What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-31 compared with 2024-05-02 · 271 added, 103 removed, 219 unchanged (63% of the section changed)

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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 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 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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Executive Overview

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.

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

Revenue and net income results for the second quarter were within the range of management’s expectations.

Client and candidate caution continues to impact hiring activity and new project starts as macroeconomic and interest rate uncertainty persists.

During the first half of 2024, service revenues were $2.95 billion, a decrease of 12.1% from the prior year.

Net income was $132 million and diluted net income per share was $1.27.

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.

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.

real gross domestic product increased 2.8% during the first half of 2024, while the unemployment rate increased from 3.7% for December 2023 to 4.1% at the end of the second quarter of 2024.

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

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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.

Client budgets remain constrained, and candidates are reluctant to change jobs.

This subdues short-term demand and elongates sales cycles.

However, job openings remain elevated and are indicative of pent-up future demand.

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

Clients continue to hire, but are generally maintaining internal headcounts based on the anticipated difficulty in finding suitable replacements, resulting in less churn in the labor markets.

The Company continues to invest in services involving higher-skilled positions across its practice groups.

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 continues to invest in technology and innovation to fuel the Company’s core business strategy, which combines the skills, judgment and expertise of the Company’s specialized talent solutions professionals with world-class AI tools.

The Company 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 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.

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

In addition, the full-time headcount for Protiviti increased 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 three months ended March 31, 2024.

There were no material changes to the Company’s critical accounting policies or estimates for the six months ended June 30, 2024.

Recent Accounting Pronouncements

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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 March 31, 2024 and 2023

Three Months Ended June 30, 2024 and 2023

Service Revenues.

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.

The Company’s revenues were $1.47 billion for the three months ended June 30, 2024, a decrease of 10.2% compared to $1.64 billion for the three months ended June 30, 2023.

Revenues from U.S.

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.

operations decreased 9.6% to $1.15 billion (78.1% of total revenue) for the three months ended June 30, 2024, compared to $1.27 billion (77.6% of total revenue) for the three months ended June 30, 2023.

Revenues from international operations decreased 12.2% to $323 million (21.9% of total revenue) for the three months ended June 30, 2024, compared to $368 million (22.4% of total revenue) for the three months ended June 30, 2023.

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

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.

Contract talent solutions revenues were $855 million for the three months ended June 30, 2024, decreasing by 14.5% compared to revenues of $1.00 billion for the three months ended June 30, 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 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.

The decrease in contract talent solutions revenues for the three months ended June 30, 2024, was primarily due to a 14.8% decrease in the number of hours worked by the Company’s engagement professionals, partially offset by a 1.1% increase in average bill rates.

On an as adjusted basis, contract talent solutions revenues decreased 14.4% for the second quarter of 2024, compared to the second quarter of 2023.

In the U.S., revenues in the second quarter of 2024 decreased 15.7% on an as reported basis, and decreased 15.8% on an as adjusted basis, compared to the second quarter of 2023.

International revenues for the second quarter of 2024 decreased 10.0% on an as reported basis, and decreased 9.4% on an as adjusted basis compared to the second quarter of 2023.

Permanent placement talent solutions revenues were $131 million for the three months ended June 30, 2024, decreasing by 12.2% compared to revenues of $149 million for the three months ended June 30, 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 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.

The decrease in permanent placement talent revenues for the three months ended June 30, 2024, was due to a 13.4% decrease in the number of placements, partially offset by a 1.2% increase in average fees earned per placement.

On an as adjusted basis, permanent placement talent solutions revenues decreased 12.0% for the second quarter of 2024, compared to the second quarter of 2023.

In the U.S., revenues for the second quarter of 2024 decreased 11.5% on an as reported basis, and decreased 11.7% on an as adjusted basis, compared to the second quarter of 2023.

International revenues for the second quarter of 2024 decreased 13.8% on an as reported basis and decreased 13.0% on an as adjusted basis, compared to the second 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 $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.

Protiviti revenues were $487 million for the three months ended June 30, 2024, decreasing by 0.9% compared to revenues of $491 million for the three months ended June 30, 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 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:

The decrease in Protiviti revenues for the three months ended June 30, 2024, was due to a 1.5% decrease in billable hours, partially offset by a 0.6% increase in average hourly bill rates.

