Robert Half Inc.

Hello and welcome to the Robert Half second quarter 2026 conference call. Today's conference call is being recorded. If you'd like to ask a question during the Q&A portion of the call, please press star and the number one on your telephone keypad. 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 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 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 refer to certain non-GAAP financial measures as adjusted. Adjusted revenue growth excludes the impact of building day variations and foreign currency exchange rates. adjusted gross margin, SG&A, and operating income reflect the combining of investment gains and losses related to employee deferred compensation plans with corresponding changes in those obligations. These items have no impact on reported net income. Reconciliations and additional information are included in the supplemental schedules to our earnings release. For your convenience, I've prepared remarks for today's call. are available at the investor center of our website, roberthalf.com. For the second quarter of 2026, global enterprise revenues were $1.336 billion, down 2% from last year's second quarter on a reported basis and down 3% on an adjusted basis. Talent Solutions delivered its third consecutive quarter of sequential revenue growth on an adjusted basis while its permanent placement operations also posted adjusted year-on-year revenue growth of 2.5%. Global enterprise revenues and earnings exceeded the midpoint of our second quarter guidance. Hiring demand continues to improve and market conditions are increasingly more supportive of our business. Our unique combination of award-winning high-tech capabilities and High Touch Expertise positions as well to help clients navigate a dynamic business environment and connect them with the specialized talent and consulting services they need. That income per share in the second quarter was 26 cents compared to 41 cents in the second quarter a year ago. As we discussed in last quarter's call, second quarter EPS was impacted by cost actions taken by productivity, which Mike which Mike will discuss further in a moment. Cash flow provided by operations during the quarter was 109 million. In June, we distributed a 59 cent per share cash dividend to our shareholders of record for a total cash outlay of 59 million. Return on invested capital for the company was 9% in the second quarter. Now I'll turn the call over to our CFO, Mike Buckley.

