Robert Half Navigates Economic Headwinds with Cost Cuts, Dividend Growth Amid Revenue Decline

Robert Half (NYSE: RHI), the global staffing and consulting giant, reported a challenging first quarter of 2025, marked by an 8% year-over-year revenue decline to $1.35 billion and a sharply lower EPS of $0.17. Despite these headwinds, the company emphasized its resilience, with strategic cost reductions and a steadfast dividend growth policy underscoring its long-term focus.

Financial Performance: A Mixed Picture
The quarter’s results were uneven across segments. Talent Solutions, the staffing arm, saw adjusted revenues drop 11% YoY, with U.S. operations down 10% and non-U.S. markets plunging 15%. Contract talent bill rates, however, rose 4.2%, reflecting persistent labor market tightness. Meanwhile, Protiviti, the business consulting division, grew adjusted revenues by 5% YoY, driven by 8% gains in non-U.S. markets. Yet Protiviti’s margins dipped to 18.1% due to $8 million in restructuring costs, highlighting the trade-off between growth and efficiency.

The company’s cost-cutting initiatives—layoffs in administrative roles targeting $80 million in annual savings—will begin fully benefiting results in Q2. CEO M. Keith Waddell noted that these moves, alongside its hybrid staffing-consulting model, position Robert Half to outlast current economic uncertainties.

Dividend and Capital Allocation: Steadfast Despite Stumbles
Despite the earnings miss, Robert Half maintained its dividend discipline. A $0.59 per-share payout in March marked an 11.3% increase over 2024, continuing an 18-year streak of annual dividend hikes averaging 11.6%. This underscores management’s confidence in cash flow stability, as operating cash flow, though seasonal, remains predictable. The company also repurchased $39 million in shares, leaving $6.6 million remaining under its current authorization—a signal that it views its stock as undervalued.

Market Challenges and Near-Term Outlook
The earnings call painted a grim near-term picture. Economic uncertainty, driven by U.S. trade policy and global slowdowns, has extended hiring cycles. March’s contract talent revenue fell 13% YoY, though permanent placement declines narrowed to 2% in early April, hinting at potential stabilization.

Robert Half’s Q2 guidance anticipates further declines: revenue is projected to drop 7% YoY (adjusted), with Talent Solutions facing a 10–14% revenue slide. Protiviti’s margin recovery to 21–24% and $80 million in annualized cost savings, however, could offset some of the pressure.

Conclusion: Navigating to Shore
Robert Half’s Q1 results reflect broader economic struggles, but its strategic moves suggest a path to recovery. The $80 million in annual cost savings—equivalent to ~6% of 2024’s $1.39 billion operating income—could meaningfully boost margins as the economy stabilizes. The dividend growth and disciplined share repurchases also signal financial strength.

Crucially, the labor market remains resilient: U.S. job openings remain elevated, and unemployment for college graduates hovers at 2.6%. This tightness supports Robert Half’s long-term value proposition as a talent intermediary. Should economic conditions improve, the company’s 38–40% gross margin target for Talent Solutions and its hybrid business model could drive a rebound.

Investors should weigh the near-term pain against Robert Half’s 75-year track record and its 18-year dividend growth streak. While the stock’s forward P/E of ~15 (vs. its five-year average of ~18) reflects current pessimism, the combination of cost discipline and a durable business model suggests the company is well-positioned to capitalize on eventual recovery. As CFO Michael Buckley noted, “the foundation is set to emerge stronger.” The next quarters will test that assertion.