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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 0-25837

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware						36-2681268
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)

233 South Wacker Drive-Suite 4900

Chicago, Illinois

60606-6303

(Address of Principal Executive Offices)

(312) 496-1200

(Registrant’s Telephone Number, Including Area Code)

Securities Registered Pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value	HSII	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer," “smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☒

Non-Accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of May 2, 2025, there were 20,620,786 shares of the Company’s common stock outstanding.

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX


		PAGE
PART I.	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements

	Condensed Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and December 31, 202 4	1

	Unaudited Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2025 and 202 4	2

	Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity for the three months ended March 31, 2025 and 202 4	3

	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 202 4	5

	Unaudited Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32

Item 4.	Controls and Procedures	33

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 6.	Exhibits	35

	SIGNATURE	36

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)


	March 31, 2025		December 31, 2024
	(Unaudited)
Current assets
Cash and cash equivalents	$	211,944	$	515,627
Marketable securities	112,715		47,896
Accounts receivable, net of allowances of $8,433 and $7,296, respectively	182,136		134,331
Prepaid expenses	33,970		28,718
Other current assets	47,421		39,935
Income taxes recoverable	6,964		6,470
Total current assets	595,150		772,977

Non-current assets
Property and equipment, net	51,938		51,685
Operating lease right-of-use assets	80,863		83,518
Assets designated for retirement and pension plans	10,424		9,976
Investments	64,434		58,290
Other non-current assets	26,113		25,500
Goodwill	139,447		137,861
Other intangible assets, net	11,304		12,483
Deferred income taxes	44,018		41,898
Total non-current assets	428,541		421,211

Total assets	$	1,023,691	$	1,194,188

Current liabilities

Accounts payable	$	23,103	$	25,088
Accrued salaries and benefits	171,155		353,531
Deferred revenue	55,957		51,085
Operating lease liabilities	17,652		17,653
Other current liabilities	64,869		21,369
Income taxes payable	16,804		14,287
Total current liabilities	349,540		483,013

Non-current liabilities

Accrued salaries and benefits	41,826		58,547
Retirement and pension plans	79,118		72,138
Operating lease liabilities	82,436		83,152
Other non-current liabilities	4,318		42,905
Deferred income taxes	1,403		1,616
Total non-current liabilities	209,101		258,358

Total liabilities	558,641		741,371

Commitments and contingencies (Note 17)

Stockholders’ equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued at March 31, 2025 and December 31, 2024	—		—
Common stock, $0.01 par value, 100,000,000 shares authorized, 20,625,866 and 20,414,915 shares issued, 20,620,786 and 20,409,835 shares outstanding at March 31, 2025 and December 31, 2024, respectively	206		204
Treasury stock at cost, 5,080 shares at March 31, 2025 and December 31, 2024	(110)		(110)
Additional paid in capital	260,512		260,893
Retained earnings	215,985		205,875
Accumulated other comprehensive loss	(11,543)		(14,045)
Total stockholders’ equity	465,050		452,817

Total liabilities and stockholders’ equity	$	1,023,691	$	1,194,188

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended March 31,
	2025		2024
Revenue
Revenue before reimbursements (net revenue)	$	283,578	$	265,197
Reimbursements	3,864		3,901
Total revenue	287,442		269,098

Operating expenses
Salaries and benefits	189,475		174,413
General and administrative expenses	41,424		41,363
Cost of services	30,059		27,432
Research and development	6,392		5,715


Reimbursed expenses	3,864		3,901
Total operating expenses	271,214		252,824

Operating income	16,228		16,274

Non-operating income (expense)
Interest, net	3,955		4,086
Other, net	(2,566)		2,571
Net non-operating income	1,389		6,657

Income before income taxes	17,617		22,931

Provision for income taxes	4,311		8,899

Net income	13,306		14,032

Other comprehensive income (loss), net of tax
Foreign currency translation adjustment	2,541		(4,058)
Net unrealized loss on available-for-sale investments	(39)		(33)

Other comprehensive income (loss), net of tax	2,502		(4,091)

Comprehensive income	$	15,808	$	9,941

Weighted-average common shares outstanding
Basic	20,464		20,144

Diluted	21,318		21,040

Earnings per common share
Basic	$	0.65	$	0.70
Diluted	$	0.62	$	0.67

Cash dividends paid per share	$	0.15	$	0.15

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except per share amounts)

(Unaudited)


							Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Common Stock			Treasury Stock
	Shares	Amount		Shares	Amount
Balance at December 31, 2024	20,415	$	204	5	$	(110)	$	260,893	$	205,875	$	(14,045)	$	452,817
Net income	—	—		—	—		—		13,306		—		13,306

Other comprehensive income, net of tax	—	—		—	—		—		—		2,502		2,502
Common and treasury stock transactions:
Stock-based compensation	—	—		—	—		2,510		—		—		2,510
Vesting of equity awards, net of tax withholding	211	2		—	—		(2,891)		—		—		(2,889)

Cash dividends declared ($0.15 per share)	—	—		—	—		—		(3,094)		—		(3,094)
Dividend equivalents on restricted stock units	—	—		—	—		—		(102)		—		(102)

Balance at March 31, 2025	20,626	$	206	5	$	(110)	$	260,512	$	215,985	$	(11,543)	$	465,050

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except per share amounts)

(Unaudited)


							Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Common Stock			Treasury Stock
	Shares	Amount		Shares	Amount
Balance at December 31, 2023	20,127	$	201	5	$	(110)	$	251,988	$	210,070	$	129	$	462,278
Net income	—	—		—	—		—		14,032		—		14,032

Other comprehensive loss, net of tax	—	—		—	—		—		—		(4,091)		(4,091)
Common and treasury stock transactions:
Stock-based compensation	—	—		—	—		2,644		—		—		2,644
Vesting of equity awards, net of tax withholding	127	1		—	—		(2,863)		—		—		(2,862)

