Hello, and welcome to the Robert Half Second Quarter 2023 Conference Call. Today's conference call is being recorded. [Operator Instructions] Our hosts for today's call are Mr. Keith Waddell, President and Chief Executive Officer of Robert Half and Mr. Michael Buckley, Chief Financial Officer. Mr. Waddell, you may begin..

Hello, everyone. We appreciate your time today. Before we get started, I'd like to remind you that the comments made on today's call contain forward-looking statements, including predictions and estimates about our future performance. These statements represent our current judgment of what the future holds.

However, they're subject to the risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties are described in today's press release and in our most recent 10-K and 10-Q filed with the SEC. We assume no obligation to update the statements made on today's call.

During this presentation, we may mention some non-GAAP financial measures and reference these figures as adjusted. Reconciliations and further explanation of these measures are included in a supplemental schedule to our earnings press release.

Our presentation of revenues and the related growth rates for each of our contract practice groups includes intersegment revenues from services provided to Protiviti in connection with the company's blended talent solutions and consulting operations. This is how we measure and manage these businesses internally.

The combined amount of intersegment revenues with Protiviti is also separately disclosed. For your convenience, our prepared remarks for today's call are available in the Investor Center of our website, roberthalf.com.

Second quarter results for Talent Solutions were impacted by elongated client hiring cycles resulting from ongoing global macro uncertainty. Protiviti was much less impacted with its diversified suite of solutions offerings. Pricing and gross margins remained strong, demonstrating the value-added benefit we continue to deliver for our clients.

We remain confident that we're well-positioned to benefit significantly as the macro landscape improves. For the second quarter of 2023, company-wide revenues were $1.639 billion, down 12% from last year's second quarter on both a reported and as-adjusted basis.

Net income per share in the second quarter was $1 compared to $1.6 0 in the second quarter one year ago. Cash flow from operations during the quarter was $281 million. In June, we distributed a $0.48 per share cash dividend to our shareholders of record for a total cash outlay of $51 million.

Our per share dividend has grown 11.5% annually since its inception in 2004. The June 2023 dividend was 11.6% higher than in 2022. We also acquired approximately 650,000 Robert Half shares during the quarter for $45 million. We have 12.7 million shares available for repurchase under our Board approved stock repurchase plan.

Return on invested capital for the company was 26% in the second quarter. Now I'll turn the call over to our CFO, Mike Buckley..

Talent Solutions, 39% to 41%; Protiviti, 14% to 16%; overall, 32% to 34%. Segment income for Talent Solutions, 5% to 8%; productivity, 9% to 12%; overall, 6% to 9%. Our tax rate, 29% to 30% and shares 105.5 million to 106.5 million shares.

2023 capital expenditures and capitalized cloud computing costs, $70 million to $80 million with $13 million to $18 million in the third quarter. We limit our guidance to one quarter. All estimates we provide on this call are subject to the risks mentioned in today's press release and in our SEC filings. Now I'll turn the call back over to Keith..

Thank you, Mike. Global labor markets remain tight, and the scarcity of talent persists, client hiring and project needs continue to be significant. However, the urgency or velocity of that demand is impacted by the prolonged period of macroeconomic uncertainty, which continues.

As clients become more cost focused, hiring time frames extend, projects are delayed, contractor workloads are shifted to internal staff. While these factors negatively impact short-term results, they also result in reduced client labor capacity that serves to create pent-up demand for talent as business conditions improve.

Historically, there's also a positive correlation between the level of job openings, which currently sit near record levels and the level of hiring, which bodes well as macro headwinds subside.

We've weathered many economic cycles in the past, each time emerging to achieve higher peaks, aging workforce demographics and clients' desire for flexible resources and variable costs are structural tailwinds that are expected to continue for many years to come.

Protiviti's regulatory risk and compliance practice leads its solution offerings with significant double-digit revenue growth. Internal audit and to a lesser extent, technology consulting are being modestly impacted by client budget pressures where projects are being deferred and/or their scopes limited and new deals are taking longer to close.

Protiviti's pipeline continues to grow and demonstrates its increasing presence in the marketplace. It competes effectively against the other large accounting and consulting firm by differentiating the breadth and depth of its resources.

This includes its more concentrated portfolio of specialized solutions and industry expertise, its greater balance of those with consulting backgrounds and professionals who worked directly in industry and its priority access to contract talent at all skill levels and at any scale, through its relationship with talent solutions.

We believe the future for Protiviti is very bright. We continue to invest in the tools needed to secure top talent for our clients. This includes making enhancements to our advanced technologies and AI.

