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 September 30, ~~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 September 30, ~~2021:~~2022:

~~111,330,204~~ 108,498,536 shares of ~~$.001~~$0.001 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)


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	633,719	$	574,426	Cash and cash equivalents	$	593,348	$	619,001
Accounts receivable, net	Accounts receivable, net	1,005,633		714,163		Accounts receivable, net	1,101,305		984,691
Employee deferred compensation trust assets	Employee deferred compensation trust assets	462,260		406,634		Employee deferred compensation trust assets	404,019		494,991
Other current assets	Other current assets	132,139		147,515		Other current assets	151,178		169,864
Total current assets	Total current assets	2,233,751		1,842,738		Total current assets	2,249,850		2,268,547
Property and equipment, net	Property and equipment, net	93,016		109,817		Property and equipment, net	106,286		93,403
Right-of-use assets	Right-of-use assets	231,927		262,688		Right-of-use assets	198,483		228,793
Other intangible assets, net	Other intangible assets, net	3,852		5,594		Other intangible assets, net	2,084		3,334
Goodwill	Goodwill	222,892		223,055		Goodwill	221,426		222,855
Noncurrent deferred income taxes	Noncurrent deferred income taxes	146,280		113,532		Noncurrent deferred income taxes	132,456		135,427
Total assets	Total assets	$	2,931,718	$	2,557,424	Total assets	$	2,910,585	$	2,952,359
LIABILITIES	LIABILITIES					LIABILITIES
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	168,720	$	130,770	Accounts payable and accrued expenses	$	153,247	$	183,796
Accrued payroll and benefit costs	Accrued payroll and benefit costs	557,913		397,877		Accrued payroll and benefit costs	553,606		540,183
Employee deferred compensation plan obligations	Employee deferred compensation plan obligations	492,147		435,121		Employee deferred compensation plan obligations	435,021		535,276
Income taxes payable	Income taxes payable	42,660		4,015		Income taxes payable	11,303		15,631
Notes payable		62		239

Current operating lease liabilities	Current operating lease liabilities	80,100		78,604		Current operating lease liabilities	81,072		83,787
Total current liabilities	Total current liabilities	1,341,602		1,046,626		Total current liabilities	1,234,249		1,358,673

Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	188,469		223,869		Noncurrent operating lease liabilities	150,938		181,291
Other liabilities	Other liabilities	85,604		81,640		Other liabilities	34,481		31,344
Total liabilities	Total liabilities	1,615,675		1,352,135		Total liabilities	1,419,668		1,571,308
Commitments and Contingencies (Note J)	Commitments and Contingencies (Note J)	0		0		Commitments and Contingencies (Note J)
STOCKHOLDERS’ EQUITY	STOCKHOLDERS’ EQUITY					STOCKHOLDERS’ EQUITY
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	—		—		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 111,228,929 shares and 113,127,501 shares		111		113
Common stock, $0.001 par value; authorized 260,000,000 shares; issued and outstanding 108,498,147 shares and 110,685,989 shares						Common stock, $0.001 par value; authorized 260,000,000 shares; issued and outstanding 108,498,147 shares and 110,685,989 shares	108		111
Additional paid-in capital	Additional paid-in capital	1,222,117		1,179,972		Additional paid-in capital	1,279,576		1,235,903
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(19,100)		(4,732)		Accumulated other comprehensive income (loss)	(71,759)		(22,622)
Retained earnings	Retained earnings	112,915		29,936		Retained earnings	282,992		167,659
Total stockholders’ equity	Total stockholders’ equity	1,316,043		1,205,289		Total stockholders’ equity	1,490,917		1,381,051
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	2,931,718	$	2,557,424	Total liabilities and stockholders’ equity	$	2,910,585	$	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
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Service revenues $ 1,712,566 $ 1,189,897 $ 4,691,527 $ 3,804,914
Costs of services 987,239 722,551 2,739,618 2,306,630
Gross margin 725,327 467,346 1,951,909 1,498,284
Selling, general and administrative expenses 495,576 390,799 1,406,731 1,240,879
(Income) loss from investments held in employee deferred compensation trusts (which is completely offset by related costs and expenses - Notes A & I) 1,759 (26,095) (38,039) (34,630)
Amortization of intangible assets 572 334 1,724 1,002
Interest income, net (238) (202) (145) (1,264)
Income before income taxes 227,658 102,510 581,638 292,297
Provision for income taxes 56,787 26,761 150,956 80,437
Net income $ 170,871 $ 75,749 $ 430,682 $ 211,860
Net income per share:
Basic $ 1.55 $ .67 $ 3.89 $ 1.88
Diluted $ 1.53 $ .67 $ 3.85 $ 1.87
Shares:
Basic 110,176 112,809 110,816 112,953
Diluted 111,490 113,355 111,954 113,444
Dividends declared per share $ .38 $ .34 $ 1.14 $ 1.02


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021

Service revenues	$	1,833,455	$	1,712,566	$	5,511,116	$	4,691,527
Costs of services	1,045,846		987,239		3,136,114		2,739,618
Gross margin	787,609		725,327		2,375,002		1,951,909
Selling, general and administrative expenses	548,579		495,576		1,572,167		1,406,731
(Income) loss from investments held in employee deferred compensation trusts (which is completely offset by related costs and expenses - Notes A & I)	15,335		1,759		110,958		(38,039)
Amortization of intangible assets	417		572		1,250		1,724
Interest income, net	(2,346)		(238)		(3,230)		(145)
Income before income taxes	225,624		227,658		693,857		581,638
Provision for income taxes	59,418		56,787		183,591		150,956
Net income	$	166,206	$	170,871	$	510,266	$	430,682

Net income per share:
Basic	$	1.54	$	1.55	$	4.70	$	3.89
Diluted	$	1.53	$	1.53	$	4.65	$	3.85

Shares:
Basic	107,855		110,176		108,630		110,816
Diluted	108,618		111,490		109,630		111,954
Dividends declared per share	$	0.43	$	0.38	$	1.29	$	1.14

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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
COMPREHENSIVE INCOME (LOSS):	COMPREHENSIVE INCOME (LOSS):									COMPREHENSIVE INCOME (LOSS):
Net income	Net income	$	170,871	$	75,749	$	430,682	$	211,860	Net income	$	166,206	$	170,871	$	510,266	$	430,682
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	(10,046)		11,156		(14,485)		3,990		Foreign currency translation adjustments, net of tax	(24,167)		(10,046)		(49,183)		(14,485)
Foreign defined benefit plans, net of tax		38		—		117		—
Foreign defined benefit plan adjustments, net of tax										Foreign defined benefit plan adjustments, net of tax	15		38		46		117
Total other comprehensive income (loss)	Total other comprehensive income (loss)	(10,008)		11,156		(14,368)		3,990		Total other comprehensive income (loss)	(24,152)		(10,008)		(49,137)		(14,368)
Total comprehensive income (loss)	Total comprehensive income (loss)	$	160,863	$	86,905	$	416,314	$	215,850	Total comprehensive income (loss)	$	142,054	$	160,863	$	461,129	$	416,314

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				Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total
		Shares	Par Value								Shares								Par Value
Balance at December 31, 2020		113,128	$	113			$	1,179,972						$	(4,732)			$	29,936		$	1,205,289
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	—	—		—				—			110,598				110,598			Net income	—			—		—			—			168,239			168,239
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—				(8,797)			—				(8,797)			Other comprehensive income (loss)	—			—		—			(952)			—			(952)
Dividends declared ($.38 per share)		—	—		—				—			(43,300)				(43,300)
Dividends declared ($0.43 per share)																			Dividends declared ($0.43 per share)	—			—		—			—			(48,413)			(48,413)
Net issuances of restricted stock	Net issuances of restricted stock	602	1		(1)				—			—				—			Net issuances of restricted stock	598			1		(1)			—			—			—
Stock-based compensation	Stock-based compensation	—	—		14,182				—			—				14,182			Stock-based compensation	—			—		15,184			—			—			15,184
Repurchases of common stock	Repurchases of common stock	(1,048)	(1)		—				—			(80,272)				(80,273)			Repurchases of common stock	(537)			(1)		—			—			(62,340)			(62,341)
Balance at March 31, 2021		112,682	$	113	$	1,194,153			$	(13,529)		$	16,962			$	1,197,699
Balance at March 31, 2022																			Balance at March 31, 2022	110,747			$	111	$	1,251,086		$	(23,574)		$	225,145		$	1,452,768

Net income	Net income	—	—		—				—			149,213				149,213			Net income	—			—		—			—			175,821			175,821
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—				4,437			—				4,437			Other comprehensive income (loss)	—			—		—			(24,033)			—			(24,033)
Dividends declared ($.38 per share)		—	—		—				—			(42,720)				(42,720)
Dividends declared ($0.43 per share)																			Dividends declared ($0.43 per share)	—			—		—			—			(47,325)			(47,325)
Net issuances of restricted stock	Net issuances of restricted stock	5	—		—				—			—				—			Net issuances of restricted stock	4			—		—			—			—			—
Stock-based compensation	Stock-based compensation	—	—		13,903				—			—				13,903			Stock-based compensation	—			—		14,409			—			—			14,409
Repurchases of common stock	Repurchases of common stock	(717)	(1)		—				—			(63,281)				(63,282)			Repurchases of common stock	(1,144)			(1)		—			—			(103,971)			(103,972)
Balance at June 30, 2021		111,970	$	112	$	1,208,056			$	(9,092)		$	60,174			$	1,259,250
Balance at June 30, 2022																			Balance at June 30, 2022	109,607			$	110	$	1,265,495		$	(47,607)		$	249,670		$	1,467,668

Net income	Net income	—	—		—				—			170,871				170,871			Net income	—			—		—			—			166,206			166,206
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—				(10,008)			—				(10,008)			Other comprehensive income (loss)	—			—		—			(24,152)			—			(24,152)
Dividends declared ($.38 per share)		—	—		—				—			(42,463)				(42,463)
Dividends declared ($0.43 per share)																			Dividends declared ($0.43 per share)	—			—		—			—			(46,944)			(46,944)
Net issuances of restricted stock	Net issuances of restricted stock	1	—		—				—			—				—			Net issuances of restricted stock	—			—		—			—			—			—
Stock-based compensation	Stock-based compensation	—	—		14,061				—			—				14,061			Stock-based compensation	—			—		14,081			—			—			14,081
Repurchases of common stock	Repurchases of common stock	(742)	(1)		—				—			(75,667)				(75,668)			Repurchases of common stock	(1,109)			(2)		—			—			(85,940)			(85,942)
Balance at September 30, 2021		111,229	$	111	$	1,222,117			$	(19,100)		$	112,915			$	1,316,043
Balance at September 30, 2022																			Balance at September 30, 2022	108,498			$	108	$	1,279,576		$	(71,759)		$	282,992		$	1,490,917

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)~~-(Continued)~~

(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, 2019 115,120 $ 115 $ 1,127,487 $ (19,986) $ 36,067 $ 1,143,683
Net income — — — — 89,915 89,915
Adoption of accounting pronouncement — — — — (558) (558)
Other comprehensive income (loss) — — — (13,700) — (13,700)
Dividends declared ($.34 per share) — — — — (39,441) (39,441)
Net issuances of restricted stock 745 1 (1) — — —
Stock-based compensation — — 13,525 — — 13,525
Repurchases of common stock (1,263) (1) — — (63,498) (63,499)
Balance at March 31, 2020 114,602 $ 115 $ 1,141,011 $ (33,686) $ 22,485 $ 1,129,925
Net income — — — — 46,196 46,196
Other comprehensive income (loss) — — — 6,534 — 6,534
Dividends declared ($.34 per share) — — — — (38,975) (38,975)
Net issuances of restricted stock 33 — — — — —
Stock-based compensation — — 13,035 — — 13,035
Repurchases of common stock 0 0 — — (9) (9)
Balance at June 30, 2020 114,635 $ 115 $ 1,154,046 $ (27,152) $ 29,697 $ 1,156,706
Net income — — — — 75,749 75,749
Other comprehensive income (loss) — — — 11,156 — 11,156
Dividends declared ($.34 per share) — — — — (38,969) (38,969)
Net issuances of restricted stock (2) — — — — —
Stock-based compensation — — 13,063 — — 13,063
Repurchases of common stock (453) (1) — — (23,675) (23,676)
Balance at September 30, 2020 114,180 $ 114 $ 1,167,109 $ (15,996) $ 42,802 $ 1,194,029


	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

Net income	—	—		—		—		149,213		149,213
Other comprehensive income (loss)	—	—		—		4,437		—		4,437
Dividends declared ($0.38 per share)	—	—		—		—		(42,720)		(42,720)
Net issuances of restricted stock	5	—		—		—		—		—
Stock-based compensation	—	—		13,903		—		—		13,903
Repurchases of common stock	(717)	(1)		—		—		(63,281)		(63,282)
Balance at June 30, 2021	111,970	$	112	$	1,208,056	$	(9,092)	$	60,174	$	1,259,250

