RHI - Earnings call transcript Q1 2024 | Robert Half International Inc.

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Operator

Hello, and welcome to the Robert Half First Quarter 2024 Conference Call. Today's conference call is being recorded. [Operator Instructions] Our host for today's call are Mr. Keith Waddell, President and Chief Executive Officer of Robert Half; and Mr. Michael Buckley, Chief Financial Officer. Mr. begin. may you Waddell,

M. Waddell

appreciate today. We your everyone. time Hello,

performance. Before that call the started, what I'd the our contain judgment our remind you like to future about comments estimates statements, future predictions we statements of including represent current get forward-looking and These made holds. on today's

most are the and and materially statements. These forward-looking made from that are XX-K described today's cause release could recent uncertainties press in they our filed today's on obligation However, SEC. risks actual XX-Q subject in the assume risks to call. We statements uncertainties to with results differ and and to the update the no

these presentation, figures in a measures and may we earnings non-GAAP some supplemental reference schedule this to as financial release. and these Reconciliations our measures of are During adjusted. press included mention explanations further

For available our roberthalf.com. are for in our today's the your call website, prepared of Center convenience, remarks Investor

continues basis. and to global a impact caution and starts on activity hiring Client candidate new project

that However, last quarter the year. trend towards of this the began in continued into year second first of half the stabilization

largely X line results sequential were Protiviti for higher encouraged time guidance, led in quarter quarter with by anticipates we're expectations, earnings first the that quarters. First second in and earnings

that to both We on services. our model growth climate professional and our technology consulting navigate remain prospects, staffing business industry-leading our includes confident and in ability business unique built current and the optimistic about brand, people,

to the quarter share revenues of as-adjusted ago. first a down were an first XX% company-wide XX% quarter billion, was the and per $X.XX in quarter on in Net last first basis first quarter XXXX, income basis. the year reported For year's $X.XXX $X.XX from a compared down on

million. of $X.XX dividend per outlay we record $XX share of March, shareholders cash In a total for cash our distributed to a

grown was XXXX annually the share since The higher per has dividend XX.X% year. in inception dividend XXXX. Our its than XX.X% March prior

quarter during approximately $XX Robert for Half million. acquired XXX,XXX shares also the We

in quarter. available on repurchase stock the first the for repurchase shares XX have XX% under plan. Board-approved Return for capital was invested million We our company

Now I'll to call CFO, our Buckley. the over turn Mike

Michael Buckley

Hello, Thank everyone. Keith. you,

billion year-over-year. $XXX As Keith noted, XX% Solutions year-over-year. prior quarter On global first U.S. revenues down quarter. million, Talent were Non-U.S. as-adjusted down $XXX first revenues year's Talent XX% Solutions revenues XX% were down from Talent were an revenues basis, quarter. million, in first Solutions the were the $X.XXX

We including worldwide, ago. first quarter same have X XX to the in the solutions of in XXX locations XX.X days countries XX.X were the year United there XX locations days outside billing compared States. In talent quarter, billing

to XX.X The quarter of the XX.X XXXX second XXXX. days billing during second has compared of billing quarter days

Talent the compared The increased Contract during for by rates X.X% quarter the of rate and revenues Protiviti. had quarter a the by of bill changes mix year-over-year quarter fluctuations ago, currency. year to $X negligible million, functional country and amount fourth Currency rate for X adjusted total effect for This million the X.X%. for was reported the for first revenues Solutions Talent first exchange increasing $X Solutions in specialization,

XX $XXX at an down and the independently quarter million from is million look closer $XX United from its X% ago Protiviti versus locations Global results first were for revenues of period. a XX%. revenues take the States. and Protiviti let's a in through owned U.S. clients States year the XX Protiviti. down down basis, countries. revenues million, while non-U.S. the network in X% of Now were the firms serve member United productivity outside that On quarter first Protiviti global were were is revenues of $XXX as-adjusted

of or gross Contract X first of revenues the the in or contract quarter XX.X% X quarter ago. Solutions, ago. in first the of to In revenues Turning quarter X.X% margin now year XX.X% X.X% quarter to Conversion compared in versus was applicable year revenues to Talent margin. hire gross revenues

of combined revenues Solutions overall were margin revenues Solutions quarter the quarter year. Contract consolidated Talent was first gross in year to Solutions the ago. of When with in Talent versus gross placement same Talent first XX% for XX.X% permanent margin, XX.X% applicable Our XX.X% compared quarter in X last revenues the

