SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

 FORM 10-Q

______________________

 (Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED June 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                      to                     .

Commission File Number 1-10427

ROBERT HALF INTERNATIONAL INC.

(Exact name of registrant as specified in its charter)

Delaware		94-1648752
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
2884 Sand Hill Road
Suite 200
Menlo Park,	California	94025
(Address of principal executive offices)		(zip-code)

Registrant’s telephone number, including area code: (650) 234-6000

Securities registered pursuant to Section 12(b) of the Act
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	RHI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of July 31, 2022:

109,567,871 shares of $.001 par value Common Stock

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(in thousands, except share amounts)

	June 30, 2022		December 31, 2021
ASSETS
Cash and cash equivalents	$	590,909	$	619,001
Accounts receivable, net	1,091,598		984,691
Employee deferred compensation trust assets	416,678		494,991
Other current assets	161,557		169,864
Total current assets	2,260,742		2,268,547
Property and equipment, net	103,616		93,403
Right-of-use assets	215,656		228,793
Other intangible assets, net	2,500		3,334
Goodwill	222,268		222,855
Noncurrent deferred income taxes	129,053		135,427
Total assets	$	2,933,835	$	2,952,359
LIABILITIES
Accounts payable and accrued expenses	$	174,724	$	183,796
Accrued payroll and benefit costs	545,342		540,183
Employee deferred compensation plan obligations	440,319		535,276
Income taxes payable	22,094		15,631
Current operating lease liabilities	84,394		83,787
Total current liabilities	1,266,873		1,358,673
Noncurrent operating lease liabilities	166,197		181,291
Other liabilities	33,097		31,344
Total liabilities	1,466,167		1,571,308
Commitments and Contingencies (Note J)
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 109,606,600 shares and 110,685,989 shares	110		111
Additional paid-in capital	1,265,495		1,235,903
Accumulated other comprehensive income (loss)	(47,607)		(22,622)
Retained earnings	249,670		167,659
Total stockholders’ equity	1,467,668		1,381,051
Total liabilities and stockholders’ equity	$	2,933,835	$	2,952,359

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

2

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Service revenues	$	1,862,827	$	1,580,581	$	3,677,661	$	2,978,961
Costs of services	1,047,280		915,709		2,090,268		1,752,378
Gross margin	815,547		664,872		1,587,393		1,226,583
Selling, general and administrative expenses	509,394		488,093		1,023,588		911,155
(Income) loss from investments held in employee deferred compensation trusts (which is completely offset by related costs and expenses - Notes A & I)	65,622		(27,810)		95,623		(39,797)
Amortization of intangible assets	416		576		833		1,152
Interest (income) expense, net	(718)		151		(884)		105
Income before income taxes	240,833		203,862		468,233		353,968
Provision for income taxes	65,012		54,649		124,173		94,157
Net income	$	175,821	$	149,213	$	344,060	$	259,811
Net income per share:
Basic	$	1.62	$	1.35	$	3.16	$	2.34
Diluted	$	1.60	$	1.33	$	3.12	$	2.32
Shares:
Basic	108,833		110,861		109,025		111,141
Diluted	109,696		111,889		110,143		112,191
Dividends declared per share	$	0.43	$	0.38	$	0.86	$	0.76

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

3

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(in thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
COMPREHENSIVE INCOME (LOSS):
Net income	$	175,821	$	149,213	$	344,060	$	259,811
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax	(24,048)		4,398		(25,016)		(4,439)
Foreign defined benefit plan adjustments, net of tax	15		39		31		79
Total other comprehensive income (loss)	(24,033)		4,437		(24,985)		(4,360)
Total comprehensive income (loss)	$	151,788	$	153,650	$	319,075	$	255,451

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

4

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in thousands, except per share amounts)

	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
	Shares	Par Value
Balance at December 31, 2021	110,686	$	111	$	1,235,903	$	(22,622)	$	167,659	$	1,381,051
Net income	—	—		—		—		168,239		168,239
Other comprehensive income (loss)	—	—		—		(952)		—		(952)
Dividends declared ($0.43 per share)	—	—		—		—		(48,413)		(48,413)
Net issuances of restricted stock	598	1		(1)		—		—		—
Stock-based compensation	—	—		15,184		—		—		15,184
Repurchases of common stock	(537)	(1)		—		—		(62,340)		(62,341)
Balance at March 31, 2022	110,747	$	111	$	1,251,086	$	(23,574)	$	225,145	$	1,452,768
Net income	—	$	—	$	—	$	—	$	175,821	$	175,821
Other comprehensive income (loss)	—	—		—		(24,033)		—		(24,033)
Dividends declared ($0.43 per share)	—	—		—		—		(47,325)		(47,325)
Net issuances of restricted stock	4	—		—		—		—		—
Stock-based compensation	—	—		14,409		—		—		14,409
Repurchases of common stock	(1,144)	(1)		—		—		(103,971)		(103,972)
Balance at June 30, 2022	109,607	$	110	$	1,265,495	$	(47,607)	$	249,670	$	1,467,668

