Robert Half Inc. RHI reported first-quarter fiscal 2026 earnings of 14 cents per share, in line with the Zacks Consensus Estimate and down 17.6% from the year-ago quarter.
Quarterly revenues were $1.3 billion, down 3.8% year over year and slightly below the consensus mark of $1.31 billion, implying a 0.9% miss. Management pointed to strengthening same-day, constant-currency trends in talent solutions as the quarter progressed and into early April, with contract bill rates up 2.6% from a year ago on an adjusted basis.
RHI Segment Trends Show Talent Solutions Pressure
Talent solutions remained under year-over-year pressure, even as sequential momentum improved. Contract talent solutions revenues were $725.0 million, down 5.0% from the prior-year period. Permanent placement talent solutions produced $109.0 million of revenue, a 2.8% decline year over year.
Protiviti posted revenues of $466.2 million, down 2.2% from the first quarter of 2025. In prepared remarks, management noted that global enterprise revenues fell 4% on a reported basis and 6% on an adjusted basis, while currency movements lifted reported year-over-year total revenues by $24 million.
Robert Half Margins Hold in Contract Staffing
Profitability metrics were mixed but generally steady in key areas. Contract talent solutions’ gross margin was 38.9% of applicable revenues, unchanged from the year-ago quarter. Conversion (contract-to-hire) revenues were 3.1% of contract revenues versus 3.2% a year earlier.
Within the talent solutions mix, permanent placement revenues were 13.1% of consolidated talent solutions revenues, up from 12.8% in the prior-year quarter. Overall gross margin for talent solutions was 46.8% versus 46.7% a year ago. Protiviti's gross margin improved to 19.2% from 18.9%, while its adjusted gross margin for Protiviti rose to 18.8% from 18.1%.
Robert Half Inc. Price, Consensus and EPS Surprise
Robert Half Inc. price-consensus-eps-surprise-chart | Robert Half Inc. Quote
RHI Profitability Hit by Elevated First-Quarter Tax
Operating income in the first quarter was $36.9 million. On an adjusted basis, operating income was $28.7 million, or 2.2% of revenues, with adjusted operating income of $15.4 million for talent solutions and $13.3 million for Protiviti.
Below the operating line, the quarter reflected an $8 million loss from investments held in employee deferred compensation trusts, which management said was fully offset by an equal amount of lower deferred compensation costs and had no effect on reported net income. The tax rate was the biggest swing factor: Robert Half’s first-quarter tax rate was 56% versus 22% a year ago, driven primarily by a tax charge tied to stock-based compensation grants that largely vest in the first quarter and the impact of non-deductible items against seasonally low pre-tax income.
Robert Half Cash Use Reflects Seasonal Outflows
Liquidity remained solid, though cash flow reflected typical first-quarter seasonality. Cash and cash equivalents were $278.4 million at the quarter end. Accounts receivable totaled $776 million, and implied days sales outstanding were 53.8 days.
Cash flow used in operations was $112 million, which management attributed to recurring first-quarter payment cycles, including bonuses and SaaS subscription renewals. Shareholder returns continued through the quarterly dividend: the company paid a 59-cent-per-share cash dividend in March, representing a total cash outlay of $62 million. Capital expenditures were $8.5 million, and capitalized cloud computing implementation costs were $8.3 million.
RHI Outlook Calls for Second-Quarter Reacceleration
For the second quarter of fiscal 2026, Robert Half guided revenues to a range of $1.275 billion to $1.375 billion. The company also guided income per share of 20 cents to 30 cents, or 23 cents to 33 cents, excluding a one-time severance charge.
Management said planned cost actions tied to shifts in the U.S. financial services regulatory environment are expected to reduce annual costs by $30 million and result in a second-quarter one-time charge of $5 million, or 3 cents per share, with actions fully completed by the beginning of the third quarter. The company’s midpoint assumptions for the second quarter included a tax rate of 34% to 36% and diluted shares of 100 million to 101 million. For capital allocation, it maintained its full-year 2026 outlook for capital expenditures and capitalized cloud computing costs of $70 million to $90 million, with $15 million to $25 million expected in the second quarter.
Currently, Robert Half carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Earnings Snapshots
Equifax Inc. EFX reported better-than-expected first-quarter 2026 results. EFX’s adjusted earnings per share of $1.86 beat the Zacks Consensus Estimate by 10.1% and increased 21.6% from the year-ago quarter. EFX’s revenues of $1.6 billion surpassed the consensus estimate by 2.3% and improved 14.4% year over year.
Waste Connections, Inc. WCN posted impressive first-quarter 2026 results. WCN’s adjusted earnings of $1.23 per share outpaced the consensus mark by 3.4% and rose 8.9% from the year-ago quarter. WCN’s total revenues of $2.37 billion surpassed the consensus mark by 0.7% and increased 6.4% year over year.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>Equifax, Inc. (EFX) : Free Stock Analysis Report
Robert Half Inc. (RHI) : Free Stock Analysis Report
Waste Connections, Inc. (WCN) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
