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Robert Half International Inc (RHI) Q2 2020 Earnings Call Transcript

By Motley Fool Transcribers – Jul 23, 2020 at 10:31PM

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RHI earnings call for the period ending June 30, 2020.

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Robert Half International Inc (RHI -0.73%)
Q2 2020 Earnings Call
Jul 23, 2020, 5:00 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Hello and welcome to the Robert Half Second Quarter 2020 Conference Call. Our host for today's call are Mr. Keith Waddell, President and Chief Executive Officer of Robert Half; and Mr. Michael Buckley, Chief Financial Officer.

Mr. Waddell, you may begin.

M. Keith Waddell -- President and Chief Executive Officer

Thank you, operator. Hello, everyone. We appreciate your time today. Before we get started, I'd like to remind you that the comments made on today's call contain forward-looking statements, including predictions and estimates about future performance. These statements represent our current judgment of what the future holds, however, they are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.

These risks and uncertainties are described in today's press release and in our most recent 10-K and 10-Q filed with the SEC. We assume no obligation to update the statements made on today's call.

During this presentation, we may mention some non-GAAP financial measures and reference these figures as, as adjusted. Reconciliations and further explanations of these measures are included in a supplemental schedule to our earnings press release. For your convenience, our prepared remarks for today's call are available in the Investor Center of our website at

I'd like to begin by acknowledging that these past few months have been unlike anything most of us have experienced in our lifetimes, with both the global economic disruption caused by the COVID-19 pandemic and the social unrest over racial injustice. I am so proud of how Robert Half has responded to these circumstances, our employees and tenured management teams have worked together to effectively manage our cost and aggressively pursue revenue generation opportunities.

We remain committed to serving our clients, candidates and partners. Since the start of the pandemic, we have prioritized the health and safety of our employees and virtually all our global staffing and Protiviti employees have been working remotely. We have successfully maintained full operations even where our physical locations have remained closed.

Robert Half's second quarter results were clearly affected by the economic crisis, resulting from the COVID-19, pandemic most acutely in our staffing business. Protiviti had an outstanding quarter and continues to benefit from strong solutions offerings and pipeline. We are encouraged by recent signs of week-on-week sequential growth in our staffing operations and although significant uncertainty continues, we have approached the third quarter with optimism.

Now let's take a look at Robert Half's second quarter 2020 financial results. Companywide revenues were $1.1 billion, down 27% from last year's second quarter on a reported basis and down 26% on an as adjusted basis. Net income per share in the second quarter was $0.41 compared to $0.98 in the second quarter, one year ago.

As announced in our last earnings call, we've implemented actions to reduce our overall cost structure by approximately 30% as compared to Q1 2020. The timing of those actions which occurred over the course of the quarter as well as certain employee compensation-related items, such as severance and salary continuation, reduced the savings actually reported in the second quarter to 24%.

Cash flow from operations during the quarter was $301 million and capital expenditures were $8 million. In June, we distributed a $0.34 per share cash dividend to our shareholders of record for a total cash outlay of $38 million. There were no repurchases during the second quarter, we anticipate repurchase activity to commence again in Q3 and at a reduced rate.

Now I'll turn the call over to our CFO, Mike Buckley.

Michael C. Buckley -- Executive Vice President, Chief Financial Officer

Thank you, Keith, and hello everyone. Let's start with revenues. As Keith noted global revenues were $1.108 billion in the second quarter. This is a decrease of 27% from the second quarter one year ago on a reported basis and a decrease of 26% on an as adjusted basis.

On an as adjusted basis, second quarter staffing revenues were down 33% year-over-year. U.S. staffing revenues were $640 million, down 34% from the prior year. Non-U.S. staffing revenues were $184 million, down 31% year-over-year on an as adjusted basis. We have 326 staffing locations worldwide, including 88 locations in 17 countries outside the United States.

In the second quarter, there were 63.4 billing days, unchanged from the same quarter one year ago. The current third quarter has 64.3 billing days compared to 64.1 billing days in the third quarter one year ago.

Currency exchange rate movements during the second quarter had the effect of decreasing reported year-over-year staffing revenues by $8 million. This decreased our year-over-year reported staffing revenue growth rates by 0.6 percentage points.