On an as adjusted basis, Protiviti revenues decreased 0.9% for the second quarter of 2024, compared to the second quarter of 2023.

In the U.S., revenues in the second quarter of 2024 increased 3.3% on an as reported basis, and increased 3.1% on an as adjusted basis, compared to the second quarter of 2023.

International revenues for the second quarter of 2024 decreased 16.2% on an as reported basis and decreased 15.9% on an as adjusted basis, compared to the second 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 June 30, 2024, is presented in the following table:

Global United States International

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Gross Margin .

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.

The Company’s gross margin dollars were $577 million for the three months ended June 30, 2024, down 12.6% from $660 million for the three months ended June 30, 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 $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.

Gross margin dollars for contract talent solutions were $336 million for the three months ended June 30, 2024, decreasing by 15.7% from $399 million for the three months ended June 30, 2023.

As a percentage of revenues, gross margin dollars for contract talent solutions were 39.3% in the second quarter of 2024, down from 39.9% in the second 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 $124 million for the three months ended March 31, 2024, down 20.4% from $156 million for the three months ended March 31, 2023.

Gross margin dollars for permanent placement talent solutions were $131 million for the three months ended June 30, 2024, down 12.2% from $149 million for the three months ended June 30, 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 $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.

Gross margin dollars for Protiviti were $110 million for the three months ended June 30, 2024, down 2.5% from $112 million for the three months ended June 30, 2023.

As a percentage of revenues, reported gross margin dollars for Protiviti were 22.5% in the second quarter of 2024, down from 22.9% in the second quarter of 2023.

As a percentage of revenues, adjusted gross margin dollars for Protiviti were 23.2% in the second quarter of 2024, down from 24.0% in the second quarter of 2023.

The year-over-year decrease in adjusted gross margin percentage was primarily due to the relative composition of and number of professional staff and their respective pay and bill rates

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

Three Months Ended March 31, Relationships

Three Months Ended June 30, Relationships

As Reported As Adjusted As Reported As Adjusted

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Total $ 576,679 $ 660,169 $ 579,909 $ 665,493 39.2 % 40.3 % 39.4 % 40.6 %

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

The following tables provide reconciliations of the non-GAAP adjusted gross margin to reported gross margin for the three months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30, 2024

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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As Adjusted $ 336,161 39.3 % $ 130,801 99.8 % $ 112,947 23.2 % $ 579,909 39.4 %

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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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 $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.

The Company’s reported selling, general and administrative expenses were $501 million for the three months ended June 30, 2024, decreasing by 7.6% from $542 million for the three months ended June 30, 2023.

As a percentage of revenues, reported selling, general and administrative expenses were 34.0% in the second quarter of 2024, up from 33.1% in the second quarter of 2023.

The Company’s adjusted selling, general and administrative expenses were $488 million for the three months ended June 30, 2024, down 5.9% from $519 million for the three months ended June 30, 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses were 33.2% in the second quarter of 2024, up from 31.6% in the second 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 $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.

Selling, general and administrative expenses for contract talent solutions, on an as reported basis, were $309 million for the three months ended June 30, 2024, decreasing by 8.5% from $338 million for the three months ended June 30, 2023.

As a percentage of revenues, reported selling, general and administrative expenses for contract talent solutions were 36.1% in the second quarter of 2024, up from 33.8% in the second quarter of 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses for contract talent solutions were 34.9% in the second quarter of 2024, up from 31.8% in the second 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 $116 million for the three months ended June 30, 2024, decreasing by 10.4% from $130 million for the three months ended June 30, 2023.

As a percentage of revenues, reported selling, general and administrative expenses for permanent placement talent solutions were 88.7% in the second quarter of 2024, up from 87.0% in the second quarter of 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement was 87.5% in the second quarter of 2024, up from 85.3% in the second 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 $76 million for the three months ended June 30, 2024, increasing by 1.8% from $74 million for the three months ended June 30, 2023.

As a percentage of revenues, selling, general and administrative expenses for Protiviti services were 15.6% in the second quarter of 2024, up from 15.1% in the second quarter of 2023.

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

(in thousands):

Three Months Ended March 31, Relationships

Three Months Ended June 30, Relationships

As Reported As Adjusted As Reported As Adjusted

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Total $ 500,832 $ 541,904 $ 488,329 $ 518,881 34.0 % 33.1 % 33.2 % 31.6 %

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 March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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As Adjusted $ 298,015 34.9 % $ 114,653 87.5 % $ 75,661 15.6 % $ 488,329 33.2 %

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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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.