Thank you, Keith. As Keith noted, global revenues were $1.336 billion in the second quarter. On an adjusted basis, second quarter talent solutions revenues were down 2% year over year. U.S. talent solutions revenues were $660 million, down 1% from the prior year's second quarter. Non-U.S. talent solutions revenues were $205 million, down 4% year over year. We conduct talent solutions operations throughout offices in the United States and 18 other countries. In the second quarter of 2026, there were 63.1 billing days compared to 63.2 billing days in the second quarter one year ago. The third quarter of 2026 has 64.6 billing days compared to 64.2 billing days in the third quarter of 2025. Currency exchange rate movements during the second quarter had the effect of increasing reported year-over-year total revenues by $7 million, $6 million for Talent Solutions and $1 million for Protivity. Contract Talent Solutions bill rates for the second quarter increased 2.3% compared to one year ago, adjusted for changes in the mix of revenues by functional specialization, currency, and country. This rate for the first quarter was 2.6%. Now let's take a closer look at results for productivity. Global revenues in the second quarter were $471 million, $373 million of that is from the United States, and $98 million is from outside of the United States. On an adjusted basis, global second quarter productivity revenues were down 5% versus the year-ago period. U.S. productivity revenues were down 6% while non-U.S. productivity revenues were down 3% compared to one year ago. Productivity and its independently owned member firms serve clients through locations in the United States and 27 other countries. Turning now to gross margin, in contract talent solutions, Gross margin was 39.1% of applicable revenues in both the current quarter and the second quarter one year ago. Conversion, or contract to hire revenues, were 3.4% of contract revenues in both the current quarter and the second quarter of 2025. Our permanent placement revenues were 13.6% of consolidated talent solutions revenues in the current quarter and many more. and 19.7% in the second quarter one year ago. Adjusted gross margin for productivity was 18.5% for the quarter just ended compared to 22.3% last year. As we discussed in our last call, productivity revenue results reflect ongoing shifts in the U.S. financial services regulatory environment. As a result, cost actions were taken during the quarter including 7 million in severance costs which reduced adjusted gross margin by 1.4 percentage points or 4 cents per share. Enterprise SG&A costs were 40.1% of global revenues in the second quarter compared to 37.1% in the same quarter one year ago. Adjusted enterprise SG&A costs were 34.3% for the quarter just ended compared to 33.8% one year ago. Talent Solutions SG&A costs were 53% of Talent Solutions revenues in the second quarter versus 49.2% in the second quarter of 2025. Adjusted Talent Solutions SG&A costs were 44.1% for both the current quarter and the second quarter one year ago. Second quarter SG&A costs for productivity were 16.4% of productivity revenues compared to 15.7% for the same quarter one year ago. Reported operating income for the second quarter was negative 62 million. Adjusted operating income was positive 39 million in the quarter, or 2.9% of revenues. Second quarter adjusted operating income for talent solutions was $29 million or 3.3% of revenues. Adjusted operating income for productivity in the second quarter was $10 million or 2.1% of revenues. Our second quarter 2026 income statement includes a $101 million gain from investments held in employee deferred compensation trusts. This is completely offset by an equal amount of higher employee deferred compensation costs, which are reflected in SG&A expenses and direct costs. As such, it has no effect on our reported net income. Our second quarter tax rate was 35% compared to 33% one year ago. The increase in the tax rate is primarily the result of lower tax credits and the increased impact of non-deductible expenses relative to lower pre-tax income. At the end of the second quarter, accounts receivable were $821 million and implied day sales outstanding, or DSO, was 55.4 days. Before we move to third quarter guidance, let's review some of the monthly revenue trends we saw in the second quarter and so far in July, all adjusted for currency and billing days. Contract Talent Solutions exited the second quarter with June revenues down 2% versus the prior year, the same as the 2% decrease for the full quarter. Revenues for the first two weeks of July were down 1% compared to the same period last year. Permanent placement revenues in June were up 4% versus June of 2025. This compares to a 3% increase for the full quarter. For the first three weeks in July, permanent placement revenues were up 4% compared to the same period in 2025. We provide this information so that you have insight into some of the trends we saw during the second quarter and into July. But as you know, these are very brief time periods. We caution against reading too much into them. With that in mind, we offer the following third quarter guidance. Revenues. 1.31 billion to 1.41 billion. Income per share, 43 to 53 cents. Midpoint revenues of 1.36 billion are flat with the same period in 2025 on an adjusted basis. Our midpoint revenue guidance for the third quarter reflects year-over-year growth of 3% for talent solutions and 6% lower revenues for Protivity. Protivity's results continue to reflect the ongoing shifts in the U.S. financial services regulatory environment, which we discussed last quarter. The major financial assumptions underlying the midpoint of these estimates are as follows. Adjusted revenue growth year-over-year for talent solutions up 1 to 5 percent for Protivity Down 4% to 8%. Overall, down 2% to up 2%. Adjusted gross margin percentage for contract talent, 38% to 40%. For productivity, 23% to 25%. Overall, 38% to 40%. Adjusted SG&A as a percentage of revenue. For talent solutions, 42 to 44 percent. For productivity, 16 to 18 percent. And overall, 33 to 35 percent. Adjusted operating income as a percentage of revenue for talent solutions, 3 to 5 percent. For productivity, 6 to 8 percent. Overall, 4 to 6 percent. Tax rate, 33 to 35 percent and shares outstanding 100 to 101 million. 2026 capital expenditures and capitalized cloud computing costs of 50 to 70 million with 10 to 20 million during the third quarter. For the fourth quarter, we offer the following directional observations. Because of the November and December holidays, The fourth quarter has 61.1 billing days compared with 64.6 billing days in the third quarter, a quarter over quarter decrease of approximately 5%. This reduction is typically partially offset by seasonal growth in average same day billings, which has historically been in the low single digits. Lower sequential revenues result in negative operating leverage, such that fourth quarter operating margins have historically been 0.5 to 1.5 percentage points lower sequentially than third quarter margins. All estimates we provide on this call are subject to the risks mentioned in today's press release and in our SEC filing. Now I'll turn the call back over to Keith.

