Robert Half Inc.

05/01/2026 | Press release | Distributed by Public on 05/01/2026 13:38

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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 Inc. (the "Company"). Forward-looking statements are not guarantees or promises that goals or targets will be met. These statements may be identified by words such as "anticipate," "potential," "estimate," "forecast," "target," "project," "plan," "intend," "believe," "expect," "should," "could," "would," "may," "might," "will," or variations or negatives thereof or by similar or comparable words or phrases. In addition, historical, current and forward-looking information about the Company's corporate responsibility and compliance programs, including targets or goals, may not be considered material for the Securities and Exchange Commission ("SEC") or other mandatory reporting purposes and may be based on standards for measuring progress that are still developing; on internal controls, diligence or processes that are evolving; on representations reviewed or provided by third parties; and on assumptions that are subject to change in the future. Forward-looking statements are estimates only and are based on management's current expectations, currently available information and current strategy, plans or forecasts, and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict, often beyond the Company's control and are inherently uncertain. Forward-looking statements are subject to risks and uncertainties that could cause actual results and outcomes, or the timing of these results or outcomes, to differ materially from those expressed or implied 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; changes in levels of unemployment and other economic conditions in the 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 development, proliferation and adoption of artificial intelligence ("AI") by the Company and the third parties it serves; 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, or 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 SEC filings; the impact of extreme weather conditions on the Company and its candidates and clients; 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 that 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. Except as required by law, the Company undertakes no obligation to update information in this report, whether as a result of new information, future events, or otherwise, and notwithstanding any historical practice of doing so.
Executive Overview
The Company's service revenues for the first quarter of 2026 were $1.30 billion, a decrease of 3.8% from the prior year. Net income was $14 million, and diluted net income per share was $0.14. Although the Company's results were impacted by the ongoing macroeconomic uncertainty that affected client and candidate confidence, we believe market conditions are becoming increasingly conducive to our business. As confidence continues to improve, even modest increases in hiring activity can drive incremental demand for our services.
Protiviti is navigating continued shifts in the bank regulatory enforcement environment in the U.S. This shift is influencing the nature of its work, with relatively fewer large-scale remediation engagements and increased demand for efficiency-oriented solutions, including the application of advanced technologies. This represents a significant future opportunity.
Demand for the Company's contract talent solutions, permanent placement talent solutions and Protiviti is largely dependent upon general economic and labor trends, both domestically and abroad. The U.S. real gross domestic product increased at an annual rate of 2.0% during the first quarter 2026, compared to an increase of 0.5% during the fourth quarter of 2025.
The U.S. job market remains resilient with overall unemployment at 4.3%, as of March 31, 2026. Labor supply constraints remain. Particularly noteworthy is that the unemployment rate for college-educated professionals is holding steady at just 2.8%, with even lower rates prevailing among specialized accounting, finance and technology roles. Broader labor market indicators continue to point to underlying demand for skilled talent, and job openings continue to run above historical averages. Decision timelines remain extended but are beginning to improve as companies revisit postponed initiatives and consider hiring tied to business-critical priorities. Economic uncertainties related to the conflicts in the Middle East and higher energy costs have not yet significantly impacted client demand; however, concerns remain if these conditions persist.
The Company continues to invest in technology and innovation, including AI. Major focus areas include providing a world-class digital experience for clients and candidates that is seamlessly connected to the Company's specialized professional recruiters. Also, the Company will continue to leverage its proprietary data assets to enhance the AI tools its recruiters use to discover, assess and select talent for its clients, and the AI tools recruiters use to effectively target leads for additional revenue. Protiviti continues to invest in and deploy AI-enabled solutions by integrating AI into its existing offerings while aiming to enhance its own AI infrastructure.
