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Heidrick & Struggles International Inc (NASDAQ:HSII)
Q2 2020 Earnings Call
Jul 27, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Heidrick & Struggles Second Quarter 2020 Earnings Conference Call. [Operator Instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Suzanne Rosenberg, Vice President, Investor Relations. Thank you. Please go ahead.

Suzanne Rosenberg -- Vice President of Investor Relations

Good afternoon, everyone, and thank you for participating in Heidrick & Struggles 2020 second quarter conference call. Joining me on today's call is our President and CEO, Krishnan Rajagopalan; and Chief Financial Officer, Mark Harris. We have posted our second quarter slides on the IR homepage of our website at heidrick.com, and we encourage you to view them for additional context, but we won't be referring to specific page numbers during our opening remarks.

In our materials, we refer to non-GAAP financial measures that we believe provide additional insight into our underlying results. A reconciliation between GAAP and non-GAAP financial measures can be found in the last schedule of the release. Also in our remarks, we'll be making forward-looking statements and ask that you please refer to the Safe Harbor language contained in our news release.

Krishnan, I'll now turn the call over to you.

Krishnan Rajagopalan -- President and Chief Executive Officer

Suzanne, thank you. Good afternoon, everyone, and thank you for taking the time to join our call. Since the onset of the pandemic, our first priority has been to ensure the health and safety of our employees and assist our clients. At the same time, we have been carefully monitoring the external landscape, as we continue to actively manage our business, navigating through these unprecedented times and seek opportunities for growth.

Look, this is an incredibly unusual cycle for our business and difficult to make predictions. But our team has done a tremendous job in maintaining our business momentum. I'm so proud of all of our colleagues who are demonstrating their dedication and resiliency, while seamlessly embracing our new virtual world of work. In June, many of our offices around the world reopened, and our team did a great job creating a safe work environment, keeping the safety of our employees and clients as our top priority.

Currently, the vast majority of our people continue to work from home and we've proven we're capable of doing that productively and we will continue to do so. As you've heard me say before, we believe we will emerge in these uncertain times in an even stronger position to help our clients recover and prepare for the future. In today's call, I'll comment on our second quarter results and some of the cost savings actions we're taking in the third quarter. Then I'll frame up how our business continues to respond in the current environment and how we are positioned to not only navigate today's economic uncertainties but also emerge even stronger once market conditions improve.

Let me briefly touch on our second quarter results. Given the current environment, we are pleased with net revenue of $145.6 million, which translated to an adjusted operating margin of 6.2%, and market performing adjusted EBITDA margin of 8.5%. These results are adjusted for non-cash impairment charge, which Mark will detail later in the call.

Our second quarter results underscore continued demand for our services and strong market performance by the Heidrick team in this challenging environment, as the new normal begins to emerge. Overall, we're pleased by the resiliency demonstrated by our business and particularly encouraged by growth in confirmations from May to June across all regions in Executive Search and Heidrick Consulting. Confirmations are key leading indicator for our business, and importantly, this positive trend is continuing into July.

Nevertheless, we're not out of the woods yet, and we expect to see continued volatility until the medical solution to this pandemic emerges. Current global economic conditions are somewhat clearer now than when we spoke in April, but still quite fluid and we're taking appropriate actions including workforce reductions to realign how we do our work and increase our efficiencies, while also continuing to reduce and manage costs. After gathering additional data and insights over the past few months, we're implementing new cost saving measures that will benefit our Company over the long term. Importantly, we've been prudent and methodical in our approach and avoided any knee-jerk reactions at the onset of the global pandemic.

Turning back to the second quarter, while economic uncertainty continues across the markets we serve, we do see in our business positive trends in healthcare and life sciences and initial geographic recovery in markets such as China, Germany, Italy and Korea. We're also seeing increased demand in service offerings such as leadership assessment, digital readiness and diversity and inclusion. These indicators could more fully materialize later in the calendar year. We remain focused on working at the top of organization, and our team has been creative and responsive in finding new ways to convene with our clients in this virtual world as we build momentum and emerge from this crisis as a stronger firm.

