ROBERT HALF INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS ROBERT HALF INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) (in thousands, except share amounts) March 31, 2025 December 31, 2024 ASSETS Cash and cash equivalents $ 342,473 $ 537,583 Accounts receivable, net 786,560 772,285 Employee deferred compensation trust assets 671,443 673,240 Other current assets 165,906 146,314 Total current assets 1,966,382 2,129,422 Property and equipment, net 125,633 119,564 Right-of-use assets 202,499 198,384 Goodwill 237,361 237,180 Noncurrent deferred income taxes 154,164 158,120 Other noncurrent assets 10,914 11,735 Total assets $ 2,696,953 $ 2,854,405 LIABILITIES Accounts payable and accrued expenses $ 144,617 $ 166,955 Accrued payroll and benefit costs 327,807 372,785 Employee deferred compensation plan obligations 648,455 678,403 Income taxes payable 2,226 2,977 Current operating lease liabilities 67,251 64,619 Total current liabilities 1,190,356 1,285,739 Noncurrent operating lease liabilities 175,382 168,900 Other noncurrent liabilities 17,993 21,763 Total liabilities 1,383,731 1,476,402 Commitments and Contingencies (Note K) STOCKHOLDERS’ EQUITY Preferred stock, $ 0.001 par value; authorized 5,000,000 shares; none issued — — Common stock, $ 0.001 par value; authorized 260,000,000 shares; issued and outstanding 102,163,763 shares and 102,199,470 shares 102 102 Additional paid-in capital 1,366,786 1,418,150 Accumulated other comprehensive loss ( 53,666 ) ( 65,138 ) Retained earnings — 24,889 Total stockholders’ equity 1,313,222 1,378,003 Total liabilities and stockholders’ equity $ 2,696,953 $ 2,854,405 The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these financial statements. 2 ROBERT HALF INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share amounts) Three Months Ended March 31, 2025 2024 Service revenues $ 1,351,907 $ 1,475,937 Costs of services 852,862 913,140 Gross margin 499,045 562,797 Selling, general and administrative expenses 460,163 521,899 Operating income 38,882 40,898 (Income) loss from investments held in employee deferred compensation trusts (which is completely offset by related costs and expenses - Note A) 20,171 ( 43,376 ) Interest income, net ( 3,572 ) ( 6,413 ) Income before income taxes 22,283 90,687 Provision for income taxes 4,933 26,986 Net income $ 17,350 $ 63,701 Net income per share: Basic $ 0.17 $ 0.61 Diluted $ 0.17 $ 0.61 Weighted average shares: Basic 100,666 103,787 Diluted 101,015 104,399 Dividends declared per share $ 0.59 $ 0.53 The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these financial statements. 3 ROBERT HALF INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (in thousands) Three Months Ended March 31, 2025 2024 COMPREHENSIVE INCOME (LOSS): Net income $ 17,350 $ 63,701 Other comprehensive income (loss): Foreign currency translation adjustments, net of tax 11,433 ( 11,422 ) Foreign defined benefit plan adjustments, net of tax 39 43 Total other comprehensive income (loss) 11,472 ( 11,379 ) Total comprehensive income (loss) $ 28,822 $ 52,322 The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these financial statements. 4 ROBERT HALF INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (in thousands, except per share amounts) Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Shares Par Value Balance at December 31, 2024 102,199 $ 102 $ 1,418,150 $ ( 65,138 ) $ 24,889 $ 1,378,003 Net income — — — — 17,350 17,350 Other comprehensive income (loss) — — — 11,472 — 11,472 Dividends declared ($ 0.59 per share) — — ( 60,163 ) — — ( 60,163 ) Net issuances of restricted stock 823 1 ( 1 ) — — — Stock-based compensation — — 16,705 — — 16,705 Repurchases of common stock ( 858 ) ( 1 ) ( 7,905 ) — ( 42,239 ) ( 50,145 ) Balance at March 31, 2025 102,164 $ 102 $ 1,366,786 $ ( 53,666 ) $ — $ 1,313,222 Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Shares Par Value Balance at December 31, 2023 105,209 $ 105 $ 1,354,703 $ ( 32,626 ) $ 266,169 $ 1,588,351 Net income — — — — 63,701 63,701 Other comprehensive income (loss) — — — ( 11,379 ) — ( 11,379 ) Dividends declared ($ 0.53 per share) — — — — ( 56,382 ) ( 56,382 ) Net issuances of restricted stock 751 1 ( 1 ) — — — Stock-based compensation — — 16,777 — — 16,777 Repurchases of common stock ( 1,028 ) ( 1 ) — — ( 81,822 ) ( 81,823 ) Balance at March 31, 2024 104,932 $ 105 $ 1,371,479 $ ( 44,005 ) $ 191,666 $ 1,519,245 The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these financial statements. 