Now let's take a closer look at results for Protiviti. Global revenues in the second quarter were $284 million, $225 million of that is from business within the United States and $59 million is from operations outside the United States. On an as adjusted basis, global second quarter Protiviti revenues were up 4% versus the year ago period, with U.S. Protiviti revenues up 6%. Non-U.S. revenues were down 2% on an as adjusted basis.

Exchange rates had the effect of decreasing year-over-year Protiviti revenue by $1 million and decreasing its year-over-year reported growth rate by 0.5 percentage points. Protiviti and its independently owned Member Firms serve clients through a network of 86 locations in 28 countries.

Turning now to gross margin. In our temporary and consulting staffing operations, second quarter gross margin was 37.1% of applicable revenues compared to 38.2% of applicable revenues in the second quarter one year ago. The year-over-year decline in gross margin percentage is primarily due to lower conversion revenues.

Our permanent placement revenues in the second quarter were 8.6% of consolidated staffing revenues versus 11.3% of consolidated staffing revenues in the same quarter one year ago. When combined with temporary and consulting gross margin, overall staffing gross margin decreased 260 basis points compared to the year-ago second quarter to 42.5%. For Protiviti, gross margin was $73 million in the second quarter or 25.7% of Protiviti revenues. One year ago, gross margin for Protiviti was $76 million or 27.9% of Protiviti revenues.

Companywide selling, general and administrative costs were 32.9% of global revenues in the second quarter compared to 31.5% in the second quarter one year ago. Staffing SG&A costs were 39.1% of staffing revenues in the second quarter versus 34.6% in the second quarter of 2019. The increase in staffing SG&A as a percentage of revenue was significantly impacted by negative leverage as revenue -- as revenues decreased.

In addition, as Keith noted earlier, the timing of our cost reduction actions, including compensation related costs associated with employee terminations impacted total SG&A expense for the quarter. Second quarter SG&A costs for Protiviti were 15% of Protiviti revenues compared to 17.3% of revenues in the year ago period.

Companywide operating income was $58 million in the second quarter, operating margin was 5.3%, second quarter operating income from our staffing divisions was $28 million, and -- with an operating margin of 3.4%. Operating income for Protiviti in the second quarter was $30 million, with an operating margin of 10.6%. Our second quarter tax rate was 20% compared to 28% a year ago. The relatively low second quarter tax rate is a consequence of a lower anticipated full-year tax rate compared to our full-year estimate in the first quarter.

Our six month year-to-date rate of 28% is in line with what we expect for the full year. Accounts receivable at the end of the second quarter, accounts receivable was $665 million and implied day sales outstanding or DSO was 54 days.

Before we move to third quarter guidance, let's review some of the monthly revenue trends we saw in the second quarter in so far in July, all adjusted for currency and billing days.

Our temporary and consultant staffing divisions exited the quarter with June revenues down 33.7% versus the prior year compared to a 31.2% decrease for the full quarter. Revenues for the first two weeks of July were down 33% compared to the same period one year ago.

On a sequential week-over-week basis, we saw revenue growth for the last three weeks of June and this has continued into July. Permanent placement revenues in June were 46.1% versus June of 2019. This compares to a 49.1% decrease for the full quarter.

For the first three weeks of July, permanent placement revenues were down 35% compared to the same period in 2019. We provide this information so that you have insight into some of the trends we saw during the second quarter and into July.

But as you know, these are very brief periods of time and we caution reading too much into them. With that in mind, we offer the following third quarter guidance.

Revenue $1.09 billion to $1.20 billion, income per share $0.49 to $0.68. The midpoint of our guidance implies a year-over-year revenue decline of 26% on an as adjusted basis, inclusive of Protiviti. We limit our guidance to one quarter. All estimates we provide on this call are subject to the risks mentioned in today's press release and in our SEC filings.

Now, I'll turn the call back over to Keith.

M. Keith Waddell -- President and Chief Executive Officer

Thanks, Mike. Only a few short months ago, we discussed our operations in an unprecedented candidate-constrained labor market. In one quarter's time, we are now operating in a labor market with unprecedented unemployment levels. The experience of our tenured management team has driven a swift shift and strategic focus to embrace this new operating environment.

