What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-02 compared with 2024-10-30 · 139 added, 282 removed, 203 unchanged (67% of the section changed)

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These statements may be identified by words such as “anticipate,” “potential,” “estimate,” “forecast,” “target,” “project,” “plan,” “intend,” “believe,” “expect,” “should,” “could,” “would,” “may,” “might,” “will,” or variations or negatives thereof or by similar or comparable words or phrases.

In addition, historical, current, and forward-looking information about the Company’s environmental, social, and governance (“ESG”) and compliance programs, including targets or goals, may not be considered material for the Securities and Exchange Commission (“SEC”) or other mandatory reporting purposes and may be based on standards for measuring progress that are still developing, on internal controls, diligence, or processes that are evolving, on representations reviewed or provided by third parties, and on assumptions that are subject to change in the future.

Forward-looking statements are estimates only, based on management’s current expectations, currently available information and current strategy, plans, or forecasts, and involve certain known and unknown risks, uncertainties, and assumptions that are difficult to predict and often beyond our control and are inherently uncertain.

Forward-looking statements are subject to risks and uncertainties that could cause actual results, outcomes, or the timing of these results or outcomes, to differ materially from those expressed or implied in the statements.

In addition, historical, current and forward-looking information about the Company’s corporate responsibility and compliance programs, including targets or goals, may not be considered material for the Securities and Exchange Commission (“SEC”) or other mandatory reporting purposes and may be based on standards for measuring progress that are still developing, on internal controls, diligence or processes that are evolving, on representations reviewed or provided by third parties, and on assumptions that are subject to change in the future.

Forward-looking statements are estimates only and are based on management’s current expectations, currently available information and current strategy, plans or forecasts, and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict, often beyond our control and are inherently uncertain.

Forward-looking statements are subject to risks and uncertainties that could cause actual results and outcomes, or the timing of these results or outcomes, to differ materially from those expressed or implied in the statements.

These risks and uncertainties include, but are not limited to, the following:

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the ability of the Company to maintain existing client relationships and attract new clients in the context of changing economic or competitive conditions;

the impact of competitive pressures, including any change in the demand for the Company’s services, on the Company’s ability to maintain its margins;

the impact of competitive pressures, including any change in the demand for the Company’s services, or the Company’s ability to maintain its margins;

the possibility of the Company incurring liability for its activities, including the activities of its engagement professionals, or for events impacting its engagement professionals on clients’ premises;

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the possibility that the additional costs the Company will incur as a result of health care or other reform legislation may adversely affect the Company’s profit margins or the demand for the Company’s services;

the possibility that the Company’s computer and communications hardware and software systems could be damaged or their service interrupted or the Company could experience a cybersecurity breach;

the possibility that the Company’s computer and communications hardware and software systems could be damaged or their service interrupted or that the Company could experience a cybersecurity breach;

and the possibility that the Company may fail to maintain adequate financial and management controls, and as a result suffer errors in its financial reporting.

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Executive Overview

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.

Revenue and net income results for the first quarter were impacted by the heightened economic uncertainty over U.S.

trade and other policy developments.

Client and job seeker caution continues to elongate decision cycles and subdue hiring activity and new project starts.

During the quarter, the Company took actions to reduce its administrative cost structure and lowered staffing levels at corporate services and administrative field positions in talent solutions and Protiviti.

During the first quarter of 2025, service revenues were $1.35 billion, a decrease of 8.4% from the prior year.

Net income was $17 million, and diluted net income per share was $0.17.

Diluted net income per share was reduced by $0.13 per share for one-time charges related to the cost actions noted above.

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 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.

real gross domestic product decreased 0.3% during the first quarter of 2025, compared to an increase of 3.4% during the fourth quarter of 2024.

Global labor markets remain resilient with U.S.

job openings significantly above historical averages indicating pent-up demand for talent.

In the U.S., unemployment stands at 4.2% and remains even lower for those with a college degree, where the rate is 2.6%.