Net income	—	—		—		—		170,871		170,871
Other comprehensive income (loss)	—	—		—		(10,008)		—		(10,008)
Dividends declared ($0.38 per share)	—	—		—		—		(42,463)		(42,463)
Net issuances of restricted stock	1	—		—		—		—		—
Stock-based compensation	—	—		14,061		—		—		14,061
Repurchases of common stock	(742)	(1)		—		—		(75,667)		(75,668)
Balance at September 30, 2021	111,229	$	111	$	1,222,117	$	(19,100)	$	112,915	$	1,316,043

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)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	Net income	$	430,682	$	211,860	Net income	$	510,266	$	430,682
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	7,262		4,579		Allowance for credit losses	5,883		7,262
Depreciation	Depreciation	40,536		47,097		Depreciation	34,769		40,536
Amortization of cloud computing implementation costs	Amortization of cloud computing implementation costs	20,776		12,631		Amortization of cloud computing implementation costs	21,203		20,776
Amortization of intangible assets	Amortization of intangible assets	1,724		1,002		Amortization of intangible assets	1,250		1,724
Realized and unrealized gains from investments held in employee deferred compensation trusts		(30,625)		(32,743)
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	114,534		(30,625)
Stock-based compensation	Stock-based compensation	42,146		39,623		Stock-based compensation	43,674		42,146
Deferred income taxes	Deferred income taxes	(32,777)		(20,021)		Deferred income taxes	2,954		(32,777)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(308,823)		138,350		Accounts receivable	(158,254)		(308,823)
Capitalized cloud computing implementation costs	Capitalized cloud computing implementation costs	(23,735)		(26,121)		Capitalized cloud computing implementation costs	(29,697)		(23,735)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	32,140		9,030		Accounts payable and accrued expenses	(18,081)		32,140
Accrued payroll and benefit cost		166,239		107,906
Accrued payroll and benefit costs						Accrued payroll and benefit costs	33,486		166,239
Employee deferred compensation plan obligations	Employee deferred compensation plan obligations	56,929		44,101		Employee deferred compensation plan obligations	(100,255)		56,929
Income taxes payable	Income taxes payable	41,435		15,284		Income taxes payable	8,950		41,435
Other assets and liabilities, net	Other assets and liabilities, net	14,356		12,063		Other assets and liabilities, net	10,794		14,356
Net cash flows provided by operating activities	Net cash flows provided by operating activities	458,265		564,641		Net cash flows provided by operating activities	481,476		458,265

CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	Capital expenditures	(24,797)		(28,878)		Capital expenditures	(48,637)		(24,797)
Investments in employee deferred compensation trusts	Investments in employee deferred compensation trusts	(55,940)		(48,205)		Investments in employee deferred compensation trusts	(52,203)		(55,940)
Proceeds from employee deferred compensation trust redemptions	Proceeds from employee deferred compensation trust redemptions	30,939		33,651		Proceeds from employee deferred compensation trust redemptions	28,640		30,939
Net cash flows used in investing activities	Net cash flows used in investing activities	(49,798)		(43,432)		Net cash flows used in investing activities	(72,200)		(49,798)

CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable	Repayment of notes payable	(177)		(162)		Repayment of notes payable	—		(177)
Repurchases of common stock	Repurchases of common stock	(212,088)		(91,013)		Repurchases of common stock	(257,848)		(212,088)
Dividends paid	Dividends paid	(128,337)		(117,301)		Dividends paid	(142,596)		(128,337)
Net cash flows used in financing activities	Net cash flows used in financing activities	(340,602)		(208,476)		Net cash flows used in financing activities	(400,444)		(340,602)
Effect of exchange rate fluctuations	Effect of exchange rate fluctuations	(8,572)		3,789		Effect of exchange rate fluctuations	(34,485)		(8,572)
Change in cash and cash equivalents	Change in cash and cash equivalents	59,293		316,522		Change in cash and cash equivalents	(25,653)		59,293
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	$	633,719	$	587,000	Cash and cash equivalents at end of period	$	593,348	$	633,719

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		$	10,239	$	2,640
Repurchases of common stock awaiting settlement						Repurchases of common stock awaiting settlement	$	—	$	10,239
Fund exchanges within employee deferred compensation trusts	Fund exchanges within employee deferred compensation trusts	$	81,955	$	182,616	Fund exchanges within employee deferred compensation trusts	$	82,410	$	81,955

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)

September 30, ~~2021~~2022

Note A—Summary of Significant Accounting Policies

Nature of Operations. Robert Half International Inc. (the “Company”) ~~provides~~is a specialized ~~staffing~~talent solutions and ~~risk~~business consulting ~~services through such divisions as~~ ~~Accountemps~~®,firm that connects opportunities at great companies with highly skilled job seekers. Robert Half® ~~Finance & Accounting~~offers contract talent solutions and permanent placement talent solutions for finance and accounting, technology, marketing and creative, legal, administrative and customer support roles. Robert Half is also the parent company of , ~~OfficeTeam~~Protiviti®, a global consulting firm that provides internal audit, risk, business, and technology consulting solutions.

The Company 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, 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 accounting, which combines the former Accountemps® ~~Technology~~,and Robert Half® Management Resources, divisions; administrative and customer support, which consists of the former OfficeTeam®; and technology, which includes the formerRobert Half® ~~Legal~~, ~~The Creative Group~~®~~, and~~ ~~Protiviti~~®Technology. ~~The Company, through its~~ ~~Accountemps~~, ~~Robert Half Finance & Accounting, and~~ ~~Robert Half Management Resources~~ ~~divisions, is a specialized provider of contract, full-time, and senior-level project professionals in the fields of accounting and finance.~~ ~~OfficeTeam~~ ~~specializes in highly skilled contract, administrative support professionals.~~ ~~Robert Half Technology~~ ~~provides project and full-time technology professionals.~~ ~~Robert Half Legal~~ ~~provides contract, project, and full-time staffing of lawyers, paralegals and legal support personnel.~~ ~~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, technology, operations, data, analytics, governance, risk and internal audit, and is a wholly-owned subsidiary of the Company. Revenues are predominantly derived from specialized staffing services.

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 September 30, ~~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 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.~~ Actual results and outcomes may differ from management’s estimates and assumptions.

Service Revenues. The Company derives its revenues from 3three 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 services consist of reimbursable expenses. Risk consulting and internal audit direct costs of services include professional staff payroll, contract labor payroll, payroll taxes and benefit costs, as well as reimbursable expenses.

ROBERT HALF INTERNATIONAL INC.

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

September 30, ~~2021~~2022

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. Protiviti direct costs of services include professional staff payroll, payroll taxes and benefit costs, as well as reimbursable expenses.

Advertising Costs. The Company expenses all advertising costs as incurred. Advertising costs were $13.5 million and $42.2 million for the three and nine months ended September 30, 2022, respectively, and $13.9 million and $34.1 million for the three and nine months ended September 30, 2021, ~~respectively, and $7.7 million and $28.9 million for the three and nine months ended September 30, 2020,~~ 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~~and adjustments are recorded 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.~~investments and is presented separately on the unaudited Condensed Consolidated Statements of Operations.

The following table presents the Company’s (income) loss from investments held in employee deferred compensation trusts (in thousands):
Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Dividend income $ (4,565) $ (443) $ (7,414) $ (1,887)
Realized and unrealized (gains) losses 6,324 (25,652) (30,625) (32,743)
(Income) loss from investments held in employee deferred compensation trusts $ 1,759 $ (26,095) $ (38,039) $ (34,630)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Dividend income	$	(966)	$	(4,565)	$	(3,576)	$	(7,414)
Realized and unrealized (gains) losses	16,301		6,324		114,534		(30,625)
(Income) loss from investments held in employee deferred compensation trusts	$	15,335	$	1,759	$	110,958	$	(38,039)

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, net accounts receivable, and 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)

September 30, ~~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
Balance at September 30, 2021 Quoted Prices
in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3)
Assets
Money market funds $ 65,681 $ 65,681 — —
Mutual funds - bond 29,720 29,720 — —
Mutual funds - stock 278,816 278,816 — —
Mutual funds - blend 88,043 88,043 — —
$ 462,260 $ 462,260 — —
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)
Assets
Money market funds $ 69,681 $ 69,681 — —
Mutual funds - bond 27,282 27,282 — —
Mutual funds - stock 234,667 234,667 — —
Mutual funds - blend 75,004 75,004 — —
$ 406,634 $ 406,634 — —


			Fair Value Measurements Using
	Balance at September 30, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets
Money market funds	$	78,932	$	78,932	—	—
Mutual funds - bond	28,043		28,043		—	—
Mutual funds - stock	224,076		224,076		—	—
Mutual funds - blend	72,968		72,968		—	—
	$	404,019	$	404,019	—	—

			Fair Value Measurements Using
	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
Money market funds	$	66,700	$	66,700	—	—
Mutual funds - bond	30,750		30,750		—	—
Mutual funds - stock	303,277		303,277		—	—
Mutual funds - blend	94,264		94,264		—	—
	$	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~~macroeconomic 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.

The following table sets forth the activity in the allowance for credit losses from December 31, 2021 through September 30, 2022 (in thousands):


	Allowance for Credit Losses




Balance as of December 31, 2021	$	21,530
Charges to expense	5,883
Deductions	(3,442)
Other, including foreign currency translation adjustments	(1,655)
Balance as of September 30, 2022	$	22,316

ROBERT HALF INTERNATIONAL INC.

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

September 30, ~~2021~~2022

~~The following table sets forth the activity in the allowance for credit losses from January 1, 2020, through September 30, 2021 (in thousands):~~


	~~Allowance for Credit Losses~~
~~Balance as of January 1, 2020~~	$	~~23,443~~
~~Charges to expense~~	~~4,200~~
~~Deductions~~	~~(7,906)~~
~~Other, including translation adjustments~~	~~(120)~~
~~Balance as of December 31, 2020~~	$	~~19,617~~
~~Charges to expense~~	~~7,262~~
~~Deductions~~	~~(5,541)~~
~~Other, including translation adjustments~~	~~(695)~~
~~Balance as of September 30, 2021~~	$	~~20,643~~

~~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 current 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 $9.5 million and $29.0 million for the three and nine months ended September 30, 2021, respectively, and $8.8 million and $31.7 million for the three and nine months ended September 30, 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 assessed at least annually for impairment, or on an as needed interim basis.~~

Note B—New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

~~None.~~Government Assistance. In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” to increase the transparency of government assistance including the disclosure of the types of assistance an entity receives, an entity’s method of accounting for government assistance and the effect of the assistance on an entity’s financial statements. This standard is effective for annual periods beginning after December 15, 2021. The amendments should be applied either (1) prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application, or (2) retrospectively to those transactions. The Company adopted this ASU in January 2022. The adoption of this guidance did not have a material impact on its financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

None.

Note C—Revenue Recognition

The Company derives its revenues from 3three 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.

~~Temporary and consultant staffing~~ Contract talent solutionsrevenues. ~~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,

~~ROBERT HALF INTERNATIONAL INC.~~

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

~~September 30, 2021~~

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.

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 liabilities. Fees to clients are generally calculated as a percentage of the new employee’s annual compensation. No fees for permanent placement talent solutions services are charged to employment candidates.

~~Risk consulting and internal audit services~~

ROBERT HALF INTERNATIONAL INC.

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

September 30, 2022

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.

The following table presents the Company’s service revenues disaggregated by ~~line of business~~functional specialization and segment (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Accountemps $ 492,558 $ 351,598 $ 1,363,007 $ 1,173,024
OfficeTeam 279,370 173,685 763,035 549,963
Robert Half Technology 215,500 161,007 581,905 519,687
Robert Half Management Resources 239,807 154,917 633,685 531,826
Elimination of intersegment revenues (a) (172,534) (59,816) (419,375) (147,603)
Temporary and consultant staffing 1,054,701 781,391 2,922,257 2,626,897
Permanent placement staffing 156,444 87,203 411,788 278,722
Risk consulting and internal audit services 501,421 321,303 1,357,482 899,295
Service revenues $ 1,712,566 $ 1,189,897 $ 4,691,527 $ 3,804,914


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Contract talent solutions
Finance and accounting	$	805,229	$	732,365	$	2,417,829	$	1,996,692
Administrative and customer support	250,531		279,370		809,578		763,035
Technology	216,735		215,500		648,252		581,905
Elimination of intersegment revenues (a)	(132,745)		(172,534)		(414,493)		(419,375)
Total contract talent solutions	1,139,750		1,054,701		3,461,166		2,922,257
Permanent placement talent solutions	182,329		156,444		569,207		411,788
Protiviti	511,376		501,421		1,480,743		1,357,482
Total service revenues	$	1,833,455	$	1,712,566	$	5,511,116	$	4,691,527

(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.

~~ROBERT HALF INTERNATIONAL INC.~~

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

~~September 30, 2021~~

Payment terms in the Company’s contracts vary by the type 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~~standalone selling values of the services and products in the arrangement. As of September 30, ~~2021,~~2022, aggregate transaction price allocated to the performance obligations that ~~are~~were unsatisfied for contracts with an expected duration of greater than one year was ~~$135.4~~$164.8 million. Of this amount, ~~$127.9~~$150.1 million is expected to be recognized within the next twelve months. As of September 30, ~~2020,~~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 ~~$108.2~~$135.4 million.