Our employees have found innovative ways to maintain connections with candidates, clients and each other in a remote environment. We've seen opportunities for new success with virtual client visits and by connecting clients to deep expertise from Protiviti on a virtual basis.

We've seen new opportunities arise across all of our lines of business in supporting a wide range of companies and entities, financial institutions, state and local governments, large school districts, just to name a few.

The widespread, global stay-at-home orders have accelerated trends in remote work, with many companies indicating a permanent shift in their staffing strategies. We see increased demand as companies upgrade their talent pools without regard to physical location of the candidate.

Likewise, as remote work takes a more prominent position, we see new demand for changing skill sets. Larger companies that have temporarily furloughed employees are also seeking opportunities to upgrade or refine remote talent from lower cost areas. And we see demand when furloughed employees are not able or ready to return to work.

We've managed through this crisis and have a solid foundation for thriving in the new normal. I'm proud of the resilience our employees demonstrated in arguably the most unique period in the company's history.

We aggressively cut costs in the quarter, achieving our targeted reductions. These reductions coupled with the talent and driven team, that is backed by industry-leading technology, position us to fully participate in any economic recovery.

Now, Mike and I will be happy to answer your questions. Please ask just one question and a single follow-up as needed. If there is time, we'll come back to you for additional questions.


[Operator Instructions] Your first question comes from the line of Mark Marcon with Baird.

Mark Marcon -- Analyst

All right. Good afternoon, Keith and Mike and congratulations on the excellent cost management that you executed during the quarter. I'm wondering if you can talk, I have one short-term question about the trends in terms of what you're seeing and then one longer-term question.

In terms of the short-term question, can you just describe the percentage of revenue that you're getting from different verticals across the U.S.? And to what extent are you impacted by some of the areas that are going to be more permanently impacted, whether it's hospitality or retail.

And then, what are you seeing from a geographic perspective as it relates to, as the virus has moved around the country. Is the Northeast coming back and the Sunbelt being impacted or how should we think about that? That's the short-term. And then, the long-term is if you could describe a little bit more about how you think the ability to source talent virtually will end up impacting the recovery when it eventually comes? To what extent could we end up seeing an even faster snap back than what we normally see, as you are able to leverage your huge network across the country? Thank you.

M. Keith Waddell -- President and Chief Executive Officer

Okay. So mix of revenues from an industry perspective. If you look at those industries where we're over indexed, I would call out professional services and financial services, and I'm talking relative to their contribution to GDP. And the industries where we're under-indexed would be real estate, government and hospitality.

And so from the standpoint of impact of hospitality, particularly, we don't have much exposure to that. And financial services is actually a good place to be kind of relative to COVID impacts.

As far as geographies, and so we track this week-by-week, office-by-office, state-by-state, etc. And there is not as much correlation as you would think if you'd look at Florida, Texas, Arizona, California, the last six weeks by and large, they've consistently grown sequentially week-on-week, just have as our other operations have, now we're talking small single-digit percentage.

But they're not significantly out-of-line with what we're seeing otherwise. Interestingly, if you look at, for example, the entire quarter, our revenue performance in New York and our revenue performance in California from a percentage standpoint was very similar, even though clearly the impact of COVID was quite different.

So on your long-term question about ability to tap a larger labor pool by going outside local geographies, I'd say, clearly, it will help short and long term. A, it will give us the ability to get even more pinpointed skills relative to what clients want and need, and 2, it allow us to tap into lower cost areas, which will be for the financial benefit of our clients as well, which should also help demand.

So we see this shift to remote work at least on a hybrid basis as a positive for us and for the industry frankly.

Mark Marcon -- Analyst

Terrific. Thank you.


Your next question is from Andrew Steinerman with JPMorgan.

Andrew Steinerman -- Analyst

Keith, I know the guide includes Protiviti, the 26%. So my question is, what's your assumption around Protiviti in the third quarter? And could you also, my second question is, could you just give us some different of thinking at the low end of the revenue range versus the high end of the revenue range, because it's a reasonably broad range.

M. Keith Waddell -- President and Chief Executive Officer

Okay. And so, let me talk about the guide generally, and then I'll come back more specifically. And so at the midpoint of our guide, not the low, not the high, at the midpoint. On the staffing side, it assumes that we have small single-digit sequential growth from June levels, which is what we've seen by the way for the last six weeks consecutively.

