What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-02 compared with 2023-10-31 · 120 added, 280 removed, 202 unchanged (66% of the section changed)

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Forward-looking statements are not guarantees or promises that goals or targets will be met.

These statements may be identified by words such as “estimate,” “forecast,” “target,” “project,” “plan,” “intend,” “believe,” “expect,” “anticipate,” 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 ESG and compliance programs, including targets or goals, may not be considered material for the Securities and Exchange Commission (“SEC”) reporting purposes and may be based on standards for measuring progress that are still developing, on internal controls, diligence, or processes that are evolving, and on assumptions that are subject to change in the future.

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 environmental, social, and governance (“ESG”) 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, 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 difficult to predict and often beyond our control and are inherently uncertain.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements.

Forward-looking statements are subject to risks and uncertainties that could cause actual results, 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:

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the global financial and economic situation;

the ongoing impact of the COVID-19 virus and efforts to mitigate its spread;

changes in levels of unemployment and other economic conditions in the U.S.

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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;

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litigation relating to prior or current transactions or activities, including litigation that may be disclosed from time to time in the Company’s SEC filings;

the ability of the Company to manage its international operations and comply with foreign laws and regulations;

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;

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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.

Executive Overview

Revenue and net income results for the third quarter exceeded management's expectations, notwithstanding the ongoing macroeconomic uncertainty that lengthens client and job candidate decision cycles.

Revenue and net income results for the first quarter were within the range of management’s expectations, notwithstanding the ongoing macroeconomic uncertainty that lengthens client and job candidate decision cycles.

Gross margins remained strong due to pricing discipline and the ongoing benefit from the rising mix shift to higher skill levels.

The Company’s operating cost base also benefited from targeted actions to align costs with revenues across all reportable segments.

During the first three quarters of 2023, service revenues were $4.92 billion, a decrease of 10.7% from the prior year.

During the first quarter of 2024, service revenues were $1.48 billion, a decrease of 14.0% from the prior year.

Net income was $64 million and diluted net income per share was $0.61.

Global labor markets remain tight and the scarcity of talent persists.

The urgency and velocity of that demand is impacted by the prolonged period of macroeconomic uncertainty, which continued in the third-quarter.

Clients are budget sensitive and very selective in their hiring activities - including approval of new projects.

On a segment basis, year-to-date revenues for contract talent solutions, permanent placement talent solutions and Protiviti were down 13.1%, 21.7% and 1.0% year-over-year, respectively.

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.

economic backdrop and labor trends for the first three quarters of 2023 remained steady for the Company as the unemployment rate increased slightly from 3.5% for December 2022 to 3.8% at the end of the third quarter of 2023.

Although recent metrics are modestly off their peaks, talent shortages persist.

real gross domestic product

increased 1.6% during the first quarter of 2024, compared to an increase of 3.4% during the fourth quarter of 2023, while the unemployment rate increased slightly from 3.7% for December 2023 to 3.8% at the end of the first quarter of 2024.

Although recent metrics are modestly off their peaks, global labor markets remain tight and the scarcity of talent persists.

In the U.S., unemployment stands near a 50-year low and remains even lower for those with a college degree, where the rate is 2.1%.

Although labor markets remain strong, ongoing uncertainty related to inflation and interest rates cause clients to be more cautious, resulting in elongated hiring cycles and a negative impact on short-term results.

However, the urgency and velocity of the demand is impacted by the prolonged period of macroeconomic uncertainty, which has impacted consumer confidence.

Clients are budget sensitive and very selective in their hiring activities—including approval of new projects—resulting in elongated hiring cycles and a negative impact on short-term results.

The Company is confident about its ability to weather the current global macroeconomic environment and its future growth prospects as the macro landscape improves.

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This has advantages of higher bill rates and gross margins, longer assignment lengths, and less economic sensitivity.

The Company continues to invest in technology and innovation to fuel the Company’s core business strategy, which places the Company’s specialized talent solutions professionals at the center of clients’ hiring experience, along with digital tools that provide greater client convenience, flexibility and transparency throughout the hiring process.

The Company also continues to leverage its proprietary data assets to enhance the AI tools the Company’s recruiters use to discover, assess and select talent for the Company’s clients and the AI tools the Company’s recruiters use to effectively target leads for additional revenue.

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.

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Accordingly, the Company’s headcount and other investments are typically assessed on at least a quarterly basis.

During the first three quarters of 2023, the Company decreased headcount for its contract talent solutions and permanent placement talent solutions segments, while it increased its full-time headcount for its Protiviti segment, when compared to prior year-end levels.

During the first quarter of 2024, the Company decreased headcount for its contract talent solutions, while the full-time headcount for its permanent placement talent solutions and Protiviti segments remained flat, when compared to prior year-end levels.

Critical Accounting Policies and Estimates

The Company’s most critical accounting policies and estimates are those that involve subjective decisions or assessments and are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

There were no material changes to the Company’s critical accounting policies or estimates for the nine months ended September 30, 2023.

There were no material changes to the Company’s critical accounting policies or estimates for the three months ended March 31, 2024.

Recent Accounting Pronouncements

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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, and administrative and customer support roles.

The Protiviti segment provides business and technology risk consulting and internal audit services.

The Protiviti segment provides internal audit, risk, business, and technology consulting solutions.

Demand for the Company’s services is largely dependent upon general economic and labor trends both domestically and abroad.

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 conducts placement activities through 319 offices in 42 states, the District of Columbia and 18 foreign countries, while Protiviti has 65 offices in 23 states and 13 foreign countries.

The Company’s talent solutions segments conduct operations through offices in the U.S.

and 17 foreign countries, while Protiviti has offices in the U.S.

and 13 foreign countries.

Non-GAAP Financial Measures

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“Quantitative and Qualitative Disclosures About Market Risk” for further discussion of the impact of foreign currency exchange rates on the Company’s results of operations and financial condition.

