What changed in this filing

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Item 1A. Risk Factors

2024-02-20 compared with 2023-02-16 · 38 added, 44 removed, 257 unchanged (24% of the section changed)

3 unchanged sentences

Demand for staffing services is significantly affected by the general level of economic activity and employment in the United States and the other countries in which we operate.

When economic activity increases, temporary employees are often added before full-time employees are hired.

When economic activity increases, companies often add temporary employees before hiring full-time employees.

As economic activity slows, however, many companies reduce their use of temporary employees before laying off full-time employees.

5 unchanged sentences

Any significant economic downturn in the United States or certain other countries in which we operate could have a material adverse effect on our business, financial condition and results of operations.

Our business has been adversely impacted by the novel coronavirus (COVID-19) outbreak and could be impacted by future outbreaks.

The emergence of new strain(s) of COVID-19 that are more deadly, contagious, or vaccine resistant, or a decline in the effectiveness of vaccines or treatment regimens could result in another economic downturn, a decline in demand for our services, or increased worker absenteeism.

Likewise, the financial viability of third parties on which we rely to provide staffing services or manage critical business functions could also be impacted by further negative COVID-19 developments.

Our stock price may be subject to significant volatility and could suffer a decline in value.

12 unchanged sentences

• sales of significant amounts of our common stock or other securities in the market.

In addition, the stock market in general, and the NASDAQ Global Market in particular, have experienced significant price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of listed companies.

In addition, the stock market in general, and the NASDAQ Global Market in particular, experiences significant price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of listed companies.

These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.

In the past, securities class action litigation has often been instituted following periods of volatility in the market price of a company’s securities.

A securities class action suit against us could result in substantial costs, potential liabilities and the diversion of our management’s attention and resources.

A securities class action suit against us arising out of stock volatility or other investor claims, could result in substantial costs, potential liabilities and the diversion of our management’s attention and resources.

Further, our operating results may be below the expectations of securities analysts or investors.

6 unchanged sentences

and Allegis Group are considerably larger than we are and have more substantial marketing and financial resources.

Additionally, the emergence of online staffing platforms or other forms of disintermediation may pose a

competitive threat to our services, which operate under a more traditional staffing business model.

Additionally, the emergence of online staffing platforms or other forms of disintermediation may pose a competitive threat to our services, which operate under a more traditional staffing business model.

Price competition in the staffing industry is intense, particularly for the provision of office clerical, light industrial and education personnel.

1 unchanged sentence

The number of customers distributing their staffing service purchases among a broader group of competitors continues to increase which, in some cases, may make it more difficult for us to obtain new customers, or to retain or maintain our current share of business, with existing customers.

We also face the risk that our current or prospective customers may decide to provide similar services internally.

We also face the risk that our current or prospective customers may decide to

provide similar services internally.

As a result, there can be no assurance that we will not encounter increased competition in the future.

Technological advances may significantly disrupt the labor market and weaken demand for human capital.

Our success is directly dependent on our customers’ demands for talent.

Our success is directly dependent on our customers’ demand for talent.

As technology continues to evolve, more tasks currently performed by people may be replaced by automation, robotics, machine learning, artificial intelligence, and other technological advances outside of our control.

This trend poses a risk to the staffing industry, particularly in lower-skill job categories that may be more susceptible to such replacement.

This trend poses a risk to the staffing industry, particularly in lower-skill job categories that may be more susceptible to such replacement and to creative, administrative, customer support, and clerical roles due to advances in generative artificial intelligence.

If we are unsuccessful in responding to this potential shift in customer demand due to advancing technology, it could have a material adverse effect on our results of operations and financial condition.

6 unchanged sentences

Although we have safeguards in place to comply with competition laws, there can be no guarantee that such safeguards will be successful.

Any government regulatory actions may result in fines and penalties or hamper our ability to provide the cost-effective benefits to consumers and businesses, reducing the attractiveness of our services and the revenues that come from them.

Any government regulatory actions may result in fines and penalties or hamper our ability to provide cost-effective benefits to consumers and businesses, reducing the attractiveness of our services and the revenues that come from them.

New competition law actions could be initiated.

