended March 31, 2020.~~2021. As a percentage of revenues, reported selling, general and administrative expenses for ~~temporary and consultant staffing~~contract talent solutions were 26.4% in the first quarter of 2022, down from 31.3% in the first quarter of ~~2021, up from 26.2% in the first quarter of 2020.~~2021. As a percentage of revenues, adjusted selling, general and administrative expenses for ~~temporary and consultant staffing~~contract talent solutions were 28.4% in the first quarter of 2022, down from 30.3% in the first quarter of 2021, ~~up from 29.2% in the first quarter of 2020~~ due primarily to ~~negative~~positive leverage ~~as revenues decreased~~from an increase in ~~response to the COVID-19 pandemic.~~revenues.

Selling, general and administrative expenses for ~~the Company’s~~ permanent placement ~~staffing division~~talent solutions were $146 million for the three months ended March 31, 2022, increasing by 54.2% compared to $95 million for the three months ended March 31, ~~2021, decreasing by 10.3% compared to $106 million for the three months ended March 31, 2020.~~2021. As a percentage of revenues, reported selling, general and administrative expenses for permanent placement ~~staffing~~talent solutions were 78.3% in the first quarter of 2022, down from 84.9% in the first quarter of ~~2021, down from 87.7% in the first quarter of 2020.~~2021. As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement ~~staffing~~talent solutions was 79.8% in the first quarter of 2022, down from 83.9% in the first quarter of 2021, ~~down from 90.8% in the first quarter of 2020~~ due primarily to positive leverage ~~as the decrease~~from an increase in ~~expenses exceeded the decrease in revenues as a result of cost curtailing initiatives implemented during 2020.~~revenues.

Selling, general and administrative expenses for Protiviti were $63 million for the ~~Company’s risk consulting and internal audit services division were~~three months ended March 31, 2022, increasing by 26.1% compared to $50 million for the three months ended March 31, ~~2021, decreasing by 2.6% compared to $51 million for the three months ended March 31, 2020.~~2021. As a percentage of revenues, selling, general and administrative expenses for ~~risk consulting and internal audit services~~Protiviti were 13.3% in the first quarter of 2022, up from 12.5% in the first quarter of 2021, ~~down from 17.3% in the first quarter of 2020~~ due primarily to ~~positive leverage from~~ an increase in ~~revenues.~~

variable overhead costs.

2324

A reconciliation of the non-GAAP adjusted summary of operations to the reported summary of operations, for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 is presented in the following table (in thousands):


		Quarter Ended March 31,												Relationships									Three Months Ended March 31,												Relationships
		2021						2020						2021		2020		2021		2020			2022						2021						2022		2021		2022		2021
		Reported		Adjustments		Adjusted (1)		Reported		Adjustments		Adjusted (1)		Reported				Adjusted					Reported		Adjustments		Adjusted (1)		Reported		Adjustments		Adjusted (1)		Reported				Adjusted
SERVICE REVENUES:	SERVICE REVENUES:																					SERVICE REVENUES:
Accountemps		$	417,116			$	417,116	$	489,884			$	489,884	29.8	%	32.5	%	29.8	%	32.5	%
OfficeTeam		220,467				220,467		239,979				239,979		15.8	%	15.9	%	15.8	%	15.9	%
Robert Half Technology		172,239				172,239		196,652				196,652		12.3	%	13.1	%	12.3	%	13.1	%
Robert Half Management Resources		183,271				183,271		211,878				211,878		13.1	%	14.1	%	13.1	%	14.1	%
Finance and accounting																						Finance and accounting	$	801,690	$	—	$	801,690	$	600,387	$	—	$	600,387	44.2	%	42.9	%	44.2	%	42.9	%
Administrative and customer support																						Administrative and customer support	284,906		—		284,906		220,467		—��		220,467		15.7	%	15.8	%	15.7	%	15.8	%
Technology																						Technology	213,327		—		213,327		172,239		—		172,239		11.7	%	12.3	%	11.7	%	12.3	%
Elimination of intersegment revenues	Elimination of intersegment revenues	(103,818)				(103,818)		(46,273)				(46,273)		(7.4	%)	(3.1	%)	(7.4	%)	(3.1	%)	Elimination of intersegment revenues	(144,200)		—		(144,200)		(103,818)		—		(103,818)		(7.9	%)	(7.4	%)	(7.9	%)	(7.4	%)
Temporary and consultant staffing		889,275				889,275		1,092,120				1,092,120		63.6	%	72.5	%	63.6	%	72.5	%
Permanent placement staffing		111,703				111,703		120,489				120,489		8.0	%	8.0	%	8.0	%	8.0	%
Contract talent solutions																						Contract talent solutions	1,155,723		—		1,155,723		889,275		—		889,275		63.7	%	63.6	%	63.7	%	63.6	%
Permanent placement talent solutions																						Permanent placement talent solutions	186,782		—		186,782		111,703		—		111,703		10.3	%	8.0	%	10.3	%	8.0	%
Protiviti	Protiviti	397,402				397,402		294,082				294,082		28.4	%	19.5	%	28.4	%	19.5	%	Protiviti	472,329		—		472,329		397,402		—		397,402		26.0	%	28.4	%	26.0	%	28.4	%
Total	Total	$	1,398,380			$	1,398,380	$	1,506,691			$	1,506,691	100.0	%	100.0	%	100.0	%	100.0	%	Total	$	1,814,834	$	—	$	1,814,834	$	1,398,380	$	—	$	1,398,380	100.0	%	100.0	%	100.0	%	100.0	%