Three Months Ended September 30, 2023 and 2022

Three Months Ended March 31, 2024 and 2023

Service Revenues.

The Company’s revenues were $1.56 billion for the three months ended September 30, 2023, a decrease of 14.7% compared to $1.83 billion for the three months ended September 30, 2022.

The Company’s revenues were $1.48 billion for the three months ended March 31, 2024, a decrease of 14.0% compared to $1.72 billion for the three months ended March 31, 2023.

Revenues from U.S.

operations decreased 17.5% to $1.21 billion (77.3% of total revenue) for the three months ended September 30, 2023, compared to $1.47 billion (79.9% of total revenue) for the three months ended September 30, 2022.

Revenues from international operations decreased 3.5% to $355 million (22.7% of total revenue) for the three months ended September 30, 2023, compared to $368 million (20.1% of total revenue) for the three months ended September 30, 2022.

operations decreased 14.9% to $1.14 billion (77.4% of total revenue) for the three months ended March 31, 2024, compared to $1.34 billion (78.2% of total revenue) for the three months ended March 31, 2023.

Revenues from international operations decreased 10.9% to $334 million (22.6% of total revenue) for the three months ended March 31, 2024, compared to $375 million (21.8% of total revenue) for the three months ended March 31, 2023.

Contributing factors for each reportable segment are discussed below in further detail.

Contract talent solutions revenues were $943 million for the three months ended September 30, 2023, decreasing by 17.3% compared to revenues of $1.14 billion for the three months ended September 30, 2022.

Contract talent solutions revenues were $887 million for the three months ended March 31, 2024, decreasing by 16.7% compared to revenues of $1.07 billion for the three months ended March 31, 2023.

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 the three months ended September 30, 2023, was primarily due to a 22.9% decrease in the number of hours worked by the Company’s engagement professionals, partially offset by a 6.9% increase in average bill rates.

On an as adjusted basis, contract talent solutions revenues decreased 16.4% for the third quarter of 2023, compared to the third quarter of 2022.

In the U.S., revenues in the third quarter of 2023 decreased 20.7% on an as reported basis, and decreased 19.2% on an as adjusted basis, compared to the third quarter of 2022.

International revenues for the third quarter of 2023 decreased 3.1% on an as reported basis, and decreased 4.9% on an as adjusted basis compared to the third quarter of 2022.

Permanent placement talent solutions revenues were $140 million for the three months ended September 30, 2023, decreasing by 23.3% compared to revenues of $182 million for the three months ended September 30, 2022.

The decrease in contract talent solutions revenues for the three months ended March 31, 2024, was primarily due to an 18.1% decrease in the number of hours worked by the Company’s engagement professionals, partially offset by a 2.3% increase in average bill rates.

On an as adjusted basis, contract talent solutions revenues decreased 16.2% for the first quarter of 2024, compared to the first quarter of 2023.

In the U.S., revenues in the first quarter of 2024 decreased 19.1% on an as reported basis, and decreased 18.6% on an as adjusted basis, compared to the first quarter of 2023.

International revenues for the first quarter of 2024 decreased 8.4% on an as reported basis, and decreased 7.5% on an as adjusted basis compared to the first quarter of 2023.

Permanent placement talent solutions revenues were $125 million for the three months ended March 31, 2024, decreasing by 20.4% compared to revenues of $157 million for the three months ended March 31, 2023.

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 revenues for the three months ended September 30, 2023, was due to a 26.8% decrease in the number of placements, partially offset by a 3.5% increase in average fees earned per placement.

On an as adjusted basis, permanent placement talent solutions revenues decreased 22.5% for the third quarter of 2023, compared to the third quarter of 2022.

In the U.S., revenues for the third quarter of 2023 decreased 26.9% on an as reported basis, and decreased 25.5% on an as adjusted basis, compared to the third quarter of 2022.

International revenues for the third quarter of 2023 decreased 13.0% on an as reported basis and decreased 14.2% on an as adjusted basis, compared to the third quarter of 2022.

The decrease in permanent placement talent revenues for the three months ended March 31, 2024, was due to a 26.4% decrease in the number of placements, partially offset by a 6.0% increase in average fees earned per placement.

On an as adjusted basis, permanent placement talent solutions revenues decreased 19.8% for the first quarter of 2024, compared to the first quarter of 2023.

In the U.S., revenues for the first quarter of 2024 decreased 19.3% on an as reported basis, and decreased 18.7% on an as adjusted basis, compared to the first quarter of 2023.

International revenues for the first quarter of 2024 decreased 23.2% on an as reported basis and decreased 22.1% on an as adjusted basis, compared to the first quarter of 2023.

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 $481 million for the three months ended September 30, 2023, decreasing by 6.0% compared to revenues of $511 million for the three months ended September 30, 2022.

Protiviti revenues were $464 million for the three months ended March 31, 2024, decreasing by 6.1% compared to revenues of $494 million for the three months ended March 31, 2023.

Key drivers of Protiviti revenues are the billable hours worked by consultants on client engagements and average hourly bill rates.

The decrease in Protiviti revenues for the three months ended September 30, 2023, was due to a 10.2% decrease in billable hours, partially offset by a 4.2% increase in average hourly bill rates.

On an as adjusted basis, Protiviti revenues decreased 4.9% for the third quarter of 2023, compared to the third quarter of 2022.

In the U.S., revenues in the third quarter of 2023 decreased 7.4% on an as reported basis, and decreased 5.6% on an as adjusted basis, compared to the third quarter of 2022.

International revenues for the third quarter of 2023 increased 0.3% on an as reported basis and decreased 1.5% on an as adjusted basis, compared to the third quarter of 2022.

A reconciliation of the non-GAAP year-over-year revenue growth rates to the as reported year-over-year revenue growth rates for the three months ended September 30, 2023, is presented in the following table:

The decrease in Protiviti revenues for the three months ended March 31, 2024, was due to a 9.1% decrease in billable hours, partially offset by a 3.0% increase in average hourly bill rates.