4 unchanged sentences

The temporary employment industry is heavily regulated in many of the countries in which we operate.

Changes in laws or government regulations may result in prohibition or restriction of certain types of employment services we are permitted to offer or the imposition of new or additional benefit, licensing or tax requirements that could reduce our revenues and earnings.

Changes in laws or government regulations may result in prohibition or restriction of certain types of employment services we can offer or the imposition of new or additional pay, benefit, licensing or tax requirements that could reduce our revenues and earnings.

In particular, we are subject to state unemployment taxes in the U.S., which typically increase during periods of increased levels of unemployment.

9 unchanged sentences

We may have additional tax liabilities that exceed our estimates.

We are subject to a multitude of federal, state, local, and foreign taxes in the jurisdictions in which we operate.

We are subject to multiple federal, state, local, and foreign taxes in the jurisdictions in which we operate.

Our tax expense could be materially impacted by changes in tax laws in these jurisdictions, changes in the valuation of deferred tax assets and liabilities or changes in the mix of income by country.

7 unchanged sentences

If we are unsuccessful in executing our strategy, we may not achieve either our stated goal of revenue growth or the intended productivity improvements, which could negatively impact profitability.

Even if effectively executed, our strategy may be insufficient considering changes in market conditions, technology, competitive pressures or other external factors.

Even if effectively executed, our strategy may be insufficient considering changes in market conditions, technology, changes in customer buying behavior, competitive pressures or other external factors.

If we fail to successfully develop new service offerings, we may be unable to retain and acquire customers, resulting in a decline in revenues.

7 unchanged sentences

A change in labor strategy or the deterioration of the financial condition or business prospects of these customers could reduce their need for our services and result in a significant decrease in the revenues and earnings we derive from these customers.

Such change could occur due to factors in our customers' control but also could occur due to economic, social, climate, or political factors outside of our customers' control.

Such change could occur due to economic, social, climate, or political factors outside of our customers' control.

Inability to meet customer demands in response to these factors could result in the decline in use of our service or outright loss of customers.

Our customers are also exposed to third-party risk through their use of vendors and suppliers which, in the event of a third-party incident at a customer, could result in a deterioration in their financial condition.

1 unchanged sentence

Since receipts from customers generally lag payroll to temporary employees, the bankruptcy of a major customer could have a material adverse impact on our ability to meet our working capital requirements.

The expansion of payment terms may extend our working capital requirements and reduce available capital for

The expansion of payment terms may extend our working capital requirements and reduce available capital for investment.

Additionally, most of our customer contracts can be terminated by the customer on short notice without penalty.

25 unchanged sentences

While we maintain insurance in types and amounts we believe are appropriate for the contemplated risks, there is no assurance that such insurance coverage will remain available on reasonable terms or be sufficient in amount or scope.

We are increasingly dependent on third parties for the execution of critical functions.

We rely on third parties to support critical functions within our operations, including portions of our technology infrastructure, vendor management, customer relationship management, and applicant tracking systems.

We are increasingly dependent on third parties for the execution of critical functions and could be liable for their inability to adhere to global compliance standards.

If we are unable to contract with third parties having the specialized skills needed to support our growth strategies or integrate their products and services with our business, or if they fail to meet our performance requirements, the results of operations could be adversely impacted.

1 unchanged sentence

If our suppliers fail to meet our standards and expectations or are unfavorably regarded by our customers, our ability to discontinue the relationship may be limited and could result in reputational damage, customer loss, and adversely affect our results of operations.

The failure or inability to perform on the part of one or more of these critical suppliers or partners could cause significant disruptions and increased costs.

The failure or inability to perform on the part of one or more of these critical vendors, suppliers, or partners could cause significant disruptions and increased costs.

Moreover, these third parties are often subject to international laws and regulations regarding their conduct, including compliance with anti-bribery, anti-corruption, human trafficking, forced or child labor, trade sanctions, sustainability, and other compliance obligations (“Global Compliance Obligations”).

While we maintain processes to monitor these third-parties for compliance to these standards, failure of these third-parties to adhere to Global Compliance Obligations could result in significant fines and penalties, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business, and damage to our reputation.