ROBERT HALF INTERNATIONAL INC.

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

September 30, 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 ~~January 1, 2020,~~December 31, 2021 through September 30, ~~2021~~2022 (in thousands):

Contract Liabilities

Balance as of ~~January 1, 2020~~December 31, 2021

~~12,948~~25,601

Payments in advance of satisfaction of performance obligations

~~25,614~~49,239

Revenue recognized

~~(20,687)~~(56,590)

Other, including translation adjustments

~~377~~

~~Balance as of December 31, 2020~~

~~18,252~~

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

~~23,204~~

~~Revenue recognized~~

~~(27,981)~~

~~Other, including translation adjustments~~

~~478~~ (2,103)

Balance as of September 30, ~~2021~~2022

~~13,953~~16,147

Note D—Other Current Assets

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


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
Prepaid expenses	Prepaid expenses	$	86,759	$	97,674	Prepaid expenses	$	60,429	$	69,526
Unamortized cloud computing implementation costs						Unamortized cloud computing implementation costs	53,152		44,692
Other	Other	45,380		49,841		Other	37,597		55,646
Other current assets	Other current assets	$	132,139	$	147,515	Other current assets	$	151,178	$	169,864

Note E—Property and Equipment, Net

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


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
Computer hardware	Computer hardware	$	153,781	$	159,180	Computer hardware	$	157,036	$	157,408
Computer software	Computer software	244,649		250,585		Computer software	216,039		246,013
Furniture and equipment	Furniture and equipment	91,358		91,112		Furniture and equipment	94,882		93,144
Leasehold improvements	Leasehold improvements	163,201		164,807		Leasehold improvements	163,589		165,153

Property and equipment, cost	Property and equipment, cost	652,989		665,684		Property and equipment, cost	631,546		661,718
Accumulated depreciation	Accumulated depreciation	(559,973)		(555,867)		Accumulated depreciation	(525,260)		(568,315)
Property and equipment, net	Property and equipment, net	$	93,016	$	109,817	Property and equipment, net	$	106,286	$	93,403

ROBERT HALF INTERNATIONAL INC.

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

September 30, ~~2021~~2022

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 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 $22.0 million and $67.1 million for the three and nine months ended September 30, 2022, respectively, and $21.6 million and $64.8 million for the three and nine months ended September 30, 2021, ~~respectively, and $20.6 million and $60.5 million for the three and nine months ended September 30, 2020,~~ respectively.

Supplemental cash flow information related to leases consisted of the following (in thousands):
Nine Months Ended
September 30,
2021 2020
Cash paid for operating lease liabilities $ 68,509 $ 62,873
Right-of-use assets obtained in exchange for operating lease liabilities from new leases $ 9,733 $ 34,530
Right-of-use assets obtained in exchange for operating lease liabilities from lease
modifications or reassessments
$ 23,155 $ 48,151


	Nine Months Ended September 30,
	2022		2021
Cash paid for operating lease liabilities	$	69,696	$	68,509
Right-of-use assets obtained in exchange for new operating lease liabilities	$	41,916	$	32,888

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

September 30,
2021

December 31,
2020

September 30,
2022

December 31,
2021

Weighted average remaining lease term for operating leases

4.0 years

4.5 years

Weighted average remaining lease term for operating leases

3.5 years

3.9 years

Weighted average discount rate for operating leases

2.4

2.6

Weighted average discount rate for operating leases

2.3

Future minimum lease payments under non-cancellable leases as of September 30, ~~2021~~2022, were as follows (in thousands):


2021 (excluding the nine months ended September 30, 2021)		$	22,453
2022		82,229
2022 (excluding the nine months ended September 30, 2022)				2022 (excluding the nine months ended September 30, 2022)	$	23,095
2023	2023	65,021		2023	80,684
2024	2024	50,773		2024	60,924
2025	2025	30,953		2025	37,370
2026				2026	24,008
Thereafter	Thereafter	31,020		Thereafter	15,481
Less: Imputed interest	Less: Imputed interest	(13,880)		Less: Imputed interest	(9,552)
Present value of operating lease liabilities (a)	Present value of operating lease liabilities (a)	$	268,569	Present value of operating lease liabilities (a)	$	232,010

(a) Includes the current portion of ~~$80.1~~$81.1 million for operating leases.

As of September 30, ~~2021,~~2022, the Company had additional future minimum lease obligations totaling ~~$5.0~~$5.7 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 6 years.

ROBERT HALF INTERNATIONAL INC.

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

September 30, ~~2021~~2022

Note G—Goodwill

The following table sets forth the activity in goodwill from December 31, ~~2020~~2021 through September 30, ~~2021~~2022 (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 106 16 (285) (163)
Balance as of September 30, 2021 $ 134,617 $ 26,196 $ 62,079 $ 222,892


	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	(821)		(160)		(448)		(1,429)
Balance as of September 30, 2022	$	133,763	$	26,029	$	61,634	$	221,426

Note H—Accrued Payroll and Benefit Costs

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


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
Payroll and benefits	Payroll and benefits	$	477,121	$	311,169	Payroll and benefits	$	470,556	$	449,246
Payroll taxes	Payroll taxes	60,799		67,712		Payroll taxes	64,833		74,117
Workers’ compensation	Workers’ compensation	19,993		18,996		Workers’ compensation	18,217		16,820
Accrued payroll and benefit costs	Accrued payroll and benefit costs	$	557,913	$	397,877	Accrued payroll and benefit costs	$	553,606	$	540,183

The Company, under the Coronavirus Aid, Relief, and Economic Security ~~(CARES)~~(“CARES”) Act, deferred paying ~~$102.2~~$51.1 million of applicable payroll taxes as of both September 30, 2022 and December 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. Deferred payroll taxes payable was $102.2 million as of December 31, 2020.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 ~~$462.3~~$404.0 million and ~~$406.6~~$495.0 million as of September 30, ~~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 ~~$492.1~~$435.0 million and ~~$435.1~~$535.3 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

ROBERT HALF INTERNATIONAL INC.

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

September 30, ~~2021~~2022

The following table presents the Company’s compensation expense related to its qualified defined contribution plans and nonqualified plans (in thousands):
Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Contribution expense $ 11,467 $ 9,753 $ 34,939 $ 28,111
Increase (decrease) in employee deferred compensation expense related to changes in the fair value of trust assets (1,759) 26,095 38,039 34,630
$ 9,708 $ 35,848 $ 72,978 $ 62,741


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Contribution expense	$	10,326	$	11,467	$	35,321	$	34,939
Increase (decrease) in employee deferred compensation expense related to changes in the fair value of trust assets	(15,335)		(1,759)		(110,958)		38,039
	$	(5,009)	$	9,708	$	(75,637)	$	72,978

The Company has statutory defined contribution plans and defined benefit plans outside the ~~U.S.,~~United States of America, which are not material.

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 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.

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.

ROBERT HALF INTERNATIONAL INC.

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

September 30, ~~2021~~2022

In May 2021, the Company entered into an amendment to extend the maturity of its ~~$100~~$100.0 million unsecured revolving credit facility (the “Credit Agreement”) to May 2024. Borrowings under the Credit Agreement will bear interest in accordance with the terms of the borrowing, which typically will be calculated according to the ~~LIBOR,~~London Interbank Offered Rate or an alternative base rate, plus an applicable margin. The Credit Agreement is subject to certain financial covenants and the Company was in compliance with these covenants as of September 30, ~~2021.~~2022. There were no borrowings under the Credit Agreement as of September 30, 2022, or December 31, 2021.

Note K—Stockholders’ Equity

Stock Repurchase Program. As of September 30, ~~2021,~~2022, the Company is authorized to repurchase, from time to time, up to ~~7.7~~4.7 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 nine months ended September 30, ~~2021~~2022 and ~~2020~~2021, are reflected in the following table (in thousands):
Nine Months Ended
September 30,
2021 2020
Common stock repurchased (in shares) 2,254 1,432
Common stock repurchased $ 199,569 $ 74,981


	Nine Months Ended September 30,
	2022		2021
Common stock repurchased (in shares)	2,493		2,254
Common stock repurchased	$	219,341	$	199,569

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 nine months ended September 30, ~~2021~~2022 and ~~2020~~2021, are reflected in the following table (in thousands):
Nine Months Ended
September 30,
2021 2020
Repurchases related to employee stock plans (in shares) 253 284
Repurchases related to employee stock plans $ 19,654 $ 12,203


	Nine Months Ended September 30,
	2022		2021
Repurchases related to employee stock plans (in shares)	297		253
Repurchases related to employee stock plans	$	32,914	$	19,654

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 and~~ nine months ended September 30, 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.

ROBERT HALF INTERNATIONAL INC.

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

September 30, ~~2021~~2022

Note L—Net Income Per Share

The calculation of net income per share for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021, is reflected in the following table (in thousands, except per share amounts):
Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Net income $ 170,871 $ 75,749 $ 430,682 $ 211,860
Basic:
Weighted average shares 110,176 112,809 110,816 112,953
Diluted:
Weighted average shares 110,176 112,809 110,816 112,953
Dilutive effect of potential common shares 1,314 546 1,138 491
Diluted weighted average shares 111,490 113,355 111,954 113,444
Net income per share:
Basic $ 1.55 $ .67 $ 3.89 $ 1.88
Diluted $ 1.53 $ .67 $ 3.85 $ 1.87


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	166,206	$	170,871	$	510,266	$	430,682
Basic:
Weighted average shares	107,855		110,176		108,630		110,816
Diluted:
Weighted average shares	107,855		110,176		108,630		110,816
Dilutive effect of potential common shares	763		1,314		1,000		1,138
Diluted weighted average shares	108,618		111,490		109,630		111,954
Net income per share:
Basic	$	1.54	$	1.55	$	4.70	$	3.89
Diluted	$	1.53	$	1.53	$	4.65	$	3.85

Note M—Business Segments

The Company has 3three 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~~contract talent solutions and ~~consultant staffing segment provides~~permanent placement talent solutions segments provide specialized ~~staffing in the~~engagement professionals and full-time personnel, respectively, for finance and accounting, technology, marketing and ~~finance,~~creative, legal, administrative and ~~office, information technology, legal, advertising, marketing and web design fields.~~customer support roles. The permanent placement staffing segment provides full-time personnel in the accounting, finance, administrative and office, and information technology fields. The risk consulting and internal audit servicesProtiviti 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)

September 30, ~~2021~~2022

The following table provides a reconciliation of service revenues and segment income by reportable segment to consolidated results for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Service revenues	Service revenues									Service revenues
Temporary and consultant staffing		$	1,054,701	$	781,391	$	2,922,257	$	2,626,897
Permanent placement staffing		156,444		87,203		411,788		278,722
Risk consulting and internal audit services		501,421		321,303		1,357,482		899,295
Contract talent solutions										Contract talent solutions	$	1,139,750	$	1,054,701	$	3,461,166	$	2,922,257
Permanent placement talent solutions										Permanent placement talent solutions	182,329		156,444		569,207		411,788
Protiviti										Protiviti	511,376		501,421		1,480,743		1,357,482
		$	1,712,566	$	1,189,897	$	4,691,527	$	3,804,914		$	1,833,455	$	1,712,566	$	5,511,116	$	4,691,527
Segment income	Segment income									Segment income
Temporary and consultant staffing		$	110,010	$	43,779	$	279,697	$	165,933
Permanent placement staffing		31,030		10,128		79,264		20,791
Risk consulting and internal audit services		86,952		48,735		224,256		105,311
Contract talent solutions										Contract talent solutions	$	120,048	$	110,010	$	386,861	$	279,697
Permanent placement talent solutions										Permanent placement talent solutions	32,178		31,030		106,257		79,264
Protiviti										Protiviti	71,469		86,952		198,759		224,256
Combined segment income	Combined segment income	227,992		102,642		583,217		292,035		Combined segment income	223,695		227,992		691,877		583,217

Amortization of intangible assets	Amortization of intangible assets	572		334		1,724		1,002		Amortization of intangible assets	417		572		1,250		1,724
Interest income, net	Interest income, net	(238)		(202)		(145)		(1,264)		Interest income, net	(2,346)		(238)		(3,230)		(145)
Income before income taxes	Income before income taxes	$	227,658	$	102,510	$	581,638	$	292,297	Income before income taxes	$	225,624	$	227,658	$	693,857	$	581,638

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 ~~$173~~$132.7 million and ~~$419~~$414.5 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, and ~~$60~~$172.5 million and ~~$148~~$419.4 million ~~for the three months and~~ nine months ended September 30, ~~2020,~~2021, respectively.