On an as adjusted basis, Protiviti revenues decreased 5.4% for the first quarter of 2024, compared to the first quarter of 2023.

In the U.S., revenues in the first quarter of 2024 decreased 4.8% on an as reported basis, and decreased 4.2% on an as adjusted basis, compared to the first quarter of 2023.

International revenues for the first quarter of 2024 decreased 11.3% on an as reported basis and decreased 10.1% on an as adjusted basis, compared to the first quarter of 2023.

A reconciliation of the non-GAAP year-over-year revenue growth rates to the as reported year-over-year revenue growth rates for the three months ended March 31, 2024, is presented in the following table:

Global United States International

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Gross Margin .

The Company’s gross margin dollars were $641 million for the three months ended September 30, 2023, down 18.6% from $788 million for the three months ended September 30, 2022.

The Company’s gross margin dollars were $563 million for the three months ended March 31, 2024, down 18.4% from $690 million for the three months ended March 31, 2023.

Contributing factors for each reportable segment are discussed below in further detail.

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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 $375 million for the three months ended September 30, 2023, decreasing by 16.6% from $450 million for the three months ended September 30, 2022.

As a percentage of revenues, gross margin dollars for contract talent solutions were 39.8% in the third quarter of 2023, up from 39.4% in the third quarter of 2022.

The increase in gross margin percentage was primarily due to lower fringe costs and higher pay-bill spreads.

Gross margin dollars for contract talent solutions were $351 million for the three months ended March 31, 2024, decreasing by 17.2% from $424 million for the three months ended March 31, 2023.

As a percentage of revenues, gross margin dollars for contract talent solutions were 39.5% in the first quarter of 2024, down from 39.8% in the first quarter of 2023.

The decrease in gross margin percentage was primarily due to lower conversion revenues.

Gross margin dollars for permanent placement talent solutions represent revenues less reimbursable expenses.

Gross margin dollars for permanent placement talent solutions were $140 million for the three months ended September 30, 2023, down 23.3% from $182 million for the three months ended September 30, 2022.

Gross margin dollars for permanent placement talent solutions were $124 million for the three months ended March 31, 2024, down 20.4% from $156 million for the three months ended March 31, 2023.

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.

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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 $126 million for the three months ended September 30, 2023, down 19.2% from $156 million for the three months ended September 30, 2022.

As a percentage of revenues, reported gross margin dollars for Protiviti were 26.2% in the third quarter of 2023, down from 30.5% in the third quarter of 2022.

As a percentage of revenues, adjusted gross margin dollars for Protiviti were 25.6% in the third quarter of 2023, down from 30.0% in the third quarter of 2022.

Gross margin dollars for Protiviti were $88 million for the three months ended March 31, 2024, down 20.1% from $110 million for the three months ended March 31, 2023.

As a percentage of revenues, reported gross margin dollars for Protiviti were 18.9% in the first quarter of 2024, down from 22.2% in the first quarter of 2023.

As a percentage of revenues, adjusted gross margin dollars for Protiviti were 20.7% in the first quarter of 2024, down from 23.2% in the first quarter of 2023.

The year-over-year decrease in adjusted gross margin percentage was primarily due to increases in the pay rates for its professional staff, which were only partially offset by higher bill rates.

The Company’s gross margin by reporting segment is summarized as follows (in thousands):

Three Months Ended September 30, Relationships

As Reported As Adjusted As Reported As Adjusted

2023 2022 2023 2022 2023 2022 2023 2022

Contract talent solutions

$ 375,158 $ 449,579 $ 375,158 $ 449,579 39.8 % 39.4 % 39.8 % 39.4 %

Permanent placement talent solutions

139,681 182,034 139,681 182,034 99.8 % 99.8 % 99.8 % 99.8 %

126,100 155,996 123,255 153,296 26.2 % 30.5 % 25.6 % 30.0 %

Total $ 640,939 $ 787,609 $ 638,094 $ 784,909 41.0 % 43.0 % 40.8 % 42.8 %

The following tables provide reconciliations of the non-GAAP adjusted gross margin to reported gross margin for the three months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended September 30, 2023

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

$ % of Revenue $ % of Revenue $ % of Revenue $ % of Revenue

As Reported $ 375,158 39.8 % $ 139,681 99.8 % $ 126,100 26.2 % $ 640,939 41.0 %

Adjustments (1) — — — — (2,845) (0.6 %) (2,845) (0.2 %)

As Adjusted $ 375,158 39.8 % $ 139,681 99.8 % $ 123,255 25.6 % $ 638,094 40.8 %

Three Months Ended September 30, 2022

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

$ % of Revenue $ % of Revenue $ % of Revenue $ % of Revenue

As Reported $ 449,579 39.4 % $ 182,034 99.8 % $ 155,996 30.5 % $ 787,609 43.0 %

Adjustments (1) — — — — (2,700) (0.5 %) (2,700) (0.2 %)

As Adjusted $ 449,579 39.4 % $ 182,034 99.8 % $ 153,296 30.0 % $ 784,909 42.8 %

(1) Changes in the Company’s employee deferred compensation plan obligations related to Protiviti operations are included in costs of services, while the related investment (income) loss is presented separately.

The non-GAAP financial adjustments shown in the table above are to reclassify investment (income) loss 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 selling, general and administrative expenses were $497 million for the three months ended September 30, 2023, decreasing by 9.5% from $549 million for the three months ended September 30, 2022.

As a percentage of revenues, reported selling, general and administrative expenses were 31.8% in the third quarter of 2023, up from 29.9% in the third quarter of 2022.

As a percentage of revenues, adjusted selling, general and administrative expenses were 32.5% in the third quarter of 2023, up from 30.6% in the third quarter of 2022.

Contributing factors for each reportable segment are discussed below in further detail.

Selling, general and administrative expenses for contract talent solutions were $307 million for the three months ended September 30, 2023, decreasing by 3.8% from $319 million for the three months ended September 30, 2022.