GROSS MARGIN:	GROSS MARGIN:																					GROSS MARGIN:
Temporary and consultant staffing		$	344,931			$	344,931	$	412,996			$	412,996	38.8	%	37.8	%	38.8	%	37.8	%
Permanent placement staffing		111,498				111,498		120,280				120,280		99.8	%	99.8	%	99.8	%	99.8	%
Contract talent solutions																						Contract talent solutions	$	461,861	$	—	$	461,861	$	344,931	$	—	$	344,931	40.0	%	38.8	%	40.0	%	38.8	%
Permanent placement talent solutions																						Permanent placement talent solutions	186,449		—		186,449		111,498		—		111,498		99.8	%	99.8	%	99.8	%	99.8	%
Protiviti	Protiviti	105,282		1,688		106,970		81,112		(3,671)		77,441		26.5	%	27.6	%	26.9	%	26.3	%	Protiviti	123,536		(3,846)		119,690		105,282		1,688		106,970		26.2	%	26.5	%	25.3	%	26.9	%
Total	Total	$	561,711	$	1,688	$	563,399	$	614,388	$	(3,671)	$	610,717	40.2	%	40.8	%	40.3	%	40.5	%	Total	$	771,846	$	(3,846)	$	768,000	$	561,711	$	1,688	$	563,399	42.5	%	40.2	%	42.3	%	40.3	%

SELLING GENERAL AND ADMINISTRATIVE EXPENSE:	SELLING GENERAL AND ADMINISTRATIVE EXPENSE:																					SELLING GENERAL AND ADMINISTRATIVE EXPENSE:
Temporary and consultant staffing		$	278,547	$	(9,151)	$	269,396	$	286,174	$	33,058	$	319,232	31.3	%	26.2	%	30.3	%	29.2	%
Permanent placement staffing		94,867		(1,149)		93,718		105,722		3,647		109,369		84.9	%	87.7	%	83.9	%	90.8	%
Contract talent solutions																						Contract talent solutions	$	305,334	$	23,281	$	328,615	$	278,547	$	(9,151)	$	269,396	26.4	%	31.3	%	28.4	%	30.3	%
Permanent placement talent solutions																						Permanent placement talent solutions	146,247		2,874		149,121		94,867		(1,149)		93,718		78.3	%	84.9	%	79.8	%	83.9	%
Protiviti	Protiviti	49,648		—		49,648		50,972		—		50,972		12.5	%	17.3	%	12.5	%	17.3	%	Protiviti	62,613		—		62,613		49,648		—		49,648		13.3	%	12.5	%	13.3	%	12.5	%
Total	Total	$	423,062	$	(10,300)	$	412,762	$	442,868	$	36,705	$	479,573	30.3	%	29.4	%	29.5	%	31.8	%	Total	$	514,194	$	26,155	$	540,349	$	423,062	$	(10,300)	$	412,762	28.3	%	30.3	%	29.8	%	29.5	%