However, business confidence levels have recently moderated and U.S.

trade and other policy uncertainty has caused many economists to lower their economic growth forecasts for the remainder of the year.

While the NFIB Small Business Optimism Index is off its recent peaks, it is still only slightly below its long-term average.

As business confidence improves, hiring urgency returns, project demand accelerates, deferred backlogs and growth initiatives are re-prioritized, and labor churn normalizes.

This creates hiring and consulting demand.

Despite the uncertain outlook, the Company is well-positioned to capitalize on emerging opportunities and support its clients’ talent and consulting needs through the strength of its industry-leading brand, people, technology and unique business model.

The Company continues to invest in technology and innovation, including AI.

Major focus areas include providing a world-class digital experience for clients and candidates that is seamlessly connected to the Company’s specialized professional recruiters.

Also, the Company will continue to leverage its proprietary data assets to enhance the AI tools its recruiters use to discover, assess and select talent for its clients, and the AI tools recruiters use to effectively target leads for additional revenue.

The Company monitors various economic indicators and business trends in all of the countries in which it operates to anticipate demand for the Company’s services.

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

During the first three quarters of 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.

During the first quarter of 2025, the Company’s headcount remained relatively flat for each of its segments when compared to prior year-end levels, while administrative headcount decreased.

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, 2024.

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

There were no material changes to the Company’s critical accounting policies or estimates for the three months ended March 31, 2025.

Recent Accounting Pronouncements

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

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

Demand for the Company’s services is largely dependent upon global economic and labor trends.

Because of the inherent difficulty in predicting economic trends, future demand for the Company’s services cannot be forecast with certainty.

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adjusted selling, general and administrative expenses;

combined segment income;

and as adjusted revenue growth rates.

adjusted operating income;

and adjusted revenue growth rates.

The following measures:

adjusted gross margin and adjusted selling, general and administrative expenses, include gains and losses on investments held to fund the Company’s obligations under employee deferred compensation plans.

adjusted gross margin, adjusted selling, general and administrative expenses and adjusted operating income, include gains and losses on investments held to fund the Company’s obligations under employee deferred compensation plans.

The Company provides these measures because they are used by management to review its operational results.

Combined segment income is income before income taxes, adjusted for interest income and amortization of intangible assets.

The Company provides combined segment income because it is how management evaluates performance.

As adjusted revenue growth rates represent year-over-year revenue growth rates after removing the impacts on reported revenues from the changes in the number of billing days and foreign currency exchange rates.

Adjusted revenue growth rates represent year-over-year revenue growth rates after removing the impacts on reported revenues from the changes in the number of billing days and foreign currency exchange rates.

The Company provides this data because it focuses on the Company’s revenue growth rates attributable to operating activities and aids in evaluating revenue trends over time.

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

Three Months Ended September 30, 2024 and 2023

Three Months Ended March 31, 2025 and 2024

Service Revenues.

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.

The Company’s revenues were $1.35 billion for the three months ended March 31, 2025, a decrease of 8.4% compared to $1.48 billion for the three months ended March 31, 2024.

Revenues from U.S.

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.

operations decreased 6.9% to $1.06 billion (78.6% of total revenue) for the three months ended March 31, 2025, compared to $1.14 billion (77.4% of total revenue) for the three months ended March 31, 2024.

Revenues from international operations decreased 13.6% to $289 million (21.4% of total revenue) for the three months ended March 31, 2025, compared to $334 million (22.6% of total revenue) for the three months ended March 31, 2024.

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

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.

Contract talent solutions revenues were $763 million for the three months ended March 31, 2025, decreasing by 14.0% compared to revenues of $887 million for the three months ended March 31, 2024.

Key drivers of contract talent solutions revenues include average hourly bill rates and the number of hours worked by the Company’s engagement professionals on client engagements.

The decrease in contract talent solutions revenues for the three months ended September 30, 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.