Cash dividends declared ($0.15 per share)	—	—		—	—		—		(3,018)		—		(3,018)
Dividend equivalents on restricted stock units	—	—		—	—		—		(198)		—		(198)

Balance at March 31, 2024	20,254	$	202	5	$	(110)	$	251,769	$	220,886	$	(3,962)	$	468,785

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months ended March 31,
	2025		2024
Cash flows - operating activities
Net income	$	13,306	$	14,032
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	4,847		4,790
Deferred income taxes	(1,883)		(87)
Stock-based compensation expense	2,510		2,644
Accretion expense related to earnout payments	481		466
Gain on marketable securities	(948)		(539)
Loss on disposal of property and equipment	7		14

Changes in assets and liabilities:
Accounts receivable	(45,609)		(41,125)
Accounts payable	(2,510)		(2,069)
Accrued expenses	(199,320)		(182,590)
Restructuring accrual	(964)		—
Deferred revenue	4,347		1,951
Income taxes recoverable and payable, net	1,846		4,723
Retirement and pension plan assets and liabilities	6,732		5,453
Prepaid expenses	(4,673)		(7,991)
Other assets and liabilities, net	(10,393)		(3,096)
Net cash used in operating activities	(232,224)		(203,424)

Cash flows - investing activities

Capital expenditures	(2,734)		(6,173)

Purchases of marketable securities and investments	(118,719)		(5,400)
Proceeds from sales of marketable securities and investments	48,325		66,285
Net cash provided by (used in) investing activities	(73,128)		54,712

Cash flows - financing activities


Debt issuance costs	(360)		—

Cash dividends paid	(3,196)		(3,216)
Payment of employee tax withholdings on equity transactions	(2,889)		(2,862)

Net cash used in financing activities	(6,445)		(6,078)

Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash	8,122		(4,997)

Net decrease in cash, cash equivalents and restricted cash	(303,675)		(159,787)
Cash, cash equivalents and restricted cash at beginning of period	515,813		412,618
Cash, cash equivalents and restricted cash at end of period	$	212,138	$	252,831

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All tables in thousands, except per share figures and percentages)

(Unaudited)

1. Basis of Presentation of Interim Financial Information

The accompanying unaudited Condensed Consolidated Financial Statements of Heidrick & Struggles International, Inc. and subsidiaries (the "Company") have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Significant items subject to estimates and assumptions include revenue recognition, allowances for deferred tax assets and liabilities, interim effective tax rates, contingent consideration liabilities, and the assessment of goodwill for impairment. Estimates are subject to a degree of uncertainty and actual results could differ from these estimates. In the opinion of management, all adjustments necessary to fairly present the financial position of the Company at March 31, 2025, and December 31, 2024, the results of operations for the three months ended March 31, 2025, and 2024, and its cash flows for the three months ended March 31, 2025, and 2024, have been included and are of a normal, recurring nature except as otherwise disclosed. These financial statements and notes are to be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 3, 2025.

2. Summary of Significant Accounting Policies

A complete listing of the Company’s significant accounting policies is discussed in Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Revenue Recognition

See Note 3, Revenue.

Cost of Services

Cost of services consists of contractor costs related to the delivery of various services in the Company's On-Demand Talent and Heidrick Consulting operating segments.

Research and Development

Research and development expense consists of payroll, employee benefits, stock-based compensation, other employee expenses and third-party professional fees associated with new product development.

Marketable Securities

The Company’s marketable securities consist of available-for-sale debt securities with original maturities exceeding three months.

Restricted Cash

The following table provides a reconciliation of the cash and cash equivalents between the Condensed Consolidated Balance Sheets and the Condensed Consolidated Statements of Cash Flows as of March 31, 2025, and 2024, and December 31, 2024, and 2023, respectively:


	March 31,				December 31,
	2025		2024		2024		2023
Cash and cash equivalents	$	211,944	$	252,831	$	515,627	$	412,618

Restricted cash included within other non-current assets	194		—		186		—
Total cash, cash equivalents and restricted cash	$	212,138	$	252,831	$	515,813	$	412,618

Earnings per Common Share

Basic earnings per common share are computed by dividing net income by weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. Common equivalent shares are excluded from the determination of diluted earnings per share in periods in which they have an anti-dilutive effect.

The following table sets forth the computation of basic and diluted earnings per share:


	Three Months Ended March 31,
	2025		2024
Net income	$	13,306	$	14,032
Weighted average shares outstanding:
Basic	20,464		20,144
Effect of dilutive securities:
Restricted stock units	562		593
Performance stock units	292		303
Diluted	21,318		21,040
Basic earnings per share	$	0.65	$	0.70
Diluted earnings per share	$	0.62	$	0.67

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets, Current liabilities - Operating lease liabilities and Non-current liabilities - Operating lease liabilities in the Company's Condensed Consolidated Balance Sheets. The Company does not have any leases that meet the finance lease criteria.

Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized on the commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, an incremental borrowing rate based on the information available at the commencement date is used in determining the present value of lease payments. The operating lease right-of-use asset also includes any lease payments made in advance and any accrued rent expense balances. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components. For office leases, the Company accounts for the lease and non-lease components as a single lease component. For equipment leases, such as vehicles and office equipment, the Company accounts for the lease and non-lease components separately.

Goodwill

Goodwill represents the difference between the purchase price of acquired businesses and the related fair value of the net assets acquired, which is accounted for by the acquisition method of accounting. The Company performs assessments of the carrying value of its goodwill at least annually and whenever events occur or circumstances indicate that a carrying amount of goodwill may not be recoverable. These circumstances include a significant change in business climate, attrition of key personnel, changes in financial condition or results of operations, prolonged decline in the Company’s stock price and market capitalization, competition, and other factors.

