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Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.06pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.02pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.14pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
cyberattacks+5
adversely+3
litigation+3
infringement+3
adverse+2
Positive rising
effective+3
enable+2
enabled+2
able+1
success+1
Risk Factors (Item 1A)
7,513 words
Item 1A. Risk Factors
The Company’s business prospects are subject to various risks and uncertainties that impact its business. The most important of these risks and uncertainties are as follows:
Risks Related to the Company’s Business Environment
Any reduction in global economic activity may harm the Company ’ s business and financial condition. The demand for the Company’s services, in particular its talent solutions services, is highly dependent upon the state of the economy and upon the staffing needs of the Company’s clients. In the recent past, certain of the Company’s markets experienced economic uncertainty characterized by increasing unemployment, limited availability of credit, significant inflation, and decreased consumer and business spending. In addition, certain geopolitical events, including the ongoing war between Russia and Ukraine, the ongoing unrest throughout the Middle East, and conflict and political instability in parts of South America have caused significant economic, market, political or regulatory uncertainty in some of the Company’s markets. Any decline in the economic condition or employment levels of the U.S. or of any of the foreign countries in which the Company does business, or in the economic condition of any region of any of the foregoing, or in any specific industry served by the Company may reduce the demand for the Company’s services and thereby significantly decrease the Company’s revenues and profits. Further, continued or intensifying economic, political or regulatory uncertainty in the Company’s markets or backlash U.S.-based companies could reduce demand for the Company’s services.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
loss+5
termination+3
concerns+1
downturn+1
easing+1
Positive rising
progress+1
enhance+1
effective+1
enabled+1
beautiful+1
MD&A (Item 7)
6,900 words
Item 7. 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 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 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 publicity could impact the Company’s ability to attract and retain clients and candidates; the 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; relating to prior or current transactions or activities, including that may be 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 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 or their service , or that the Company could experience a cybersecurity ; and the possibility that the Company may to maintain adequate financial and management controls, and as a result in its financial reporting. Additionally, with respect to Protiviti, other risks and uncertainties include the fact that future 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; to produce projected revenues could affect financial results; and there is the possibility of involvement in 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.
The Company ’ s business depends on a strong reputation and anything that harms its reputation will likely harm its results. As a provider of contract and permanent talent solutions as well as consulting services, the Company’s reputation is dependent upon the performance of the employees it places with its clients and the services rendered by its consultants. The Company depends on its reputation and name recognition to secure engagements and to hire skilled employees and consultants. If the Company’s clients become dissatisfied with the performance of those employees or consultants, or if any of those employees or consultants engage in or are believed to have engaged in conduct that is harmful to the Company’s clients, the Company’s ability to maintain or expand its client base may be harmed.
The Company faces risks in operating internationally. The Company depends on operations in international markets for a significant portion of its business. These international operations are subject to a number of risks, including general political and economic conditions in those foreign countries, international hostilities and responses to those hostilities, the burden of complying with various potentially conflicting foreign laws, technical standards, unpredictable changes in foreign regulations, U.S. legal requirements governing U.S. companies operating in foreign countries, legal and cultural differences in the conduct of business, potential adverse tax consequences, and difficulty in staffing and managing international operations. Furthermore, the Company’s operations may be adversely impacted by conflicts between the U.S. government and those of other jurisdictions in which the Company operates. These factors may have a material adverse effect on the performance of the Company’s business. In addition, the Company’s business may be affected by foreign currency exchange fluctuations. In particular, the Company is subject to risk in translating its results in foreign currencies into the U.S. dollar. If the value of the U.S. dollar strengthens relative to other currencies, the Company’s reported income from these operations could decrease.
Natural disasters and unusual weather conditions, pandemic outbreaks, terrorist acts, global political events and other seriouscatastrophic events could disrupt business and otherwise materially adversely affect the Company ’ s business and financial condition. With operations in many states and multiple foreign countries, the Company is subject to numerous risks outside of the Company’s control, including risks arising from natural disasters, such as fires, earthquakes, hurricanes, floods, tornadoes, unusual weather conditions, pandemics and other global health emergencies, terrorist acts or disruptive global political events, or similar disruptions that could materially adversely affect the Company’s business and financial performance. Historically, the Company’s operations are dependent on the ability of employees and consultants to travel from business to business and from location to location. Any public health emergencies, including a real or potential global pandemic such as those caused by the avian flu, SARS, Ebola, coronavirus, or even a particularly virulent flu, could decrease demand for the Company’s services and the Company’s ability to offer them. Uncharacteristic or significant weather conditions may increase in frequency or severity due to climate change, which may increase the Company’s expenses, exacerbate other risks to the Company, including from impacts to key suppliers, and affect travel and the ability of businesses to remain open, which could lead to a decreased ability to offer the Company’s services and materially adversely affect the Company’s results of operations. In addition, these events could result in delays in placing employees and consultants, the temporary disruption in the transport of employees and consultants overseas and domestically, the inability of employees and consultants to reach or have transportation to clients directly affected by such events, and disruption to the Company’s information systems. Although it is not possible to predict such events or their consequences, these events could materially adversely affect the Company’s reputation, business and financial condition.
Failure to meet evolving and increasingly contradictory expectations for action or inaction on sustainability and ESG commitments and initiatives could harm the Company’s reputation, or otherwise adversely impact the business, financial condition or results of operations. The Company has public sustainability and environmental, social and governance (“ESG”) commitments, including environmental targets validated by the Science Based Target initiative (“SBTi”), designed to have a positive impact on the climate. The Company’s ability to achieve these goals is subject to a multitude of risks that may be outside of the Company’s control. The Company’s failure or perceived failure to achieve ESG- or climate-related goals or maintain ESG-related practices that meet evolving and sometimes contradictory regulatory and stakeholder expectations could harm the Company’s reputation, adversely impact the Company’s ability to attract and retain employees or clients, and expose the Company to increased scrutiny from the media, lawmakers, the investment community and regulators. The Company’s reputation also may be harmed by the perceptions that clients, employees and other stakeholders, lawmakers and the media have about the Company’s action or inaction on social, ethical or political issues. Damage to the Company’s reputation and loss of brand equity may reduce demand for the Company’s services and thus have an adverse effect on future financial results and reduce the stock price, as well as require additional resources to rebuild the Company’s reputation and restore the value of the brands. Increasingly, lawmakers, regulators and stakeholders have expressed or pursued ESG legislation and investment expectations with opposing positions and impacts. In recent years anti-ESG and anti-DEI sentiment has gained momentum across the U.S., with several dozen states, Congress and the Executive Branch having proposed or enacted “anti-ESG” and “anti-DEI” policies, legislation, executive orders or initiatives or issued related legal opinions. Meanwhile other states, countries and regions have introduced or enacted broader ESG disclosure or performance compliance obligations. Conflicting regulations, legal and regulatory uncertainty, and a lack of ESG harmonization of legal and regulatory environments across the jurisdictions in which the Company operates has created and, in the future may continue to create, enhanced compliance risks and costs. The Company may also face increasing scrutiny from its clients, candidates, employees, stakeholders, lawmakers and the media relating to the appropriate role of ESG practices and disclosures. Failure to prepare for and meet evolving standards and expectations could result in client dissatisfaction, regulatory penalties, investor backlash and diminished shareholder confidence.