On the Protiviti, we're talking low to mid single-digit growth, where solutions -- their solutions offerings, primarily technology, consulting and risk and compliance, regulatory for financial institutions are leading the way. On the gross margin, we're talking about down 50 to 70 basis points sequentially, primarily with lower conversions.

Protiviti down 1.5 to 1.75 percentage points on slightly lower utilization in the internal audit practice. From an SG&A standpoint, staffing, we get the full impact of the 30% savings less some modest increases to tax spending that we plan, plus the smaller more experienced internal staff is going to be more bonus eligible as revenues rise.

So you'll give back sum of a modest amount, not a large amount of the 30% in the quarter. Protiviti, third quarter SG&A, that's their big quarter to campus hires, so they have training costs associated with that.

Further, they're making, they're aggressively hiring laterally at higher skill-sets that they need. So at Protiviti, they should be a consistent percent of revenue. Staffing should be 36, 36.5 as a percent of revenue, which means from an operating income standpoint, you got staffing all of this is at midpoint.

Staffing 5% to 6% operating income, Protiviti 11% to 14%, overall 6% to 9%. Tax rate 28%, shares a 113 million. Now, more specific to your question. So low point of our guide, maybe, frankly Andrew, what we did was we spent most of our time on midpoint, then at the top, we said plus or minus 5%, 5% on the bottom side, 5% on the top and then we built up the P&Ls based on those 5% lower, 5% higher revenue levels.

Andrew Steinerman -- Analyst

Okay. Make sense. Thank you.


Your next question is from Jeff Silber with BMO Capital Markets.

Jeff Silber -- Analyst

Thank you so much. Wanted to focus on the perm side first. I'm just wondering the rate of new assignments, how that's been tracking, how attracted in the quarter and I know it's early in this quarter? And also from a deal closing perspective, are you seeing any delays because some of your clients want to meet the candidates statistically before they close the deal? Thanks.

M. Keith Waddell -- President and Chief Executive Officer

So on perm, we've been pretty pleased with the new job order front as well as the deals closed front. I'd say pre-COVID video interviewing was pretty broadly accepted and that has continued and grown from there, such that we pretty routinely closed perm deals, where clients interact primarily via video with the candidate.

Jeff Silber -- Analyst

Okay. And I know you have a sizable exposure to the small and mid-sized business level. I'm just wondering if you can talk about what's going on from a trend perspective? Did you see some clients close out that didn't come back, any color would be great. Thanks.

M. Keith Waddell -- President and Chief Executive Officer

So our SMB practice, which is 80% of our total, while clearly we saw hesitancy, we saw some pull back in what their resource requirements were. I mean, we didn't see a lot of closings per se. As we've talked before, our typical clients between 50 and a 100 employees, its not sub-10. And so particularly with the PPP loans that most of them got, it certainly sustained their existence for the quarter.

NFIB publishes quite a bit. It claims that most of the PPP money has been spent by the recipients. And frankly, all that remains there now at the moment, is for them to apply for the total forgiveness.

Jeff Silber -- Analyst

Okay, great, that's helpful. Thank you so much.


Your next question is from Gary Bisbee with Bank of America Securities.

Gary Bisbee -- Analyst

Hi, good afternoon. I guess I just -- any color you can provide on the commentary around the last six weeks seeing, some week-to-week improvement in staffing revenue is, what's driving that, are there pockets within that that are stronger and weaker?

And I guess, how do you think about the sustainability of that trend from here?

M. Keith Waddell -- President and Chief Executive Officer

Well, clearly as more and more states open and at different degrees, that has an impact, a positive impact on our revenue trends. The sequential improvements we've talked about are pretty broad, in fact almost universal across the U.S., even in the hot-spots that we talked about earlier.

That said and our guidance is pretty conservative because we do think there are going to be new flare-ups, there are going to be rollbacks. There will be uncertainty created by that and I think that's the new normal, and at least until there are therapeutics or a vaccine.

Gary Bisbee -- Analyst

Okay. And -- go ahead.

M. Keith Waddell -- President and Chief Executive Officer

Go ahead.