OPERATING/SEGMENT INCOME:	OPERATING/SEGMENT INCOME:																					OPERATING/SEGMENT INCOME:
Temporary and consultant staffing		$	66,384	$	9,151	$	75,535	$	126,822	$	(33,058)	$	93,764	7.5	%	11.6	%	8.5	%	8.6	%
Permanent placement staffing		16,631		1,149		17,780		14,558		(3,647)		10,911		14.9	%	12.1	%	15.9	%	9.1	%
Contract talent solutions																						Contract talent solutions	$	156,527	$	(23,281)	$	133,246	$	66,384	$	9,151	$	75,535	13.5	%	7.5	%	11.5	%	8.5	%
Permanent placement talent solutions																						Permanent placement talent solutions	40,202		(2,874)		37,328		16,631		1,149		17,780		21.5	%	14.9	%	20.0	%	15.9	%
Protiviti	Protiviti	55,634		1,688		57,322		30,140		(3,671)		26,469		14.0	%	10.2	%	14.4	%	9.0	%	Protiviti	60,923		(3,846)		57,077		55,634		1,688		57,322		12.9	%	14.0	%	12.1	%	14.4	%
Total	Total	$	138,649	$	11,988	$	150,637	$	171,520	$	(40,376)	$	131,144	9.9	%	11.4	%	10.8	%	8.7	%	Total	$	257,652	$	(30,001)	$	227,651	$	138,649	$	11,988	$	150,637	14.2	%	9.9	%	12.5	%	10.8	%
(Income) loss from investments held in employee deferred compensation trusts																						(Income) loss from investments held in employee deferred compensation trusts	30,001		(30,001)		—		(11,988)		11,988		—		1.7	%	(0.9	%)	—		—
Amortization of intangible assets	Amortization of intangible assets	576		—		576		338		—		338		0.1	%	0.1	%	0.1	%	0.1	%	Amortization of intangible assets	417		—		417		576		—		576		0.0	%	0.1	%	0.0	%	0.1	%
(Income) loss from investments held in employee deferred compensation trusts		(11,988)		11,988		—		40,376		(40,376)		—		0.9	%	(2.7	%)	0.0	%	0.0	%
Interest income, net	Interest income, net	(45)		—		(45)		(957)		—		(957)		0.0	%	0.1	%	0.0	%	0.1	%	Interest income, net	(166)				(166)		(45)		—		(45)		0.0	%	0.0	%	0.0	%	0.0	%
Income before income taxes	Income before income taxes	$	150,106	$	—	$	150,106	$	131,763	$	—	$	131,763	10.7	%	8.7	%	10.7	%	8.7	%	Income before income taxes	$	227,400	$	—	$	227,400	$	150,106	$	—	$	150,106	12.5	%	10.7	%	12.5	%	10.7	%

(1) Changes in the Company’s deferred compensation obligations are included in selling, general and administrative expense or, in the case of Protiviti, costs of services, while the related investment ~~income~~(income) loss is presented separately. The non-GAAP financial measures shown in the table above are adjusted to reclassify investment ~~income~~(income) loss from investments held in employee deferred compensation trusts to the same line item, which includes the corresponding change in obligation. These adjustments have no impact to income before income taxes.

2425

~~Income~~(Income) Loss from Investments Held in Employee Deferred Compensation Trusts. Under the Company’s employee deferred compensation plans, employees direct the investment of their account balances, and the Company invests amounts held in the associated investment trusts consistent with these directions. As realized and unrealized investment gains and losses occur, the Company’s employee deferred compensation obligation to employees changes accordingly. Changes in the Company’s deferred compensation obligations noted above remain in selling, general and administrative, or in the case of ~~the Company’s risk consulting and internal audit services division,~~Protiviti, costs of services. The value of the related investment trust assets also changes by the equal and offsetting amount, leaving no net costs to the Company. The Company’s ~~income~~(income) loss from investments held in employee deferred compensation trusts consists primarily of unrealized and realized gains and losses and dividend income from trust investments. The Company’s ~~income/~~(income) loss from investments held in employee deferred compensation trusts was ana loss of $30 million for the three months ended March 31, 2022, compared to income of $12 million for the three months ended March 31, ~~2021 whereas it had a~~2021. The loss ~~of $40 million for the three months ended March 31, 2020. The increase in income~~ from trust investments was due to ~~positive~~negative market returns in ~~2021.~~the first quarter of 2022.