This incremental expense is completely offset by investment income related to the employee deferred compensation trust.

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 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.

The Company’s income from investments held in employee deferred compensation trusts was $16 million and $28 million for the three months ended June 30, 2024 and 2023, respectively.

The income from trust investments during the second 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 $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 total income before income taxes was $96 million, or 6.6% of revenues, for the three months ended June 30, 2024, down from $151 million, or 9.2% of revenues, for the three months ended June 30, 2023.

Combined segment income was $92 million, or 6.2% of revenues, for the three months ended June 30, 2024, down from $147 million, or 8.9% of revenues, for the three months ended June 30, 2023.

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

Three Months Ended March 31,

Three Months Ended June 30,

2024 % of Revenue 2023 % of Revenue

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Total $ 91,580 6.2 % $ 146,612 8.9 %

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,

The following table provides a reconciliation of the non-GAAP combined segment income to reported income before income taxes for the three months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

2024 % of Revenue 2023 % of Revenue

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Provision for income taxes .

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.

The provision for income taxes was 29.3% and 29.7% for the three months ended June 30, 2024 and 2023, respectively.

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.

The Company continues to monitor developments and evaluate any potential tax impacts from Pillar Two.

There were no material impacts for the three months ended June 30, 2024, nor are any expected throughout the remainder of 2024.

Six Months Ended June 30, 2024 and 2023

Service Revenues.

The Company’s revenues were $2.95 billion for the six months ended June 30, 2024, a decrease of 12.1% compared to $3.36 billion for the six months ended June 30, 2023.

Revenues from U.S.

operations decreased 12.3% to $2.29 billion (77.7% of total revenue) for the six months ended June 30, 2024, compared to $2.61 billion (77.9% of total revenue) for the six months ended June 30, 2023.

Revenues from international operations decreased 11.6% to $657 million (22.3% of total revenue) for the six months ended June 30, 2024, compared to $743 million (22.1% of total revenue) for the six months ended June 30, 2023.

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

Contract talent solutions revenues were $1.74 billion for the six months ended June 30, 2024, decreasing by 15.6% compared to revenues of $2.07 billion for the six months ended June 30, 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 six months ended June 30, 2024, was primarily due to a 16.5% decrease in the number of hours worked by the Company’s engagement professionals, partially offset by a 1.7% increase in average bill rates.

On an as adjusted basis, contract talent solutions revenues in the first half of 2024 decreased 15.3% compared to the first half of 2023.

In the U.S., revenues in the first half of 2024 decreased 17.4% on an as reported basis, and decreased 17.3% on as adjusted basis, compared to the first half of 2023.

International revenues for the first half of 2024 decreased 9.2% on an as reported basis, and decreased 8.4% on an as adjusted basis, compared to the first half of 2023.

Permanent placement talent solutions revenues were $256 million for the six months ended June 30, 2024, decreasing by 16.4% compared to revenues of $306 million for the six months ended June 30, 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 staffing revenues for the six months ended June 30, 2024, was due to a 20.0% decrease in the number of placements, partially offset by a 3.6% increase in average fees earned per placement.

On an as adjusted basis, permanent placement talent solutions revenues decreased 16.0% for the first half of 2024, compared to the first half of 2023.

In the U.S., revenues for the first half of 2024 decreased 15.5% on an as reported basis, and decreased 15.3% on an as adjusted basis, compared to the first half of 2023.

International revenues for the first half of 2024 decreased 18.6% on an as reported basis, and decreased 17.7% on an as adjusted basis, compared to the first half of 2023.

Protiviti revenues were $951 million for the six months ended June 30, 2024, decreasing by 3.5% compared to revenues of $985 million for the six months ended June 30, 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 six months ended June 30, 2024, was due to a 5.4% decrease in billable hours, partially offset by a 1.9% increase in average hourly bill rates.

On an as adjusted basis, Protiviti revenues decreased 3.1% for the first half of 2024, compared to the first half of 2023.

In the U.S., revenues in the first half of 2024 decreased 0.8% on an as reported basis, and decreased 0.6% on an as adjusted basis, compared to the first half of 2023.