We also continue to align and enable cross-enterprise collaboration between our Executive Search and Heidrick Consulting businesses to ensure we are bringing the very best of Heidrick to our clients. We are winning great projects around the world and are continuing to identify significant opportunities and see activity in the private equity world and cross-border engagements. One great example is an assessment in organization transformational project for a multi-billion dollar company in the Middle East that we've been conducting for the last several months.

In Heidrick Consulting, our team has quickly pivoted to create new digital solutions across leadership assessment for development, team acceleration, and organization and culture acceleration that can be delivered virtually to help shift away from a reliance on large physical gatherings. Other examples include our Agile leadership potential tool, team journey workshops, our performance engine and culture transfer of competence, just to name a few.

Looking ahead, considering the fits and starts in the marketplace, certain rollbacks of global reopening plans and other concerns around the additional waves of COVID, we anticipate the second half of the year will be sluggish. In this environment, collaboration and winning with our digital offerings and capabilities are that much more important, and we will continue to focus on these areas.

The common theme now across both Executive Search and Heidrick Consulting is that we're seeing client conversations and engagements have shifted from crisis management and peer learnings to post-COVID priorities including ESG, scenario planning, succession planning and employee engagement. In addition, as we all know diversity and inclusion or D&I has become even more important and a significant area of focus in both the US and around the world, particularly as we emerge from this crisis.

In April, we launched our global D&I practice that integrates our Executive Search and Consulting capabilities to create comprehensive D&I strategy that are grounded in data and designed to deliver sustainable results. We have a unique approach that differentiates us in the marketplace as we're able to bring not only our capabilities in search to help clients build diverse representation, but equally important, we have integrated our consulting capabilities to help our clients build inclusive organizations.

We're applying an exciting and truly differentiated approach to what we call the ABCs of D&I. The A is for accelerating the impact and the results of D&I B for building diverse leadership teams and talent pipeline; and the C is for creating inclusive leadership behaviors in workplace cultures. It brings together the best of Heidrick in this offering. Already, we are gaining a lot of traction in the market, and we're applying this methodology internally as well. Together, we're doing more for our teams and our clients as one firm dedicated to significantly moving the needle on diversity and inclusion.

Importantly, as you know, we already have a powerful digital search platform that is an incredible asset and we continue to enhance it. Simply put, this allows us to continue to operate effectively and efficiently in an increasingly digital and virtual world. Recently, we rolled out significant upgrades to our digital search platform to further improve collaboration, allow greater flexibility, increase productivity and help deliver more insights to our clients. The global pandemic will only accelerate client adoption of our distinctive data-driven and technology-enabled talent leadership and culture solutions to accelerate their performance.

The power of our digital platform is evident, as clients hired over 800 executives in the second quarter. This is in line with the year-ago levels. With these assets, our firm is well positioned to address the management capital growth opportunities we see in a post-COVID world, including leadership teams in crisis, acceleration at the top, restructuring activities, PE growth, increased M&A activity, digital transformations, major organization culture shifts and a widening racial, social and economic divide, which is driving a renewed focus in urgency on D&I. As conditions eventually improve, our clients' needs for talent solutions will be more important than ever, and we are well positioned to emerge even stronger as a firm.

In summary, the environment remains uncertain, however, we are a strong and resilient firm both strategically and financially. We're adjusting our cost structure and improving efficiencies while further promoting our long-term ability to capitalize on our industry-leading platform, strong balance sheet and compelling growth opportunities. As we prepare for the future and operating in a new normal, we're setting the firm up to be healthy and agile for 2021 and beyond.

Our focus remains on creating shareholder value through serving our clients as a trusted global advisor, especially during these unprecedented times. Thank you for joining us. And thank you to our global team for everything that you do. Now let me turn the call over to Mark to elaborate on the quarter.

