Heidrick & Struggles Records 5.9 Percent Q3 Revenue Increase
November 5, 2024 – Executive search, leadership consulting, and culture shaping services provider Heidrick & Struggles / (NASDAQ:HSII) has posted third quarter revenues of $278.6 million, a 5.9 percent increase compared to revenues of $263.2 million a year ago. The firm experienced revenue growth in On-Demand Talent, Heidrick Consulting, and Executive Search in the Americas and Asia Pacific, partially offset by a decrease in Executive Search in Europe. “Our Heidrick colleagues delivered solid quarterly results, outperforming industry trends and reaching the upper end of our outlook,” said Tom Monahan, CEO. “This performance reflects our team’s sharp focus on market opportunities and client needs even as we implemented significant change across our organization. Looking ahead, there is still much work to be done as we pursue growth opportunities in executive search, more tightly focus our suite of leadership solutions, and drive profitability and scalability across the portfolio.”
“This work will allow us to take advantage of a large and growing market opportunity as clients increasingly put leadership strategy at the heart of their corporate strategy,” Mr. Monahan said. “With an iconic brand, deep expertise across regions and sectors, and a robust financial position, we believe Heidrick is well positioned to attract top talent and cultivate deeper and more durable client relationships. Combining these assets with disciplined execution will enable us to achieve sustained and profitable organic growth while enhancing long-term shareholder value.”
Executive Search net revenue of $204.4 million increased $5.6 million, or 2.8 percent, compared to net revenue of $198.8 million in the 2023 third quarter. Excluding the impact of exchange rate fluctuations, which positively impacted results by $0.2 million, or 0.1 percent, net revenue increased 2.7 percent, or $5.4 million from the 2023 third quarter. Net revenue increased 1.7 percent in the Americas (up 2.1 percent on a constant currency basis), decreased 3.3 percent in Europe (down 5.0 percent on a constant currency basis), and increased 22 percent in Asia Pacific (up 22 percent on a constant currency basis) when compared to the prior year third quarter.
Heidrick had 414 executive search consultants at September 30, 2024, compared to 417 at September 30, 2023. Productivity, as measured by annualized Executive Search net revenue per consultant, was $2 million compared to $1.9 million in the 2023 third quarter, reflecting a lower number of consultants combined with higher revenue. Average revenue per executive search was approximately $149,000 compared to $153,000 in the prior year period. The number of search confirmations increased 5.4 percent compared to the year-ago period.
On-Demand Talent net revenue of $46.2 million increased $5.2 million, or 12.6 percent, compared to net revenue of $41.1 million in the 2023 third quarter. Excluding the impact of exchange rate fluctuations, which positively impacted results by $0.4 million, or 0.9 percent, net revenue increased 11.7 percent, or $4.8 million from the 2023 third quarter.
Heidrick Consulting net revenue of $27.9 million increased $4.6 million, or 19.9 percent, compared to net revenue of $23.3 million in the 2023 third quarter. Excluding the impact of exchange rate fluctuations, which positively impacted results by $0.3 million, or 1.1 percent, net revenue increased 18.9 percent, or $4.4 million. The firm had 84 Heidrick Consulting consultants at September 30, 2024, compared to 90 at September 30, 2023.
Heidrick’s board of directors declared a 2024 fourth quarter cash dividend of $0.15 per share payable on November 21, 2024, to shareholders of record at the close of business on November 14, 2024.
Newly Appointed CEO and President
Earlier this year, Heidrick announced that Krishnan Rajagopalan has decided to retire, after more than 23 years with the firm. Following a planned succession process, the board has appointed Mr. Monahan to succeed Mr. Rajagopalan as CEO and member of the board, which was effective March 4. Mr. Monahan was managing partner of Norton Street Holdings and was previously president and CEO of DeVry University. “Search firms are highly focused on trying to leverage data, innovative technology, analytics, and IT to not only lift their client’s performance, but also their own,” said Scott Scanlon, CEO of Hunt Scanlon Media. “Bringing in this outsider at this time makes a whole lot of sense.”
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“The board of directors, including Krishnan, have thoughtfully and deliberately developed this succession plan, and we are confident these leadership announcements position Heidrick & Struggles for continued success well into the future,” said Adam Warby, chairman of the board of Heidrick & Struggles. “Tom Monahan is a proven and innovative executive with a deep passion for the leadership arena and a unique view into what matters – and what works – when driving corporate performance. Tom’s decades of experience in growing technology-enabled services firms focused on delivering C-suite advice makes him the right person to build on our strengths in leadership advisory and to unlock transformative growth through our strategy of innovative diversification.
“Anyone who knows me, understands that I am passionate about the work of finding, developing, and supporting great leaders,” said Mr. Monahan. “Heidrick & Struggles has shaped the leadership advisory industry for decades. As a longtime client, I can see endless possibilities to extend our strength in search, which will continue to be the cornerstone of our strategy, and leverage our diverse assets — including our On-Demand, Consulting and Digital solutions — to deliver value for our clients and our shareholders, and I look forward to leading the company’s talented team as we help clients put the right leadership teams and strategies in place to change the world.”
Heidrick & Struggles Elects New Board Members
Heidrick & Struggles has elected Vijaya Kaza and Timothy Carter to its board of directors as independent directors, effective immediately. The firm also announced that long-serving board member Lyle Logan will depart. Following these changes, the company’s board of directors consists of nine directors, eight of whom are independent. “We are thrilled to welcome both Vijaya and Tim to our board, and on behalf of Heidrick & Struggles and the board of directors, I would like to thank Lyle for his valuable contributions to the company and wish him well with his future endeavors,” said Tom Monahan, CEO of Heidrick & Struggles. “Vijaya’s executive experience overseeing digital products, consumer experience, and cybersecurity, combined with Tim’s record of value creation in complex advisory businesses, will greatly enhance our board’s capabilities and value in the marketplace as we continue to innovate and grow across diverse industries. Furthermore, Tim’s appointment marks the first time a public company CFO joins our board, bringing a new depth of financial expertise to help guide our strategic decisions.”
Heidrick also announced that Mr. Murray, global managing partner of Executive Search, has become president, reporting to Mr. Monahan. In addition to continuing to lead Executive Search, he will have operational responsibility for On-Demand Talent, Heidrick Consulting and go-to-market in his new role. Based in Heidrick’s Boston office, Mr. Murray is a member of the global management committee and is responsible for leading the firm’s global executive search business and client operations.
Fourth Quarter Outlook
Heidrick expects 2024 fourth quarter consolidated net revenue of between $255 million and $275 million, while acknowledging that continued fluidity in external factors, such as the foreign exchange and interest rate environments, foreign conflicts, inflation and macroeconomic constraints on pricing actions, may impact quarterly results. In addition, this outlook is based on the average currency rates in September 2024 and reflects, among other factors, management’s assumptions for the anticipated volume of new Executive Search confirmations, On-Demand Talent projects, and Heidrick Consulting assignments, consultant productivity, consultant retention, and the seasonality of the business along with the current backlog.
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Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Executive Editor – Hunt Scanlon Media