5 ROBERT HALF INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) Three Months Ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 17,350 $ 63,701 Adjustments to reconcile net income to net cash used in operating activities: Allowance for credit losses 1,232 183 Depreciation 13,006 13,004 Amortization of cloud computing implementation costs 8,308 9,183 Amortization of intangible assets 304 304 Realized and unrealized (gains) losses from investments held in employee deferred compensation trusts 22,111 ( 41,305 ) Stock-based compensation 16,705 16,777 Deferred income taxes 3,967 6,602 Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable ( 8,305 ) ( 7,042 ) Capitalized cloud computing implementation costs ( 6,160 ) ( 8,391 ) Accounts payable and accrued expenses ( 23,244 ) ( 5,756 ) Accrued payroll and benefit costs ( 48,462 ) ( 83,490 ) Employee deferred compensation plan obligations ( 29,948 ) 34,837 Income taxes payable 3,784 10,044 Other assets and liabilities, net ( 29,995 ) ( 24,570 ) Net cash flows used in operating activities ( 59,347 ) ( 15,919 ) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 12,394 ) ( 11,780 ) Investments in employee deferred compensation trusts ( 42,420 ) ( 32,643 ) Proceeds from employee deferred compensation trust redemptions 22,106 22,389 Net cash flows used in investing activities ( 32,708 ) ( 22,034 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repurchases of common stock ( 49,935 ) ( 85,887 ) Dividends paid ( 61,290 ) ( 57,502 ) Net cash flows used in financing activities ( 111,225 ) ( 143,389 ) Effect of exchange rate fluctuations 8,170 ( 9,459 ) Change in cash and cash equivalents ( 195,110 ) ( 190,801 ) Cash and cash equivalents at beginning of period 537,583 731,740 Cash and cash equivalents at end of period $ 342,473 $ 540,939 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Non-cash items: Fund exchanges within employee deferred compensation trusts $ 53,230 $ 29,073 Contingent consideration related to acquisition $ — $ 350 The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these financial statements. 6 ROBERT HALF INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2025 Note A— Summary of Significant Accounting Policies Nature of Operations . Robert Half Inc. (the “Company”) is a specialized talent solutions and business consulting firm, connecting highly skilled job seekers with rewarding opportunities at great companies. Robert Half ® offers contract talent solutions and permanent placement talent solutions for finance and accounting, technology, marketing and creative, legal, and administrative and customer support, and provides executive search services. Robert Half is also the parent company of Protiviti ® , a global consulting firm that delivers internal audit, risk, business, and technology consulting solutions. The Company operates in North America, South America, Europe, Asia and Australia. The Company is a Delaware corporation. Basis of Presentation. The unaudited Condensed Consolidated Financial Statements (“Financial Statements”) of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”). The comparative year-end Condensed Consolidated Statement of Financial Position data presented was derived from audited financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) necessary for a fair statement of the financial position and results of operations for the periods presented have been included. These Financial Statements should be read in conjunction with the audited Consolidated Financial Statements of the Company for the year ended December 31, 2024, included in its Annual Report on Form 10-K. The results of operations for any interim period are not necessarily indicative of, nor comparable to, the results of operations for a full year. Certain reclassifications have been made to prior year’s Financial Statements to conform to the 2025 presentation. Principles of Consolidation. The Financial Statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. As of March 31, 2025, such estimates include allowances for credit losses, variable consideration, workers’ compensation losses, accrued medical expenses, income and other taxes, and assumptions used in the Company’s goodwill impairment assessment and in the valuation of stock grants subject to market conditions. Actual results and outcomes may differ from management’s estimates and assumptions. Service Revenues. The Company derives its revenues from three segments: contract talent solutions, permanent placement talent solutions, and Protiviti. Revenues are recognized when promised goods or services are delivered to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. See Note C for further discussion of the revenue recognition accounting policy. Costs of Services. Direct costs of contract talent solutions consist of payroll, payroll taxes, and benefit costs for the Company’s engagement professionals, as well as reimbursable expenses. Direct costs of permanent placement talent solutions consist of reimbursable expenses. Protiviti direct costs of services include professional staff payroll, payroll taxes and benefit costs, as well as reimbursable expenses. Advertising Costs. The Company expenses all advertising costs as incurred. Advertising costs were $ 12.0 million and $ 13.2 million for the three months ended March 31, 2025, and 2024, respectively. (Income) Loss from Investments Held in Employee Deferred Compensation Trusts . Under the Company’s employee deferred compensation plans, employees direct the investment of their account balances, and the Company invests amounts held in the associated investment trusts consistent with these directions. As realized and unrealized investment gains and losses occur, the Company’s employee deferred compensation plan obligations change and adjustments are recorded in selling, general and administrative expenses or, in the case of Protiviti, costs of services. The value of the related investment trust assets also changes by an equal and offsetting amount, leaving no net cost 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 of unrealized and realized gains and losses, and dividend income from trust investments and is presented separately on the Condensed Consolidated Statements of Operations. 