For margin Protiviti, of revenues revenues was gross X ago. Protiviti XX.X% Protiviti of XX.X% compared to year

income for completely is Protiviti margin XX.X% for compensation compensation related Adjusted for deferred quarter deferred investment compensation last that to the employee ended deferred just to was the income amount year. for investment offset by offset, the of compared XX.X% trusts gross

of X revenues XX% SG&A year investment enterprise the first compared first SG&A. were quarter the were Adjusted of ago. XX.X% SG&A year. to costs for to global in compared Enterprise quarter for were in in the income XX.X% costs Talent ended Solutions in just quarter offset, of costs Talent to the revenues on first XX.X% the quarter Solutions, compensation SG&A XX.X% versus the last quarter Moving same XX% XXXX. deferred

income offset, Solutions costs XX.X% for to compensation ended quarter year. deferred investment the Talent for Adjusted the last SG&A compared just were XX.X%

revenues XX.X% of costs quarter of Protiviti First for revenues compared last for XX.X% SG&A year. the to Protiviti were same quarter

Combined was for deferred Adjusted was segment for margin the quarter income income segment $XX compensation million the $XX offset, combined in million. first was Operating investment the income quarter. X.X%.

segment was of in million margin with $XX for first Solutions income from million segment divisions X.X%. the with Protiviti X.X%. our of was quarter Segment income segment quarter a a First $XX Talent margin

SG&A offset deferred income first Our trusts. million direct held as which is XXXX amount employee compensation, investments $XX completely and income of compensation This reflected additional in employee an quarter equal from costs. includes by statement in expenses is

our no on has net it reported -- income. the such, reported effect As on

XX% tax to was XX% Our year compared first X ago. quarter rate

sales quarter, receivable implied or million accounts were $XXX and At the outstanding the was end days. days DSO, XX.X of first

in trends quarter in quarter to revenues adjusted the versus for X of compares with Revenue move down XX% of placement far March the last were were we XXXX. first the review so to a to we weeks down Before currency This revenue first days. XX% let's March prior the decrease all saw second the quarter. billing XX% the quarter the quarter. Talent period year. to April in for Contract XX% full XX% Solutions revenues March same year some down a exited full first and compared decrease the and Permanent April, monthly compared for for guidance, versus

we are brief For into into But the first XXXX. insight XX% We time X too information permanent during that. placement revenues quarter of so period to provide same caution you and the periods. first much compared weeks into in of this very as know, these reading the were April, the have down against you trends April. saw some We

the than period $X.XX revenues basis. $X.XX $X.XX billion major to to on as we a same Income in offer following revenue X% second lower that assumptions down $X.XX. year-over-year Midpoint billion. With guidance: Solutions or in XX% Talent growth the The basis $X.X quarter midpoint mind, of as-adjusted an XXXX billion share the these of XX%. financial Revenue follows: underlying adjusted. estimates to as on are per

X% down For talent, X% XX%. for flat Protiviti, to contract margin Gross XX% overall down to to XX%.

an Talent to compensation the to to overall XX% on Protiviti as XX% for XX%, deferred of as XX% income Solutions, adjusted XX% percentage and SG&A XX% offset income compensation to for investment Protiviti For offset XX%. investment overall the to XX%. revenues a XX% deferred XX%; adjusted

to Talent X%, income X%. for Segment overall X% X% Protiviti Solutions X% to to X%;

and XX% outstanding shares $XXX million rate $XXX tax to XX% Our to million.

million costs cloud with million million, capitalized second $XX quarter. and expenditures million computing in capital $XXX to XXXX $XX to the $XX

guidance As always, to we forward. limit formal quarter our one

impact X.X%. XXXX's and for gains for filings. COVID we our third risks average of XX-year provide we is are for X.X% would to of estimates EPS release gains SEC in All mentioned performance note informational quarter on the and Just call purposes, press subject excluding that this sequential revenue today's the the in sequential