The goodwill impairment test compares the fair value of a reporting unit to its carrying amount, including goodwill. The Company operates five reporting units: Americas, Europe (which includes Africa), Asia Pacific (which includes the Middle East), On-Demand Talent and Heidrick Consulting. The fair value of each of the Company’s reporting units is determined using a discounted cash flow methodology. An impairment charge is recognized for the amount by which the carrying value of the reporting unit exceeds its fair value; however, the loss recognized is not to exceed the total amount of goodwill allocated to that reporting unit.

Recently Issued Financial Accounting Standards

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." The standard is intended to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its financial statements.

In November 2024, the FASB issued ASU No. 2024-03 "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)." The standard requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. The amendment in this update is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this guidance on its financial statements.

3. Revenue

Executive Search

Revenue is recognized as performance obligations are satisfied by transferring a good or service to a client. Generally, each executive search contract contains one performance obligation which is the process of identifying potentially qualified candidates for a specific client position. In most contracts, the transaction price includes both fixed and variable consideration. Fixed consideration is comprised of a retainer, equal to approximately one-third of the estimated first year compensation for the position to be filled, and indirect expenses, equal to a specified percentage of the retainer, as defined in the contract. The Company generally bills clients for the retainer and indirect expenses in one-third increments over a three-month period commencing in the month of a client’s acceptance of the contract. If actual compensation of a placed candidate exceeds the original compensation estimate, the Company is often authorized to bill the client for one-third of the excess compensation. The Company refers to this additional billing as uptick revenue. In most contracts, variable consideration is comprised of uptick revenue and direct expenses. The Company bills its clients for uptick revenue upon completion of the executive search, and direct expenses are billed as incurred.

The Company estimates uptick revenue at contract inception, based on a portfolio approach, utilizing the expected value method based on a historical analysis of uptick revenue realized in the Company’s geographic regions and industry practices, and initially records a contract’s uptick revenue in an amount that is probable not to result in a significant reversal of cumulative revenue recognized when the actual amount of uptick revenue for the contract is known. Differences between the estimated and actual amounts of variable consideration are recorded when known. The Company does not estimate revenue for direct expenses as it is not materially different than recognizing revenue as direct expenses are incurred.

Revenue from executive search engagement performance obligations is recognized over time as clients simultaneously receive and consume the benefits provided by the Company's performance. Revenue from executive search engagements is recognized over the expected average period of performance, in proportion to the estimated personnel time incurred to fulfill the obligations under the executive search contract. Revenue is generally recognized over a period of approximately six months.

The Company's executive search contracts contain a replacement guarantee which provides for an additional search to be completed, free of charge except for expense reimbursements, should the candidate presented by the Company be hired by the client and subsequently terminated by the client for performance reasons within a specified period of time. The replacement guarantee is an assurance warranty, which is not a performance obligation under the terms of the executive search contract, as the Company does not provide any services under the terms of the guarantee that transfer benefits to the client in excess of assuring that the identified candidate complies with the agreed-upon specifications. The Company accounts for the replacement guarantee under the relevant warranty guidance in Accounting Standards Codification 460 - Guarantees.

On-Demand Talent

The Company enters into contracts with clients that outline the general terms and conditions of the assignment to provide on-demand consultants for various types of consulting projects, which consultants may be independent contractors or temporary employees. The consideration the Company expects to receive under each contract is dependent on the time-based fees specified in the contract. Revenue from on-demand engagement performance obligations is recognized over time as clients simultaneously receive and consume the benefits provided by the Company's performance. The Company has applied the practical expedient to recognize revenue for these services in the amount to which the Company has a right to invoice the client, as this amount corresponds directly with the value provided to the client for the performance completed to date. For transactions where a third-party contractor is involved in providing the services to the client, the Company reports the revenue and the related direct costs on a gross basis as it has determined that it is the principal in the transaction. The Company is primarily responsible for fulfilling the promise to provide consulting services to its clients and the Company has discretion in establishing the prices charged to clients for the consulting services and is able to contractually obligate the independent service provider to deliver services and deliverables that the Company has agreed to provide to its clients.

Heidrick Consulting

Revenue is recognized as performance obligations are satisfied by transferring a good or service to a client. Heidrick Consulting enters into contracts with clients that outline the general terms and conditions of the assignment to provide succession planning, executive assessment, top team and board effectiveness and culture shaping programs. The consideration the Company expects to receive under each contract is generally fixed. Most of the Company's consulting contracts contain one performance obligation, which is the overall process of providing the consulting service requested by the client. The majority of our consulting revenue is recognized over time utilizing input methods. Revenue recognition over time for the majority of our consulting engagements is measured by total cost or time incurred as a percentage of the total estimated cost or time on the consulting engagement.

Contract Balances

Contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. Contract assets and liabilities are classified as current due to the nature of the Company's contracts, which are completed within one year. Contract assets are included within Other current assets on the Condensed Consolidated Balance Sheets.

Unbilled receivables: Unbilled receivables represents contract assets from revenue recognized over time in excess of the amount billed to the client and the amount billed to the client is solely dependent upon the passage of time. This amount includes revenue recognized in excess of billed Executive Search retainers, Heidrick Consulting fees, and On-Demand Talent fees.

Contract assets: Contract assets represent revenue recognized over time in excess of the amount billed to the client, and the amount billed to the client is not solely subject to the passage of time. This amount primarily includes revenue recognized for upticks and contingent placement fees in executive search contracts.

Deferred revenue: Contract liabilities consist of deferred revenue, which is equal to billings in excess of revenue recognized.