	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
	Shares	Par Value
Balance at December 31, 2020	113,128	$	113	$	1,179,972	$	(4,732)	$	29,936	$	1,205,289
Net income	—	—		—		—		110,598		110,598
Other comprehensive income (loss)	—	—		—		(8,797)		—		(8,797)
Dividends declared ($0.38 per share)	—	—		—		—		(43,300)		(43,300)
Net issuances of restricted stock	602	1		(1)		—		—		—
Stock-based compensation	—	—		14,182		—		—		14,182
Repurchases of common stock	(1,048)	(1)		—		—		(80,272)		(80,273)
Balance at March 31, 2021	112,682	$	113	$	1,194,153	$	(13,529)	$	16,962	$	1,197,699
Net income	—	$	—	$	—	$	—	$	149,213	$	149,213
Other comprehensive income (loss)	—	—		—		4,437		—		4,437
Dividends declared ($0.38 per share)	—	—		—		—		(42,720)		(42,720)
Net issuances of restricted stock	5	—		—		—		—		—
Stock-based compensation	—	—		13,903		—		—		13,903
Repurchases of common stock	(717)	(1)		—		—		(63,281)		(63,282)
Balance at June 30, 2021	111,970	$	112	$	1,208,056	$	(9,092)	$	60,174	$	1,259,250

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

5

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Six Months Ended June 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	344,060	$	259,811
Adjustments to reconcile net income to net cash provided by operating activities:
Allowance for credit losses	4,316		4,733
Depreciation	22,907		27,715
Amortization of cloud computing implementation costs	13,804		13,353
Amortization of intangible assets	833		1,152
Realized and unrealized (gains) losses from investments held in employee deferred compensation trusts	98,233		(36,949)
Stock-based compensation	29,593		28,085
Deferred income taxes	6,421		(5,524)
Changes in operating assets and liabilities:
Accounts receivable	(129,983)		(201,602)
Capitalized cloud computing implementation costs	(19,540)		(16,236)
Accounts payable and accrued expenses	(8,374)		17,138
Accrued payroll and benefit costs	15,848		68,340
Employee deferred compensation plan obligations	(94,957)		46,236
Income taxes payable	21,516		22,110
Other assets and liabilities, net	(2,599)		5,110
Net cash flows provided by operating activities	302,078		233,472
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(35,275)		(16,114)
Investments in employee deferred compensation trusts	(45,061)		(42,423)
Proceeds from employee deferred compensation trust redemptions	25,140		27,424
Net cash flows used in investing activities	(55,196)		(31,113)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable	—		(117)
Repurchases of common stock	(160,610)		(145,314)
Dividends paid	(96,229)		(86,479)
Net cash flows used in financing activities	(256,839)		(231,910)
Effect of exchange rate fluctuations	(18,135)		(2,070)
Change in cash and cash equivalents	(28,092)		(31,621)
Cash and cash equivalents at beginning of period	619,001		574,426
Cash and cash equivalents at end of period	$	590,909	$	542,805
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Non-cash items:
Repurchases of common stock awaiting settlement	$	11,296	$	1,345
Fund exchanges within employee deferred compensation trusts	$	66,645	$	63,154

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

6

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2022

Note A—Summary of Significant Accounting Policies

Nature of Operations. Robert Half International Inc. (the “Company”) is a specialized talent solutions and business consulting firm that connects opportunities at great companies with highly skilled job seekers. Robert Half® offers contract talent solutions and permanent placement talent solutions for finance and accounting, technology, marketing and creative, legal, administrative and customer support roles. Robert Half is also the parent company of Protiviti®, a global consulting firm that provides internal audit, risk, business, and technology consulting solutions.

