What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-30 compared with 2024-07-31 · 167 added, 172 removed, 318 unchanged (52% of the section changed)

37 unchanged sentences

Executive Overview

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.

Revenue and net income results for the third quarter exceeded management’s expectations, driven by strong results from Protiviti, which posted sequential and year-on-year revenue gains.

While client budgets remain constrained and decision cycles extended, business confidence levels are improving, aided by continuing progress on inflation and the beginning of a global rate-cutting cycle.

Consistent with this trend, the Company’s recent weekly sequential results in contract talent have reflected increased stability.

During the first three quarters of 2024, service revenues were $4.41 billion, a decrease of 10.3% from the prior year.

Net income was $197 million, and diluted net income per share was $1.91.

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 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.

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 2.4%.

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

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 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.

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

Although sales cycles are still elongated, job openings remain significantly above historical averages, indicating substantial pent-up demand for talent.

While the tightness of the labor supply has eased somewhat, the unemployment rate in the U.S.

for those with a college degree is still only 2.3%, with rates for many in-demand accounting, finance and IT positions even lower.

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

The Company continues to invest in technology and innovation to fuel its core business strategy.

The Company’s proprietary “Recruiters plus award-winning AI” strategy offers significant added value to its clients.

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 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.

During the first three quarters of 2024, the Company decreased headcount for its contract talent solutions and permanent placement talent solutions segments, when compared to prior year-end levels.

In addition, the full-time headcount for Protiviti increased when compared to prior year-end levels.

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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 six months ended June 30, 2024.

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

Recent Accounting Pronouncements

3 unchanged sentences

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, administrative and customer support, and executive searches.

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

2 unchanged sentences

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.

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

and 13 other 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 June 30, 2024 and 2023

Three Months Ended September 30, 2024 and 2023

Service Revenues.

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.

The Company’s revenues were $1.47 billion for the three months ended September 30, 2024, a decrease of 6.3% compared to $1.56 billion for the three months ended September 30, 2023.

Revenues from U.S.

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.

operations decreased 5.2% to $1.15 billion (78.2% of total revenue) for the three months ended September 30, 2024, compared to $1.21 billion (77.3% of total revenue) for the three months ended September 30, 2023.

Revenues from international operations decreased 10.2% to $319 million (21.8% of total revenue) for the three months ended September 30, 2024, compared to $355 million (22.7% of total revenue) for the three months ended September 30, 2023.

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

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.

Contract talent solutions revenues were $831 million for the three months ended September 30, 2024, decreasing by 11.9% compared to revenues of $943 million for the three months ended September 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 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.

The decrease in contract talent solutions revenues for the three months ended September 30, 2024, was primarily due to a 12.8% decrease in the number of hours worked by the Company’s engagement professionals, partially offset by a 1.4% increase in average bill rates.

On an as adjusted basis, contract talent solutions revenues decreased 13.2% for the third quarter of 2024, compared to the third quarter of 2023.

In the U.S., revenues in the third quarter of 2024 decreased 12.4% on an as reported basis, and decreased 13.7% on an as adjusted basis, compared to the third quarter of 2023.

International revenues for the third quarter of 2024 decreased 10.6% on an as reported basis, and decreased 11.7% on an as adjusted basis compared to the third quarter of 2023.

Permanent placement talent solutions revenues were $123 million for the three months ended September 30, 2024, decreasing by 11.9% compared to revenues of $140 million for the three months ended September 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 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.

The decrease in permanent placement talent revenues for the three months ended September 30, 2024, was due to a 13.6% decrease in the number of placements, partially offset by a 1.7% increase in average fees earned per placement.

On an as adjusted basis, permanent placement talent solutions revenues decreased 13.2% for the third quarter of 2024, compared to the third quarter of 2023.

In the U.S., revenues for the third quarter of 2024 decreased 9.0% on an as reported basis, and decreased 10.4% on an as adjusted basis, compared to the third quarter of 2023.

International revenues for the third quarter of 2024 decreased 18.6% on an as reported basis and decreased 19.8% on an as adjusted basis, compared to the third 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 $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.

