Robert Half Inc. (RHI): A Compelling Undervalued Play in the Staffing Industry

The staffing industry, long a barometer of macroeconomic health, has faced headwinds in 2025 as post-pandemic recovery stutters. Yet, within this turbulence lies an opportunity for investors to identify undervalued plays—companies that are recalibrating for efficiency while positioning themselves for the next phase of growth. Robert Half Inc. (RHI) fits this profile. Despite a Q1 2025 earnings miss—where revenue fell to $1.35 billion, below the $1.41 billion forecast—RHI has taken decisive steps to enhance capital efficiency and leverage AI-driven innovation, making it a compelling candidate for long-term investors [3].

Capital Efficiency: A Foundation for Resilience

RHI’s Q1 performance, marked by a 15.39% post-earnings stock plunge, underscored vulnerabilities in its business model. However, the company’s swift response has been instructive. By implementing $80 million in annual cost savings, RHI has signaled a commitment to lean operations. These measures, coupled with a 11.3% increase in dividends to $0.59 per share and $20 million in share repurchases during Q2, demonstrate a disciplined approach to capital allocation [1].

Such actions are critical in an industry where margin compression is a persistent risk. According to a report by Robert Half Management Resources, the firm’s credit rating stabilized after a temporary dip in 2023, reflecting improved financial resilience [1]. While global enterprise revenue declined 7% year-over-year in Q2 2025 to $1.37 billion, the company maintained a robust balance sheet, with $119 million in operational cash flow [1]. This fiscal prudence positions RHI to navigate prolonged hiring cycles and economic uncertainty without sacrificing shareholder returns.

AI-Driven Margin Expansion: A Strategic Edge

The staffing industry’s traditional reliance on human capital is being disrupted by AI and automation. RHI, however, is not merely reacting to this shift—it is leading it. The company’s recent hiring of a Data/Information Architect to optimize manufacturing processes and a Technical Recruiter for AI/ML product lines highlights its proactive integration of AI into core operations [1]. These roles are not peripheral; they are central to RHI’s strategy to offer data-driven recruitment solutions and automate task-heavy workflows, thereby reducing costs and improving service quality.

Protiviti, RHI’s consulting segment, exemplifies this transformation. Despite a slight dip in adjusted gross margins to 22.3% in Q2 2025 (from 23.2% in Q2 2024), the segment has shown resilience in international markets like Germany and Canada [2]. This resilience is partly attributable to AI-enhanced project management tools, which allow Protiviti to deliver scalable solutions for clients navigating digital transformation. As larger projects return to the market, RHI’s AI-first approach could unlock significant margin expansion.

A Recovering Market and RHI’s Position

The broader staffing industry is at an inflection point. Elevated economic uncertainty has elongated hiring cycles and subdued project activity, but these are temporary headwinds. RHI’s Q3 2025 guidance—revenue of $1.31 billion to $1.41 billion—reflects cautious optimism, with a midpoint revenue decline of 8% year-over-year [1]. This guidance, while conservative, acknowledges the market’s fragility while hinting at stabilization.

Moreover, RHI’s investments in Europe and its focus on AI-driven recruitment position it to capitalize on the next phase of recovery. As remote work and direct digital matching platforms challenge traditional staffing models, RHI’s hybrid approach—combining AI with human-centric skills like data storytelling and change management—offers a differentiated value proposition [2]. This duality is critical: technology automates efficiency, while human expertise ensures client retention in a competitive landscape.

Valuation and Outlook

At a glance, RHI’s recent earnings misses and stock volatility may deter investors. Yet, these metrics mask a company in transition. With $80 million in annual cost savings, a resilient international segment, and a clear AI strategy, RHI is laying the groundwork for capital-efficient growth. Its Q3 guidance, coupled with a 11.3% dividend increase and aggressive share repurchases, suggests management’s confidence in navigating the current downturn.

For investors with a medium-term horizon, RHI represents an undervalued opportunity. The company’s ability to balance fiscal discipline with innovation—while addressing the staffing industry’s evolving demands—positions it to outperform peers as the market recovers. In an era where AI is reshaping every sector, RHI’s proactive integration of technology is not just a competitive edge; it is a necessity for survival.

**Source:[1] Robert Half Management Resources [https://martini.ai/pages/research/Robert%20Half%20Management%20Resources-f32b942687ec98a8d390df4fdb8b4f01][2] Remote Work And AI Will Dismantle Obsolete Staffing Models [https://simplywall.st/community/narratives/us/commercial-services/nyse-rhi/robert-half/vmuospz1-remote-work-and-ai-will-dismantle-obsolete-staffing-models-iexp][3] Earnings call transcript: Robert Half Q1 2025 misses ... [https://www.investing.com/news/transcripts/earnings-call-transcript-robert-half-q1-2025-misses-forecasts-stock-plunges-93CH-4000399]