As a percentage of revenues, reported selling, general and administrative expenses for contract talent solutions were 32.5% in the third quarter of 2023, up from 27.9% in the third quarter of 2022.

As a percentage of revenues, adjusted selling, general and administrative expenses for contract talent solutions were 33.6% in the third quarter of 2023, up from 28.9% in the third quarter of 2022, due primarily to negative leverage as revenues decreased as a result of economic conditions during the quarter.

Selling, general and administrative expenses for permanent placement talent solutions were $119 million for the three months ended September 30, 2023, decreasing by 19.5% from $148 million for the three months ended September 30, 2022.

As a percentage of revenues, reported selling, general and administrative expenses for permanent placement talent solutions were 85.3% in the third quarter of 2023, up from 81.3% in the third quarter of 2022.

As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement was 86.2% in the third quarter of 2023, up from 82.2% in the third quarter of 2022, due primarily to negative leverage as revenues decreased as a result of economic conditions during the quarter.

Selling, general and administrative expenses for Protiviti were $71 million for the three months ended September 30, 2023, decreasing by 13.4% from $82 million for the three months ended September 30, 2022.

As a percentage of revenues, selling, general and administrative expenses for Protiviti services were 14.7% in the third quarter of 2023, down from 16.0% in the third quarter of 2022, due primarily to lower variable overhead costs.

The Company’s selling, general and administrative expenses by reportable segment are summarized as follows:

(in thousands):

Three Months Ended September 30, Relationships

As Reported As Adjusted As Reported As Adjusted

2023 2022 2023 2022 2023 2022 2023 2022

Selling, General and

Administrative Expenses

Contract talent solutions

$ 306,503 $ 318,462 $ 316,683 $ 329,531 32.5 % 27.9 % 33.6 % 28.9 %

Permanent placement talent solutions

119,376 148,290 120,626 149,856 85.3 % 81.3 % 86.2 % 82.2 %

70,853 81,827 70,853 81,827 14.7 % 16.0 % 14.7 % 16.0 %

Total $ 496,732 $ 548,579 $ 508,162 $ 561,214 31.8 % 29.9 % 32.5 % 30.6 %

The following tables provide reconciliations of the non-GAAP selling, general and administrative expenses to reported selling, general and administrative expenses for the three months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended September 30, 2023

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

$ % of Revenue $ % of Revenue $ % of Revenue $ % of Revenue

Selling, General and

Administrative Expenses

As Reported $ 306,503 32.5 % $ 119,376 85.3 % $ 70,853 14.7 % $ 496,732 31.8 %

Adjustments (1) 10,180 1.1 % 1,250 0.9 % — — 11,430 0.7 %

As Adjusted $ 316,683 33.6 % $ 120,626 86.2 % $ 70,853 14.7 % $ 508,162 32.5 %

Three Months Ended September 30, 2022

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

$ % of Revenue $ % of Revenue $ % of Revenue $ % of Revenue

Selling, General and

Administrative Expenses

As Reported $ 318,462 27.9 % $ 148,290 81.3 % $ 81,827 16.0 % $ 548,579 29.9 %

Adjustments (1) 11,069 1.0 % 1,566 0.9 % — — 12,635 0.7 %

As Adjusted $ 329,531 28.9 % $ 149,856 82.2 % $ 81,827 16.0 % $ 561,214 30.6 %

(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) loss is presented separately.

These adjustments have no impact on income before income taxes.

(Income) Loss 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.

The Company’s (income) loss 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 unaudited Condensed Consolidated Statements of Operations.

The Company’s loss from investments held in employee deferred compensation trusts was $14 million and $15 million for the three months ended September 30, 2023 and 2022, respectively.

The loss from trust investments was due to negative market returns during the third quarter of 2023.

Income Before Income Taxes and Segment Income.

The Company’s total income before income taxes was $136 million, or 8.7% of revenues, for the three months ended September 30, 2023, down from $226 million or 12.3% of revenues, for the three months ended September 30, 2022.

Combined segment income was $130 million, or 8.3% of revenues, for the three months ended September 30, 2023, down from $224 million, or 12.2% of revenues, for the three months ended September 30, 2022.

The Company’s non-GAAP combined segment income is summarized as follows (in thousands):

Three Months Ended September 30,

2023 % of Revenue 2022 % of Revenue

Combined Segment Income

Contract talent solutions $ 58,475 6.2 % $ 120,048 10.5 %

Permanent placement talent solutions 19,055 13.6 % 32,178 17.6 %

Protiviti 52,402 10.9 % 71,469 14.0 %

Total $ 129,932 8.3 % $ 223,695 12.2 %

The following table provides a reconciliation of the non-GAAP combined segment income to reported income before income taxes for the three months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended September 30,

2023 % of Revenue 2022 % of Revenue

Income before income taxes $ 136,343 8.7 % $ 225,624 12.3 %

Interest income, net (7,131) (0.4 %) (2,346) (0.1 %)

Amortization of intangible assets 720 0.0 % 417 0.0 %

Combined segment income $ 129,932 8.3 % $ 223,695 12.2 %

Provision for income taxes .

The provision for income taxes was 29.9% and 26.3% for the three months ended September 30, 2023 and 2022, respectively.

The higher tax rate for 2023 can be attributed to an increased impact of nondeductible expenses and fewer tax credits.

Nine Months Ended September 30, 2023 and 2022

Service Revenues.

The Company’s revenues were $4.92 billion for the nine months ended September 30, 2023, a decrease of 10.7% compared to $5.51 billion for the nine months ended September 30, 2022.

Revenues from U.S.

operations decreased 12.1% to $3.82 billion (77.7% of total revenue) for the nine months ended September 30, 2023, compared to $4.35 billion (78.9% of total revenue) for the nine months ended September 30, 2022.

Revenues from international operations decreased 5.6% to $1.10 billion (22.3% of total revenue) for the nine months ended September 30, 2023, compared to $1.16 billion (21.1% of total revenue) for the nine months ended September 30, 2022.

