Heidrick & Struggles International Inc

NASDAQ:HSII

Earnings Call Analysis

Heidrick & Struggles Reports Strong Q3 Growth Amid Strategic Initiatives

Heidrick & Struggles delivered a solid third quarter with revenue reaching $279 million, a 6% increase year-over-year. The Executive Search segment grew 3%, with significant boosts in the Americas (1.7%) and Asia Pacific (22%). On-Demand Talent surged 13% to $46 million, while consulting saw a remarkable 20% rise to $27.9 million. Adjusted EBITDA was $30.4 million, maintaining a margin of 10.9%. Looking forward, fourth-quarter revenue is forecasted between $255 million and $275 million, sustaining expectations for annual revenue exceeding $1 billion.

Strong Third Quarter Performance

Heidrick & Struggles reported solid results in the third quarter of 2024, achieving revenue of $279 million, which signifies a 6% increase from the same period in 2023. This growth was primarily fueled by all business segments, underlining the company's diversified practice platform. Adjusted EBITDA rose to $30.4 million, up from $29.3 million year on year, despite an adjusted EBITDA margin decline to 10.9% from 11.2%. This solid performance highlights the company's strong client engagement and ability to capture market opportunities.

Segment Achievements

In the Executive Search segment, revenue increased by 3% to $204 million. Regional performance revealed a robust growth trajectory in the Asia Pacific (22%) and a smaller increase in the Americas (1.7%), while Europe experienced a decrease of 3.3% amidst challenging economic conditions. On-Demand Talent showed a remarkable 13% growth to $46 million, displaying increased average contract values that reflect longer project durations. Heidrick Consulting reported a striking 20% organic revenue increase to $27.9 million, signaling strong demand for leadership assessment solutions.

Profitability and Expenses

The company's adjusted net income was reported at $15.1 million with adjusted diluted earnings per share (EPS) at $0.72, only slightly down from $0.73 in the previous year. However, fixed and variable compensation costs rose significantly, leading to salaries and benefits comprising 65.7% of net revenue, up from 63.5%. The general and administrative expenses were stable at 14.3% of net revenue. Nonetheless, Heidrick continues to invest in R&D, maintaining a spend of around $25 million for the year, which emphasizes their commitment to innovation.

Strategic Growth Initiatives

Heidrick & Struggles' leadership team expressed confidence in the company’s strategic focus on organic growth, reinforced by recent acquisitions. They aim to build robust relationships with C-suite clients and boards while innovating to enhance service delivery. The company anticipates strong demand signals and fundamentals across the board, expecting a strong fourth quarter. Full-year revenue guidance has been set between $255 million and $275 million for Q4, looking forward to finishing above $1 billion in total revenue for the year.

Market Positioning

The call emphasized the company’s unique capabilities in addressing urgent client needs amid a complex market. Heidrick’s commitment to nurturing leadership pipelines and implementing new technologies is targeted at sustaining long-term client relationships. The management expressed optimism about leveraging macroeconomic trends, such as the growing emphasis on AI and leadership effectiveness, to create new opportunities and enhance the ability to meet client aspirations.

Conclusion and Future Outlook

In conclusion, Heidrick & Struggles positioned itself well for future growth with clear strategic priorities that address leadership transformation in the corporate landscape. They foresee a continued expansion in their addressable market fueled by their expertise in leadership placement and consulting. The leadership reiterated their readiness to enhance operational efficiencies through disciplined execution while fostering an environment for sustainable organic growth.

Earnings Call Transcript 2024-Q3

[Operator]

Ladies and gentlemen, good afternoon, and thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Heidrick & Struggles Third Quarter 2024 Conference Call. [Operator Instructions] And I would now like to turn the conference over to Suzanne Rosenberg, Investor Relations. You may begin.

[Suzanne Rosenberg, executive]

Thank you, and welcome to our 2024 third quarter conference call. Joining me today are our CEO, Tom Monahan; and Vice President and Controller, Steve Bondi.

