- Global Enterprise Revenues: $1.382 billion, down 6% year-over-year on an as-reported basis.
- Net Income Per Share: $0.53, compared to $0.83 in the previous year.
- Cash Flow from Operations: $155 million.
- Cash Dividend: $0.53 per share, totaling $54 million, a 10.4% increase from the prior year.
- Share Repurchase: Approximately 1 million shares acquired for $77 million.
- Return on Invested Capital: 15% for the fourth quarter.
- U.S. Talent Solutions Revenues: $686 million, down 11% year-over-year.
- Non-U.S. Talent Solutions Revenues: $208 million, down 14% year-over-year.
- Protiviti Global Revenues: $488 million, up 5% year-over-year.
- Protiviti U.S. Revenues: $396 million, up 6% year-over-year.
- Protiviti Non-U.S. Revenues: $92 million, flat year-over-year.
- Contract Talent Solutions Gross Margin: 39.1%, compared to 39.7% in the previous year.
- Overall Talent Solutions Gross Margin: 46.4%, compared to 46.9% in the previous year.
- Protiviti Gross Margin: 24.9%, compared to 23.9% in the previous year.
- SG&A Costs: 34.1% of global revenues, compared to 35.1% in the previous year.
- Operating Income: $65 million.
- Fourth Quarter Tax Rate: 28%, compared to 27% in the previous year.
- Accounts Receivable: $772 million with a DSO of 50.5 days.
- First Quarter 2025 Revenue Guidance: $1.35 billion to $1.45 billion.
- First Quarter 2025 Income Per Share Guidance: $0.31 to $0.41.
Release Date: January 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Protiviti reported year-on-year revenue growth for the second consecutive quarter, with a 5% increase globally.
- Cash flow from operations was strong at $155 million, and the company distributed a $0.53 per share cash dividend, marking a 10.4% increase from the previous year.
- Robert Half Inc (RHI, Financial) repurchased approximately 1 million shares during the quarter, indicating confidence in the company's valuation.
- The company maintained a return on invested capital of 15% in the fourth quarter.
- Protiviti's collaboration with talent solutions has been a significant competitive advantage, with contractor-sourced revenues up 18%.
Negative Points
- Global enterprise revenues decreased by 6% on a reported basis and 7% on an adjusted basis compared to the previous year.
- Net income per share dropped to $0.53 from $0.83 in the same quarter last year.
- U.S. talent solutions revenues fell by 11%, and non-U.S. talent solutions revenues decreased by 14% year over year.
- Contract talent solutions gross margin declined to 39.1% from 39.7% in the previous year.
- The company experienced a decrease in permanent placement revenues, which were down 6% in December compared to the previous year.
Q & A Highlights
Q: Can you explain the factors behind Protiviti's revenue growth deceleration in Q4 and the expected reacceleration in Q1?
A: Keith Waddell, CEO: The holidays had a larger-than-expected impact due to client soft closes and contract signing delays. However, Protiviti's solution growth was strong and broad-based, with momentum expected to continue into Q1. The pipeline is strong, particularly in risk and consulting, including anti-money laundering.
Q: How does the recent increase in NFIB Small Business Optimism Index affect your outlook, and are there any concerns about AI impacting small businesses?
A: Keith Waddell, CEO: Current job openings and unemployment rates are more favorable than past recoveries, indicating a tighter labor market. We haven't seen a meaningful impact from AI on our business. We've maintained staffing levels, expecting margins to recover as they did in past cycles.
Q: Have new orders for Robert Half's contract business picked up, and how does the tech business compare to F&A in terms of recovery trajectory?
A: Keith Waddell, CEO: Early January was noisy due to holidays, but client sentiment is improving. While it's too early for an uptick in starts and placements, tech has performed better, particularly in data analytics and ERP modernization, and may outperform F&A in the next cycle.
Q: What is the demand environment for your international business, and how do you expect Protiviti's operating margins to perform in 2025?
A: Keith Waddell, CEO: International demand is modestly softer but not dramatically so. Protiviti's full-year operating margins are expected to increase, with a goal of achieving double-digit revenue growth and operating margins.
Q: How does Protiviti's use of contractors from talent solutions impact your business, and what are the expectations for small business optimism translating into hiring?
A: Keith Waddell, CEO: Protiviti's use of contractors is rising, providing a competitive advantage. Small business optimism is high, but clients are in a "show-me" state, waiting for tangible improvements before increasing hiring. We expect this to eventually lead to more starts and placements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