To further improve our already effective matching engines, we are using our proprietary data and algorithms to customize our latest generation, large language model and incorporate it into our AI.

We remain committed to our time-tested corporate purpose, to connect people to meaningful and exciting work and provide clients with the talent and consulting expertise they need to confidently compete and grow. Finally, we're proud to have received a number of new accolades in the second quarter.

Robert Half ranked number one on Forbes list of America's best professional recruiting firms, was recognized by Fortune as one of the best workplaces for millennials. And just today, named by Forbes as one of America's best employers for women.

None of this recognition would be possible without the dedication and commitment of our employees around the world. Now Mike and I'd be happy to answer your questions. Please ask just one question and a single follow-up as needed. If there's time, we'll come back to you for additional questions..

Thank you. [Operator Instructions] And your first question comes from the line of Mark Marcon with Baird..

Good afternoon, Keith and Mike. I'm wondering you've been through many cycles. Right now, the unemployment rate is still at 3.6%. When we take a look at the declines that we've seen thus far, you've obviously indicated it's due to the elongation of the hiring cycles.

How much do you think that is due to just the fact that we're comparing to a period -- a year ago that was particularly beneficial to recruiting, staffing and consulting, and perhaps just an extraordinary period versus real signs of an economic slowdown? And how does that impact how you think about managing expenses in the future and what the future trajectory could look like?.

Well, there's no question that a year ago, post-COVID, was a very robust period for recruiting and consulting and so those comparisons matter.

That said, we are seeing clients being more conservative, being more cautious, with all of the rate hikes, with all the leading indicator bearishness, with our NFIB small businesses and their optimism index being below average, I think now for 18 straight months, mean there is caution, there is focus on cost. I think that's just a fact.

As to how we're thinking and how we're managing on the cost side, we continue to manage headcount on an individual basis. That's the same as we've always done. We've compared it to trough performance of prior cycles.

We've looked at the most recent four quarters that have been sequentially down to the first four quarters in prior cycles down -- downturns.

And we would observe that, a, I mean, so far this time, the revenue impact is about half what it's been in the past that gross margins have held up better, that we've managed our SG&A better, that the operating margins have declined less. And so we feel good from a cost management standpoint that we're doing the right things.

We talked on, in the script, about severance that we had this quarter, $8 million total, $5 million Talent Solutions, $3 million Protiviti. Our Q3 guidance considers cost savings that follow from that. On the Talent Solutions side, $19 million in quarterly savings, on the Protiviti side, $18.5 million, primarily in direct costs.

That said, we will continue to invest in innovation technology because we think that's important to the future. Further on the headcount front, we do want to have dry powder as things get better.

We want the right kind of dry powder and we're finding that many of the people hired in the last few years were pretty recruiting-focused and not as sales-focused as they needed to be, and therefore, set the stage for some cost reduction actions that we've taken. I think the bigger story is recovery and what we've done historically.

And as we've said in the calls, in every cycle, we've grown peak to peak. That's not only at the revenue line, that's also what the earnings line. And further, we've significantly reduced our share count during those cycles. Just in the last 10 years, for example, we've reduced our share count by 23%.

The last five years, we've reduced our headcount by -- excuse me, share count by 13%, given our policy of dollar cost averaging, buying back essentially every quarter. During this next cycle, you could expect further reduction.

So the point is, not only do we make new highs at the revenue level, you get leverage at the net income level and then you get further leverage of significant amount from lower share counts. So our view is we've been here, we've done this. We've managed through it. So far, milder than what we've seen in the past.

We've managed better on the cost side than we have in the past. We would expect that to continue. Our gross margins are holding up beautifully. We're quite proud of that. So we feel good about our long-term prospects. We think the earnings capacity we have as we go forward is greater, better than it's ever been.

And we'll just have to cut it through what we're going through in the short-term..

I appreciate that, Keith. And, obviously, you've got a tremendous long-term track record. Keith, you mentioned the $18 million and $19 million in quarterly savings.

Are you going to enjoy the full benefit of those severance actions in the third quarter, or is some of that also going to spill over into the fourth quarter?.

I'd say most of that will benefit the third quarter. There will be some spillover, but orders of magnitude, it's not tremendous..

Okay. And then one last follow-up.

Just on the Protiviti side, what are your thoughts with regards to continuing to expand the business from a headcount, from a permanent headcount perspective? How would you go into the fall recruiting season when it comes to like on-campus hiring and things of that nature?.