Income Before Income Taxes and Segment Income. The Company’s total income before income taxes was $227 million, or 12.5% of revenues, for the three months ended March 31, 2022, up from $150 million or 10.7% of revenues, for the three months ended March 31, ~~2021, up from $132~~2021. Combined segment income was $228 million, or ~~8.7%~~12.5% of revenues, for the three months ended March 31, ~~2020. Combined segment income was~~2022, up from $151 million, or 10.8% of revenues, for the three months ended March 31, ~~2021, up from $131 million or 8.7% of revenues, for the three months ended March 31, 2020.~~2021.

The following table provides a reconciliation of the non-GAAP combined segment income to reported income before income taxes for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 (in thousands):


		Three Months Ended March 31,
			2021		2020			Three Months Ended March 31,
									2022		2021
Income before income taxes	Income before income taxes		$	150,106	$	131,763	Income before income taxes		$	227,400	$	150,106
Interest income, net	Interest income, net		(45)		(957)		Interest income, net		(166)		(45)
Amortization of intangible assets	Amortization of intangible assets		576		338		Amortization of intangible assets		417		576
Combined segment income	Combined segment income		$	150,637	$	131,144	Combined segment income		$	227,651	$	150,637

~~For the Company’s temporary and consultant staffing division,~~Contract talent solutions segment income was $133 million, or 11.5% of applicable revenues for the three months ended March 31, 2022, up from $76 million, or 8.5% of applicable revenues ~~down from $94~~for the three months ended March 31, 2021. Permanent placement talent solutions segment income was $37 million, or ~~8.6%~~20.0% of applicable revenues in the first quarter of ~~2020. For the Company’s permanent placement staffing division, segment income was~~2022, up from $18 million, or 15.9% ~~of applicable revenues, up from segment income of $11 million, or 9.1%~~ of applicable revenues, in the first quarter of ~~2020. For the Company’s risk consulting and internal audit services division,~~2021. Protiviti segment income was $57 million, or ~~14.4% of applicable revenues, compared to segment income of $26 million or 9.0%~~12.1% of applicable revenues in the first quarter of ~~2020.~~2022, compared to segment income of $57 million, or 14.4% of applicable revenues, in the first quarter of 2021.

Provision for income taxes. The provision for income taxes was ~~26.3%~~26.0% and ~~31.8%~~26.3% for the three months ended March 31, 2022 and 2021, ~~and 2020,~~ respectively. ~~The 2020 rate was elevated based on the estimated lower coverage of non-deductible tax items due to lower pandemic-impacted revenues.~~

Liquidity and Capital Resources

The change in the Company’s liquidity during the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, is primarily the net effect of funds generated by operations and the funds used for capital expenditures, investment in employee deferred compensation trusts, net of redemptions from employee deferred compensation trusts, repurchases of common stock, and payment of dividends.

Cash and cash equivalents were ~~$498~~$550 million and ~~$250~~$498 million at March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. Operating activities provided cash flows of $69 million during the three months ended March 31, 2022, offset by $27 million and $110 million of net cash used in investing activities and financing activities, respectively. Operating activities provided cash flows of $68 million during the three months ended March 31, 2021, offset by $15 million and $124 million of net cash used in investing activities and financing activities, respectively.

Operating activities—Net cash provided by operating activities ~~provided $125 million during~~for the three months ended March 31, ~~2020,~~2022 was composed of net income of $168 million adjusted upward for non-cash items of $72 million, offset by ~~$28 million and $110 million of~~ net cash used in ~~investing activities and financing activities, respectively.~~

~~Operating activities—~~changes in working capital of $171 million. Net cash provided by operating activities for the three months ended March 31, 2021 was composed of net income of $111 million adjusted upward for non-cash items of $33 million, offset by net cash used in changes in working capital of $76 million. ~~Net cash provided by operating~~

Investing activities—Cash used in investing activities for the three months ended March 31, ~~2020,~~2022 was $27 million. This was composed of ~~net income~~capital expenditures of ~~$90~~$15 million ~~adjusted upward for non-cash items~~and investments in employee deferred compensation trusts of ~~$91~~$34 million, partially offset by ~~net cash used in changes in working capital~~proceeds from employee deferred compensation trusts redemptions of ~~$56~~$22 million.