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

Note N—Subsequent Events

On October ~~28, 2021,~~27, 2022, the Company announced the following:


Quarterly dividend per share			$~~.38~~0.43
Declaration date			October ~~28, 2021~~27, 2022
Record date			November ~~24, 2021~~25, 2022
Payment date			December 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 future operating results or financial positions of Robert Half International Inc. (the ~~"Company"~~“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 United States of America ("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~~U.S. 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 broad based consulting, regulatory compliance, technology services, public sector or other 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 ~~achieved record levels~~recently completed a multiyear process to unify its family of ~~service revenues~~Robert Half endorsed divisional brands to a single brand, Robert Half. This simplifies the Company’s go-to-market brand structure for clients and ~~earnings~~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 Company reported another quarter of year-over-year growth, over and above very strong growth reported in the ~~third quarter due to a broad-based, global acceleration in~~prior year. Global labor demand ~~for its staffing~~remains high, notwithstanding the increasingly uncertain economic outlook, although the sales cycle has lengthened. Reported results were once again unfavorably impacted by currency exchange rates as the U.S. dollar strengthened against the Euro and ~~business consulting services.~~British pound. During the first three quarters of ~~2021,~~2022, service revenues were ~~$4.69~~$5.51 billion, an increase of ~~23.3%~~17.5% from the prior year. Net income increased ~~103.3%~~18.5% to ~~$431~~$510 million and diluted net income per share increased ~~105.9%~~20.8% to ~~$3.85.~~$4.65.

The ~~future~~Company’s talent solutions led the way, with permanent placement and contract talent solutions achieving year-over-year revenue growth of ~~work increasingly includes flexible,~~38.2% and 18.4%, respectively. Protiviti also performed well, growing year-over-year revenues by 9.1%, and reached new all-time highs.

Remote and hybrid ~~and fully remote~~working models ~~and~~are expected to remain. This structural shift in how companies source talent plays to the ~~Company can deliver deeper skills and more price-point choices to its clients by expanding candidate searches beyond local markets, leveraging~~Company’s numerous strengths, including its global brand, office network, candidate database and ~~advanced~~ AI-driven technologies. This trend, together with elevated employee attrition rates at clients, has contributed to the Company's staffing results recovering from the recent downturn at a faster pace than experienced in the past.

Protiviti continues its trend of consecutive growth, with a highly diversified client base and suite of solution offerings. The collaboration between Protiviti and staffing continues to be a strong differentiator, and growth remains strong across internal audit, technology consulting, risk and compliance consulting, and business performance improvement.

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. The ~~United States~~U.S. economic backdrop ~~throughout~~and labor trends for the first three quarters of ~~2021 was~~2022 remained conducive to growth for the Company as ~~real gross domestic product (“GDP”) grew 6.1%, 6.5%, and 2.0% for the first, second, and third quarter, respectively, while~~ the unemployment rate decreased from ~~6.7%~~3.9% in December ~~2020~~2021 to ~~4.8%~~3.5% at the end of the third quarter of ~~2021.~~ 2022. In the ~~United States, the number of~~U.S., job openings ~~exceeded the number of hires at the end of September 2021, creating competition for skilled talent that increases the Company's value to clients. The U.S. labor market remains robust, with significant~~and quit rates remain elevated although modestly below all-time highs. Significant demand due to talent shortages persists across professional ~~disciplines.~~

disciplines in the U.S., although general economic uncertainty is causing a lengthening of sales cycles as clients take more time to fill roles.

~~We monitor~~The Company monitors various economic indicators and business trends in all of the countries in which ~~we operate~~it operates to anticipate demand for the Company’s services. ~~We evaluate these~~These trends are evaluated 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~~Visibility into future revenues is limited 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~~the Company’s headcount and other investments are typically assessed on at least a quarterly basis. During the first three quarters of ~~2021,~~2022, the Companyincreased headcount across all segments when compared to prior year-end levels.

Capital expenditures, including $23.7 million for cloud computing arrangements, for the nine months ended September 30, 2021, totaled $48.5 million, approximately 84% 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 $60 million to $70 million, of which $50 million to $60 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 nine months ended September 30, ~~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

~~Demand~~The Company analyzes its operating results for ~~the Company’s temporary and consultant staffing,~~three reportable segments: contract talent solutions, permanent placement ~~staffing~~talent solutions, and Protiviti. The contract talent solutions and permanent placement talent solutions segments provide specialized engagement professionals and full-time personnel, respectively, for finance and accounting, technology, marketing and creative, legal, administrative and customer support roles. The Protiviti segment provides business and technology risk consulting and internal audit ~~services~~services.

Demand for the Company’s contract talent solutions, permanent placement talent solutions, and consulting 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. Third quarter results show that the recovery from the recent economic downturn continues with strong momentum. As we have done historically, the Company will continue to invest in its people, its technology, its brands and its business model to strengthen the ability to connect people to meaningful new work and provide clients with the talent and deep subject matter expertise they need to confidently compete and grow.

The Company’s ~~temporary and permanent placement staffing~~talent solutions business has ~~321~~316 offices in 42 states, the District of Columbia and 17 foreign countries, while Protiviti has 6365 offices in 2423 states and 1213 foreign countries.

Non-GAAP Financial Measures

The financial results of the Company are prepared in conformity with accounting principles generally accepted in the ~~United States of America~~U.S. (“GAAP”) and the rules of the 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;~~expenses; 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. 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 basis for global, U.S., and international operations. 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 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;~~expenses; 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 September 30, ~~2021~~2022 and ~~2020~~2021

Service Revenues. The Company’s revenues were $1.83 billion for the three months ended September 30, 2022, increasing by 7.1% compared to $1.71 billion for the three months ended September 30, ~~2021, increasing by 43.9% compared to $1.19 billion for three months ended September 30, 2020.~~2021. Revenues from ~~foreign~~U.S. operations ~~represented 22.2%~~increased 10.0% to $1.47 billion (79.9% of total ~~revenues~~revenue) for ~~both~~ the three months ended September 30, ~~2021 and 2020. The Company analyzes its revenues~~2022, compared to $1.33 billion (77.8% of total revenue) for the three ~~reportable segments: temporary and consultant staffing, permanent placement staffing, and risk consulting and internal audit services.~~months ended September 30, 2021. Revenues from international operations decreased 3.3% to $368 million (20.1% of total revenue) for the three months ended September 30, 2022, compared to $381 million (22.2% of total revenue) for the three months ended September 30, 2021. Contributing factors for each reportable segment are discussed below in further detail.

~~Temporary and consultant staffing~~Contract talent solutions revenues were $1.14 billion for the three months ended September 30, 2022, increasing by 8.1% compared to revenues of $1.05 billion for the three months ended September 30, ~~2021, increasing by 35.0% compared to revenues of $781 million for the three months ended September 30, 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. The increase in contract talent solutions revenues for the three months ended September 30, 2022, was primarily due to 10.3% increase in average bill rates, offset by a 2.2% decrease in the number of hours worked by the Company's engagement professionals.On an as adjusted basis, ~~temporary and consultant staffing~~contract talent solutions revenues increased ~~34.0%~~10.7% for the third quarter of ~~2021,~~2022, compared to the third quarter of ~~2020, due primarily to more hours worked by the Company’s engagement professionals on client engagements.~~2021. In the U.S., revenues in the third quarter of ~~2021~~2022 increased ~~35.5%~~11.3% on both an as reported basis and on an as adjusted basis, compared to the third quarter of ~~2020.~~2021. For the Company’s international

operations, revenues for the third quarter of ~~2021 increased 33.0%~~2022 decreased 3.2% on an as reported basis, and increased ~~29.1%~~8.7% on an as adjusted basis compared to the third quarter of ~~2020.~~2021.

Permanent placement ~~staffing~~talent solutions revenues were $182 million for the three months ended September 30, 2022, increasing by 16.5% compared to revenues of $156 million for the three months ended September 30, ~~2021, increasing by 79.4% compared to revenues of $87 million for the three months ended September 30, 2020.~~2021. Key drivers of permanent placement ~~staffing~~talent solutions revenues consist of the number of candidate placements and average fees earned per placement. The increase in permanent placement staffing revenues for the three months ended September 30, 2022, was primarily due to a 9.2% increase in the number of placements and a 7.3% increase in average fees earned per placement. On an as adjusted basis, permanent placement ~~staffing~~talent solutions revenues increased ~~77.7%~~20.3% for the third quarter of ~~2021,~~2022, compared to the third quarter of ~~2020, driven by an increase in number of placements.~~2021. In the U.S., revenues for the third quarter of ~~2021~~2022 increased ~~85.1%~~22.4% on both an as reported basis and on an as adjusted basis, compared to the third quarter of ~~2020.~~2021. For the Company’s international operations, revenues for the third quarter of ~~2021~~2022 increased ~~67.3%~~2.9% on an as reported basis and ~~62.1%~~15.4% on an as adjusted basis, compared to the third 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 $511 million for the three months ended September 30, 2022, increasing by 2.0% compared to revenues of $501 million for the three months ended September 30, ~~2021, increasing by 56.1% compared to revenues of $321 million for the three months ended September 30, 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. The increase in Protiviti revenues for the three months ended September 30, 2022, was primarily due to a 22.6% increase in average hourly bill rates, partially offset by a 20.6% decrease in billable hours. The increase in hourly bill rates and decrease in billable hours for the three months ended September 30, 2022, was primarily due to an increase in the mix of full-time Protiviti consultants relative to contractors. On an as adjusted basis, ~~risk consulting and internal audit services~~Protiviti revenues increased ~~55.1%~~4.8% for the third quarter of ~~2021,~~2022, compared to the third quarter of ~~2020, due primarily to an increase in billable hours.~~2021. In the U.S., revenues in the third quarter of ~~2021~~2022 increased ~~53.7%~~4.1% on both an as reported basis and on an as adjusted basis, compared to the third quarter of ~~2020. The~~2021. For the Company’s ~~risk consulting and internal audit services~~international operations, revenues for the third quarter of ~~2021 from international operations increased 65.9%~~2022 decreased 6.3% on an as reported basis and ~~61.4%~~increased 7.3% on an as adjusted basis, compared to the third 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 September 30, ~~2021,~~2022, is presented in the following table:
Global United States International
Temporary and consultant staffing
As Reported 35.0 % 35.5 % 33.0 %
Billing Days Impact -0.2 % 0.0 % -0.5 %
Currency Impact -0.8 % ― -3.4 %
As Adjusted 34.0 % 35.5 % 29.1 %
Permanent placement staffing
As Reported 79.4 % 85.1 % 67.3 %
Billing Days Impact -0.2 % 0.0 % -0.6 %
Currency Impact -1.5 % ― -4.6 %
As Adjusted 77.7 % 85.1 % 62.1 %
Risk consulting and internal audit services
As Reported 56.1 % 53.7 % 65.9 %
Billing Days Impact -0.3 % 0.0 % -0.7 %
Currency Impact -0.7 % ― -3.8 %
As Adjusted 55.1 % 53.7 % 61.4 %


	Global		United States		International
Contract talent solutions
As Reported	8.1	%	11.3	%	-3.2	%
Billing Days Impact	0.1	%	0.0	%	0.5	%
Currency Impact	2.5	%	―		11.4	%
As Adjusted	10.7	%	11.3	%	8.7	%
Permanent placement talent solutions
As Reported	16.5	%	22.4	%	2.9	%
Billing Days Impact	0.2	%	0.0	%	0.6	%
Currency Impact	3.6	%	―		11.9	%
As Adjusted	20.3	%	22.4	%	15.4	%
Protiviti
As Reported	2.0	%	4.1	%	-6.3	%
Billing Days Impact	0.2	%	0.0	%	0.5	%
Currency Impact	2.6	%	―		13.1	%
As Adjusted	4.8	%	4.1	%	7.3	%

Gross ~~Margin.~~Margin. The Company’s gross margin dollars were $788 million for the three months ended September 30, 2022, up 8.6% from $725 million for the three months ended September 30, ~~2021, increasing by 55.2% compared to $467 million for the three months ended September 30, 2020.~~2021. Contributing factors for each reportable segment are discussed below in further detail.

Gross margin dollars for ~~temporary~~contract talent solutions represent revenues less costs of services, which consist of payroll, payroll taxes and ~~consultant~~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; and iii) conversion revenues, which are earned when a contract talent solutions position converts to a permanent position with the Company’s client. Gross margin dollars for contract talent solutions were $450 million for the three months ended September 30, 2022, up 6.7% from $421 million for the

three months ended September 30, 2021. As a percentage of revenues, gross margin dollars for contract talent solutions were 39.4% in the third quarter of 2022, down from 40.0% in the third quarter of 2021. This year-over-year decrease in gross margin percentage was primarily attributable to higher fringe costs.

Gross margin dollars for permanent placement talent solutions represent revenues less reimbursable expenses. Gross margin dollars for permanent placement talent solutions were $182 million for the three months ended September 30, 2022, up 16.6% from $156 million for the three months ended September 30, 2021. Because reimbursable expenses for permanent placement talent solutions are de minimis, the increase in gross margin dollars is substantially explained by the increase in revenues previously discussed.

Gross margin dollars for 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 Protiviti’s gross margin are: i) the relative composition 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 Protiviti’s staff. Gross margin dollars for Protiviti were $156 million for the three months ended September 30, 2022, up 5.6% from $148 million for the three months ended September 30, 2021. As a percentage of revenues, reported gross margin dollars for Protiviti were 30.5% in the third quarter of 2022, up from 29.5% in the third quarter of 2021. As a percentage of revenues, adjusted gross margin dollars for Protiviti were 30.0% in the third quarter of 2022, up from 29.4% in the third quarter of 2021. The year-over-year increase in adjusted gross margin percentage was due to the relative composition of and number of professional staff and their respective pay and bill rates.