We posted our accompanying slides on the IR homepage of our website at heidrick.com, and we encourage you to view these slides for additional context. Please note that in the materials presented today, we may refer to non-GAAP financial measures that we believe provide additional insight into underlying results. Reconciliations between these non-GAAP financial measures and the most comparable GAAP measures may be found in the earnings press release.

Also in our remarks, we may make certain forward-looking statements. We ask that you please refer to the safe harbor language also included in today's press release. With that, Tom, I'll turn the call over to you.

[Thomas Monahan, executive]

Thank you, Suzanne, and welcome to everyone joining on our earnings call today. I'm pleased to share that Heidrick & Struggles delivered a solid performance in the third quarter, a testament to our ongoing commitment to creating unrivaled value for our clients. This client focus is especially notable given that we are continuing to drive leadership changes within our organization. Our new leadership team has done an excellent job of keeping our colleagues around the world focused on market opportunities and client needs as we more tightly target our solutions and prioritize scalability and profitability.

While we still have much work to do, we saw some early returns from the important steps we took in the second quarter to position the company for growth and impact. We anticipate that Heidrick's near and midterm growth will come from our ability to clarify what we do for clients, simplify work for our people and amplify our message in the marketplace. Our leadership team is confident the steps we are taking will enable us to create substantial value for our clients, our colleagues and our fellow shareholders.

Today, I'll provide a brief overview of our third quarter results, share examples of how our approach is delivering tangible value for clients and outline our strategic priorities. After that, I'll hand over to Steve for a more in-depth look at our Q3 results, and then we'll open the call for Q&A.

Lastly, as our Investor Day approaches, we look forward to seeing many of you on December 3, when we'll dive deeper into the important initiatives we're pursuing to drive value for both our clients and our investors.

Let me start with a quick overview of our third quarter performance before Steve provides more detail. While we operate in a complex world, our business remains strong, thanks to our team's exceptional work in staying close and relevant to our clients. Our top line performance came in at the high end of our outlook with contributions from all areas of our business. Our core Executive Search business delivered excellent results, driven by strong performances in the Americas and Asia Pacific regions. We also believe that the environment in Europe is beginning to stabilize. Our On-Demand Talent business achieved solid growth despite the ongoing slowdown in the broader temporary staffing space, highlighting our unique position in attractive market segments.

Heidrick Consulting gains were accompanied by strong confirmation increases. Just as important, our third quarter top line growth translated into solid adjusted EBITDA performance, although, of course, we see room for continued improvement here and have urgent focus on making that happen.

You may notice a shift in how we discuss our results as we place greater emphasis on highlighting organic performance. We have assembled unique capabilities to help our clients, and now we need to work to bring them to life. With this rich array of capabilities, our leadership is focused on driving client impact through organic growth at market and client level. Going forward, we will, of course, be willing and able to add new capabilities through select acquisitions. But given the strength of the assets we've already acquired, this needs to be in addition to great execution on our organic growth opportunity.

As you can see in the third quarter, we achieved revenue growth of 6%. And on a year-to-date basis, organic revenue growth was 5% despite continued caution in some segments of the marketplace. This speaks to the power of our unique assets and the scale of our teams in shaping and responding to client need.

We know that the most critical factor in driving corporate and organizational performance is having the right leaders in the right place, and this presents an ever-expanding addressable market. Of course, cycles and shifts in the macroeconomic environment are inevitable, but there will always be a significant market opportunity for the essential leadership advisory work we provide. This vast opportunity to support our clients, combined with our strong positioning is super exciting and prepares us well for continued success.

With our world-class professional colleagues, supported by our distinctive brand, powerful technology and valuable intellectual property, we have a strong platform to grow in scale and impact. To accomplish this, we've set 3 strategic priorities, each of which are centered on building a differentiated, deep and durable client relationships.