International revenues in the first half of 2024 decreased 13.8% on an as reported basis, and decreased 13.1% on an as adjusted basis, compared to the first half 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 six months ended June 30, 2024, is presented in the following table:

Global United States International

Contract talent solutions

As Reported -15.6 % -17.4 % -9.2 %

Billing Days Impact 0.2 % 0.1 % 0.3 %

Currency Impact 0.1 % ― 0.5 %

As Adjusted -15.3 % -17.3 % -8.4 %

Permanent placement talent solutions

As Reported -16.4 % -15.5 % -18.6 %

Billing Days Impact 0.2 % 0.2 % 0.1 %

Currency Impact 0.2 % ― 0.8 %

As Adjusted -16.0 % -15.3 % -17.7 %

As Reported -3.5 % -0.8 % -13.8 %

Billing Days Impact 0.3 % 0.2 % 0.2 %

Currency Impact 0.1 % ― 0.5 %

As Adjusted -3.1 % -0.6 % -13.1 %

Gross Margin .

The Company’s gross margin dollars were $1.14 billion for the six months ended June 30, 2024, down 15.6% from $1.35 billion for the six months ended June 30, 2023.

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 $687 million for the six months ended June 30, 2024, down 16.5% from $822 million for the six months ended June 30, 2023.

As a percentage of revenues, gross margin dollars for contract talent solutions were 39.4% in the first half of 2024, down from 39.8% in the first half 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 $255 million for the six months ended June 30, 2024, down 16.4% from $305 million for the six months ended June 30, 2023.

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 $197 million for the six months ended June 30, 2024, down 11.2% from $222 million for the six months ended June 30, 2023.

As a percentage of revenues, reported gross margin dollars for Protiviti were 20.8% in the first half of 2024, down from 22.6% in the first half of 2023.

As a percentage of revenues, adjusted gross margin dollars for Protiviti were 22.0% in the first half of 2024, down from 23.6% in the first half of 2023.

The year-over-year decrease in adjusted gross margin percentage was primarily due to the relative composition of and number of professional staff and their respective pay and bill rates

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

(in thousands):

Six Months Ended June 30, Relationships

As Reported As Adjusted As Reported As Adjusted

2024 2023 2024 2023 2024 2023 2024 2023

Contract talent solutions

$ 686,731 $ 822,261 $ 686,731 $ 822,261 39.4 % 39.8 % 39.4 % 39.8 %

Permanent placement talent solutions

255,349 305,370 255,349 305,370 99.8 % 99.8 % 99.8 % 99.8 %

197,396 222,270 208,983 232,366 20.8 % 22.6 % 22.0 % 23.6 %

Total $ 1,139,476 $ 1,349,901 $ 1,151,063 $ 1,359,997 38.6 % 40.2 % 39.0 % 40.5 %

The following tables provide reconciliations of the non-GAAP adjusted gross margin to reported gross margin for the six months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended June 30, 2024

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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

As Reported $ 686,731 39.4 % $ 255,349 99.8 % $ 197,396 20.8 % $ 1,139,476 38.6 %

Adjustments (1) — — — — 11,587 1.2 % 11,587 0.4 %

As Adjusted $ 686,731 39.4 % $ 255,349 99.8 % $ 208,983 22.0 % $ 1,151,063 39.0 %

Six Months Ended June 30, 2023

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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

As Reported $ 822,261 39.8 % $ 305,370 99.8 % $ 222,270 22.6 % $ 1,349,901 40.2 %

Adjustments (1) — — — — 10,096 1.0 % 10,096 0.3 %

As Adjusted $ 822,261 39.8 % $ 305,370 99.8 % $ 232,366 23.6 % $ 1,359,997 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 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.

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 reported selling, general and administrative expenses were $1.02 billion for the six months ended June 30, 2024, down 6.6% from $1.09 billion for the six months ended June 30, 2023.

As a percentage of revenues, reported selling, general and administrative expenses were 34.7% in the first half of 2024, up from 32.6% in the first half of 2023.

The Company’s adjusted selling, general and administrative expenses were $975 million for the six months ended June 30, 2024, down 7.0% from $1.05 billion for the six months ended June 30, 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses were 33.1% in the first half of 2024, up from 31.2% in the first half 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 $640 million for the six months ended June 30, 2024, decreasing by 5.7% from $679 million for the six months ended June 30, 2023.