Well, so first of all, in the regulatory risk and compliance, the business is extremely strong. They continue to add to headcount at the feedback growth, and that will continue. In their other businesses, we've talked before, they've got less attrition, which is impacting their hiring plans and their chargeability.

That's more for experienced hires than for campus hires. They will recruit and hire on campus in the fall, maybe not quite to the extent they have in the past, but they'll certainly have a presence there, which is what they need to sustain their business going forward. So Protiviti, not near as impacted as is the case in talent solutions.

But somewhat impacted in internal audit, as we talked about in the prepared comments. They've also got their business process improvement practice that includes some IPO that includes some M&A transaction related work. And so that's also been impacted because it's more discretionary as you understand.

But generally speaking, Protiviti is holding in there quite well.

Their plan with their headcount management, they had some severance during the quarter with their conversion of full time into contractors that they will continue to see recovering gross margins, which recovered some in Q2 are expected to recover even more in Q3 and more yet again in Q4 such that they get back to more normalized gross margin levels.

But we feel good about Protiviti..

Terrific. Thank you..

And our next question will come from Andrew Steinerman with JPMorgan..

I, obviously, just heard your feelings about Protiviti.

Could you just give us a little more sense, not necessarily the second or third quarter here, but how do you think of Protiviti's revenues and margins holding up through a down cycle and particularly the largest vertical, financial services?.

Well, Andrew, we feel good about Protiviti's revenues and margins, including with FSI. As we speak in internal audit with FSI, you've got many large financial institutions swapping contractors for internal staff to protect their internal staff to reduce the cost of third-party spend.

That's what those banks are doing from a cost-cutting standpoint today. As we also talked about earlier, it's very classic to see companies first reduce contractors to then stretch their internal staff, both of which have the positive effect when things get better.

That they need more capacity, which is pent-up demand and a springboard for growth thereafter. Back to Protiviti, we feel good. The other than the great financial crisis, if you look at Protiviti's performance across cycles, the latest being COVID, they performed quite a bit better and more resiliently than was the case in Talent Solutions.

And our expectation would be that, that continue..

Makes sense. Thanks, Keith..

Thank you. And our next question will come from Kevin McVeigh with Credit Suisse..

Great. Thanks so much. Keith, you typically don't miss relative to the guide. I mean, it seems like it happens around macro inflection points.

So is it -- I guess if you think about it relative to initial expectations, the revenue and EPS, where do you think in terms of where the initial guidance was where, maybe the most adjustments were intra-quarter? Typically, it doesn't -- the quarter looks good and then maybe the guidance will be a little light, but it seems like you missed, which you typically don't..

I'd say broadly, clients were more cautious, more conservative, more tentative than we had counted on. They got modestly more so during the quarter, which we had not forecast, but that was broad. It wasn't confined to any particular state or two. It was broader than that.

While it wasn't quite as severe outside of the US as inside of the US, everybody was impacted. And so it was more macro related than any kind of internal execution or internal specific area of weakness. And also pretty much span practice groups. It impacted finance and accounting, it impacted technology, it impacted administrative and customer service.

It impacted everything..

I’ll leave it there. Thank you..

And our next question will come from Trevor Romeo with William Blair..

Hi, good afternoon. Thanks so much for taking the questions. First, just on the contract Talent Solutions business, it looked like the deceleration this quarter was kind of strongest for finance, accounting and technology.

So I was just wondering if you can maybe drill down into the trends for each of the three contract talent sub-segments and kind of talk about what you're seeing now and what you've embedded into guidance for next quarter?.

And so for accounting and technology, the operational level skills were more impacted by the higher level. And so for accounting, that's accounts payable, accounts receivable, payroll, et cetera, for technology, that's tech support, help desk, more operational level. And so those were more impacted and higher level.

Customer service, we've talked about for some time, when companies cut cost, that's an area where they often go first. The potential good news on the horizon with all the Medicaid changes in many states, you've got a lot of people that no longer qualify for Medicaid will now be looking for insurance.

That will impact enrollment many times at private companies and open enrollment is certainly a demand driver for ACS, administrative and customer support. And so hopefully, we'll get a little bit of a lift from that. As to guidance, frankly, it's pretty simple.

We looked at long-term seasonal/sequential trends and their most noticeable and perm where summer and perm is typically down mid-ish single digits sequentially. And so we took those long-term sequential trends, contract and perm, and we apply to that the variance from normal trends we've seen in the last two or three quarters.

And that, in turn, then pretty much gives you what we forecast for Q3..