First, to be the most trusted leadership partner to the C-suite and board. Even in the rarefied air of top search firms, we believe that our focus on leadership talent differentiates us. We remain committed to consistently growing our Executive Search and assessment capabilities, which are the cornerstone of our enterprise. It's clear from our Search results that we are deeply engaged in helping the world's most talent-centered organizations drive impact by finding and elevating great leaders. This work not only immediately inflects client performance, but also gives unmatched access to leaders and their priorities, allowing us to build valuable insights and data sets.

Take, for example, recent research from our board and CEO practice about the importance of testing would-be C-suite leaders to self-awareness. It began with the pattern recognition from our leaders in the field was validated by our assessment base of leadership performance and now informs both our Search work and points to opportunities in our coaching and leadership development offers.

Spoiler alert, only 13% of leaders currently show this trait. The good news, however, is people can develop it, and we can help clients both find people with this trait and shape this as part of people's leadership journeys. This rich intellectual property and deep and growing data asset also allows us to better arm our elite teams with the most effective tools to do their job.

We have launched a couple of new tools on our OneSearch platform that enable our teams to do an even better job of partnering with our clients. We look forward to showing you some of these recent innovations in our upcoming Investor Day.

Our second priority is to help clients lead transformation in the new world of leadership. Our richer set of capabilities in the hands of our thoughtful partners and advisers creates the opportunity to build larger, deeper client relationships. We know that once we place or elevate a new leader, our work is just beginning. Each leader has a mandate to transform the performance of his or her organization. Our capabilities are often vital to that objective. No matter what the endpoint of the transformation is, could be margin improvement, digital transformation, faster growth, better agility, et cetera. A leader must always ask whether they have the right leaders around them, the right skills for the immediate term and the right ways of leading and performing as a team and as an organization.

And we have lined up the resources to help them from assessing and where necessary, augmenting their team through new talent to driving permanent changes to performance through cultural change, we can meet them where they are and partner with them to get where they need to be.

The most obvious example right now is the ongoing effort to use AI to change work itself. As documented by our technology, analytics and AI practice, nearly 1/3 of clients surveyed have now installed an exec with this remit as a direct report to the CEO. And more broadly, we see this movement reshaping the roles and organizational structures around the C-suite from finance to HR to the supply chain. And with these new roles and skills come new ways of working and urgent gaps in capability, all of which our On-Demand and Consulting offers can help shape.

The broader point is that in this era, every client everywhere has a mandate to change. And every client everywhere is confronting a changed market for the talent to lead that change. It's our job to grow larger and more impactful client relationships by linking our work to ambitious client goals.

The great thing about this business attribute is that every economic and/or paradigm shift, whether it's AI advancement, M&A waves, IPO cycles and beyond, creates a need for new leaders and innovative new leadership approaches. These long-term secular tailwinds are likely to keep expanding. Simply put, when we execute effectively, change plays to our strengths.

Our third priority is innovating to create continuous engagement with our clients. In our work with CEOs, boards and chief people officers, we continue to see an important theme emerging. Leadership and talent decisions are becoming an always-on activity. Rather than waiting for retirement or a crisis to bring our teams in, clients are asking us to partner with them to shape their leadership pipelines year in and year out.

This shouldn't be surprising. Many companies now talk openly in their 10-Ks or annual reports about leadership and critical talent being a key risk or opportunity for their business. And yet historically, the process for managing this risk has lacked consistency and rigor. This is obviously a great opportunity for us to develop larger and stickier relationships with clients.

We term this word leadership assurance, knowing that companies face an urgent need to bring the same consistency, insight and rigor to leadership questions as they do to say, financial reporting. Doing this well requires a different level of scale as rather than just assessing 3 finalists for an immediate CEO role, we now need to look at pipelines of dozens of high-performing leaders to understand not only who can be CEO today, but also who can be in the C-suite a decade from now.

Here's a recent example from our work. A major technology company partnered with us to recruit an exceptional external candidate to CEO after working with us to evaluate both internal and external candidates. The new CEO told their team almost immediately that succession planning was everyday business, and they set in motion an ongoing process through which we are partnering with them to continually assess the top team, advice on how best to organize and work, evaluate the team against best-in-class rivals and make selective additions through key external hires.

