What happened

Shares of Heidrick & Struggles International (HSII -1.65%), an executive recruiter and temporary-help provider, fell sharply at the open on Tuesday, dropping as much as 20% at one point. Although the stock managed to claw back more than half of that loss by midday, it was still off in the high single digits by 1 p.m. ET today. The big news came after the close on Monday, when the company reported third-quarter earnings.

So what

By Wall Street's estimate, Heidrick & Struggles' quarter looked decent. It soundly beat analyst expectations on the top line. Putting some numbers on that, sales were $255.2 million, and adjusted earnings per share came in at $1 (analysts had been looking for just $0.86 per share). The likely problem this morning was that these numbers don't exist in a vacuum. 

In the same quarter a year ago, revenue was $263.8 million and per-share adjusted earnings were $1.11. In other words, results fell notably year over year. In the second quarter of 2022, meanwhile, revenue was $298.7 million and earnings tallied up to $1.19 per share. So sequential quarterly performance was weak as well. That puts a different spin on the quarter and helps explain why investors might not have been as pleased as you would expect after beating analyst projections.

Now what

That said, perhaps the most troubling item in the company's earnings release was its sales outlook for the fourth quarter. At this point, management is projecting the top line to fall between $215 million and $235 million, which would represent another sequential quarterly decline and would be lower year over year. Given the trends here, perhaps the stock's decline isn't as shocking as it first seemed.