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- **Q4 Revenue Guidance**: $1.245B-$1.345B (down 5%-9% YoY), first sequential growth since Q2 2022, driven by late Q3 contract talent recovery.
- **Protiviti Challenges**: Gross margin decline to 20.9% due to shorter projects; long-term confidence in double-digit margins by 2026.
- **Dividend Commitment**: Free cash flow covers dividend, with $360M cash cushion; Q1 2026 faces $0.04 tax charge.
- **AI Impact**: Minimal disruption to contract talent; focus on high-skill roles with stable demand.
- **Cost Management**: SG&A at 36.2% of revenue; plans to deleverage costs and invest in AI for productivity.

**【CEO Summary Section】**
- Global enterprise revenues for Q3 2025 were $1.354 billion, down 8% year-over-year on both reported and adjusted bases. Net income per share was $0.43, in line with the midpoint of prior guidance.
- Despite cautious hiring activity, weekly contract talent revenues showed sequential growth in September and early October, leading to Q4 revenue guidance of $1.245 billion to $1.345 billion (down 5% to 9% year-over-year on an adjusted basis). This reflects the first sequential growth since Q2 2022.
- Management highlighted strong cash flow ($77 million from operations) and a $0.59 dividend, with $59 million distributed in Q3. The company repurchased 550,000 shares, leaving 5.6 million available under the repurchase plan.
- Protiviti's pipeline grew across all major solutions, with Q4 revenue guidance expecting improved growth rates despite tougher prior-year comparables.

**【CFO Financial Commentary】**
- Adjusted Talent Solutions revenues declined 11% year-over-year, with U.S. and non-U.S. segments down 11% and 12%, respectively. Contract talent bill rates increased 3.7% year-over-year, adjusted for mix and currency.
- Gross margin for Contract Talent Solutions remained stable at 38.9%, while Protiviti's gross margin declined to 20.9% (23% adjusted) due to shorter-duration projects and cost pressures.
- SG&A expenses rose to 36.2% of revenue, driven by higher Talent Solutions costs (48.3% of segment revenue). Adjusted operating income was $61 million, or 4.5% of revenue.
- Q4 2025 guidance included a tax rate of 30% to 34% and capital expenditures of $75 million to $90 million. Q1 2026 is expected to face seasonal margin compression for Protiviti and a $0.04 per share tax charge.

**【Q&A Highlights】**
- **Protiviti Performance**: CEO noted pipeline growth but challenges with replacing large projects with smaller, lower-margin engagements. Gross margin compression was attributed to inflation, project mix, and staff reallocation. Long-term confidence in returning to double-digit operating margins.
- **Dividend Sustainability**: CEO emphasized commitment to the dividend, with free cash flow covering payments. A $360 million cash cushion provides flexibility, though Q1 2026 may face seasonal cash flow challenges.
- **AI Impact**: CEO dismissed short-term AI disruption, citing studies showing minimal impact on labor markets. Entry-level roles were most affected, but Robert Half focuses on higher-skill talent with stable demand.
- **Revenue Trends**: Q4 guidance described as conservative, with sequential growth of 1.5-2% if September trends continued. Historically, Q4 sees modest negative leverage due to fewer billing days.
- **Margin Leverage**: CFO highlighted potential for margin improvement through skill curve migration and cost deleveraging, with plans to use AI to enhance recruiter productivity.

Robert Half Inc. (RHI) Q3 2025 Earnings Call Transcript

Revenue

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RHI

RHI fundamentals

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