Next step is helping them find ways to bring technology and AI to scale the process even further. We don't expect every company to change how they work overnight, but we also can't imagine a world in which a topic as important as top-of-the-house leadership will be an afterthought in ongoing corporate management.

The fourth part of our strategy is not a pillar, but a foundation, and that's Heidrick talent. At the core of these strategic pillars lies a strong commitment to fostering a culture of inclusion, collaboration and excellence. To that end, Tom Murray and I believe that our primary responsibility as leaders is to make Heidrick a place where top talent can thrive and achieve their best work. This applies not only to our existing teams, but to great talent that wants to help us impact corporate performance globally by getting the right leaders into the right roles leading in the right way. This may be hard to believe given our reach and scale, but we still see opportunities to bring top talent into Heidrick to accelerate our growth and impact in search, assessment and beyond. We'll share a little more about our targets for organic growth at Investor Day.

In conclusion, we've made early progress positioning us for the next phase of sustained organic growth and margin expansion. With a vast market opportunity ahead, we are supported by a strong and experienced leadership team, solid momentum and the financial flexibility to innovate against client needs and attract great people. This, combined with disciplined execution, will enable us to continue driving organic growth, expanding profitability and enhancing long-term shareholder value.

Before I turn the call over to Steve, I would like to extend a warm welcome to both Vijaya Kaza and Tim Carter, who joined our company's Board of Directors at the end of September. Vijaya brings deep expertise in digital products, user experience and cybersecurity. While Tim's impressive track record and value creation within public advisory businesses will strengthen our Board's capabilities. Notably, Tim's public company CFO experience adds an additional level of financial expertise to guide our strategic decisions as we continue to innovate and grow.

With that, I'll now hand the call over to Steve to provide a detailed review of our financial performance and outlook.

[Stephen Bondi, executive]

Thank you, Tom, and welcome, everyone, joining us on the call. Today, I will provide you with a review of our third quarter results with organic revenue growth that came in at the high end of our guidance, along with a solid adjusted EBITDA performance in the quarter.

Looking at our performance on a consolidated basis, third quarter revenue was $279 million or 6% above third quarter 2023 results, driven by each of our businesses. Adjusted EBITDA of $30.4 million compares to $29.3 million in the third quarter of 2023, and adjusted EBITDA margin was 10.9% compared to 11.2% last year.

Now let's turn to each of our businesses for further details. In Executive Search, revenue grew 3% to $204 million. Looking at our regional performance compared to the prior year quarter, we saw revenue increases in the Americas and Asia Pacific of 1.7% and 22%, respectively. Europe was down 3.3% or 5% on a constant currency basis, given the operating environment we commented on in the previous quarter.

As you know, we have a diversified practice platform with great client engagement. During the third quarter, we saw outperformance by the healthcare and life sciences, global technology and services and the social impact practice groups. We also saw consultant productivity annualized in the third quarter at $2 million compared to $1.9 million on the same basis in the year-ago quarter, which continues to be within the longer-term range of [ $1 ] million to $2 million we had commented on previously. We were also very pleased with Executive Search maintaining strong profitability with adjusted EBITDA of $50.7 million and a margin of 24.8%.

Turning to On-Demand Talent. Revenue was $46 million, up 13% compared to third quarter 2023. While we offer a variety of products with On-Demand Talent, we are especially pleased with our top line performance in this business and in the current market dynamics in the temporary staffing space. We saw increases in average contract values, reflecting longer duration projects, along with an increased number of extensions with higher extension values. On-Demand Talent generated adjusted EBITDA of $1.8 million versus a loss of $0.6 million in the prior year quarter.

With a new leader and plan in place, we have streamlined the business and made changes to the model to improve operating efficiency while fostering innovation in our products and services as we pivot and accelerate growth. Our results demonstrate that On-Demand Talent is a valuable complement to our robust Search business, providing clients with essential talent and interim executives as we simultaneously work on their long-term placements. We see significant opportunities to continue growing this business, which addresses an urgent client need and enhances our ability to serve clients comprehensively.

