Thank you, and welcome to Heidrick & Struggles 2025 Second Quarter Conference Call. Participating on the call today are company's CEO, Tom Monahan; and CFO, Nirupam Sinha. Accompanying slides are posted on the IR home page of the company's website at heidrick.com, and you are encouraged to view these slides for additional context. Please note that in the materials presented today, management may refer to non-GAAP financial measures that the company believes provide additional insight to the underlying results. Reconciliations between these non-GAAP financial measures and the most comparable GAAP measures may be found in the earnings press release. Also, certain forward-looking statements may be made in management's remarks. Please refer to the safe harbor language also included in today's press release. I will now turn the call over to Tom Monahan. Please go ahead. Thomas L

Thank you for the kind introduction. Let me add my welcome and share an outline of the agenda for today's call. I'll start by touching on our Q2 results and our strong current operating performance, provide some context for our outlook on the rest of 2025, and provide an update on our strategic priorities. Then I'll hand the call over to Nirupam to walk us through a closer look at our Q2 results, our go- forward outlook, and we'll both be available for Q&A. Maintaining our strong start in 2025, our Q2 results exceeded the high end of our revenue range. While we are pleased, we continue to stay close to clients as economic and geopolitical events remain very uncertain. Let me quickly reflect on the macro trends that shape our business and strategy and comment on how they are currently affecting our business. In the near to midterm, we see 3 big trends that affect our clients and provide us with a unique opportunity to grow our business and our impact. The first is probably the least volatile but the most important. Great leadership talent is in chronically short supply. But there are both short- and long-term tailwinds that make it scarcer than ever. First, in the near term, the volatility that we all see is increasing demand for great leaders capable of managing organizations through this period of complexity. Simply put, clients need our help, both to discover new leaders and to enable existing leaders to lead differently. Second, over the long term, demographic headwinds touch all our markets across the coming decades, which will obviously affect general labor availability, but squeeze the pool of top talent even further. The second major trend is that for more than a decade now, dating back to Brexit, if not earlier, changing geopolitics and global economic relationships are reconfiguring business strategy. Our clients aren't backing away from global markets, supply chains or talent pools, but they do need to adjust strategy to reflect changing context. This obviously continues to be a really important theme in client conversations. Even as our overall business remains strong, we can and do see intermittent pockets of hesitance as clients digest industry-specific implications of, say, tariffs or tax policy. Finally, new technologies continue to remake work. AI is the most obvious of these and clients continue to adapt their strategies to this powerful new asset. And as we have learned in previous technology revolutions, fully realizing the potential of AI requires rethinking leadership, organization and work itself. Our job is to be their partner in transforming the promise of new technologies into progress against their goals through great leaders, teams and high-performing organizations. And at the same time, we need to continue to leverage these technologies in our own organization to drive great client impact. Against this backdrop, we saw growth in both revenue and confirmations across the firm and believe that we are entering the second half of the year in a great position to sustain and extend our impact on clients. All 3 of our reported solution lines saw growth and contributed to profit through outstanding work in solving client problems against the backdrop of this complex environment. In the near term, we know that our diverse business mix across sector, region, service lines and client-driven solutions gives our team