Robert Half Q1 Earnings Call Highlights

Key Points

• Robert Half reported Q1 global revenue of $1.3 billion (down 4% reported, 6% adjusted) with net EPS of $0.14 versus $0.17 a year earlier, a higher tax rate (56% vs. 22%) driven by stock‑based compensation, and adjusted operating income of $29 million (2.2% margin).
• Talent Solutions showed improving sequential trends—its second consecutive quarter of positive sequential growth led by technology roles and rising contract bill rates—and management says AI so far is reshaping work and enhancing matching rather than causing widespread job displacement; the company is investing AI to improve candidate matching using proprietary performance data.
• Protiviti faces softness in U.S. risk and compliance work due to regulatory easing, prompting planned cost actions to save $30 million annually and a Q2 one‑time charge of $5 million (~$0.03/sh); Q2 guidance is revenue $1.275–1.375B and EPS $0.20–0.30 (or $0.23–0.33 ex‑charge), and management expects potential return to year‑over‑year segment income growth in Q3 with consolidated EPS growth of 8%–12% year over year.

Robert Half NYSE: RHI reported first-quarter 2026 global enterprise revenue of $1.3 billion, down 4% from the prior-year period on a reported basis and down 6% on an adjusted basis, as management pointed to improving sequential trends in its Talent Solutions business and continued regulatory-related pressure in Protiviti’s U.S. risk and compliance work.

First-quarter results and profitability

President and CEO Keith Waddell said Talent Solutions delivered “a second consecutive quarter of positive sequential growth on a same-day constant currency basis,” with trends strengthening through the quarter and into early April. Net income per share was $0.14, compared with $0.17 a year earlier. Waddell noted first-quarter EPS was impacted by “a seasonally elevated tax rate tied to stock-based compensation,” which the company expects to normalize as the year progresses.

Chief Financial Officer Michael Buckley said the first-quarter tax rate was 56% versus 22% a year earlier, primarily due to a tax charge related to stock-based compensation grants that largely vested in the first quarter, along with the impact of nondeductible items against seasonally low pretax income.

Operating income for the quarter was $37 million. Adjusted operating income was $29 million, or 2.2% of revenue. By segment, Buckley reported:

• Adjusted operating income from Talent Solutions of $16 million (1.8% of revenue)
• Adjusted operating income from Protiviti of $13 million (2.9% of revenue)

Buckley also highlighted that the income statement included an $8 million loss from investments held in employee deferred compensation trusts, offset by lower employee deferred compensation costs, with “no effect on our reported net income.”

Segment performance: Talent Solutions and Protiviti

On an adjusted basis, first-quarter Talent Solutions revenue declined 7% year over year. U.S. Talent Solutions revenue was $626 million, down 7%, while non-U.S. Talent Solutions revenue was $208 million, down 3%. Buckley said contract bill rates rose 2.6% year over year in the quarter (adjusted for mix, currency, and country), compared with 3.2% in the fourth quarter.

For Protiviti, global first-quarter revenue was $466 million, including $362 million in the U.S. and $104 million outside the U.S. On an adjusted basis, Protiviti revenue fell 4% versus a year ago, with U.S. revenue down 6% and non-U.S. revenue up 8%.

Waddell said Protiviti’s quarter reflected seasonal dynamics the company had guided to, including sequentially lower internal audit revenue and higher staff compensation costs due to annual adjustments on January 1. He also emphasized continued change within Protiviti’s risk and compliance solutions practice due to shifts in the U.S. financial services regulatory environment.

Demand commentary: improving activity, tech-led strength, and AI discussion

Waddell said Robert Half saw weather-related disruption in February, but activity “improved steadily throughout March and into early April,” including higher client engagement and job orders, particularly in “technology modernization, data initiatives, and IT infrastructure.” He added that small and midsize businesses—Robert Half’s core client base—remain lean after years of cost discipline, creating capacity constraints as projects recover.

He said decision timelines remain extended but are beginning to improve as companies revisit postponed initiatives. When asked to quantify the elongation, Waddell said he had not measured it precisely, estimating timelines may be “20%-30% longer,” while calling it an educated guess.