Contributing factors for each reportable segment are discussed below in further detail.

Contract talent solutions revenues were $3.01 billion for the nine months ended September 30, 2023, decreasing by 13.1% compared to revenues of $3.46 billion for the nine months ended September 30, 2022.

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 the nine months ended September 30, 2023, was primarily due to a 20.7% decrease in the number of hours worked by the Company’s engagement professionals, partially offset by an 8.5% increase in average bill rates.

On an as adjusted basis, contract talent solutions revenues in the first three quarters of 2023 decreased 12.7% compared to the first three quarters of 2022.

In the U.S., revenues in the first three quarters of 2023 decreased 15.1% on an as reported basis, and decreased 15.0% on as adjusted basis, compared to the first three quarters of 2022.

International revenues for the first three quarters of 2023 decreased 5.1% on an as reported basis, and decreased 4.0% on an as adjusted basis, compared to the first three quarters of 2022.

Permanent placement talent solutions revenues were $446 million for the nine months ended September 30, 2023, decreasing by 21.7% compared to revenues of $569 million for the nine months ended September 30, 2022.

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 staffing revenues for the nine months ended September 30, 2023, was due to a 23.7% decrease in the number of placements, partially offset by a 2.0% increase in average fees earned per placement.

On an as adjusted basis, permanent placement talent solutions revenues decreased 21.2% for the first three quarters of 2023, compared to the first three quarters of 2022.

In the U.S., revenues for the first three quarters of 2023 decreased 23.4% on an as reported basis and decreased 23.3% on an as adjusted basis, compared to the first three quarters of 2022.

International revenues for the first three quarters of 2023 decreased 17.0% on an as reported basis, and decreased 15.6% on an as adjusted basis, compared to the first three quarters of 2022.

Protiviti revenues were $1.47 billion for the nine months ended September 30, 2023, decreasing by 1.0% compared to revenues of $1.48 billion for the nine months ended September 30, 2022.

Key drivers of Protiviti revenues are the billable hours worked by consultants on client engagements and average hourly bill rates.

The decrease in Protiviti revenues for the nine months ended September 30, 2023, was due to a 4.5% decrease in billable hours, partially offset by a 3.5% increase in average hourly bill rates.

On an as adjusted basis, Protiviti revenues decreased 0.6% for the first three quarters of 2023, compared to the first three quarters of 2022.

In the U.S., revenues in the first three quarters of 2023 decreased 1.1% on an as reported basis and decreased 0.9% on an as adjusted basis, compared to the first three quarters of 2022.

International revenues in the first three quarters of 2023 decreased 0.7% on an as reported basis, and increased 0.5% on an as adjusted basis, compared to the first three quarters of 2022.

A reconciliation of the non-GAAP year-over-year revenue growth rates to the as reported year-over-year revenue growth rates for the nine months ended September 30, 2023, is presented in the following table:

Global United States International

Contract talent solutions

As Reported -13.1 % -15.1 % -5.1 %

Billing Days Impact 0.2 % 0.1 % 0.2 %

Currency Impact 0.2 % ― 0.9 %

As Adjusted -12.7 % -15.0 % -4.0 %

Permanent placement talent solutions

As Reported -21.7 % -23.4 % -17.0 %

Billing Days Impact 0.2 % 0.1 % 0.2 %

Currency Impact 0.3 % ― 1.2 %

As Adjusted -21.2 % -23.3 % -15.6 %

As Reported -1.0 % -1.1 % -0.7 %

Billing Days Impact 0.2 % 0.2 % 0.2 %

Currency Impact 0.2 % ― 1.0 %

As Adjusted -0.6 % -0.9 % 0.5 %

Gross Margin .

The Company’s gross margin dollars were $1.99 billion for the nine months ended September 30, 2023, down 16.2% from $2.38 billion for the nine months ended September 30, 2022.

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 $1.20 billion for the nine months ended September 30, 2023, down 13.0% from $1.38 billion for the nine months ended September 30, 2022.

As a percentage of revenues, gross margin dollars for contract talent solutions were 39.8% in the first three quarters of both 2023 and 2022.

Gross margin dollars for permanent placement talent solutions represent revenues less reimbursable expenses.

Gross margin dollars for permanent placement talent solutions were $445 million for the nine months ended September 30, 2023, down 21.7% from $568 million for the nine months ended September 30, 2022.

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 $348 million for the nine months ended September 30, 2023, down 19.1% from $431 million for the nine months ended September 30, 2022.

As a percentage of revenues, reported gross margin dollars for Protiviti were 23.8% in the first three quarters of 2023, down from 29.1% in the first three quarters of 2022.

As a percentage of revenues, adjusted gross margin dollars for Protiviti were 24.3% in the first three quarters of 2023, down from 27.9% in the first three quarters of 2022.

The year-over-year decrease in adjusted gross margin percentage was primarily due to increases in the pay rates for its professional staff, which were only partially offset by higher bill rates.

The Company’s gross margin by reportable segment are summarized as follows:

(in thousands):

Nine Months Ended September 30, Relationships

Three Months Ended March 31, Relationships

As Reported As Adjusted As Reported As Adjusted

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Total $ 562,797 $ 689,732 $ 571,154 $ 694,504 38.1 % 40.2 % 38.7 % 40.5 %

The following tables provide reconciliations of the non-GAAP adjusted gross margin to reported gross margin for the nine months ended September 30, 2023 and 2022 (in thousands):

Nine Months Ended September 30, 2023

The following tables provide reconciliations of the non-GAAP adjusted gross margin to reported gross margin for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31, 2024

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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As Adjusted $ 350,570 39.5 % $ 124,548 99.8 % $ 96,036 20.7 % $ 571,154 38.7 %

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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As Adjusted $ 423,625 39.8 % $ 156,395 99.8 % $ 114,484 23.2 % $ 694,504 40.5 %

(1) Changes in the Company’s deferred compensation obligations related to Protiviti operations are included in costs of services, while the related investment (income) loss is presented separately.