Related to the Company’s Operations
The Company may be unable to find sufficient candidates for its talent solutions business. The Company’s talent solutions services business consists of the placement of individuals seeking employment. There can be no assurance that candidates for employment will continue to seek employment through the Company. Candidates generally seek contract or permanent positions through multiple sources, including the Company and its competitors. There have been periods of historically low unemployment in the U.S. in recent periods during which competition for workers in a number of industries was intense. When unemployment levels are low, finding sufficient eligible candidates to meet employers’ demands is more challenging. Although unemployment has risen in some areas in which the Company operates, talent shortages have persisted in a number of disciplines and jurisdictions. Any shortage of candidates could materially adversely affect the Company.
The Company operates in a highly competitive business and may be unable to retain clients or market share. The talent solutions business is highly competitive and, because it is a service business, the barriers to entry are quite low. There are many competitors, some of which have greater resources than the Company, and new competitors are entering the market all the time. The increased availability and maturation of AI tools may enable clients to use advanced automation capabilities in lieu of services provided by the Company’s contract talent personnel. Therefore, there can be no assurance that the Company will be able to retain clients or market share in the future. Nor can there be any assurance that the Company will, in light of competitive pressures, be able to remain profitable or, if profitable, maintain its current profit margins.
The Company may incur potential liability to employees and clients. The Company’s contract talent solutions business entails employing individuals on a temporary basis and placing such individuals in clients’ workplaces. The Company’s ability to control the workplace environment is limited. As the employer of record of its temporary employees, the Company incurs a risk of liability to its temporary employees for various workplace events, including claims of physical injury, discrimination, harassment or failure to protect confidential or personal information. In addition, in order to facilitate remote working arrangements, some of the Company’s temporary workers are accessing client workspaces from their personal devices through cloud-based systems, which could increase cybersecurity risks to the Company’s clients. If cybersecurity incidents were to occur in such a way, the Company may face legal and contractual liability, reputational damage, loss of business, and other expenses. The Company also incurs a risk of liability to its clients resulting from allegations of damages caused by temporary employees acting on phishing emails, facilitating, allowing or failing to stop cyberattacks, and other errors, omissions or theft by its temporary employees, or allegations of compromise of client confidential information. In some cases, the Company has agreed to indemnify its clients in respect of these types of claims. The Company maintains insurance with respect to many such claims. While such claims have not historically had a material adverse effect on the Company, there can be no assurance that the Company will continue to be able to obtain insurance at a cost that does not have a material adverse effect on the Company or that such claims (whether by reason of the Company not having sufficient insurance or by reason of such claims being outside the scope of the Company’s insurance) will not have a material adverse effect on the Company.
Protiviti operates in a highly competitive business and faces competitors who are significantly larger and have more established reputations. As with the Company’s talent solutions services business, the barriers to entry are quite low. There are many competitors, some of which have greater resources than Protiviti and many of which have been in operation far longer than Protiviti. In particular, Protiviti faces competition from the “Big Four” accounting firms, which have been in operation for a considerable period of time and have established reputations and client bases. Because the principal factors upon which competition is based are reputation, technology, tools, project methodologies, price of services and depth of skills of personnel, there can be no assurance that Protiviti will be successful in attracting and retaining clients or be able to maintain the technology, personnel, and other requirements to successfully compete.
Protiviti ’ s operations could subject it to liability. The business of Protiviti consists of providing business consulting and internal audit services. Protiviti risks liability from allegations of damages caused by errors, omissions or misconduct by its employees or allegations of compromised client confidential or personal information while working on consulting engagements, or from damages caused by its employees acting on phishing emails and facilitating, allowing or failing to stop cyberattacks while working in a client’s environment. In some cases, the Company has agreed to indemnify its clients in respect of these types of claims. Liability could be incurred, or litigation could be, and from time-to-time has been, instituted against the Company or Protiviti for claims related to these activities or to prior transactions or activities. There can be no assurance that such liability or litigation will not have a material adverse impact on Protiviti or the Company.
The Company is dependent on its management personnel and employees, and a failure to attract and retain such personnel could harm its business. The Company is engaged in the services business. As such, its success or failure is highly dependent upon the performance of its management personnel and employees, rather than upon tangible assets (of which the Company has few). There can be no assurance that the Company will be able to attract and retain the personnel that are essential to its success. A failure to retain key management personnel could disrupt the Company’s operations and its succession strategy, hindering a smooth transition to new leadership and potentially disrupting the Company’s operations.
The Company ’ s results of operations and ability to grow could be materially negatively affected if it cannot successfully keep pace with technological changes impacting the development and implementation of its services and the evolving needs of its clients. The Company’s success depends on its ability to keep pace with rapid technological changes affecting both the development and implementation of its services and the staffing needs of its clients. Technological advances such as AI, machine learning and automation are impacting industries served by all of the Company’s lines of business. In addition, the Company’s business relies on a variety of technologies, including those that support hiring and tracking, order management, billing, and client data analytics. If the Company does not sufficiently invest in new technology and keep pace with industry developments, appropriately implement new technologies, or evolve its business at sufficient speed and scale in response to such developments, or if it does not make the right strategic investments to respond to these developments, the Company’s services, results of operations, and ability to develop and maintain its business could be negatively affected.
The Company uses AI in its provision of services which may result in operational challenges, legal liability, reputational concerns, and privacy, security and competitive risks. The Company currently uses and intends to continue using its proprietary AI processes, algorithms and applications, as well as those of third parties in its daily operations for Protiviti and talent solutions, including by deploying generative AI into the Company’s talent solutions search operations. Protiviti has expanded its service offerings to include AI risk analysis, policy creation, governance, and technology selection and architecture. The use of AI by talent solutions and provision of AI related services by Protiviti may result in operational challenges, legal liability, reputational concerns, and privacy, security and competitive risks which could result in adverse effects to the Company’s financial condition, results or reputation. Generative AI products and services leverage existing and widely available technologies, such as Chat GPT-4 and its successors, or alternative large language models or other processes. The use of generative AI processes at scale is relatively new and may lead to challenges, concerns and risks that are significant or that the Company may not be able to predict, especially if its use of these technologies in the delivery of its services becomes more important to its operations over time.
Use of generative AI in search operations and services offerings may be difficult to deploy successfully due to operational issues inherent to the nature of such technologies. AI algorithms use machine learning and predictive analytics, which may lead to flawed, biased, and inaccurate candidate and lead generation search results. Datasets used for AI training, development or operations may be insufficient, of poor quality, reflect unwanted forms of bias, or raise other legal concerns (such as concerns relating to intellectual property infringement or data protection). Inappropriate or controversial data practices by, or practices reflecting inherent biases of, data scientists, engineers and end-users of the Company’s systems could lead to mistrust, rejection or skepticism of the Company’s services by clients and candidates.
Further, unauthorized use or misuse of AI by the Company’s employees, vendors or others may result in disclosure of confidential company and customer data, reputational harm, privacy law violations, and legal liability. The Company’s use of
AI may also lead to novel and urgent cybersecurity risks, including access to or the misuse of personal data, all of which may adversely affect its operations and reputation.