Gary Bisbee -- Analyst

As a follow-up then just on the trends internationally versus the U.S. I know your business is different than the commercial staffing companies. But we've seen from some others and even for some of the market data stronger performance or improvement moderation of declines if you will in a lot of European markets than maybe we've seen in the U.S.

Are you -- are you seeing any major differences, the growth rates for the quarter weren't dramatically different. So anything you'd call out? Thank you.

M. Keith Waddell -- President and Chief Executive Officer

They aren't dramatically different. If you kind of look at the countries, I would say, that France was harder hit probably than any other country. You had Belgium, Germany, Australia that were a little less hit than the average and then you had U.K. kind of in the middle.

But overall, I thought it was remarkable how similar the impacts were to us between international countries and the U.S. I mean there were only couple, three percentage points different.

Gary Bisbee -- Analyst

Thank you.


Your next question is from Tobey Sommer with SunTrust.

Jasper Bibb -- Analyst

Hey, good afternoon. This is Jasper Bibb homing for Tobey. I was wondering about any demand impact you might be seeing from furloughed workers with customers maybe first looking at bringing back their own staff before hiring times?

M. Keith Waddell -- President and Chief Executive Officer

Furloughs are an interesting and complicated situation. So let me just little bit. And so, I'd say, first of all for furloughs are more prevalent at mid cap and large cap companies than they are at SMBs, not that they don't exist at SMBs. I'd say, further, the tax subsidy, which is this 50% retention credit you get for the cost of furloughed employees, which for many companies, they've continued the benefits including medical for those they furloughed such that those people are eligible for unemployment plus they're still getting their medical cost covered by their employer.

But I believe that's highly motivated or significantly motivated by the fact that half the cost is paid for by these retention credits. Net-net, we believe more of those furloughs will be terminations than is generally thought to be the case by some. As to reasons why the furloughs won't be the first back to some degree there are new skill requirements because of COVID, particularly to support remote work, some companies will establish to upgrade skills, which is a friendlier labor market than when they hired some of the people they furloughed. Further they'll be look into lower cost communities, such they get a lower price point with those new employees rather than bring back to furloughs.

And then further from the standpoint of a furloughed employee, some may not want to come back. First of all, they've got concerns about COVID and health risks, kind of all with your children out of school who need child care, they can't come back because they have to provide that care. Lot of discussion about the high level of unemployment benefits, the $600 federal supplement. I guess the news is, today that's going to go down to $175 to $200.

Further, the longer people are on furlough, the more likely they'll look back to opportunities -- for other opportunities. I guess the point being, we're not sure that the overhang that many perceive the furloughs to be on staffing demand will in fact play out to the degree that it's assumed, both from the standpoint of the companies going first to them as they had new requirements and secondly, from the willingness of the furloughed employees to come back right now, not just because of the higher unemployment, but importantly, because of the child care needs and the healthcare risk or the health risk and everybody has got a different risk profile in that way. So I said I was going to ramble and I did.

Jasper Bibb -- Analyst

Thanks. That all makes sense. And then as a follow-up, I was hoping you could just broadly speak to how you expect cash flow to trend over the balance of the year? And if you saw any impact in the quarter from payroll tax deferrals?

M. Keith Waddell -- President and Chief Executive Officer

Well, cash flow was unbelievable in the quarter. I think we had $301 million of operating cash flow, a $190 million of that was receivables. We did defer about $38 million of FICA, that was a piece of that $300 million. But the good news is our receivables held up very well. While at face value, it looks like we lost 3 days in our DSO, if you just look at our temp business, we lost zero days. If you look at our perm business, because it was more back ended in the second quarter than the first, you've had less time to collect those, so that's pure timing. And further, because Protiviti did so well. There is a mix shift to Protiviti, their collection period because they deal with bigger companies as longer so that had an impact, but net-net, our receivables performed beautifully and they were the lion's share of that $190 million receivable reduction that went straight into cash.

So the projection for the rest of the year, I mean to the extent -- revenues level off and continue to head up a little bit. You would see some of that receivable reduction reverse. But that will be a good thing. We will continue to have the FICA deferrals through the end of the year, which will help a little bit, but from a balance sheet standpoint, from a cash flow standpoint, from a liquidity standpoint, we are rock solid.