As a percentage of revenues, reported selling, general and administrative expenses for contract talent solutions were 36.8% in the first half of 2024, up from 32.9% in the first half of 2023.

Selling, general and administrative expenses for contract talent solutions, on an adjusted basis, were $598 million for the six months ended June 30, 2024, down 6.3% from $639 million for the six months ended June 30, 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses for contract talent solutions were 34.4% in the first half of 2024, up from 30.9% in the first half of 2023, 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 $233 million for the six months ended June 30, 2024, decreasing by 12.0% from $265 million for the six months ended June 30, 2023.

As a percentage of revenues, reported selling, general and administrative expenses for permanent placement talent solutions were 91.0% in the first half of 2024, up from 86.5% in the first half of 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement talent solutions were 88.9% in the first half of 2024, up from 84.9% in the first half of 2023, due primarily to negative leverage as revenues decreased as a result of economic conditions.

Selling, general and administrative expenses for Protiviti were $149 million for the six months ended June 30, 2024, decreasing by 0.6% from $150 million for the six months ended June 30, 2023.

As a percentage of revenues, selling, general and administrative expenses for Protiviti were 15.7% in the first half of 2024, up from 15.2% in the first half of 2023, due primarily to negative leverage as revenues decreased as a result of economic conditions.

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

(in thousands):

Six Months Ended June 30, Relationships

As Reported As Adjusted As Reported As Adjusted

2024 2023 2024 2023 2024 2023 2024 2023

Selling, General and

Administrative Expenses

Contract talent solutions

$ 640,474 $ 679,464 $ 598,467 $ 638,799 36.8 % 32.9 % 34.4 % 30.9 %

Permanent placement talent solutions

232,861 264,690 227,346 259,813 91.0 % 86.5 % 88.9 % 84.9 %

149,092 149,979 149,092 149,979 15.7 % 15.2 % 15.7 % 15.2 %

Total $ 1,022,427 $ 1,094,133 $ 974,905 $ 1,048,591 34.7 % 32.6 % 33.1 % 31.2 %

The following tables provide reconciliations of the non-GAAP selling, general and administrative expenses to reported selling, general and administrative expenses for the six months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended June 30, 2024

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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

Selling, General and

Administrative Expenses

As Reported $ 640,474 36.8 % $ 232,861 91.0 % $ 149,092 15.7 % $ 1,022,427 34.7 %

Adjustments (1) (42,007) (2.4 %) (5,515) (2.1 %) — — (47,522) (1.6 %)

As Adjusted $ 598,467 34.4 % $ 227,346 88.9 % $ 149,092 15.7 % $ 974,905 33.1 %

Six Months Ended June 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 $ 679,464 32.9 % $ 264,690 86.5 % $ 149,979 15.2 % $ 1,094,133 32.6 %

Adjustments (1) (40,665) (2.0 %) (4,877) (1.6 %) — — (45,542) (1.4 %)

As Adjusted $ 638,799 30.9 % $ 259,813 84.9 % $ 149,979 15.2 % $ 1,048,591 31.2 %

(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 is presented separately.

These adjustments have no impact on income before income taxes.

Income 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.

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 from investments held in employee deferred compensation trusts was $59 million and $56 million for the six months ended June 30, 2024 and 2023, respectively.

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

Income Before Income Taxes and Segment Income.

The Company’s total income before income taxes was $187 million, or 6.3% of revenues, for the six months ended June 30, 2024, down from $320 million, or 9.5% of revenues, for the six months ended June 30, 2023.

Combined segment income was $176 million, or 6.0% of revenues, for the six months ended June 30, 2024, down from $311 million, or 9.3% of revenues, for the six months ended June 30, 2023.

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

Six Months Ended June 30,

2024 % of Revenue 2023 % of Revenue

Combined Segment Income

Contract talent solutions $ 88,264 5.1 % $ 183,462 8.9 %

Permanent placement talent solutions 28,003 10.9 % 45,557 14.9 %

Protiviti 59,891 6.3 % 82,387 8.4 %

Total $ 176,158 6.0 % $ 311,406 9.3 %

The following table provides a reconciliation of the non-GAAP combined segment income to reported income before income taxes for the six months ended June 30, 2024, and 2023 (in thousands):

Six Months Ended June 30,

2024 % of Revenue 2023 % of Revenue

Income before income taxes $ 187,149 6.3 % $ 320,109 9.5 %

Interest income, net (11,599) (0.3 %) (10,145) (0.2) %

Amortization of intangible assets 608 0.0 % 1,442 0.0 %

Combined segment income $ 176,158 6.0 % $ 311,406 9.3 %

Provision for income taxes .