Now turn over back the call I'll Keith. to

M. Waddell

Mike. significantly including change projects. selective their quarters, sensitive reluctant with internal clients replacements. in also are Consistent many Also, to of employee prior another less have reflecting market. the a you, difficulty since Candidates year. middle to the exited quarter the stabilization their at finding in last attrition of maintaining is and jobs is very new end budget head the impact anticipated diminished the counts down Thank are more on sign activities, those approval we suitable are net labor prior the the we hiring basis, force based the churn quarter. revenues seen with globe. On the in in of similar and the in across confidence very The of weekly

about We future. have be to the many reasons optimistic

related growth from to normalized also have and We Talent with of and data, in downturns, improved. Job prior demand opportunities our typically which improve, Solutions pent-up focus follows amounts that than now the candidate skilled significantly starting churn the on significant labor continued Protiviti. services indicates by of confidence industry both for as encouraged talent, in reacceleration prospects when higher and velocity and more margin the in client the openings future is macroeconomic hiring hiring. higher We're substantial conditions

Our in client skilled economic less higher gross bill talent, assignments, advantages, to services carry higher increased rates professionals openness and many longer full-time and more sensitivity. margins, engagement investments remote

steadily of revenues skilled currently over years mix positions Our the from higher rising several and been exceeds has past XX%.

to We expect trend positive this continue.

places fuel continue provide business client experience We strategy, flexibility the along clients' center transparency the that and talent our solutions innovation process. throughout in with core our greater to of technology at digital which professionals convenience, tools invest and to hiring hiring specialized

use to additional proprietary data AI recruiters leads discover, the clients, to and for select assets target We effectively recruiters also our continue use our assess tools revenue. to the our enhance and tools, leverage our are AI talent for

costs sequential marketplace. quarter projected client results in to solutions with quarters staff higher and rates, its drives strong this the in growth income Protiviti X segment time which broad-based encouraged continues first and each its a sequentially. anticipated of quarter, approximately diverse gross seasonally have based all strength to of are for report growth effectively margin expects costs. points impacted first control the the a Protiviti over expected margin. improvement solution were Protiviti's that to second utilization grow close in for of offering very budget compete on XXX in measures basis and Protiviti and resource also in We're which sequential areas, pipeline segment by Coupled

weathered [indiscernible] cycles the each in to past, many economic We've time peaks. higher emerging

the results in pent-up projects demand While resource client this in also term, improve. talent levels for macroeconomic conditions business as conditions short have and constrained

costs of our variable Protiviti to for expected and more aging and years are our solutions, current desire us confident resources structural Also, flexible demographics about and benefit we're are that With to tailwinds even come. for future. workforce Talent many clients' portfolio

compete and We by are with corporate work people they connect meaningful the to our exciting need grow. clients consulting confidently to and provide talent expertise and time-tested and held steadfast to purpose

and companies like companies were number Robert in consecutive made Best few a efforts prestigious Half first most to We our whose Fortune's to our also -- All a one the best cornerstone Forbes, XX the employers. recognized globe, honored among large our years. one a admired as we'd across our only of accolades, possible companies best which a be of as people for to America's our for, employees industry recent work success. extend an Finally, And Fortune testament was XXX to Forbes gratitude just to of one elite Diversity. is this week, to culture for Employers are XXX company

we'll Now for a to questions, to single there's answer you just time, needed. and questions. be additional follow-up Mike come and I'd as X ask happy please your If question back

Operator

question Instructions] the from with first line JPMorgan. of [Operator Andrew Steinerman Your comes

Andrew Steinerman

with of my your is by recession. you question so we're going not point this the quarter you Hi kind And down will get like contract averages. but was out what a for there'll typical where sequential recovery we shape I do at of we temporary be of stability, you after to have Or funk business, kind When go look Like more intrigued Keith. do help about of back do feel your has this like? averages? long, think staffing we're do a to third spring-loaded rebound? of of look like in you the to feel sequential point

M. Waddell

job are at latter, $X spring the U.S. and I just rebound. base if the And argue which of part under look Well, the in openings, in number I the that on million. load you would

staffing While those for and future industry it it was understand contract perm less placement. view it those be peak demand XX-ish is pent-up that was I openings in range higher than if $X.X than the at that's or million hires, as you we to prior times their downturns, significantly or compare

that for we've through well. we X demand short get loaded So the word we evidenced your think in, further market the last pent-up come of by we're level been the we funk, this hiring And think that think when X, we bodes as experiencing we will labor quarters. spring very for

