RHI 10-K & 10-Q changes, risk factors and insider trading

Any reduction in global economic activity may harm the Company’s business and financial condition. The demand for the Company’s services, in particular its talent solutions services, is highly dependent upon the state of the economy and upon the staffing needs of the Company’s clients. In the recent past, certain of the Company’s markets experienced economic uncertainty characterized by increasing unemployment, limited availability of credit, significant inflation, and decreased consumer and business spending. In addition, certain geopolitical events, including the ongoing war between Russia and Ukraine, the war between Israel, Hamas and Hezbollah, and the ongoing unrest throughout the Middle East, and conflict and political instability in parts of South America have caused significant economic, market, political or regulatory uncertainty in some of the Company’s markets. Any decline in the economic condition or employment levels of the U.S. or of any of the foreign countries in which the Company does business, or in the economic condition of any region of any of the foregoing, or in any specific industry served by the Company may severely reduce the demand for the Company’s services and thereby significantly decrease the Company’s revenues and profits. Further, continued or intensifying economic, political or regulatory uncertainty in the Company’s markets or backlash against U.S.-based companies could reduce demand for the Company’s services.

The Company faces risks in operating internationally. The Company depends on operations in international markets for a significant portion of its business. These international operations are subject to a number of risks, including general political and economic conditions in those foreign countries, international hostilities and responses to those hostilities, the burden of complying with various potentially conflicting foreign laws, technical standards, unpredictable changes in foreign regulations, U.S. legal requirements governing U.S. companies operating in foreign countries, legal and cultural differences in the conduct of business, potential adverse tax consequences, and difficulty in staffing and managing international operations. Furthermore, the Company’s operations may be adversely impacted by conflicts between the U.S. government and those of other jurisdictions in which the Company operates. These factors may have a material adverse effect on the performance of the Company’s business. In addition, the Company’s business may be affected by foreign currency exchange fluctuations. In particular, the Company is subject to risk in translating its results in foreign currencies into the U.S. dollar. If the value of the U.S. dollar strengthens relative to other currencies, the Company’s reported income from these operations could decrease.

Natural disasters and unusual weather conditions, pandemic outbreaks, terrorist acts, global political events and other serious catastrophic events could disrupt business and otherwise materially adversely affect the Company’s business and financial condition. With operations in many states and multiple foreign countries, the Company is subject to numerous risks outside of the Company’s control, including risks arising from natural disasters, such as fires, earthquakes, hurricanes, floods, tornadoes, unusual weather conditions, pandemics and other global health emergencies, terrorist acts or disruptive global political events, or similar disruptions that could materially adversely affect the Company’s business and financial performance. Historically, the Company’s operations are heavily dependent on the ability of employees and consultants to travel from business to business and from location to location. Any public health emergencies, including a real or potential global pandemic such as those caused by the avian flu, SARS, Ebola, coronavirus, or even a particularly virulent flu, could decrease demand for the Company’s services and the Company’s ability to offer them. Uncharacteristic or significant weather conditions may increase in frequency or severity due to climate change, which may increase the Company’s expenses, exacerbate other risks to the Company, including from impacts to key suppliers, and affect travel and the ability of businesses to remain open, which could lead to a decreased ability to offer the Company’s services and materially adversely affect the Company’s results of operations. In addition, these events could result in delays in placing employees and consultants, the temporary disruption in the transport of employees and consultants overseas and domestically, the inability of employees and consultants to reach or have transportation to clients directly affected by such events, and disruption to the Company’s information systems. Although it is not possible to predict such events or their consequences, these events could materially adversely affect the Company’s reputation, business and financial condition.

Failure to meet,meet evolving and increasingincreasingly scrutiny of, and evolvingcontradictory expectations for,for action or inaction on sustainability and ESG commitments and initiatives could harm the Company’s reputation, or otherwise adversely impact ourthe business, financial condition or results of operations. The Company has public sustainability and environmental, social and governance (“ESG”) commitments, including environmental targets validated by the Science Based Target initiative (“SBTi”), designed to have a positive impact on the climate. The Company’s ability to achieve these goals is subject to a multitude of risks that may be outside of the Company’s control. The Company’s failure or perceived failure to achieve ESG-relatedESG- or climate-related goals or maintain ESG-related practices that meet evolving and sometimes contradictory regulatory and stakeholder expectations could harm the Company’s reputation, adversely impact the Company’s ability to attract and retain employees or clients, and expose the Company to increased scrutiny from the media, lawmakers, the investment community and enforcement authorities.regulators. The Company’s reputation also may be harmed by the perceptions that clients, employees and other stakeholdersstakeholders, lawmakers and the media have about the Company’s action or inaction on social, ethical or political issues. Damage to the Company’s reputation and loss of brand equity may reduce demand for the Company’s services and thus have an adverse effect on future financial results and reduce the stock price, as well as require additional resources to rebuild the Company’s reputation and restore the value of the brands. AtIncreasingly, the same time,lawmakers, regulators and stakeholders have increasingly expressed or pursued opposing views,ESG legislation and investment expectations with respectopposing topositions sustainabilityand initiatives.impacts. In recent years anti-ESG and anti-DEI sentiment has gained momentum across the U.S., with several dozen states, Congress and the Executive Branch having proposed or enacted “anti-ESG” and “anti-DEI” policies, legislation, executive orders or initiatives or issued related legal opinions. Meanwhile other states, countries and regions have introduced or enacted broader ESG disclosure or performance compliance obligations. Conflicting regulationsregulations, legal and regulatory uncertainty, and a lack of ESG harmonization of ESG legal and regulatory environments across the jurisdictions in which wethe operateCompany operates has created and, in the future may createcontinue to create, enhanced compliance risks and costs. WeThe Company may also face increasing scrutiny from ourits clients, candidates, employeesemployees, stakeholders, lawmakers and otherthe stakeholdersmedia relating to the appropriate role of ESG practices and disclosures. Failure to prepare for and meet evolving standards and expectations could result in client dissatisfaction, regulatory penalties, investor backlash and diminished shareholder confidence.

The Company operates in a highly competitive business and may be unable to retain clients or market share. The talent solutions business is highly competitive and, because it is a service business, the barriers to entry are quite low. There are many competitors, some of which have greater resources than the Company, and new competitors are entering the market all the time. The increased availability and maturation of AI tools may enable clients to use advanced automation capabilities in lieu of services provided by the Company’s contract talent personnel. Therefore, there can be no assurance that the Company will be able to retain clients or market share in the future. Nor can there be any assurance that the Company will, in light of competitive pressures, be able to remain profitable or, if profitable, maintain its current profit margins.