In addition, the Company increasingly relies on third-party technology vendors that regularly deploy new and enhanced AI-enabled features, tools and platforms, often at a rapid pace and with limited advance notice. These technologies in some cases may be made broadly available to employees, including through embedded features in existing enterprise software or low-code or no-code development environments that enable employees to build or customize AI-enabled tools. As a result, the Company may have limited ability to fully evaluate, test, restrict, monitor or govern the security, data handling practices, model behavior, or downstream uses of such AI technologies before or after deployment.
Governance, monitoring and security controls designed to manage the use of AI technologies, including controls related to data access, data retention, model training, prompt inputs and outputs, explainability, auditability and third-party risk management, are evolving and may not mature at the same pace as the deployment of new AI capabilities by vendors. This disparity may increase the risk of unauthorized or unintended use of AI, data leakage, regulatory non-compliance, intellectual property infringement, security vulnerabilities, or inconsistent application of Company policies. The Company may also incur additional costs and operational complexity through attempts to retrofit controls, implement safeguards, restrict access, or discontinue use of certain AI tools after deployment. Any failure to effectively manage these risks could adversely affect the Company’s business, results of operations, financial condition or reputation.
Uncertainty in the legal regulatory regime relating to AI may require significant resources to modify and maintain business practices to comply with U.S. and non-U.S. laws, the nature of which cannot be determined at this time. Several jurisdictions around the globe, including Europe and certain U.S. states, have already proposed or enacted laws governing the use, development and training of AI. For example, the European Union passed the Artificial Intelligence Act in 2024 which contains prescriptive AI regulations and laws, and the Company expects other jurisdictions will adopt similar legislation. Such other jurisdictions may decide to adopt similar or more restrictive legislation, and jurisdictions that have already enacted legislation could elect to enact additional legislation, any of which could render the use of AI challenging, impossible or financially prohibitive.
The demand for the Company ’ s services related to regulatory compliance may decline. The operations of both the talent solutions business and Protiviti include services related to Sarbanes-Oxley, Anti-Money Laundering Act of 2020 reviews, the Bank Secrecy Act of 1970, as amended, and related anti-money laundering regulations, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Foreign Corrupt Practices Act of 1977 and other regulatory compliance services. There can be no assurance that there will be ongoing demand for these services. Similarly, from time-to-time proposals are considered by the U.S. Congress to further delay or, in some cases, remove the requirements of Sarbanes-Oxley and the Dodd-Frank Act for a number of public and private companies. Furthermore, the enforcement priorities of U.S. regulators fluctuate from time to time, which may lead to periods of decreased demand for certain of the Company’s regulatory compliance services. These or other similar modifications of the regulatory requirements could decrease demand for Protiviti’s and talent solution’s services.
Long-term contracts do not comprise a significant portion of the Company ’ s revenue. Because long-term contracts are not a significant part of the Company’s talent solutions business, future results cannot be reliably predicted by considering past trends or extrapolating past results. Additionally, the Company’s clients will frequently enter nonexclusive arrangements with several firms, which the client is generally able to terminate on short notice and without penalty. The nature of these arrangements further exacerbates the difficulty in predicting the Company’s future results.
If the Company does not effectively manage billable rates, the Company ’ s financial results could suffer. Accurate and strategic pricing represents a key factor in the Company’s financial results. If billable rates are too low, the Company’s service revenues may not cover operational costs, whereas if billable rates are too high, the Company risks hindering client retention and limits competitiveness.
Legal and Regulatory Risks
The Company and certain subsidiaries are defendants in several lawsuits that could cause the Company to incur substantial liabilities . The Company and certain subsidiaries are defendants in several certified or putative class and representative action lawsuits brought by or on behalf of the Company’s current and former employees allegingviolations of federal and state law with respect to certain wage and hour related matters. The various claims made in one or more of such lawsuits include, among other things, the misclassification of certain employees as exempt employees under applicable law, failure to comply with wage statement requirements, failure to compensate certain employees for time spent performing activities related to the interviewing process (including attending the interviews themselves), and other related wage and hour violations. Such suits seek, as applicable, unspecified amounts for unpaid overtime compensation, penalties and other damages, as well as attorneys’ fees. The Company is defending several claims brought under the California Labor Code Private Attorney
General Act (“PAGA”) and which authorizes individuals to file lawsuits to seek civil penalties on behalf of themselves and other employees for alleged labor code violations. It is not possible to predict the outcome of these lawsuits. However, these lawsuits may consume substantial amounts of the Company’s financial and managerial resources and might result in adverse publicity regardless of the ultimate outcome of the lawsuits. In addition, the Company and its subsidiaries may become subject to similar lawsuits in the same or other jurisdictions, or to various other claims, disputes, and legal or regulatory proceedings that arise in the ordinary course of business. An unfavorable outcome with respect to these lawsuits and any future lawsuits or regulatory proceedings could, individually or in the aggregate, cause the Company to incur substantial liabilities or impact its operations in such a way that may have a material adverse effect upon the Company’s business, financial condition or results of operations. Furthermore, any future lawsuits, claims, disputes, or legal or regulatory proceedings may also consume substantial amounts of the Company’s financial and managerial resources and might result in adverse publicity regardless of the ultimate outcome. In addition, an unfavorable outcome in one or more of these cases could cause the Company to change its compensation plans for its employees, which could have a material adverse effect upon the Company’s business.
Government regulations may result in prohibition or restriction of certain types of employment services or the imposition of additional licensing or tax requirements that may reduce the Company ’ s future earnings. In many jurisdictions in which the Company operates, the employment services industry is heavily regulated. For example, governmental regulations in some countries restrict the length of contracts and the industries in which the Company’s employees may be used. In other countries, special taxes, fees or costs are imposed in connection with the use of its employees. Additionally, trade unions in some countries have used the political process to target the industry in an effort to increase the regulatory burden and expense associated with offering or utilizing temporary staffing solutions.
The countries in which the Company operates may, among other things:
• create additional regulations that prohibit or restrict the types of employment services that the Company currently provides;
• require new or additional benefits be paid to the Company’s employees;
• require the Company to obtain additional licensing to provide employment services; or
• increase taxes, such as sales or value-added taxes, payable by the providers of temporary workers.
Any future regulations may have a material adverse effect on the Company’s business and financial results because they may make it more difficult or expensive for the Company to continue to provide employment services. Additionally, as the Company expands existing service offerings, adds new service offerings or enters new markets, it may become subject to additional restrictions and regulations which may impede its business, increase costs and impact profitability.