Jasper Bibb -- Analyst

Thanks for taking the questions, Keith.


Your next question is from Ryan Leonard with Barclays.

Ryan Leonard -- Analyst

Hey guys, thanks for taking the questions. Just if you think about the quarter. I know obviously really hard to think about kind of trends and forecast, but when we spoke last, you had kind of talked about but some level of optimism that the declines exiting the first quarter, there was a bottom there and you talked specifically about having some benefit from helping out with the PPP loans. So I'm just curious, was there any one-time type revenue that really started to fall out after the last earnings call? Is there anything more specific to the trends that deteriorated throughout the quarter?

M. Keith Waddell -- President and Chief Executive Officer

Well, we got some lift from helping clients submit their PPP loan application. We did not get much lift by clients using the proceeds of their PPP loans to use our staff and have that qualify as payroll, which was necessary to get forgiveness. I won't bore you with all the legalities, but there was -- there were different legal points of view as to whether temporary payroll counted as payroll for purposes of loan forgiveness. But we did see some traction in helping prepare applications and we do expect to see some traction in helping clients fill out the forgiveness documentation as well, which is far from straightforward.

Ryan Leonard -- Analyst

Got it. Makes sense. And then on Protiviti, obviously another great quarter and executed kind of above what your expectations were. Is there still ongoing demand for obviously the cross selling with the staffing services. I guess -- how is the pipeline there, especially as people may be start to reexamine budgets, thinking that this is lasting longer than maybe initially anticipated.

M. Keith Waddell -- President and Chief Executive Officer

Yes. Joint solution offerings by Protiviti and staffing are doing great. They continue to grow nicely during the quarter, up across Protiviti solutions, I talked earlier FSI, regulatory, technology, cyber privacy cloud, that went great. As we talked about last time internal audit was modestly impacted kind of down 9%, 10%. They had some exposure to energy, transportation and hospitality that were hit.

Some of the internal audit is driven by discretionary spending, which was reduced a bit, but overall Protiviti had a wonderful quarter. We couldn't be more pleased. In fact, it's even better than what you see because the reported revenue grew by 4%. Their fees actually grew by 8% and the difference is the reimbursable expenses because it didn't travel as much, didn't get reported as revenue because those expenses were incurred, but I would argue on a real basis, they grew 8% not 4%. Pipeline along Protiviti is great, as well as the cross-sell Protiviti using staffing on engagements where it's applicable and they continue to go to market together. A lot of the government services work that we're doing. Protiviti has the GSA schedules. So -- but for Protiviti, staffing wouldn't even participate in those engagements. But because of Protiviti our staffing and Protiviti together can go to cities, states and service the demands there.

Ryan Leonard -- Analyst

Got it. Thank you.


Your next question is from Kevin McVeigh with Credit Suisse.

Kevin D. McVeigh -- Analyst

Great. Hey. Keith, I wonder if you could give us a sense, as you talk about kind of source of candidates from different areas kind of geographically and then ultimately -- how do you think about that within the context of pricing? And then just the ability to work remotely, more structural, does that impact one part of the business more than other obviously, Protiviti, there's probably a lot more flexibility on that as opposed to other areas. I guess any thoughts on kind of those two puts and takes if you could.

M. Keith Waddell -- President and Chief Executive Officer

Well, first of all, let me say that because we have a single, global instance of sales force, any office can access our candidate pool globally. And in fact, it with our new AI, we automatically provide to our internal staff a shortlist of candidates that where the the geography was opened up nationally what their -- without there even having to do anything. So from a technology support standpoint, we're in a very strong position to identify remote candidates for clients. As to pricing to the extent, they ultimately choose candidates that are in lower cost areas. That's OK, we'll apply our margin to that. We're quite happy to do that. It's a win-win for everybody, we still get our normal margins and the client gets a lower total price point.

As far as, is remote more applicable to some of our lines of businesses than others? Clearly Protiviti it would be the most prevalent, but management resources, Robert Half Technology, it's very prevalent, account temps prevalent, not as prevalent at office team, but certainly things like customer support are certainly candidates for remote work as well.