Thank you, Mike. Our second quarter results for Talent Solutions reflect continued Sequential revenue growth on a same-day constant currency basis and a return to year-over-year growth for our permanent placement segment. Technology was our strongest performing practice group within Contract Talent Solutions achieving adjusted year-over-year revenue growth of 2.3% for the quarter. Client engagement remained strong throughout the quarter with job orders and project activity increasing across many markets particularly in technology modernization, data, cybersecurity, and IT infrastructure. Many of our small to mid-sized business clients continue to operate with lean organizations after several years of disciplined cost management. As confidence improves and strategic priorities advance, we're seeing demand for specialized talent and consulting expertise to help execute those initiatives. While clients continue to approach hiring thoughtfully, We are seeing steady progress in client interactions and activity. While geopolitical and macroeconomic uncertainty persists, our clients remain resilient, although inflation remains a key concern, including the potential effects of escalating tensions in the Middle East. Organizations continue to focus on initiatives that drive productivity, growth, and long-term competitiveness. Employment levels among many of the professionals we place are healthy, and job openings continue to outpace historical norms. The labor market for specialized talent remains tight. Professionals with in-demand skills continue to prioritize flexibility, career opportunities, and competitive compensation, reinforcing the value of Robert Half's ability to identify and deliver exceptional talent efficiently. Artificial Intelligence continues to complement, not replace, the work performed by the professionals we place. We're seeing growing demand for candidates who combine deep domain expertise with AI fluency, and the judgment required to apply these technologies effectively and responsibly, including verifying the accuracy of their outcomes, the rapid adoption of generative AI by job seekers, has also changed the recruiting landscape, increasing application volumes and making candidate evaluation more complex. This underscores the importance of Robert Half's proprietary candidate insights, specialized recruiting expertise, and proven ability to identify highly skilled talent. Productivity's results were largely as expected during the quarter. Technology consulting continues to lead with particularly strong demand and platform transformation engagements. At the same time, Pertiviti's risk and compliance solutions practice continues to navigate shifts in the U.S. financial services regulatory environment, including a marked decline in new enforcement actions and the easing of prior enforcement requirements. As financial institutions adjust, we're beginning to see New work focused on improving efficiency of ongoing compliance programs, many of which rely on substantial internal resources and aging infrastructure. These changes continue to influence productivity's engagement mix with fewer large-scale regulatory remediation projects and growing demand for solutions focused on operational efficiency, productivity, and advanced technologies. These projects are generally shorter in duration, and have different staffing and leverage characteristics than traditional remediation engagements. During the second quarter, productivity acted decisively to better align its resource base with shifting client demand while continuing to invest in capabilities that position the business for sustained growth. These actions resulted in a one-time charge in Q2 of $7 million or $0.04 per share and an annualized cost savings of $45 million, which are fully reflected in our third quarter guidance. Demand across productivity's other key solution areas remains healthy and the pipeline strong, and we expect sequential revenue growth in those practices during the third quarter. Our strategic use of contract professionals through our talent solutions business remains a key differentiator, enhancing our ability to serve clients and reinforcing our enterprise-wide competitive advantage. Looking ahead, we remain optimistic about the trajectory of our business. Clients continue to prioritize critical investments in technology, business transformation and growth. As hiring activity recovers and organizations advance strategic initiatives, we believe Robert Half is well-positioned to help clients secure the specialized talent and consulting expertise they need to be successful. Our purpose has never been more relevant, connecting companies with specialized talent and helping people build meaningful careers. Backed by our trusted brand, exceptional people, innovative capabilities and diversified business model, we remain confident in our ability to create long-term value for our clients, our employees and our shareholders. Finally, we'd like to thank our global workforce for their continued dedication. Their commitment to excellence was recently recognized as Robert Half earned the number one ranking on Forbes America's Best Professional Recruiting Firms. Now, Mike and I'd be happy to answer your questions. Please ask just one and a single follow-up as needed. If there's time, we'll come back to you for additional questions. Thank you.

If you would like to signal with questions, please press star 1 on your touchtone telephone. If you're joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. If you would like to withdraw your question, please press star 2 on your touchtone telephone. Again, that is star 1 to signal with questions. And our first question will come from Mark Marcon with Baird.

Hey, good afternoon and thanks for taking my questions. Keith and Mike, last quarter you talked about the risk and compliance solutions and you talked about a $5 million charge and $35 million in savings. I take it from the discussion that you just went through that you actually saw maybe some additional factors that came into play that changed the plan a little bit. on the risk and compliance side. And so I'm wondering if you could just dig in a little bit in terms of what you ended up seeing during the quarter in terms of risk and compliance solutions. To what extent did it deteriorate further? And what percentage of productivity is still risk and compliance solutions and how are you thinking about that? And then on the technology side, There have been some mixed messages depending on which conference calls you're on about projects being delayed. I'm wondering if you've seen any of that on the technology solution side. It doesn't sound like it, but I just want to confirm that.

Okay, and so the five in severance grew to seven, and the savings got larger proportionately. I'd say there was more international zone savings and many more. We're happy to report that our departivities technology consulting practice group reported the best revenue quarter in its history and clearly was not impacted by project delays.