Mark Harris -- Chief Financial Officer

Thank you, Krishnan. Good afternoon, everyone, and thank you for joining our call today. Today, I will start off with a review of our second quarter results, which were clearly impacted by the global pandemic, but reflects strong market performance compared to the publicly available data that we have seen through today, and it's clearly an outstanding accomplishment by our team here at Heidrick & Struggles.

After covering the second quarter results, I will then take a closer look into what we are seeing at the beginning of the third quarter of 2020 and give you my insights going forward.

Turning to our second quarter results, we recorded net revenue of $145.6 million, down 16% from the same quarter last year, but surpassing both our internal expectations and analyst consensus, due to better than expected demand for our services. That demand momentum continued into the early days of our third quarter, which makes us cautiously optimistic about the second half of the year, something I will comment more on in my prepared remarks.

Looking at Executive Search, net revenue was $134.2 million compared to $158.5 million in the same period last year, or down 15%. In the second quarter, America Executive Search revenue was $84.8 million and compared to the same quarter last year was down 16% or 15% on a constant currency basis. Europe Executive Search revenue was $30.1 million, down 14% or 11% on a constant currency basis; and Asia Pacific Executive Search revenue was $19.2 million, down 17% or 15% on a constant currency basis. These declines in revenue were reflective of the global pandemic in the second quarter.

Turning to Heidrick Consulting, revenue was down $11.4 million compared to $14.6 million in last year's second quarter, but was also higher than we expected given the prevailing conditions in the leadership consulting market. We saw two major drivers around this. First, a significant number of our clients are engaging us to assess their talent as they pivot their own companies into new operating models. And second, adoption and acceptance of our digital delivery services across multiple leadership advisory solutions resulted in larger client engagements.

With regards to salary and benefits, this declined $15.9 million or 13% to $104.7 million compared to $120.6 million in last year's second quarter. Fixed compensation decreased $2.2 million, primarily driven by lower talent acquisition and retention costs, stock compensation expenses and other benefit expenses such as retirement. This was partially offset by higher deferred compensation plan and base salaries and payroll taxes. Variable compensation decreased $13.8 million due to the lower revenue in the quarter.

General and administrative expenses reduced by $2.2 million or 7% year-over-year to $32 million. There were savings achieved in several areas, but the biggest improvement was in travel and entertainment, partially offset by the increase in professional fees, bad debt expense and IT investments. Given our new operating model where more of our team will continue to work from home and has a material impact on our real estate strategy and our transformative digital strategy that will enable us to reduce travel, we expect to see continued savings in G&A into the long-term as we move to the new normal.

As Krishnan mentioned, during the second quarter, we recorded a goodwill impairment charge of $33 million related to the write-off of goodwill within our reporting units in Asia-Pacific and Europe. The impairment was non-cash and did not affect our liquidity, cash flows or operations, nor did it impact the debt covenants and borrowing capabilities under our credit agreement. The impairment charge primarily related to historical acquisitions from several years ago and is simply an accounting requirement to charge these off on our exogenous shocks in the market such as COVID-19 make it difficult in the short term to carry those values.

Adjusting operating income, removing the impact of the impairment charge in the second quarter was $9 million compared to $18.4 million last year. Adjusted operating margin was 6.2% versus 10.6% in last year's second quarter and on a trailing 12-month basis, our operating margin was 8.8%, compared to 9.8% in the trailing 12-month period before that. This corresponded to an adjusted EBITDA of $12.4 million and adjusted EBITDA margin of 8.5%, which was strong performance given the headwinds we've been seeing in our market due to the pandemic.

Our adjusted net income in the second quarter of 2020 was $7.2 million compared to $14.3 million last year, or adjusted diluted earnings per share of $0.37 versus $0.73 last year. Now I'll turn to our balance sheet. At the end of our second quarter, our cash and marketable securities was $287.8 million compared to $144 million at the end of last year's second quarter. However, this was inflated by the $100 million of credit facility we drew down in March. Thus taking that out, we finished the quarter at $187.8 million of on-balance sheet liquidity, an increase of 30% over the same period last year. Much of this came from strong performance in our operating activities, which increased 22% to $40.8 million compared to $33.4 million in last year's second quarter.