The following table outlines the changes in the contract asset and liability balances from December 31, 2024, to March 31, 2025:


	March 31, 2025		December 31, 2024		Change
Contract assets
Unbilled receivables, net	$	21,302	$	17,610	$	3,692
Contract assets	18,581		15,540		3,041
Total contract assets	39,883		33,150		6,733

Contract liabilities
Deferred revenue	$	55,957	$	51,085	$	4,872

Contract assets were recorded within Current Assets - Other current assets in the Condensed Consolidated Balance Sheets at both March 31, 2025 and December 31, 2024.

During the three months ended March 31, 2025, the Company recognized revenue of $37.0 million that was included in the contract liabilities balance at the beginning of the period. The amount of revenue recognized during the three months ended March 31, 2025, from performance obligations partially satisfied in previous periods as a result of changes in the estimates of variable consideration was $11.4 million.

Each of the Company's contracts has an expected duration of one year or less. Accordingly, the Company has elected to utilize the available practical expedient related to the disclosure of the transaction price allocated to the remaining performance obligations under its contracts. The Company has also elected the available practical expedients related to adjusting for the effects of a significant financing component and the capitalization of contract acquisition costs. The Company charges and collects from its clients sales tax and value added taxes as required by certain jurisdictions. The Company has made an accounting policy election to exclude these items from the transaction price in its contracts.

4. Credit Losses

The Company is exposed to credit losses primarily through the provision of its executive search, consulting, and on-demand talent services. The Company’s expected credit loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of clients' trade accounts receivables. Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected is primarily based on historical loss-rate experience. When required, the Company adjusts the loss-rate methodology to account for current conditions and reasonable and supportable expectations of future economic and market conditions. The Company generally assesses future economic conditions for a period of sixty to ninety days, which corresponds with the contractual life of its accounts receivables. Additionally, specific allowance amounts are established to record the appropriate provision for clients that have a higher probability of default. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of clients' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible.

The activity in the allowance for credit losses on the Company's trade receivables is as follows:


Balance at December 31, 2024	$	7,296
Provision for credit losses	1,963
Write-offs	(912)
Foreign currency translation	86
Balance at March 31, 2025	$	8,433

There were no investments with unrealized losses at March 31, 2025, and December 31, 2024.

5. Property and Equipment, net

The components of the Company’s property and equipment are as follows:


	March 31, 2025		December 31, 2024
Leasehold improvements	$	51,000	$	49,744
Office furniture, fixtures and equipment	14,926		14,384
Computer equipment and software	49,593		47,649
Property and equipment, gross	115,519		111,777
Accumulated depreciation	(63,581)		(60,092)
Property and equipment, net	$	51,938	$	51,685

Depreciation expense for the three months ended March 31, 2025, and 2024, was $3.2 million and $2.5 million, respectively.

6. Leases

The Company's lease portfolio is comprised of operating leases for office space and equipment. The majority of the Company's leases include both lease and non-lease components, which the Company accounts for differently depending on the underlying class of asset. Certain of the Company's leases include one or more options to renew or terminate the lease at the Company's discretion. Generally, the renewal and termination options are not included in the right-of-use assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates the renewal and termination options and, when they are reasonably certain of exercise, includes the renewal or termination option in the lease term.

As most of the Company's leases do not provide an implicit interest rate, the Company utilizes an incremental borrowing rate based on the information available at the commencement date of the lease in determining the present value of lease payments. The Company has a centrally managed treasury function and, therefore, a portfolio approach is applied in determining the incremental borrowing rate. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a fully collateralized basis over a similar term in an amount equal to the total lease payments in a similar economic environment.

As of March 31, 2025, office leases have remaining lease terms that range from less than one year to 10.9 years, some of which also include options to extend or terminate the lease. Most office leases contain both fixed and variable lease payments. Variable lease costs consist primarily of rent escalations based on an established index or rate and taxes, insurance, and common area or other maintenance costs, which are paid based on actual costs incurred by the lessor. The Company has elected to utilize the available practical expedient to not separate lease and non-lease components for office leases.

As of March 31, 2025, equipment leases, which are comprised of vehicle and office equipment leases, have remaining terms that range from less than one year to 4.5 years, some of which also include options to extend or terminate the lease. The Company's equipment leases do not contain variable lease payments. The Company separates the lease and non-lease components for its equipment leases. Equipment leases do not comprise a significant portion of the Company's lease portfolio.

Lease cost components included within Operating expenses - General and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income were as follows:


	Three Months Ended March 31,
	2025		2024
Operating lease cost	$	5,122	$	5,637
Variable lease cost	2,270		$	2,455
Total lease cost	$	7,392	$	8,092

Supplemental cash flow information related to the Company's operating leases is as follows for the three months ended March 31:


	2025		2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,520	$	5,539
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	967	$	3,993

The weighted average remaining lease term and weighted average discount rate for operating leases as of March 31, are as follows:


	2025		2024
Weighted Average Remaining Lease Term
Operating leases	7.5 years		7.3 years
Weighted Average Discount Rate
Operating leases	5.20	%	4.92	%

The future maturities of the Company's operating lease liabilities as of March 31, 2025, for the years ended December 31, are as follows:


	Operating Lease Maturity
2025	$	13,495
2026	17,550
2027	17,376
2028	14,977
2029	13,420
Thereafter	46,484
Total lease payments	123,302
Less: Interest	23,214
Present value of lease liabilities	$	100,088

7. Financial Instruments and Fair Value

Cash, Cash Equivalents and Marketable Securities

The Company's investments in marketable debt securities, which consist of U.S. Treasury bills, are classified and accounted for as available-for-sale. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument's underlying contractual maturity date. Unrealized gains and losses on marketable debt securities classified as available-for-sale are recognized in Accumulated other comprehensive income (loss) in the Condensed Consolidated Balance Sheets until realized.