The Company recently completed a multiyear process to unify its family of Robert Half endorsed divisional brands to a single brand, Robert Half. This simplifies the Company’s go-to-market brand structure for clients and candidates, provides leverage for greater brand awareness, and allows future flexibility to expand the Company’s existing functional specializations. In connection with this process, the Company’s current financial statement disclosures reflect new names for its reportable segments, including contract talent solutions (formerly temporary and consultant staffing), permanent placement talent solutions (formerly permanent placement staffing) and Protiviti (formerly risk consulting and internal audit services). What was previously referred to as staffing operations is now referred to as talent solutions.

The presentation of contract talent solutions includes functional specializations rather than the previously branded divisions. The functional specializations are: finance and accounting, which combines the former Accountemps® and Robert Half® Management Resources divisions; administrative and customer support, which consists of the former OfficeTeam®; and technology, which includes the former Robert Half® Technology.

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, 2021, 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 Condensed Consolidated Financial Statements to conform to the 2022 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 June 30, 2022, such estimates include allowances for credit losses, variable consideration, workers’ compensation losses, accrued medical expenses, income and other taxes, 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.

7

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2022

Costs of Services. Direct costs of contract talent solutions consist of professional staff 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 $14.5 million and $28.7 million for the three and six months ended June 30, 2022, respectively, and $11.8 million and $20.2 million for the three and six months ended June 30, 2021, 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 deferred compensation obligation to employees changes accordingly. Changes in the Company’s deferred compensation obligations remain 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. 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.

The following table presents the Company’s (income) loss from investments held in employee deferred compensation trusts (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Dividend income	$	(2,315)	$	(2,556)	$	(2,610)	$	(2,848)
Realized and unrealized (gains) losses	67,937		(25,254)		98,233		(36,949)
(Income) loss from investments held in employee deferred compensation trusts	$	65,622	$	(27,810)	$	95,623	$	(39,797)

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 INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2022

The following table sets forth the composition of the underlying assets which comprise the Company’s deferred compensation trust assets (in thousands):

			Fair Value Measurements Using
	Balance at June 30, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets
Money market funds	$	76,166	$	76,166	—	—
Mutual funds - bond	29,939		29,939		—	—
Mutual funds - stock	232,565		232,565		—	—
Mutual funds - blend	78,008		78,008		—	—
	$	416,678	$	416,678	—	—
			Fair Value Measurements Using
	Balance at December 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets
Money market funds	$	66,700	$	66,700	—	—
Mutual funds - bond	30,750		30,750		—	—
Mutual funds - stock	303,277		303,277		—	—
Mutual funds - blend	94,264		94,264		—	—
	$	494,991	$	494,991	—	—

Certain items such as goodwill and other intangible assets are recognized or disclosed at fair value on a non-recurring 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 INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2022

The following table sets forth the activity in the allowance for credit losses from December 31, 2021 through June 30, 2022 (in thousands):

	Allowance for Credit Losses
Balance as of December 31, 2021	$	21,530
Charges to expense	4,316
Deductions	(2,206)
Other, including foreign currency translation adjustments	(805)
Balance as of June 30, 2022	$	22,835

Note B—New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Government Assistance. In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” to increase the transparency of government assistance including the disclosure of the types of assistance an entity receives, an entity’s method of accounting for government assistance and the effect of the assistance on an entity’s financial statements. This standard is effective for annual periods beginning after December 15, 2021. The amendments should be applied either (1) prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application, or (2) retrospectively to those transactions. The Company adopted this ASU in January 2022. The adoption of this guidance did not have a material impact on its financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

None.

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 in the unaudited 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 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 revenues 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 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.

10

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2022

Permanent placement talent solutions revenues. Permanent placement talent solutions revenues 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 or fixed-fee 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.

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 service revenues disaggregated by functional specialization and segment (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Contract talent solutions
Finance and accounting	$	810,910	$	663,892	$	1,612,600	$	1,264,326
Administrative and customer support	274,141		263,192		559,047		483,665
Technology	218,190		194,233		431,517		366,406
Elimination of intersegment revenues (a)	(137,548)		(143,036)		(281,748)		(246,840)
Total contract talent solutions	1,165,693		978,281		2,321,416		1,867,557
Permanent placement talent solutions	200,096		143,640		386,878		255,344
Protiviti	497,038		458,660		969,367		856,060
Total service revenues	$	1,862,827	$	1,580,581	$	3,677,661	$	2,978,961

(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 of the Company’s customer and the services offered. The term between invoicing and when payment is due is not significant.