The Company monitors various economic indicators and business trends in all of the countries in which it operates to anticipate demand for the Company's services. 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. Visibility into future revenues is limited not only due to the dependence on macroeconomic and labor market conditions noted above, but also because of the relatively short duration of the Company's client engagements. Accordingly, the Company's headcount and other investments are typically assessed on at least a quarterly basis. During the first quarter of 2026, the Company's headcount remained relatively flat for its contract talent solutions and permanent placement talent solutions segments, as well as administrative headcount, when compared to prior year-end levels, while Protiviti headcount decreased.
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, 2025. There were no material changes to the Company's critical accounting policies or estimates for the three months ended March 31, 2026.
Recent Accounting Pronouncements
See Note B-"New Accounting Pronouncements" to the Company's Condensed Consolidated Financial Statements included under Part I-Item 1 of this report.
Results of Operations
The Company analyzes its operating results for three reportable segments: contract talent solutions, permanent placement talent solutions and Protiviti. The contract talent solutions and permanent placement talent solutions segments provide engagement professionals and full-time personnel, respectively, for finance and accounting, technology, marketing and creative, legal, administrative and customer support, and executive search. The Protiviti segment provides internal audit, risk, business and technology consulting solutions.
Demand for the Company's services is largely dependent upon global economic and labor trends. Because of the inherent difficulty in predicting economic trends, future demand for the Company's services cannot be forecast with certainty.
The Company's talent solutions segments conduct operations through offices in the U.S. and 18 other countries, while Protiviti has offices in the U.S. and 13 other countries.
Non-GAAP Financial Measures
The financial results of the Company are prepared in conformity with accounting principles generally accepted in the 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: adjusted gross margin; adjusted selling, general and administrative expenses; adjusted operating income; and adjusted revenue growth rates.
The following measures: adjusted gross margin, adjusted selling, general and administrative expenses, and adjusted operating 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.
Adjusted revenue growth rates represent year-over-year revenue growth rates after removing the impacts on reported revenues from the changes in the number of billing days and foreign currency exchange rates. The Company provides 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 impacts from the changes in billing days and foreign currency exchange rates are calculated as follows:
•Billing days impact is calculated by dividing each comparative period's reported revenues by the number of billing days for that period to arrive at a per billing day amount. Same billing day growth rates are then calculated based on the per billing day amounts. Management calculates a global, weighted-average number of billing days for each reporting period based upon inputs from all countries and all functional specializations and segments.
•Foreign currency impact is calculated by retranslating current period international revenues using foreign currency exchange rates from the prior year's comparable period.
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" of this report for further discussion of the impact of foreign currency exchange rates on the Company's results of operations and financial condition.
Three Months Ended March 31, 2026 and 2025
Service Revenues. The Company's revenues were $1.30 billion for the three months ended March 31, 2026, a decrease of 3.8% compared to $1.35 billion for the three months ended March 31, 2025. Revenues from U.S. operations decreased 7.1% to $988 million (76.0% of total revenue) for the three months ended March 31, 2026, compared to $1.06 billion (78.6% of total revenue) for the three months ended March 31, 2025. Revenues from international operations increased 8.1% to $312 million (24.0% of total revenue) for the three months ended March 31, 2026, compared to $289 million (21.4% of total revenue) for the three months ended March 31, 2025. Contributing factors for each reportable segment are discussed below in further detail.
Contract talent solutions revenues were $725 million for the three months ended March 31, 2026, decreasing by 5.0% compared to revenues of $763 million for the three months ended March 31, 2025. 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 decrease in contract talent solutions revenues for the three months ended March 31, 2026, was primarily due to a 7.2% decrease in the number of hours worked by the Company's engagement professionals, partially offset by a 2.4% increase in average bill rates. On an adjusted basis, contract talent solutions revenues decreased 6.8% for the first quarter of 2026 compared to the first quarter of 2025. In the U.S., revenues in the first quarter of 2026 decreased 7.6% on a reported basis, and decreased 7.5% on an adjusted basis, compared to the first quarter of 2025. International revenues for the first quarter of 2026 increased 4.3% on a reported basis, and decreased 3.4% on an adjusted basis, compared to the first quarter of 2025.