This accomplishment was driven by our expense reductions and favorable working capital achievements in the period, through proactive treasury management, where we maintain strict DSO discipline. In terms of overall liquidity, I'm very pleased to report that we finished the quarter with $360.3 million of liquidity, again demonstrating outstanding balance sheet strength for our future.

Now let me turn to the third quarter and beyond. Consider the continued uncertainty due to the pandemic, new shelter in place orders in the US and other international markets and other market uncertainties weighing on global businesses in the second half of 2020, we are refraining from providing financial guidance in the third quarter, consistent with last quarter. Instead, let me give you some of the latest trends we are seeing.

Before reflecting on the current trends, it's important to comment that our backlog coming into the third quarter is weaker than this time last year due to the second quarter having less volume than the same period the year before. What this means is, we expect our revenue recognition to be impacted by this. And while we expect the volume to pick up in the third quarter and beyond, our revenue will have a lag. Therefore, we will likely see a decrease in revenue in the third quarter from the second quarter by anywhere from 10% to 15%, but may not be reflective of the pickup in activity. If that pickup in activity comes to fruition, then we would see our fourth quarter revenue rebound sequentially.

Regarding confirmations, as Krishnan mentioned, we saw confirmations began to improve in June and we are encouraged that July is off to a good start. We expect continued improvement in the third and fourth quarters as more countries open back up for business and business rebounds. Looking at our average fees. Overall, we're seeing our aggregate fees hold up during the pandemic, but we will expect some pressure on this given the geographical mix and increase in non-standard assignments we saw in the second quarter.

Turning to our on-hold assignments. We did see our on-hold rate increased significantly in the second quarter, but this trend has slowed with July trending lower than June at this time. While on-holds have started to come off in the late second and early third quarters, we do not see a meaningful trend as of now to report on. The backlog on the old on-hold assignments continues to support our view that the third and fourth quarters will likely have activity picking back up compared to that of the second quarter.

Turning to Heidrick Consulting, which has some offerings that historically have leveraged in-person gatherings to deliver the service, we are starting to see a number of on-hold engagements restart using our virtual capabilities. And while others remain on-hold, we have seen no increases in cancellations. With the distributed workforce due to the COVID and the sharpened lens on racial and social disparities, we expect our clients will need more support to help them keep employees engaged around the purpose and values, create and maintain inclusive cultures, and understand leadership capabilities, which should also help our D&I offering.

Importantly, as we deliver virtually and continue to educate the market on the effectiveness of digital delivery, we're encouraged by the runway that's in front of us. Finally, as we have disclosed in our press release and 10-Q, we have begun the process in the third quarter of implementing a restructuring plan to optimize future growth and profitability. These actions will enable the firm to be in an even stronger position to continue navigating through the ongoing market uncertainties, while accelerating our business growth and future opportunities.

In connection with this restructuring plan, the Company expects to record a one-time charge in the third quarter, managing from approximately $30 million to $40 million, and that will generate initial savings of $30 million to $40 million. Of the total charge, $15 million to $20 million relate to workforce reductions. The other $15 million to $20 million of total charge reflects additional components of the restructuring plan, including a reduction in our real estate global footprint, professional fees and elimination of certain programs from which we expect future savings that are difficult to quantify at this time.

In summary, while our second quarter performance, certainly reflects the impact of the pandemic, our team continues to win in a difficult market and provide a relative strong returns to our shareholders. With continued focus on strong execution, long-term planning and adding value to our clients, we look forward to what Heidrick can achieve in the future.

With that, we'll be glad to take your questions. Operator, over to you.

Questions and Answers:

Operator

[Operator Instructions] And your first question comes from the line of Josh Vogel from Sidoti & Company. Your line is open.

Josh Vogel -- Sidoti & Company -- Analyst

Thanks. Good evening, guys. I guess my first question, Mark, just talking about the restructuring. How soon should we expect to see some of those benefits? Would it be by Q4? Or is it more a 2021 event?