Thanks. That's very helpful.

For the follow-up, just kind of wondering how much do you think labor hoarding is having an impact on the Talent Solutions business? I'd imagine a lot of companies are kind of holding on to more staff maybe than they normally would in this economic climate because they may have let people go in 2020 and had a hard time kind of rehiring during the recovery.

So just kind of curious for your thoughts on that topic of labor hoarding..

Well, I think they're more apt to hoard full time than they are contract employees. And therefore, since we're in the contract employee business primarily, that certainly has an impact. On the full-time side, there's less churn than there has been because of that hoarding and less churn means fewer at bats for our perm placement business.

So there's some impact there. But I guess we ultimately come back to we've seen these kind of circumstances multiple times in the past. And in part for structural reasons, as I talked about earlier, we always come back, we always make new peaks, and that's leveraged as you move down the P&L and leveraged yet again when you look at the share count..

All right. Thank you. Appreciate it..

And our next question will come from Stephanie Moore with Jefferies..

Good evening. This is Harold Antor on for Stephanie Moore.

Just wanted to know if you could break out the drivers of gross margin performance in 2Q and what do you think the puts and takes there with respect to 3Q?.

Well, as we called out in our prepared remarks, we are very pleased with our gross margin in Q2, conversions declined a bit year-on-year. We more than made that up with higher pay-bill spreads.

Some of that's mix related, more management resources, more full-time engagement professionals, which, by the way, continue to grow and is the strongest part of our contract business, which is great for bill rates, which is great for gross margins.

As we carry into Q3, while our forecast conservatively includes a couple a 10, 20 basis points of conservatism by and large, they're flat and continue into Q3. But our gross margins have held up remarkably well. That's partly indicative of the tightness of the labor market.

That's partly indicative of we add value to our clients, and they pay for our services..

Thank you.

And then just internationally, if you could call out any countries where you saw doing the most -- some of the most weakness as compared to the US?.

And so in Europe, as we've said for many quarters, Germany stands out positively. They continued to have a very solid quarter, and the outlook is good. A couple of new ones, Protiviti, you'll notice IZ International [ph] actually had a tick up with their growth rate between quarters year-on-year and that was more Asia-related.

And within Asia, Hong Kong, within Hong Kong, FSI [ph]. And so as you see that area of the country totally reopening from COVID, we had a nice little lift from Asia Pacific, specifically Hong Kong..

Thank you..

And our next question will come from Manav Patnaik with Barclays..

Hi, Keith, this is Princy Thomas on for Manav. Thanks for the question.

One just based on what you've been seeing, where do you think we are in the cycle? And can you give us an idea of the typical 3Q and 4Q seasonality revenue and margin trends?.

So where are we in the cycle? That's a very hard answer -- very hard question to answer. We've now just had our fourth quarter -- fourth consecutive quarter of sequential declines. And as I said earlier, we certainly can look back to prior cycles and say, where were we four quarters in, in those cycles.

And as I said before, we're outperforming at the revenue line, the gross margin line, the SG&A line and the operating income line.

But what that says about the ultimate duration of whatever we're in, who knows? I think there's this question about, are we going to have a recession? How deep the recession going to be? Is there going to be a soft landing? Are we going to stick to landing? Is it short and shallow? Those questions have been debated for 18 months.

And for 18 months, the answers have been incorrect, but at some point, even a broken clock is, right? And so we don't know, is the answer to exactly where we are in the cycle. All we're saying is wherever we are, dealing with the downside of it, from a cost side, better than we ever have.

And we feel strongly that we'll recover from whatever we have to deal with just as we always have in the past 25 years, where we've personally been here..

Got it.

And can you please also talk about the seasonality trends that you've seen historically for the second half of the year?.

Seasonality -- all right. On the contract side, it's flattish Q3 versus Q2. On the perm side, it's down kind of mid-ish single digits, Q2 versus -- Q3 versus Q2, which are the summer months. And so as I said earlier, we discounted those buying a percentage that's indicative of the variances we've seen in the last two or three quarters.

So the only -- the more significant trend typically is perm is softer during the summer. Our guidance reflects that typical softness and additional softness consistent with the past two or three quarters..

Got it. Thank you..

And we have a question from Josh Chan with UBS..

Hi. Good afternoon, Keith and Mike. I guess, historically, Robert Half has done a good job aligning SG&A when demand slowed. And so I guess, it sounds like you had some severance in Q2.