the ability to perform even against this complex environment. In the medium and long term, this complexity and the growing client need for great leaders leading in the right way reminds us just how much white space we have available in our existing core business areas. We have an enormous opportunity, both to drive broader client relationships and secure new client relationships in nearly every sector around the world, and we are working hard to grow the teams necessary to realize this opportunity. As we have shared, the #1 driver of growth in our business or any professional services firm is a simple formula of how many great people you have multiplied by how productive they are. Given the white space opportunity in our existing business areas, we are intensely focused on 2 things: one, growing our talent base. This, of course, begins with ensuring that we retain, develop and inspire our incredible global community of outstanding Heidrick professionals. Our great retention of top performers, combined with our track record of promoting from within, are evidence that we take this really seriously. Achieving our goals also demands that we bring great new people on board effectively at all levels of the firm. Second, driving great enablement of those people via training, development and importantly, cutting-edge analytic technology. Those of you at Investor Day saw a few of the tools that we've developed, but we see an opportunity to accelerate innovation even further and faster. This focus governs how we think about the consistent margin progression we targeted at Investor Day. You can see that we maintained a healthy margin in the first half. As we look to the second half of the year, we expect to see quarterly margins cycle down as we make progress on our hiring plans for the year. Even with this focus, we still anticipate making margin progress on an annual basis and setting ourselves up for continued expansion next year on a full year basis. Before I hand the call over to Nirupam, let me update you on our 3 areas of strategic priority. First, we aim to build differentiated relationships by being the most trusted leadership partner to the C-suite and Board. The need here is great, as illustrated by the most recent addition of our annual route-to-the-top analysis that looks at CEO succession across major markets globally. The most surprising finding was that although the majority of Boards agreed that CEO succession was a critical strategic priority, 30% of them admitted that time on this topic was crowded up by more urgent and likely less important tasks. This creates a huge opportunity and a huge obligation for us to consistently partner with CEOs and Boards shape their leadership strategy on an ongoing basis. Second, we work to deepen client relationships by partnering with them on transformation in this new world of leadership. We've made great progress in standing up consultant toolkits for key recurring client challenges like cost transformations. These should allow us to bring a fuller set of our capabilities to bear when clients are driving major work. Finally, we aim to create durable client relationships through innovations that embed our solutions more consistently in client workflows. Adding great people, combined with intense focus on our long-term strategic priorities will enable us to create unrivaled value for clients, colleagues and shareholders by creating differentiated, deep and durable client relationships. In sum, our strong Q2 results reflect our team's energy and focus on our compelling and integrated growth opportunities across Executive Search, consulting and on-demand talent. This performance gives us confidence in our medium-term through-cycle target shared at our Investor Day, organic revenue growth of mid- to high single digits and organic adjusted EBITDA growth between 5% and 8% per year. While top line growth and margins won't always move in a straight line, we see an attractive opportunity for our entire suite of increasingly digitally enabled professional services as our clients move leadership strategy to the forefront of their corporate initiatives. With that, I'll now hand the call over to Nirupam to provide a detailed review of our financial performance and outlook.