Contracts with multiple performance obligations are recognized as performance obligations are delivered, and contract value is allocated based on relative standalone selling values of the services and products in the arrangement. As of June 30, 2022, aggregate transaction price allocated to the performance obligations that were unsatisfied for contracts with an expected duration of greater than one year was $202.4 million. Of this amount, $183.6 million is expected to be recognized within the next twelve months. As of June 30, 2021, aggregate transaction price allocated to the performance obligations that were unsatisfied for contracts with an expected duration of greater than one year was $173.5 million.

11

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2022

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, 2021 through June 30, 2022 (in thousands):

	Contract Liabilities
Balance as of December 31, 2021	$	25,601
Payments in advance of satisfaction of performance obligations	36,646
Revenue recognized	(41,310)
Other, including translation adjustments	(876)
Balance as of June 30, 2022	$	20,061

Note D—Other Current Assets

Other current assets consisted of the following (in thousands):

	June 30, 2022		December 31, 2021
Prepaid expenses	$	72,932	$	69,526
Unamortized cloud computing implementation costs	50,410		44,692
Other	38,215		55,646
Other current assets	$	161,557	$	169,864

Note E—Property and Equipment, Net

Property and equipment consisted of the following (in thousands):

	June 30, 2022		December 31, 2021
Computer hardware	$	168,714	$	157,408
Computer software	248,496		246,013
Furniture and equipment	94,206		93,144
Leasehold improvements	164,611		165,153
Property and equipment, cost	676,027		661,718
Accumulated depreciation	(572,411)		(568,315)
Property and equipment, net	$	103,616	$	93,403

12

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2022

Note F—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 1 year to 8 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year. Operating lease expenses were $22.5 million and $45.1 million for the three and six months ended June 30, 2022, respectively, and $21.7 million and $43.2 million for the three and six months ended June 30, 2021, respectively.

Supplemental cash flow information related to leases consisted of the following (in thousands):

	Six Months Ended June 30,
	2022		2021
Cash paid for operating lease liabilities	$	46,743	$	45,531
Right-of-use assets obtained in exchange for operating lease liabilities from new leases	$	17,384	$	8,467
Right-of-use assets obtained in exchange for operating lease liabilities from lease modifications or reassessments	$	17,744	$	13,829

Supplemental balance sheet information related to leases consisted of the following:

	June 30, 2022		December 31, 2021
Weighted average remaining lease term for operating leases	3.6 years		3.9 years
Weighted average discount rate for operating leases	2.3	%	2.3	%

Future minimum lease payments under non-cancellable leases as of June 30, 2022, were as follows (in thousands):

2022 (excluding the six months ended June 30, 2022)	$	46,348
2023	79,956
2024	60,256
2025	36,690
2026	23,270
Thereafter	14,623
Less: Imputed interest	(10,552)
Present value of operating lease liabilities (a)	$	250,591

(a) Includes current portion of $84.4 million for operating leases.

As of June 30, 2022, the Company had additional future minimum lease obligations totaling $6.1 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 1 to 6 years.

13

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2022

Note G—Goodwill

The following table sets forth the activity in goodwill from December 31, 2021 through June 30, 2022 (in thousands):

	Goodwill
	Contract talent solutions		Permanent placement talent solutions		Protiviti		Total
Balance as of December 31, 2021	$	134,584	$	26,189	$	62,082	$	222,855
Foreign currency translation adjustments	(369)		(72)		(146)		(587)
Balance as of June 30, 2022	$	134,215	$	26,117	$	61,936	$	222,268

The Company completed its annual assessment of the recoverability of goodwill during the quarter ended June 30, 2022, and determined there were no events or circumstances that would more likely than not reduce the fair value of the Company’s reporting units below their carrying value.

Note H—Accrued Payroll and Benefit Costs

Accrued payroll and benefit costs consisted of the following (in thousands):

	June 30, 2022		December 31, 2021
Payroll and benefits	$	471,325	$	449,246
Payroll taxes	57,108		74,117
Workers’ compensation	16,909		16,820
Accrued payroll and benefit costs	$	545,342	$	540,183

The Company, under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, deferred paying $51.1 million of applicable payroll taxes as of both June 30, 2022 and December 31, 2021, which is expected to be paid during the next 12 months and is included in payroll taxes.