Mark Harris -- Chief Financial Officer

No, we'll see the savings will obviously start working their way through in Q3. I'd imagine it's absolutely see the bigger and greater impact into 2021. We'll see some of it spillover to Q4, but obviously we're still putting those charges through as we continue to look at our real estate footprint and some of our other facets of the workforce reduction will -- savings will be offset by the costs, if you will, a breakeven point. So we would expect to start to see in Q4 and onward from there.

Josh Vogel -- Sidoti & Company -- Analyst

Okay, great. You've done a great job over the years in bringing down G&A as a percentage of net revenue and given these initiatives you're taking here. Do you think that you can get sub-19% longer-term?

Mark Harris -- Chief Financial Officer

So right now, as you know, we finished at 32%, we came down from the first quarter, we expect that to continue. Some of that, Josh, is the fact that -- in COVID environment, so as you can imagine our travel and entertainment is very minimal, and that's going to be a function of when that starts to return, that will put some pressure on it. I do think the working from home has been accepted across the board, within the organization and we expect that trying to continue to a good extent and we're rethinking our business, how we deliver to clients, etc, and what kind of efficiencies that's going to give us.

I want to be a little bit careful. I think we can be [indecipherable] I also don't want to make it, feel like it could be a material discount if you will from the 18% that we were trying to achieve and we were achieving before COVID. So, we'll see where it comes out, but I definitely think there is some interesting savings on that.

Josh Vogel -- Sidoti & Company -- Analyst

Okay, great. And when we think about the delivery model and the percentage of business that's being done virtually or digitally today, how much do you think can continue to be delivered through that type of format going forward even when we get back to a new normal? So I know you talked about reducing reliance on real estate footprint and whatnot, but how -- when we think longer term, how much of your business could be virtual or digital?

Krishnan Rajagopalan -- President and Chief Executive Officer

Yeah. Josh, hi, it's Krishnan. Thanks. Yeah, look, I think this trend is going to continue. I think clients are accepting it. We're converting more and more offerings into a digital virtual offering. And I think clients, they are also living in that same world. So I think it's going to continue down that path. So expect it to increase.

Josh Vogel -- Sidoti & Company -- Analyst

Okay. And a long-term goal here is just to get to that 50:50 split between search and consulting and knowing that it will take some M&A activity to get there on the consulting front. Can you talk about the pipeline on this front? How are valuations trending and whether you have an appetite today to deploy some of that capital on this front? Or is it something more targeted for 2021 or beyond?

Mark Harris -- Chief Financial Officer

Sure. So to your comment, I think first of all pipeline continued to improve in terms of what we're seeing out there. On the other comment that I would make, Josh is with the increase in pipeline, I think there is a reality coming back to the pipeline, in terms of people really having a good understanding of what's going on in the market, the valuation expectations coming back down, etc. And of course, the cost of capital has increased a lot. The accessibility to capital has obviously been very problematic.

So I think those kind of storms, if you will, are really helping us out. We're very much interested in continuing with our strategy. I don't think anything is going to make us hit the pause button on that. That's very important to us for a long-term vision. So we'll continue to focus and try to see what's available from a partnership, from an acquisition, etc point of view. And do the right things for the long-term value of the company.

Josh Vogel -- Sidoti & Company -- Analyst

All right. Thanks for the insights. And just lastly, sort of a housekeeping one. Can you provide what the adjusted operating margin was for Europe and APAC outside of the goodwill impairment?

Mark Harris -- Chief Financial Officer

Yeah. If you grab that [Indecipherable] actually calculated on that basis, but one thing we did do in there Josh is, you do have the goodwill broken out by each of the respective regions. So Europe and Asia have been broken out, you can add that kind of adjustment back into it and you can kind of come up with that margin.

Josh Vogel -- Sidoti & Company -- Analyst

Okay, great. Well thank you guys for taking my questions. Okay, great. Thank you guys.

Operator

Your next question comes from the line of Tobey Sommer from SunTrust. Your line is open.