Thank you, Tom. We delivered strong results in the second quarter of 2025 with outperformance on revenue that exceeded the high end of our outlook as well as robust profitability. In the next few minutes, I'll walk through the details of our performance along with our Q3 outlook. Second quarter revenue reached approximately $317 million, marking a 14% increase compared to Q2 2024. Adjusted EBITDA improved $5 million to $34 million and adjusted EBITDA margin expanded 40 basis points to 10.7%. Looking more deeply at operating expenses, salary and benefits increased 17.6% from the prior year quarter. Fixed compensation increased $14.1 million in the second quarter of 2025 due to higher base salaries and payroll taxes, expenses related to our deferred compensation plan, talent acquisition and retention costs, retirement and benefit costs and stock compensation. Variable compensation increased $17.2 million, benefiting from an increase in consultant productivity. As a percentage of net revenue, salary and benefits was 65.9% versus 63.8% in the year ago period. Excluding a $5.2 million change in the market-based deferred compensation, salary and benefits would have been 64.3%. Consistent with our prior commentary for the full year, we continue to expect the normalized run rate to be in the 65% range. General and administrative expenses improved by $4.3 million to $42.2 million or 9.2% from the prior year quarter and includes the fair value earn-out adjustment, which is excluded from our adjusted results. As a percentage of net revenue, general and administrative expenses improved 340 basis points from the prior year to 13.3%. Obviously, this is a significant improvement. Part of the improvement is driven by the onetime fair value adjustment, but a major portion is also due to the progress we're making across the enterprise and scaling G&A. With respect to R&D, as we have described previously, we continue to invest in the future of Heidrick. At the core of this investment is IP that powers all our businesses, including Search, Heidrick Consulting and our digital product portfolio, which includes digital assessments. R&D spend for the second quarter was $6 million or 1.9% of net revenue. We continue to look for ways to maximize the return of our technology spend. Now let's turn to our service lines for further details. In Executive Search, revenue grew 13% to $238 million. Looking at our regional performance compared to the prior year quarter, we saw revenue increase of 9% in the Americas, 31% in Europe, and 12% in APAC. As you know, we have a diversified practice platform with great client engagement. During the second quarter, we saw outperformance by the majority of our practice groups. Consultant productivity annualized in the second quarter at $2.3 million, up from $2 million on the same basis in the year ago quarter, and we saw increases in confirmations and average revenue for Executive Search. Executive Search continues to produce strong profitability with adjusted EBITDA of $54.6 million and an adjusted EBITDA margin of 22.9%. Turning to On-Demand Talent. Revenue increased 14% to $48 million, marking a continued outperformance amid-market dynamics. We saw growth in both wins and project extensions. On-Demand Talent reported adjusted EBITDA of $1 million versus an adjusted EBITDA loss of $1.6 million in the year ago period. Clients continue to benefit from our ability to address urgent needs, which complements our Search business and enhances our ability to serve clients comprehensively. Looking at Heidrick Consulting, we saw second quarter revenue increased 17% year-over-year to $31 million, driven by increases in leadership assessment as we implement a more intense focus on pairing assessments with different client solutions. Adjusted EBITDA was positive at $0.6 million for the quarter. Moving forward, we are focused on growing the business and ensuring continued efficiency gains. We're refining and simplifying Heidrick Consulting's offerings to focus on its core strengths, including assessments, leadership development and performance culture. Turning to the bottom line performance. Adjusted net income for the quarter was $18.1 million. 2025 second quarter adjusted diluted EPS was $0.85, which was 27% above last year's performance. Now I'll turn to the balance sheet. We ended the second quarter in a strong cash position of $400 million, up $103 million from $297 million at the end of June 2024. This balance, coupled with our credit facility, gives us great strength and flexibility to execute our strategic plan. As you will know, we're heading into higher watermark seasonality for cash. With bonus payouts in Q1, cash levels typically build across the rest of the year. Moving forward, we expect third quarter revenue to be within a range of $295 million to $315 million. This compares to $279 million in Q3 of 2024, with the midpoint being almost 10% growth. As we discussed previously, the current economic climate can heighten uncertainty, which may lead clients to delay initiating new projects. In most cases, the underlying demand does not dissipate and this client work resumes once there is greater clarity or stability in the macro environment. Similarly, we also find that client demand can accelerate quickly if critical client needs arise. As Tom mentioned, we're also focused on ensuring continued growth into 2026 and beyond. As we look to the second half of the year, we'd expect to see margins ebb down as we make progress on our hiring plans and subsequent expense comes online. We still anticipate making margin progress on an annual basis. In conclusion, our performance underscores the ability to deliver for clients across a variety of market environments. We're fortunate to have dedicated and focused global teams who remain committed to serving our clients with excellence. As we look ahead, we remain confident in the ability to navigate the evolving landscape with discipline and continue to drive long-term value for our shareholders. With that, operator, please open the line, Tom and I would be happy to take questions.