7 ROBERT HALF INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued) March 31, 2025 The following table presents the Company’s (income) loss from investments held in employee deferred compensation trusts (in thousands): Three Months Ended March 31, 2025 2024 Dividend income $ ( 1,940 ) $ ( 2,071 ) Realized and unrealized (gains) losses 22,111 ( 41,305 ) (Income) loss from investments held in employee deferred compensation trusts (which is completely offset by related costs and expenses) $ 20,171 $ ( 43,376 ) The following table presents the Company’s increase (decrease) in employee deferred compensation costs and expense related to changes in the fair value of trust assets for its nonqualified employee deferred compensation plans (in thousands): Three Months Ended March 31, 2025 2024 Increase (decrease) in employee deferred compensation costs and expense related to changes in the fair value of trust assets $ ( 20,171 ) $ 43,376 Comprehensive Income (Loss). Comprehensive income (loss) includes net income and certain other items that are recorded directly to stockholders’ equity. The Company’s only sources of other comprehensive income (loss) are foreign currency translation and foreign defined benefit plan adjustments. Fair Value of Financial Instruments. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market to measure fair value, summarized as follows: Level 1: Observable inputs for identical assets or liabilities, such as quoted prices in active markets Level 2: Inputs other than the quoted prices in active markets that are observable either directly or indirectly Level 3: Unobservable inputs in which there is little or no market data, which requires management’s best estimates and assumptions that market participants would use in pricing the asset or liability The carrying value of cash and cash equivalents, net accounts receivable, and accounts payable and accrued expenses approximates fair value because of their short-term nature. The Company holds mutual funds and money market funds to satisfy its obligations under its employee deferred compensation plans which are carried at fair value based on quoted market prices in active markets for identical assets (Level 1). 8 ROBERT HALF INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued) March 31, 2025 The following tables summarize the Company’s financial instruments by significant category and fair value measurement on a recurring basis (in thousands): Fair Value Measurements Using Balance at March 31, 2025 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents Money market funds $ 163,652 $ 163,652 — — Employee deferred compensation trust assets Money market funds $ 140,394 $ 140,394 — — Mutual funds - bond 39,971 39,971 — — Mutual funds - stock 375,669 375,669 — — Mutual funds - blend 115,409 115,409 — — Total employee deferred compensation trust assets $ 671,443 $ 671,443 — — Fair Value Measurements Using Balance at December 31, 2024 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents Money market funds $ 293,990 $ 293,990 — — Employee deferred compensation trust assets Money market funds $ 125,112 $ 125,112 — — Mutual funds - bond 38,705 38,705 — — Mutual funds - stock 401,751 401,751 — — Mutual funds - blend 107,672 107,672 — — Total employee deferred compensation trust assets $ 673,240 $ 673,240 — — Certain items, such as goodwill and other intangible assets, are recognized or disclosed at fair value on a nonrecurring basis. The Company determines the fair value of these items using Level 3 inputs. There are inherent limitations when estimating the fair value of financial instruments, and the fair values reported are not necessarily indicative of the amounts that would be realized in current market transactions. Allowance for Credit Losses. The Company is exposed to credit losses resulting from the inability of its customers to make required payments. The Company establishes an allowance for these potential credit losses based on its review of customers’ credit profiles, historical loss statistics, prepayments, recoveries, age of customer receivable balances, current business conditions and macroeconomic trends. The Company considers risk characteristics of trade receivables based on asset type and geographical locations to evaluate trade receivables on a collective basis. The Company applies credit loss estimates to these pooled receivables to determine expected credit losses. 