Protiviti revenues were $511 million for the three months ended September 30, 2024, increasing by 6.4% compared to revenues of $481 million for the three months ended September 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 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:

The increase in Protiviti revenues for the three months ended September 30, 2024, was due to a 4.4% increase in average hourly bill rates, and a 2.0% increase in billable hours.

On an as adjusted basis, Protiviti revenues increased 4.5% for the third quarter of 2024, compared to the third quarter of 2023.

In the U.S., revenues in the third quarter of 2024 increased 9.3% on an as reported basis, and increased 7.6% on an as adjusted basis, compared to the third quarter of 2023.

International revenues for the third quarter of 2024 decreased 5.6% on an as reported basis and decreased 8.1% on an as adjusted basis, compared to the third 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 September 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 $577 million for the three months ended June 30, 2024, down 12.6% from $660 million for the three months ended June 30, 2023.

The Company’s gross margin dollars were $572 million for the three months ended September 30, 2024, down 10.8% from $641 million for the three months ended September 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 $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 contract talent solutions were $323 million for the three months ended September 30, 2024, decreasing by 13.9% from $375 million for the three months ended September 30, 2023.

As a percentage of revenues, gross margin dollars for contract talent solutions were 38.9% in the third quarter of 2024, down from 39.8% in the third quarter of 2023.

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

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

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.

Gross margin dollars for permanent placement talent solutions were $123 million for the three months ended September 30, 2024, down 11.9% from $140 million for the three months ended September 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 $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

Gross margin dollars for Protiviti were $126 million for both the three months ended September 30, 2024 and 2023.

As a percentage of revenues, reported gross margin dollars for Protiviti were 24.6% in the third quarter of 2024, down from 26.2% in the third quarter of 2023.

As a percentage of revenues, adjusted gross margin dollars for Protiviti were 25.8% in the third quarter of 2024, up from 25.6% in the third quarter of 2023.

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

Three Months Ended June 30, Relationships

Three Months Ended September 30, Relationships

As Reported As Adjusted As Reported As Adjusted

6 unchanged sentences

Total $ 571,656 $ 640,939 $ 577,746 $ 638,094 39.0 % 41.0 % 39.4 % 40.8 %

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

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

Three Months Ended September 30, 2024

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

3 unchanged sentences

As Adjusted $ 323,035 38.9 % $ 123,004 99.8 % $ 131,707 25.8 % $ 577,746 39.4 %

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

3 unchanged sentences

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

(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.

(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.

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.

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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 $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.

The Company’s reported selling, general and administrative expenses were $511 million for the three months ended September 30, 2024, increasing by 2.8% from $497 million for the three months ended September 30, 2023.

As a percentage of revenues, reported selling, general and administrative expenses were 34.9% in the third quarter of 2024, up from 31.8% in the third quarter of 2023.

The Company’s adjusted selling, general and administrative expenses were $488 million for the three months ended September 30, 2024, down 4.0% from $508 million for the three months ended September 30, 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses were 33.3% in the third quarter of 2024, up from 32.5% in the third 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 $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 June 30, Relationships

Selling, general and administrative expenses for contract talent solutions, on an as reported basis, were $318 million for the three months ended September 30, 2024, increasing by 3.7% from $307 million for the three months ended September 30, 2023.

As a percentage of revenues, reported selling, general and administrative expenses for contract talent solutions were 38.3% in the third quarter of 2024, up from 32.5% in the third quarter of 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses for contract talent solutions were 35.8% in the third quarter of 2024, up from 33.6% in the third 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 $113 million for the three months ended September 30, 2024, decreasing by 5.0% from $119 million for the three months ended September 30, 2023.

As a percentage of revenues, reported selling, general and administrative expenses for permanent placement talent solutions were 92.0% in the third quarter of 2024, up from 85.3% in the third quarter of 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement were 89.9% in the third quarter of 2024, up from 86.2% in the third 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 $80 million for the three months ended September 30, 2024, increasing by 12.4% from $71 million for the three months ended September 30, 2023.

As a percentage of revenues, selling, general and administrative expenses for Protiviti services were 15.6% in the third quarter of 2024, up from 14.7% in the third quarter of 2023, due primarily to restructuring charges incurred during the third quarter of 2024.