Tobey Sommer -- SunTrust -- Analyst

Thank you. I'm curious how has this experience in the performance of the business informed your perspectives on which areas something are the most resilient and has it changed your perspective on where you would desire to deploy capital when you can ramp up M&A?

Krishnan Rajagopalan -- President and Chief Executive Officer

Yeah. Hey, Tobey, how are you? Let me just take the answer on consulting. Look I think what -- this is unprecedented times and I think what we've shown is that we can transition almost all of our offerings to a digital virtual platform and that in this new market that we see some of those are really, really critical needs. I mean, we talked a little bit about D&I and the divide across all dimensions growing and the need for that. So there is tons of demand that's coming out of that digital transformation and digital readiness.

I mean if ever there was moments where companies are questioning whether they're ready or not what they need to do, that's right there then on driving cultures and resilience. I mean, sort of, it's interesting, probably this far into it whether you want to call it seven months or five months into this COVID pandemic period here. Clients are really asking themselves those tough questions now about culture. So I think that's there as well. And then we are definitely seeing on purely the leadership side, the need for a lot more help on assessments because people can't meet people easily face-to-face. So being able to do that in a systematic scientific way and some of the tools that we've got like our ALP tool that we talked about before and things like that are really, really important.

So I think it's interesting, I think consulting has been, it started off down, but I think it's beginning to bounce back and the collaboration with search is terrific. So we're seeing lots of opportunities over there. I'll let Mark talk a little bit about some of the opportunities in the second part of your question there. Okay.

Mark Harris -- Chief Financial Officer

Yeah. The comment that I'd make to on the second part, obviously search is part of our bread and butter, and we'll continue to look at it opportunistically, less so on the strategic side in terms of things that we would look at from search would be geographic expansion, maybe some of our industrial -- industries expansion, excuse me, not specific. But that's what we are looking on the search side. I think the two buckets that really you want to put my -- pipeline we're really focused in on, one is obviously in terms of Heidrick Consulting and the continued expansion that we feel is the next best steps to help position us, but also the outside of search, third line augmented whatever you want to call it.

But companies that we really think are important in terms of augmenting what we're doing in both search and consulting either bridging together or enhancing, what the two do together, etc are obviously the other parts of the market that we're very much focused on in the pipeline.

Tobey Sommer -- SunTrust -- Analyst

Okay, thank you. What sort of financial constraint did you have in mind when you decided to cut expenses? Are you managing to a margin given an expectation for revenue decline sort of how did you go about this and arrive at the right level? Thanks.

Mark Harris -- Chief Financial Officer

No, that's a really good question, Tobey. So here's what we did. We worked with a lot of our leadership team. Our practice leaders, our regional leaders. We talked to clients, we looked at outside market data, management team and the Board of Directors really came together and said, well what is this, what it's going to be and where is the runway going, both really 2020 but mostly 2021 was where for our focus was. And we looked at that, we had a real kind of consensus on where we think our growth was going to come back from. And then the answer really became how do we reinvest ourselves and position ourselves.

So when we get back to the old levels, hopefully we get back with more margin. That's obviously what the attractive goal today. So we had to be balancing between really focusing on the delivery, focusing on our clients, making sure they get what they need and how that -- the bench, if you will, to ensure that we can deliver and not lose market share. That was a big priority from our point of view is to ensure that we can maintain all the hard work this team has worked so bloody hard to do over the last several years.

So that was how we did it. Whether -- were the margins that fell from that? Absolutely. Did we look at it? Sure, we do, but we are really looking at it very much down the road in terms of where we get back to, etc, and what kind of business we want to be. And then it is what it is in terms of 2020 or even the beginning of 2021. The long as we've reshaped that ship appropriately, we thought we could really be able to meet the mandate. Krishnan, I don't know if you want to add to that?

Krishnan Rajagopalan -- President and Chief Executive Officer

Yeah, no, it was very much a forward look, I think in terms of how we align. We spent some time with clients and I'm glad we took the time because the answer in month one would have been a different answer than the conclusions that you get when you have some data and you have client insights, and you can see what that begins to look like. So that's what we did.