The Company's cash, cash equivalents, and marketable securities by significant investment category are as follows:



	Amortized Cost		Unrealized Gains		Fair Value		Cash and Cash Equivalents		Marketable Securities
Balance at March 31, 2025
Cash							$	179,237	$	—

Level 1(1):
Money market funds							32,707		—
U.S. Treasury securities	$	112,700	$	15	$	112,715	—		112,715
Total Level 1	112,700		15		112,715		32,707		112,715




Total	$	112,700	$	15	$	112,715	$	211,944	$	112,715



	Amortized Cost		Unrealized Gains		Fair Value		Cash and Cash Equivalents		Marketable Securities
Balance at December 31, 2024
Cash							$	256,638	$	—

Level 1(1):
Money market funds							36,781		—
U.S. Treasury securities	$	270,050	$	54	$	270,104	222,208		47,896
Total Level 1	270,050		54		270,104		258,989		47,896

Total	$	270,050	$	54	$	270,104	$	515,627	$	47,896

(1)Level 1 – Quoted prices in active markets for identical assets and liabilities.

Investments, Assets Designated for Retirement and Pension Plans and Associated Liabilities

The Company has a U.S. non-qualified deferred compensation plan that consists primarily of U.S. marketable securities and mutual funds. The aggregate cost basis for these investments was $52.0 million and $45.3 million as of March 31, 2025, and December 31, 2024, respectively.

The Company also maintains a pension plan for certain current and former employees in Germany. The pensions are individually fixed Euro amounts that vary depending on the function and the eligible years of service of the employee. The Company’s investment strategy is to support its pension obligations through reinsurance contracts. The BaFin—German Federal Financial Supervisory Authority—supervises the insurance companies and the reinsurance contracts. The BaFin requires each reinsurance contract to guarantee a fixed minimum return. The Company’s pension benefits are fully reinsured by group insurance contracts with ERGO Lebensversicherung AG, and the group insurance contracts are measured in accordance with BaFin guidelines (including mortality tables and discount rates) which are considered Level 2 inputs.

The following tables provide a summary of the fair value measurements for each major category of investments, assets designated for retirement and pension plans and associated liabilities measured at fair value:


			Balance Sheet Classification
			Current Assets		Non-Current Assets				Current Liabilities		Non-current Liabilities
	Fair Value		Other Current Assets		Assets Designated for Retirement and Pension Plans		Investments		Other Current Liabilities		Retirement and Pension Plans
Balance at March 31, 2025

Measured on a recurring basis:
Level 1(1):
U.S. non-qualified deferred compensation plan	$	64,434	$	—	$	—	$	64,434	$	—	$	—

Level 2(2):
Retirement and pension plan assets	11,611		1,187		10,424		—		—		—
Pension benefit obligation	(12,961)		—		—		—		(1,187)		(11,774)

Total Level 2	(1,350)		1,187		10,424		—		(1,187)		(11,774)





Total	$	63,084	$	1,187	$	10,424	$	64,434	$	(1,187)	$	(11,774)


			Balance Sheet Classification
			Current Assets		Non-Current Assets				Current Liabilities		Non-current Liabilities
	Fair Value		Other Current Assets		Assets Designated for Retirement and Pension Plans		Investments		Other Current Liabilities		Retirement and Pension Plans
Balance at December 31, 2024

Measured on a recurring basis:
Level 1(1):
U.S. non-qualified deferred compensation plan	$	58,290	$	—	$	—	$	58,290	$	—	$	—

Level 2(2):
Retirement and pension plan assets	11,112		1,136		9,976		—		—		—
Pension benefit obligation	(12,404)		—		—		—		(1,136)		(11,268)
Total Level 2	(1,292)		1,136		9,976		—		(1,136)		(11,268)





Total	$	56,998	$	1,136	$	9,976	$	58,290	$	(1,136)	$	(11,268)

(1)Level 1 – Quoted prices in active markets for identical assets and liabilities.

(2)Level 2 – Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Contingent Consideration and Compensation

The former owners of certain of the Company's acquired businesses are eligible to receive additional cash consideration based on the attainment of certain operating metrics in the periods subsequent to acquisition. Contingent consideration and compensation are valued using significant inputs that are not observable in the market, which are defined as Level 3 inputs pursuant to fair value measurement accounting.

The following table provides a reconciliation of the beginning and ending balance of Level 3 liabilities for the three months ended March 31, 2025:


	Earnout		Contingent Compensation
Balance at December 31, 2024	$	(38,648)	$	(22,901)

Earnout accretion	(481)		—
Compensation expense	—		(2,821)
Fair value adjustment	(942)		—
Payments	—		4,847
Foreign currency translation	(1,697)		(775)

Balance at March 31, 2025	$	(41,768)	$	(21,650)

Earnout accruals of $41.8 million were recorded within Current liabilities - Other current liabilities as of March 31, 2025, and earnout accruals of $38.6 million were recorded within Non-current liabilities - Other non-current liabilities as of December 31, 2024. Contingent compensation accruals of $21.7 million and $4.9 million are recorded within Current liabilities - Accrued salaries and benefits as of March 31, 2025, and December 31, 2024, respectively, and contingent compensation accruals of $18.0 million are recorded within Non-current liabilities - Accrued salaries and benefits as of December 31, 2024.

Other Investments

The Company holds an equity investment that does not have a readily determinable fair value for which the Company uses the measurement alternative prescribed in FASB Accounting Standards Codification Topic 321, Investments-Equity Securities. As of March 31, 2025 and December 31, 2024, the Company held the equity investment under the measurement alternative of $11.0 million which is presented in Other non-current assets in the Condensed Consolidated Balance Sheets. There were no impairments or changes resulting from observable transactions for these investments in the three months ended March 31, 2025 and no adjustments have been made to the carrying values as of March 31, 2025.