I wonder if there's any severance in the Q3 number and whether you expect SG&A to kind of decline close to revenue over time as you go through the downturn?.

So there's no severance in Q3, but there's also no benefit that would result from any severance either. We've long said that we manage our SG&A on an individual head count basis, that hasn't changed. History says, our costs are relatively aligned with revenues.

And if anything, if you look cycle-to-cycle, our costs are relatively better aligned each time, and we would expect that to continue as we move forward. That said….

Okay. Okay. All right.

And then I guess my follow-up is, I guess, could you talk about your approach to the buyback program, whether there's an opportunity if the share price is at a level that's attractive that you could be more opportunistic than programmatic in the past?.

Sure. So, first of all, understand as revenues decline, receivables decline and convert to cash. So just from ordinary course programmatic buying, as you call it, we'll have an additional opportunity for that reason alone.

And to the extent the stock goes on sale, we will certainly consider going beyond that, and we have $700 million of cash on the balance sheet. So programmatically, we'll have more funding from receivable reduction and then there's an opportunity given our substantial balance sheet and cash balance to go beyond that..

That's great. Thanks for the color..

And our next question will come from Kartik Mehta with Northcoast Research..

Good afternoon. I was wondering, if other companies have reported softness in perm as well. But when you look at numbers being published, those job openings are near record highs.

And I'm wondering, as you've talked to your customers or as you look, are your customers reducing the number of people they want, or is it just a matter of taking longer and maybe waiting to figure out what's going to happen with the economy?.

It's clearly the latter. Our people will tell you that clients clearly have openings they'd like to hire for. They're taking a wait-and-see attitude given the uncertainty. They're taking longer, they're being more selective. They want to see more candidates, they've got more approval levels.

All of those things that we've talked about for several quarters in a row. They'll also tell you there are many, many, many projects in the hopper on the runway that have been delayed, not canceled but delayed. And that's also a source for revenue growth on the other side as things look better.

So it's not about absolute demand or aggregate demand, it's about the velocity or the urgency of that demand. And our SMB clients that are more nimble, they're taking a wait-and-see attitude. They're being more cautious, but the requirements are there, and that's a good thing. And I think that's best shown by the job openings you talk about.

We also went back, I think it was for 20-plus years and correlated job openings and hiring, and you can take the JOLTS data and do the same thing. And as common sense would tell you, they're highly correlated. So the more openings that there are, the more hiring there is thereafter.

And so it's a good thing that openings are in the 10 million level where typically, they're in the 5 million or 6 million level..

And then just as a follow-up, just your thoughts on the health of your SMB customers.

If you've seen any changes, or is this just maybe a little bit of a pullback because like everybody else just waiting to see what's going to happen?.

It's very typical behavior for SMB's to be more nimble, to be more budget focused and to do it more quickly. And as we've said before, that same behavior pattern happens on the upside as well. While they're quick to cut and conserve on the downside, they're also quicker to add on the upside, particularly if they've got reduced internal capacity.

And quite frankly, stretching your internal capacity is less and less acceptable the stronger the labor markets are….

Thank you very much..

…unless you have a retention..

Go ahead, Keith. I'm sorry..

No, no, I'm saying you can't stretch your internal capacity, but so far, particularly in the tight labor market, unless you have a retention problem..

Thank you very much. Appreciate it..

And our next question will come from Jeff Silber with BMO Capital Markets..

Thanks so much. I know it's late. I'll just ask one. I wanted to focus on Protiviti margins. They were below our numbers and I think your guidance as well. And I know in your prepared remarks, you cited deferred comp classification and as well as severance.

If we took those out, would it have come in within your guidance? And if not, what else was going on there?.

Thank you. If you took those out, it would still be a little below guidance in large part because internal audit to a lesser degree, technology consulting, but also business process improvement were both a bit softer than forecast because clients got more budget-focused.

And many times as particularly as it relates to internal audit, Protiviti does a lot of co-sourcing work where the client has some of the work, Protiviti does some of the work. And as clients get more cost conscious, they keep a bigger share of the work, which comes to some degree, at the expense of Protiviti.

So because Protiviti has more fixed cost with their full-time labor force, revenues are a little soft in those two areas, not near as impacted as what we see in Talent Solutions, modestly soft. And so you had some negative leverage from that in their margins.

Given the cost actions they've taken related to the severance in the quarter, related to the -- using fewer contractors and spreading the workload to their internal staff, the exact same phenomenon I just talked about our other clients are using, right? They do expect those margins to expand in the third quarter and again in the fourth quarter.