The Company ’ s business is subject to extensive government regulation and a failure to comply with regulations could harm its business. The Company’s business is subject to regulation or licensing in many states in the U.S. and in certain foreign countries. While the Company has had no material difficulty complying with regulations in the past, there can be no assurance that the Company will be able to continue to obtain all necessary licenses or approvals or that the cost of compliance will not prove to be material. Any inability of the Company to comply with government regulation or licensing requirements could materially adversely affect the Company. Further, changes to existing regulation or licensing requirements could impose additional costs and other burdens or limitations on the Company’s operations. In addition, the Company’s contract talent services business entails employing individuals on a temporary basis and placing such individuals in clients’ workplaces. Increased government regulation of the workplace or of the employer-employee relationship, or judicial or administrative proceedings related to such regulation, could materially adversely affect the Company. In addition, to the extent that government regulation imposes increased costs upon the Company, such as unemployment insurance taxes, there can be no assurance that such costs will not adversely impact the Company’s profit margins. Further, lawsuits or other proceedings related to the Company’s compliance with government regulations or licensing requirements could materially adversely affect the Company. For example, the Company is currently named as a defendant in PAGA litigation in California alleging wage and hour and other labor code compliance issues. It is not possible to predict the outcome of such litigation; however, such litigation or any future lawsuits or proceedings related to the Company’s compliance with government regulation or licensing requirements could consume substantial amounts of the Company’s financial and managerial resources, and might result in adverse publicity regardless of the ultimate outcome of any such lawsuits or other proceedings. An unfavorable outcome with respect to such litigation or any future lawsuits or proceedings could, individually or in the aggregate, cause the Company to incur substantial liabilities that may have a material adverse effect upon the Company’s business, financial condition or results of operations.
If the Company fails to comply with Anti-Bribery Laws, anti-forced labor laws or economic sanction regulations, it could be subject to substantial fines or other penalties and reputational harm . In many parts of the world, including countries in which the Company operates and/or seeks to expand, practices in the local business community might not conform to international business standards and could violate the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act, and other anti-corruption and anti-bribery laws and regulations (“Anti-Bribery Laws”). These laws generally prohibit companies, their employees and third-party intermediaries from authorizing, promising, offering, providing, soliciting or accepting, directly or indirectly, improper payments or benefits to or from any person whether in the public or private sector. In addition, some of these laws have accounting provisions that require the Company to maintain accurate books and records and a system of internal accounting controls. Any violation of the FCPA or other applicable Anti-Bribery Laws could result in substantial fines, sanctions or civil and/or criminalpenalties, debarment from business dealings with certain governments or government agencies or restrictions on the marketing of the Company’s products in certain countries, and damage to the Company’s reputation, which could harm the Company’s business, financial condition or results of operations.
Additionally, the U.S. Department of the Treasury’s Office of Foreign Assets Control and other relevant agencies of the U.S. government administer certain laws and regulations that restrict U.S. persons and in some instances non-U.S. persons from conducting activities, transacting business with or making investments in certain countries, or with certain governments, entities and individuals, subject to U.S. economic sanctions. Similar economic sanctions are imposed by the European Union and other jurisdictions. The Company’s international operations subject it to these and other laws and regulations, which are complex, restrict the Company’s business dealings with certain countries, governments, entities and individuals, and are constantly changing. Penalties for noncompliance with these complex laws and regulations can be significant and include substantial fines, sanctions, or civil and/or criminalpenalties, and violations can result in adverse publicity, which could harm the Company’s business, financial condition or results of operations.
Although the Company has implemented policies and procedures designed to ensure compliance with Anti-Bribery Laws, U.S. export control laws, economic sanctions, anti-forced labor, and other laws and regulations, the Company cannot be sure that its employees, agents or other third parties will not violate such policies or applicable laws and regulations. Any such violations could result in significant fines and penalties, criminal sanctions against the Company, its officers or its employees, and prohibitions on the conduct of its business, causing material damage the Company’s reputation, brand, business and operating results. Further, detecting, investigating and resolving actual or allegedviolations is expensive and can consume significant time and attention of the Company’s senior management.
Health care reform could increase the costs of the Company ’ s contract staffing operations . The Company cannot predict with any certainty the impact of the adoption of any health care reform legislation on the Company’s financial condition or operating results. Whether or not there is alternative health care legislation enacted in the U.S., there is likely to be significant disruption to the health care market in the coming months and years. Consequently, the costs of the Company’s health care expenditures may rise, adversely impacting the Company’s profitability.
The Company could be subject to changes in tax rates, adoption of new U.S. or international tax legislation or tax audits that could result in additional income tax liabilities. The Company is subject to income and other taxes in the U.S. and international jurisdictions. The tax bases and rates of these respective tax jurisdictions change from time to time due to economic and political conditions. Tax accounting involves complex matters and requires judgment to determine the Company’s worldwide provision for income and other taxes and tax assets and liabilities. The Company is routinely subject to tax examinations by the U.S. Internal Revenue Service and other tax authorities. Tax authorities have disagreed, and may disagree in the future, with the Company’s judgments and if its judgments are not sustained as a result of these examinations, the amounts ultimately paid could be materially different from the amounts previously recorded.
In addition, changes in tax laws, treaties or regulations, or their interpretation or enforcement, have become more unpredictable and may become more stringent, which could materially adversely affect the Company’s tax position. A number of countries where the Company does business, including the U.S. and many countries in the European Union, have implemented, and are considering implementing, changes in relevant tax, accounting and other laws, regulations and interpretations. The overall tax environment has made it increasingly challenging for multinational corporations to operate with certainty about taxation in many jurisdictions. For example, the Organization of Economic Cooperation and Development (“OECD”), an international association of many countries, has introduced a framework to impose a 15% global minimum corporate tax, referred to as Pillar Two, effective for tax years beginning in 2024. On January 5, 2026, the OECD released new guidance establishing the Side-by-Side (“SbS”) program under the Pillar Two global minimum tax framework. The SbS program includes a Simplified Effective Tax Rate Safe Harbor, an extended Transitional Country-by-Country Reporting Safe Harbor, and a Substance-based Tax Incentive Safe Harbor. These enacted and proposed changes in tax laws, treaties or regulations, or their interpretation or enforcement could have a material adverse impact on the Company’s current or future tax positions.
Risks Related to the Company’s Information Technology, Cybersecurity and Data Protection
Company and third-party computer, technology and communications hardware and software systems and assets (“IT Assets”) are vulnerable to damage, unauthorized access and disruption that could expose the Company to material operational, financial and reputational damage (including the unauthorized access to, or exposure of, personal and confidential information and intellectual property). The Company’s ability to manage its operations using IT Assets successfully is critical to its success and largely depends upon the efficient and uninterrupted operation of its and third parties’ IT Assets, some of which are managed and run by third-party vendors. The Company’s primary IT Assets (and, as a result, its operations) are vulnerable to damage or interruption from power outages, computer, technology and telecommunications failures, computer viruses, security breaches, cyberattacks, catastrophic events, and errors in usage by the Company’s or its vendors’ employees and contractors. In addition, the Company’s IT Assets contain personal and confidential information and intellectual property, including information of importance to the Company and its employees, vendors, contractors and clients.
Cyberattacks, including attacks motivated by the desire for monetary gain or embarrassment, geopolitics, and grievancesagainst the business services industry in general or against the Company in particular, could potentially disable or damage the Company’s IT Assets or those of its vendors or clients, or allow unauthorized access to, or exposure of, intellectual property and personal or confidential information, including information about employees, vendors, candidates, contractors and clients. The Company’s security tools, controls and practices, including those relating to identity and access management, credential strength, and the security tools, controls and practices of its vendors and clients, may not prevent or detect access, damage or disruption to Company or third-party IT Assets or the unauthorized access to, or exposure of, intellectual property or personal or confidential information. A failure to prevent or detect unauthorized access to Company or third-party IT Assets could expose the Company to material operational, financial and reputational damage. There are many approaches through which such IT Assets or the information stored thereon could be damaged, disrupted, exposed or accessed, including through system vulnerabilities, configuration errors, vendor vulnerabilities, social engineering, cyberattacks (including cyberattacks through the use of AI), improper acquisition and use of user credentials, malfeasance, or the misuse of authorized user access.