On artificial intelligence, Waddell said the company has seen “limited impact on employment levels” for roles it supports and little evidence so far of widespread AI-driven displacement. Instead, he said AI is reshaping work and increasing the need for professionals who can apply judgment and support implementations. He also said generative AI has increased application volumes and made it harder to verify qualifications, which he argued underscores the value of Robert Half’s vetting and proprietary data.

Responding to questions about Robert Half’s AI investments, Waddell said the company’s “principal investments” have been in matching candidates to job orders, and that its AI-driven matching leverages “proprietary data around candidate performance rather than clicks.” He also cited AI tools used to prioritize prospects and improve connect and conversion rates.

Protiviti regulatory shift and planned cost actions

Waddell described “a marked decline in new enforcement actions” and easing of prior enforcement requirements in U.S. financial services, shifting demand toward improving the efficiency of ongoing compliance programs. He said this has reduced large-scale remediation work and increased demand for shorter, efficiency-oriented engagements using advanced technologies.

In response, the company plans cost actions intended to reduce annual costs by $30 million. Those actions will result in a second-quarter one-time charge of $5 million, which management equated to $0.03 per share. Waddell said the changes are “primarily by leaps and bounds, directly related” to enforcement-action work in the risk and compliance area, and are expected to be fully implemented by the beginning of the third quarter.

When asked about how long the U.S. regulatory softness could persist, Waddell said it could last “the duration of this administration” unless an event triggers a reassessment, adding Protiviti has adjusted its cost structure assuming the current environment is “the new normal.”

Guidance and early-quarter trend data

Buckley provided second-quarter 2026 guidance of revenue between $1.275 billion and $1.375 billion and EPS of $0.20 to $0.30. Excluding the $0.03 severance charge tied to the Protiviti cost actions, EPS guidance was $0.23 to $0.33. At the midpoint, Buckley said revenue would be 4% lower than the second quarter of 2025 on an adjusted basis.

Management also shared near-term trend indicators adjusted for currency and billing days. Buckley said Contract Talent Solutions exited the quarter with March revenue down 5% year over year versus a 7% decline for the full quarter, and that revenue for the first two weeks of April was down 1% compared with the same period last year. Permanent placement revenue in March was down 6% versus March 2025 (compared with a 5% decline for the full quarter), and for the first three weeks of April was down 7% year over year. Buckley cautioned these were “very brief time periods” and warned against reading too much into them.

Looking to the third quarter, Buckley said typical seasonality suggests relatively flat sequential revenue for Talent Solutions due to summer holidays, especially in Europe, but said current trends would imply year-over-year adjusted revenue growth of 1% to 3%—which would be the first return to positive growth since 2022. For Protiviti, he cited typical third-quarter sequential increases tied to internal audit work related to annual internal control certifications, which can lift utilization and incremental margins.

Buckley projected that, with the completion of the second-quarter cost actions and seasonality, Protiviti could deliver third-quarter sequential revenue gains of 0% to 3% and adjusted segment margins of 7% to 9%. He said the company estimates both Talent Solutions and Protiviti will deliver positive year-over-year segment income growth in the third quarter, driving consolidated net income and EPS growth of 8% to 12% year over year.

Waddell reiterated that the company’s Talent Solutions run rate early in the second quarter was stronger than its guidance and said management had not assumed any “short-term snapback” in Protiviti’s risk and compliance practice. He also said the improvement in Contract Talent Solutions was “broad-based” and “led by technology,” which management believes is sustainable.

About Robert Half NYSE: RHI

Robert Half International Inc, founded in 1948 by Robert Half, is a global professional staffing and consulting firm headquartered in Menlo Park, California. As a pioneer in specialized staffing, the company has built a reputation for matching skilled professionals with leading organizations across a range of industries. Robert Half's shares trade on the New York Stock Exchange under the ticker RHI, reflecting its position as one of the longest‐standing and best‐known firms in the staffing sector.

The company offers a comprehensive suite of services, including temporary staffing, permanent placement, and consulting solutions.

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