Looking at Heidrick Consulting, we saw third quarter organic revenue increase 20% year-over-year to $27.9 million, driven by increases in leadership assessment and development engagements, along with purpose-driven change solutions. Adjusted EBITDA loss narrowed to $1 million versus a loss of $2.4 million in the third quarter of 2023. We also delivered a 45% increase in confirmations from the year ago period, and the number of consultants decreased to 84 from 90. Now with the new leadership in place, Heidrick Consulting is focused on its core strengths as we refine and simplify our solutions.

While we are encouraged by our progress toward profitability, we know there is much work ahead. Importantly, our new leadership team has clarity and conviction on this business' road map to profitability. To accomplish our goals, we will concentrate our efforts on the most strategic elements of our offer portfolio and continue scaling them successfully.

Turning to operating expenses. Salaries and benefits increased 9.5% from the prior year quarter. Fixed compensation increased $9.9 million in the third quarter of 2024, primarily reflecting increases in expenses related to the noncash mark-to-market adjustments associated with our deferred and stock compensation plans. Variable compensation increased $5.9 million due to an increase in consultant production. As a percentage of net revenue, salaries and benefits was 65.7% versus 63.5% in the year ago period. General and administrative expenses increased $2.2 million versus the year ago period to $39.7 million. As a percentage of net revenue, general and administrative expenses were 14.3%, which was flat with the third quarter of 2023. The increase in dollars versus the year ago period is primarily due to bad debt, office occupancy costs, expenses related to information technology and business development travel. Over the long term, as the business grows and scales and we get more shared capabilities, G&A is an ongoing source of leverage in our operating model.

With respect to R&D, as you've seen, we continue to invest in the future of Heidrick. At the core of this investment are technology platforms and IP that power all our businesses, including Search, Heidrick Consulting and our digital product portfolio. R&D spend for the third quarter was $5.7 million or 2% of net revenue, essentially flat with the third quarter of 2023. For the full year, we continue to expect R&D to be approximately $25 million.

Moving on to the bottom line profitability. Adjusted net income for the quarter was $15.1 million and adjusted diluted EPS was $0.72, which compares to adjusted net income of $15 million and adjusted diluted EPS of $0.73 in the same quarter last year.

The 2024 third quarter effective tax rate was positively impacted by a decrease in the company's estimated annual effective tax rate. As a reminder, moving forward, we expect our tax rate in 2024 and 2025 to temporarily be around 38%, driven by the nondeductibility of acquisition earn-out costs. However, once these acquisition costs run off, we expect our tax rate to be back in the low 30% range, assuming no other statutory tax changes.

Now I'll turn to the balance sheet. We ended the third quarter with a strong cash position of $409 million up $112 million from the end of June 2024 and up $75 million from September 2023. The year-over-year improvement was mainly driven by payments for earn-outs and acquisitions, which we did not have this year. As we've discussed before, our cash position typically builds through the year as employee bonuses are accrued. Employee bonuses are paid out in the first quarter, along with their associated tax and related costs. Our strong cash position with no debt, along with our $275 million accordion credit facility or over $0.5 billion of liquidity gives us great strength and flexibility to execute our strategic plan and return capital to our shareholders.

Moving forward, while there is some uncertainty in global markets, we continue to see good demand signals and strong fundamentals across our businesses. Therefore, we expect the fourth quarter to be strong compared to last year, allowing us to finish the third consecutive year north of $1 billion in revenue. That said, turning to our fourth quarter 2024 revenue guidance, we expect a range between $255 million and $275 million.

In conclusion, we delivered a solid performance in the third quarter with good organic revenue growth. We are particularly encouraged by the ongoing progress we are making as we build and enhance our portfolio of solutions that meets urgent client needs while amplifying our impact in Search.

With that, Operator, if you could please open the lines, Tom and I would be happy to take questions.