The decrease in contract talent solutions revenues for the three months ended March 31, 2025, was primarily due to a 16.2% decrease in the number of hours worked by the Company’s engagement professionals, partially offset by a 2.7% increase in average bill rates.

On an adjusted basis, contract talent solutions revenues decreased 11.8% for the first quarter of 2025 compared to the first quarter of 2024.

In the U.S., revenues in the first quarter of 2025 decreased 11.8% on a reported basis, and decreased 10.7% on an adjusted basis, compared to the first quarter of 2024.

International revenues for the first quarter of 2025 decreased 20.7% on a reported basis, and decreased 16.2% on an adjusted basis, compared to the first quarter of 2024.

Permanent placement talent solutions revenues were $112 million for the three months ended March 31, 2025, decreasing by 10.2% compared to revenues of $125 million for the three months ended March 31, 2024.

Key drivers of permanent placement talent solutions revenues consist of the number of candidate placements and average fees earned per placement.

The decrease in permanent placement talent revenues for the three months ended September 30, 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.

The decrease in permanent placement talent revenues for the three months ended March 31, 2025, was due to an 11.4% decrease in the number of placements, partially offset by a 1.2% increase in average fees earned per placement.

On an adjusted basis, permanent placement talent solutions revenues decreased 7.8% for the first quarter of 2025 compared to the first quarter of 2024.

In the U.S., revenues for the first quarter of 2025 decreased 8.5% on a reported basis, and decreased 7.3% on an adjusted basis, compared to the first quarter of 2024.

International revenues for the first quarter of 2025 decreased 14.5% on a reported basis, and decreased 10.1% on an adjusted basis, compared to the first quarter of 2024.

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 $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 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:

Protiviti revenues were $477 million for the three months ended March 31, 2025, increasing by 2.7% compared to revenues of $464 million for the three months ended March 31, 2024.

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

The increase in Protiviti revenues for the three months ended March 31, 2025, was due to a 3.4% increase in billable hours, partially offset by a 0.7% decrease in average hourly bill rates.

On an adjusted basis, Protiviti revenues increased 4.7% for the first quarter of 2025, compared to the first quarter of 2024.

In the U.S., revenues in the first quarter of 2025 increased 2.3% on a reported basis, and increased 3.6% on an adjusted basis, compared to the first quarter of 2024.

International revenues for the first quarter of 2025 increased 4.4% on a reported basis, and increased 7.9% on an adjusted basis, compared to the first quarter of 2024.

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, 2025, is presented in the following table:

Global United States International

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Gross Margin .

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.

The Company’s gross margin dollars were $499 million for the three months ended March 31, 2025, down 11.3% from $563 million for the three months ended March 31, 2024.

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 $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 contract talent solutions were $297 million for the three months ended March 31, 2025, decreasing by 15.3% from $351 million for the three months ended March 31, 2024.

As a percentage of revenues, gross margin dollars for contract talent solutions were 38.9% in the first quarter of 2025, down from 39.5% in the first quarter of 2024.

The decrease in gross margin percentage was primarily due to higher fringe costs.

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

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.

Gross margin dollars for permanent placement talent solutions were $112 million for the three months ended March 31, 2025, down 10.2% from $124 million for the three months ended March 31, 2024.

Because reimbursable expenses for permanent placement talent solutions are de minimis, the decrease in gross margin dollars is substantially explained by the decrease in revenues previously discussed.

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and ii) staff utilization, which is the relationship of time spent on client engagements in proportion to the total time available for the Company’s Protiviti staff.

Gross margin dollars for Protiviti were $126 million for 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.

Gross margin dollars for Protiviti were $90 million for the three months ended March 31, 2025, up 2.9% from $88 million for the three months ended March 31, 2024.

As a percentage of revenues, reported gross margin dollars for Protiviti were 18.9% in both the first quarter of 2025 and 2024.