9 ROBERT HALF INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued) March 31, 2025 The following table sets forth the activity in the allowance for credit losses from December 31, 2024, through March 31, 2025 (in thousands): Allowance for Credit Losses Balance as of December 31, 2024 $ 21,961 Charges to expense 1,232 Deductions ( 1,316 ) Other, including foreign currency translation adjustments 415 Balance as of March 31, 2025 $ 22,292 Note B— New Accounting Pronouncements Recently Adopted Accounting Pronouncements None Recently Issued Accounting Pronouncements Not Yet Adopted Income Tax Disclosures . In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Under this ASU, public filers must disclose annually (1) specific categories in the rate reconciliation, and (2) provide additional information for reconciling items that meet a quantitative threshold, if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income by the applicable statutory income tax rate. The new guidance is effective for public filers for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures. Income Statement Disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement, Reporting Comprehensive Income, Expense Disaggregation Disclosures (Subtopic 220-40). This ASU requires disclosure of disaggregated information about specific categories underlying certain income statement expense line items in the notes to the financial statements. This guidance is effective for public filers for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures. Note C— Revenue Recognition The Company derives its revenues from three segments: contract talent solutions, permanent placement talent solutions, and Protiviti. Revenues are recognized when promised goods or services are delivered to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Service revenues, as presented on the Condensed Consolidated Statements of Operations, represent services rendered to customers less variable consideration, such as sales adjustments and allowances. Reimbursements, including those related to travel and out-of-pocket expenses, are also included in service revenues, and equivalent amounts of reimbursable expenses are included in costs of services. Contract talent solutions revenues. Contract talent solutions revenues from contracts with customers are recognized in the amount to which the Company has a right to invoice when the services are rendered by the Company’s engagement professionals. The substantial majority of engagement professionals placed on assignment by the Company are the Company’s legal employees while they are working on assignments. The Company pays all related costs of employment, including workers’ compensation insurance, state and federal unemployment taxes, social security, and certain fringe benefits. The Company assumes the risk of acceptability of its employees to its customers. The Company records contract talent solutions revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded that gross reporting is appropriate because the Company (i) has the risk of identifying and hiring qualified employees, (ii) has the discretion to select the employees and 10 ROBERT HALF INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued) March 31, 2025 establish their price and duties, and (iii) bears the risk for services that are not fully paid for by customers. Fees paid to time management or vendor management service providers selected by clients are recorded as a reduction of revenues, as the Company is not the primary obligor with respect to those services. Permanent placement talent solutions revenues. Permanent placement talent solutions revenues from contracts with customers are primarily recognized when employment candidates accept offers of permanent employment. The Company has a substantial history of estimating the financial impact of permanent placement candidates who do not remain with its clients through the 90 -day guarantee period. These amounts are established based primarily on historical data and are recorded as liabilities. Fees to clients are generally calculated as a percentage of the new employee’s annual compensation. No fees for permanent placement talent solutions services are charged to employment candidates. Protiviti revenues. Protiviti’s consulting services are generally provided on a time-and-material basis, fixed-fee basis, or unit basis. Revenues earned under time-and-material arrangements and fixed-fee arrangements are recognized using a proportional performance method. Revenue is measured using cost incurred relative to total estimated cost for the engagement to measure progress towards satisfying the Company’s performance obligations. Cost incurred represents work performed and thereby best depicts the transfer of control to the customer. Protiviti’s consulting services generally contain one or more performance obligation(s) which are satisfied over a period of time. Revenues are recognized over time as the performance obligations are satisfied, because the services