The Company's gross margin by reporting segment is summarized as follows (in thousands):


	Three Months Ended September 30,								Relationships
	As Reported				As Adjusted				As Reported				As Adjusted
	2022		2021		2022		2021		2022		2021		2022		2021
Gross Margin
Contract talent solutions	$	449,579	$	421,419	$	449,579	$	421,419	39.4	%	40.0	%	39.4	%	40.0	%
Permanent placement talent solutions	182,034		156,170		182,034		156,170		99.8	%	99.8	%	99.8	%	99.8	%
Protiviti	155,996		147,738		153,296		147,461		30.5	%	29.5	%	30.0	%	29.4	%
Total	$	787,609	$	725,327	$	784,909	$	725,050	43.0	%	42.4	%	42.8	%	42.3	%

The following tables provide reconciliations of the non-GAAP adjusted gross margin to reported gross margin for the three months ended September 30, 2022 and 2021 (in thousands):


	Three Months Ended September 30, 2022
	Contract Talent Solutions				Permanent Placement Talent Solutions				Protiviti				Total
	$		% of Revenue		$		% of Revenue		$		% of Revenue		$		% of Revenue
Gross Margin
As Reported	$	449,579	39.4	%	$	182,034	99.8	%	$	155,996	30.5	%	$	787,609	43.0	%
Adjustments (1)	—		—		—		—		(2,700)		(0.5	%)	(2,700)		(0.2	%)
As Adjusted	$	449,579	39.4	%	$	182,034	99.8	%	$	153,296	30.0	%	$	784,909	42.8	%


	Three Months Ended September 30, 2021
	Contract Talent Solutions				Permanent Placement Talent Solutions				Protiviti				Total
	$		% of Revenue		$		% of Revenue		$		% of Revenue		$		% of Revenue
Gross Margin
As Reported	$	421,419	40.0	%	$	156,170	99.8	%	$	147,738	29.5	%	$	725,327	42.4	%
Adjustments (1)	—		—		—		—		(277)		(0.1	%)	(277)		(0.1	%)
As Adjusted	$	421,419	40.0	%	$	156,170	99.8	%	$	147,461	29.4	%	$	725,050	42.3	%

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

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 $549 million for the three months ended September 30, 2022, up 10.7% from $496 million for the three months ended September 30, 2021. As a percentage of revenues, reported selling, general and administrative expenses were 29.9% in the third quarter of 2022, up from 28.9% in the third quarter of 2021. As a percentage of revenues, adjusted selling, general and administrative expenses were 30.6% in the third quarter of 2022, up from 29.0% in the third quarter of 2021. Contributing factors for each reportable segment are discussed below in further detail.

Selling, general and administrative expenses for contract talent solutions were $319 million for the three months ended September 30, 2022, increasing by 2.7% from $310 million for the three months ended September 30, 2021. As a percentage of revenues, reported selling, general and administrative expenses for contract talent solutions were 27.9% in the third quarter of 2022, down from 29.4% in the third quarter of 2021. As a percentage of revenues, adjusted selling, general and administrative expenses for contract talent solutions were 28.9% in the third quarter of 2022, down from 29.5% in the third quarter of 2021, due primarily to positive leverage from an increase in revenues.

Selling, general and administrative expenses for permanent placement talent solutions were $148 million for the three months ended September 30, 2022, increasing by 18.7% from $125 million for the three months ended September 30, 2021. As a percentage of revenues, reported selling, general and administrative expenses for permanent placement talent solutions were 81.3% in the third quarter of 2022, up from 79.9% in the third quarter of 2021. As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement was 82.2% in the third quarter of 2022, up from 80.0% in the third quarter of 2021, due primarily to higher staff compensation costs.

Selling, general and administrative expenses for the Company’s Protiviti division were $82 million for the three months ended September 30, 2022, increasing by 35.2% from $61 million for the three months ended September 30, 2021. As a percentage of revenues, selling, general and administrative expenses for Protiviti services were 16.0% in the third quarter of 2022, up from 12.1% in the third quarter of 2021, due primarily to operating expenditures returning to more normal levels.

The Company's selling, general and administrative expenses by reportable segment are summarized as follows: (in thousands):


	Three Months Ended September 30,								Relationships
	As Reported				As Adjusted				As Reported				As Adjusted
	2022		2021		2022		2021		2022		2021		2022		2021
Selling, General and Administrative Expenses
Contract talent solutions	$	318,462	$	310,112	$	329,531	$	311,409	27.9	%	29.4	%	28.9	%	29.5	%
Permanent placement talent solutions	148,290		124,955		149,856		125,140		81.3	%	79.9	%	82.2	%	80.0	%
Protiviti	81,827		60,509		81,827		60,509		16.0	%	12.1	%	16.0	%	12.1	%
Total	$	548,579	$	495,576	$	561,214	$	497,058	29.9	%	28.9	%	30.6	%	29.0	%

The following tables provide reconciliations of the non-GAAP selling, general and administrative expenses to reported selling, general and administrative expenses for the three months ended September 30, 2022 and 2021 (in thousands):


	Three Months Ended September 30, 2022
	Contract Talent Solutions				Permanent Placement Talent Solutions				Protiviti				Total
	$		% of Revenue		$		% of Revenue		$		% of Revenue		$		% of Revenue
Selling, General and Administrative Expenses
As Reported	$	318,462	27.9	%	$	148,290	81.3	%	$	81,827	16.0	%	$	548,579	29.9	%
Adjustments (1)	11,069		1.0	%	1,566		0.9	%	—		—		12,635		0.7	%
As Adjusted	$	329,531	28.9	%	$	149,856	82.2	%	$	81,827	16.0	%	$	561,214	30.6	%


	Three Months Ended September 30, 2021
	Contract Talent Solutions				Permanent Placement Talent Solutions				Protiviti				Total
	$		% of Revenue		$		% of Revenue		$		% of Revenue		$		% of Revenue
Selling, General and Administrative Expenses
As Reported	$	310,112	29.4	%	$	124,955	79.9	%	$	60,509	12.1	%	$	495,576	28.9	%
Adjustments (1)	1,297		0.1	%	185		0.1	%	—		—		1,482		0.1	%
As Adjusted	$	311,409	29.5	%	$	125,140	80.0	%	$	60,509	12.1	%	$	497,058	29.0	%

(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 and adjustments are recorded in selling, general and administrative expenses, or in the case of 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) loss from investments held in employee deferred compensation trusts consists primarily of unrealized and realized gains and losses and dividend income from trust investments and is presented separately on the unaudited Condensed Consolidated Statements of Operations. The Company’s loss from investments held in employee deferred compensation trusts was a loss of $15 million and $2 million for the three months ended September 30, 2022 and 2021, respectively. The increased loss from trust investments was due to negative market returns in the third quarter of 2022.

Income Before Income Taxes and Segment Income. The Company’s total income before income taxes was $226 million, or 12.3% of revenues, for the three months ended September 30, 2022, down from $228 million or 13.3% of revenues, for the three months ended September 30, 2021. Combined segment income was $224 million, or 12.2% of revenues, for the three months ended September 30, 2022, down from $228 million, or 13.3% of revenues, for the three months ended September 30, 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 September 30, 2022 and 2021 (in thousands):


	Three Months Ended September 30,
		2022		% of Revenue		2021		% of Revenue
Income before income taxes		$	225,624	12.3	%	$	227,658	13.3	%
Interest income, net		(2,346)		(0.1	%)	(238)		0.0	%
Amortization of intangible assets		417		0.0	%	572		0.0	%
Combined segment income		$	223,695	12.2	%	$	227,992	13.3	%

Contract talent solutions segment income was $120 million, or 10.5% of applicable revenues, for the three months ended September 30, 2022, up from $110 million, or 10.4% of applicable revenues, for the three months ended September 30, 2021. Permanent placement talent solutions segment income was $32 million, or 17.6% of applicable revenues, for the three months ended September 30, 2022, up from $31 million, or 19.8% of applicable revenues, for the three months ended September 30, 2021. Protiviti segment income was $72 million, or 14.0% of applicable revenues, for the three months ended September 30, 2022, down from $87 million, or 17.3% of applicable revenues, for the three months ended September 30, 2021.

Provision for income taxes. The provision for income taxes was 26.3% and 24.9% for the three months ended September 30, 2022 and 2021, respectively.

Nine Months EndedSeptember 30, 2022 and 2021

Service Revenues. The Company’s revenues were $5.51 billion for the nine months ended September 30, 2022, increasing by 17.5% compared to $4.69 billion for the nine months ended September 30, 2021. Revenues from U.S. operations increased 19.9% to $4.35 billion (78.9% of total revenue) for the nine months ended September 30, 2022, compared to $3.63 billion (77.3% of total revenue) for the nine months ended September 30, 2021. Revenues from international operations increased 9.3% to $1.16 billion (21.1% of total revenue) for the nine months ended September 30, 2022, compared to $1.06 billion (22.7% of total revenue) for the nine months ended September 30, 2021.Contributing factors for each reportable segment are discussed below in further detail.

Contract talent solutions revenues were $3.46 billion for the nine months ended September 30, 2022, increasing by 18.4% compared to revenues of $2.92 billion for the nine months ended September 30, 2021. Key drivers of contract talent solutions revenues include average hourly bill rates and the number of hours worked by the Company’s engagement professionals on client engagements. The increase in contract talent solutions revenues for the nine months ended September 30, 2022, was primarily due to 9.3% increase in average bill rates, and an 8.0% increase in the number of hours worked by the Company's engagement professionals. On an as adjusted basis, contract talent solutions revenues in the first three quarters of 2022 increased 20.4% compared to the first three quarters of 2021. In the U.S., revenues in the first three quarters of 2022 increased 21.8% on both an as reported basis and an as adjusted basis, compared to the first three quarters of 2021. For the Company’s international operations, revenues for the first three quarters of 2022 increased 7.0% on an as reported basis and increased 16.0% on an as adjusted basis, compared to the first three quarters of 2021.

Permanent placement talent solutions revenues were $569 million for the nine months ended September 30, 2022, increasing by 38.2% compared to revenues of $412 million for the nine months ended September 30, 2021. Key drivers of permanent placement talent solutions revenues consist of the number of candidate placements and average fees earned per placement. The increase in permanent placement staffing revenues for the nine months ended September 30, 2022, was primarily due to a 28.9% increase in the number of placements and a 9.3% increase in average fees earned per placement. On an as adjusted basis, permanent placement talent solutions revenues increased 41.3% for the first three quarters of 2022, compared to the first three quarters of 2021. In the U.S., revenues for the first three quarters of 2022 increased 44.8% on both an as reported basis and an as adjusted basis, compared to the first three quarters of 2021. For the Company’s international operations, revenues for the first three quarters of 2022 increased 23.6% on an as reported basis, and increased 33.5% on an as adjusted basis, compared to the first three quarters of 2021. Historically, demand for permanent placement talent solutions is even more sensitive to economic and labor market conditions than demand for contract talent solutions and this is expected to continue.

Protiviti revenues were $1.48 billion for the nine months ended September 30, 2022, increasing by 9.1% compared to revenues of $1.36 billion for the nine months ended September 30, 2021. Key drivers of Protiviti revenues are the billable hours worked by consultants on client engagements and average hourly bill rates. The increase in Protiviti revenues for the nine months ended September 30, 2022, was primarily due to a 17.3% increase in average hourly bill rates, partially offset by a 8.3% decrease in billable hours. The increase in hourly bill rates and decrease in billable hours for the nine months ended September 30, 2022, was primarily due to an increase in the mix of full-time Protiviti consultants relative to contractors. On an as adjusted basis, Protiviti revenues increased 11.3% for the first three quarters of 2022, compared to the first three quarters of 2021. In the U.S., revenues in the first three quarters of 2022 increased 9.3% on both an as reported basis and an as adjusted basis, compared to the first three quarters of 2021. For the Company’s international operations, revenues in the first three quarters of 2022 increased 8.3% on an as reported basis, and increased 19.2% on an as adjusted basis, compared to the first three quarters of 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 nine months ended September 30, 2022, is presented in the following table:


	Global		United States		International
Contract talent solutions
As Reported	18.4	%	21.8	%	7.0	%
Billing Days Impact	0.1	%	0.0	%	0.1	%
Currency Impact	1.9	%	―		8.9	%
As Adjusted	20.4	%	21.8	%	16.0	%
Permanent placement talent solutions
As Reported	38.2	%	44.8	%	23.6	%
Billing Days Impact	0.1	%	0.0	%	0.1	%
Currency Impact	3.0	%	―		9.8	%
As Adjusted	41.3	%	44.8	%	33.5	%
Protiviti
As Reported	9.1	%	9.3	%	8.3	%
Billing Days Impact	0.0	%	0.0	%	0.2	%
Currency Impact	2.2	%	―		10.7	%
As Adjusted	11.3	%	9.3	%	19.2	%

Gross Margin. The Company’s gross margin dollars were $2.38 billion for the nine months ended September 30, 2022, up 21.7% from $1.95 billion for the nine months ended September 30, 2021. Contributing factors for each reportable segment are discussed below in further detail.