As a percentage of revenues, adjusted gross margin dollars for Protiviti were 18.1% in the first quarter of 2025, down from 20.7% in the first quarter of 2024.

The decrease in adjusted gross margin percentage was primarily due to one-time charges of $8 million related to cost actions to reduce ongoing expenses.

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

Three Months Ended September 30, Relationships

Three Months Ended March 31, Relationships

As Reported As Adjusted As Reported As Adjusted

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Total $ 499,045 $ 562,797 $ 495,006 $ 571,154 36.9 % 38.1 % 36.6 % 38.7 %

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

The following tables provide reconciliations of the non-GAAP adjusted gross margin to reported gross margin for the three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31, 2025

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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As Adjusted $ 296,933 38.9 % $ 111,861 99.8 % $ 86,212 18.1 % $ 495,006 36.6 %

Three Months Ended September 30, 2023

Three Months Ended March 31, 2024

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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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 $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.

The Company’s selling, general and administrative expenses consist primarily of staff compensation, advertising, lease expense, depreciation, cloud computing service costs and overhead costs.

The Company’s reported selling, general and administrative expenses were $460 million for the three months ended March 31, 2025, decreasing by 11.8% from $522 million for the three months ended March 31, 2024.

As a percentage of revenues, reported selling, general and administrative expenses were 34.0% in the first quarter of 2025, down from 35.4% in the first quarter of 2024.

The Company’s adjusted selling, general and administrative expenses were $476 million for the three months ended March 31, 2025, down 2.2% from $487 million for the three months ended March 31, 2024.

As a percentage of revenues, adjusted selling, general and administrative expenses were 35.2% in the first quarter of 2025, up from 33.0% in the first quarter of 2024.

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 $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.

Selling, general and administrative expenses for contract talent solutions, on a reported basis, were $276 million for the three months ended March 31, 2025, decreasing by 16.7% from $332 million for the three months ended March 31, 2024.

As a percentage of revenues, reported selling, general and administrative expenses for contract talent solutions were 36.2% in the first quarter of 2025, down from 37.4% in the first quarter of 2024.

As a percentage of revenues, adjusted selling, general and administrative expenses for contract talent solutions were 38.0% in the first quarter of 2025, up from 33.9% in the first quarter of 2024, due primarily to negative leverage as revenues decreased as a result of economic conditions during the quarter, combined with the impact of one-time charges of $7 million in the first quarter of 2025, related to cost actions to reduce ongoing administrative expenses.

Selling, general and administrative expenses for permanent placement talent solutions were $106 million for the three months ended March 31, 2025, decreasing by 9.0% from $117 million for the three months ended March 31, 2024.

As a percentage of revenues, reported selling, general and administrative expenses for permanent placement talent solutions were 94.7% in the first quarter of 2025, up from 93.4% in the first quarter of 2024.

As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement were 96.6% in the first quarter of 2025, up from 90.3% in the first quarter of 2024, due primarily to negative leverage as revenues decreased as a result of economic conditions during the quarter, combined with the impact of one-time charges of $2 million in the first quarter of 2025, related to cost actions to reduce ongoing administrative expenses.

Selling, general and administrative expenses for Protiviti were $78 million for the three months ended March 31, 2025, increasing by 5.5% from $74 million for the three months ended March 31, 2024.

As a percentage of revenues, selling, general and administrative expenses for Protiviti services were 16.3% in the first quarter of 2025, up from 15.9% in the first 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

Three Months Ended March 31, Relationships

As Reported As Adjusted As Reported As Adjusted

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Total $ 460,163 $ 521,899 $ 476,295 $ 486,880 34.0 % 35.4 % 35.2 % 33.0 %

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

Three Months Ended September 30, 2024

Three Months Ended March 31, 2025

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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As Adjusted $ 290,242 38.0 % $ 108,237 96.6 % $ 77,816 16.3 % $ 476,295 35.2 %

Three Months Ended September 30, 2023

Three Months Ended March 31, 2024

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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These adjustments have no impact on income before income taxes.