That's great. And then I'd like to ask just kind of an overall big picture question. So on the productivity side, you know, with the change that we've seen, like how confident are you in terms of getting productivity to return to growth? And we're really encouraged on the talent solution side On the talent solution side, do you think, you know, barring a huge change in terms of the macro environment, which is possible, but barring a huge change, do you think the bottom is in on the staffing cycle? And, you know, do you foresee an opportunity to get back to prior peak revenues on the staffing side?

As to how confident are we that productivity returns to growth? I'd say if you look at Pertivity's pipeline, on a probability-weighted basis, their total pipeline, including FSI, is up sequentially and year-on-year total. That's probability-weighted. And so that says that tech is particularly strong in that composition, and we feel great about Pertivity's future. and its ability to return to growth. And if you look at FSI and non-FSI, non-FSI is already growing and is expected to continue to grow. And the offset from FSI over time will wane. So we feel good about productivity returning to growth in the not too distant future. Talent Solutions is the bottom end. Well, we've now had three quarters of sequential growth. That continued into the post-quarter. And so we've been steady. We've been consistent for some time. I think everybody worries about inflation. Everybody worries about renewed tensions in the Middle East. But barring some major impact from that, We feel good given we've already had three straight quarters that were in the early parts of recovery. Can we get back to the prior peaks? I've been here a long time and every time we've had a downturn we've subsequently not only returned to but made new peaks and I see no reason why that wouldn't be the case this time.

That's great. Thank you.

And the next question comes from Trevor Romeo with William Blair.

Good afternoon. Thank you for taking my questions. One, I had kind of just a follow-up on productivity, I guess. You talked about the U.S. regulatory environment quite a bit, but the international productivity business, I think you just mentioned you had some realignment there. that business declined three percent whereas it had been a pretty strong growth area for you previously so so maybe you could just dive a little deeper on you know what caused the weakening in internationally for productivity this quarter and would you expect that to continue?

And so unrelated to FSI in international zone particularly Germany they had some large public sector engagements that wound down that impacted their results Given the macro in Germany and to a lesser extent, but still in Belgium, it seems that higher inflation, higher energy prices kind of are impacting sentiment and macro tone over there more. So it's harder for them to backfill and replace those projects that have wound down. And so the productivity IZ year-on-year change between quarters one and two is not related to FSI. It's public sector. Wind down.

Okay, thanks. Thanks, Keith. That's helpful. And then for my follow-up, I guess I wanted to touch on the, in the contract talent solutions, the bill rate growth, I think decelerating to closer to 2% this quarter, which I think is the lowest you've seen in a while. I think the gross margins were steady, so it doesn't feel like spread compression or I think those metrics are already adjusted for Nick. So maybe could you just talk a little bit about the bill rates and what you're seeing there? Is that like wage inflation slowing or maybe something else?

Well, it was only, what, 30 basis points different than the prior quarter, so that's not a big change. But they largely reflect the weighted average pay rates of our different practice groups. And so typically, if our pay Bill rate growth is less, so is our pay rate growth, because as you noted, our gross margins stayed the same.

Okay, thanks, Keith. Appreciate it.

And the next question will come from Andrew Steinerman with J.P. Morgan.

Hi, Keith. It's Andrew. I wanted to ask you a fourth quarter directional question about productivity. Obviously, you gave these directional observations about the total company for fourth quarters typically being down 50 to 100 basis points in a third quarter. So my question is, can you give us some of that same perspective for a typical productivity margin in the fourth quarter versus the third quarter and also allowing you some, you know, If you want to make any kind of caveat, you know, is this kind of setting up to be a typical or atypical year for productivity margins as we think about, you know, kind of heading towards year end?

And so our Q4 directional observations were enterprise-wide. And so that was talent solutions plus productivity. So we did not break out one from the other. But The historical range is inclusive of productivity. I mean, the only thing that's particularly different is something we've not talked about a bunch is the impact of regulatory. And that impact is expected to continue into Q4. The other thing is there's nuances with the calendar. And so you'll lose one more billing day this year in the fourth quarter than you typically do. And so that cost you about $20 million in revenue. But other than that, the two-quarter directional guidance, it's not even guidance, it's two-quarter historical trends that we noted are enterprise trends, not one or the other.

Okay. Thanks, Keith.

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

Thank you so much. Actually, just had a couple of follow-up questions from some prior questions. The first was on billing rates. I know mix really played a big role into the change, but is underlying wage inflation changing at all? And I know there's some economists thinking that's going to accelerate. If that does, should we see an acceleration in bill rate increases?