Permanent placement talent solutions revenues were $109 million for the three months ended March 31, 2026, decreasing by 2.8% compared to revenues of $112 million for the three months ended March 31, 2025. Key drivers of permanent placement talent solutions revenues consist of the number of candidate placements and average fees earned per placement. The decrease in permanent placement talent solutions revenues for the three months ended March 31, 2026, was due to a 7.5% decrease in the number of placements, partially offset by a 4.7% increase in average fees earned per placement. On an adjusted basis, permanent placement talent solutions revenues decreased 4.7% for the first quarter of 2026 compared to the first quarter of 2025. In the U.S., revenues for the first quarter of 2026 decreased 5.9% on a reported basis, and decreased 5.7% on an adjusted basis, compared to the first quarter of 2025. International revenues for the first quarter of 2026 increased 5.7% on a reported basis, and decreased 0.9% on an adjusted basis, compared to the first quarter of 2025. 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 $466 million for the three months ended March 31, 2026, decreasing by 2.2% compared to revenues of $477 million for the three months ended March 31, 2025. Key drivers of Protiviti revenues are the billable hours worked on client engagements and average hourly bill rates. The decrease in Protiviti revenues for the three months ended March 31, 2026, was due to a 6.3% decrease in billable hours, partially offset by a 4.1% increase in average hourly bill rates. On an adjusted basis, Protiviti revenues decreased 3.8% for the first quarter of 2026 compared to the first quarter of 2025. In the U.S., revenues in the first quarter of 2026 decreased 6.4% on a reported basis, and decreased 6.3% on an adjusted basis, compared to the first quarter of 2025. International revenues for the first quarter of 2026 increased 16.0% on a reported basis, and increased 8.1% on an adjusted basis, compared to the first quarter of 2025.
A reconciliation of the non-GAAP year-over-year revenue growth rates to the as reported year-over-year revenue growth rates for the three months ended March 31, 2026, is presented in the following table:
Global United States International
Contract talent solutions
As Reported -5.0 % -7.6 % 4.3 %
Billing Days Impact 0.0 % 0.1 % 0.6 %
Currency Impact -1.8 % ― -8.3 %
As Adjusted -6.8 % -7.5 % -3.4 %
Permanent placement talent solutions
As Reported -2.8 % -5.9 % 5.7 %
Billing Days Impact 0.0 % 0.2 % 0.6 %
Currency Impact -1.9 % ― -7.2 %
As Adjusted -4.7 % -5.7 % -0.9 %
Protiviti
As Reported -2.2 % -6.4 % 16.0 %
Billing Days Impact 0.0 % 0.1 % 0.7 %
Currency Impact -1.6 % ― -8.6 %
As Adjusted -3.8 % -6.3 % 8.1 %
Gross Margin. The Company's gross margin dollars were $480 million for the three months ended March 31, 2026, decreasing 3.8% from $499 million for the three months ended March 31, 2025. 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 contract position converts to a permanent position with the Company's client.
Gross margin dollars for contract talent solutions were $282 million for the three months ended March 31, 2026, decreasing by 5.1% from $297 million for the three months ended March 31, 2025. As a percentage of revenues, gross margin dollars for contract talent solutions were 38.9% in both the first quarter of 2026 and 2025.
Gross margin dollars for permanent placement talent solutions represent revenues less reimbursable expenses. Gross margin dollars for permanent placement talent solutions were $109 million for the three months ended March 31, 2026, decreasing 2.8% from $112 million for the three months ended March 31, 2025. Because reimbursable expenses for permanent placement talent solutions are de minimis, the decrease in gross margin dollars is substantially explained by the decrease 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 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 Protiviti staff. Gross margin dollars for Protiviti were $89 million for the three months ended March 31, 2026, decreasing 0.9% from $90 million for the three months ended March 31, 2025. As a percentage of revenues, reported gross margin dollars for Protiviti were 19.2% in the first quarter of 2026, up from 18.9% in the first quarter of 2025. As a percentage of revenues, adjusted gross margin dollars for Protiviti were 18.8% in the first quarter of 2026, up from 18.1% in the first quarter of 2025. The increase in adjusted gross margin percentage was primarily driven by the absence of cost reduction charges incurred in the prior year.