[Operator]

[Operator Instructions] And your first question comes from the line of Tobey Sommer with Truist Bank.

[Tobey Sommer, analyst]

I wanted to ask a question about Executive Search. Based on the confirmation data you have in your slide deck, it looks like confirmation is still down just at ever such a touch sequentially. Is it fair to describe the market as mostly driven by fee growth and not volume, at least in recent months? And I'm curious how October shaped up in the face of the U.S. election.

[Thomas Monahan, executive]

Steve, do you want to take the first part of that, and I'll take the second part.

[Stephen Bondi, executive]

I think confirmation growth is still strong. We're seeing quarter-over-quarter in prior years, we're seeing strong growth in Asia Pacific and Americas. Sequentially, it's about flat. October, though, really strong. So October confirmations, both in Search and in HC were strong. And so, like any business services company, we've been watching this period because to see if client decisions freeze up, et cetera. And we can't say we've seen that happen yet. And I think part of it is 2 things. Number one, we now are in an era of permanent complexity. So clients are getting used to operating in this environment. And then second, what we do is not discretionary in Search. People need -- if they need a key executive, they got a key gap they need to drive, they need our help to go get that done. So we have not seen any uncertainty in the economy driving client decision-making at this time.

[Tobey Sommer, analyst]

Are you seeing the kind of customer decision-making, the entering in new markets, the launching of new products and services that create new roles in the marketplace? Or is this a function do you think at the executive level of turnover in existing roles?

[Thomas Monahan, executive]

Yes. I would say, look, we're certainly -- to the turnover point, we're certainly through the sort of war for talent of '21, '22 and the great resignation and there was lots of turnover. And the great thing about our business is every cyclical tailwind you see out there right now, the obvious one is people trying to figure out what to do with AI. As I said on the call, people are creating new roles, they're changing roles, they're adding capabilities, trying to get after that. So when things come through that things come through the economy that way, you end up being able to take advantage of that does create new opportunities for us in addition to the normal turnover that we see. And some of this is also just great execution from our teams, staying in front of clients. We've enjoyed great engagement retention from our teams this year. Teams staying really focused on client need, even as we've driven some significant change to the organization. So I think it's both the fact that in this business, major changes like in this particular cycle, AI, create new roles and new profiles that people need. And our team is doing a great job staying in front of clients and converting those opportunities for us.

[Tobey Sommer, analyst]

Last question for me. In the newer businesses adjacent to Executive Search, interim, I guess, even Consulting newer than Search itself. Are you changing your philosophy at all on how you're managing those businesses to be more profitable and have a focus not just on revenue growth, but profit? Did notice some improvement there and wonder if it's market conditions or a change in approach as well?

[Thomas Monahan, executive]

Yes. I don't think it's either/or. It's just really disciplined execution in both businesses that we -- it's not either growth or profit, we believe we can profitably grow. And the way that those 2 come together is we know what specific offers in those businesses are most attractive and scaling those, making sure the growth comes in the areas that are most attractive where we have the strongest competitive advantage and scaling up and our great teams and great IP is how we're going to make those businesses perform at a very high level. So it's not growth or profit it's a very real focus on growing profitably, and you're seeing us make some progress. I don't think we're going to get any less intense about that tomorrow. We see a lot of work ahead even as we've gotten some work done.

[Operator]

[Operator Instructions] And your next question comes from the line of Kevin Steinke with Barrington Research.

[Kevin Steinke, analyst]

I wanted to just ask about your prepared comments where you really talked about the focus on organic growth. Just wondering if that implies a little bit less intensity in terms of seeking out acquisition opportunities or if you still view acquisitions as a meaningful potential driver of growth as you go forward here?