And so underlying wage inflation has come down, and so have bill rates. Just like kind of post-COVID when wage inflation flared up, so did our bill rates to recover. And so if you believe wage inflation is getting ready to rise, then we would expect our bill rates to rise along with that. If there's anything we've been consistent about over a very long, long period of time, it's about protecting our gross margins.

All right, that's great to hear. And then let me go back to Mark's questions about getting back to prior peak revenues. Is there any reason you can't get back to prior peak margins as well?

Absolutely not, and I actually am bullish that we can get to new peak margins. Not only do you get operating leverage, but we've, over time, changed the mix of revenues between higher level and operational level positions. And we get higher gross margins at higher levels. So we have a larger portion of those from here forward than we have in prior cycles. And so I think there's upside there. I think there's upside from efficiencies we might gain from technology over time. and so I feel good about future margin upside from where we are principally about mix. The other thing I would mention there, our full-time engagement professionals is cycle low as we sit here. It's closer to 15% of the total. It's been north of 20% and we could go even further north of that. That's also margin accretive. So that's another mix of revenue upside in the next peak relative to the last.

All right. That's really helpful. Thanks so much. And the next question comes from George Tong with Goldman Sachs.

Hi, thanks. Good afternoon. Your guiding to talent solutions to return to year-over-year growth in 3Q As you think beyond the near-term recovery, what do you view as a reasonable steady state revenue growth rate for the staffing business in a more normalized environment?

Normal, you'd have to define normal and normal, who knows what normal even means the last four or five years, but somewhere Mid-ish single digits is where normal talent solutions growth would be. Half of that would probably be wage slash bill rate inflation and the other part volume, but mid-single digit.

Got it. That's helpful.

On productivity, You've discussed ongoing impact from changes in the U.S. financial services regulatory environment, including fewer enforcement actions, less remediation work. How much of this pressure do you view as tied to the current regulatory backdrop versus a more permanent shift in demand? And what would need to change for that business to return to growth?

Well, since anti-money laundering is the key area, that's been impacted here. History says money laundering doesn't go away and if anything if there's less scrutiny today that probably means there are more issues in the future which would bode well for demand in anti-money laundering. So the changes are more about the current administration and their stance on regulation broadly and so it's certainly not a structural, there's less money laundering and therefore long-term, there's gonna be less anti-money laundering demand from regulators. I would argue it's the opposite. I'd argue that there's probably pin-up demand being created as we sit here today because there's less scrutiny.

Very helpful, thank you.

and the next question is from Kartik Mehta with North Coast Research.

Hey, Keith. I know you've talked about the financial services regulatory headwinds and you said that should last in the fourth quarter. When do you move beyond that and when do you stop lapping that?

Well, you know, the FSI growth rates went solidly negative in Q3 of last year. They took a bigger step down in Q1 and Q2. And so I would say, you know, starting first quarter of 2027, you'll get some relief and then you'll get a lot of relief Q2.

And then, you know, one of the things I think about it, I don't know, a few quarters ago, we talked about and the pricing environment productivity and the market had changed a little bit, maybe gotten a little bit more competitive. As you look today, how do you view the market in terms of pricing outside of this regulatory stuff?

I would say consistently competitive. It's been competitive for a while, but it hasn't gotten even more competitive. I mean, the big four, It's very market-based. If big four firms have capacity in a given market, they will price very aggressively in that market. But that's been true for some time. But I'd say the pricing environment for going on a couple years with the big four has been very competitive. And it remains so today, but not more so.

Perfect. Thank you, I appreciate it.

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

Hi, good afternoon. This is Rowan Kennedy. I'm from Manav.

Thank you for taking our question.

This was discussed much earlier in the call in response to Mark's second question, but can I please reaffirm the characterization as recovery? and the leading indicators and metrics that give you confidence and such. In addition, what you're seeing today, how that compares to prior recoveries in terms of hiring velocity, client urgency and a willingness to improve incremental headcount.

Well, yeah, some of this is semantics and then every downturn and following recovery is different. We had dot-com back in early 2000. You had great financial crisis. 2008 to 10 they were very different and the post those periods were very different and this time officially there hasn't been a recession but there's certainly been a staffing recession and there's a big difference between enterprise mid and large cap and SMB who are more conservative and so conditions are quite different now unemployment is very low which is not the case coming out of dot-com nor coming out of great financial crisis. That's a good thing for us because it makes it harder for clients to hire themselves. Job openings much higher than it was coming out of either of those. That's also good for us. I think AI has made it tougher for clients to hire as we've talked about before in that there are more applications. It's harder to distinguish one from the other. to the extent they're using Gen AI. And so they're different, but the metrics you would typically look at, unemployment rates, pent-up demand via job openings, we've got the new AI impacts which are playing out to be more benign than some have feared. I would argue that the metrics taken as a whole are more positive today than they were at similar early recovery periods post dot com, post great financial crisis.