And so the trajectory is good. It's just in the second quarter, the revenues in those two areas were a little softer than they expected, not significantly softer, but a little softer..

Okay. That’s really helpful. Thanks so much..

And our next question will come from Tobey Sommer with Truist Securities..

Thanks. I wanted to get your perspective on what growth may look like in year one or two of a rebound on the other side of whatever we're in or about to go in.

If the unemployment rate doesn't pick up significantly, and this has been a head scratcher of a sort of slowdown and so forth, but I'd love to get your perspective on what that could look like versus other cycles where the unemployment rate goes up significantly and then the growth rates are sort of equally robust on the other side..

Well, I guess we would think about supply and demand a little differently. I'd say for traditional structural reasons, clients reduce their capacity with fewer contractors, they scratch their internal capacity by transferring workloads to them. There's a rubber band effect that happens early on that we would expect to reoccur.

The unemployment rate impact, typically, that higher unemployment rate produces a bigger candidate pool that's available to us to service that additional demand.

To the extent unemployment doesn't rise like it has traditionally, we're confident we have other sources of that candidate supply, and it's the same ones we've looked to during peak period over the last few quarters, namely, a, we have our 30 million candidate database; b, we have our advanced AI, where we can pinpoint skills quickly; c, clients, even today will accept remote work, hybrid work, particularly at high skill levels.

And maybe most importantly of all, we've got these full-time engagement professionals where we're recruiting from a much larger pool of people, i.e., those that already have a full-time job, not those that are between jobs.

And so collectively, we're confident that we'll find the candidates to service that heightened demand that we always see in the early part of an up cycle, it will just be sourced differently than what we traditionally do because you've got this much larger group of unemployed people traditionally early in an up cycle, which looks like won't occur this time -- won't reoccur at this time..

Thank you..

And our next question will come from George Tong with Goldman Sachs..

Hi. Thanks, good afternoon. You talked about seeing elongated client hiring cycles because of macro uncertainty.

Based on trends that you're seeing so far through July and conversations with clients, when do you expect to see those sales cycles stabilize?.

So when do we expect it to stabilize? All I could say is our short-term guidance continued -- assumes that the glide path continues pretty much as it has been in the last two or thre3 quarters. So we're not expecting stabilization, if you will, in the very short term. As to when they stabilize, that's as much a macro question as anything.

And I'm certainly not a macro, a, expert or b, fortune teller. And so I'm not sure I have a great answer to when. All I've said and I've said it a couple of times now, is that we've managed through many downturns in the past much more severe than what we've seen here. We've come out on the other side.

We've made new peaks at the top line, new peaks at the bottom line.

We've spread it over many fewer shares and ultimately got significantly higher peaks at the EPS line so that whenever it does stabilize and not only stabilize with our SMB clients, as things begin to look up as the clouds begin to part, our SMB clients react very quickly and we'll participate significantly in that as we've talked about.

Many of the very same factors that are negative in the short term more contractors, more workload to internal staff, those very same factors spring load demand on the other side. That's happened every single cycle, and we expect it to happen again..

Got it. That's helpful. And then you have varying performance across business lines based on functional and end market exposure.

As you look across the business, where would you say you saw the most upside surprise in the quarter? And then conversely, we would see some of those downside surprise in the quarter?.

Well, the upside that wasn't necessarily a surprise, our full-time engagement professionals, we continue to grow sequentially. We continue to grow year-on-year. Our clients love the fact that we're recruiting from a very broad pool of people that already have a full-time job.

The clients love these people because they, on the one hand, they want the security of a full-time job, but they love the variety of different engagements semi consultants, if you will. So on the contract talent side, our FTEP, as we call them, continue to grow, continue to do well, and we couldn't be more happy about that.

From a mix of business, those full-time engagement professionals range from 5% to 30% of a given practice group's workforce and it skews the higher the skill level, the more of the higher the mix of full-time engagement professionals to the total.

On the downside, our administrative and customer support group has been the most impacted as clients have gotten more cautious. That's not new. That's not unexpected. We're seeing it yet again. You see it in the numbers. Hopefully, with a little help on open enrollment, as I talked about, that will be a bit of a boost from them.

But again, it's not unusual to see them most impacted..

Got it. Very helpful. Thank you..

Okay. That was our last question. Thank you very much..

Thank you. And this concludes today's teleconference. If you missed any part of the call, it will be archived in audio format in the Investor Center on Robert Half's website at roberthalf.com. You can also log in to the conference call replay. Details are contained in the company's press release issued earlier today..