Operator

of Marcon with question Baird. line Your Mark the next comes from

Mark Marcon

consulting broad-based companies you talk strength if seeing for of about I'm some what your stabilization in rebound. talked about see A of the other the think underlying there a confidence end? proposition? that Is value you doing and of number you a enabling of wondering have you're aren't to broad-based little the that you to the marketing sort are a in on Protiviti. improved that bit we improvement? the Keith, Are can bit a some space it sequential continue gain any see should you share? that you to high Is differently that's things it factors

M. Waddell

Protiviti quarter contributed we with at leads to with pipeline statistics seasonal will budget quite confidence. risk continues the that last, to year-on-year, very first solution, be by gotten that little pressures for We much second and pipeline, like Protiviti. We the quarter Well, and consulting some look to lift, and the not this nice strong process the where and getting back very improvement quarter of impacted way. tech average typically while a And all, by pretty [indiscernible] to a we're lift we've see second luck joint Solutions, regulatory had Protiviti as But close be say, the seasonal I'd in client with that. us And a wins back before. if good what had flat. compliance certainly Talent quarter get gives to we business continued compared

We got line. momentum gross quarter which to the pipeline which the about point bottom line, pipeline, are from of the and because very based falls on good amount in first much feel the second strong, revenue they've coming of that thing. and of disproportionate that segment wonderful margin based improvements talked they in basis the bottom growth so to on And is falls a XXX the which sequential internals about a incremental all margin quarter,

Mark Marcon

towards That trends is. about those we patterns. seasonal would out margins how profitability second if that half, back the kind you normal as think And continue, then assuming get to getting the we of start

M. Waddell

in would third nice Well, in quarter. the typically, see you another margins lift

big that's internal audit the compliance quarter the On Sarbanes-Oxley side, for work.

some lift So that. seasonally, get you from

to cyclical you you add alluded. as If that any improvement,

so because cost of down And revenue quarters. X internal structure external and the recover audit audit pattern that in got have of year a crowd step course the you've your the first the quarter from of the the seasonally, side, over is the new promotions raises of course you staff out next you the on for and then over

I last fourth nice in we're double up So in. XX.X%, the year, Protiviti, notwithstanding environment quarter, digits think ended at we

gross talent have of their recover using but their variable with -- tranche, control Protiviti's cost solutions that resource good are feel So the their we which past. includes from contractors which they as margins cost, nicely will in

Operator

line the question of comes Manav from Barclays. next with Your Patnaik

Unknown Analyst

give what you're us around if and attrition to could utilization. you staff This Manav. wanted color see additional seeing is I [indiscernible] on for Thomas just on

M. Waddell

about talking are Protiviti, about What's we talking enterprise? the Robert we Protiviti, Half context? are And

Unknown Analyst

into able go to both. [indiscernible]

M. Waddell

attrition company And our our say the I'd as area corporate as as branches. far at as down Robert consistent both across every well staff in globe, out with attrition our in is Half, virtually services

those as And our of about think a because of -- staff assignment, there's internal as as attrition. inclusive on before we it's and just less caution well just so talked we've I place

in particularly using part an to includes controlling margin utilization part a on their to margin we that costs utilization, measure is As by due where of contractors. it, improvement which large is that improvement, of Protiviti, which increase

and you year-over-year, a look done look has margin you improvement Protiviti big utilization story. is of job good sequentially, utilization if a piece the if a their is But managing the So of nice one story levels.

Operator

question line next Trevor William Your of comes Blair. with from Romeo the

Trevor Romeo

sounded Had X% like one saw growth bill the on pricing and It quarter. in bill rates. about you rate

if your kind variation you spreads that see fill think your within whether to and relative bill of rate over both any I about the moderate specialties for growth across mix wondering and to was continued contract just I you few. few next a quarters the talent? past of could expectations pay talk bit

M. Waddell

for like we row, rate in continue. seen growth Just to in that quarters moderation moderation several we've bill expect a would

very we the little impact seen to very we've over our However, quarters. impact our as see little spreads last just to spreads few

year-on-year. If XX Solutions on XX you at margins the has sequentially. Those gross Talent XX contract our change conversions They're look another on to primarily contract points the hire. basis down to side, been down are

driving are the of to gross expect pay in continue we also moderate. much margins the which rate moderating increases, are more So pass-throughs to rate those increases, bill so essentially change which than