Gross margin dollars for 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; and iii) conversion revenues, which are earned when a temporary position converts to a permanent position with the Company’s client.

Gross margin dollars for ~~the Company’s temporary and consultant staffing division~~contract talent solutions were ~~$421 million~~$1.38 billion for the ~~three~~nine months ended September 30, ~~2021, increasing 43.7% compared to $293 million~~2022, up 19.2% from $1.15 billion for the ~~three~~nine months ended September 30, ~~2020.~~2021. As a percentage of revenues, gross margin dollars for ~~temporary and consultant staffing was 40.0% for~~contract talent solutions were 39.8% in the first three ~~months ended September 30, 2021,~~quarters of 2022, up from ~~37.5% for~~39.5% in the first three ~~months ended September 30, 2020.~~quarters of 2021. This year-over-year ~~increase~~improvement in gross margin percentage was primarily ~~attributable~~due to ~~higher 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 ~~$156~~$568 million for the ~~three~~nine months ended September 30, ~~2021, increasing 79.4%~~2022, up 38.2% from ~~$87~~$411 million for the ~~three~~nine months ended September 30, ~~2020.~~2021 Because reimbursable expenses for permanent placement ~~staffing~~talent solutions are de minimis, the increase in gross margin dollars ~~are~~is substantially explained by the increase in 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 staff. Gross margin dollars for ~~the~~

~~Company’s risk consulting and internal audit division~~Protiviti were ~~$148~~$431 million for the ~~three~~nine months ended September 30, ~~2021, increasing 69.8% compared to $87~~2022, up 11.4% from $386 million for the ~~three~~nine months ended September 30, ~~2020.~~2021. As a percentage of revenues, reported gross margin dollars for ~~risk consulting and internal audit services~~Protiviti were 29.1% in the ~~third quarter~~first three quarters of ~~2021 was 29.5%,~~2022, up from ~~27.1%~~28.5% in the ~~third quarter~~first three quarters of ~~2020.~~2021. As a percentage of revenues, adjusted gross margin dollars for ~~risk consulting and internal audit services~~Protiviti were ~~29.4%~~27.9% in the ~~third quarter~~first three quarters of ~~2021, up~~2022, down from ~~28.1%~~28.9% in the ~~third quarter~~first three quarters of ~~2020.~~2021. The year-over-year ~~improvement~~decrease in adjusted gross margin percentage was primarily due to lower staff utilization rates.

The Company's gross margin by reportable segment are summarized as follows: (in thousands):


	Nine Months Ended September 30,								Relationships
	As Reported				As Adjusted				As Reported				As Adjusted
	2022		2021		2022		2021		2022		2021		2022		2021
Gross Margin
Contract talent solutions	$	1,376,293	$	1,154,420	$	1,376,293	$	1,154,420	39.8	%	39.5	%	39.8	%	39.5	%
Permanent placement talent solutions	568,147		411,122		568,147		411,122		99.8	%	99.8	%	99.8	%	99.8	%
Protiviti	430,562		386,367		412,603		391,932		29.1	%	28.5	%	27.9	%	28.9	%
Total	$	2,375,002	$	1,951,909	$	2,357,043	$	1,957,474	43.1	%	41.6	%	42.8	%	41.7	%

The following tables provide reconciliations of the ~~relative composition~~non-GAAP adjusted gross margin to reported gross margin for the nine months ended September 30, 2022 and 2021 (in thousands):


	Nine Months Ended September 30, 2022
	Contract Talent Solutions				Permanent Placement Talent Solutions				Protiviti				Total
	$		% of Revenue		$		% of Revenue		$		% of Revenue		$		% of Revenue
Gross Margin
As Reported	$	1,376,293	39.8	%	$	568,147	99.8	%	$	430,562	29.1	%	$	2,375,002	43.1	%
Adjustments (1)	—		—		—		—		(17,959)		(1.2	%)	(17,959)		(0.3	%)
As Adjusted	$	1,376,293	39.8	%	$	568,147	99.8	%	$	412,603	27.9	%	$	2,357,043	42.8	%


	Nine Months Ended September 30, 2021
	Contract Talent Solutions				Permanent Placement Talent Solutions				Protiviti				Total
	$		% of Revenue		$		% of Revenue		$		% of Revenue		$		% of Revenue
Gross Margin
As Reported	$	1,154,420	39.5	%	$	411,122	99.8	%	$	386,367	28.5	%	$	1,951,909	41.6	%
Adjustments (1)	—		—		—		—		5,565		0.4	%	5,565		0.1	%
As Adjusted	$	1,154,420	39.5	%	$	411,122	99.8	%	$	391,932	28.9	%	$	1,957,474	41.7	%

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

Selling, General and Administrative ~~Expenses.~~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 ~~$496 million~~$1.57 billion for the ~~three~~nine months ended September 30, ~~2021, increasing 26.8%~~2022, up 11.8% from ~~$391 million~~$1.41 billion for the ~~three~~nine months ended September 30, ~~2020.~~2021. As a percentage of revenues, ~~the Company’s~~ reported selling, general and administrative expenses were ~~28.9% for~~28.5% in the ~~third quarter~~first three quarters of ~~2021,~~2022, down from ~~32.8%~~30.0% in the ~~third quarter~~first three quarters of ~~2020.~~2021. As a percentage of revenues, ~~the Company’s~~ adjusted selling, general and administrative expenses were ~~29.0%~~30.2% in the ~~third quarter~~first three quarters of ~~2021, down~~2022, up from ~~30.9%~~29.3% in the ~~third quarter~~first three quarters of ~~2020.~~2021. Contributing factors for each reportable segment are discussed below in further detail.

Selling, general and administrative expenses for ~~the Company’s temporary and consultant staffing division~~contract talent solutions were ~~$310~~$908 million for the ~~three~~nine months ended September 30, ~~2021,~~2022, increasing ~~14.9%~~by 0.5% from ~~$270~~$904 million for the ~~three~~nine months ended September 30, ~~2020.~~2021. As a percentage of revenues, reported selling, general and administrative expenses for ~~temporary and consultant staffing~~contract talent solutions were ~~29.4%~~26.2% in the ~~third quarter~~first three quarters of ~~2021,~~2022, down from ~~34.5%~~30.9% in the ~~third quarter~~first three quarters of ~~2020.~~2021. As a percentage of revenues, adjusted selling, general and administrative expenses for ~~temporary and consultant staffing~~contract talent solutions were ~~29.5%~~28.6% in the ~~third quarter~~first three quarters of ~~2021,~~2022, down from ~~31.9%~~29.9% in the ~~third quarter~~first three quarters of ~~2020~~2021, due primarily to positive leverage from an increase in revenues.

Selling, general and administrative expenses for ~~the Company’s~~ permanent placement ~~staffing division~~talent solutions were ~~$125~~$450 million for the ~~three~~nine months ended September 30, ~~2021,~~2022, increasing by ~~57.8% compared to $79~~34.3% from $335 million for the ~~three~~nine months ended September 30, ~~2020.~~2021. As a percentage of revenues, reported selling, general and administrative expenses for permanent placement ~~staffing~~talent solutions were ~~79.9%~~79.1% in the ~~third quarter~~first three quarters of ~~2021,~~2022, down from ~~90.8%~~81.4% in the ~~third quarter~~first three quarters of ~~2020.~~2021. As a percentage of revenues,

adjusted selling, general and administrative expenses for permanent placement ~~staffing~~talent solutions was ~~80.0%~~81.1% in the ~~third quarter~~first three quarters of ~~2021, down~~2022, up from ~~88.2%~~80.6% in the ~~third quarter~~first three quarters of ~~2020~~2021, due primarily to ~~positive leverage from an increase in revenues.~~higher staff compensation costs.

Selling, general and administrative expenses for ~~the Company’s risk consulting and internal audit services division~~Protiviti were ~~$61~~$214 million for the ~~three~~nine months ended September 30, ~~2021,~~2022, increasing by ~~45.3% compared to $42~~27.5% from $168 million for the ~~three~~nine months ended September 30, ~~2020.~~2021. As a percentage of revenues, selling, general and administrative expenses for ~~risk consulting and internal audit services~~Protiviti were ~~12.1%~~14.4% in the ~~third quarter~~first three quarters of ~~2021, down~~2022, up from ~~13.0%~~12.4% in the ~~third quarter~~first three quarters of ~~2020~~2021, due primarily to ~~positive leverage from an increase in revenues.~~operating expenditures returning to more normal levels.

The Company's selling, general and administrative expenses by reportable segment are summarized as follows: (in thousands):


	Nine Months Ended September 30,								Relationships
	As Reported				As Adjusted				As Reported				As Adjusted
	2022		2021		2022		2021		2022		2021		2022		2021
Selling, General and Administrative Expenses
Contract talent solutions	$	907,886	$	903,739	$	989,432	$	874,723	26.2	%	30.9	%	28.6	%	29.9	%
Permanent placement talent solutions	450,437		335,316		461,890		331,858		79.1	%	81.4	%	81.1	%	80.6	%
Protiviti	213,844		167,676		213,844		167,676		14.4	%	12.4	%	14.4	%	12.4	%
Total	$	1,572,167	$	1,406,731	$	1,665,166	$	1,374,257	28.5	%	30.0	%	30.2	%	29.3	%

~~A reconciliation~~The following tables provide reconciliations of the non-GAAP ~~adjusted summary of operations~~selling, general and administrative expenses to ~~the~~ reported ~~summary of operations,~~selling, general and administrative expenses for the ~~three~~nine months ended September 30, ~~2021~~2022 and ~~2020 is presented in the following table~~2021 (in thousands):

Three Months Ended September 30, Relationships
2021 2020 2021 2020 2021 2020
Reported Adjustments Adjusted (1) Reported Adjustments Adjusted (1) Reported Adjusted
SERVICE REVENUES:
Accountemps $ 492,558 $ — $ 492,558 $ 351,598 $ — $ 351,598 28.8 % 29.5 % 28.8 % 29.6 %
OfficeTeam 279,370 — 279,370 173,685 — 173,685 16.3 % 14.6 % 16.3 % 14.6 %
Robert Half Technology 215,500 — 215,500 161,007 — 161,007 12.6 % 13.5 % 12.6 % 13.5 %
Robert Half Management
Resources
239,807 — 239,807 154,917 — 154,917 14.0 % 13.0 % 14.0 % 13.0 %
Elimination of intersegment
revenues
(172,534) — (172,534) (59,816) — (59,816) (10.1 %) (5.0 %) (10.1 %) (5.0 %)
Temporary and consultant staffing 1,054,701 — 1,054,701 781,391 — 781,391 61.6 % 65.7 % 61.6 % 65.7 %
Permanent placement staffing 156,444 — 156,444 87,203 — 87,203 9.1 % 7.3 % 9.1 % 7.3 %
Protiviti 501,421 — 501,421 321,303 — 321,303 29.3 % 27.0 % 29.3 % 27.0 %
Total $ 1,712,566 $ — $ 1,712,566 $ 1,189,897 $ — $ 1,189,897 100.0 % 100.0 % 100.0 % 100.0 %
GROSS MARGIN:
Temporary and consultant staffing $ 421,419 $ — $ 421,419 $ 293,318 $ — $ 293,318 40.0 % 37.5 % 40.0 % 37.5 %
Permanent placement staffing 156,170 — 156,170 87,043 — 87,043 99.8 % 99.8 % 99.8 % 99.8 %
Protiviti 147,738 (277) 147,461 86,985 3,392 90,377 29.5 % 27.1 % 29.4 % 28.1 %
Total $ 725,327 $ (277) $ 725,050 $ 467,346 $ 3,392 $ 470,738 42.4 % 39.3 % 42.3 % 39.6 %
SELLING GENERAL AND
ADMINISTRATIVE EXPENSE:
Temporary and consultant staffing $ 310,112 $ 1,297 $ 311,409 $ 269,963 $ (20,424) $ 249,539 29.4 % 34.5 % 29.5 % 31.9 %
Permanent placement staffing 124,955 185 125,140 79,194 (2,279) 76,915 79.9 % 90.8 % 80.0 % 88.2 %
Protiviti 60,509 — 60,509 41,642 — 41,642 12.1 % 13.0 % 12.1 % 13.0 %
Total $ 495,576 $ 1,482 $ 497,058 $ 390,799 $ (22,703) $ 368,096 28.9 % 32.8 % 29.0 % 30.9 %
OPERATING/SEGMENT INCOME:
Temporary and consultant staffing $ 111,307 $ (1,297) $ 110,010 $ 23,355 $ 20,424 $ 43,779 10.6 % 3.0 % 10.4 % 5.6 %
Permanent placement staffing 31,215 (185) 31,030 7,849 2,279 10,128 20.0 % 9.0 % 19.8 % 11.6 %
Protiviti 87,229 (277) 86,952 45,343 3,392 48,735 17.4 % 14.1 % 17.3 % 15.2 %
Total $ 229,751 $ (1,759) $ 227,992 $ 76,547 $ 26,095 $ 102,642 13.4 % 6.4 % 13.3 % 8.6 %
(Income) loss from investments held in
employee deferred compensation trusts
1,759 (1,759) — (26,095) 26,095 — (0.1 %) 2.2 % 0.0 % 0.0 %
Amortization of intangible assets 572 — 572 334 — 334 0.0 % 0.0 % 0.0 % 0.0 %
Interest income, net (238) — (238) (202) — (202) 0.0 % 0.0 % 0.0 % 0.0 %
Income before income taxes $ 227,658 $ — $ 227,658 $ 102,510 $ — $ 102,510 13.3 % 8.6 % 13.3 % 8.6 %