The Company's gross margin by reporting segment is summarized as follows (in thousands):
Three Months Ended March 31, Relationships
As Reported As Adjusted As Reported As Adjusted
2026 2025 2026 2025 2026 2025 2026 2025
Gross Margin
Contract talent solutions
$ 281,753 $ 296,933 $ 281,753 $ 296,933 38.9 % 38.9 % 38.9 % 38.9 %
Permanent placement talent solutions
108,726 111,861 108,726 111,861 99.7 % 99.8 % 99.7 % 99.8 %
Protiviti
89,430 90,251 87,426 86,212 19.2 % 18.9 % 18.8 % 18.1 %
Total $ 479,909 $ 499,045 $ 477,905 $ 495,006 36.9 % 36.9 % 36.8 % 36.6 %
The following tables provide reconciliations of the non-GAAP adjusted gross margin to reported gross margin for the three months ended March 31, 2026 and 2025 (in thousands):
Three Months Ended March 31, 2026
Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total
$ % of Revenue $ % of Revenue $ % of Revenue $ % of Revenue
Gross Margin
As Reported $ 281,753 38.9 % $ 108,726 99.7 % $ 89,430 19.2 % $ 479,909 36.9 %
Adjustments (1) - - - - (2,004) (0.4 %) (2,004) (0.1 %)
As Adjusted $ 281,753 38.9 % $ 108,726 99.7 % $ 87,426 18.8 % $ 477,905 36.8 %
Three Months Ended March 31, 2025
Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total
$ % of Revenue $ % of Revenue $ % of Revenue $ % of Revenue
Gross Margin
As Reported $ 296,933 38.9 % $ 111,861 99.8 % $ 90,251 18.9 % $ 499,045 36.9 %
Adjustments (1) - - - - (4,039) (0.8 %) (4,039) (0.3 %)
As Adjusted $ 296,933 38.9 % $ 111,861 99.8 % $ 86,212 18.1 % $ 495,006 36.6 %
(1)Changes in the Company's deferred compensation obligations related to Protiviti operations are included in 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) loss 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 on income before income taxes.
Selling, General and Administrative Expenses. The Company's selling, general and administrative expenses consist primarily of staff compensation, advertising, lease expense, depreciation, cloud computing service costs and overhead costs. The Company's reported selling, general and administrative expenses were $443 million for the three months ended March 31, 2026, decreasing by 3.7% from $460 million for the three months ended March 31, 2025. As a percentage of revenues, reported selling, general and administrative expenses were 34.1% in the first quarter of 2026, up from 34.0% in the first quarter of 2025. The Company's adjusted selling, general and administrative expenses were $449 million for the three months ended March 31, 2026, down 5.7% from $476 million for the three months ended March 31, 2025. As a percentage of revenues, adjusted selling, general and administrative expenses were 34.6% in the first quarter of 2026, down from 35.2% in the first quarter of 2025. Contributing factors for each reportable segment are discussed below in further detail.
Selling, general and administrative expenses for contract talent solutions, on a reported basis, were $267 million for the three months ended March 31, 2026, decreasing by 3.3% from $276 million for the three months ended March 31, 2025. As a percentage of revenues, reported selling, general and administrative expenses for contract talent solutions were 36.8% in the first quarter of 2026, up from 36.2% in the first quarter of 2025. As a percentage of revenues, adjusted selling, general and administrative expenses for contract talent solutions were 37.6% in the first quarter of 2026, down from 38.0% in the first quarter of 2025, primarily driven by the absence of cost reduction charges incurred in the prior year, partially offset by negative leverage as revenues decreased as a result of economic conditions during the quarter.