(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.

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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 $1.59 billion for the nine months ended September 30, 2023, up 1.2% from $1.57 billion for the nine months ended September 30, 2022.

As a percentage of revenues, reported selling, general and administrative expenses were 32.3% in the first three quarters of 2023, up from 28.5% in the first three quarters of 2022.

The Company’s adjusted selling, general and administrative expenses were $1.56 billion for the nine months ended September 30, 2023, down 6.5% from $1.67 billion for the nine months ended September 30, 2022.

As a percentage of revenues, adjusted selling, general and administrative expenses were 31.6% in the first three quarters of 2023, up from 30.2% in the first three quarters of 2022.

The Company’s reported selling, general and administrative expenses were $522 million for the three months ended March 31, 2024, decreasing by 5.5% from $552 million for the three months ended March 31, 2023.

As a percentage of revenues, reported selling, general and administrative expenses were 35.3% in the first quarter of 2024, up from 32.2% in the first quarter of 2023.

The Company’s adjusted selling, general and administrative expenses were $487 million for the three months ended March 31, 2024, down 8.1% from $530 million for the three months ended March 31, 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses were 33.0% in the first quarter of 2024, up from 30.9% in the first quarter of 2023.

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 $986 million for the nine months ended September 30, 2023, increasing by 8.6% from $908 million for the nine months ended September 30, 2022.

As a percentage of revenues, reported selling, general and administrative expenses for contract talent solutions were 32.8% in the first three quarters of 2023, up from 26.2% in the first three quarters of 2022.

Selling, general and administrative expenses for contract talent solutions, on an adjusted basis, were $955 million for the nine months ended September 30, 2023, down 3.4% from $989 million for the nine months ended September 30, 2022.

As a percentage of revenues, adjusted selling, general and administrative expenses for contract talent solutions were 31.8% in the first three quarters of 2023, up from 28.6% in the first three quarters of 2022, 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 $384 million for the nine months ended September 30, 2023, decreasing by 14.7% from $450 million for the nine months ended September 30, 2022.

As a percentage of revenues, reported selling, general and administrative expenses for permanent placement talent solutions were 86.1% in the first three quarters of 2023, up from 79.1% in the first three quarters of 2022.

As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement talent solutions was 85.3% in the first three quarters of 2023, up from 81.1% in the first three quarters of 2022, due primarily to negative leverage as revenues decreased as a result of economic conditions.

Selling, general and administrative expenses for Protiviti were $221 million for the nine months ended September 30, 2023, increasing by 3.3% from $214 million for the nine months ended September 30, 2022.

As a percentage of revenues, selling, general and administrative expenses for Protiviti were 15.1% in the first three quarters of 2023, up from 14.4% in the first three quarters of 2022, due primarily to negative leverage as revenues decreased as a result of economic conditions.

Selling, general and administrative expenses for contract talent solutions, on an as reported basis, were $332 million for the three months ended March 31, 2024, decreasing by 3.0% from $342 million for the three months ended March 31, 2023.

As a percentage of revenues, reported selling, general and administrative expenses for contract talent solutions were 37.4% in the first quarter of 2024, up from 32.1% in the first quarter of 2023.

Selling, general and administrative expenses for contract talent solutions, on an adjusted basis, were $300 million for the three months ended March 31, 2024, down 6.5% from $321 million for the three months ended March 31, 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses for contract talent solutions were 33.9% in the first quarter of 2024, up from 30.2% in the first quarter of 2023, due primarily to negative leverage as revenues decreased as a result of economic conditions during the quarter.

Selling, general and administrative expenses for permanent placement talent solutions were $117 million for the three months ended March 31, 2024, decreasing by 13.5% from $135 million for the three months ended March 31, 2023.

As a percentage of revenues, reported selling, general and administrative expenses for permanent placement talent solutions were 93.4% in the first quarter of 2024, up from 86.0% in the first quarter of 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement was 90.3% in the first quarter of 2024, up from 84.6% in the first quarter of 2023, due primarily to negative leverage as revenues decreased as a result of economic conditions during the quarter.

Selling, general and administrative expenses for Protiviti were $73 million for the three months ended March 31, 2024, decreasing by 2.9% from $75 million for the three months ended March 31, 2023.

As a percentage of revenues, selling, general and administrative expenses for Protiviti services were 15.8% in the first quarter of 2024, up from 15.3% in the first quarter of 2023, due primarily to negative leverage as revenues decreased as a result of economic conditions during the quarter.

The Company’s selling, general and administrative expenses by reportable segment are summarized as follows:

(in thousands):

Nine Months Ended September 30, Relationships

Three Months Ended March 31, Relationships

As Reported As Adjusted As Reported As Adjusted

8 unchanged sentences

Total $ 521,595 $ 552,229 $ 486,576 $ 529,710 35.3 % 32.2 % 33.0 % 30.9 %

The following tables provide reconciliations of the non-GAAP selling, general and administrative expenses to reported selling, general and administrative expenses for the nine months ended September 30, 2023 and 2022 (in thousands):

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

5 unchanged sentences

As Adjusted $ 300,452 33.9 % $ 112,693 90.3 % $ 73,431 15.8 % $ 486,576 33.0 %

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

5 unchanged sentences

As Adjusted $ 321,479 30.2 % $ 132,568 84.6 % $ 75,663 15.3 % $ 529,710 30.9 %

These adjustments have no impact on income before income taxes.

(Income) Loss from Investments Held in Employee Deferred Compensation Trusts .

Income from Investments Held in Employee Deferred Compensation Trusts .

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The value of the related investment trust assets also changes by the equal and offsetting amount, leaving no net costs to the Company.

The Company’s (income) loss from investments held in employee deferred compensation trusts was income of $41 million and a loss of $111 million for the nine months ended September 30, 2023 and 2022, respectively.