Our information technology strategy may not yield its intended results.

Our information technology strategy includes improvements to our applicant onboarding and tracking systems, order management, and improvements to financial processes such as billing and accounts payable through system consolidation and

We do not use a single enterprise resource planning system, which limits our ability to react to evolving technology and customer expectations and increases the amount of investment and effort necessary to provide global service integration to our customers.

Although the technology strategy is intended to increase productivity and operating efficiencies, these initiatives may not yield their intended results.

Any delays in completing, or an inability to successfully complete, these technology initiatives or an inability to achieve the anticipated efficiencies could adversely affect our operations, liquidity and financial condition.

Any delays in completing, or an inability to successfully complete, these technology

initiatives, or an inability to achieve the anticipated efficiencies, could adversely affect our operations, liquidity and financial condition.

Some of the initiatives are dependent on the products and services of third-party vendors.

5 unchanged sentences

Further, acquisitions result in goodwill and intangible assets which have the risk of impairment if the future operating results and cash flows of such acquisitions are lower than our initial estimates.

In the event that we determine that there is an impairment, we may be required to record a significant non-cash charge to earnings that could adversely affect our results of operations.

In 2022, changes in market conditions related to demand in hiring in the high-tech industry and slowing growth in RPO more broadly, resulted in a goodwill impairment charge of $41.0 million.

Certain equity investments may expose us to additional risks and uncertainties.

We participate, or may participate in the future, in certain investments in equity affiliates, such as joint ventures or other investments with strategic partners, including PersolKelly Pte.

These investments or arrangements expose us to a number of risks, including the risk that the management of the investment or combined venture may not be able to fulfill their performance obligations under the management agreements or that the joint venture parties may be incapable of providing the required financial support.

Additionally, improper, illegal or unethical actions by the investment or venture management could have a negative impact on the reputation of the investment or venture and our Company.

In the event of an impairment determination, we may be required to record a significant non-cash charge to earnings that could adversely affect our results of operations.

Risks Related to Operating a Global Enterprise

We conduct a significant portion of our operations outside of the United States and we are subject to risks relating to our international business activities, including fluctuations in currency exchange rates and numerous legal and regulatory requirements.

We conduct a portion of our operations outside of the United States and we are subject to risks relating to our international business activities, including fluctuations in currency exchange rates and numerous legal and regulatory requirements.

We conduct our business in major staffing markets throughout the world.

15 unchanged sentences

dollar and these fluctuations may have an adverse or favorable effect on our operating results when translating foreign currencies into U.S.

Our international operations subject us to potential liability under anti-corruption, trade protection, and other laws and regulations.

The Foreign Corrupt Practices Act and other anti-corruption laws and regulations (“Anti-Corruption Laws”) prohibit corrupt payments by our employees, vendors, or agents.

While we devote substantial resources to our global compliance programs and have implemented policies, training, and internal controls designed to reduce the risk of corrupt payments, our employees, vendors, or agents may violate our policies.

Our failure to comply with Anti-Corruption Laws could result in significant fines and penalties, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business, and damage to our reputation.

Our international operations subject us to potential liability under anti-bribery, anti-corruption, anti-trafficking, supply chain, trade protection, and other laws and regulations.

The Foreign Corrupt Practices Act and other anti-bribery and anti-corruption laws and regulations (“Anti-Corruption Laws”) prohibit corrupt payments by our employees, vendors, or agents.

Other international laws and compacts hold companies liable for human rights violations that occur within their supply chain, and impose obligations on companies to prohibit human trafficking, forced labor, and child labor ("Human Rights and Supply Chain Laws").

While we devote substantial resources to our global compliance programs and have implemented policies, training, and internal controls designed to reduce the risk of corrupt payments and ensure compliance with human rights standards, our employees, vendors, or agents may violate our policies.

Our failure to comply with Anti-Corruption Laws or Human Rights and Supply Chain Laws could result in significant fines and penalties, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business, and damage to our reputation.

Operations outside the U.S.

11 unchanged sentences

Competition for individuals with proven professional skills is intense, and demand for these individuals is expected to remain strong for the foreseeable future.