provided do not have any alternative use to the Company, and contracts generally include language giving the Company an enforceable right to payment for services provided to date. Unit-based revenues are recognized when the service has transferred to the customer. Revenue is recognized based on unit price multiplied by the number of units delivered and based on specific terms outlined in contracts The Company periodically evaluates the need to provide for any losses on these projects, and losses are recognized when it is probable that a loss will be incurred. The following table presents the Company’s revenues disaggregated by functional specialization and segment (in thousands): Three Months Ended March 31, 2025 2024 Contract talent solutions Finance and accounting $ 562,933 $ 641,970 Administrative and customer support 165,627 199,932 Technology 152,542 157,970 Elimination of intersegment revenues (a) ( 117,897 ) ( 112,814 ) Total contract talent solutions 763,205 887,058 Permanent placement talent solutions 112,091 124,767 Protiviti 476,611 464,112 Total service revenues $ 1,351,907 $ 1,475,937 (a) Service revenues for finance and accounting, administrative and customer support, and technology include intersegment revenues, which represent revenues from services provided to the Company’s Protiviti segment in connection with the Company’s blended business solutions. Intersegment revenues for each functional specialization are aggregated and then eliminated as a single line. Payment terms in the Company’s contracts vary by the type and location of the Company’s customer and the services offered. The term between invoicing and when payment is due is not significant. 11 ROBERT HALF INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued) March 31, 2025 Contracts with multiple performance obligations are recognized as performance obligations are delivered, and contract value is allocated based on relative stand-alone selling values of the services and products in the arrangement. As of March 31, 2025, aggregate transaction price allocated to the performance obligations that were unsatisfied for contracts with an expected duration of greater than one year was $ 227.4 million. Of this amount, $ 209.4 million is expected to be recognized within the next 12 months. As of March 31, 2024, aggregate transaction price allocated to the performance obligations that were unsatisfied for contracts with an expected duration of greater than one year was $ 176.1 million. Contract liabilities are recorded when cash payments are received or due in advance of performance and are reflected in accounts payable and accrued expenses on the unaudited Condensed Consolidated Statements of Financial Position. The following table sets forth the activity in contract liabilities from December 31, 2024, through March 31, 2025 (in thousands): Contract Liabilities Balance as of December 31, 2024 $ 24,005 Payments in advance of satisfaction of performance obligations 6,320 Revenue recognized ( 14,823 ) Other, including translation adjustments 388 Balance as of March 31, 2025 $ 15,890 Note D— Other Current Assets Other current assets consisted of the following (in thousands): March 31, 2025 December 31, 2024 Prepaid expenses $ 89,742 $ 64,185 Unamortized cloud computing implementation costs 26,832 28,417 Other 49,332 53,712 Other current assets $ 165,906 $ 146,314 Note E— Property and Equipment, Net Property and equipment consisted of the following (in thousands): March 31, 2025 December 31, 2024 Computer hardware $ 115,778 $ 131,059 Computer software 228,294 224,609 Furniture and equipment 95,715 96,288 Leasehold improvements 200,457 200,565 Property and equipment, cost 640,244 652,521 Accumulated depreciation ( 514,611 ) ( 532,957 ) Property and equipment, net $ 125,633 $ 119,564 12 ROBERT HALF INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued) March 31, 2025 Note F— Other Noncurrent Assets Other noncurrent assets consisted of the following (in thousands): March 31, 2025 December 31, 2024 Unamortized cloud computing implementation costs $ 10,001 $ 10,517 Other intangible assets, net 913 1,218 Other noncurrent assets $ 10,914 $ 11,735 Note G— Leases The Company has operating leases for corporate and field offices, and certain equipment. The Company’s leases have remaining lease terms of less than one year to 11 years, some of which include options to extend the leases for up to seven years , and some of which include options to terminate the leases within one year . Operating lease expense was $ 20.0 million and $ 21.2 million for the three months ended March 31, 2025 and 2024, respectively. Supplemental cash flow information related to leases consisted of the following (in thousands): Three Months Ended March 31, 2025 2024 Cash paid for operating lease liabilities $ 19,579 $ 23,029 Right-of-use assets obtained in exchange for new operating lease liabilities $ 24,171 $ 21,802 Supplemental balance sheet information related to leases consisted of the following: March 31, 2025 December 31, 2024 Weighted