Periodic and continuous assessments are conducted by the Company on its IT Assets to identify security risks, vulnerabilities, weaknesses or gaps, and a risk-based approach is then employed to address them. This risk-based approach prioritizes risks, vulnerabilities, weaknesses and gaps based on, among other factors, budgetary constraints, impact, likelihood of mitigation and the broader risk landscape.
No security program can offer a guarantee against all potential cyberattacks or other cybersecurity-related incidents. The Company and its third-party vendors experience cybersecurity attacks with increasing frequency, including incidents that have resulted in unauthorized access to the Company’s or its third-party vendors’ IT Assets. To date, no such incidents have been determined to have had a material impact on the Company, but there is no guarantee that such incidents will not have a material impact on the Company in the future.
The Company has transitioned a significant number of its employee population to remote work. This transition has also increased the Company’s vulnerability to cybersecurity-related risks related to the Company’s IT Assets and has exacerbated certain related risks, including risks of phishing and other cybersecurity attacks.
The damage or disruption to Company or third-party systems, or unauthorized access to, or exposure of, intellectual property or personal or confidential information, could harm the Company’s operations, reputation and brand, resulting in a loss of business or revenue. It could also subject the Company to government sanctions, litigation from candidates, contractors, clients and employees, and legal liability under its contracts, resulting in increased costs or loss of revenue. The Company may also incur additional expenses, including the cost of remediating cybersecurity incidents or improving security measures, identifying and retaining replacement vendors, increased insurance premiums, or ransomware payments.
Cybersecurity threats continue to increase in frequency and sophistication (including through the use of AI), thereby increasing the difficulty of detecting and defendingagainst them. Furthermore, the potential risk of cybersecurity breaches and cyberattacks may increase as the Company introduces new service offerings and deploys new AI technologies. Any future events impacting the Company or its third-party vendors that damage or interrupt the Company’s or its third-party vendors’ IT Assets or expose intellectual property or data or other confidential information stored thereon could have a material adverse effect on the Company’s operations, reputation and financial results.
Changes in data privacy and protection laws and regulations relating to the use and control of personal information (and the failure to comply with such laws and regulations) could increase the Company ’ s costs or otherwise adversely impact its operations, financial results, and reputation. In the ordinary course of business, the Company collects, uses and retains personal information from its clients, employees, candidates and contractors, including, without limitation, full names, government-issued identification numbers, addresses, phone numbers, birthdates and payroll-related information. The possession and use of personal information in conducting the Company’s business subjects it to a variety of complex and evolving domestic and foreign laws and regulations regarding data privacy.
For example, the European Union’s General Data Protection Regulation (“GDPR”), which became effective in May 2018, imposes specific operational requirements on entities that process personal information (including requirements relating to data transfers to certain countries outside the European Union) and strong enforcement mechanisms. In the United States, the California Consumer Privacy Act (the “CCPA”), which became effective in January 2020, limits the collection and use of personal data and mandates that covered companies provide new disclosures to California consumers and afford such consumers new data privacy rights. Under the CCPA, a data breach affecting California residents’ personal information because of a failure to maintain reasonable security procedures and practices can trigger a private right of action lawsuit, and as a result data breachlitigation is likely to increase. Many other U.S. states have enacted their own privacy laws that are in some ways similar to, and in other ways different from, the CCPA’s requirements. Compliance with the GDPR, the CCPA and other current and future laws and regulations relating to data storage, use, transfer, residency, privacy and protection has increased and may continue to increase the Company’s operating costs and may require significant management time and attention. Further, any actual or perceived failure by the Company or its subsidiaries to comply with applicable laws could result in litigation, reputational harm, governmental enforcement actions or fines, and other penalties that could potentially have an adverse effect on the Company’s operations, financial results and reputation.
Risks Related to the Intellectual Property
The Company may not be able to adequately protect its intellectual property (“IP”) or may be found to infringe upon the IP rights of others, which could harm the value of the Company’s brand and adversely affect its business. The Company utilizes IP, including patents, trademarks, copyrights and trade secrets, in its business, including in the software and AI the Company uses, and in its customer lists. A combination of patent, copyright, trademark and trade secret laws in the jurisdictions in which the Company operates are critical to protecting these IP rights. However, these laws may not be adequate to protect the Company’s IP from being challenged, invalidated, infringed, diluted or misappropriated. While the Company enters into confidentiality agreements with employees, consultants and partners, such agreements may not be effective in preventingunauthorized disclosure or use of its proprietary information. If such disclosures occur, the Company may not have adequate remedies.
Moreover, while it is the Company’s policy to protect and vigorously defend its IP rights, it cannot predict whether steps taken by it will be adequate to prevent misappropriation of these rights or the use by others of the Company’s IP. IP disputes and proceedings and infringementclaims may result in a significant distraction for management and significant expense, which may not be recoverable regardless of whether the Company is successful. Such proceedings may be protracted with no certainty of success, and an adverse outcome could subject the Company to liabilities, force it to cease use of certain trademarks or other IP, or force it to enter into license agreements on terms which may not be favorable to the Company. Any one of these occurrences may have an adverse effect on the Company’s business, profitability, results of operation and financial condition.
The Company uses open-source software in connection with its software development, which could negatively affect its ability to operate its business and subject the Company to litigation or other actions. The Company uses and may continue to use open-source software in connection with the development and operation of its platforms. Open-source software is generally licensed under open-source licenses, which could subject the Company to unfavorable conditions, including requiring it to make publicly available the source code for any modifications or derivative works the Company develops using the open-source software. The Company may face claims demanding the release of software it developed that incorporates open-source software, which could include its source code, or otherwise seeking to enforce the terms of underlying license. Litigation could be costly for the Company to defend and could require it to devote additional research and development resources to change the Company’s platforms. Further, open-source licensors typically do not provide warranties or controls regarding the origin or security of the software and related support from the licensor is often unavailable. Therefore, the Company cannot be sure that the authors of the open-source software it uses will implement or offer updates to address security risks or will not abandon further development and maintenance. Many risks associated with usage of open-source software cannot be eliminated, and may, if not effectively addressed, negatively affect the Company’s operations, reputation and financial results.
Risks Associated With the Effects of Climate Change
T he Company may be adversely affected by global climate change or by legal, regulatory or market responses to such change. The physical effects of climate change could have a material adverse effect on the Company’s operations and business. To the extent climate change causes changes in weather patterns, certain regions where the Company operates could experience increases in storm intensity, extreme temperatures, wildfires, rising sea-levels and/or drought. Over time, these conditions could result in increases in the Company’s operating costs or business interruptions. For example, the Company’s headquarters are located in areas of California where the incidence of wildfire has increased over time and may continue to increase. In addition, in 2023 the Company established certain emissions targets and other environmental goals and submitted them for validation to the SBTi. Failure to achieve such goals, or a perception (whether valid or invalid) of failure to achieve such goals, could result in market, reputational, regulatory or liability risks, client dissatisfaction, reduced revenue and profitability, or shareholder
lawsuits. If the Company is unable to achieve its environmental goals, the Company’s business and reputation may be adversely affected. There can be no assurance that climate change will not have a material adverse effect on the Company’s properties, operations or business.