Trevor Romeo

a And from rule the question. then I to bit to earlier related bigger this maybe for wanted picture ask follow-up, the noncompete about agreements. potentially of a FTC a banning week

affect I market. of think would whole U.S. almost XX% estimate they labor the it

market, of you would could similar expect from gaps with Just or potentially given any kind noncompetes, could talent. to on potential whether your churn there Half higher view I if labor as be any and labor the that fewer professional market such contract fill flow-through maybe impact was companies Robert curious

M. Waddell

know, as one enforce, noncompetes, Well, biggest several you of being already the allow states don't enforceability California. don't

extent. seen to that we've So that movie

in more more say different churn probably and be our the people in think I'd would noncompetes, not I plays. area. talk net-net, how sure be with we news, you I'm churn. would are those than say in hair significant if they'd no that there that skills logic very about be significant. it'd results dressers Certainly, But

trade secret However, agreements remember there now are enforceable. are that

that those enforceable. pieces property agreements intellectual are are There to

that property one's a become goes there's and still west trade the make still would to move. a the intellectual because an away there's willingness doesn't noncompete just it ability still when So secret, wild impact

Operator

of Securities. the Next with line Tobey Sommer question from Truist comes

Jasper Bibb

about for for at that capacity Wanted the recruiter is might Tobey. Bibb eventual costs year? and G&A ask cycle thinking to This an of you're that about managing infer the stage for Jasper on the look rebound what

M. Waddell

spring levels a now, have our the load a our pretty that recruiter without levels, about capacity And that so headcount. held to the today, could having some certainly sequential we notwithstanding so quarters about few from talked done we've to And benefit resource here of quarters we good sit we participate few we have much feel revenues. in we earlier, as for significantly growth have we add reductions line on the that our we in

I So our that for pretty resource pretty holding pattern. sequentially X X been declining pretty been notwithstanding levels revenue think stable, we've or minimum we've quarters clear steady, a

Jasper Bibb

staffing Tech has have like the still on to sequentially quarter. might seems been outlook pay be seeing this what revenue and in what point. look your segment, of of I said guess experience public peers fall some the the second quarter? your kind curious Others the just for there stabilizing demand at second

M. Waddell

than I continuation outlook second seen QX for staffing for overall would our which this of that line, pretty a say mid but small single-digit theme since year. a different stabilization isn't outlook that tech is our decline top sequential last that the for we've much quarter, in

say starting in with accounting with segments, our other line I'd So and finance.

Operator

Your next with from Heather of America. of question comes line Balsky the Bank

Heather Balsky

about curious was pipeline Protiviti. for your I

at and projects business you about a weaknesses, there do talked or within you accelerate, how business that there there? that at You you that correlation strength could you how then guess look evolving pipeline. see if into a think come look there. should when back you recovery? sort strong And within I seeing are faster. And think you about and you're where -- is When that areas a rebound Protiviti, sales of potential

M. Waddell

most then cautiousness on continue first expected risk strongest. be It The cost been our impacted technology by It's client very a the internal has focus and and pipeline. nice and been audit consulting. the Well, next compliance has strongest. regulatory area has to to

Protiviti tech quarter. different reversal what the sequential and so expecting And would of a those very benefit single And in most. revenue than consulting as second conditions quarters. that's for the But a growth said, is turnout every several we've seen we solution

very as that pipeline solutions, those good reasonably a areas the see all we is and So like And it's regulatory strong across in compliance. very trend. strong

Heather Balsky

you -- are for recovery? for a seeing seeing pipeline -- as the you've talked the you to about being it the Got strong you while. is wait it. And quarter-over-quarter pipeline build Are continue

M. Waddell

as about slice all those But of probability I'm publicly, Protiviti conditions to subcomponents those I very in statistics, of And that to it's disclosing stack audit. types favorite ways. has you'd if not encouraged start all relative to weighted. pipeline competitive. not word. Clearly, tends dice about Clearly, they you their to their internal many an only year ago, a think but well. internals choppy, up and at look ago be They how to which That's aren't that quarter be a not say

certain You've got additional with competitive. markets, price in firms capacity big very X they're

built its there us guidance. that All of been which quarters. are strong, quite and our into pipeline said, that's there. It's quite optimistic. several for But components the We makes that