Note I—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 $416.7 million and $495.0 million as of June 30, 2022 and December 31, 2021, 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 $440.3 million and $535.3 million as of June 30, 2022 and December 31, 2021, respectively.

14

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2022

The following table presents the Company’s compensation expense related to its qualified defined contribution plans and nonqualified plans (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Contribution expense	$	12,794	$	13,918	$	24,996	$	23,472
Increase (decrease) in employee deferred compensation expense related to changes in the fair value of trust assets	(65,622)		27,810		(95,623)		39,797
	$	(52,828)	$	41,728	$	(70,627)	$	63,269

The Company has statutory defined contribution plans and defined benefit plans outside the United States of America, which are not material.

Note J—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 statutory penalties on behalf of herself and other allegedly “aggrieved employees” as defined by California’s Labor Code Private Attorney 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. 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.

15

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2022

In May 2021, the Company entered into an amendment to extend the maturity of its $100.0 million unsecured revolving credit facility (the “Credit Agreement”) to May 2024. Borrowings under the Credit Agreement will bear interest in accordance with the terms of the borrowing, which typically will be calculated according to the London Interbank Offered Rate or an alternative base rate, plus an applicable margin. The Credit Agreement is subject to certain financial covenants and the Company was in compliance with these covenants as of June 30, 2022. There were no borrowings under the Credit Agreement as of June 30, 2022.

Note K—Stockholders’ Equity

Stock Repurchase Program. As of June 30, 2022, the Company is authorized to repurchase, from time to time, up to 5.8 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 six months ended June 30, 2022 and 2021, are reflected in the following table (in thousands):

	Six Months Ended June 30,
	2022		2021
Common stock repurchased (in shares)	1,386		1,514
Common stock repurchased	$	133,527	$	124,210

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 six months ended June 30, 2022 and 2021, are reflected in the following table (in thousands):

	Six Months Ended June 30,
	2022		2021
Repurchases related to employee stock plans (in shares)	295		251
Repurchases related to employee stock plans	$	32,786	$	19,345

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 six months ended June 30, 2022 and 2021, (consisting of purchase 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.

16

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2022

Note L—Net Income Per Share

The calculation of net income per share for the three and six months ended June 30, 2022 and 2021, is reflected in the following table (in thousands, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income	$	175,821	$	149,213	$	344,060	$	259,811
Basic:
Weighted average shares	108,833		110,861		109,025		111,141
Diluted:
Weighted average shares	108,833		110,861		109,025		111,141
Dilutive effect of potential common shares	863		1,028		1,118		1,050
Diluted weighted average shares	109,696		111,889		110,143		112,191
Net income per share:
Basic	$	1.62	$	1.35	$	3.16	$	2.34
Diluted	$	1.60	$	1.33	$	3.12	$	2.32

Note M—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 in deciding how to allocate resources and assess performance. 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, administrative and customer support roles. The Protiviti segment provides business and technology risk consulting and internal audit services.

The accounting policies of the segments are set forth in Note A—“Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The Company evaluates performance based on income before net interest (income) expense, intangible assets amortization expense, and income taxes.

17

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2022

The following table provides a reconciliation of service revenues and segment income by reportable segment to consolidated results for the three and six months ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Service revenues
Contract talent solutions	$	1,165,693	$	978,281	$	2,321,416	$	1,867,557
Permanent placement talent solutions	200,096		143,640		386,878		255,344
Protiviti	497,038		458,660		969,367		856,060
	$	1,862,827	$	1,580,581	$	3,677,661	$	2,978,961
Segment income
Contract talent solutions	$	133,567	$	94,010	$	266,813	$	169,688
Permanent placement talent solutions	36,751		30,599		74,079		48,234
Protiviti	70,213		79,980		127,290		137,303
Combined segment income	240,531		204,589		468,182		355,225
Amortization of intangible assets	416		576		833		1,152
Interest (income) expense, net	(718)		151		(884)		105
Income before income taxes	$	240,833	$	203,862	$	468,233	$	353,968

Service revenues presented above are shown net of eliminations of intersegment revenues. Intersegment revenues between the contract talent solutions segment and Protiviti segment were $137.5 million and $281.7 million for the three and six months ended June 30, 2022, respectively, and $143.0 million and $246.8 million six months ended June 30, 2021, respectively.

Revenue and 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.