Selling, general and administrative expenses for permanent placement talent solutions were $102 million for the three months ended March 31, 2026, decreasing by 4.1% from $106 million for the three months ended March 31, 2025. As a percentage of revenues, reported selling, general and administrative expenses for permanent placement talent solutions services were 93.4% in the first quarter of 2026, down from 94.7% in the first quarter of 2025. As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement talent solutions were 94.2% in the first quarter of 2026, down from 96.6% in the first quarter of 2025, primarily driven by the absence of cost reduction charges incurred in the prior year, partially offset by negative leverage as revenues decreased as a result of economic conditions during the quarter.
Selling, general and administrative expenses for Protiviti were $74 million for the three months ended March 31, 2026, decreasing by 4.8% from $78 million for the three months ended March 31, 2025. As a percentage of revenues, selling, general and administrative expenses for Protiviti services were 15.9% in the first quarter of 2026, down from 16.3% in the first quarter of 2025.
The Company's selling, general and administrative expenses by reportable segment are summarized as follows (in thousands):
Three Months Ended March 31, Relationships
As Reported As Adjusted As Reported As Adjusted
2026 2025 2026 2025 2026 2025 2026 2025
Selling, General and
Administrative Expenses
Contract talent solutions
$ 267,081 $ 276,212 $ 272,440 $ 290,242 36.8 % 36.2 % 37.6 % 38.0 %
Permanent placement talent solutions
101,806 106,135 102,670 108,237 93.4 % 94.7 % 94.2 % 96.6 %
Protiviti
74,111 77,816 74,111 77,816 15.9 % 16.3 % 15.9 % 16.3 %
Total $ 442,998 $ 460,163 $ 449,221 $ 476,295 34.1 % 34.0 % 34.6 % 35.2 %
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 March 31, 2026 and 2025 (in thousands):
Three Months Ended March 31, 2026
Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total
$ % of Revenue $ % of Revenue $ % of Revenue $ % of Revenue
Selling, General and
Administrative Expenses
As Reported $ 267,081 36.8 % $ 101,806 93.4 % $ 74,111 15.9 % $ 442,998 34.1 %
Adjustments (1) 5,359 0.8 % 864 0.8 % - - 6,223 0.5 %
As Adjusted $ 272,440 37.6 % $ 102,670 94.2 % $ 74,111 15.9 % $ 449,221 34.6 %
Three Months Ended March 31, 2025
Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total
$ % of Revenue $ % of Revenue $ % of Revenue $ % of Revenue
Selling, General and
Administrative Expenses
As Reported $ 276,212 36.2 % $ 106,135 94.7 % $ 77,816 16.3 % $ 460,163 34.0 %
Adjustments (1) 14,030 1.8 % 2,102 1.9 % - - 16,132 1.2 %
As Adjusted $ 290,242 38.0 % $ 108,237 96.6 % $ 77,816 16.3 % $ 476,295 35.2 %
(1)Changes in the Company's employee deferred compensation plan obligations related to talent solutions operations are included in selling, general and administrative expenses, while the related investment (income) loss is presented separately. The non-GAAP financial adjustments shown in the table above are to reclassify investment (income) loss 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 on income before income taxes.
Operating Income. The Company's operating income consists of gross margin less selling, general and administrative expenses. The Company's reported operating income was $37 million for the three months ended March 31, 2026, down 5.1% compared to $39 million for the three months ended March 31, 2025. As a percentage of revenues, reported operating income was 2.8% in the first quarter of 2026, down from 2.9% in the first quarter of 2025. The Company's adjusted operating income was $29 million for the three months ended March 31, 2026, up 53.3% from $19 million for the three months ended March 31, 2025. As a percentage of revenues, adjusted operating income was 2.2% in the first quarter of 2026, up from 1.4% in the first quarter of 2025. Since operating income is defined as gross margin less selling, general and administrative expenses, the year over year change is explained by factors previously discussed.