average remaining lease term for operating leases 4.5 years 4.6 years Weighted average discount rate for operating leases 4.0 % 3.9 % Future minimum lease payments under noncancelable leases as of March 31, 2025, were as follows (in thousands): 2025 (excluding the three months ended March 31, 2025) $ 58,094 2026 66,372 2027 46,943 2028 33,918 2029 24,254 Thereafter 40,900 Less: Imputed interest ( 27,848 ) Present value of operating lease liabilities (a) $ 242,633 (a) Includes the current portion of $ 67.3 million for operating leases. As of March 31, 2025, the Company had additional future minimum lease obligations totaling $ 27.2 million under executed operating lease contracts that had not yet commenced. These operating leases include agreements for corporate and field office facilities with lease terms of three to 10 years. 13 ROBERT HALF INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued) March 31, 2025 Note H— Goodwill The following table sets forth the activity in goodwill from December 31, 2024 through March 31, 2025 (in thousands): Goodwill Contract talent solutions Permanent placement talent solutions Protiviti Total Balance as of December 31, 2024 $ 133,938 $ 26,063 $ 77,179 $ 237,180 Foreign currency translation adjustments 147 29 5 181 Balance as of March 31, 2025 $ 134,085 $ 26,092 $ 77,184 $ 237,361 Note I— Accrued Payroll and Benefit Costs Accrued payroll and benefit costs consisted of the following (in thousands): March 31, 2025 December 31, 2024 Payroll and benefits $ 300,403 $ 330,803 Payroll taxes 14,955 29,513 Workers’ compensation 12,449 12,469 Accrued payroll and benefit costs $ 327,807 $ 372,785 Note J— Employee Deferred Compensation Plan Obligations The Company provides various qualified defined contribution 401(k) plans covering eligible employees. The plans offer a savings feature with the Company matching employee contributions. Assets of this plan are held by an independent trustee for the sole benefit of participating employees. Nonqualified plans are provided for employees on a discretionary basis, including those not eligible for the qualified plans. These plans include provisions for salary deferrals and discretionary contributions. The asset value of the nonqualified plans was $ 671.4 million and $ 673.2 million as of March 31, 2025 and December 31, 2024, respectively. The Company holds these assets to satisfy the Company’s liabilities under its deferred compensation plans. The liability value for the nonqualified plans was $ 648.5 million and $ 678.4 million as of March 31, 2025 and December 31, 2024, respectively. Contribution expenses for the Company’s qualified and nonqualified defined contribution plans were $ 13.8 million and $ 13.4 million for the three months ended March 31, 2025 and 2024, respectively. The Company has statutory defined contribution plans and defined benefit plans outside the United States of America, which are not material. Note K— Commitments and Contingencies On March 23, 2015, Plaintiff Jessica Gentry, on her own behalf and on behalf of a putative class of allegedly similarly situated individuals, filed a complaint against the Company in the Superior Court of California, San Francisco County, which was subsequently amended on October 23, 2015. The complaint alleges that a putative class of current and former employees of the Company working in California since March 13, 2010, were denied compensation for the time they spent interviewing “for temporary and permanent employment opportunities” as well as performing activities related to the interview process. Gentry seeks recovery on her own behalf and on behalf of the putative class in an unspecified amount for this allegedly unpaid compensation. Gentry also seeks recovery of an unspecified amount for the alleged failure of the Company to provide her and the putative class with accurate wage statements. Gentry also seeks an unspecified amount of other damages, attorneys’ fees and statutory penalties, including penalties for allegedly not paying all wages due upon separation to former employees and 14 ROBERT HALF INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued) March 31, 2025 statutory penalties on behalf of herself and other allegedly “aggrieved employees” as defined by California’s Labor Code Private Attorneys General Act (“PAGA”). On January 4, 2016, the Court denied a motion by the Company to compel all of Gentry’s claims, except the PAGA claim, to individual arbitration. On March 8, 2024, the Court issued an order certifying: (1) a class of California-based temporary employees who attended at least one uncompensated interview with a third-party client at any time since March 13, 2010; (2) a subclass of class members who held a prior temporary job assignment before interviewing for a subsequent assignment; and (3) a subclass of class members who are no longer employed by the Company (i.e., a “waiting time penalties” subclass). At this stage of the litigation, it is not feasible to predict the outcome of or a range of loss, should a loss occur, from