Tobey Sommer -- SunTrust -- Analyst

Okay, thanks.

Krishnan Rajagopalan -- President and Chief Executive Officer

Welcome.

Tobey Sommer -- SunTrust -- Analyst

Do you have a -- could you help us out on a revenue-generating consultant kind of head count. What -- how much was that cut or maybe expressed a different way, what kind of number should we be looking for in 3Q, whichever way you're willing to answer?

Mark Harris -- Chief Financial Officer

So look, I think if you're asking about headcount reductions. It was less than 10%. So that's probably the best way to answer that question. And say, OK, so that's what you may expect to see in the modeling as you move ahead. If you're trying to model headcount.

Tobey Sommer -- SunTrust -- Analyst

Okay, perfect. If I could just ask a couple more things about within the quarter. How does the depth of the decline in confirmations compare to, I assume it might have been April but I don't know if that was bottom compared to what things look like in July? And just kind of give a sense for the oscillation within the last several months?

Mark Harris -- Chief Financial Officer

So our expectations, look in April, where -- as we talked about it on the call, we saw it kind of getting into the high 20s. My concern at the conference call, Tobey, was that we probably creep into the 30 [Phonetic] territory, and we saw that and that's compared to the same period last year. And as we started to see our way worked through it, I'd say May was similar, [indecipherable] marginally less than that, I would tell you that June, we started to -- started to pick up in terms of July, what we hope so.

I think our view is that again that we hope we've seen what we hope to put on the recovery side of it and we hope that trend continues.

Tobey Sommer -- SunTrust -- Analyst

Relative year-over-year decline and sort of the June, July timeframe versus the April, May?

Mark Harris -- Chief Financial Officer

In terms of the percentage?

Tobey Sommer -- SunTrust -- Analyst

Yes.

Mark Harris -- Chief Financial Officer

We're not giving obviously that out, but we don't want to give it out by month. I think we kind of see it kind of coming through on the revenue side, etc. I think you've got some of our general market information that's in the Q, but we don't want to break it out by month.

Tobey Sommer -- SunTrust -- Analyst

Okay. And not even with the range or anything like that? Okay.

Mark Harris -- Chief Financial Officer

No.

Tobey Sommer -- SunTrust -- Analyst

Could you give us a sense for the -- to the extent there were nuances geographically. Sid the rebound in confirmations track the reopening of economies as you -- because you do have a global footprint, we have an interesting perspective on that. And I'll get back in the queue after this. Thanks.

Mark Harris -- Chief Financial Officer

No, that's fine, Tobey. It was actually -- it was somewhat aligned to that obviously is what you would expect is April to be -- April and May were the trough and we saw some pretty good numbers in terms of compatibility to those previous months. So I think that was very good. Into July, we're starting to see similar trend, that trend continue. We hope that that keeps that its ascending rate. So, and we hope that mirroring globally, where we're seeing people come back with.

The only comment that I'd make is we still saw anomaly, so for example, in Italy, even when they were going through a tough part of that pandemic, we still saw very good numbers, very strong numbers come from our team in there, which was really incredible. And we've seen similar things in China. So it's not, I think you can probably say it from a macro trend, but we are seeing some micro cases where we're actually performing quite well in places that have more sell-through in place. I think that's kudos to the digital platform that we have, I think it resonates quite well.

We can be very effective, still in that market assuming the appetite and the demand is there, we're ready to go. So I think from that component of it, it was very surprising, but in a very good way.

Krishnan Rajagopalan -- President and Chief Executive Officer

I just -- I'd just add look countries that are being credited like Germany with handling the crisis well. We begin to see markets rebound. So I'm not necessarily saying it's because of the timing of the open. I think it's how they're handling at all that's giving businesses and people confidence to in their markets. So I'll call that out.

Tobey Sommer -- SunTrust -- Analyst

Thank you very much.