Operator

line Stephanie Next with question Jefferies. of Moore comes the from

Stephanie Benjamin Moore

your think, sensitive I are based So clients, selective budget what Keith, hiring be but what very aggressive we've the them? been hiring? more continuing the most What you simply need factors hear from their with see on called they clients are that you with see in and do bit to a to to that activities, conversations out very

M. Waddell

it comes think to confidence. I down

their business new inflation And this It clearly, confidence. of all #X there going kind will tell was look thought businesses is been that into you small impact NFIB, you inflation. the stickier. problem for of to which of say progress There's seems at longer, on year. If have it more hire

we they what's demand think confidence. I of urgency have pent-up more client so And more all hiring, get And to needed that is need therefore, for done.

Stephanie Benjamin Moore

question. maybe one just clarification then And

non-U.S. the performance Just there? the to looking little at like geographic a more kind down was materially the bit in out quarter. call Anything U.S. of Looks than actually

M. Waddell

had it's a from and and and would Solutions, for on going had speaking, case generally has in together. And turn Germany attributable meaningful Germany. the is that Protiviti market I'd probably the to in And that's several Germany Talent been the So a Solutions been don't results quarters, say even now look an And say, X of non-U.S. the than combination, it quarters. zone of on therefore, top hours dollars by that's largely basis, to ranks by as in It's Talent I higher I relative meaningful impact most you impact you performance it nicely. at our X, the also led success I if X that. international would countries dollars, on countries, add, our last, know, coming U.S. on in for do Brazil converted has

And because to so I'm to first about happy been Brazil well. is It's talking quite starting do start Brazil doing quite well.

Operator

Your Silber from of the next Capital Markets. comes question line Jeff with BMO

Jeffrey Silber

Keith, businesses you you was price Talent the Solutions or can competition when if have competition word not? color give were about meaningfully talking you some changed productivity. in wondering your I mentioned about us price

M. Waddell

it those able just say changed. our had to over through to rising and continued been as value-add rates we've that in as quarters, not that relative shown quickly aren't been premium to they these premium we've pay rising Bill were. we've that. sustain time, the throughout the that X fast rates would I pricing as notwithstanding competition, We've but aren't Clearly, client, meaningfully as to position. pass been that spread, sustain last always market. has they priced And

are are. that and much, typically our And intact pretty much where to relative changed hasn't margins they so

reflect the competitive higher swing function to market. said hiring conversions, earlier, about marketplace. that to certainly I As contract hire attempt full-time of which is the a to the [indiscernible] is our gross big more margins,

remarkably margins in gross held well. have Our

Jeffrey Silber

one just I sneak question. appreciate I If in color. numbers that could

so in your remarks. think it us this I prepared flow operating You get possible cash typically you quarter. to give that number? Is don't did

M. Waddell

if Let's see we has see anybody the in a -- will room number?

Jeffrey Silber

[indiscernible] can follow offline. up

M. Waddell

reason quarter where flow the first addition it's the subscriptions quarterly I a coming all is we use pay we quarter the bonuses it's pay was Operating it's technology a also the the the and in million bonuses. $XX for think -- year. to SaaS our is of cash quarter use annual And normal

look between there's quarters. you So cash the over the back the and time, first flow most of quarter of any in if earnings differential

Operator

of from Tong the line George Your Sachs. next comes with Goldman question

Keen Fai Tong

phenomenon And lower Labor would to underperform by extent if in expect for does, porting demand has nonfarm been what be staffing causing staffing When would lap? accompanied general? that it to payrolls. overall you it [indiscernible] to client

M. Waddell

hoarding they difficult of suitable Well involuntary there's be that is the which a a hoarding. post labor has I if fine replacements from replace by for could is confidence of increase. the the of to a see outlook any to anymore. switch candidate. I during causes, compensation also COVID, multiple impacted it'd compensation attrition the jobs see which make That's move concern make what's candidate the not one get height move, labor standpoint you large and case

of just It's that matter not move [indiscernible] So don't to it's a caution. matter get the you also [indiscernible] a premium the you of want

be There's below-trend several been quarters. to client churn pretty when industry the is need churn is that which of industry the There reconciliation biggest staffing question hoarding strong, is of some no no I And think hyper there is improvement impacts get to to post for item confidence revenues. clearly, there's there for that's to there's there So for of confidence, down is but macro normalization improvement. piece a our is, And that change, has way revenues. this has that it's -- be we me, whole doubt quarters. of probably of impacting questions got the last COVID, a you there function the is markets churn, need was look you that and otherwise all X down. asked and hasn't labor entire the that one But churn, why churn. hyper been the most it answer now churn for churn staffing confidence And the macro you've

slightly which confidence, hiring. to I years We it's its or of line flat below look You at But It's small directly think more X to business gets measures multi-decade need confidence urgency optimism confidence. at their what down, about NFIB, it's index, all and down, average. that optimism. least