8. Goodwill and Other Intangible Assets

Goodwill

The Company's goodwill by segment (for the segments that had recorded goodwill) is as follows:


	March 31, 2025		December 31, 2024
Executive Search
Americas	$	90,977	$	90,740
Europe	1,463		1,463

Total Executive Search	92,440		92,203
On-Demand Talent	106,485		105,136
Heidrick Consulting	7,246		7,246
Goodwill, gross	206,171		204,585
Accumulated impairment	(66,724)		(66,724)
Total goodwill	$	139,447	$	137,861

Changes in the carrying amount of goodwill by segment (for the segments that had recorded goodwill) for the three months ended March 31, 2025, are as follows:


	Executive Search				On-Demand Talent	Heidrick Consulting
	Americas		Europe							Total
Goodwill	$	90,740	$	1,463		$	105,136	$	7,246	$	204,585
Accumulated impairment losses	—		(1,463)			(58,015)		(7,246)		(66,724)
Balance at December 31, 2024	90,740		—			47,121		—		137,861




Foreign currency translation	237		—			1,349		—		1,586

Goodwill	90,977		1,463			106,485		7,246		206,171
Accumulated impairment losses	—		(1,463)			(58,015)		(7,246)		(66,724)
Balance at March 31, 2025	$	90,977	$	—		$	48,470	$	—	$	139,447

Other Intangible Assets, net

The Company’s other intangible assets, net by segment, are as follows:


	March 31, 2025		December 31, 2024
Executive Search
Americas	$	4	$	5
Europe	29		37

Total Executive Search	33		42
On-Demand Talent	9,636		10,592
Heidrick Consulting	1,635		1,849
Total other intangible assets, net	$	11,304	$	12,483

The carrying amount of amortizable intangible assets and the related accumulated amortization are as follows:


	Weighted Average Life (Years)	March 31, 2025						December 31, 2024
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Client relationships	10.7	$	25,970	$	(16,773)	$	9,197	$	25,188	$	(15,371)	$	9,817
Trade name	3.0	4,979		(4,374)		605		4,836		(4,039)		797
Software	3.0	8,517		(7,015)		1,502		8,285		(6,416)		1,869
Total intangible assets	9.2	$	39,466	$	(28,162)	$	11,304	$	38,309	$	(25,826)	$	12,483

Intangible asset amortization expense for the three months ended March 31, 2025, and 2024, was $1.7 million and $2.3 million, respectively.

The Company's estimated future amortization expense related to intangible assets as of March 31, 2025, for the following years ended December 31, is as follows:


2025	$	4,285
2026	2,500
2027	1,520
2028	890
2029	642
Thereafter	1,467
Total	$	11,304

9. Other Current and Non-current Assets and Liabilities

The components of other current assets are as follows:


	March 31, 2025		December 31, 2024
Contract assets	$	39,883	$	33,150
Other	7,538		6,785
Total other current assets	$	47,421	$	39,935

The components of other current liabilities are as follows:


	March 31, 2025		December 31, 2024
Earnout liability	$	41,768	$	—
Other	23,101		21,369
Total other current liabilities	$	64,869	$	21,369

The components of other non-current liabilities are as follows:


	March 31, 2025		December 31, 2024
Earnout liability	$	—	$	38,648
Other	4,318		4,257
Total other non-current liabilities	$	4,318	$	42,905

10. Line of Credit

On March 17, 2025, the Company entered into the Third Amendment (the “Third Amendment”) to the Credit Agreement, dated as of October 26, 2018 (the “Credit Agreement” and, as amended by the First Amendment to Credit Agreement, dated as of July 13, 2021, and the Second Amendment, dates as of February 24, 2023, the "Amended Credit Agreement") by and among the Company, Bank of America, N.A., as administrative agent, and the lenders party thereto. The Third Amendment provides that Lenders (as defined in the Third Amendment) will make available to the Borrowers (as defined in the Third Amendment) a committed revolving credit facility in an aggregate amount of $100 million, which includes a sublimit of $25 million for letters of credit and a sublimit of $10 million for swingline loans, with a $75 million expansion feature (collectively, the “Facility”). The Amended Credit Agreement matures on March 17, 2030, extended from July 13, 2026.

Borrowings under the Credit Agreement may be used for working capital, capital expenditures, permitted acquisitions, restricted payments and for other general corporate purposes of the Company and its subsidiaries. The obligations under the Credit Agreement are guaranteed by certain of the Company’s subsidiaries and from time to time may be secured by equity interests in certain of the Company’s subsidiaries.

As of March 31, 2025, and December 31, 2024, the Company had no outstanding borrowings. As of such dates, the Company was in compliance with the financial and other covenants under the Amended Credit Agreement and no event of default existed.

11. Stock-Based Compensation and Common Stock

On May 23, 2024, the stockholders of the Company approved an amendment and restatement of the Company's Fourth Amended and Restated 2012 Heidrick & Struggles GlobalShare Program (as so amended and restated, the "Fifth A&R Program") to increase the number of shares of common stock reserved for issuance under the plan by 649,000 shares, among other things. The Fifth A&R Program provides for grants of stock options, stock appreciation rights, restricted stock units, performance stock units, and other stock-based compensation awards that are valued based upon the grant date fair value of the awards. These awards may be granted to directors, selected employees and independent contractors.

As of March 31, 2025, 5,123,002 awards have been issued under the Fifth A&R Program, including 936,805 forfeited awards, and 719,364 shares remain available for future awards assuming performance stock units vest at maximum levels. The

Fifth A&R Program provides that no awards can be granted after the first annual meeting of the Company's stockholders to occur on or after May 23, 2034.

The Company measures its stock-based compensation costs based on the grant date fair value of the awards and recognizes these costs over the requisite service period.