General Risks
Failure to maintain adequate financial and management processes and controls could lead to errors in the Company ’ s financial reporting. If the Company’s management is unable to certify the effectiveness of its internal controls or if its independent registered public accounting firm cannot render an opinion on the effectiveness of its internal control over financial reporting, or if material weaknesses in the Company’s internal controls are identified, the Company could be subject to regulatory scrutiny and a loss of public confidence. In addition, if the Company does not maintain adequate financial and management personnel and processes and controls, it may not be able to accurately report its financial performance on a timely basis, which could cause its stock price to fall.
Failure to identify and respond to risk issues in a timely manner could have a material adverse effect on the Company ’ s business. Although the Company has processes in place to attempt to identify and respond to risk issues in a timely manner, the Company’s efforts may not be sufficient.
The collective impact of the tone at the top, tone in the middle and tone at the bottom on risk management, compliance and responsible business behavior has a huge effect on timely escalation of risk issues, particularly those affecting core operations. The Company’s processes, corporate culture and general ethical climate may not be sufficient to ensure timely identification and escalation of significant risk issues.
difficult
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adverse
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litigation
litigation
disclosed
adversely
damaged
interrupted
breach
fail
suffer
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Executive Overview
The Company’s service revenues were $5.38 billion in 2025, a decrease of 7.2% from the prior year. Full-year 2025 net income decreased 47.1% to $133 million and diluted net income per share decreased 45.5% to $1.33. The Company’s results were impacted by the ongoing macroeconomic uncertainty that affects client and candidate confidence, lengthening decision cycles and delaying hiring activities and projects in the short term.
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 4.4% in the third quarter of 2025 (the latest information available as of the date of this filing), compared to an increase of 2.3% in 2024. Concerns around a near-term economic downturn have moderated, supported by a more conducive macro environment. Continued progress in the rate-cutting cycle, easing inflation, less regulation and relatively more clarity on trade policy all contribute.
The U.S. job market remains resilient with overall unemployment at 4.4% in December 2025, up from 4.1% in December 2024. 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. Although current hiring and quit rates remain subdued and well below post-Covid highs, job openings continue to be well above historical levels, indicating strong pent-up hiring demand.
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 2025 the Company’s headcount remained relatively flat for its contract talent solutions, permanent placement talent solutions and Protiviti segments when compared to prior year-end levels, while administrative headcount decreased.
Critical Accounting Policies and Estimates
As described below, the Company’s most critical accounting policies and estimates are those that involve subjective decisions or assessments.
Service Revenues. The Company derives its revenues from three segments: contract talent solutions, permanent placement talent solutions, and Protiviti. Revenues are recognized when promised goods or services are delivered to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. See Note C—“Revenue Recognition” to the Company’s Consolidated Financial Statements included under Part II—Item 8 of this report.
Income Taxes. The Company’s operations are subject to U.S. federal, state, local and foreign income taxes. In establishing its deferred income tax assets and liabilities and its provision for income taxes, the Company makes judgments and interpretations based on the enacted tax laws that are applicable to its operations in various jurisdictions. Deferred tax assets and liabilities are measured and recorded using current enacted tax rates, which the Company expects will apply to taxable income in the years in which those temporary differences are recovered or settled. The likelihood of a material change in the Company’s expected realization of its deferred tax assets is dependent on future taxable income and the effectiveness of its tax planning in the various relevant jurisdictions.
The Company also evaluates the need for valuation allowances to reduce the deferred tax assets to realizable amounts. Management evaluates all positive and negative evidence and uses judgment regarding past and future events, including operating results, to help determine when it is more likely than not that all or some portion of the deferred tax assets may not be realized. When appropriate, a valuation allowance is recorded against deferred tax assets to offset future tax benefits that may not be realized. Valuation allowances of $33.2 million and $26.4 million were recorded as of December 31, 2025, and 2024, respectively. The valuation allowances recorded relate primarily to net operating losses in certain international operations. If such losses are ultimately utilized to offset future operating income, the Company will recognize a tax benefit up to the full amount of the related valuation reserve.
Previously, the Organization of Economic Cooperation and Development (“OECD”), an international association of many countries including the U.S., introduced a framework to impose a 15% global minimum corporate tax, referred to as Pillar Two, effective for tax years beginning in 2024. On January 5, 2026, the OECD released new guidance establishing the Side-by-Side (“SbS”) program under the Pillar Two global minimum tax framework. The SbS program includes a Simplified Effective Tax
Rate Safe Harbor, an extended Transitional Country-by-Country Reporting Safe Harbor, and a Substance-based Tax Incentive Safe Harbor. The Company does not expect the SbS guidance to materially affect its tax obligations and will continue to monitor global implementation.
While management believes that its judgments and interpretations regarding income taxes are appropriate, significant differences in actual experience may materially affect the future financial results of the Company.
Recent Accounting Pronouncements
See Note B—“New Accounting Pronouncements” to the Company’s Consolidated Financial Statements included under Part II—Item 8 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 7A. “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.
Years ended December 31, 2025, and 2024
Service Revenues. The Company’s revenues were $5.38 billion for the year ended December 31, 2025, a decrease of 7.2%, compared to $5.80 billion for the year ended December 31, 2024. Revenues from U.S. operations decreased 7.7% to $4.17 billion (77.6% of total revenue) for the year ended December 31, 2025, compared to $4.52 billion (78.0% of total revenue) for the year ended December 31, 2024. Revenues from international operations decreased 5.4% to $1.21 billion (22.4% of total revenue) for the year ended December 31, 2025, compared to $1.28 billion (22.0% of total revenue) for the year ended December 31, 2024. Contributing factors for each reportable segment are discussed below in further detail.
Contract talent solutions revenues were $2.99 billion for the year ended December 31, 2025, decreasing by 11.0% compared to revenues of $3.36 billion for the year ended December 31, 2024. 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 2025 was primarily due to a 14.1% decrease in the number of hours worked by the Company’s engagement professionals, partially offset by a 3.5% increase in average bill rates. On an as adjusted basis, contract talent solutions revenues decreased 10.8% for 2025 compared to 2024. In the U.S., 2025 revenues decreased 10.6% on a reported basis, and decreased 10.3% on an as adjusted basis, compared to 2024. International revenues for 2025 decreased 12.1% on a reported basis, and decreased 12.7% on an as adjusted basis, compared to 2024.
Permanent placement talent solutions revenues were $440 million for the year ended December 31, 2025, decreasing by 9.8% compared to revenues of $487 million for the year ended December 31, 2024. 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 2025 was due to a 13.6% decrease in the number of placements, partially offset by a 3.8% increase in average fees earned per placement. On an as adjusted basis, permanent placement talent solutions revenues decreased 9.6% for 2025 compared to 2024. In the U.S., 2025 revenues decreased 9.9% on a reported basis, and decreased 9.5% on an as adjusted basis, compared to 2024. International revenues for 2025 revenues decreased 9.6% on a reported basis, and decreased 10.0% on an as adjusted basis, compared to 2024. Historically, demand for permanent placement talent solutions is even more sensitive to economic and labor market conditions than demand for contract talent solutions and this is expected to continue.