Keen Fai Tong

line helpful contraction declines then reflect the your To control a you perspective. And do extent margin guidance for XQ in top That's operating deleveraging basis. bit and to over year-over-year have? what a contraction simply margin quite margin from of XQ the does on margin much profile how points

M. Waddell

got of to first keep as we've compensation Protiviti. let's costs out margin say, well in the tied I'd SG&A accretion mind. the got Year-on-year, compensation, sequential in additional Well, and component from you've your deleveraging in administrative all, branches that as of corporate services, fixed both

we it's contraction down a still first accreting actually quarters sequentially, out, operating that and we're those in cycle in just in it's part capacity time. remarks, and every fixed we're been single and way, sequential is as because our retaining we've time in year-on-year, we've levels about X it's around, you it's So in in seen, point in where of confidence the improvement deleveraging participation which increase because the we that a and see the costs. long since prepared talking accreting to about nice as broader that in a there's of macro fact, margins. But the talked said year-on-year, by we're for

Operator

line Your Kartik Mehta next from the question with of comes Northcoast Research.

Kartik Mehta

to a wanted. talked from resulted that any Protiviti, having areas. wasn't margin in business you Keith, away what Is the all in in you profile price little walk some bit especially about at because you competition

M. Waddell

crazy pricing. competitors examples I -- reasons, are there crazy mean, own our had for for business their Well,

the it No. priced when we aggressively away? the priced And didn't Did we win did walk yes, so crazy we business, which we to think competition it.

not capacity walked pricing. margins super aggressive given even their propose That's So quarter the we new. our firms, their some away. but that. new. not before to this quarter, declined rarely some get say That's past It's built in markets, I into levels wouldn't We

a few longer, guidance. We expect into that's that for all quarters built our to but continue

Kartik Mehta

of it for the I AI is just wondering where or And know needed a more an Half. just benefiting to you've expense And I'm follow-up, about as and become a benefit? a AI AI sits, And of don't if benefit. talked Robert more it Keith, today obviously, it time

M. Waddell

we certainly a to data, Well, so continue We're models. language currently efficient fine-tuning low whole these large proprietary algorithms. this in your to news parameter you incorporating We're of matching we at is and that let cost models The good use our customize using own models into relatively customize there's our large invest these language benefit. group AI. data

which technology. which are of have it data. most algorithms competitors, with further and don't differentiates clients, small small our for have value of our for businesses more add They us don't our candidates can we and most from that are our our believe AI We

And We've revenue of particularly for medium models additional we large so about P&L language matching our to were today's X go XX in down been know could I about AI. were AI, we but they models, the world. have for because language they talk and years,

head doing up. So We've a leg a a for We've a we've been we've got while. got this start. got

skills language I understanding in words, at the history. upside meanings models, end we the expand quickly matching work which window -- means think large the for it's titles, which when context that participate you're and more of candidate the important of day, the are of

are customizing we're there's candidates, these our models we're mean customizing source no So I on data. use. can of for language measure language personally, use I doing those, the high for AI those advancements large we made as based that in the question, cost taking that And for exceeds wonderful just themselves. those we there said earlier, of the individual open source place large And these the our revenue use hyperscalers is for the cost cases using are your more foundation on of greatly being that. models own models our your version

So outweigh that's the benefits the think way cost. of a I long-winded real saying,

Okay.

our everyone you today. appreciate So much. We that question. last Thank participating was very

Operator

This concludes today's teleconference.

the roberthalf.com. at you format in of the website Investor of any Center it If archived missed will part call, Half's be in Robert audio

today. log conference You contained in call in issued to the company's can earlier also Details the release are press replay.

Robert Half International (RHI) 25 Apr 242024 Q1 Earnings call transcript