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

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Total $ 510,786 $ 496,732 $ 487,646 $ 508,162 34.9 % 31.8 % 33.3 % 32.5 %

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 June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

5 unchanged sentences

As Adjusted $ 297,191 35.8 % $ 110,817 89.9 % $ 79,638 15.6 % $ 487,646 33.3 %

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

5 unchanged sentences

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

(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 .

(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.

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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 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 $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.

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 (income) loss from investments held in employee deferred compensation trusts was income of $29 million and a loss of $14 million for the three months ended September 30, 2024 and 2023, respectively.

The income from trust investments during the third 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 $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 total income before income taxes was $95 million, or 6.5% of revenues, for the three months ended September 30, 2024, down from $136 million, or 8.7% of revenues, for the three months ended September 30, 2023.

Combined segment income was $90 million, or 6.2% of revenues, for the three months ended September 30, 2024, down from $130 million, or 8.3% of revenues, for the three months ended September 30, 2023.

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

Three Months Ended June 30,

Three Months Ended September 30,

2024 % of Revenue 2023 % of Revenue

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Total $ 90,100 6.2 % $ 129,932 8.3 %

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,

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, 2024 and 2023 (in thousands):

Three Months Ended September 30,

2024 % of Revenue 2023 % of Revenue

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Provision for income taxes .

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

The provision for income taxes was 31.2% and 29.9% for the three months ended September 30, 2024 and 2023, respectively.

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

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 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

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

Nine Months Ended September 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.

The Company’s revenues were $4.41 billion for the nine months ended September 30, 2024, a decrease of 10.3% compared to $4.92 billion for the nine months ended September 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.

operations decreased 10.0% to $3.44 billion (77.9% of total revenue) for the nine months ended September 30, 2024, compared to $3.82 billion (77.7% of total revenue) for the nine months ended September 30, 2023.

Revenues from international operations decreased 11.1% to $976 million (22.1% of total revenue) for the nine months ended September 30, 2024, compared to $1.10 billion (22.3% of total revenue) for the nine months ended September 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.

Contract talent solutions revenues were $2.57 billion for the nine months ended September 30, 2024, decreasing by 14.5% compared to revenues of $3.01 billion for the nine months ended September 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.

The decrease in contract talent solutions revenues for the nine months ended September 30, 2024, was primarily due to a 15.3% decrease in the number of hours worked by the Company’s engagement professionals, partially offset by a 1.6% increase in average bill rates.

On an as adjusted basis, contract talent solutions revenues in the first three quarters of 2024 decreased 14.7% compared to the first three quarters of 2023.

In the U.S., revenues in the first three quarters of 2024 decreased 15.9% on an as reported basis, and decreased 16.2% on an as adjusted basis, compared to the first three quarters of 2023.

International revenues for the first three quarters of 2024 decreased 9.6% on an as reported basis, and decreased 9.5% on an as adjusted basis, compared to the first three quarters of 2023.

Permanent placement talent solutions revenues were $379 million for the nine months ended September 30, 2024, decreasing by 15.0% compared to revenues of $446 million for the nine months ended September 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.

The decrease in permanent placement staffing revenues for the nine months ended September 30, 2024, was due to an 18.0% decrease in the number of placements, partially offset by a 3.0% increase in average fees earned per placement.

On an as adjusted basis, permanent placement talent solutions revenues decreased 15.1% for the first three quarters of 2024, compared to the first three quarters of 2023.

In the U.S., revenues for the first three quarters of 2024 decreased 13.5% on an as reported basis, and decreased 13.8% on an as adjusted basis, compared to the first three quarters of 2023.

International revenues for the first three quarters of 2024 decreased 18.6% on an as reported basis, and decreased 18.4% on an as adjusted basis, compared to the first three quarters 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 $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.

Protiviti revenues were $1.46 billion for the nine months ended September 30, 2024, decreasing by 0.3% compared to revenues of $1.47 billion for the nine months ended September 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:

The decrease in Protiviti revenues for the nine months ended September 30, 2024, was due to a 3.0% decrease in billable hours, partially offset by a 2.7% increase in average hourly bill rates.

On an as adjusted basis, Protiviti revenues decreased 0.6% for the first three quarters of 2024, compared to the first three quarters of 2023.