Protiviti revenues were $1.95 billion for the year ended December 31, 2025, decreasing by 0.1% compared to revenues of $1.95 billion for the year ended December 31, 2024. Key drivers of Protiviti revenues are the billable hours worked on client engagements and average hourly bill rates. The decrease in Protiviti revenues for 2025 was due to a 7.3% decrease in average hourly bill rate, partially offset by a 7.2% increase in billable hours. The decrease in the average hourly bill rate was primarily driven by the relative mix of contractors and full-time staff and their related experience levels deployed on engagements. On an as adjusted basis, Protiviti revenues decreased 0.1% for 2025 compared to 2024. In the U.S., 2025 revenues decreased 2.5% on a reported basis, and decreased 2.2% on an as adjusted basis, compared to 2024. International revenues for 2025 revenues increased 10.9% on a reported basis, and increased 8.8% on an as adjusted basis, compared to 2024.
A reconciliation of the non-GAAP year-over-year revenue growth rates to the reported year-over-year revenue growth rates for the year ended December 31, 2025, is presented in the following table:
Global
United States
International
Contract talent solutions
As Reported
Billing Days Impact
Currency Impact
As Adjusted
Permanent placement talent solutions
As Reported
Billing Days Impact
Currency Impact
As Adjusted
Protiviti
As Reported
Billing Days Impact
Currency Impact
As Adjusted
Gross Margin . The Company’s gross margin dollars were $2.00 billion for the year ended December 31, 2025, down 10.9% from $2.25 billion for the year ended December 31, 2024. 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 $1.17 billion for the year ended December 31, 2025, down 11.4% from $1.32 billion for the year ended December 31, 2024. As a percentage of revenues, gross margin dollars for contract talent solutions were 39.0% in 2025, down from 39.2% in 2024.
Gross margin dollars for permanent placement talent solutions represent revenues less reimbursable expenses. Gross margin dollars for permanent placement talent solutions were $439 million for the year ended December 31, 2025, down 9.8% from $486 million for the year ended December 31, 2024. 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 $397 million for the year ended December 31, 2025, down 10.7% from $444 million for the year ended December 31, 2024. As a percentage of revenues, reported gross margin dollars for Protiviti were 20.4% in 2025, down from 22.8% in 2024. As a percentage of revenues, adjusted gross margin dollars for Protiviti were 21.6% in 2025, down from 23.7% in 2024. The year-over-year decrease in adjusted gross margin percentage was primarily due to the relative composition of and number of professional staff and their respective pay and bill rates.
The Company’s gross margin by reporting segment is summarized as follows (in thousands):
Year Ended December 31,
Relationships
As Reported
As Adjusted
As Reported
As Adjusted
Gross Margin
Contract talent solutions
Permanent placement talent solutions
Protiviti
Total
The following tables provide reconciliations of the non-GAAP adjusted gross margin to reported gross margin for the years ended December 31, 2025, and 2024 (in thousands):
Year Ended December 31, 2025
Contract talent solutions
Permanent placement talent solutions
Protiviti
Total
% of Revenue
% of Revenue
% of Revenue
% of Revenue
Gross Margin
As Reported
Adjustments (1)
As Adjusted
Year Ended December 31, 2024
Contract talent solutions
Permanent placement talent solutions
Protiviti
Total
% of Revenue
% of Revenue
% of Revenue
% of Revenue
Gross Margin
As Reported
Adjustments (1)
As Adjusted
(1) Changes in the Company’s deferred compensation obligations related to Protiviti operations are included in costs of services, while the related investment income is presented separately. The non-GAAP financial adjustments shown in the table above are to reclassify investment income from investments held in employee deferred compensation trusts to the same line item that includes the corresponding change in obligation. These adjustments have no impact on income before income taxes.
Selling, General and Administrative Expenses . The Company’s selling, general and administrative expenses consist primarily of staff compensation, advertising, variable overhead, depreciation and occupancy costs. The Company’s reported selling, general and administrative expenses were $1.93 billion for the year ended December 31, 2025, down 4.0% from $2.01 billion for the year ended December 31, 2024. As a percentage of revenues, reported selling, general and administrative expenses were 35.8% in 2025, up from 34.6% in 2024. The Company’s adjusted selling, general and administrative expenses were $1.84 billion for the year ended December 31, 2025, down 4.5% from $1.93 billion in 2024. As a percentage of revenues, adjusted selling, general and administrative expenses were 34.3% in 2025, up from 33.3% in 2024. Contributing factors for each reportable segment are discussed below in further detail.
Selling, general and administrative expenses for contract talent solutions, on an as-reported basis, were $1.19 billion for the year ended December 31, 2025, decreasing 4.9% from $1.25 billion the year ended December 31, 2024. As a percentage of revenues, reported selling, general and administrative expenses for contract talent solutions were 39.9% in 2025, up from 37.3% in 2024. As a percentage of revenues, adjusted selling, general and administrative expenses for contract talent solutions were 37.4% in 2025, up from 35.3% in 2024, due primarily to negative leverage as revenues decreased as a result of economic conditions.
Selling, general and administrative expenses for permanent placement talent solutions were $426 million for the year ended December 31, 2025, decreasing by 5.2% from $449 million for the year ended December 31, 2024. As a percentage of revenues, reported selling, general and administrative expenses for permanent placement talent solutions services were 96.9% in 2025, up from 92.1% in 2024. As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement talent solutions were 94.9% in 2025, up from 90.3% in 2024, due primarily to negative leverage as revenues decreased as a result of economic conditions.
Selling, general and administrative expenses for Protiviti were $308 million for the year ended December 31, 2025, increasing by 1.3% from $304 million for the year ended December 31, 2024. As a percentage of revenues, selling, general and administrative expenses for Protiviti were 15.8% in 2025, up from 15.6% in 2024.