	Nine Months Ended September 30, 2022
	Contract Talent Solutions				Permanent Placement Talent Solutions				Protiviti				Total
	$		% of Revenue		$		% of Revenue		$		% of Revenue		$		% of Revenue
Selling, General and Administrative Expenses
As Reported	$	907,886	26.2	%	$	450,437	79.1	%	$	213,844	14.4	%	$	1,572,167	28.5	%
Adjustments (1)	81,546		2.4	%	11,453		2.0	%	—		—		92,999		1.7	%
As Adjusted	$	989,432	28.6	%	$	461,890	81.1	%	$	213,844	14.4	%	$	1,665,166	30.2	%


	Nine Months Ended September 30, 2021
	Contract Talent Solutions				Permanent Placement Talent Solutions				Protiviti				Total
	$		% of Revenue		$		% of Revenue		$		% of Revenue		$		% of Revenue
Selling, General and Administrative Expenses
As Reported	$	903,739	30.9	%	$	335,316	81.4	%	$	167,676	12.4	%	$	1,406,731	30.0	%
Adjustments (1)	(29,016)		(1.0	%)	(3,458)		(0.8	%)	—		—		(32,474)		(0.7	%)
As Adjusted	$	874,723	29.9	%	$	331,858	80.6	%	$	167,676	12.4	%	$	1,374,257	29.3	%

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

2530

(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~~and adjustments are recorded in selling, general and administrative expenses, 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) loss from investments held in employee deferred compensation trusts consists primarily of unrealized and realized gains and losses and dividend income from trust ~~investments.~~investments and is presented separately on the unaudited Condensed Consolidated Statements of Operations. The Company’s (income) loss from investments held in employee deferred compensation trusts was $2a loss of $111 million ~~and ($26 million)~~ for the ~~three~~nine months ended September 30, ~~2021 and 2020, respectively.~~2022, compared to income of $38 million for the nine months ended September 30, 2021. The loss from trust investments was due to negative market returns in 2022.

Income Before Income Taxes and Segment Income. The Company’s total income before income taxes was ~~$228~~$694 million, or ~~13.3%~~12.6% of revenues, for the three months ended September 30, 2021, up from $103 million or 8.6% of revenues, for the three months ended September 30, 2020. Combined segment income was $228 million, or 13.3% of revenues, for the three months ended September 30, 2021, up from $103 million, or 8.6% of revenues, for the three months ended September 30, 2020.

~~The following table provides a reconciliation of the non-GAAP combined segment income to reported income before income taxes for the three months ended September 30, 2021 and 2020 (in thousands):~~
Three Months Ended
September 30,
2021 2020
Income before income taxes $ 227,658 $ 102,510
Interest income, net (238) (202)
Amortization of intangible assets 572 334
Combined segment income $ 227,992 $ 102,642

For the Company’s temporary and consultant staffing division, segment income was $110 million, or 10.4% of applicable revenues, for the three months ended September 30, 2021, up from $44 million, or 5.6% of applicable revenues, for the three months ended September 30, 2020. For the Company’s permanent placement staffing division, segment income was $31 million, or 19.8% of applicable revenues, for the three months ended September 30, 2021, up from $10 million, or 11.6% of applicable revenues, for the three months ended September 30, 2020. For the Company’s risk consulting and internal audit services division, segment income was $87 million, or 17.3% of applicable revenues, for the three months ended September 30, 2021, up from $49 million, or 15.2% of applicable revenues, for the three months ended September 30, 2020.

~~Provision for income taxes. The provision for income taxes was 24.9% and 26.1% for the three months ended September 30, 2021 and 2020, respectively.~~

~~Nine Months EndedSeptember 30, 2021 and 2020~~

~~Revenues.~~ The Company’s revenues were $4.69 billion for the nine months ended September 30, 2021, increasing by 23.3% compared to $3.80 billion for the nine months ended September 30, 2020. Revenues from foreign operations represented 22.7% of total revenues, for the nine months ended September 30, ~~2021,~~2022, up from 22.0% of total revenues for the nine months ended September 30, 2020. The Company analyzes its revenues for three reportable segments: temporary and consultant staffing, permanent placement staffing, and risk consulting and internal audit services. Contributing factors for each reportable segment are discussed below in further detail.

Temporary and consultant staffing revenues were $2.92 billion for the nine months ended September 30, 2021, increasing by 11.2% compared to revenues of $2.63 billion for the nine months ended September 30, 2020. Key drivers of temporary and consultant staffing 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 revenues in the first three quarters of 2021 increased 10.1% compared to the first three quarters of 2020, due primarily to more hours worked by the Company’s engagement professionals on client engagements. In the U.S., revenues in the first three quarters of 2021 increased 9.9% on an as reported basis and increased 10.4% on an as adjusted basis, compared to the first three quarters of 2020. For the Company’s international operations, revenues for the first three quarters of 2021 increased 15.9% on an as reported basis and increased 9.2% on an as adjusted basis, compared to the first three quarters of 2020.

Permanent placement staffing revenues were $412 million for the nine months ended September 30, 2021, increasing by 47.7% compared to revenues of $279 million for the nine months ended September 30, 2020. Key drivers of permanent placement staffing revenues consist of the number of candidate placements and average fees earned per placement. On an as adjusted basis, permanent placement staffing revenues increased 45.6% for the first three quarters of 2021, compared to the first three quarters of 2020, driven primarily by an increase in number of placements. In the U.S., revenues for the first three quarters of 2021 increased 47.8% on an as reported basis and 48.4% on an as adjusted basis, compared to the first three quarters of 2020. For the Company’s international operations, revenues for the first three quarters of 2021 increased 47.6% on an as reported basis and 39.3% on an as adjusted basis, compared to the first three quarters of 2020. Historically, demand for permanent placement staffing is even more sensitive to economic and labor market conditions than demand for temporary and consultant staffing and this is expected to continue.

Risk consulting and internal audit services revenues were $1.36 billion for the nine months ended September 30, 2021, increasing by 50.9% compared to revenues of $899 million for the nine months ended September 30, 2020. Key drivers of risk consulting and internal audit services 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 revenues increased 49.7% for the first three quarters of 2021, compared to the first three quarters of 2020, due primarily to an increase in billable hours. In the U.S., revenues in the first three quarters of 2021 increased 50.6% on an as reported basis and 51.2% on an as adjusted basis, compared to the first three quarters of 2020. The Company’s risk consulting and internal audit services revenues for the first three quarters of 2021 from international operations increased 52.4% on an as reported basis and 43.8% on an as adjusted basis, compared to the first three quarters of 2020.

A reconciliation of the non-GAAP year-over-year revenue growth rates to the as reported year-over-year revenue growth rates for the nine months ended September 30, 2021, is presented in the following table:
Global United States International
Temporary and consultant staffing
As Reported 11.2 % 9.9 % 15.9 %
Billing Days Impact 0.4 % 0.5 % 0.3 %
Currency Impact -1.5 % ― -7.0 %
As Adjusted 10.1 % 10.4 % 9.2 %
Permanent placement staffing
As Reported 47.7 % 47.8 % 47.6 %
Billing Days Impact 0.6 % 0.6 % 0.4 %
Currency Impact -2.7 % ― -8.7 %
As Adjusted 45.6 % 48.4 % 39.3 %
Risk consulting and internal audit services
As Reported 50.9 % 50.6 % 52.4 %
Billing Days Impact 0.6 % 0.6 % 0.3 %
Currency Impact -1.8 % ― -8.9 %
As Adjusted 49.7 % 51.2 % 43.8 %

~~Gross Margin.~~ The Company’s gross margin dollars were $1.95 billion for the nine months ended September 30, 2021, increasing by 30.3% compared to $1.50 billion for the nine months ended September 30, 2020. Contributing factors for each reportable segment are discussed below in further detail.

Gross margin dollars for temporary and consultant staffing 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; and iii) conversion revenues, which are earned when a temporary position converts to a permanent position with the Company’s client. Gross margin dollars for the Company’s temporary and consultant staffing division were $1.15 billion for the nine months ended September 30, 2021, increasing 17.1% compared to $986 million for the nine months ended September 30, 2020. As a percentage of revenues, gross margin for temporary and consultant staffing was 39.5% for the nine months ended September 30, 2021, up from 37.5% for the nine months ended September 30, 2020. This year-over-year increase in gross margin percentage was primarily attributable to higher pay-bill spreads and higher conversion revenues.

Gross margin dollars for permanent placement staffing represent revenues less reimbursable expenses. Gross margin dollars for the Company’s permanent placement staffing division were $411 million for the nine months ended September 30, 2021, increasing 47.8% from $278 million for the nine months ended September 30, 2020. Because reimbursable expenses for permanent placement staffing are de minimis, gross margin dollars are substantially explained by revenues previously discussed.

Gross margin dollars for risk consulting and internal audit services 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 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 staff. Gross margin dollars for the Company’s risk consulting and internal audit division were $386 million for the nine months ended September 30, 2021, increasing 64.8% compared to $234 million for the nine months ended September 30, 2020. As a percentage of revenues, reported gross margin for risk consulting and internal audit services in the first three quarters of 2021 was 28.5%, up from 26.1% in the first three quarters of 2020. As a percentage of revenues, adjusted gross margin dollars for risk consulting and internal audit services were 28.9% the first three quarters of 2021, up from 26.8% in the first three quarters of 2020. The year-over-year increase in adjusted gross margin percentage was due primarily to higher staff utilization rates.

~~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 $1.41 billion for the nine months ended September 30, 2021, increasing 13.4% from $1.24 billion for the nine months ended September 30, 2020. As a percentage of revenues, the Company’s reported selling, general and administrative expenses were 30.0% for the first three quarters of 2021, down from 32.6% the first three quarters of 2020. As a percentage of revenues, the Company’s adjusted selling, general and administrative expenses were 29.3% in the first three quarters of 2021 down from 31.9% in the first three quarters of 2020. Contributing factors for each reportable segment are discussed below in further detail.

Selling, general and administrative expenses for the Company’s temporary and consultant staffing division were $904 million for the nine months ended September 30, 2021, increasing 6.9% from $845 million for the nine months ended September 30, 2020. As a percentage of revenues, reported selling, general and administrative expenses for temporary and consultant staffing were 30.9% in the first three quarters of 2021, down from 32.2% in the first three quarters of 2020. As a percentage of revenues, adjusted selling, general and administrative expenses for temporary and consultant staffing were 29.9% in the first three quarters of 2021, down from 31.2% in the first three quarters of 2020 due primarily to positive leverage from an increase in revenues and a continued reduction in expenses.

Selling, general and administrative expenses for the Company’s permanent placement staffing division were $335 million for the nine months ended September 30, 2021, increasing by 28.9% compared to $260 million for the nine months ended September 30, 2020. As a percentage of revenues, reported selling, general and administrative expenses for permanent placement staffing were 81.4% in the first three quarters of 2021, down from 93.3% in the first three quarters of 2020. As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement staffing was 80.6% in the first three quarters of 2021, down from 92.4% in the first three quarters of 2020 due primarily to positive leverage from an increase in revenues.

Selling, general and administrative expenses for the Company’s risk consulting and internal audit services division were $168 million for the nine months ended September 30, 2021, increasing by 23.9% compared to $135 million for the nine months ended September 30, 2020. As a percentage of revenues, selling, general and administrative expenses for risk consulting and internal audit services were 12.4% in the first three quarters of 2021, down from 15.1% in the first three quarters of 2020 due primarily to positive leverage from an increase in revenues.