The Company's operating income by reporting segment is summarized as follows (in thousands):
Three Months Ended March 31, Relationships
As Reported As Adjusted As Reported As Adjusted
2026 2025 2026 2025 2026 2025 2026 2025
Operating income
Contract talent solutions
$ 14,672 $ 20,721 $ 9,313 $ 6,691 2.0 % 2.7 % 1.3 % 0.9 %
Permanent placement talent solutions
6,920 5,726 6,056 3,624 6.3 % 5.1 % 5.6 % 3.2 %
Protiviti 15,319 12,435 13,315 8,396 3.3 % 2.6 % 2.9 % 1.8 %
Total $ 36,911 $ 38,882 $ 28,684 $ 18,711 2.8 % 2.9 % 2.2 % 1.4 %
The following tables provide reconciliations of the non-GAAP adjusted operating income to reported operating income for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31, 2026
Contract talent
solutions 		Permanent placement talent solutions Protiviti Total
$ % of Revenue $ % of Revenue $ % of Revenue $ % of Revenue
Operating income
As Reported $ 14,672 2.0 % $ 6,920 6.3 % $ 15,319 3.3 % $ 36,911 2.8 %
Adjustments (1) (5,359) (0.7 %) (864) (0.7 %) (2,004) (0.4 %) (8,227) (0.6 %)
As Adjusted $ 9,313 1.3 % $ 6,056 5.6 % $ 13,315 2.9 % $ 28,684 2.2 %
Three Months Ended March 31, 2025
Contract talent
solutions 		Permanent placement talent solutions Protiviti Total
$ % of Revenue $ % of Revenue $ % of Revenue $ % of Revenue
Operating income
As Reported $ 20,721 2.7 % $ 5,726 5.1 % $ 12,435 2.6 % $ 38,882 2.9 %
Adjustments (1) (14,030) (1.8 %) (2,102) (1.9 %) (4,039) (0.8 %) (20,171) (1.5 %)
As Adjusted $ 6,691 0.9 % $ 3,624 3.2 % $ 8,396 1.8 % $ 18,711 1.4 %
(1)Changes in the Company's employee deferred compensation plan obligations are included in operating income. The non-GAAP financial adjustments shown in the table above are to reclassify investment (income) loss 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 on 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 plan obligations change 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, and therefore no effect on reported net income. 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 $8 million and $20 million for the three months ended March 31, 2026 and 2025, respectively. The loss from trust investments during the first quarter of 2026 was due to negative market returns.
Provision for income taxes. The provision for income taxes was 56.1% and 22.1% for the three months ended March 31, 2026 and 2025, respectively. The higher tax rate for 2026 can be primarily attributed to a tax charge in the current quarter related to employee stock-based compensation grants, the majority of which vest in the first quarter, and the magnified impact of non-deductible tax items when measured against seasonally low pre-tax income in the current quarter.
Liquidity and Capital Resources
The change in the Company's liquidity during the three months ended March 31, 2026 and 2025, is primarily the effect of funds used in operations, as well as 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 outflows are typically elevated in the first quarter due to the annual payment cycle for bonuses and software subscription renewals.
Cash and cash equivalents were $278 million and $342 million at March 31, 2026 and 2025, respectively. Operating activities used net cash flows of $112 million during the three months ended March 31, 2026, combined with $3 million and $68 million of net cash used in investing activities and financing activities, respectively. Operating activities used net cash flows of $59 million during the three months ended March 31, 2025, combined with $33 million and $111 million of net cash used in investing activities and financing activities, respectively. Fluctuations in foreign currency exchange rates had the effect of decreasing reported cash and cash equivalents by $3 million during the three months ended March 31, 2026, compared to an increase of $8 million during the three months ended March 31, 2025.
Operating activities-Net cash used in operating activities for the three months ended March 31, 2026, was $112 million. This was composed of net income of $14 million adjusted upward for non-cash items of $52 million, offset by net cash used in changes in working capital of $178 million. Net cash used in operating activities for the three months ended March 31, 2025, was $59 million. This was composed of net income of $17 million adjusted upward for non-cash items of $66 million, offset by net cash used in changes in working capital of $142 million.