this proceeding and, accordingly, no amounts have been provided in the Company’s Financial Statements. The Company believes it has meritorious defenses to the allegations and the Company intends to continue to vigorously defend against the litigation. On April 6, 2018, Plaintiff Shari Dorff, on her own behalf and on behalf of a putative class of allegedly similarly situated individuals, filed a complaint against the Company in the Superior Court of California, County of Los Angeles. In addition to certain claims individual to Plaintiff Dorff, the complaint alleges that salaried recruiters based in California have been misclassified as exempt employees and seeks an unspecified amount for: unpaid wages resulting from such alleged misclassification; alleged failure to provide a reasonable opportunity to take meal periods and rest breaks; alleged failure to pay wages on a timely basis both during employment and upon separation; alleged failure to comply with California requirements regarding wage statements and record-keeping; and alleged improper denial of expense reimbursement. Plaintiff Dorff also seeks an unspecified amount of other damages, attorneys’ fees and penalties, including but not limited to statutory penalties on behalf of herself and other allegedly “aggrieved employees” as defined by PAGA. At this stage of the litigation, it is not feasible to predict the outcome of or a range of loss, should a loss occur, from this proceeding and, accordingly, no amounts have been provided in the Company’s Financial Statements. The Company believes it has meritorious defenses to the allegations and the Company intends to continue to vigorously defend against the litigation. The Company is involved in a number of other lawsuits arising in the ordinary course of business. While management does not expect any of these other matters to have a material adverse effect on the Company’s results of operations, financial position or cash flows, litigation is subject to certain inherent uncertainties. Legal costs associated with the resolution of claims, lawsuits and other contingencies are expensed as incurred. The Company has an unsecured revolving credit facility (the “Credit Agreement”) of $ 100 million, which matures May 2026. Borrowings under the Credit Agreement will bear interest in accordance with the terms of the borrowing which will be calculated according to the adjusted term Secured Overnight Financing Rate (“SOFR”), or an alternative base rate, plus an applicable margin. The Credit Agreement is subject to certain financial covenants, and the Company was in compliance with these covenants as of March 31, 2025. There were no borrowings under the Credit Agreement as of March 31, 2025, or December 31, 2024. Note L— Stockholders’ Equity Stock Repurchase Program. 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. The number and the cost of common stock shares repurchased during the three months ended March 31, 2025 and 2024, are reflected in the following table (in thousands): Three Months Ended March 31, 2025 2024 Common stock repurchased (in shares) 668 761 Common stock repurchased $ 39,279 $ 60,655 15 ROBERT HALF INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued) March 31, 2025 Additional stock repurchases were made in connection with employee stock plans, whereby Company shares were tendered by employees for the payment of applicable statutory withholding taxes. The number and the cost of employee stock plan repurchases made during the three months ended March 31, 2025 and 2024, are reflected in the following table (in thousands): Three Months Ended March 31, 2025 2024 Repurchases related to employee stock plans (in shares) 190 267 Repurchases related to employee stock plans $ 10,866 $ 21,168 The repurchased shares are held in treasury and are presented as if constructively retired. Treasury stock is accounted for using the cost method. Treasury stock activity for the three months ended March 31, 2025 and 2024, (consisting of purchases of shares for the treasury) is presented in the unaudited Condensed Consolidated Statements of Stockholders’ Equity. Repurchases of shares and issuances of dividends are applied first to the extent of retained earnings and any remaining amounts are applied to additional paid-in capital. Note M— Net Income Per Share The calculation of net income per share for the three months ended March 31, 2025 and 2024, is reflected in the following table (in thousands, except per share amounts): Three Months Ended March 31, 2025 2024 Net income $ 17,350 $ 63,701 Basic: Weighted average shares 100,666 103,787 Diluted: Weighted average shares 100,666 103,787 Dilutive effect of potential common shares 349 612 Diluted weighted average shares 101,015 104,399 Net income per share: Basic $ 0.17 $ 0.61 Diluted $ 0.17 $ 0.61 Note N— Business Segments The Company has three reportable segments: contract talent solutions, permanent placement talent solutions and Protiviti. Operating segments are defined as components of the Company