The provision for income taxes was 29.5% and 28.7% for the six months ended June 30, 2024 and 2023, respectively.

The higher tax rate for 2024 can primarily be attributed to the impact of nondeductible expenses.

Liquidity and Capital Resources

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.

The change in the Company’s liquidity during the six months ended June 30, 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 $547 million and $723 million at June 30, 2024 and 2023, respectively.

Operating activities provided cash flows of $126 million during the six months ended June 30, 2024, partially offset by $38 million and $258 million of net cash used in investing activities and financing activities, respectively.

Operating activities provided cash flows of $347 million during the six months ended June 30, 2023, offset by $78 million and $210 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 $15 million during the six months ended June 30, 2024, compared to an increase of $5 million during the six months ended June 30, 2023.

Operating activities—Net cash used in operating activities for the six months ended June 30, 2024, was composed of net income of $132 million adjusted upward for non-cash items of $19 million, offset by net cash used in changes in working capital of $25 million.

Net cash provided by operating activities for the six months ended June 30, 2023, was composed of net income of $228 million adjusted upward for non-cash items of $22 million and net cash provided by changes in working capital of $97 million.

Investing activities—Cash used in investing activities for the six months ended June 30, 2024, was $38 million.

This was composed of capital expenditures of $24 million and investments in employee deferred compensation trusts of $43 million, partially offset by proceeds from employee deferred compensation trusts redemptions of $29 million.

Cash used in investing activities for the six months ended June 30, 2023, was $78 million.

This was composed of capital expenditures of $19 million, investments in employee deferred compensation trusts of $82 million, and $1 million in payments related to an acquisition, partially offset by proceeds from employee deferred compensation trusts redemptions of $24 million.

Capital expenditures, including $16 million for cloud computing arrangements, for the six months ended June 30, 2024, totaled $40 million, approximately 64% 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 $80 million to $100 million, of which $40 million to $50 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 three months ended March 31, 2024, was $144 million.

Financing activities—Cash used in financing activities for the six months ended June 30, 2024, was $258 million.

This included repurchases of $146 million in common stock and $112 million in dividends paid to stockholders.

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

Cash used in financing activities for the six months ended June 30, 2023, was $210 million.

This included repurchases of $105 million in common stock and $105 million in dividends paid to stockholders.

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.

As of June 30, 2024, the Company is authorized to repurchase, from time to time, up to 9.1 million additional shares of the Company’s common stock on the open market or in privately negotiated transactions, depending on market conditions.

During the six months ended June 30, 2024 and 2023, the Company repurchased 1.7 million shares, at a cost of $121 million, and 1.1 million shares, at a cost of $83 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 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.

During the six months ended June 30, 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 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.

The Company’s working capital at June 30, 2024, included $547 million in cash and cash equivalents and $893 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.

There is limited visibility into future cash flows as the Company’s revenues and net income are largely dependent on macroeconomic conditions.

1 unchanged sentence

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.

Borrowings under the Credit Agreement will bear interest in accordance with the terms of the borrowing and 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 June 30, 2024.

There were no borrowings under the Credit Agreement as of June 30, 2024, or December 31, 2023.

On July 30, 2024, the Company announced a quarterly dividend of $0.53 per share to be paid to all shareholders of record as of August 23, 2024.

The dividend will be paid on September 13, 2024.

Material Cash Requirements from Contractual Obligations

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.

As of June 30, 2024, the Company reported current and long-term operating lease liabilities of $71 million and $168 million, respectively.

These balances consist of the minimum rental commitments for July 2024 and thereafter, discounted to reflect the Company’s cost of borrowing, under noncancellable lease contracts executed as of June 30, 2024.

The majority of these leases are for real estate.

3 unchanged sentences

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.

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

Employee Deferred Compensation Plan.

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.

As of June 30, 2024, the Company reported employee deferred compensation plan obligations of $628 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.

These obligations are funded through contributions to investment trusts, whose assets as of June 30, 2024, were 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.

1 unchanged sentence

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