Note N—Subsequent Events

On August 2, 2022, the Company announced the following:

Quarterly dividend per share	$0.43
Declaration date	August 2, 2022
Record date	August 25, 2022
Payment date	September 15, 2022

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain information contained in Management’s Discussion and Analysis and in other parts of this report may be deemed forward-looking statements regarding events and financial trends that may affect the future operating results or financial positions of Robert Half International Inc. (the “Company”). These statements may be identified by words such as “estimate,” “forecast,” “project,” “plan,” “intend,” “believe,” “expect,” “anticipate,” or variations or negatives thereof or by similar or comparable words or phrases. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. These risks and uncertainties include, but are not limited to, the following: changes to or new interpretations of United States of America ("U.S.") or international tax regulations, the global financial and economic situation; the duration and impact of the COVID-19 pandemic and efforts to mitigate its spread; changes in levels of unemployment and other economic conditions in the U.S. or foreign countries where the Company does business, or in particular regions or industries; reduction in the supply of candidates for contract employment or the Company’s ability to attract candidates; the entry of new competitors into the marketplace or expansion by existing competitors; 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 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; the possibility that adverse publicity could impact the Company’s ability to attract and retain clients and candidates; the success of the Company in attracting, training, and retaining qualified management personnel and other staff employees; the Company’s ability to comply with governmental regulations affecting personnel services businesses in particular or employer/employee relationships in general; whether there will be ongoing demand for Sarbanes-Oxley or other regulatory compliance services; the Company’s reliance on short-term contracts for a significant percentage of its business; litigation relating to prior or current transactions or activities, including litigation that may be disclosed from time to time in the Company’s Securities and Exchange Commission (“SEC”) filings; the ability of the Company to manage its international operations and comply with foreign laws and regulations; the impact of fluctuations in foreign currency exchange rates; 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; 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. Additionally, with respect to Protiviti, other risks and uncertainties include the fact that future success will depend on its ability to retain employees and attract clients; there can be no assurance that there will be ongoing demand for broad based consulting, regulatory compliance, technology services, public sector or other high demand advisory services; failure to produce projected revenues could adversely affect financial results; and there is the possibility of involvement in litigation relating to prior or current transactions or activities. Because long-term contracts are not a significant part of the Company’s business, future results cannot be reliably predicted by considering past trends or extrapolating past results.

Executive Overview

The Company recently completed a multiyear process to unify its family of Robert Half endorsed divisional brands to a single brand, Robert Half. This simplifies the Company’s go-to-market brand structure for clients and candidates and provides leverage for greater brand awareness and allows future flexibility to expand the Company’s existing functional specializations. In connection with this process, the Company’s current financial statement disclosures reflect new names for its reportable segments, including contract talent solutions (formerly temporary and consultant staffing), permanent placement talent solutions (formerly permanent placement staffing) and Protiviti (formerly risk consulting and internal audit services). What was previously referred to as staffing operations is now referred to as talent solutions.

The presentation of contract talent solutions includes functional specializations rather than the previously branded divisions. The functional specializations are: finance and accounting, which combines the former Accountemps® and Robert Half® Management Resources divisions; administrative and customer support, which consists of the former OfficeTeam®; and technology, which includes the former Robert Half® Technology.

The Company reported another very strong quarter which reflects a robust global labor market and demand environment, although reported results were unfavorably impacted by currency exchange rates as the U.S. dollar strengthened against the Euro and British pound. During the first half of 2022, service revenues were $3.68 billion, an increase of 23.5% from the prior year. Net income increased 32.4% to $344 million and diluted net income per share increased 34.5% to $3.12.

19

The Company’s talent solutions led the way, with permanent placement and contract talent solutions achieving year-over-year revenue growth of 51.5% and 24.3%, respectively. Protiviti also performed strong, growing year-over-year revenues by 13.2%.

Remote and hybrid working models are here to stay and provide the Company with a significant opportunity to capitalize on the structure shift in how companies source talent. This plays to the Company’s numerous strengths, including its global brand, office network, candidate database and AI-driven technologies.

Demand for the Company’s contract talent solutions, permanent placement talent solutions, and consulting talent is largely dependent upon general economic and labor trends both domestically and abroad. The U.S. economic backdrop and labor trends for the first half of 2022 remained conducive to growth for the Company as the unemployment rate decreased from 3.9% in December 2021 to 3.6% at the end of the second quarter of 2022. In the U.S., job openings and quit rates remain elevated and only modestly below all-time highs. The U.S. labor market remains robust, with significant demand due to talent shortages across professional disciplines.