Kevin D. McVeigh -- Analyst

That's helpful. Then just real quick, on the margin side, any sense of where the conversion fee settlement. Can you just remind us of kind of -- when you think about gross profit, just the range across the different segments how much is kind of the gross margin? If you don't want to give specific like just what would the range be for account temps versus office team, anything like that would help us directionally?

M. Keith Waddell -- President and Chief Executive Officer

Well, our gross margins for staffing temporary have been better than certainly what we experienced in the last downturn. Last downturn, peak to trough, we were downtown 300 basis points. We're not even halfway there so far, so that's a positive. Conversions are always significantly impacted. I think, we're at 2.7% or 2.8% of revenue currently for conversion, that's versus 3.5% last quarter.

They settled out in the last downturn just under 2%. So we're not that far from the bottom. But overall, I would argue, our staffing gross margins, our temporary staffing gross margins have held up better this time than given the revenue impacts that I would have predicted and that's a good thing.

As far as the difference by segment, the management resources as always had the highest gross margins. Account temps is kind of mid-point, office team a little lower and technology in the middle as well. So there's not a huge, huge difference by line of business. I mean, clearly the bill rates are different. So the dollar gross margin is different.

But if you're just looking at the gross margin percentage, there aren't orders of magnitude differences by line of business.

Kevin D. McVeigh -- Analyst

Super helpful. Thank you.


Your next question is from Hamzah Mazari with Jefferies.

Mario Cortellacci -- Analyst

Hi. This is Mario Cortellacci filling in for Hamzah. Could you just give us a quick update on the bill-pay spread and give us a sense for how that trended throughout the quarter? And how much are you able to give us an update of what that looks like so far in this quarter? And then, just, you guys also mentioned that as companies we're looking for talent in lower cost community, just wanted to see -- does that impact the bill-pay spread in your top-line, with potentially lower wages being paid for candidates?

M. Keith Waddell -- President and Chief Executive Officer

So first of all, on the pricing front, because there was such a disparity between how management resources and technology did versus account temps office team. If we mix adjust the pricing, our bill rates were up 4.8% for the quarter and that compares to 6.1% last quarter. And on this business around lower cost communities, while the absolute dollar amount of our billings would be impacted as the percentage gross margins shouldn't be significantly impacted, if we have a higher mix of people coming from lower cost communities. We would argue that with that lower price point, our people -- clients can afford more.

Mario Cortellacci -- Analyst

Okay. And then, just kind of looking at recruiters and just have you started adding recruiters yet as employment picks up or is hiring paused completely right now? And just, could you give us a sense for the timing that you -- that you guys typically have with ramping recruiters as you see an employment start to come back, is it by a quarter, is it by a month? Just kind of how far an event do you start to ramp your own recruiter as in sales force in preparation for future demand?

M. Keith Waddell -- President and Chief Executive Officer

Well, we believe there is significant unused capacity with our existing recruiter base. So while we have clearly back-fill turnover and we'll look first to furloughs to do that. We don't see for the near-term the need to add recruiters or salespeople internally, because there is significant upside and frankly the success we've had with the new technology tools over the last 24 months, give us even more optimism that there has significant unused capacity and we won't needing to be it, adding to them on a net basis any time soon, certainly not in the next quarter.

Mario Cortellacci -- Analyst

Great, thank you so much.


Your next question is from Seth Weber with RBC Capital Markets.

Emily McLaughlin -- Analyst

Hi, this is Emily McLaughlin on for Seth. My question is on Protiviti. You've talked about the strong pipeline, wondering how much visibility you have in this business and if you can provide any color on the pace of new wins or projects in the ability to back-fill work that's rolling off?

M. Keith Waddell -- President and Chief Executive Officer

Protiviti's pipeline looks good. They do have visibility on staffing when we talk to them each quarter about the coming quarter. They have a very high percentage of their forecasted revenues already staffed by client. And so, I would argue, at least for one quarter out, they have a lot of visibility, two quarters out, they have some visibility.

As far as pace of new wins because the sales cycle is pretty long, they had many things in the hopper pre-COVID and they successfully concluded some of those new engagements during COVID, where they did their orals via video and they had some extremely impressive new wins. But they were first started, the sales process first started pre-COVID.

