Robert Half Q1FY25 Earnings Release

(Apr 27.): Robert Half (RHI) released their Q1FY2025 earnings on April 23rd. Robert Half is a staffing agency that also have a consulting business. Their main focus is in the finance and accounting division. And a majority of their revenues are derived from the NA region.

The objective of this article is not to focus on the quantitative values alone, but to also check the companies advancement and structural changes. This article also plans to look into the management’s outlook.

Revenues are down 8% yoy. There is greater uncertainty with the trade policies set by the US. Robert Half grew their distribution of dividends and returned $39 million in stock repurchases. They mentioned in their webcast, that they are determined to keep growing dividends.

Despite the economic uncertainty, at least for Q1 this year, Protiviti, their consulting business, is doing great and growing albeit at a slower pace sequentially from last quarter. With a yoy revenue growth rate of 2.7% (last quarter growth rate of 5.3%), Protiviti is faring much better than the talent solution business (both contract and permanent). It was mentioned that Protiviti has a decent diversification of discretionary and non-discretionary service offering.

During the quarter they had expenses related to lowering their administrative costs. However, Robert Half states they are lowering cost with lowering revenues. Additionally, they mentioned how talent and labor remain tight. The lower costs came in response from the negative leverage the company received due years of no reduction in overhead costs.

Management found that project pipeline is up yoy. Weighted project pipeline is also up yoy. However the projects may be delayed.

The company is confident in the pent up demand reflected through very low unemployment rate. They believe once uncertainty clears up and their clients gain confidence, their services will support the pent up demand. 

AI impact on finance and accounting segment is mentioned not to be material. They attributed the lower revenues to client confidence rather than AI structurally changing employment. Robert Half believe in the Jevons paradox. A theory that states that an increase in efficiency in resource use does not decrease the demand in the resource consumption but rather increases it. In the perspective of staffing agencies, one might believe that companies will layoff more or their workforce as they gain efficiencies through AI and automation. In this case the company may retain their productive while reducing costs. However, if the company choose to increase their workforce it may increase productivity by a greater factor due to AI and automation augmentation. Thus, it is not hard to imagine if a company is looking to expand they would increase their workforce even though AI and automation increases the efficiency of the operations. Furthermore, due to the company’s size and reputation, they can attract talent more quickly and effectively due to their size. As many smaller and more fragmented staffing agencies will not be able to compete with Robert Half’s salaries and benefits.