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

Under the Company’s employee deferred compensation plans, employees direct the investment of their account balances, and the Company invests amounts held in the associated investment trusts consistent with these directions.

As realized and unrealized investment gains and losses occur, the Company’s employee deferred compensation plan obligations change and adjustments are recorded in selling, general and administrative expenses, or in the case of Protiviti, costs of services.

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) 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 $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 September 30,

2024 % of Revenue 2023 % of Revenue

Combined Segment Income

Contract talent solutions $ 25,844 3.1 % $ 58,475 6.2 %

Permanent placement talent solutions 12,187 9.9 % 19,055 13.6 %

Protiviti 52,069 10.2 % 52,402 10.9 %

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 September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

2024 % of Revenue 2023 % of Revenue

Income before income taxes $ 95,186 6.5 % $ 136,343 8.7 %

Interest income, net (5,391) (0.3 %) (7,131) (0.4 %)

Amortization of intangible assets 305 0.0 % 720 0.0 %

Combined segment income $ 90,100 6.2 % $ 129,932 8.3 %

Provision for income taxes .

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 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 $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 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 $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 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 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 $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 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

Contract talent solutions

As Reported -14.5 % -15.9 % -9.6 %

Billing Days Impact -0.3 % -0.3 % -0.4 %

Currency Impact 0.1 % ― 0.5 %

As Adjusted -14.7 % -16.2 % -9.5 %

Permanent placement talent solutions

As Reported -15.0 % -13.5 % -18.6 %

Billing Days Impact -0.3 % -0.3 % -0.4 %

Currency Impact 0.2 % ― 0.6 %

As Adjusted -15.1 % -13.8 % -18.4 %

As Reported -0.3 % 2.5 % -11.2 %

Billing Days Impact -0.3 % -0.4 % -0.4 %

Currency Impact 0.0 % ― 0.1 %

As Adjusted -0.6 % 2.1 % -11.5 %

Gross Margin .

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.

Gross margin dollars for contract talent solutions represent revenues less costs of services, which consist of payroll, payroll taxes and benefit costs for engagement professionals, and reimbursable expenses.

The key drivers of gross margin are:

i) pay-bill spreads, which represent the differential between wages paid to engagement professionals and amounts billed to clients;

ii) fringe costs, which are primarily composed of payroll taxes and benefit costs;

and iii) conversion revenues, which are earned when a contract position converts to a permanent position with the Company’s client.

Gross margin dollars for contract talent solutions were $1.01 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 $378 million for the nine months ended September 30, 2024, down 15.0% from $445 million for the nine months ended September 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 $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

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

(in thousands):

Nine Months Ended September 30, Relationships

As Reported As Adjusted As Reported As Adjusted

2024 2023 2024 2023 2024 2023 2024 2023

Contract talent solutions

$ 1,009,766 $ 1,197,419 $ 1,009,766 $ 1,197,419 39.3 % 39.8 % 39.3 % 39.8 %

Permanent placement talent solutions

378,353 445,051 378,353 445,051 99.8 % 99.8 % 99.8 % 99.8 %

323,013 348,370 340,690 355,621 22.1 % 23.8 % 23.3 % 24.3 %

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 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

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

As Reported $ 1,009,766 39.3 % $ 378,353 99.8 % $ 323,013 22.1 % $ 1,711,132 38.8 %

Adjustments (1) — — — — 17,677 1.2 % 17,677 0.4 %

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

Nine Months Ended September 30, 2023

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

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

As Reported $ 1,197,419 39.8 % $ 445,051 99.8 % $ 348,370 23.8 % $ 1,990,840 40.5 %

Adjustments (1) — — — — 7,251 0.5 % 7,251 0.1 %

As Adjusted $ 1,197,419 39.8 % $ 445,051 99.8 % $ 355,621 24.3 % $ 1,998,091 40.6 %

(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 $1.53 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 $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

Operating Income The Company’s operating income consists of gross margin less selling, general and administrative expenses.

