Heidrick (HSII) Q2 Revenue Jumps 14%
Revenue grew 13.9% in Q2 2025, beating GAAP revenue expectations by $24.3 million.
Adjusted EPS reached $0.85, exceeding analyst estimates by 15.4% (non-GAAP).
On-Demand Talent and Heidrick Consulting achieved adjusted EBITDA profitability for the first time.
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Heidrick & Struggles International (NASDAQ:HSII), a global executive search and leadership advisory firm, reported quarterly earnings on August 4, 2025. The most notable news was its GAAP revenue of $317.2 million, which surpassed the consensus GAAP estimate of $292.9 million by $24.3 million. Adjusted earnings per share (EPS) were $0.85 (non-GAAP), beating the expected $0.74 (non-GAAP). The company delivered growth across all regions and segments, as well as new adjusted EBITDA profitability in its On-Demand Talent and consulting operations. Overall, the quarter reflected broad-based outperformance versus expectations, though management noted the presence of ongoing cost pressures and a cautious forward outlook due to uncertainties in the broader economic environment.
Metric Q2 2025 Q2 2025 Estimate Q2 2024 Y/Y Change
EPS (Non-GAAP) $0.85 $0.74 $0.67 26.9 %
Revenue (Non-GAAP) N/A N/A $278.6 million N/A
Adjusted EBITDA $33.9 million $28.8 million 17.5 %
Adjusted EBITDA Margin 10.7 % 10.3 % 0.4 pp
Adjusted Net Income $18.1 million $14.1 million 28.4 %
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Heidrick & Struggles International operates as a retained executive search and human capital advisory firm. It provides services like senior-level executive placements, interim talent solutions, and leadership consulting to corporate clients globally. The company is organized across three primary segments: Executive Search, On-Demand Talent, and Heidrick Consulting, with a strong worldwide presence. It serves its clients through a network of over 60 offices in 30 countries, working with large multinationals, private equity firms, and not-for-profits.
The company's recent strategy has focused on driving growth outside its core executive search business. Acquisitions in both the On-Demand Talent area (notably Atreus Group) and consulting (such as businessfourzero) reflect a push into new, adjacent service lines. Key factors for success hinge on maintaining a differentiated competitive position in executive recruiting, scaling its new segments, and investing in technology platforms to improve client value and consultant productivity. Technological investment—like proprietary platforms for client engagement and assessment—remains an ongoing priority.
Quarter Highlights and Segment Developments
The Executive Search segment remained the largest contributor, generating $238.2 million in net revenue, up 13.4% from the prior year. All global regions saw growth, with Europe standing out at 30.9%, followed by Asia Pacific at 12.0% and the Americas at 8.9%. Consultant productivity improved to $2.3 million annualized, compared to $2.0 million in Q2 2024, and the number of search confirmations rose 5.2%. Revenue per search increased to $162,000 from $151,000. However, the adjusted EBITDA margin in this segment tightened from 25.1% in Q2 2024 to 22.9%. This margin compression was driven by salaries and benefits as a share of net revenue rising to 65.9%.
For On-Demand Talent—a segment offering interim executives and project-based talent—the top-line (GAAP net revenue) grew 14.3% to $47.9 million. The segment reached positive adjusted EBITDA of $1.0 million, a marked turnaround from a $1.6 million loss in Q2 2024. The division has benefited from the integration of acquired businesses and increased client demand for flexible leadership solutions. Margin levels are still relatively low at 2.1% (adjusted EBITDA margin for On-Demand Talent), so efficiency and scale will be important areas to watch.
Heidrick Consulting saw net revenue climb 16.6% to $31.2 million, with Adjusted EBITDA was $0.6 million, compared to a $1.4 million loss in Q2 2024. The segment's adjusted EBITDA margin improved to 1.8%. The business has been reshaped through targeted acquisitions and simplifying service lines, though management confirmed that margins remain well below longer-term group targets of 11–13%, as efficiency initiatives are still being rolled out.
Operating cost trends were mixed. While general and administrative expenses (covering overheads like office and support costs) improved as a percentage of net revenue to 14.6% in Q1 2025, Salaries and benefits as a share of net revenue rose to 65.9% from 63.8% in Q2 2024, while operating margin improved to 8.0% from (1.5)% over the same period. Research and development spending was $6.0 million, or 1.9% of revenue, funding investments in proprietary tools like the Heidrick Leadership Framework and digital client platforms. Cash levels declined compared to the start of the year, from $515.6 million at December 31, 2024, to $211.2 million at June 30, 2025. This decline was due to investment in marketable securities and cash outflows for compensation.
All segments and geographies posted revenue growth. The company's client list remained highly diversified, with no single client accounting for more than 2% of net revenue in 2024. External risks noted by management included ongoing macroeconomic uncertainty, rising interest rates, and foreign currency fluctuations. The company declared a quarterly dividend of $0.15 per share, in line with previous quarters.
Outlook and Topics for the Coming Quarter
For the third quarter, management guided to revenue between $295 million and $315 million. At the midpoint, this implies growth of about 9.5% compared to Q3 2024. Guidance was presented as measured, reflecting possible impacts from macroeconomic factors such as inflation, global conflicts, currency moves, and interest rates. The company did not issue explicit projections for earnings per share or adjusted EBITDA for the next period. As such, investors and followers should expect some caution about near-term demand and project timing in the coming months.
Looking ahead, observers should focus on trends in margins, especially in Executive Search, where labor and incentive costs have been rising. The recently profitable On-Demand Talent and Consulting segments offer promising diversification, but their overall adjusted EBITDA margins (2.1% for On-Demand Talent and 1.8% for Consulting, non-GAAP) need to approach group targets for these businesses to become core contributors. As the company continues to balance organic investment, technology upgrades, and careful cost control, progress in operating efficiency and capital allocation will be important. The company declared a quarterly dividend of $0.15 per share, unchanged from the prior period.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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