[Operator Instructions] And our first question comes from the line of Marc Riddick with Sidoti.

I wanted to start with the hiring plan announcements that you mentioned for the back half of the year and maybe given the macro, maybe we could get a little bit deeper into that and give maybe some extra thoughts there as to the thought process there as well as maybe how many additions you're looking to add and availability of maybe the right candidates, if you will.

Yes. As I said in our prepared remarks, growing our team is one of the 2 foundations for growing the business. The other, of course, is ensuring that those people are super productive through development, making them great with their jobs and technology undergirds how they can be fantastic high-impact client advisers. We're focused on this lever for 2 reasons. First, when we plan the business, we see tons of white space in 2 directions, both existing clients, we can grow faster across our service lines and lots of clients we just haven't engaged in their first service line yet. So we see 2 ways to grow the business. We know that's by adding people. Second, we know that our people and culture are a source of competitive advantage. We have a distinctive culture, which has yielded great retention of top performers at all levels, and we'll obviously stay laser-focused on this. But we know we also need to leverage this culture to add great talent more consistently than we have in the past. We have a distinctive strategy for adding talent, at least for our sector that leans heavily on hiring folks early in their careers, often from industry or other professional services sectors and growing them through development and apprenticeship. And of course, we always keep our eye out for great senior talent in all of our areas as well. But I think those combinations put us in a great place to go off and create marketing [ paths ]. Clarity around the strategy lets us be more consistent in adding talent and lets us get after that white space quicker. I'll let Nirupam just talk for a minute around the quantum you should be thinking about.

Yes. Marc, so in terms of the last part around dollars and cents and sort of think about the numbers of people, I mean it's not a huge number relatively speaking. I think it's just important to note that some of the hiring we've done in the first half will come into the cost base in the second half of the year. And that's not completely [ unexpected ] part of the strategy, as Tom outlined, to ensure we're set up for '26 and beyond. And so I think you'll see this as not a [ future decision ], but just enough where we think it will set us up well for the growth that we have outlined for you.

In terms of -- Marc, you had asked about finding the talent. I know some people are really good at that. So we're happy to put our own skills to work on behalf of building the firm.

Okay. And is there sort of a general time frame that we should think about as far as the pace of adding and then maybe when those expenses would take place through the year? Or are we expecting that to sort of be a smooth process through the remainder of the year?

I think, Marc, it's mostly smooth through the end of the year. And I think this is an evergreen kind of thing for us, right? I think we're just highlighting that I think this year, particularly, we've had a lot of hiring in the first half that is just coming online in the second half. But it's a smooth, I think, throughout the back half of the year and evergreen for us in terms of our strategy.

Okay. Great. And then switching gears, I wanted to sort of touch a little bit as far as cash usage and prioritization beyond the internal investments, maybe what you're looking at as far as -- has the prioritization changed? Or have you seen any opportunity sets that would sort of maybe be a little bit more highlighted than it would have been at the beginning of the year?

Yes. I think the broader theme there is, Marc, is just white space. We have -- you saw strength in our businesses across the board. And look, it's a very complex geopolitical environment right now. Every day, there's news in the U.S. and around the world. And as we said before, complexity is our friend. No one ever called Heidrick & Struggles because they were completely happy or believe they have the great leadership team in place to address the challenges they had. So when there's more challenges, there's opportunities for our people to be out in front of clients creating great impact. That's what you see happening. There's always going to be micro climates in the business, geo, industry, et cetera. But one of the real strengths of the business is we're strong across industries. We're strong across service lines. We're strong across solutions areas. We're strong across geos. And that gives us the ability to flex the business and meet clients where they are.

And Marc, in terms of the cash flow, a couple of things just to point out there. One is we still have earn-out payments in Q1 2026 that we're managing the cash flows paid for. And certainly, our cash uses factor that in. And then I think, as Tom said, we believe that the right investments are organic. But often in this business, as we, I think, highlighted in the past, some of those hiring conversations sometimes turn into acquisitions or lift outs, and that's where we think there's use of cash. So some of the hiring that we mentioned in the strategy on the evergreen hiring, it turns into uses of cash off the balance sheet. And I think that's just the life of a professional services firm.

Your next question comes from the line of Kevin Steinke with Barrington Research.

Just wanted to start out by digging into the third quarter revenue guidance range a little bit. Obviously implies really solid year-over- year growth. It does point to a sequential decline versus the second quarter, but I think that is probably explained by typical summer seasonality around vacations. But beyond that, given the global macro environment you talked about with continued uncertainty, potential project delays and pockets of hesitancy among clients. Have you attempted to kind of factor that into the guidance range in terms of some potential conservatism? And maybe could you talk about the assumptions behind what would get you to the low end versus the high end of that range in terms of just the macro?