[Thomas Monahan, executive]

Sure. I'll start with organic, which is we have acquired some pretty powerful capabilities over the past few years. Acquisitions we've done in On-Demand Talent. We've added capability to Heidrick Consulting. And job one, obviously, is get those great capabilities in front of as many clients as need help in those areas, which is a huge segment [ to come ]. So we're always going to start with, have we gotten the right solutions in front of the right clients on a truly scaled basis. That's job one when we plan the business. And we see a great opportunity to build more differentiated, deeper and durable client relationships given the breadth of capabilities we've added. So that's planning horizon and job one is grow the great assets we have organically. That doesn't mean we don't continue to add great capabilities across time. But the value of those next capabilities is going to be made evident by how successful we are about bringing these capabilities and integrating them into our offers for clients. So it's just -- I think that focus on organic just reflects the fact that we have a much richer and more compelling story to build distinctive deep and durable relationships with clients, and that's going to be job one. And of course, we'll add capabilities across that.

[Kevin Steinke, analyst]

And yes, circling back on On-Demand Talent. I believe you mentioned some longer contracts or contract extensions in that segment. Again, I don't know if you'd attribute it to the market improving a bit, the market environment or your execution or what led you to highlight that particular trend?

[Thomas Monahan, executive]

I'll provide a frame and turn to Steve for a little more detail. But obviously, this is a vast market, and we've chosen to compete in some pretty narrow and specific places. So I think it speaks more to the highly differentiated strategy we have of key roles that people really, really need to run their business and basically in 2 basic categories. One category is great interim talent, which you can't live without and you need help to get in the door as fast as you can. And the second is critical talent where you're never going to have enough -- if you think about a company, let's say, that's going through a major M&A integration. There's a whole bunch of skills they need in that integration period that they don't need forever. So to some degree, it speaks to the relevance and quality of our value prop in this market right now.

Steve, I don't know if you want to add anything else to that.

[Stephen Bondi, executive]

I would say that in Europe, we saw more confirmations in On-Demand Talent. And in the U.S., it's more of a value-driven proposition. We saw higher contract value. We saw longer and higher extensions. So it was a mix between the 2 regions on the very good quarter we had [indiscernible] On-Demand Talent.

[Thomas Monahan, executive]

I probably should note, we also did a lot of work in Q2 to set that business up for success as we enter the back half of the year. We took -- obviously a leadership in there. We took some actions to position ourselves for growth in our strongest value proposition areas that's starting to flow through.

[Kevin Steinke, analyst]

Good. You also talked about G&A expenses and that being a source of ongoing operating leverage as you grow the top line. Yes, I think previously, the company had been talking about G&A at around 15% of revenue or maybe a little bit less. Is that kind of where you're still targeting kind of going into 2025? Or is there -- you think that's just going to be a source of leverage year after year if you can grow this top line sustainably?

[Stephen Bondi, executive]

Yes. I think obviously, we're not going to give you '25 guide now because we're still finalizing budget. We'll talk a little more at Investor Day around how we see the different elements of the P&L coming together. But obviously, if we grow the business effectively, G&A should be a source of leverage, but a lot of what we do is also variable cost. So on one hand, if we double the business tomorrow, I think it's highly unlikely that the Board would double Tom and my salaries. So that's a source of leverage. And other parts of the business, you do need to make sure that you're adding in capability. So it's a source of leverage. We'll give you some context around how we think that flows through, but it's part of the reason we talk about that focus on organic growth because that's the surest way to get G&A leverage.

[Operator]

And that concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Tom Monahan for any closing remarks.

[Thomas Monahan, executive]

First off, thanks to our colleagues for working to put together a continued track record of incredible client impact and a strong quarter. Secondly, thanks, everyone, who dialed in. You brought up to speed on the Heidrick story. It's exciting to share what we've got going on, and we look forward to continuing to do so. We'll see a number of you out on the road in between now and end of year. And hopefully, we'll see many, many of you at Investor Day on December 3. So we'll be able to go a little deeper into some of the dynamics we talked about and show off some of our leading-edge technology and we get to meet some of our exceptional leadership team. So I do hope folks have marked that in their calendar are planning to be with us.

[Operator]

And ladies and gentlemen, this concludes today's conference call, and we thank you for your participation. participation. You may now disconnect.