And so, clearly, it's harder to start a brand new relationship, be a video, it's not impossible. But because the duration of their engagements is as long as it is, they've got some runway here but where that becomes a major concern.

Internal audit by and large is renewed annually. And while there is some discretionary spend around the total by and large it gets renewed annually.

Emily McLaughlin -- Analyst

Okay. And then, just a quick follow-up. Revenue in Robert Half Technology is a little softer than we were expecting. Wondering if this was different than how you're thinking about it internally, just any more color on the areas of weakness and how you expect it to perform relative to the others over the near and medium term?

Michael C. Buckley -- Executive Vice President, Chief Financial Officer

Well, from our perspective, Robert Half Technology and Robert Half Management Resources much better than was the case with account temps and office team, so we weren't disappointed, we weren't surprised. Generally speaking, small businesses have been harder hit than mid cap and large cap companies and that's where we're positioned.

And so, we weren't surprised, nor where we disappointed. Given the circumstances, we're down 15% in technology, which was about what we did in management resources as well.

Emily McLaughlin -- Analyst

Okay, that's helpful. Thanks for the time.


Your final question comes from George Gong with Goldman Sachs.

George Gong -- Analyst

Hi, thanks, good afternoon. So temp staffing revenue in June and July were down 33% to 34% year-over-year, which worsened from down 31% for the full quarter. At the same time, you noted that you're seeing low-single digit week-over-week growth in June and July.

Can you elaborate on whether those sequential trends are strengthening or weakening given the decelerating growth exiting the quarter?

M. Keith Waddell -- President and Chief Executive Officer

Well, first the 33% versus 31%, those are already pretty close. But quite frankly they're more about the year-ago months or year-ago quarter than anything.

And I would argue, if there was ever a period of time when what we did a year ago, wasn't particularly relevant. I would argue its at this time. And as far as, if you look at the last six weeks, is there any demonstrative trend there in these week-on-week improvements? As I said earlier, they're all low single digit, so there is not a lot of variation when you're talking low single digit, but we are encouraged that at the end of last quarter, we were talking how the pace of declines was slowing and now at the end of this quarter, we're talking how we've now got sequential week-on-week improvements. So, it's a heck of a lot better to talk about week-on-week improvements than the pace of your declines is slowing.

George Gong -- Analyst

Got it. Makes sense. And then as a follow-up, your third quarter guidance assumes would you say a continuation of July trends or does it assume some degree of improvement?

M. Keith Waddell -- President and Chief Executive Officer

It assumes early July trends continue. Again, we said sequential growth low single digits. So a little bit of growth and again that's premised on, there's going to be flare-ups, there's going to be rollbacks, there's going to be uncertainty around that and given that overall environment, plus there is some uncertainty about the amount, the type of the stimulus that's being discussed. So given all of that uncertainty, it seem prudent to us to kind of be conservative and and dial in a little bit of sequential growth, but not a significant amount. We hope -- we're surprised on the upside, we have 5% upside at our high level.

George Gong -- Analyst

Got it. Very helpful, thank you.

M. Keith Waddell -- President and Chief Executive Officer

Okay. I think that's all we have for today. Thank you very much for joining us.


[Operator Closing Remarks] If you missed any part of the call, it will be archived in the audio format in the Investor Center of Robert Half's website at You can also dial the conference call replay. Dial-in details and the conference ID are contained in the Company's press release issued earlier today.

Questions and Answers:

Duration: 52 minutes

Call participants:

M. Keith Waddell -- President and Chief Executive Officer

Michael C. Buckley -- Executive Vice President, Chief Financial Officer

Mark Marcon -- Baird -- Analyst

Andrew Steinerman -- JPMorgan -- Analyst

Jeff Silber -- BMO Capital Markets -- Analyst

Gary Bisbee -- Bank of America -- Analyst

Jasper Bibb -- SunTrust Robinson Humphrey -- Analyst

Ryan Leonard -- Barclays Capital, Inc. -- Analyst

Kevin D. McVeigh -- Credit Suisse -- Analyst

Mario Cortellacci -- Jefferies -- Analyst

Emily McLaughlin -- RBC Capital Markets -- Analyst

George Gong -- Goldman Sachs -- Analyst

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