The Company may incur potential liability to employees and clients. The Company’s contract talent solutions business entails employing individuals on a temporary basis and placing such individuals in clients’ workplaces. The Company’s ability to control the workplace environment is limited. As the employer of record of its temporary employees, the Company incurs a risk of liability to its temporary employees for various workplace events, including claims of physical injury, discrimination, harassment or failure to protect confidential or personal information. In addition, in order to facilitate remote working arrangements, some of the Company’s temporary workers are accessing client workspaces from their personal devices through cloud-based systems, which could increase cybersecurity risks to the Company’s clients. If cybersecurity incidents were to occur in such a way, the Company may face legal and contractual liability, reputational damage, loss of business, and other expenses. The Company also incurs a risk of liability to its clients resulting from allegations of damages caused by temporary employees acting on phishing emails, cyberfacilitating, attacks,allowing or failing to stop cyberattacks, and other errors, omissions or theft by its temporary employees, or allegations of compromise of client confidential information. In some cases, the Company has agreed to indemnify its clients in respect of these types of claims. The Company maintains insurance with respect to many such claims. While such claims have not historically had a material adverse effect on the Company, there can be no assurance that the Company will continue to be able to obtain insurance at a cost that does not have a material adverse effect on the Company or that such claims (whether by reason of the Company not having sufficient insurance or by reason of such claims being outside the scope of the Company’s insurance) will not have a material adverse effect on the Company.

Protiviti operates in a highly competitive business and faces competitors who are significantly larger and have more established reputations. As with the Company’s talent solutions services business, the barriers to entry are quite low. There are many competitors, some of which have greater resources than Protiviti and many of which have been in operation far longer than Protiviti. In particular, Protiviti faces competition from the “Big Four” accounting firms, which have been in operation for a considerable period of time and have established reputations and client bases. Because the principal factors upon which competition is based are reputation, technology, tools, project methodologies, price of services,services and depth of skills of personnel, there can be no assurance that Protiviti will be successful in attracting and retaining clients or be able to maintain the technology, personnel, and other requirements to successfully compete.

Protiviti’s operations could subject it to liability. The business of Protiviti consists of providing business consulting and internal audit services. Protiviti risks liability from allegations of damages caused by errors, omissions or misconduct by its employees or allegations of compromised client confidential or personal information while working on consulting engagementsengagements, or from damages caused by its employees acting on phishing emails and cyberfacilitating, attacks,allowing or allegationsfailing ofto compromisestop ofcyberattacks clientwhile confidentialworking information.in a client’s environment. In some cases, the Company has agreed to indemnify its clients in respect of these types of claims. Liability could be incurred, or litigation could be, and from time-to-time has been, instituted against the Company or Protiviti for claims related to these activities or to prior transactions or activities. There can be no assurance that such liability or litigation will not have a material adverse impact on Protiviti or the Company.

The Company is dependent on its management personnel and employees, and a failure to attract and retain such personnel could harm its business. The Company is engaged in the services business. As such, its success or failure is highly dependent upon the performance of its management personnel and employees, rather than upon tangible assets (of which the Company has few). There can be no assurance that the Company will be able to attract and retain the personnel that are essential to its success. A failure to retain key management personnel could disrupt the Company’s operations and its succession strategy, hindering a smooth transition to new leadership and potentially disrupting the Company’s operations.

The Company’s results of operations and ability to grow could be materially negatively affected if it cannot successfully keep pace with technological changes impacting the development and implementation of its services and the evolving needs of its clients. The Company’s success depends on its ability to keep pace with rapid technological changes affecting both the development and implementation of its services and the staffing needs of its clients. Technological advances such as artificial intelligence,AI, machine learning and automation are impacting industries served by all of the Company’s lines of business. In addition, the Company’s business relies on a variety of technologies, including those that support hiring and tracking, order management, billing, and client data analytics. If the Company does not sufficiently invest in new technology and keep pace with industry developments, appropriately implement new technologies, or evolve its business at sufficient speed and scale in response to such developments, or if it does not make the right strategic investments to respond to these developments, the Company’s services, results of operations, and ability to develop and maintain its business could be negatively affected.

The Company uses artificial intelligenceAI in its provision of services which may result in operational challenges, legal liability, reputational concerns, and privacyprivacy, security and competitive risks. The Company currently uses and intends to leveragecontinue using its ownproprietary andAI third parties’ artificial intelligence (“AI”) processes andprocesses, algorithms and itsapplications, ownas evolvingwell andas those of third parties’ cognitive, analytical and artificial intelligence applicationsparties in its daily operations for Protiviti and talent solutions, including by deploying generative AI into the Company’s talent solutions search operations. Protiviti has expanded its service offerings to include AI risk analysis, policy creation, governance, and technology selection and architecture. The use of AI by talent solutions and provision of AI related services by Protiviti may result in operational challenges, legal liability, reputational concerns, and privacyprivacy, security and competitive risks which could result in adverse effects to the Company’s financial condition, results or reputation. Generative AI products and services leverage existing and widely available technologies, such as Chat GPT-4 and its successors, or alternative large language models or other processes. The use of generative AI processes at scale is relatively new and may lead to challenges, concerns and risks that are significant or that the Company may not be able to predict, especially if its use of these technologies in the delivery of its services becomes more important to its operations over time.

Use of generative AI in search operations and services offerings may be difficult to deploy successfully due to operational issues inherent to the nature of such technologies. AI algorithms use machine learning and predictive analytics, which may lead to flawed, biased, and inaccurate candidate and lead generation search results. Datasets inused for AI training, development or operations may be insufficient, of poor quality, reflect unwanted forms of bias, or raise other legal concerns (such as concerns regardingrelating copyrightto protectionsintellectual property infringement or data protection). Inappropriate or controversial data practices by, or practices reflecting inherent biases of, data scientists, engineers and end-users of the Company’s systems could lead to mistrust, rejection or skepticism of the Company’s services by clients and candidates.

Uncertainty in the legal regulatory regime relating to AI may require significant resources to modify and maintain business practices to comply with U.S. and non-U.S. laws, the nature of which cannot be determined at this time. Several jurisdictions around the globe, including Europe and certain U.S. states, have already proposed or enacted laws governing the use, development and training of AI. For example, the European Union passed the Artificial Intelligence Act in 2024 which contains stringentprescriptive AI regulations and laws, and the Company expects other jurisdictions will adopt similar legislation. OtherSuch other jurisdictions may decide to adopt similar or more restrictive legislationlegislation, and jurisdictions that mayhave already enacted legislation could elect to enact additional legislation, any of which could render the use of such technologiesAI challenging, impossible or financially prohibitive.

The demand for the Company’s services related to regulatory compliance may decline. The operations of both the talent solutions business and Protiviti include services related to Sarbanes-Oxley, Anti-Money Laundering Act of 2020 reviewsreviews, the Bank Secrecy Act of 1970, as amended, and related anti-money laundering regulations, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Foreign Corrupt Practices Act of 1977 and other regulatory compliance services. There can be no assurance that there will be ongoing demand for these services. Similarly, from time-to-time proposals are considered by the U.S. Congress to further delay or, in some cases, remove the requirements of Sarbanes-Oxley and the Dodd-Frank Act for a number of public and private companies. Furthermore, the enforcement priorities of U.S. regulators fluctuate from time to time, which may lead to periods of decreased demand for certain of the Company’s regulatory compliance services. These or other similar modifications of the regulatory requirements could decrease demand for Protiviti’s and talent solution’s services.

If the Company does not effectively manage billable rates, the Company’s financial results could suffer. Accurate and strategic pricing represents a key factor in ourthe Company’s financial results. If billable rates are too low, the Company’s service revenues may not cover operational costs, whereas if billable rates are too high, the Company risks hindering client retention and limits competitiveness.

The Company and certain subsidiaries are defendants in several lawsuits that could cause the Company to incur substantial liabilities. The Company and certain subsidiaries are defendants in several certified or putative class and representative action lawsuits brought by or on behalf of the Company’s current and former employees alleging violations of federal and state law with respect to certain wage and hour related matters, as well as claims by job applicants challenging the Company’s compliance with the Fair Credit Reporting Act.matters. The various claims made in one or more of such lawsuits include, among other things, the misclassification of certain employees as exempt employees under applicable law, failure to comply with wage statement requirements, failure to compensate certain employees for time spent performing activities related to the interviewing process (including attending the interviews themselves), and other related wage and hour violations. Such suits seek, as applicable, unspecified amounts for unpaid overtime compensation, penalties and other damages, as well as attorneys’ fees. The Company is defending several claims brought under the California Labor Code Private Attorney General Act (“PAGA”) and which authorizes individuals to file lawsuits to seek civil penalties on behalf of themselves and other employees for alleged labor code violations. It is not possible to predict the outcome of these lawsuits. However, these lawsuits may consume substantial amounts of the Company’s financial and managerial resources and might result in adverse publicity regardless of the ultimate outcome of the lawsuits. In addition, the Company and its subsidiaries may become subject to similar lawsuits in the same or other jurisdictions, or to various other claims, disputes, and legal or regulatory proceedings that arise in the ordinary course of business. An unfavorable outcome with respect to these lawsuits and any future lawsuits or regulatory proceedings could, individually or in the aggregate, cause the Company to incur substantial liabilities or impact its operations in such a way that may have a material adverse effect upon the Company’s business, financial condition or results of operations. Furthermore, any future lawsuits, claims, disputes, or legal or regulatory proceedings may also consume substantial amounts of the Company’s financial and managerial resources and might result in adverse publicity regardless of the ultimate outcome. In addition, an unfavorable outcome in one or more of these cases could cause the Company to change its compensation plans for its employees, which could have a material adverse effect upon the Company’s business.

The Company’s business is subject to extensive government regulation and a failure to comply with regulations could harm its business. The Company’s business is subject to regulation or licensing in many states in the U.S. and in certain foreign countries. While the Company has had no material difficulty complying with regulations in the past, there can be no assurance that the Company will be able to continue to obtain all necessary licenses or approvals or that the cost of compliance will not prove to be material. Any inability of the Company to comply with government regulation or licensing requirements could materially adversely affect the Company. Further, changes to existing regulation or licensing requirements could impose additional costs and other burdens or limitations on the Company’s operations. In addition, the Company’s contract talent services business entails employing individuals on a temporary basis and placing such individuals in clients’ workplaces. Increased government regulation of the workplace or of the employer-employee relationship, or judicial or administrative proceedings related to such regulation, could materially adversely affect the Company. In addition, to the extent that government regulation imposes increased costs upon the Company, such as unemployment insurance taxes, there can be no assurance that such costs will not adversely impact the Company’s profit margins. Further, lawsuits or other proceedings related to the Company’s compliance with government regulations or licensing requirements could materially adversely affect the Company. For example, the Company is currently named as a defendant in litigation challenging its compliance with the Fair Credit Reporting Act and PAGA litigation in California alleging wage and hour and other labor code compliance issues. It is not possible to predict the outcome of such litigation; however, such litigation or any future lawsuits or proceedings related to the Company’s compliance with government regulation or licensing requirements could consume substantial amounts of the Company’s financial and managerial resources, and might result in adverse publicity regardless of the ultimate outcome of any such lawsuits or other proceedings. An unfavorable outcome with respect to such litigation or any future lawsuits or proceedings could, individually or in the aggregate, cause the Company to incur substantial liabilities that may have a material adverse effect upon the Company’s business, financial condition or results of operations.

In addition, changes in tax laws, treaties or regulations, or their interpretation or enforcement, have become more unpredictable and may become more stringent, which could materially adversely affect the Company’s tax position. A number of countries where the Company does business, including the U.S. and many countries in the European Union, have implemented, and are considering implementing, changes in relevant tax, accounting and other laws, regulations and interpretations. The overall tax environment has made it increasingly challenging for multinational corporations to operate with certainty about taxation in many jurisdictions. For example, the Organization of Economic Cooperation and Development (“OECD”), an international association of many countries, has introduced a framework to impose a 15% global minimum corporate tax, referred to as Pillar Two, effective for tax years beginning in 2024. Currently,On thereJanuary are5, no2026, lawsthe enactedOECD incorporatingreleased new guidance establishing the Side-by-Side (“SbS”) program under the Pillar Two inglobal theminimum U.S.,tax however,framework. certainThe countriesSbS inprogram which the Company operates have adopted, or are in the process of adopting legislation to implement Pillar Two. In the U.S., various proposals to raise corporate income taxes are periodically considered such as the Inflation Reduction Act, which introducedincludes a 15%Simplified Corporate Alternative MinimumEffective Tax beginningRate inSafe 2023.Harbor, an extended Transitional Country-by-Country Reporting Safe Harbor, and a Substance-based Tax Incentive Safe Harbor. These enacted changedand proposed changes in tax laws, treaties or regulations, or their interpretation or enforcement could impact our current or future tax positions while the proposed changes in tax laws, treaties or regulations, or their interpretation or enforcement, could have a material adverse impact on ourthe Company’s current or future tax positions.

Company and third-party computer, technology and communications hardware and software systems and assets (“IT Assets”) are vulnerable to damage, unauthorized access,access and disruption that could expose the Company to material operational, financial and reputational damage (including the unauthorized access to, or exposure of, personal and confidential information and intellectual property). The Company’s ability to manage its operations using theseIT systemsAssets successfully is critical to its success and largely depends upon the efficient and uninterrupted operation of its and third parties’ computer,IT technology and communications systems,Assets, some of which are managed and run by third-party vendors. The Company’s primary systemsIT Assets (and, as a result, its operations) are vulnerable to damage or interruption from power outages, computer, technology and telecommunications failures, computer viruses, security breaches, cyberattacks, catastrophic events, and errors in usage by the Company’s or its vendors’ employees and contractors. In addition, the Company’s systemsIT Assets contain personal and confidential information and intellectual property, including information of importance to the Company and its employees, vendors, contractors and clients.

Cyberattacks, including attacks motivated by the desire for monetary gain or embarrassment, geopolitics, and grievances against the business services industry in general or against the Company in particular, could potentially disable or damage itsthe systemsCompany’s IT Assets or the systemsthose of its vendors or clients, or allow unauthorized access to, or exposure of, intellectual property and personal or confidential information, including information about employees, vendors, candidates, contractors and clients. The Company’s security tools, controls and practices, including those relating to identity and access management, credential strength, and the security tools, controls and practices of its vendors and clients, may not prevent or detect access, damage or disruption to Company or third-party computer,IT technology, and communications hardware and software systemsAssets or the unauthorized access to, or exposure of, intellectual property or personal or confidential information. A failure to prevent or detect unauthorized access to Company or third-party systemsIT Assets could expose the Company to material operational, financial and reputational damage. There are many approaches through which such systemsIT Assets or the information stored thereon could be damaged ordamaged, disrupted, or information exposed or accessed, including through system vulnerabilities, configuration errors, vendor vulnerabilities, social engineering, cyberattacks,cyberattacks improperly(including obtainingcyberattacks through the use of AI), improper acquisition and usinguse of user credentials, malfeasance, or the misuse of authorized user access.

Periodic and continuous assessments are conducted by the Company on its IT Assets to identify security risks, vulnerabilities, weaknesses or gaps, and a risk-based approach is then employed to address them, recognizing that not all system and software updates can be made and not all risks or vulnerabilities, weaknesses or gaps can be eliminated in an economical or timely manner.them. This risk-based approach prioritizes risks, vulnerabilities, weaknesses and gaps based on, among other factors, budgetary constraints, impact, likelihood of mitigation and the broader risk landscape.

No security program can offer a guarantee against all potential cyberattacks or other cybersecurity-related incidents. On an increasing frequency, theThe Company and its third-party vendors experience securitycybersecurity attacks with increasing frequency, including incidents that have resulted in unauthorized access to the Company’s or its third-party vendors’ computer,IT technology and communications hardware and software systems.Assets. To date, no such incidents have been determined to have had a material impact on the Company.Company, but there is no guarantee that such incidents will not have a material impact on the Company in the future.

The Company has transitioned a significant number of the Company’sits employee population to remote work. This transition to remote working has also increased the Company’s vulnerability to cybersecurity-related risks related to the Company’s computer,IT technology, and communications hardware and software systemsAssets and has exacerbated certain related risks, including risks of phishing and other cybersecurity attacks.

The damage or disruption to Company or third-party systems, or unauthorized access to, or exposure of, intellectual property or personal or confidential information, could harm the Company’s operations, reputation and brand, resulting in a loss of business or revenue. It could also subject the Company to government sanctions, litigation from candidates, contractors, clients and employees, and legal liability under its contracts, resulting in increased costs or loss of revenue. The Company may also incur additional expenses, including the cost of remediating cybersecurity incidents or improving security measures, the cost of identifying and retaining replacement vendors, increased costsinsurance of insurance,premiums, or unexpected costs of ransomware payments.

Cybersecurity threats continue to increase in frequency and sophistication,sophistication (including through the use of AI), thereby increasing the difficulty of detecting and defending against them. Furthermore, the potential risk of securitycybersecurity breaches and cyberattacks may increase as the Company introduces new service offerings.offerings and deploys new AI technologies. Any future events impacting the Company or its third-party vendors that damage or interrupt the Company’s or its third-party vendors’ computer,IT technology, and communications hardware and software systemsAssets or expose intellectual property or data or other confidential information stored thereon could have a material adverse effect on ourthe Company’s operations, reputation and financial results.

Changes in data privacy and protection laws and regulations inrelating respectto ofthe use and control of personal information (and the failure to comply with such laws and regulations) could increase the Company’s costs or otherwise adversely impact its operations, financial results, and reputation. In the ordinary course of business, the Company collects, uses and retains personal information from its clients, employees, candidates,candidates and contractors, including, without limitation, full names, government-issued identification numbers, addresses, phone numbers, birthdates,birthdates and payroll-related information. The possession and use of personal information in conducting the Company’s business subjects it to a variety of complex and evolving domestic and foreign laws and regulations regarding data privacy. For example, the European Union’s General Data Protection Regulation (“GDPR”), which became effective in May 2018, imposes specific operational requirements for entities processing personal information, including requirements for data transfers to certain countries outside the European Union, and strong enforcement authorities and mechanisms. Complying with the enhanced obligations imposed by the GDPR and other current and future laws and regulations relating to data storage, use, transfer, residency, privacy and protection has increased and may continue to increase the Company’s operating costs and require significant management time and attention, while any failure by the Company or its subsidiaries to comply with applicable laws could result in governmental enforcement actions, fines and other penalties that could potentially have an adverse effect on the Company’s operations, financial results and reputation.

The Company may be adversely affected by global climate change or by legal, regulatory or market responses to such change. The physical effects of climate change could have a material adverse effect on ourthe Company’s operations and business. To the extent climate change causes changes in weather patterns, certain regions where the Company operates could experience increases in storm intensity, extreme temperatures, wildfires, rising sea-levels and/or drought. Over time, these conditions could result in increases in ourthe Company’s operating costs or business interruptions. For example, ourthe Company’s headquarters isare located in an areaareas of California where the incidence of wildfire has increased over time and may continue to increase. In addition, in 2023 the Company established certain emissions targets and other environmental goals and submitted them for validation to the Science Based Target initiative (“SBTi”).SBTi. Failure to achieve such goals, or a perception (whether valid or invalid) of our failure to achieve such goals, could result in market, reputational, regulatory or liability risks, client dissatisfaction, reduced revenue and profitability, or shareholder lawsuits. If the Company is unable to achieve ourits environmental goals, ourthe Company’s business and reputation may be adversely affected. There can be no assurance that climate change will not have a material adverse effect on ourthe Company’s properties, operations or business.

Failure to maintain adequate financial and management processes and controls could lead to errors in the Company’s financial reporting. Failure to maintain adequate financial and management processes and controls could lead to errors in the Company’s financial reporting. If the Company’s management is unable to certify the effectiveness of its internal controls or if its independent registered public accounting firm cannot render an opinion on the effectiveness of its internal control over financial reporting, or if material weaknesses in the Company’s internal controls are identified, the Company could be subject to regulatory scrutiny and a loss of public confidence. In addition, if the Company does not maintain adequate financial and management personnel and processes and controls, it may not be able to accurately report its financial performance on a timely basis, which could cause its stock price to fall.

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 Inc. (the “Company”). Forward-looking statements are not guarantees or promises that goals or targets will be met. These statements may be identified by words such as “anticipate,” “potential,” “estimate,” “forecast,” “target,” “project,” “plan,” “intend,” “believe,” “expect,” “should,” “could,” “would,” “may,” “might,” “will,” or variations or negatives thereof or by similar or comparable words or phrases. In addition, historical, current and forward-looking information about the Company’s environmental,corporate social and governance (“ESG”)responsibility and compliance programs, including targets or goals, may not be considered material for the Securities and Exchange Commission (“SEC”) or other mandatory reporting purposes and may be based on standards for measuring progress that are still developing,developing; on internal controls, diligence or processes that are evolving,evolving; on representations reviewed or provided by third parties,parties; and on assumptions that are subject to change in the future. Forward-looking statements are estimates only and are based on management’s current expectations, currently available informationinformation, and current strategy, plans or forecasts, and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict, often beyond ourthe Company’s control and are inherently uncertain. Forward-looking statements are subject to risks and uncertainties that could cause actual results and outcomes, or the timing of these results or outcomes, to differ materially from those expressed or implied 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; 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 development, proliferation and adoption of artificial intelligence (“AI”) by the Company and the third parties it serves; 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, or 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 SEC filings; the impact of extreme weather conditions on the Company and its candidates and clients; 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 interruptedinterrupted, or that 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. Except as required by law, the Company undertakes no obligation to update information in this report, whether as a result of new information, future events, or otherwise, and notwithstanding any historical practice of doing so.

The Company’s service revenues were $5.38 billion in 2025, a decrease of 7.2% from the prior year. Full-year 2025 net income decreased 47.1% to $133 million and diluted net income per share decreased 45.5% to $1.33. The Company’s results were impacted by the ongoing macroeconomic uncertainty that affects client and candidate confidence, lengthening decision cycles and delaying hiring activities and projects in the short term.

Demand for the Company’s contract talent solutions, permanent placement talent solutions and Protiviti is largely dependent upon general economic and labor trends both domestically and abroad. The U.S. real gross domestic product increased 2.3%at an annual rate of 4.4% in 2024,the third quarter of 2025 (the latest information available as of the date of this filing), compared to an increase of 2.5%2.3% in 2023,2024. whileConcerns around a near-term economic downturn have moderated, supported by a more conducive macro environment. Continued progress in the unemploymentrate-cutting ratecycle, roseeasing frominflation, 3.8%less in December 2023 to 4.1% in December 2024. Global labor markets remain resilient with U.S. job openings significantly above historical averages indicating pent-up demand for talent. In the U.S., unemployment stands at 4.1%regulation and remainsrelatively evenmore lowerclarity foron thosetrade withpolicy aall college degree, where the rate is 2.4%.contribute.

The Company continues to invest in technology and innovation, including AI. Major focus areas include providing a world-class digital experience for clients and candidates that is seamlessly connected to the Company’s specialized professional recruiters. Also, the Company will continue to leverage its proprietary data assets to enhance the AI tools its recruiters use to discover, assess and select talent for its clients, and the AI tools recruiters use to effectively target leads for additional revenue. Protiviti continues to invest in and deploy AI-enabled solutions by integrating AI into its existing offerings while aiming to enhance its own AI infrastructure.

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 and labor market 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 20242025 the Company decreasedCompany’s headcount remained relatively flat for its contract talent solutions andsolutions, permanent placement talent solutions segments,and Protiviti segments when compared to prior year-end levels.levels, Inwhile addition, the full-timeadministrative headcount for Protiviti increased when compared to prior year-end levels.decreased.

Service Revenues. The Company derives its revenues from three segments: contract talent solutions, permanent placement talent solutionssolutions, 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—“Revenue Recognition” to the Company’s Consolidated Financial Statements included under Part II—Item 8 of this report.

ThePreviously, the Organization of Economic Cooperation and Development (“OECD”), an international association of many countries,countries hasincluding the U.S., introduced a framework to impose a 15% global minimum corporate tax, referred to as Pillar Two, effective for tax years beginning in 2024. Currently,On thereJanuary are5, no2026, lawsthe enactedOECD incorporatingreleased new guidance establishing the Side-by-Side (“SbS”) program under the Pillar Two inglobal theminimum U.S.,tax however, certain countries in which the Company operates have adopted, or are in the process of adopting legislation to implement Pillar Two.framework. The OECDSbS continuesprogram toincludes releasea additionalSimplified guidanceEffective Tax Rate Safe Harbor, an extended Transitional Country-by-Country Reporting Safe Harbor, and countriesa areSubstance-based implementingTax legislationIncentive withSafe widespread adoption of the Global Anti-Base Erosion (“GloBE”) Model Rules for Pillar Two.Harbor. The Company isdoes continuingnot expect the SbS guidance to evaluatematerially theaffect GloBEits Modeltax Rules for Pillar Twoobligations and relatedwill legislation;continue noto materialmonitor taxglobal impacts are expected.implementation.

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: adjusted gross margin; adjusted selling, general and administrative expenses; combinedadjusted segmentoperating income; and as adjusted revenue growth rates.

The following measures,measures: adjusted gross margin andmargin, adjusted selling, general and administrative expenses, and adjusted operating 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.

As adjustedAdjusted revenue growth rates represent year-over-year revenue growth rates after removing the impacts on reported revenues from the changes in the number of billing days and foreign currency exchange rates. The Company provides 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 impacts from the changes in billing days and foreign currency exchange rates are calculated as follows:

•Foreign currency impact is calculated by retranslating current periodcurrent-period international revenues using foreign currency exchange rates from the prior year’s comparable period.

The change in the Company’s liquidity during the years ended December 31, 2024,2025, and 2023,2024, is primarily the net effect of funds generated by operations and the funds used for capital expenditures, investments in employee deferred compensation trusts,trusts net of redemptions from employee deferred compensation trusts, repurchases of common stock, and payments of dividends.

The Company’s service revenues for the first quarterhalf of 2026 were $1.30$2.64 billion, a decrease of 3.8%3.1% from the prior year. Net income was $14$40 million, and diluted net income per share was $0.14.$0.40. Although the Company’s results were impacted by the ongoing macroeconomic uncertainty that affected client and candidate confidence, we believe market conditions are becoming increasingly conducive to our business. As confidence continues to improve, even modest increases in hiring activity can drive incremental demand for our services.

Protiviti is navigating continued shifts in the bankfinancial services regulatory enforcement environment in the U.S. This shift is influencing the nature of its work, with relatively fewer large-scale regulatory remediation engagements and increased demand for efficiency-oriented solutions, including the application of advanced technologies. This represents a significant future opportunity.

Demand for the Company’s contract talent solutions, permanent placement talent solutions and Protiviti is largely dependent upon general economic and labor trends, both domestically and abroad. The U.S. real gross domestic product increased at an annual rate of 2.0%1.5% during the firstsecond quarter 2026, compared to an increase of 0.5%2.0% during the fourthfirst quarter of 2025.2026.

The U.S. job market remains resilient with overall unemployment at 4.3%,4.2%, as of MarchJune 31,30, 2026. Labor supply constraints remain. Particularly noteworthy is that the unemployment rate for college-educated professionals is holding steady at just 2.8%,2.7%, with even lower rates prevailing among specialized accounting, finance and technology roles. Broader labor market indicators continue to point to underlying demand for skilled talent, and job openings continue to run above historical averages. DecisionWhile timelinesclients continue to approach hiring thoughtfully, the Company sees steady progress in client interactions and activity. These interactions suggest that clients remain extendedresilient, butalthough are beginning to improve as companies revisit postponed initiativesgeopolitical and considermacroeconomic hiringuncertainty tiedpersists, toand business-criticalinflation priorities.remains Economica uncertaintiesconcern related toincluding the conflictspotential effects of escalating tensions in the Middle EastEast. Organizations continue to focus on initiatives that drive productivity, growth and higherlong-term energycompetitiveness costswhich havecontributes notto yet significantly impacted clientongoing demand; however,for concernsthe remainCompany’s if these conditions persist.services.

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 and labor market 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 quarterhalf of 2026, the Company’s headcount remained relatively flat for its contract talent solutions and permanent placement talent solutions segments,segment, as well as administrative headcount, when compared to prior year-end levels, while its permanent placement talent solutions segment and Protiviti headcount decreased.

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, 2025. There were no material changes to the Company’s critical accounting policies or estimates for the threesix months ended MarchJune 31,30, 2026.

Three Months Ended MarchJune 31,30, 2026 and 2025

Service Revenues. The Company’s revenues were $1.30$1.34 billion for the three months ended MarchJune 31,30, 2026, a decrease of 3.8%2.4% compared to $1.35$1.37 billion for the three months ended MarchJune 31,30, 2025. Revenues from U.S. operations decreased 7.1%2.9% to $988$1.03 millionbillion (76.0%77.3% of total revenue) for the three months ended MarchJune 31,30, 2026, compared to $1.06 billion (78.6%77.7% of total revenue) for the three months ended MarchJune 31,30, 2025. Revenues from international operations increaseddecreased 8.1%1.0% to $312$303 million (24.0%22.7% of total revenue) for the three months ended MarchJune 31,30, 2026, compared to $289$306 million (21.4%22.3% of total revenue) for the three months ended MarchJune 31,30, 2025. Contributing factors for each reportable segment are discussed below in further detail.

Contract talent solutions revenues were $725$747 million for the three months ended MarchJune 31,30, 2026, decreasing by 5.0%1.6% compared to revenues of $763$760 million for the three months ended MarchJune 31,30, 2025. 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. The decrease in contract talent solutions revenues for the three months ended MarchJune 31,30, 2026, was primarily due to a 7.2%2.8% decrease in the number of hours worked by the Company’s engagement professionals, partially offset by a 2.4%1.2% increase in average bill rates. On an adjusted basis, contract talent solutions revenues decreased 6.8%2.1% for the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. In the U.S., revenues in the firstsecond quarter of 2026 decreased 7.6%2.1% on a reported basis, and decreased 7.5%1.8% on an adjusted basis, compared to the firstsecond quarter of 2025. International revenues for the firstsecond quarter of 2026 increaseddecreased 4.3%0.1% on a reported basis, and decreased 3.4%3.5% on an adjusted basis, compared to the firstsecond quarter of 2025.

Permanent placement talent solutions revenues were $109$118 million for the three months ended MarchJune 31,30, 2026, decreasingincreasing by 2.8%2.9% compared to revenues of $112$115 million for the three months ended MarchJune 31,30, 2025. Key drivers of permanent placement talent solutions revenues consist of the number of candidate placements and average fees earned per placement. The decreaseincrease in permanent placement talent solutions revenues for the three months ended MarchJune 31,30, 2026, was due to a 7.5% decrease in the number of placements, partially offset by a 4.7%5.5% increase in average fees earned per placement.placement, partially offset by a 2.6% decrease in the number of placements. On an adjusted basis, permanent placement talent solutions revenues decreasedincreased 4.7%2.5% for the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. In the U.S., revenues for the firstsecond quarter of 2026 decreasedincreased 5.9%6.0% on a reported basis, and decreasedincreased 5.7%6.3% on an adjusted basis, compared to the firstsecond quarter of 2025. International revenues for the firstsecond quarter of 2026 increaseddecreased 5.7%4.8% on a reported basis, and decreased 0.9%7.1% on an adjusted basis, compared to the firstsecond quarter of 2025. 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 $466$471 million for the three months ended MarchJune 31,30, 2026, decreasing by 2.2%4.9% compared to revenues of $477$495 million for the three months ended MarchJune 31,30, 2025. Key drivers of Protiviti revenues are the billable hours worked on client engagements and average hourly bill rates. The decrease in Protiviti revenues for the three months ended MarchJune 31,30, 2026, was due to a 6.3%19.9% decrease in billable hours, partially offset by a 4.1%15.0% increase in average hourly bill rates. The increase in average bill rate largely reflects changes in the composition and number of professional staff, as well as differences in their respective billing rates. As engagements shift from large, highly leveraged projects to smaller engagements with less leverage, average bill rates increase. On an adjusted basis, Protiviti revenues decreased 3.8%5.0% for the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. In the U.S., revenues in the firstsecond quarter of 2026 decreased 6.4%5.8% on a reported basis, and decreased 6.3%5.5% on an adjusted basis, compared to the firstsecond quarter of 2025. International revenues for the firstsecond quarter of 2026 increaseddecreased 16.0%1.2% on a reported basis, and increaseddecreased 8.1%3.1% on an adjusted basis, compared to the firstsecond quarter of 2025.

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 MarchJune 31,30, 2026, is presented in the following table:

Gross Margin. The Company’s gross margin dollars were $480$474 million for the three months ended MarchJune 31,30, 2026, decreasing 3.8%7.0% from $499$509 million for the three months ended MarchJune 31,30, 2025. Contributing factors for each reportable segment are discussed below in further detail.

Gross margin dollars for contract talent solutions were $282$292 million for the three months ended MarchJune 31,30, 2026, decreasing by 5.1%1.7% from $297 million for the three months ended MarchJune 31,30, 2025. As a percentage of revenues, gross margin dollars for contract talent solutions were 38.9%39.1% in both the firstsecond quarter of 2026 and 2025.

Gross margin dollars for permanent placement talent solutions represent revenues less reimbursable expenses. Gross margin dollars for permanent placement talent solutions were $109$118 million for the three months ended MarchJune 31,30, 2026, decreasingincreasing 2.8%2.9% from $112$115 million for the three months ended MarchJune 31,30, 2025. Because reimbursable expenses for permanent placement talent solutions are de minimis, the decreaseincrease in gross margin dollars is substantially explained by the decreaseincrease in revenues previously discussed.

Gross margin dollars for Protiviti represent revenues less costs of services, which consist primarily of professional staff payroll, payroll taxes, benefit costs and reimbursable expenses. The primary drivers of Protiviti’s gross margin are: i) the relative composition of and number of professional staff and their respective pay and bill rates; and ii) staff utilization, which is the relationship of time spent on client engagements in proportion to the total time available for the Company’s Protiviti staff. Gross margin dollars for Protiviti were $89$64 million for the three months ended MarchJune 31,30, 2026, decreasing 0.9%34.6% from $90$97 million for the three months ended MarchJune 31,30, 2025. As a percentage of revenues, reported gross margin dollars for Protiviti were 19.2%13.5% in the firstsecond quarter of 2026, updown from 18.9%19.7% in the firstsecond quarter of 2025. As a percentage of revenues, adjusted gross margin dollars for Protiviti were 18.8%18.5% in the firstsecond quarter of 2026, updown from 18.1%22.3% in the firstsecond quarter of 2025. The increaseyear-over-year decrease in adjusted gross margin percentage was primarily drivendue by the absence ofto cost reduction charges incurred in the priorquarter, year.as well as the relative composition of and number of professional staff and their respective pay and bill rates.

The following tables provide reconciliations of the non-GAAP adjusted gross margin to reported gross margin for the three months ended MarchJune 31,30, 2026 and 2025 (in thousands):

Selling, General and Administrative Expenses. The Company’s selling, general and administrative expenses consist primarily of staff compensation, advertising, lease expense, depreciation, cloud computing service costs and overhead costs. The Company’s reported selling, general and administrative expenses were $443$536 million for the three months ended MarchJune 31,30, 2026, decreasingincreasing by 3.7%5.6% from $460$508 million for the three months ended MarchJune 31,30, 2025. As a percentage of revenues, reported selling, general and administrative expenses were 34.1%40.1% in the firstsecond quarter of 2026, up from 34.0%37.1% in the firstsecond quarter of 2025. The Company’s adjusted selling, general and administrative expenses were $449$459 million for the three months ended MarchJune 31,30, 2026, down 5.7%0.9% from $476$463 million for the three months ended MarchJune 31,30, 2025. As a percentage of revenues, adjusted selling, general and administrative expenses were 34.6%34.3% in the firstsecond quarter of 2026, downup from 35.2%33.8% in the firstsecond quarter of 2025. Contributing factors for each reportable segment are discussed below in further detail.

Selling, general and administrative expenses for contract talent solutions, on a reported basis, were $267$343 million for the three months ended MarchJune 31,30, 2026, decreasingincreasing by 3.3%7.6% from $276$319 million for the three months ended MarchJune 31,30, 2025. As a percentage of revenues, reported selling, general and administrative expenses for contract talent solutions were 36.8%45.9% in the firstsecond quarter of 2026, up from 36.2%42.0% in the firstsecond quarter of 2025. As a percentage of revenues, adjusted selling, general and administrative expenses for contract talent solutions were 37.6%36.7% in both the firstsecond quarter of 2026,2026 downand from 38.0% in the first quarter of 2025, primarily driven by the absence of cost reduction charges incurred in the prior year, partially offset by negative leverage as revenues decreased as a result of economic conditions during the quarter.2025.

Selling, general and administrative expenses for permanent placement talent solutions were $102$116 million for the three months ended MarchJune 31,30, 2026, decreasingincreasing by 4.1%4.3% from $106$111 million for the three months ended MarchJune 31,30, 2025. As a percentage of revenues, reported selling, general and administrative expenses for permanent placement talent solutions services were 93.4%98.3% in the firstsecond quarter of 2026, downup from 94.7%97.0% in the firstsecond quarter of 2025. As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement talent solutions were 94.2%90.6% in the firstsecond quarter of 2026, down from 96.6%92.7% in the firstsecond quarter of 2025, due primarily drivento by the absence of cost reduction charges incurred in the prior year, partially offset by negativepositive leverage as revenues decreased as a result of economic conditions during the quarter.increased.

Selling, general and administrative expenses for Protiviti were $74$77 million for the three months ended MarchJune 31,30, 2026, decreasing by 4.8%0.7% from $78 million for the three months ended MarchJune 31,30, 2025. As a percentage of revenues, selling, general and administrative expenses for Protiviti services were 15.9%16.4% in the firstsecond quarter of 2026, downup from 16.3%15.7% in the firstsecond quarter of 2025.2025, due primarily to negative leverage as revenues decreased.

The following tables provide reconciliations of the non-GAAP selling, general and administrative expenses to reported selling, general and administrative expenses for the three months ended MarchJune 31,30, 2026 and 2025 (in thousands):

Operating (Loss) Income. The Company’s operating (loss) income consists of gross margin less selling, general and administrative expenses. The Company’s reported operating incomeloss was $37$62 million for the three months ended MarchJune 31,30, 2026, down 5.1% compared to $39operating income of $2 million for the three months ended MarchJune 31,30, 2025. As a percentage of revenues, reported operating (loss) income was 2.8%(4.7)% in the firstsecond quarter of 2026, down from 2.9%0.1% in the firstsecond quarter of 2025. The Company’s adjusted operating income was $29$39 million for the three months ended MarchJune 31,30, 2026, updown 53.3%34.8% from $19$59 million for the three months ended MarchJune 31,30, 2025. As a percentage of revenues, adjusted operating income was 2.2%2.9% in the firstsecond quarter of 2026, updown from 1.4%4.3% in the firstsecond quarter of 2025. Since operating (loss) income is defined as gross margin less selling, general and administrative expenses, the year over year change is explained by factors previously discussed.

The Company’s operating (loss) income by reporting segment is summarized as follows (in thousands):

The following tables provide reconciliations of the non-GAAP adjusted operating income to reported operating (loss) income for the three months ended MarchJune 31,30, 2026 and 2025:

(1)Changes in the Company’s employee deferred compensation plan obligations are included in operating (loss) income. The non-GAAP financial adjustments shown in the table above are to reclassify investment (income) loss from investments held in employee deferred compensation trusts to the same line item that includes the corresponding change in obligation. These adjustments have no impact on income before income taxes.

(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 employee deferred compensation plan obligations change and adjustments are recorded 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 the equal and offsetting amount, leaving no net costs to the Company, and therefore no effect on reported net income. 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 and is presented separately on the unaudited Condensed Consolidated Statements of Operations. The Company’s lossincome from investments held in employee deferred compensation trusts was $8$101 million and $20$58 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The lossincome from trust investments during the firstsecond quarter of 2026 was due to negativepositive market returns.

Provision for income taxes. The provision for income taxes was 56.1%35.2% and 22.1%33.3% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The higher tax rate for 2026 can be primarily attributed to alower tax charge in the current quarter related to employee stock-based compensation grants, the majority of which vest in the first quarter,credits and the magnifiedincreased impact of non-deductiblenondeductible taxexpenses itemsrelative whento measured against seasonally lowlower pre-tax income in the current quarter.income.

The change in the Company’s liquidity during the threesix months ended MarchJune 31,30, 2026 and 2025, is primarily the effect of funds used in operations, as well as funds used for capital expenditures, investment in employee deferred compensation trusts, net of redemptions from employee deferred compensation trusts, repurchases of common stock, and payment of dividends. Cash outflows are typically elevated in the first quarter due to the annual payment cycle for bonuses and software subscription renewals.

Cash and cash equivalents were $278$325 million and $342$381 million at MarchJune 31,30, 2026 and 2025, respectively. Operating activities used net cash flows of $112$4 million during the threesix months ended MarchJune 31,30, 2026, combined with $3$5 million and $68$127 million of net cash used in investing activities and financing activities, respectively. Operating activities usedprovided net cash flows of $59$60 million during the threesix months ended MarchJune 31,30, 2025, combinedoffset withby $33$49 million and $111$192 million of net cash used in investing activities and financing activities, respectively. Fluctuations in foreign currency exchange rates had the effect of decreasing reported cash and cash equivalents by $3 million during the threesix months ended MarchJune 31,30, 2026, compared to an increase of $8$24 million during the threesix months ended MarchJune 31,30, 2025.

Operating activities—Net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026, was $112$4 million. This was composed of net income of $14$40 million, offset by non-cash items of $10 million, and net cash used in changes in working capital of $34 million. Net cash provided by operating activities for the six months ended June 30, 2025, was $60 million. This was composed of net income of $58 million adjusted upward for non-cash items of $52$46 million, offset by net cash used in changes in working capital of $178$44 million. Net cash used in operating activities for the three months ended March 31, 2025, was $59 million. This was composed of net income of $17 million adjusted upward for non-cash items of $66 million, offset by net cash used in changes in working capital of $142 million.

Investing activities—Cash used in investing activities for the threesix months ended MarchJune 31,30, 2026, was $3$5 million. This was composed of capital expenditures of $9$16 million, and investments in employee deferred compensation trusts of $25$39 million, partially offset by proceeds from employee deferred compensation trust redemptions of $31$50 million. Cash used in investing activities for the threesix months ended MarchJune 31,30, 2025, was $33$49 million. This was composed of capital expenditures of $12$28 million andmillion, investments in employee deferred compensation trusts of $43$51 million, and payments for acquisitions of $10 million, partially offset by proceeds from employee deferred compensation trust redemptions of $22$40 million.