Operator

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

Kevin Steinke -- Barrington Research -- Analyst

Good afternoon, everyone. Mark, [Technical Issues] that your performance in the second quarter was strong relative to publicly available market. Just wanted to get a sense as to what you think might be driving that to your comment on the competitive landscape.

Krishnan Rajagopalan -- President and Chief Executive Officer

Sure. Yeah. Yeah, I think I got that question was a little bit choppy, but sort of what do you think is driving our success, I think. So maybe I'll kick that off, and if that was the question and then I'll turn to Mark. What I think number one momentum that we've had coming into this and the brand we're building, the platform we're building all is very useful where we work at the top. I think you're seeing that that's perhaps a little bit more resilient than other segments. So number one is that. Number two, I would also say that that the actual digital platform that we've built, has allowed us to be incredibly productive, clients have become used to it.

So there is ability to start to conduct and to be even close searches as we've said, how we've been able to do that. So I think all of these things have given us a leg up in the market on the search side. And then on the consulting side, quickly translating things to be digital offerings has been advantage. So I think these are the kinds of things we've been doing that translate to our view of wins and success. I mean you guys probably track the competitive markets better than we do. And you probably can crunch the data on all of that stuff yourself, but between what we hear anecdotally, and what we track, we feel like we're winning in a difficult marketplace. I don't know, if Mark you want to add to that.

Mark Harris -- Chief Financial Officer

It's really what I think, that answers.

Kevin Steinke -- Barrington Research -- Analyst

Okay, thanks, no that answer the question, I apologize for the choppiness there. But one other question. Yeah, one other question. So it's great to hear the clients' acceptance of digital delivery and you're making moves to reduce your real estate footprint and maybe it sounds like you have more your staff working remotely or virtually over time. Obviously cost benefits, cost savings from that, but I just wonder longer term in a professional services firm, how you balance that out with the benefits of in-person mentoring and knowledge transfer and all those benefits of having people together in one place. How you kind of balance it out as you think about the future in the new normal as you put it?

Krishnan Rajagopalan -- President and Chief Executive Officer

Yeah, that's a great question and I think that's really the question that's keeping up most executives who I talk to about real estate at least in footprints and how they should be thinking about. I think those are two great points you put. Look, I think there is some small offices that we're exiting. But overall in our real estate strategy we will need less -- the office will continue to be important, I believe in the future and this is evolving, it will continue to be quite important. It will be the center of collaborations, it will be center of some innovation, people will be coming in and out of it in a different fashion than what we do today.

So I just think that's going to change a little bit, but I don't think the office per se is going away. We're going to need it to be able to again particularly innovate, particularly help develop and bring people together to be able to do things as well. So we'll augment that, obviously virtual things but I don't think it's going to be the way it was, but it's also not disappearing as well.

Kevin Steinke -- Barrington Research -- Analyst

Okay, that's very helpful. Thanks for taking the questions.

Krishnan Rajagopalan -- President and Chief Executive Officer

Hey, you're welcome.

Operator

[Operator Instructions] And there are no further questions at this time. I'll turn the call back over to Krishnan for some closing remarks.

Krishnan Rajagopalan -- President and Chief Executive Officer

Okay. Look, thank you all for joining. As we have mentioned before this environment certainly remains uncertain. However, look, we've got a fantastic team and we continue to win in a very difficult market. We're a strong and resilient firm strategically and financially, we're adjusting our cost structure as we prepare for this new normal and we're setting the firm up to be healthy and agile for 2021 and beyond.

Look, we remain focused on creating shareholder value through serving our clients. So again, thank you for your support and everybody please stay safe. Thank you.

Operator

[Operator Closing Remarks]

Duration: 42 minutes

Call participants:

Suzanne Rosenberg -- Vice President of Investor Relations

Krishnan Rajagopalan -- President and Chief Executive Officer

Mark Harris -- Chief Financial Officer

Josh Vogel -- Sidoti & Company -- Analyst

Tobey Sommer -- SunTrust -- Analyst

Kevin Steinke -- Barrington Research -- Analyst

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