The Company’s selling, general and administrative expenses by reportable segment are summarized as follows (in thousands):
Year Ended December 31,
Relationships
As Reported
As Adjusted
As Reported
As Adjusted
Selling, General and
Administrative Expenses
Contract talent solutions
Permanent placement talent solutions
Protiviti
Total
The following tables provide reconciliations of the non-GAAP selling, general and administrative expenses to reported selling, general and administrative expenses for the years ended December 31, 2025, and 2024 (in thousands):
Year Ended December 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
Adjustments (1)
As Adjusted
Year Ended December 31, 2024
Contract talent solutions
Permanent placement talent solutions
Protiviti
Total
% of Revenue
% of Revenue
% of Revenue
% of Revenue
Selling, General and
Administrative Expenses
As Reported
Adjustments (1)
As Adjusted
(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 is presented separately. The non-GAAP financial adjustments shown in the table above are to reclassify investment income from investments held in employee deferred compensation trusts to the same line item that includes the corresponding change in obligation. These adjustments have no impact 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 $76 million for the year ended December 31, 2025, down 68.3% compared to $241 million for the year ended December 31, 2024. As a percentage of revenues, reported operating income was 1.4% for the year ended December 31, 2025, down from 4.2% for the year ended December 31, 2024. The Company’s adjusted operating income was $183 million for the year ended December 31, 2025, down 45.6% from $336 million for the year ended December 31, 2024. As a percentage of revenues, adjusted operating income was 3.4% for the year ended December 31, 2025, down from 5.8% for the year ended December 31, 2024. 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 (loss) by reporting segment is summarized as follows (in thousands):
Year Ended December 31,
Relationships
As Reported
As Adjusted
As Reported
As Adjusted
Operating Income (Loss)
Contract talent solutions
Permanent placement talent solutions
Protiviti
Total
The following tables provide reconciliations of the non-GAAP adjusted operating income to reported operating income (loss) for the years ended December 31, 2025, and 2024:
Year Ended December 31, 2025
Contract talent
solutions
Permanent placement talent solutions
Protiviti
Total
% of Revenue
% of Revenue
% of Revenue
% of Revenue
Operating Income (Loss)
As Reported
Adjustments (1)
As Adjusted
Year Ended December 31, 2024
Contract talent
solutions
Permanent placement talent solutions
Protiviti
Total
% of Revenue
% of Revenue
% of Revenue
% of Revenue
Operating Income
As Reported
Adjustments (1)
As Adjusted
(1) Changes in the Company’s employee deferred compensation plan obligations related to talent solutions operations are included in operating income (loss). The non-GAAP financial adjustments shown in the table above are to reclassify investment income from investments held in employee deferred compensation trusts to the same line item that includes the corresponding change in obligation. These adjustments have no impact on income before income taxes.
Income 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 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 Consolidated Statements of Operations. The Company’s income from investments held in employee deferred compensation trusts was $106 million and $94 million for the years ended December 31, 2025, and 2024, respectively. The income from trust investments was due to positive market returns during 2025.
Provision for income taxes . The provision for income taxes was 31.6% and 29.7% for the years ended December 31, 2025, and 2024, respectively. The higher tax rate for 2025 can be attributed to an increased impact of nondeductible expenses and fewer tax credits.
On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act (the “Tax Act”). Included in this legislation are provisions that allow for the immediate expensing of domestic United States research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. The Tax Act did not have a material impact on income tax expense for the year ended December 31, 2025.
Years ended December 31, 2024, and 2023
A discussion of changes regarding the Company’s financial condition and results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023, can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 13, 2025, which is available free of charge on the SEC’s website at www.sec.gov and at www.roberthalf.com/investor-center.
Liquidity and Capital Resources
The change in the Company’s liquidity during the years ended December 31, 2025, and 2024, is primarily the net effect of funds generated by operations and the funds used for capital expenditures, investments in employee deferred compensation trusts net of redemptions from employee deferred compensation trusts, repurchases of common stock, and payments of dividends.
Cash and cash equivalents were $464 million and $538 million at December 31, 2025, and 2024, respectively. Operating activities provided $320 million during the year ended December 31, 2025, offset by $86 million and $330 million of net cash used in investing activities and financing activities, respectively. Operating activities provided $410 million during the year ended December 31, 2024, offset by $87 million and $496 million of net cash used in investing and financing activities, respectively. Fluctuations in foreign currency exchange rates had the effect of increasing reported cash and cash equivalents by $22 million during the year ended December 31, 2025, compared to a decrease of $21 million in 2024.
Operating activities—Net cash provided by operating activities for the year ended December 31, 2025, was $320 million. This was composed of net income of $133 million, adjusted upward for non-cash items of $88 million, and cash provided by changes in working capital of $99 million. Net cash provided by operating activities for the year ended December 31, 2024, was $410 million. This was composed of net income of $252 million, adjusted upward for non-cash items of $68 million, and cash provided by changes in working capital of $90 million.
Investing activities—Cash used in investing activities for the year ended December 31, 2025, was $86 million. This was composed of capital expenditures of $53 million, investments in employee deferred compensation trusts of $80 million, and payments for acquisitions of $11 million, partially offset by proceeds from employee deferred compensation trust redemptions of $58 million. Cash used in investing activities for the year ended December 31, 2024, was $87 million. This was composed of capital expenditures of $56 million, and investments in employee deferred compensation trusts of $69 million, partially offset by proceeds from employee deferred compensation trust redemptions of $38 million.
Capital expenditures, including $29 million related to cloud computing implementations, in 2025 totaled $82 million, approximately 65% 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 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 2026 capitalized expenditures will range from $70 million to $90 million, of which $45 million to $60 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 year ended December 31, 2025, was $330 million. This included repurchases of $92 million in common stock and $238 million in dividends paid to stockholders. Cash used in financing activities for the year ended December 31, 2024, was $496 million. This included repurchases of $276 million in common stock and $220 million in dividends paid to stockholders.
As of December 31, 2025, 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. During the years ended December 31, 2025, and 2024, the Company repurchased 1.7 million shares, at a cost of $80 million, and 3.5 million shares, at a cost of $249 million, on the open market, respectively. Additional stock repurchases were made in connection with employee stock plans, whereby Company shares were tendered by employees for the payment of applicable statutory withholding taxes. During the years ended December 31, 2025, and 2024, such repurchases totaled 0.2 million shares, at a cost of $11 million, and 0.3 million shares, at a cost of $23 million, respectively. Repurchases of shares have been funded with cash generated from operations and from cash reserves.
The Company’s working capital as of December 31, 2025, included $464 million in cash and cash equivalents and $748 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.
On May 28, 2025, the Company entered into 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 December 31, 2025. The Company had no borrowings under the Credit Agreement as of December 31, 2025, and maintained $10.1 million in standby letters of credit to satisfy workers’ compensation insurer’s collateral requirements.
In connection with entering into the 2025 Credit Agreement, the Company terminated its prior Credit Agreement dated May 11, 2020 (as amended from time to time, the “2020 Credit Agreement”). At the time of termination, the 2020 Credit Agreement provided for up to $100 million of borrowings and the Company had no outstanding borrowings. There were no early termination fees associated with the Company’s termination of the 2020 Credit Agreement. There were no borrowings outstanding under the 2020 Credit Agreement as of December 31, 2025.
On February 12, 2026, the Company announced a quarterly dividend of $0.59 per share to be paid to all shareholders of record as of February 25, 2026. The dividend will be paid on March 13, 2026.
Material Cash Requirements from Contractual Obligations
Leases. As of December 31, 2025, the Company reported current and long-term operating lease liabilities of $70 million and $176 million, respectively. These balances consist of the minimum rental commitments for 2026 and thereafter, discounted to reflect the Company’s cost of borrowing, under noncancelable lease contracts executed as of December 31, 2025.
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 Consolidated Financial Statements included under Part II—Item 8 of this report.
Purchase Obligations. As of December 31, 2025, the Company’s contractual purchase obligations were $221 million, primarily related to software subscriptions, services, telecom services and software maintenance agreements. Of this amount, $127 million is expected to be paid within the next 12 months. These purchase obligations are incurred during the normal course of business.
Employee Deferred Compensation Plan. As of December 31, 2025, the Company reported employee deferred compensation plan obligations of $772 million in its accompanying 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 December 31, 2025, 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 Plans” to the Company’s Consolidated Financial Statements included under Part II—Item 8 of this report.