In the U.S., revenues in the first three quarters of 2024 increased 2.5% on an as reported basis, and increased 2.1% on an as adjusted basis, compared to the first three quarters of 2023.

International revenues in the first three quarters of 2024 decreased 11.2% on an as reported basis, and decreased 11.5% on an as adjusted basis, compared to the first three quarters 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 nine months ended September 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 $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.

The Company’s gross margin dollars were $1.71 billion for the nine months ended September 30, 2024, down 14.0% from $1.99 billion for the nine months ended September 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 $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 contract talent solutions were $1.01 billion for the nine months ended September 30, 2024, down 15.7% from $1.20 billion for the nine months ended September 30, 2023.

As a percentage of revenues, gross margin dollars for contract talent solutions were 39.3% in the first three quarters of 2024, down from 39.8% in the first three quarters of 2023.

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

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 permanent placement talent solutions were $378 million for the nine months ended September 30, 2024, down 15.0% from $445 million for the nine months ended September 30, 2023.

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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 $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.

Gross margin dollars for Protiviti were $323 million for the nine months ended September 30, 2024, down 7.3% from $348 million for the nine months ended September 30, 2023.

As a percentage of revenues, reported gross margin dollars for Protiviti were 22.1% in the first three quarters of 2024, down from 23.8% in the first three quarters of 2023.

As a percentage of revenues, adjusted gross margin dollars for Protiviti were 23.3% in the first three quarters of 2024, down from 24.3% in the first three quarters 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

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(in thousands):

Six Months Ended June 30, Relationships

Nine Months Ended September 30, Relationships

As Reported As Adjusted As Reported As Adjusted

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Total $ 1,711,132 $ 1,990,840 $ 1,728,809 $ 1,998,091 38.8 % 40.5 % 39.2 % 40.6 %

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

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

Nine Months Ended September 30, 2024

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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As Adjusted $ 1,009,766 39.3 % $ 378,353 99.8 % $ 340,690 23.3 % $ 1,728,809 39.2 %

Six Months Ended June 30, 2023

Nine Months Ended September 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 $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.

The Company’s reported selling, general and administrative expenses were $1.53 billion for the nine months ended September 30, 2024, down 3.6% from $1.59 billion for the nine months ended September 30, 2023.

As a percentage of revenues, reported selling, general and administrative expenses were 34.7% in the first three quarters of 2024, up from 32.3% in the first three quarters of 2023.

The Company’s adjusted selling, general and administrative expenses were $1.46 billion for the nine months ended September 30, 2024, down 6.1% from $1.56 billion for the nine months ended September 30, 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses were 33.1% in the first three quarters of 2024, up from 31.6% in the first three quarters 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

Selling, general and administrative expenses for contract talent solutions, on an as-reported basis, were $958 million for the nine months ended September 30, 2024, decreasing by 2.8% from $986 million for the nine months ended September 30, 2023.

As a percentage of revenues, reported selling, general and administrative expenses for contract talent solutions were 37.2% in the first three quarters of 2024, up from 32.8% in the first three quarters of 2023.

Selling, general and administrative expenses for contract talent solutions, on an adjusted basis, were $896 million for the nine months ended September 30, 2024, down 6.3% from $955 million for the nine months ended September 30, 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses for contract talent solutions were 34.8% in the first three quarters of 2024, up from 31.8% in the first three quarters 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 $346 million for the nine months ended September 30, 2024, decreasing by 9.8% from $384 million for the nine months ended September 30, 2023.

As a percentage of revenues, reported selling, general and administrative expenses for permanent placement talent solutions were 91.3% in the first three quarters of 2024, up from 86.1% in the first three quarters of 2023.

As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement talent solutions were 89.2% in the first three quarters of 2024, up from 85.3% in the first three quarters of 2023, due primarily to negative leverage as revenues decreased as a result of economic conditions.

Selling, general and administrative expenses for Protiviti were $229 million for the nine months ended September 30, 2024, increasing by 3.6% from $221 million for the nine months ended September 30, 2023.