~~Investing activities—~~Cash used in investing activities for the three months ended March 31, 2021 was $15 million. This was composed of capital expenditures of $10 million and ~~investment~~investments in employee deferred compensation trusts of $28 million, offset by proceeds from employee deferred compensation trusts redemptions of $23 million. Cash used in investing activities for the three months ended March 31, 2020, was $28 million. This was composed of capital expenditures of $14 million and investment in employee deferred compensation trusts of $37 million,partially offset by proceeds from employee deferred compensation trusts redemptions of $23 million.

Capital expenditures, including $9.5 million for cloud computing arrangements, for the three months ended March 31, 2022, totaled $24.5 million, approximately 81% of which represented investments in software initiatives and technology infrastructure, both of which are important to the Company’s sustainability and future growth opportunities. Capital expenditures for cloud computing arrangements are included in cash flows from operating activities on the Company’s Condensed Consolidated Statements of Cash Flows. Capital expenditures included amounts spent on tenant improvements and furniture and equipment in the Company’s leased offices. The Company currently expects that 2022 capital expenditures will range from $95 million to $105 million, of which $75 million to $85 million relates to software initiatives and technology infrastructure, including capitalized costs related to implementation of cloud computing arrangements.

Financing activities—Cash used in financing activities for the three months ended March 31, 2022 was $110 million. This included repurchases of $62 million in common stock and $48 million in dividends paid to stockholders. Cash used in financing activities for the three months ended March 31, 2021 was $124 million. This included repurchases of $80 million in common stock and $44 million in dividends paid to stockholders. Cash used in financing activities for the three months ended March 31, 2020, was $110 million. This included repurchases of $70 million in common stock and $40 million in dividends paid to stockholders.

As of March 31, ~~2021,~~2022, the Company is authorized to repurchase, from time to time, up to ~~9.2~~6.7 million additional shares of the Company’s common stock on the open market or in privately negotiated transactions, depending on market conditions. During the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company repurchased 0.5 million shares, at a cost of $55 million, and 0.8 million shares, at a cost of $61 ~~million, and 1.0 million shares, at a cost of $51~~ million, on the open market, respectively. Additional stock repurchases were made in connection with employee stock plans, whereby Company shares were tendered by employees for the payment of exercise price and applicable statutory withholding taxes. During the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, such repurchases totaled ~~0.3~~0.1 million shares, at a cost of ~~$19~~$7 million, and 0.3 million shares, at a cost of ~~$12~~$19 million, respectively. Repurchases of shares have been funded with cash generated from operations.

The Company’s working capital at March 31, ~~2021,~~2022 included ~~$498~~$550 million in cash and cash equivalents and ~~$800 million~~$1.07 billion in accounts receivable, both of which will be a significant source of ongoing liquidity and financial resilience. The Company expects that internally generated cash will be sufficient to support the working capital needs of the Company, the Company’s fixed payments, dividends, and other obligations on both a short-term and long-term basis.

~~We have~~There is limited visibility into future cash flows as the Company’s revenues are dependent on macroeconomic conditions. The Company’s variable direct costs related to its ~~temporary and consultant staffing~~contract talent solutions business will largely fluctuate in relation to its revenues.

In May ~~2020,~~2021, the Company entered into ~~a new~~an amendment to extend the maturity of its $100 million unsecured revolving credit facility (the ~~“364-Day Credit~~“Credit Agreement”). to May 2024. Borrowings under the ~~364-Day~~ Credit Agreement will bear interest in accordance with the terms of the borrowing, which typically will be calculated according to the LIBOR, or an alternative base rate, plus an applicable margin. The ~~364-Day~~ Credit Agreement is subject to certain financial covenants and the Company was in compliance with these covenants as of March 31, ~~2021.~~2022. There were no borrowings under the ~~364-Day~~ Credit Agreement as of March 31, ~~2021.~~2022.

On ~~April 29, 2021,~~May 3, 2022, the Company announced a quarterly dividend of ~~$.38~~$.43 per share to be paid to all shareholders of record as of May 25, ~~2021.~~2022. The dividend will be paid on June 15, 2022.

Material Cash Requirements from Contractual Obligations

Leases.As of March 31, 2022, the Company reported current and long-term operating lease liabilities of $86.3 million and $176.4 million, respectively. These balances consist of the minimum rental commitments for April 2022 and thereafter, discounted to reflect the Company’s cost of borrowing, under noncancelable lease contracts executed as of March 31, 2022.