The Company’s reported operating income was $39 million for the three months ended March 31, 2025, down 4.9% compared to $41 million for the three months ended March 31, 2024.

As a percentage of revenues, reported operating income was 2.9% in the first quarter of 2025, up from 2.8% in the first quarter of 2024.

The Company’s adjusted operating income was $19 million for the three months ended March 31, 2025, down 77.8% from $84 million for the three months ended March 31, 2024.

As a percentage of revenues, adjusted operating income was 1.4% in the first quarter of 2025, down from 5.7% in the first quarter of 2024.

Since operating income is defined as gross margin less selling, general and administrative expenses, the year over year change is explained by factors previously discussed, including the impact of one-time charges of $17 million in the first quarter of 2025 related to cost actions to reduce ongoing administrative expenses.

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

Three Months Ended March 31, Relationships

As Reported As Adjusted As Reported As Adjusted

2025 2024 2025 2024 2025 2024 2025 2024

Selling, General and

Administrative Expenses

Operating income

Contract talent solutions

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5,726 7,972 3,624 11,855 5.1 % 6.4 % 3.2 % 9.5 %

228,730 220,832 228,730 220,832 15.6 % 15.1 % 15.6 % 15.1 %

Protiviti 12,435 13,944 8,396 22,301 2.6 % 3.0 % 1.8 % 4.8 %

Total $ 38,882 $ 40,898 $ 18,711 $ 84,274 2.9 % 2.8 % 1.4 % 5.7 %

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

The following tables provide reconciliations of the non-GAAP adjusted operating income to reported operating income for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31, 2025

Contract talent

solutions Permanent placement talent solutions Protiviti Total

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

Selling, General and

Administrative Expenses

Operating income

As Reported $ 20,721 2.7 % $ 5,726 5.1 % $ 12,435 2.6 % $ 38,882 2.9 %

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As Adjusted $ 6,691 0.9 % $ 3,624 3.2 % $ 8,396 1.8 % $ 18,711 1.4 %

Nine Months Ended September 30, 2023

Contract Talent Solutions Permanent Placement Talent Solutions Protiviti Total

Three Months Ended March 31, 2024

Contract talent

solutions Permanent placement talent solutions Protiviti Total

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

Selling, General and

Administrative Expenses

Operating income

As Reported $ 18,982 2.1 % $ 7,972 6.4 % $ 13,944 3.0 % $ 40,898 2.8 %

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As Adjusted $ 50,118 5.6 % $ 11,855 9.5 % $ 22,301 4.8 % $ 84,274 5.7 %

(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.

(1) Changes in the Company’s employee deferred compensation plan obligations related to talent solutions operations are included in operating income.

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

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

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

The Company’s income 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 $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 $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):

Nine Months Ended September 30,

2024 % of Revenue 2023 % of Revenue

Combined Segment Income

Contract talent solutions $ 114,108 4.4 % $ 241,937 8.0 %

Permanent placement talent solutions 40,190 10.6 % 64,612 14.5 %

Protiviti 111,960 7.7 % 134,789 9.2 %

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 nine months ended September 30, 2024, and 2023 (in thousands):

Nine Months Ended September 30,

2024 % of Revenue 2023 % of Revenue

Income before income taxes $ 282,335 6.4 % $ 456,452 9.3 %

Interest income, net (16,990) (0.4 %) (17,276) (0.3) %

Amortization of intangible assets 913 0.0 % 2,162 0.0 %

Combined segment income $ 266,258 6.0 % $ 441,338 9.0 %

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

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 a loss of $20 million and income of $43 million for the three months ended March 31, 2025 and 2024, respectively.

The loss from trust investments during the first quarter of 2025 was due to negative market returns.

Provision for income taxes .

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.

The provision for income taxes was 22.1% and 29.8% for the three months ended March 31, 2025 and 2024, respectively.