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. These trends are evaluated to determine the appropriate level of investment, including personnel, which will best position the Company for success in the current and future global macroeconomic environment. The Company’s investments in headcount are typically structured to proactively support and align with expected revenue growth trends and productivity metrics. Visibility into future revenues is limited not only due to the dependence on macroeconomic conditions noted above, but also because of the relatively short duration of the Company’s client engagements. Accordingly, the Company’s headcount and other investments are typically assessed on at least a quarterly basis. During the first half of 2022, the Company increased headcount across all segments when compared to prior year-end levels.

Critical Accounting Policies and Estimates

The Company’s most critical accounting policies and estimates are those that involve subjective decisions or assessments and are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. There were no material changes to the Company’s critical accounting policies or estimates for the six months ended June 30, 2022.

Recent Accounting Pronouncements

See Note B—“New Accounting Pronouncements” to the Company’s Condensed Consolidated Financial Statements included under Part I—Item 1 of this report.

Results of Operations

The Company analyzes its operating results for three reportable segments: contract talent solutions, permanent placement talent solutions, and Protiviti. 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, administrative and customer support roles. The Protiviti segment provides business and technology risk consulting and internal audit services.

Demand for the Company’s contract talent solutions, permanent placement talent solutions, and consulting talent is largely dependent upon general economic and labor trends both domestically and abroad. Because of the inherent difficulty in predicting economic trends, future demand for the Company’s services cannot be forecast with certainty.

The Company’s talent solutions business has 316 offices in 42 states, the District of Columbia and 17 foreign countries, while Protiviti has 65 offices in 23 states and 13 foreign countries.

20

Non-GAAP Financial Measures

The financial results of the Company are prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”) and the rules of the SEC. To help readers understand the Company’s financial performance, the Company supplements its GAAP financial results with the following non-GAAP measures: as adjusted revenue growth rates; adjusted gross margin; adjusted selling, general and administrative expense; segment income and combined segment income.

Variations in the Company’s financial results include the impact of changes in foreign currency exchange rates and billing days. The Company provides “as adjusted” revenue growth calculations to remove the impact of these items. These calculations show the year-over-year revenue growth rates for the Company’s functional specializations and segments on both a reported basis and also on an as adjusted basis for global, U.S., and international operations. The Company has provided this data because it focuses on the Company’s revenue growth rates attributable to operating activities and aids in evaluating revenue trends over time. The Company expresses year-over-year revenue changes as calculated percentages using the same number of billing days and constant currency exchange rates.

In order to calculate constant currency revenue growth rates, as reported amounts are retranslated using foreign currency exchange rates from the prior year’s comparable period. Management then calculates a global, weighted average number of billing days for each reporting period based upon input from all countries and all functional specializations and segments. In order to remove the fluctuations caused by comparable periods having different billing days, the Company calculates same billing day revenue growth rates by dividing each comparative period’s reported revenues by the calculated number of billing days for that period to arrive at a per billing day amount. Same billing day growth rates are then calculated based upon the per billing day amounts. The term “as adjusted” means that the impact of different billing days and currency fluctuations are removed from the revenue growth rate calculation.

The following measures: adjusted gross margin; adjusted selling, general and administrative expense; and segment 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 net interest (income) expense, net and amortization of intangible assets. The Company provides combined segment income because it is how management evaluates segment performance.

The non-GAAP financial measures provided herein may not provide information that is directly comparable to that provided by other companies in the Company’s industry, as other companies may calculate such financial results differently. The Company’s non-GAAP financial measures are not measurements of financial performance under GAAP and should not be considered as alternatives to amounts presented in accordance with GAAP. The Company does not consider these non-GAAP financial measures to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is provided on the following pages.

Refer to Item 3. “Quantitative and Qualitative Disclosures About Market Risk” for further discussion of the impact of foreign currency exchange rates on the Company’s results of operations and financial condition.

Three Months Ended June 30, 2022 and 2021

Revenues. The Company’s revenues were $1.86 billion for the three months ended June 30, 2022, increasing by 17.9% compared to $1.58 billion for the three months ended June 30, 2021. Revenues from U.S. operations increased 20.2% to $1.47 billion (78.8% of total revenue) for the three months ended June 30, 2022, compared to $1.22 billion (77.2% of total revenue) for the three months ended June 30, 2021. Revenues from international operations increased 10.0% to $396 million (21.2% of total revenue) for the three months ended June 30, 2022, compared to $360 million (22.8% of total revenue) for the three months ended June 30, 2021. Contributing factors for each reportable segment are discussed below in further detail.