The majority of these leases are for real estate. In the event the Company vacates a location prior to the end of the lease term, the Company may be obliged to continue making lease payments. For further information, see Note F— “Leases” to the Company’s Condensed Consolidated Financial Statements included under Part I—Item 1 of this report.

Purchase Obligations. Purchase obligations are discussed in more detail in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021. There have been no material changes to the Company's contractual purchase obligations during the first quarter of 2022.

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Employee Deferred Compensation Plan.As of March 31, 2022, the Company reported deferred compensation plan obligations of $495.3 million in its accompanying Condensed Consolidated Statements of Financial Position. The balances are due to employees based upon elections they make at the time of deferring their funds. The timing of these payments may change based upon factors including termination of the Company’s employment arrangement with a participant. Assets of these plans are held by an independent trustee for the sole benefit of participating employees and consist of money market funds and mutual funds.For further information, see Note I—“Employee Deferred Compensation Plan Obligations” to the Company’s Condensed Consolidated Financial Statements included under Part I—Item 1 of this report.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

~~We continue~~The Company continues to monitor the ~~significant~~ global economic uncertainty as a result ~~of coronavirus (“COVID-19”)~~the COVID-19 pandemic to assess the impact on ~~the Company’s~~its results of operations, financial condition, and liquidity. In light of the ongoing economic disruption, we continue to face a greater degree of uncertainty than normal in making the judgments and estimates needed to apply the Company’s significant accounting policies. As the situation continues to develop, we may make changes to these estimates and judgments over time, which could result in meaningful impacts to the Company’s financial statements in future periods. Actual results and outcomes may differ from management’s estimates and assumptions.

Because a portion of the Company’s net revenues are derived from its operations outside the U.S. and are denominated in local currencies, the Company is exposed to the impact of foreign currency fluctuations. The Company’s exposure to foreign currency exchange rates relates primarily to the Company’s foreign subsidiaries. Exchange rates impact the U.S. dollar value of the Company’s reported revenues, expenses, earnings, assets and liabilities.

For the three months ended March 31, ~~2021,~~2022, approximately ~~23% of the~~22.0% Company’s revenues were generated outside of the United States. These operations transact business in their functional currency, which is the same as their local currency. As a result, fluctuations in the value of foreign currencies against the U.S. dollar, particularly the Canadian dollar, British pound, Euro, ~~and~~ Australian dollar and Brazilian real, have an impact on the Company’s reported results. Under GAAP, revenues and expenses denominated in foreign currencies are translated into U.S. dollars at the monthly average exchange rates prevailing during the period. Consequently, as the value of the U.S. dollar changes relative to the currencies of the Company’s non-U.S. markets, the Company’s reported results vary.

During the first three months of ~~2021,~~2022, the U.S. dollar fluctuated, and generally ~~weakened,~~strengthened, against the primary currencies in which the Company conducts business, compared to one year ago. Currency exchange rates had the effect of ~~increasing~~decreasing reported ~~net~~ service revenues by ~~$22.6~~$18.5 million, or ~~1.5%~~1.3%, in the first quarter of ~~2021~~2022 compared to the same period one year ago. The general ~~weakening~~strengthening of the U.S. dollar also affected the reported level of expenses incurred in the Company’s foreign operations. Because substantially all the Company’s foreign operations generated revenues and incurred expenses within the same country and currency, the effect of ~~higher~~lower reported revenues is largely offset by the ~~increase~~decrease in reported operating expenses. Reported net income was ~~$0.8~~$1 million, or 0.9%, ~~higher~~lower in the first quarter of ~~2021~~2022 compared to the same period one year ago due to the effect of currency exchange rates. If currency exchange rates were to remain at March 31, ~~2021~~2022 levels throughout the remainder of ~~2021,~~2022, the currency impact on the Company’s full-year reported revenues and operating expenses would be nearly flat compared to full year ~~2020~~2021 results. Should current trends continue, the impact to reported net income would be immaterial.

For the one month ended April 30, 2022, the U.S. dollar has strengthened against the Euro, Canadian Dollar, British Pound, Australian Dollar, and the Brazilian Real since March 31, 2022. If currency exchange rates were to remain at April 2022 levels throughout 2022, the currency impact on the Company’s full-year reported revenues would be unfavorable, offset by a favorable impact on operating expenses. These results will likely have an immaterial impact on reported net income.