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

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

Nine Months Ended September 30, Relationships

As Reported As Adjusted As Reported As Adjusted

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Total $ 1,533,213 $ 1,590,865 $ 1,462,551 $ 1,556,753 34.7 % 32.3 % 33.1 % 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 six months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended June 30, 2024

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, 2024 and 2023 (in thousands):

Nine Months Ended September 30, 2024

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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As Adjusted $ 895,658 34.8 % $ 338,163 89.2 % $ 228,730 15.6 % $ 1,462,551 33.1 %

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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These adjustments have no impact on income before income taxes.

Income from Investments Held in Employee Deferred Compensation Trusts .

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

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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 $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.

The Company’s income from investments held in employee deferred compensation trusts was $88 million and $41 million for the nine months ended September 30, 2024 and 2023, respectively.

The income from trust investments was due to positive market returns during the first three quarters 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 total income before income taxes was $282 million, or 6.4% of revenues, for the nine months ended September 30, 2024, down from $456 million, or 9.3% of revenues, for the nine months ended September 30, 2023.

Combined segment income was $266 million, or 6.0% of revenues, for the nine months ended September 30, 2024, down from $441 million, or 9.0% of revenues, for the nine months ended September 30, 2023.

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

Six Months Ended June 30,

Nine Months Ended September 30,

2024 % of Revenue 2023 % of Revenue

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Total $ 266,258 6.0 % $ 441,338 9.0 %

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,

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, 2024, and 2023 (in thousands):

Nine Months Ended September 30,

2024 % of Revenue 2023 % of Revenue

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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 provision for income taxes was 30.1% and 29.1% for the nine months ended September 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 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.

The change in the Company’s liquidity during the nine months ended September 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 $570 million and $729 million at September 30, 2024 and 2023, respectively.

Operating activities provided cash flows of $255 million during the nine months ended September 30, 2024, partially offset by $58 million and $362 million of net cash used in investing activities and financing activities, 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.

Fluctuations in foreign currency exchange rates had the effect of increasing reported cash and cash equivalents by $3 million during the nine months ended September 30, 2024, compared to a decrease of $6 million during the nine months ended September 30, 2023.

Operating activities—Net cash provided by operating activities for the nine months ended September 30, 2024, was composed of net income of $197 million adjusted upward for non-cash items of $27 million and net cash provided by changes in working capital of $31 million.

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.

Investing activities—Cash used in investing activities for the nine months ended September 30, 2024, was $58 million.

This was composed of capital expenditures of $42 million and investments in employee deferred compensation trusts of $50 million, partially offset by proceeds from employee deferred compensation trust redemptions of $34 million.

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 trust redemptions of $33 million.

Capital expenditures, including $23 million for cloud computing arrangements, for the nine months ended September 30, 2024, totaled $65 million, approximately 58% 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 $90 million, of which $45 million to $55 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 six months ended June 30, 2024, was $258 million.

Financing activities—Cash used in financing activities for the nine months ended September 30, 2024, was $362 million.

This included repurchases of $196 million in common stock and $166 million in dividends paid to stockholders.

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

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

This included repurchases of $199 million in common stock and $155 million in dividends paid to stockholders.

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.

As of September 30, 2024, the Company is authorized to repurchase, from time to time, up to 8.3 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, 2024 and 2023, the Company repurchased 2.5 million shares, at a cost of $171 million, and 2.4 million shares, at a cost of $175 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 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.

During the nine months ended September 30, 2024 and 2023, such repurchases totaled 0.3 million shares, at a cost of $22 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 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’s working capital at September 30, 2024, included $570 million in cash and cash equivalents, and $885 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.

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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.

The Credit Agreement is subject to certain financial covenants, and the Company was in compliance with these covenants as of September 30, 2024.

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

On October 29, 2024, the Company announced a quarterly dividend of $0.53 per share to be paid to all shareholders of record as of November 25, 2024.

The dividend will be paid on December 13, 2024.

Material Cash Requirements from Contractual Obligations

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.

As of September 30, 2024, the Company reported current and long-term operating lease liabilities of $66 million and $173 million, respectively.

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

The majority of these leases are for real estate.

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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 half of 2024.

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

Employee Deferred Compensation Plan.

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.

As of September 30, 2024, the Company reported employee deferred compensation plan obligations of $664 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 as of June 30, 2024, were substantially equal to the obligations.

These obligations are funded through contributions to investment trusts, whose assets as of September 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.

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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