A summary of information with respect to stock-based compensation is as follows:


	Three Months Ended March 31,
	2025		2024
Salaries and benefits (1)	$	2,614	$	3,441

Income tax benefit related to stock-based compensation included in net income	711		949

(1) Includes $0.1 million and $0.8 million of expense related to cash-settled restricted stock units for the three months ended March 31, 2025, and 2024.

Restricted Stock Units

Restricted stock units granted to employees are subject to ratable vesting over a three-year or four-year period dependent upon the terms of the individual grant. Compensation expense related to service-based restricted stock units is recognized on a straight-line basis over the vesting period.

Non-employee members of the Board of Directors may elect to receive restricted stock units or shares of common stock annually pursuant to the Fifth A&R Program as part of their annual compensation. Based on their respective elections, the Company issued no restricted stock units for services provided by the non-employee directors during the three months ended March 31, 2025, and 2024, respectively. Restricted stock units issued to non-employee directors remain unvested until the respective non-employee directors retire from the Board of Directors.

Restricted stock unit activity for the three months ended March 31, 2025, is as follows:


	Number of Restricted Stock Units	Weighted- Average Grant-Date Fair Value
Outstanding on December 31, 2024	675,411	$	31.85
Granted	185,594	46.27
Vested and converted to common stock	(115,069)	35.26
Forfeited	(19,617)	30.67
Outstanding on March 31, 2025	726,319	$	35.02

As of March 31, 2025, there was $14.3 million of pre-tax unrecognized compensation expense related to unvested restricted stock units, which is expected to be recognized over a weighted average of 2.5 years.

Performance Stock Units

The Company grants performance stock units to certain of its senior executives. The majority of performance stock units are subject to cliff vesting at the end of a three-year period. The vesting will vary between 0% and 200% based on the attainment of certain performance and market conditions over the three-year vesting period. For the majority of granted performance stock units, half of the award is based on the achievement of adjusted operating margin or Adjusted EBITDA margin thresholds and half of the award is based on the Company's total shareholder return, relative to a peer group. The fair value of the awards subject to total shareholder return metrics is determined using a Monte Carlo simulation model. A Monte Carlo simulation model uses stock price volatility and other variables to estimate the probability of satisfying the performance conditions and the resulting fair value of the award. The performance stock units are expensed on a straight-line basis over the three-year vesting period.

Certain of the Company's senior executives are granted performance stock units that are subject to ratable vesting over a four-year period. The vesting will vary between 0% and 100% of the shares subject to the performance stock units based on the

attainment of specified stock price hurdles over the vesting period. The fair value of the awards subject to such stock price hurdles is determined using the Monte Carlo simulation model. The performance stock units are expensed on a straight-line basis over the derived service period, which ranges from one to four-years.

Performance stock unit activity for the three months ended March 31, 2025, is as follows:


	Number of Performance Stock Units	Weighted- Average Grant-Date Fair Value
Outstanding on December 31, 2024	353,076	$	34.17
Granted	132,944	53.37
Vested and converted to common stock	(160,636)	43.57
Forfeited	(687)	27.82
Outstanding on March 31, 2025	324,697	$	37.40

As of March 31, 2025, there was $8.7 million of pre-tax unrecognized compensation expense related to unvested performance stock units, which is expected to be recognized over a weighted average of 2.5 years.

Phantom Stock Units

Phantom stock units are grants of phantom stock with respect to shares of the Company's common stock that are settled in cash and are subject to various restrictions, including restrictions on transferability, vesting and forfeiture provisions. Shares of phantom stock that do not vest for any reason will be forfeited by the recipient and will revert to the Company.

Phantom stock units are subject to vesting over a three-year or four-year period, and such vesting is subject to certain other conditions, including continued service to the Company. As a result of the cash-settlement feature of the awards, the Company classifies the awards as liability awards, which are measured at fair value at each reporting date and the vested portion of the award is recognized as a liability to the extent that the service condition is deemed probable. The fair value of the phantom stock awards on the balance sheet date is determined using the closing share price of the Company's common stock on that date.

The Company recorded phantom stock-based compensation expense of $0.1 million and $0.8 million related to cash-settled restricted stock units for the three months ended March 31, 2025, and 2024.

Phantom stock unit activity for the three months ended March 31, 2025, is as follows:


			Number of Phantom Stock Units
Outstanding on December 31, 2024			131,177
Granted			22,049
Vested			—
Forfeited			(1,312)
Outstanding on March 31, 2025			151,914

As of March 31, 2025, there was $1.8 million of pre-tax unrecognized compensation expense related to unvested phantom stock units, which is expected to be recognized over a weighted average of 2.4 years.

Common Stock

Non-employee members of the Board of Directors may elect to receive restricted stock units or shares of common stock annually pursuant to the Fifth A&R Program as part of their annual compensation, which is typically issued in the second quarter each year. The Company issued no shares of common stock for services provided by the non-employee directors during the three months ended March 31, 2025, and 2024, respectively.

On February 11, 2008, the Company's Board of Directors authorized management to repurchase shares of the Company's common stock with an aggregate purchase price of up to $50.0 million (the "Repurchase Authorization"). From time to time and as business conditions warrant, the Company may purchase shares of its common stock on the open market or in negotiated or block trades. No time limit has been set for completion of this program. There were no repurchases of common stock in 2025

and 2024. Prior to 2024, the most recent purchase of the Company's shares of common stock occurred during the year ended December 31, 2023 when the Company purchased 36,000 shares of common stock for $0.9 million. As of March 31, 2025, the Company has purchased 1,074,670 shares of its common stock pursuant to the Repurchase Authorization for a total of $29.2 million and $20.8 million remains available for future purchases under the Repurchase Authorization.

12. Restructuring

During the year ended December 31, 2024, the Company implemented a restructuring plan (the "2024 Plan") to optimize future growth and profitability through a workforce reduction. The Company did not incur any such charges related to the implementation of the 2024 Plan during the three months ended March 31, 2025.