Contract talent solutions revenues were $1.16 billion for the three months ended June 30, 2022, increasing by 19.2% compared to revenues of $978 million for the three months ended June 30, 2021. 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. On an as adjusted basis, contract talent solutions revenues increased 21.3% for the second quarter of 2022, compared to the second quarter of 2021, primarily due to an increase in the number of hours worked by the Company’s engagement professionals and an 8.2% increase in weighted average bill rates, adjusted for changes in the mix of revenues by functional specialization, currency and country. In the U.S., revenues in the second quarter of 2022 increased 22.7% on both an as reported basis and on an as adjusted basis, compared to the second quarter of 2021. For the Company’s international

21

operations, revenues for the second quarter of 2022 increased 7.0% on an as reported basis, and increased 16.6% on an as adjusted basis compared to the second quarter of 2021.

Permanent placement talent solutions revenues were $200 million for the three months ended June 30, 2022, increasing by 39.3% compared to revenues of $144 million for the three months ended June 30, 2021. Key drivers of permanent placement talent solutions revenues consist of the number of candidate placements and average fees earned per placement. On an as adjusted basis, permanent placement talent solutions revenues increased 42.6% for the second quarter of 2022, compared to the second quarter of 2021, driven by an increase in number of placements. In the U.S., revenues for the second quarter of 2022 increased 44.3% on both an as reported basis and on an as adjusted basis, compared to the second quarter of 2021. For the Company’s international operations, revenues for the second quarter of 2022 increased 28.0% on an as reported basis and 39.0% on an as adjusted basis, compared to the second quarter of 2021. 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 $497 million for the three months ended June 30, 2022, increasing by 8.4% compared to revenues of $459 million for the three months ended June 30, 2021. Key drivers of Protiviti revenues are the billable hours worked by consultants on client engagements and average hourly bill rates. On an as adjusted basis, Protiviti revenues increased 10.8% for the second quarter of 2022, compared to the second quarter of 2021, due primarily to an increase in billable hours. In the U.S., revenues in the second quarter of 2022 increased 8.3% on both an as reported basis and on an as adjusted basis, compared to the second quarter of 2021. For the Company’s international operations, revenues for the second quarter of 2022 increased 8.6% on an as reported basis and 20.6% on an as adjusted basis, compared to the second quarter of 2021.

A reconciliation of the non-GAAP year-over-year revenue growth rates to the as reported year-over-year revenue growth rates for the three months ended June 30, 2022, is presented in the following table:

	Global		United States		International
Contract talent solutions
As Reported	19.2	%	22.7	%	7.0	%
Billing Days Impact	0.0	%	0.0	%	0.2	%
Currency Impact	2.1	%	―		9.4	%
As Adjusted	21.3	%	22.7	%	16.6	%
Permanent placement talent solutions
As Reported	39.3	%	44.3	%	28.0	%
Billing Days Impact	0.0	%	0.0	%	0.2	%
Currency Impact	3.3	%	―		10.8	%
As Adjusted	42.6	%	44.3	%	39.0	%
Protiviti
As Reported	8.4	%	8.3	%	8.6	%
Billing Days Impact	0.0	%	0.0	%	0.2	%
Currency Impact	2.4	%	―		11.8	%
As Adjusted	10.8	%	8.3	%	20.6	%

Gross Margin. The Company’s gross margin dollars were $816 million for the three months ended June 30, 2022, increasing by 22.7% compared to $665 million for the three months ended June 30, 2021. 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 talent solutions position converts to a permanent position with the Company’s client. Gross margin dollars for contract talent solutions were $465 million for the three months ended June 30, 2022, increasing 19.8% compared to $388 million for the three months ended June 30, 2021. As a percentage of revenues, gross margin for contract talent solutions was 39.9% in the second quarter of 2022, up from 39.7% in the second quarter of 2021.

22

Gross margin dollars for permanent placement talent solutions represent revenues less reimbursable expenses. Gross margin dollars for permanent placement talent solutions were $200 million for the three months ended June 30, 2022, increasing 39.2% from $143 million for the three months ended June 30, 2021. Because reimbursable expenses for permanent placement talent solutions are de minimis, gross margin dollars are substantially explained by revenues previously discussed.

Gross margin dollars for Protiviti represent revenues less costs of services, which consist primarily of profess