The income from trust investments was due to positive market returns during the first three quarters of 2023.

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 unaudited Condensed Consolidated Statements of Operations.

The Company’s income from investments held in employee deferred compensation trusts was $43 million and $27 million for the three months ended March 31, 2024 and 2023, respectively.

The income from trust investments during the first quarter of 2024 was due to positive market returns.

Income Before Income Taxes and Segment Income.

The Company’s total income before income taxes was $456 million, or 9.3% of revenues, for the nine months ended September 30, 2023, down from $694 million or 12.6% of revenues, for the nine months ended September 30, 2022.

Combined segment income was $441 million, or 9.0% of revenues, for the nine months ended September 30, 2023, down from $692 million, or 12.6% of revenues, for the nine months ended September 30, 2022.

The Company’s total income before income taxes was $91 million, or 6.1% of revenues, for the three months ended March 31, 2024, down from $169 million, or 9.8% of revenues, for the three months ended March 31, 2023.

Combined segment income was $85 million, or 5.7% of revenues, for the three months ended March 31, 2024, down from $165 million, or 9.6% of revenues, for the three months ended March 31, 2023.

The Company’s non-GAAP combined segment income is summarized as follows (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

2024 % of Revenue 2023 % of Revenue

4 unchanged sentences

Total $ 84,578 5.7 % $ 164,794 9.6 %

The following table provides a reconciliation of the non-GAAP combined segment income to reported income before income taxes for the nine months ended September 30, 2023, and 2022 (in thousands):

Nine Months Ended September 30,

The following table provides a reconciliation of the non-GAAP combined segment income to reported income before income taxes for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

2024 % of Revenue 2023 % of Revenue

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Provision for income taxes .

The provision for income taxes was 29.1% and 26.5% for the nine months ended September 30, 2023 and 2022, respectively.

The higher tax rate for 2023 can be attributed to an increased impact of nondeductible expenses and fewer tax credits.

The provision for income taxes was 29.8% and 27.8% for the three months ended March 31, 2024 and 2023, respectively.

The higher tax rate for 2024 can be attributed to the impact of nondeductible expenses and lower income tax benefit related to restricted stock vesting.

In 2021, the Organization for Economic Co-operation and Development established an inclusive framework on base erosion and profit shifting and agreed on a two-pillar solution (“Pillar Two”) to global taxation, focusing on global profit allocation and a 15% global minimum effective tax rate.

The Company considered the applicable tax law changes from Pillar Two implementation in the relevant countries, and there is no material impact to its tax provision for the three months ended March 31, 2024.

While the Company monitors developments and evaluates their potential impact on future periods, it does not expect Pillar Two to significantly impact its 2024 financial results.

Liquidity and Capital Resources

The change in the Company’s liquidity during the nine months ended September 30, 2023 and 2022, is primarily the net effect of funds generated by operations and the funds used for capital expenditures, investment in employee deferred compensation trusts, net of redemptions from employee deferred compensation trusts, repurchases of common stock, and payment of dividends.

Cash and cash equivalents were $729 million and $593 million at September 30, 2023 and 2022, respectively.

Operating activities provided cash flows of $522 million during the nine months ended September 30, 2023, offset by $91 million and $354 million of net cash used in investing activities and financing activities, respectively.

Operating activities provided cash flows of $481 million during the nine months ended September 30, 2022, offset by $72 million and $400 million of net cash used in investing activities and financing activities, respectively.

Fluctuations in foreign currency exchange rates had the effect of decreasing reported cash and cash equivalents by $6 million during the nine months ended September 30, 2023, compared to a decrease of $35 million during the nine months ended September 30, 2022.

Operating activities—Net cash provided by operating activities for the nine months ended September 30, 2023, was composed of net income of $324 million adjusted upward for non-cash items of $75 million and net cash provided by changes in working capital of $123 million.

Net cash provided by operating activities for the nine months ended September 30, 2022, was composed of net income of $510 million adjusted upward for non-cash items of $224 million, offset by net cash used in changes in working capital of $253 million.

Investing activities—Cash used in investing activities for the nine months ended September 30, 2023, was $91 million.

This was composed of capital expenditures of $34 million, investments in employee deferred compensation trusts of $89 million, and $1 million in payments related to an acquisition, partially offset by proceeds from employee deferred compensation trusts redemptions of $33 million.

Cash used in investing activities for the nine months ended September 30, 2022, was $72 million.

This was composed of capital expenditures of $49 million and investments in employee deferred compensation trusts of $52 million, partially offset by proceeds from employee deferred compensation trusts redemptions of $29 million.

Capital expenditures, including $28 million for cloud computing arrangements, for the nine months ended September 30, 2023, totaled $63 million, approximately 68.0% of which represented investments in software initiatives and technology infrastructure, both of which are important to the Company’s sustainability and future growth opportunities.

The change in the Company’s liquidity during the three months ended March 31, 2024 and 2023, is primarily the net effect of funds generated by operations and the funds used for capital expenditures, investment in employee deferred compensation trusts, net of redemptions from employee deferred compensation trusts, repurchases of common stock, and payment of dividends.

Cash and cash equivalents were $541 million and $548 million at March 31, 2024 and 2023, respectively.

Operating activities used net cash flows of $16 million during the three months ended March 31, 2024, combined with $22 million and $144 million of net cash used in investing activities and financing activities, respectively.

Operating activities provided cash flows of $66 million during the three months ended March 31, 2023, offset by $63 million and $117 million of net cash used in investing activities and financing activities, respectively.

Fluctuations in foreign currency exchange rates had the effect of decreasing reported cash and cash equivalents by $9 million during the three months ended March 31, 2024, compared to an increase of $3 million during the three months ended March 31, 2023.

Operating activities—Net cash used in operating activities for the three months ended March 31, 2024, was composed of net income of $64 million adjusted upward for non-cash items of $5 million, offset by net cash used in changes in working capital of $85 million.