Fluctuations in currency exchange rates impact the U.S. dollar amount of the Company’s stockholders’ equity. The assets and liabilities of the Company’s non-U.S. subsidiaries are translated into U.S. dollars at the exchange rates in effect at period end. The resulting translation adjustments are recorded in stockholders’ equity as a component of accumulated other comprehensive income. Although currency fluctuations impact the Company’s reported results and shareholders’ equity, such fluctuations generally do not affect cash flow or result in actual economic gains or losses. The Company generally has few cross-border transfers of funds, ~~except for transfers to the U.S. for payment~~consisting of ~~intercompany loans, working capital loans made between the U.S. and~~dividends from the Company’s foreign subsidiaries, and ~~dividends~~transfers to and from the ~~Company’s foreign subsidiaries.~~U.S. related to intercompany working capital requirements.

ITEM 4. Controls and Procedures

Management, including the Company’s President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports the Company files and submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

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PART II—OTHER INFORMATION

ITEM 1. Legal Proceedings

There have been no material developments with regard to any of the legal proceedings previously disclosed in the Company’s annual report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

ITEM 1A. Risk Factors

There have not been any material changes with regard to the risk factors previously disclosed in the Company’s annual report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities
Total
Number
of Shares
Purchased Average
Price Paid
per Share Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Plans Maximum
Number of
Shares that May
Yet Be
Purchased
Under Publicly
Announced
Plans (c)
January 1, 2021 to January 31, 2021 — $ — — 9,947,956
February 1, 2021 to February 28, 2021 246,623 (a) $ 76.79 178,051 9,769,905
March 1, 2021 to March 31, 2021 801,406 (b) $ 76.53 618,905 9,151,000
Total January 1, 2021 to March 31, 2021 1,048,029 796,956


	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares that May Yet Be Purchased Under Publicly Announced Plans (c)
January 1, 2022 to January 31, 2022	—		$	—	—	7,151,693
February 1, 2022 to February 28, 2022	210,020	(a)	$	119.16	149,307	7,002,386
March 1, 2022 to March 31, 2022	327,207	(b)	$	114.04	326,111	6,676,275
Total January 1, 2022 to March 31, 2022	537,227				475,418

(a)Includes ~~68,572~~60,713 shares repurchased in connection with employee stock plans, whereby Company shares were tendered by employees for the payment of applicable withholding taxes.

(b)Includes ~~182,501~~1,096 shares repurchased in connection with employee stock plans, whereby Company shares were tendered by employees for the payment of applicable withholding taxes.

(c)Commencing in October 1997, the Company's Board of Directors has, at various times, authorized the repurchase, from time to time, of the Company's common stock on the open market or in privately negotiated transactions depending on market conditions. Since plan inception, a total of 128,000,000 shares have been authorized for repurchase, of which ~~118,849,000~~121,323,725 shares have been repurchased as of March 31, ~~2021.~~2022.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosure

Not applicable.

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ITEM 5. Other Information

None.

ITEM 6. Exhibits


3.1			Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2009.

3.2			Amended and Restated By-Laws, incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K dated February 12, 2020.



31.1			Rule 13a-14(a) Certification of Chief Executive Officer.

31.2			Rule 13a-14(a) Certification of Chief Financial Officer.

32.1			Section 1350 Certification of Chief Executive Officer.

32.2			Section 1350 Certification of Chief Financial Officer.

101.1			Part I, Item 1 of this Form 10-Q formatted in Inline XBRL.

104			Cover page of this Form 10-Q formatted in Inline XBRL and contained in Exhibit 101.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			ROBERT HALF INTERNATIONAL INC. (Registrant)

			/S/ Michael C. Buckley
			Michael C. Buckley Executive Vice President and Chief Financial Officer (Principal Financial Officer and duly authorized signatory)

Date: ~~April 30, 2021~~May 4, 2022

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2021 (excluding the three months ended March 31, 2021)	$	65,666
2022	73,205
2023	59,476
2024	47,524
2025	29,095
Thereafter	29,371
Less: Imputed interest	(16,932)
Present value of operating lease liabilities (a)	$	287,405