Rapid evolution of technology may worsen this skills gap, where the demand for expertise outpaces the availability of suitably skilled professionals.

Low unemployment, as well as social, political and financial conditions can negatively impact the amount of qualified personnel available to meet the staffing requirements of our customers.

18 unchanged sentences

and certain other countries in which we operate, new employment and labor laws and regulations have been proposed or adopted that may increase the potential exposure of employers to employment-related claims and litigation.

In addition, such laws and regulations are arising

with increasing frequency at the state and local level in the U.S.

In addition, such laws and regulations are arising with increasing frequency at the state and local level in the U.S.

and the resulting inconsistency in such laws and regulations results in additional complexity.

5 unchanged sentences

Many business processes critical to our continued operation are hosted in outsourced facilities in America, Europe and Asia.

Certain other processes are hosted at our corporate headquarters complex or occur in cloud-based computer environments.

Certain other processes are hosted at our corporate headquarters or occur in cloud-based computer environments.

These critical processes include, but are not limited to, payroll, customer reporting, and order management.

Although we have taken steps to protect all such instances by establishing robust data backup and disaster recovery capabilities, the loss of these data centers or access to the cloud-based environments could create a substantial risk of business interruption which could have a material adverse effect on our business, financial condition and results of operations.

Although we have taken steps to protect such instances by establishing data backup and disaster recovery capabilities, the loss of these data centers or access to the cloud-based environments could create a substantial risk of business interruption which could have a material adverse effect on our business, financial condition and results of operations.

A failure to maintain the privacy of information entrusted to us could have significant adverse consequences.

In the normal course of business we control, process, or have access to personal information regarding our own employees or employment candidates, as well as that of many of our customers or managed suppliers.

In the normal course of business we control, process, or have access to personal information regarding our own employees or employment candidates, as well as that of employees of our customers and managed suppliers.

Information concerning these individuals may also reside in systems controlled by third parties for purposes such as employee benefits and payroll administration.

15 unchanged sentences

The actions we take to reduce the risk of impairments to our operations or systems and breaches of confidential or proprietary data may not be sufficient to prevent or repel future cyber events or other impairments of our networks or information technologies.

systems or those of critical vendors (e.g., ransomware), could result in damage to our reputation, fines, regulatory sanctions or interventions, contractual or financial liabilities, additional compliance and remediation costs, loss of employees or customers, loss of payment card network privileges, operational disruptions and other forms of costs, losses or reimbursements, any of which could materially adversely affect our operations or financial condition.

An event involving the destruction, modification, accidental or unauthorized release, or theft of sensitive information from systems related to our business, or an attack that results in damage to or unavailability of our key technology systems or those of critical vendors (e.g., ransomware), could result in damage to our reputation, fines, regulatory sanctions or interventions, contractual or financial liabilities, additional compliance and remediation costs, loss of employees or customers, loss of payment card network privileges, operational disruptions and other forms of costs, losses or reimbursements, any of which could materially adversely affect our operations or financial condition.

Our cyber security and business continuity plans, and those of our third parties with whom we do business, may not be effective in anticipating, preventing and effectively responding to all potential cyber risk exposures.

10 unchanged sentences

Parfet is the brother of Donald R.

Parfet, the Chairman of the board of directors of the Company.

Parfet, a member of the board of directors of the Company.

The trustees, acting by majority vote, have sole investment and voting power over the shares of Class B common stock held by Trust K, which represent approximately 93.5% of the outstanding Class B shares.

14 unchanged sentences

Provisions in our certificate of incorporation and bylaws and Delaware law may delay or prevent an acquisition of our Company.

Our restated certificate of incorporation and bylaws contain provisions that could make it harder for a third party to acquire us without the consent of our board of directors.

Our certificate of incorporation and bylaws contain provisions that could make it harder for a third party to acquire us without the consent of our board of directors.

For example, if a potential acquirer were to make a hostile bid for us, the acquirer would not be able to call a special meeting of stockholders to remove our board of directors or act by written consent without a meeting.

24 unchanged sentences

If broader credit markets were to experience dislocation, our potential access to other funding sources would be limited.

UNRESOLVED STAFF COMMENTS.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors