HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025

Heidrick & Struggles Reports Strong First Quarter Results

Heidrick & Struggles, a leading global human capital advisory firm, has released its financial results for the first quarter of 2025, showcasing solid performance across its business segments. The company’s diversified service offerings, including executive search, on-demand talent, and consulting, have contributed to its continued growth and profitability.

Revenue and Profitability Highlights

Consolidated total revenue for the first quarter of 2025 increased by 6.8% to $287.4 million, compared to $269.1 million in the same period of 2024. This growth was primarily driven by a 6.9% increase in revenue before reimbursements (net revenue), which reached $283.6 million.

The company’s Executive Search segment, which accounts for the largest portion of its revenue, reported a 5.9% increase in net revenue to $213.4 million. This was largely due to a 5.3% rise in the number of executive search confirmations compared to the prior year period. The On-Demand Talent segment also exhibited strong performance, with a 12.4% increase in net revenue to $42.6 million, driven by an increase in the volume of on-demand projects. Heidrick Consulting, the company’s consulting services division, saw a 6.8% increase in net revenue to $27.6 million, primarily due to growth in leadership assessment consulting engagements.

Consolidated Adjusted EBITDA, a key measure of the company’s profitability, increased by 12.6% to $29.1 million in the first quarter of 2025, compared to $25.9 million in the same period of 2024. Adjusted EBITDA margin also improved, reaching 10.3% compared to 9.8% in the prior year period.

Segment Performance Breakdown

Executive Search The Americas segment, the largest within Executive Search, reported a 5.7% increase in net revenue to $144.4 million, driven by a 3.6% rise in the number of executive search confirmations. The Europe segment saw a 9.4% increase in net revenue to $45.4 million, primarily due to a 7.5% increase in the number of executive search confirmations. The Asia Pacific segment reported a 1.2% increase in net revenue to $23.6 million, with a 7.1% increase in the number of executive search confirmations.

On-Demand Talent The On-Demand Talent segment reported a 12.4% increase in net revenue to $42.6 million, driven by an increase in the volume of on-demand projects. Adjusted EBITDA for this segment improved significantly, reaching $0.4 million compared to a loss of $0.9 million in the prior year period.

Heidrick Consulting The Heidrick Consulting segment reported a 6.8% increase in net revenue to $27.6 million, primarily due to growth in leadership assessment consulting engagements. The segment’s Adjusted EBITDA loss improved slightly to $2.1 million, compared to a loss of $2.0 million in the prior year period.

Operational and Strategic Highlights

Compensation Model Heidrick & Struggles’ compensation model is designed to incentivize its consultants to drive revenue growth. The model includes both fixed and variable components, with the variable portion directly tied to the net revenue generated by each consultant. This structure aligns the interests of the consultants with the overall performance of the company.

Technology Investments The company continues to invest in research and development (R&D) to enhance its technology-enabled products and services. Consolidated R&D expense increased by 11.8% to $6.4 million in the first quarter of 2025, as the company focuses on developing new technologies to support its Executive Search, Heidrick Consulting, and On-Demand Talent offerings.

One Heidrick Strategy Heidrick & Struggles is focused on expanding its revenue streams beyond its core executive search business through its “One Heidrick” strategy. This strategy aims to diversify the company’s product offerings and meet clients’ growing talent and human capital needs by providing a more comprehensive suite of services, including its recently launched Heidrick Digital initiative.

Liquidity and Capital Resources

Heidrick & Struggles maintains a strong financial position, with $324.7 million in cash, cash equivalents, and marketable securities as of March 31, 2025. The company has access to a $100 million committed revolving credit facility, which was recently extended to 2030, providing additional liquidity and financial flexibility.

Cash used in operating activities was $232.2 million for the first quarter of 2025, primarily due to the payment of annual bonuses related to 2024 performance. The company’s investing activities used $73.1 million, mainly for the purchase of marketable securities and investments, while financing activities used $6.4 million, primarily for dividend payments and employee tax withholding on equity transactions.

Outlook and Future Prospects

Heidrick & Struggles’ diversified business model, investments in technology, and focus on expanding its service offerings position the company well for continued growth and profitability. The company’s strong liquidity and access to capital resources provide the financial flexibility to execute its strategic initiatives and capitalize on market opportunities.

As the company navigates the evolving business landscape, it remains committed to delivering exceptional human capital advisory services to its clients and creating value for its shareholders. With its experienced leadership team, innovative solutions, and dedication to client success, Heidrick & Struggles is poised to build on its strong performance and maintain its position as a leading global human capital advisory firm.