Got it.

Thank you for that. And then another follow up question for me, please. You expressed confidence that you return or ultimately exceed prior peak margins. Can I please reconfirm that opportunity? You know, does that come from primarily mix Structural Efficiencies, Productivity Improvements. And then how should we think about what comes first as revenues recover? Is it the gross margin? Is it the productivity and efficiency or operating margin?

I would say there's the most upside cycle to cycle, peak to peak on gross margins because of mix. I think there's some additional upside for operational efficiencies. Thank you. Appreciate it. And the next question will come from Toby Summer with Truist.

Thank you. I had a question about your directional guidance or directional context for the fourth quarter. Would the current business trend that you're seeing within three consecutive quarters, a slight sequential same-day billing growth, would that be characterized as typical with normal seasonal patterns? Because you're trying to triangulate in on Whether that historical pattern can be achieved or the current demand environment is sort of better or worse, for example?

I would say up until the last couple of quarters, we've underperformed typical seasonal patterns. But starting the last couple of quarters, unexpected for the next few, we're returning to normal seasonal patterns. So for Q4, on the one hand, it's a much shorter quarter, even more so this year because of the calendar. We're going to lose an extra day more than we typically lose because of the calendar. But as far as the billings per day, we're looking at normal seasonality. We're not making a forecast. were just saying normal seasonality in the fourth quarter on a per day basis, you would get one or two percentage points of growth on a per day basis.

That's clear. Within Protivity, what are your opportunities like on the government side, state, local, and federal? It was a number of years ago that you You did capture some good work there. What does it look like today? And I'm kind of steering clear of the context of the financial regulation.

We like our opportunities in the public sector. Productivity focuses more in federal and state than they do local, where talent solutions has a bigger presence. but you know we have a very we have a dedicated team and effort that approaches federal and state separately we've got good opportunities there the pipeline is is solid and so we feel good about public sector it's very different than it was coming out of covid and so we've made some relationships that were sticky that remain to this date and so we're well positioned to have a tranche of revenue that we didn't have traditionally. And then defense and aerospace, by the way, incrementally adds to that. Thank you.

And the next question will come from the line of Kevin McVey with UBS.

Great. Thanks so much. Keith, could you just run through the restructuring again? I apologize. I had a couple calls at the same time. just what was it in the third quarter the impact and the impact for Q4 and then how do we think about that in 27?

Okay so in Q2 we had four pennies of severance if you want to pro forma in the savings that weren't fully reflected you got another five pennies for a total of nine pennies if you want a full pro forma Q2 You got nine pennies. Now, if you look at Q3, all those savings, you know, a quarter of 11 million in savings have been embedded in the guidance we gave for Q3 and no more severance. So take Q2, add nine. That's your Q2 pro forma, giving effective the savings as of the beginning of the quarter. and then Q3 is as stated to take full advantage of the 45 million in annualized savings or I'll call it 11 on a quarterly basis. I think if you look at Proctivity's margins, they're recovering very well. are getting back to near what a year ago's margins were on less revenue because of the cost actions they've taken, because of how they've reallocated between work that contractors do versus work that their employees do. Clearly, the incremental margins when their own employees do work are much higher than when contractors do. And so the combination, we're very happy with the margin impact of the actions Protiviti have taken, some of which are cost actions, some of which are reallocation of resources between contractors and full-time employees.

Are you at the mix, Keith, in terms of fixed versus variable and Protiviti where you want it? Because I know you've set some targets in the past. Is that mix in terms of staffing ratio, fixed versus variable, where you want it to be with these most recent cost actions, or is it independent of that?

Where we want it to be, it's more project-driven than that. Certain projects lend themselves to contractors more than full-time because of the skills involved, because of the ramp-up and scale and speed of that involved. and so it's not like we stand up centrally and say we want a contractor full-time mix of X. It's more project by project what makes sense relative to the skills and capabilities needed on that project. Generally speaking, these large FSI projects that have declined were very highly leveraged, contractor heavy engagements. Very profitable. The projects that replace them are less contractor heavy.

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

Thank you. This concludes today's teleconference.