Net cash provided by operating activities for the three months ended March 31, 2023, was composed of net income of $122 million adjusted upward for non-cash items of $17 million, offset by net cash used in changes in working capital of $73 million.

Investing activities—Cash used in investing activities for the three months ended March 31, 2024, was $22 million.

This was composed of capital expenditures of $12 million, investments in employee deferred compensation trusts of $33 million, partially offset by proceeds from employee deferred compensation trusts redemptions of $23 million .

Cash used in investing activities for the three months ended March 31, 2023, was $63 million.

This was composed of capital expenditures of $9 million and investments in employee deferred compensation trusts of $71 million, and $1 million in payments related to an acquisition, partially offset by proceeds from employee deferred compensation trusts redemptions of $18 million.

Capital expenditures, including $8 million for cloud computing arrangements, for the three months ended March 31, 2024, totaled $20 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 Condensed Consolidated Statements of Cash Flows.

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The Company currently expects that 2024 capital expenditures will range from $90 million to $110 million, of which $50 million to $60 million relates to software initiatives and technology infrastructure, including capitalized costs related to implementation of cloud computing arrangements.

Financing activities—Cash used in financing activities for the nine months ended September 30, 2023, was $354 million.

Financing activities—Cash used in financing activities for the three months ended March 31, 2024, was $144 million.

This included repurchases of $86 million in common stock and $58 million in dividends paid to stockholders.

Cash used in financing activities for the nine months ended September 30, 2022, was $400 million.

Cash used in financing activities for the three months ended March 31, 2023, was $117 million.

This included repurchases of $63 million in common stock and $54 million in dividends paid to stockholders.

As of September 30, 2023, the Company is authorized to repurchase, from time to time, up to 11.5 million additional shares of the Company’s common stock on the open market or in privately negotiated transactions, depending on market conditions.

During the nine months ended September 30, 2023 and 2022, the Company repurchased 2.4 million shares, at a cost of $175 million, and 2.5 million shares, at a cost of $219 million, on the open market, respectively.

As of March 31, 2024, the Company is authorized to repurchase, from time to time, up to 10.0 million additional shares of the Company’s common stock on the open market or in privately negotiated transactions, depending on market conditions.

During the three months ended March 31, 2024 and 2023, the Company repurchased 0.8 million shares, at a cost of $61 million, and 0.5 million shares, at a cost of $38 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 exercise price and applicable statutory withholding taxes.

During the nine months ended September 30, 2023 and 2022, such repurchases totaled 0.3 million shares, at a cost of $22 million, and 0.3 million shares, at a cost of $33 million, respectively.

During the three months ended March 31, 2024 and 2023, such repurchases totaled 0.3 million shares, at a cost of $21 million, and 0.3 million shares, at a cost of $22 million, respectively.

Repurchases of shares have been funded with cash generated from operations.

The Company’s working capital at September 30, 2023, included $729 million in cash and cash equivalents and $941 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.

The Company’s working capital at March 31, 2024, included $541 million in cash and cash equivalents and $861 million in net accounts receivable, both of which will be a significant source of ongoing liquidity and financial resilience.

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.

In May 2023, the Company entered into an amendment to extend the maturity of its $100.0 million unsecured revolving credit facility (the “Credit Agreement”) to May 2026.

Borrowings under the Credit Agreement will bear interest in accordance with the terms of the borrowing which, effective May 2023, will be calculated according to the Adjusted Term Secured Overnight Financing Rate (“SOFR”), or an alternative base rate, plus an applicable margin.

The Credit Agreement is subject to certain financial covenants and the Company was in compliance with these covenants as of September 30, 2023.

There were no borrowings under the Credit Agreement as of September 30, 2023, or December 31, 2022.

On October 30, 2023, the Company announced a quarterly dividend of $0.48 per share to be paid to all shareholders of record as of November 24, 2023.

The dividend will be paid on December 15, 2023.

The Company has an unsecured revolving credit facility (the “Credit Agreement”) of $100.0 million, which matures in May 2026.

Borrowings under the Credit Agreement will bear interest in accordance with the terms of the borrowing will be calculated according to the Adjusted Term Secured Overnight Financing Rate (“SOFR”), or an alternative base rate, plus an applicable margin.

The Credit Agreement is subject to certain financial covenants and the Company was in compliance with these covenants as of March 31, 2024.

There were no borrowings under the Credit Agreement as of March 31, 2024, or December 31, 2023.

On May 1, 2024, the Company announced a quarterly dividend of $0.53 per share to be paid to all shareholders of record as of May 24, 2024.

The dividend will be paid on June 14, 2024.

Material Cash Requirements from Contractual Obligations

As of September 30, 2023, the Company reported current and long-term operating lease liabilities of $81 million and $134 million, respectively.

These balances consist of the minimum rental commitments for October 2023 and thereafter, discounted to reflect the Company’s cost of borrowing, under noncancellable lease contracts executed as of September 30, 2023.

As of March 31, 2024, the Company reported current and long-term operating lease liabilities of $76 million and $165 million, respectively.

These balances consist of the minimum rental commitments for April 2024 and thereafter, discounted to reflect the Company’s cost of borrowing, under noncancellable lease contracts executed as of March 31, 2024.

The majority of these leases are for real estate.

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Purchase Obligations.

Purchase obligations are discussed in more detail in Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

There have been no material changes to the Company’s contractual purchase obligations during the first three quarters of 2023.

Purchase obligations are discussed in more detail in Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

There have been no material changes to the Company’s contractual purchase obligations during the first quarter of 2024.

Employee Deferred Compensation Plan.

As of September 30, 2023, the Company reported employee deferred compensation plan obligations of $519 million in its accompanying unaudited Condensed Consolidated Statements of Financial Position.

As of March 31, 2024, the Company reported employee deferred compensation plan obligations of $608 million in its accompanying unaudited Condensed 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 at March 31, 2024, are substantially equal to 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.

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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-Q

Item 2. Management’s Discussion and Analysis