Investing activities-Cash used in investing activities for the three months ended March 31, 2026, was $3 million. This was composed of capital expenditures of $9 million, investments in employee deferred compensation trusts of $25 million, partially offset by proceeds from employee deferred compensation trust redemptions of $31 million. Cash used in investing activities for the three months ended March 31, 2025, was $33 million. This was composed of capital expenditures of $12 million and investments in employee deferred compensation trusts of $43 million, partially offset by proceeds from employee deferred compensation trust redemptions of $22 million.
Capital expenditures, including $8 million related to cloud computing implementations, for the three months ended March 31, 2026, totaled $17 million, approximately 75% 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 2026 capitalized expenditures will range from $70 million to $90 million, of which $55 million to $65 million relates to software initiatives and technology infrastructure, including capitalized costs relating to the implementation of cloud computing arrangements.
Financing activities-Cash used in financing activities for the three months ended March 31, 2026, was $68 million. This included repurchases of $6 million in common stock and $62 million in dividends paid to stockholders. Cash used in financing activities for the three months ended March 31, 2025, was $111 million. This included repurchases of $50 million in common stock and $61 million in dividends paid to stockholders.
As of March 31, 2026, the Company is authorized to repurchase, from time to time, up to 5.6 million additional shares of the Company's common stock on the open market or in privately negotiated transactions, depending on market conditions. There were no open market repurchases during the three months ended March 31, 2026. During the three months ended March 31, 2025, the Company repurchased 0.7 million shares, at a cost of $39 million, on the open market. 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. During the three months ended March 31, 2026 and 2025, such repurchases totaled 0.2 million shares, at a cost of $6 million, and 0.2 million shares, at a cost of $11 million, respectively. Repurchases of shares have been funded with cash generated from operations and from cash reserves.
The Company's working capital at March 31, 2026, included $278 million in cash and cash equivalents, and $776 million in net 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.
There is limited visibility into future cash flows as the Company's revenues and net income are largely dependent on macroeconomic conditions. The Company's variable direct costs related to its contract talent solutions business will largely fluctuate in relation to its revenues.
The Company has a $100.0 million credit agreement (the "2025 Credit Agreement") which matures in May 2030. Borrowings under the 2025 Credit Agreement will bear interest in accordance with the terms of the borrowing, which typically will be calculated according to the adjusted term Secured Overnight Financing Rate ("SOFR"), or an alternative base rate, plus an applicable margin. The 2025 Credit Agreement is subject to certain financial covenants, and the Company was in compliance with these covenants as of March 31, 2026. The Company had no cash borrowings under the Credit Agreement as of March 31, 2026, and maintained $10.1 million in standby letters of credit to satisfy workers' compensation insurers' collateral requirements.
On April 30, 2026, the Company announced a quarterly dividend of $0.59 per share to be paid to all shareholders of record as of May 22, 2026. The dividend will be paid on June 15, 2026.
Material Cash Requirements from Contractual Obligations
Leases. As of March 31, 2026, the Company reported current and long-term operating lease liabilities of $69 million and $183 million, respectively. These balances consist of the minimum rental commitments for April 2026 and thereafter, discounted to reflect the Company's cost of borrowing, under noncancelable lease contracts executed as of March 31, 2026.
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 year ended
December 31, 2025. There have been no material changes to the Company's contractual purchase obligations during the first quarter of 2026.
Employee Deferred Compensation Plan. As of March 31, 2026, the Company reported employee deferred compensation plan obligations of $738 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. These obligations are funded through contributions to investment trusts, whose assets as of March 31, 2026, exceeded the obligations. 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 J-"Employee Deferred Compensation Plan Obligations" to the Company's Condensed Consolidated Financial Statements included under Part I-Item 1 of this report.
Robert Half Inc. published this content on May 01, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 01, 2026 at 19:38 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]