The lower tax rate for 2025 can be primarily attributed to accelerated timing of certain tax credits that would have otherwise been recorded in the upcoming fourth quarter.

Liquidity and Capital Resources

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.

The change in the Company’s liquidity during the three months ended March 31, 2025 and 2024, is primarily the effect of funds used in operations, as well as 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 outflows are typically elevated in the first quarter due to the annual payment cycle for bonuses and software subscription renewals.

Cash and cash equivalents were $342 million and $541 million at March 31, 2025 and 2024, respectively.

Operating activities used net cash flows of $59 million during the three months ended March 31, 2025, combined with $33 million and $111 million of net cash used in investing activities and financing activities, 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.

Fluctuations in foreign currency exchange rates had the effect of increasing reported cash and cash equivalents by $8 million during the three months ended March 31, 2025, compared to a decrease of $9 million during the three months ended March 31, 2024.

Operating activities—Net cash used in operating activities for the three months ended March 31, 2025 was $59 million.

This was composed of net income of $17 million adjusted upward for non-cash items of $66 million, offset by net cash used in changes in working capital of $142 million.

Net cash used in operating activities for the three months ended March 31, 2024, was $16 million.

This 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.

Investing activities—Cash used in investing activities for the three months ended March 31, 2025, was $33 million.

This was composed of capital expenditures of $12 million and investments in employee deferred compensation trusts of $43 million, partially offset by proceeds from employee deferred compensation trust redemptions of $22 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.

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 and investments in employee deferred compensation trusts of $33 million, partially offset by proceeds from employee deferred compensation trust redemptions of $23 million.

Capital expenditures, including $6 million for cloud computing arrangements, for the three months ended March 31, 2025, totaled $19 million, approximately 69% 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 2025 capital expenditures will range from $75 million to $95 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 nine months ended September 30, 2024, was $362 million.

Financing activities—Cash used in financing activities for the three months ended March 31, 2025, was $111 million.

This included repurchases of $50 million in common stock and $61 million in dividends paid to stockholders.

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

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

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

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.

As of March 31, 2025, the Company is authorized to repurchase, from time to time, up to 6.6 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, 2025 and 2024, the Company repurchased 0.7 million shares, at a cost of $39 million, and 0.8 million shares, at a cost of $61 million, on the open market, respectively.

Additional stock repurchases were made in connection with employee stock plans, whereby Company shares were tendered by employees for the payment of exercise price and applicable statutory withholding taxes.

During the nine months ended September 30, 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.

During the three months ended March 31, 2025 and 2024, such repurchases totaled 0.2 million shares, at a cost of $11 million, and 0.3 million shares, at a cost of $21 million, respectively.

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

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’s working capital at March 31, 2025, included $342 million in cash and cash equivalents, and $787 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 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.

The Credit Agreement is subject to certain financial covenants, and the Company was in compliance with these covenants as of March 31, 2025.

There were no borrowings under the Credit Agreement as of March 31, 2025, or December 31, 2024.

On May 1, 2025, the Company announced a quarterly dividend of $0.59 per share to be paid to all shareholders of record as of May 23, 2025.

The dividend will be paid on June 13, 2025.

Material Cash Requirements from Contractual Obligations

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.

As of March 31, 2025, the Company reported current and long-term operating lease liabilities of $67 million and $176 million, respectively.

These balances consist of the minimum rental commitments for April 2025 and thereafter, discounted to reflect the Company’s cost of borrowing, under noncancelable lease contracts executed as of March 31, 2025.

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, 2024.

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

There have been no material changes to the Company’s contractual purchase obligations during the first quarter of 2025.

Employee Deferred Compensation Plan.

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.

As of March 31, 2025, the Company reported employee deferred compensation plan obligations of $648 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 September 30, 2024, were substantially equal to the obligations.

These obligations are funded through contributions to investment trusts, whose assets as of March 31, 2025, exceeded 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