Yes. Certainly, Kevin. So it's a very fair question first and foremost. I think we feel good about the guidance of $295 million to $315 million for the quarter. We're trying to be prudent. I think we've not witnessed a slowdown in the business. And as you point out, the sequential is just seasonality that you would see normally. But the uncertainty of the macro certainly doesn't seem to be going away. And so if you think about it from the way you positioned it in terms of what can help us to the upper end, I think it's continuing to see the demand that we're seeing that assumes a bit of uncertainty as normal, frankly. We've seen clients actually move more quickly to launch of search as client needs vary by sector and geo. And I think every week kind of brings something different there for certain clients. I think we continue to see the acceleration of the focus in consulting around its strength, including assessment, leadership development and performance culture, that continues to be that pushes to the upper end. And then the acceleration of the tie between search and interim search placements with on demand. So I think if we continue to see what we've been seeing, I think we feel good about the upper end. What can pull us down, the macro uncertainty. As we've said and we kind of alluded to in the question, we often can see client demand push back. Usually, as we talked about, it doesn't usually go away, but we can see it push back. And so even with booked business, the client get delayed to start a project or making offer to a candidate, that has an impact on us. So I think the broader story here is our teams are staying close to clients, focusing very clearly on client needs, and we feel good about the range, and we feel good about the growth.

Great. Well, that's really helpful color. I appreciate it. I wanted to follow up by asking about the executive search productivity in the quarter was really strong, $2.3 million annualized. And the company has historically talked in the past about kind of a target range of $1.8 million to $2.0 million there. Do you view that $2.3 million is a little hot and part of the reason you have to ramp up hiring? Or do you think there's potential longer term to maybe exceed that range that's been discussed in the past?

Yes. I'm happy to take that, Kevin. So I think generally, we did see the $2.3 million for the quarter annualized. But if you look at trailing 12, it's still $2 million. And so I think we still see the range is sort of around that $2 million. But part of what you say is when you start seeing a little bit of that, it just tells you how much white space you have and how much client demand continues to be there for our services. And so I think that does make us comfortable kind of moving forward on the hiring. But I think from a longer-term trend, still around $2 million.

Okay. Great. So obviously, you also talked about the hiring investments you're making and the impact that will have on margins in the second half of the year. Should we think about that as across segments, pretty broad-based hiring? And then just second part of that is you did see some nice profitability increase in the non-search segments in the quarter. Do you think that continues in the second half? Or does the hiring impact that?

I think one is -- I think most of the investments are just across the business. I mean, in general, we see, as we've talked about before, the synergies across the service lines to serve clients. Clients in some ways don't care which service line things are coming out of, right? They just look to the client needs. So I think we see the demand across all 3. But having said that, I think what we saw in the non-serve service line is the trajectory that we want. And I think longer term the guidance that we've given around those 2 service lines, we continue to feel good about that guidance. And I think from an annual basis, we continue to see progression towards it, and that's the goal to see that annual progression, and we feel good about the progression we're seeing.

Yes. I think as Nirupam said, it's -- we manage the business on an annual basis. So it won't be perfectly linear quarter-to-quarter, but we feel very comfortable with the business getting to the numbers we put out there for the -- at the Investor Day. That's a long-term target, but it shows we're making progress.

Okay. And then just lastly, more of a housekeeping question. I think in the year ago second quarter, there were some expenses related to a global consultants conference that you held internally. Is there anything on the horizon like that over the remainder of the year that we should think about in terms of just the G&A expense line?

When we don't do global consultants conferences, we tend to do regional things, but those are spread out more evenly across the year. So the reason it was notable last year in Q2 is we kind of do it all at once in one quarter versus smoothing it out across the year. So safely assume, we believe getting our people together is a great idea because they connect with each other, they teach each other, they learn from each other, they strategize around client solutions. So we'll still do that, but it doesn't all show up in one quarter. It's spread out through the year.

And our final question comes from the line of Tobey Sommer with Truist Securities.

I was wondering if you could dig into some of the regional differences in Executive Search EBITDA margin with Europe and Asia increasing. Is that sustainable? And the Americas contracting, I'm just kind of curious what's driving that given that the top line across the geos is pretty good.