A reconciliation of the non-GAAP adjusted summary of operations to the reported summary of operations, for the nine months ended September 30, 2021 and 2020 is presented in the following table (in thousands):

Nine Months Ended September 30, Relationships
2021 2020 2021 2020 2021 2020
Reported Adjustments Adjusted (1) Reported Adjustments Adjusted (1) Reported Adjusted
SERVICE REVENUES:
Accountemps $ 1,363,007 $ — $ 1,363,007 $ 1,173,024 $ — $ 1,173,024 29.0 % 30.8 % 29.0 % 30.8 %
OfficeTeam 763,035 — 763,035 549,963 — 549,963 16.3 % 14.5 % 16.3 % 14.5 %
Robert Half Technology 581,905 — 581,905 519,687 — 519,687 12.4 % 13.7 % 12.4 % 13.7 %
Robert Half Management
Resources
633,685 — 633,685 531,826 — 531,826 13.5 % 14.0 % 13.5 % 14.0 %
Elimination of intersegment
revenues
(419,375) — (419,375) (147,603) — (147,603) (8.9 %) (3.9 %) (8.9 %) (3.9 %)
Temporary and consultant staffing 2,922,257 — 2,922,257 2,626,897 — 2,626,897 62.3 % 69.0 % 62.3 % 69.0 %
Permanent placement staffing 411,788 — 411,788 278,722 — 278,722 8.8 % 7.3 % 8.8 % 7.3 %
Protiviti 1,357,482 — 1,357,482 899,295 — 899,295 28.9 % 23.6 % 28.9 % 23.6 %
Total $ 4,691,527 $ — $ 4,691,527 $ 3,804,914 $ — $ 3,804,914 100.0 % 100.0 % 100.0 % 100.0 %
GROSS MARGIN:
Temporary and consultant staffing $ 1,154,420 $ — $ 1,154,420 $ 985,616 $ — $ 985,616 39.5 % 37.5 % 39.5 % 37.5 %
Permanent placement staffing 411,122 — 411,122 278,229 — 278,229 99.8 % 99.8 % 99.8 % 99.8 %
Protiviti 386,367 5,565 391,932 234,439 6,248 240,687 47.0 % 26.1 % 28.9 % 26.8 %
Total $ 1,951,909 $ 5,565 $ 1,957,474 $ 1,498,284 $ 6,248 $ 1,504,532 28.5 % 39.4 % 41.7 % 39.5 %
SELLING GENERAL AND
ADMINISTRATIVE EXPENSE:
Temporary and consultant staffing $ 903,739 $ (29,016) $ 874,723 $ 845,342 $ (25,659) $ 819,683 30.9 % 32.2 % 29.9 % 31.2 %
Permanent placement staffing 335,316 (3,458) 331,858 260,161 (2,723) 257,438 81.4 % 93.3 % 80.6 % 92.4 %
Protiviti 167,676 — 167,676 135,376 — 135,376 12.4 % 15.1 % 12.4 % 15.1 %
Total $ 1,406,731 $ (32,474) $ 1,374,257 $ 1,240,879 $ (28,382) $ 1,212,497 30.0 % 32.6 % 29.3 % 31.9 %
OPERATING/SEGMENT INCOME:
Temporary and consultant staffing $ 250,681 $ 29,016 $ 279,697 $ 140,274 $ 25,659 $ 165,933 8.6 % 5.3 % 9.6 % 6.3 %
Permanent placement staffing 75,806 3,458 79,264 18,068 2,723 20,791 18.4 % 6.5 % 19.2 % 7.5 %
Protiviti 218,691 5,565 224,256 99,063 6,248 105,311 16.1 % 11.0 % 16.5 % 11.7 %
Total $ 545,178 $ 38,039 $ 583,217 $ 257,405 $ 34,630 $ 292,035 11.6 % 6.8 % 12.4 % 7.7 %
(Income) loss from investments held in
employee deferred compensation trusts
(38,039) 38,039 — (34,630) 34,630 — 0.8 % 0.9 % 0.0 % 0.0 %
Amortization of intangible assets 1,724 — 1,724 1,002 — 1,002 0.0 % 0.0 % 0.0 % 0.0 %
Interest income, net (145) — (145) (1,264) — (1,264) 0.0 % 0.0 % 0.0 % 0.0 %
Income before income taxes $ 581,638 $ — $ 581,638 $ 292,297 $ — $ 292,297 12.4 % 7.7 % 12.4 % 7.7 %

(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) loss is presented separately. The non-GAAP financial measures shown in the table above are adjusted to reclassify investment (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.

~~(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, 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) 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) loss from investments held in employee deferred compensation trusts was ($38 million) for the nine months ended September 30, 2021, up from ($35 million) for the nine months ended September 30, 2020. The increase in income from trust investments was due to positive market returns in 2021.

~~Income Before Income Taxes and Segment Income.~~ ~~The Company’s total income before income taxes was~~ $582 million or 12.4% of revenues, for the nine months ended September 30, ~~2021, up from $292~~2021. Combined segment income was $692 million, or ~~7.7%~~12.6% of revenues, for the nine months ended September 30, ~~2020. Combined segment income was~~2022, up from $583 million, or 12.4% of revenues, for the nine months ended September 30, ~~2021, up from $292 million, or 7.7% of revenues, for the nine months ended September 30, 2020.~~2021.

The following table provides a reconciliation of the non-GAAP combined segment income to reported income before income taxes for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 (in thousands):
Nine Months Ended
September 30,
2021 2020
Income before income taxes $ 581,638 $ 292,297
Interest income, net (145) (1,264)
Amortization of intangible assets 1,724 1,002
Combined segment income $ 583,217 $ 292,035

~~For the Company’s temporary and consultant staffing division,~~


	Nine Months Ended September 30,
		2022		% of Revenue		2021		% of Revenue
Income before income taxes		$	693,857	12.6	%	$	581,638	12.4	%
Interest income, net		(3,230)		0.0	%	(145)		0.0	%
Amortization of intangible assets		1,250		0.0	%	1,724		0.0	%
Combined segment income		$	691,877	12.6	%	$	583,217	12.4	%

Contract talent solutions segment income was $387 million, or 11.2% of applicable revenues for the nine months ended September 30, 2022, up from $280 million, or 9.6% of applicable revenues for the nine months ended September 30, ~~2021, up from $166~~2021. Permanent placement talent solutions segment income was $106 million, or ~~6.3%~~18.7% of applicable revenues for the nine months ended September 30, ~~2020. For the Company’s permanent placement staffing division, segment income was~~2022, up from $79 million, or 19.2% of applicable revenues, infor the ~~first three quarters of 2021, up from~~nine months ended September 30, 2021. Protiviti segment income ~~of $21~~was $199 million, or ~~7.5%~~13.4% of applicable revenues infor the ~~first three quarters of 2020. For the Company’s risk consulting and internal audit services division, segment income was~~nine months ended September 30, 2022, down from $224 million, or 16.5% of applicable revenues, infor the ~~first three quarters of 2021, compared to segment income of $105 million, or 11.7% of applicable revenues, in the first three quarters of 2020.~~nine months ended September 30, 2021.

Provision for income taxes. The provision for income taxes was ~~26.0%~~26.5% and ~~27.5%~~26.0% for the nine months ended September 30, 2022 and 2021, ~~and 2020,~~ respectively. ~~The 2020 rate was elevated based on lesser coverage of non-deductible tax items due to lower pandemic-impacted income.~~

Liquidity and Capital Resources

The change in the Company’s liquidity during the nine months ended September 30, ~~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 ~~$634~~$593 million and ~~$587~~$634 million at September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Operating activities provided cash flows of $481 million during the nine months ended September 30, 2022, offset by $72 million and $400 million of net cash used in investing activities and financing activities, respectively. Operating activities provided cash flows of $458 million during the nine months ended September 30, 2021, offset by $50 million and $341 million of net cash used in investing activities and financing activities, respectively. ~~Operating activities provided $565~~Fluctuations in foreign currency exchange rates had the effect of decreasing reported cash and cash equivalents by $35 million during the nine months ended September 30, ~~2020,~~2022, compared to a decrease of $8 million during the nine months ended September 30, 2021.

Operating activities—Net cash provided by operating activities for the nine months ended September 30, 2022, was composed of net income of $510 million adjusted upward for non-cash items of $224 million, offset by ~~$43 million and $208 million of~~ net cash used in ~~investing activities and financing activities, respectively.~~

~~Operating activities—~~changes in working capital of $253 million. Net cash provided by operating activities for the nine months ended September 30, 2021, was composed of net income of $431 million adjusted upward for non-cash items of $49 million, offset by net cash used in changes in working capital of $22 million. ~~Net cash provided by operating~~

Investing activities—Cash used in investing activities for the nine months ended September 30, ~~2020~~2022, was $72 million. This was composed of ~~net income~~capital expenditures of ~~$212~~$49 million ~~adjusted upward for non-cash items~~and investments in employee deferred compensation trusts of $52 million, ~~and net cash provided~~partially offset by ~~changes in working capital~~proceeds from employee deferred compensation trusts redemptions of ~~$301~~$29 million.

~~Investing activities—~~Cash used in investing activities for the nine months ended September 30, 2021, was $50 million. This was composed of capital expenditures of $25 million and investments in employee deferred compensation trusts of $56 million, partially offset by proceeds from employee deferred compensation trusts redemptions of $31 million.

Capital expenditures, including $30 million for cloud computing arrangements, for the nine months ended September 30, 2022, totaled $78 million, approximately 80.3% 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 $90 million to $100 million, of which $70 million to $80 million relates to software initiatives and technology infrastructure, including capitalized costs related to implementation of cloud computing arrangements.

Financing activities—Cash used in ~~investing~~financing activities for the nine months ended September 30, ~~2020~~2022, was ~~$43~~$400 million. This ~~was composed~~included repurchases of ~~capital expenditures of $29~~$258 million in common stock and ~~investments~~$142 million in ~~employee deferred compensation trusts of $48 million, offset by proceeds from employee deferred compensation trusts redemptions of $34 million.~~

~~Financing activities—~~dividends paid to stockholders. Cash used in financing activities for the nine months ended September 30, 2021, was $341 million. This included repurchases of $212 million in common stock and $129 million in dividends paid to stockholders. Cash used in financing activities for the nine months ended September 30, 2020 was $208 million. This included repurchases of $91 million in common stock and $117 million in dividends paid to stockholders.

As of September 30, ~~2021,~~2022, the Company is authorized to repurchase, from time to time, up to ~~7.7~~4.7 million additional shares of the Company’s common stock on the open market or in privately negotiated transactions, depending on market conditions. During the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, the Company repurchased 2.5 million shares, at a cost of $219 million, and 2.3 million shares, at a cost of $200 ~~million, and 1.4 million shares, at a cost of $75~~ 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 nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, such repurchases totaled 0.3 million shares, at a cost of ~~$20~~$33 million, and 0.3 million shares, at a cost of ~~$12~~$20 million, respectively. Repurchases of shares have been funded with cash generated from operations.

The Company’s working capital at September 30, ~~2021~~2022, included ~~$634~~$593 million in cash and cash equivalents and ~~$1.01~~$1.10 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 2021, the Company entered into an amendment to extend the maturity of its $100 million unsecured revolving credit facility (the “Credit Agreement”) to May 2024. Borrowings under the 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 Credit Agreement is subject to certain financial covenants and the Company was in compliance with these covenants as of September 30, ~~2021.~~2022. There were no borrowings under the Credit Agreement as of September 30, 2022, or December 31, 2021.

On October ~~28, 2021,~~27, 2022, the Company announced a quarterly dividend of ~~$.38~~$0.43 per share to be paid to all shareholders of record as of November ~~24, 2021.~~25, 2022. The dividend will be paid on December 15, 2022.

Material Cash Requirements from Contractual Obligations

Leases.As of September 30, 2022, the Company reported current and long-term operating lease liabilities of $81 million and $151 million, respectively. These balances consist of the minimum rental commitments for October 2022 and thereafter, discounted to reflect the Company’s cost of borrowing, under noncancellable lease contracts executed as of September 30, 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 nine months of 2022.

Employee Deferred Compensation Plan.As of September 30, 2022, the Company reported deferred compensation plan obligations of $435 million in its accompanying unaudited 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 to monitor the 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. 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 nine months ended September 30, ~~2021,~~2022, approximately ~~22.7% of the~~21.1% Company’s revenues were generated outside of the ~~United States.~~U.S.. 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 nine 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 service revenues by ~~$63.6~~$101 million, or ~~1.7%~~2.1%, in the first three quarters 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~~international operations. Because substantially all the Company’s ~~foreign~~international 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 ~~$3.6~~$5 million, or ~~1.7%~~1.1%, ~~higher~~lower in the first three quarters 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 September 30, ~~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~~consistent with the first three quarters of 2022 results. Should current trends continue, the impact to reported net income would be immaterial.

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. In accordance with this review, no material changes to controls and procedures were made in the quarter ended September 30, 2022.

3234

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)
July 1, 2021 to July 31, 2021 — $ — — 8,433,799
August 1, 2021 to August 31, 2021 214,178 (a) $ 101.42 213,914 8,219,885
September 1, 2021 to September 30, 2021 527,749 (b) $ 102.08 525,709 7,694,176
Total July 1, 2021 to September 30, 2021 741,927 739,623


	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 (b)
July 1, 2022 to July 31, 2022	50,000		$	75.94	50,000	5,715,534
August 1, 2022 to August 31, 2022	679,015		$	78.18	679,015	5,036,519
September 1, 2022 to September 30, 2022	379,528	(a)	$	76.56	377,889	4,658,630
Total July 1, 2022 to September 30, 2022	1,108,543				1,106,904

(a)Includes ~~264~~1,639 shares repurchased in connection with employee stock plans, whereby Company shares were tendered by employees for the payment of applicable withholding taxes.

(b)~~Includes 2,040 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~~Company’s Board of Directors has, at various times, authorized the repurchase, from time to time, of the ~~Company's~~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 ~~120,305,824~~123,341,370 shares have been repurchased as of September 30, ~~2021.~~2022.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosure

Not applicable.

3335

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.

3436

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: October ~~29, 2021~~28, 2022

3537