for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”), a position currently held by the Company’s Chief Executive Officer, in deciding how to allocate resources and assess performance. The contract talent solutions reportable segment results from the aggregation of three operating segments with similar economic and qualitative characteristics: finance and accounting, administration and customer support, and technology. The contract talent solutions and permanent placement talent solutions segments provide specialized engagement professionals and full-time personnel, respectively, for finance and accounting, technology, marketing and creative, legal, and administrative and customer support roles. The Protiviti segment provides business and technology risk consulting and internal audit services. 16 ROBERT HALF INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued) March 31, 2025 The CODM uses segment income to evaluate performance and allocate resources to each segment. Segment income excludes interest income, income taxes and the impacts of the (income) loss from investments held in employee deferred compensation trusts, along with the related compensation costs and expenses. The CODM considers variances between actual results and expectations as well as historical trends for segment income when making decisions about allocating capital and personnel resources to each segment. The accounting policies of the segments are set forth in Note A— “ Summary of Significant Accounting Policies. ” The following tables provide a reconciliation of service revenues and segment income by reportable segment to consolidated results (in thousands): Three Months Ended March 31, Contract Talent Solutions 2025 2024 Service revenues (1) $ 763,205 $ 887,058 Segment costs of services (2) 466,272 536,488 Compensation expenses (3) 220,982 227,719 Other (4) 69,260 72,733 Segment selling, general and administrative expenses 290,242 300,452 Segment income $ 6,691 $ 50,118 Three Months Ended March 31, Permanent Placement Talent Solutions 2025 2024 Service revenues (1) $ 112,091 $ 124,767 Segment costs of services (2) 230 219 Compensation expenses (3) 88,900 92,322 Other (4) 19,337 20,371 Segment selling, general and administrative expenses 108,237 112,693 Segment income $ 3,624 $ 11,855 Three Months Ended March 31, Protiviti 2025 2024 Service revenues (1) $ 476,611 $ 464,112 Segment costs of services (2) 390,399 368,076 Compensation expenses (3) 25,043 23,627 Other (4) 52,773 50,108 Segment selling, general and administrative expenses 77,816 73,735 Segment income $ 8,396 $ 22,301 17 ROBERT HALF INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued) March 31, 2025 Three Months Ended March 31, Combined Segment 2025 2024 Service revenues (1) $ 1,351,907 $ 1,475,937 Costs of services (2) 856,901 904,783 Compensation expenses (3) 334,925 343,668 Other (4) 141,370 143,212 Selling, general and administrative expenses 476,295 486,880 Combined segment income 18,711 84,274 Interest income, net ( 3,572 ) ( 6,413 ) Income before income taxes $ 22,283 $ 90,687 (1) Service revenues presented above are shown net of eliminations of intersegment revenues. Intersegment revenues between the contract talent solutions segment and the Protiviti segment were $ 117.9 million and $ 112.8 million for the three months ended March 31, 2025 and 2024, respectively. Service revenues related to the intersegment activity are reflected in the Protiviti segment. (2) Segment costs of services consist of direct payroll, payroll taxes and benefit costs, as well as reimbursable expenses. Direct costs related to the intersegment activity are reflected in the Protiviti segment, including the costs of candidate payroll, fringe benefits and incremental recruiter compensation. For further information on costs of services, see Note A—“Summary of Significant Accounting Policies.” (3) Includes payroll and applicable taxes, employee incentive compensation and other employee costs not included in direct cost as noted above. (4) Other selling, general and administrative expenses is comprised of advertising, as well as other allocated expenses including lease expense, depreciation, cloud computing service costs and overhead costs. These costs are allocated to the individual segments based on an internal allocation method. The following table represents depreciation expense by segment (in thousands): Three Months Ended March 31, 2025 2024 Depreciation expense Contract talent solutions $ 6,498 $ 6,593 Permanent placement talent solutions 2,099 2,224 Protiviti 4,409 4,187 $ 13,006 $ 13,004 18 ROBERT HALF INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued) March 31, 2025 Note O— Subsequent Events During April 2025, the Company acquired Adamantia, a management consulting firm in France, for approximately $ 14 million in a strategic transaction that will enhance the capabilities of the Company. On May 1, 2025, the Company announced the following: Quarterly dividend per share $ 0.59 Declaration date May 1, 2025 Record date May 23, 2025 Payment date June 13, 2025 19