Yes. No Tobey, it's Nirupam. So a couple of things going on there. So first and foremost, I mean, I think you saw especially in Europe, right, just kind of a great growth number, 31%. And so first and foremost, just profits to the team for great execution there. But second, as we've seen that, I mean, there is a little bit of just scale built in there and bonuses, people hitting targets earlier, which allows us to just have a little bit of room in the system. And so I think what you're seeing in the non-U.S. or non-North American regions is just a little bit of the growth and the scale that's coming in there. I think in the U.S., you have a phenomenon where, obviously, that is the largest and the most profitable, where you have basically what we call the production where certain producers may produce more in the first half of the year. So they're hitting higher tiers, which means there's more bonuses going to them that gets a catch up to the rest of the year. And so seeing that problem is why you've seen probably the quarter come down a little bit. We don't anticipate any structural changes in terms of what margins are in any of these regions.

Yes. We think the long-term margin rate we put out there is going to be the right rate for business as a whole. And it's also -- it's a quarter, right? So I think we'll stay. I don't think we're seeing any changes to the economic structure that we put out there.

What are you hearing from customers, particularly those that touch capital markets because we've seen some deal flow be pretty good, I guess, last week, for example. And I don't think the regulatory hurdle for mergers is as high as it has been in the past. So if that really gets going, it can help the industry and the company. So what are you hearing from customers?

Yes. I think -- I mean, right now, the world is 1,000 different microclimates realistically. So I guess, there's some -- there are places where there can be more enthusiasm due to a change in the regulatory environment. The flip side is there's still uncertainty in some cases around tariff structures, cost of inputs, tax treatments, et cetera. So it's a complex time. I don't think we've yet seen -- again, complexities are a friend in that people need different types of help, new sorts of help, new roles, et cetera. And I'd say our teams have done a great job even when deal flow wasn't coming at the rate it was going to be the next big thing in deal flow for a couple of years now. Our team has been doing a very good job staying in front of clients who weren't able to do deals and still need to change out management teams or accelerate performance or restructure a business. And I think that's -- our job is to build an all-weather firm that can be in front of clients no matter what external factors they have because they always have challenges.

What industry verticals are you most optimistic about for the balance of '25?

Yes. Look, I think it tends to be -- you've seen our business good balance across industry verticals across time. It tends to be more thematic, right, where people say, you can imagine right now, pretty much every industry is thinking about structure, trying to move AI from promise to actual outcome, what talent do they need specifically to AI, what other talent do they need in the business, how they organize around it. So I don't think we see necessarily kind of a spike in an industry, although you see -- obviously, you find pockets of frontier technologies, et cetera, that are growing quickly because people are investing them from a private capital basis. But more broadly, it tends to be thematic within the existing client base rather than little segments popping here and there.

And if I could sneak in the last one, I'd be remiss if I didn't take the opportunity just to invite you to say that margins in ODT and consulting are on a trajectory that's durable and likely to be sustained here over the balance of the year and into next.

We'll accept your invitation. Look, I think it's a quarter. So we're pleased with the progress. I think we're probably -- rather than spiking the football after 1 quarter, we're more pleased with the incredible both growth and progress those teams are making. And we feel very comfortable with the long-term targets we put out there for those businesses, and those teams have taken those challenges and run at them very hard. So yes, we're very pleased. We're not there by any stretch of the imagination, and it won't be perfectly linear to those zones. And if I know these teams when we get to the target zones, they'll want to push harder, faster and higher. That's who those people are. We work with them. We know how ambitious they are. But it's 1 quarter, but it's a good dot point in the trajectory we want to set in motion.

And with no further questions in queue, I will now turn the call back to Tom Monahan for closing remarks. Thank you.

Thanks, Tina, and thanks, everyone, for joining us today. We appreciate your continued interest in Heidrick & Struggles, and I'll keep you updated as we move through the second half of the year. Please don't hesitate to reach out with additional questions. And I hope everyone enjoys their summer, and I'm sure Nirupam and I will see you out on the road.

Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.