Restructuring charges incurred to date for the 2024 Plan by type of charge and reportable segment are as follows:


	Executive Search
	Americas		Europe		Asia Pacific		On-Demand Talent		Heidrick Consulting		Global Operations Support		Total
Employee related	$	1,277	$	876	$	157	$	286	$	3,367	$	976	$	6,939

Changes in the restructuring accrual for the three months ended March 31, 2025, were as follows:


	Employee Related





























Accrual balance at December 31, 2024	2,506

Cash payments	(964)



Accrual balance at March 31, 2025	$	1,542

Restructuring accruals are recorded within current Accrued salaries and benefits in the Consolidated Balance Sheets as of March 31, 2025.

13. Income Taxes

The Company reported income before taxes of $17.6 million and an income tax provision of $4.3 million for the three months ended March 31, 2025. The Company reported income before taxes of $22.9 million and an income tax provision of $8.9 million for the three months ended March 31, 2024. The effective tax rates for the three months ended March 31, 2025, and 2024, were 24.5% and 38.8%, respectively. The effective tax rates for the three months ended March 31, 2025, and 2024, were impacted by the mix of income and the tax effect on discrete items.

14. Changes in Accumulated Other Comprehensive Income (Loss)

The changes in Accumulated other comprehensive income (loss) (“AOCI”) by component for the three months ended March 31, 2025, are as follows:


	Available- for- Sale Securities		Foreign Currency Translation		Pension		AOCI
Balance at December 31, 2024	$	53	$	(13,770)	$	(328)	$	(14,045)
Other comprehensive income (loss) before reclassification, net of tax	(39)		2,541		—		2,502
Balance at March 31, 2025	$	14	$	(11,229)	$	(328)	$	(11,543)

15. Segment Information

The Company has five operating segments. The Executive Search business operates in the Americas, Europe (which includes Africa) and Asia Pacific (which includes the Middle East), and the Heidrick Consulting and On-Demand Talent businesses operate globally. The Company's operating segments are based on the organizational structure for which financial results are regularly reviewed by our chief operating decision-maker to evaluate performance and allocate resources.

Executive Search partners with our clients - respected organizations across the globe - to help them build and sustain the best leadership teams in the world, with a specialized focus on the placement of top-level senior executives.

On-Demand Talent provides clients seamless on-demand access to top independent talent, including professionals with deep industry and functional expertise for interim leadership roles and critical, project-based initiatives.

Heidrick Consulting partners with organizations to unlock the power of their people. The Company's tools and experts use data and technology designed to bring science to the art of human capital development and organizational design. Our services allow our clients to accelerate their strategies and the effectiveness of individual leaders, teams and organizations as a whole.

The Company's chief operating decision-maker is its Chief Executive Officer. The Company evaluates performance and allocates resources based on the review of the chief operating decision make ("CODM") of (1) net revenue and (2) net income before interest, taxes, depreciation and amortization, as adjusted, to the extent they occur, for earnout accretion, earnout fair value adjustments, contingent compensation, deferred compensation plan income or expense, certain reorganization costs, impairment charges and restructuring charges ("Adjusted EBITDA"). Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of net revenue in the same period. The CODM considers actual to historical, actual to budgeted, and actual to forecasted results and variances on a monthly basis using net revenue and Adjusted EBITDA when making decisions about allocating resources to the segments and assessing performance. The CODM is not provided asset information by reportable segment.

Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP (as defined below) financial measures. The following table presents a reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA margin:


	Three Months Ended March 31,
	2025			2024
Revenue before reimbursements (net revenue)	$	283,578		$	265,197

Net income	13,306			14,032
Interest, net	(3,955)			(4,086)
Other, net	2,566			(2,571)
Provision for income taxes	4,311			8,899
Operating income	16,228			16,274

Adjustments
Depreciation	3,179			2,493
Intangible amortization	1,668			2,297
Earnout accretion	481			466
Earnout fair value adjustments	942			—
Acquisition contingent consideration	2,821			1,988
Deferred compensation plan	(358)			2,350
Reorganization costs	4,161			—


Total adjustments	12,894			9,594

Adjusted EBITDA	$	29,122		$	25,868
Adjusted EBITDA margin	10.3		%	9.8		%

The following tables present our segment information, including significant segment expenses, for the three months ended March 31, 2025, and 2024:


	Three Months ended March 31, 2025
	Executive Search
	Americas		Europe		Asia Pacific		On-Demand Talent		Heidrick Consulting		Total
Revenue
Revenue before reimbursements	$	144,404	$	45,391	$	23,595	$	42,564	$	27,624	$	283,578
Reimbursements											3,864
Total revenue											287,442

Operating Expenses
Salaries and benefits (1)	90,093		32,489		16,817		11,598		21,635		172,632
General and administrative (2)	10,089		7,860		3,743		3,741		4,851		30,284
Cost of services	—		—		—		26,825		3,234		30,059
Total segment operating expenses	100,182		40,349		20,560		42,164		29,720		232,975

Segment Adjusted EBITDA	44,222		5,042		3,035		400		(2,096)		50,603

Reconciling Items
Research and development expenses (3)	—		—		—		—		—		4,624
Global Operations Support expenses (3)	—		—		—		—		—		16,857
Total reconciling expenses	—		—		—		—		—		21,481

Adjusted EBITDA	$	44,222	$	5,042	$	3,035	$	400	$	(2,096)	$	29,122


	Three Months ended March 31, 2024
	Executive Search
	Americas		Europe		Asia Pacific		On-Demand Talent		Heidrick Consulting		Total
Revenue
Revenue before reimbursements	$	136,679	41,481		23,321		37,857		25,859		$	265,197
Reimbursements											3,901
Total revenue											269,098

Operating Expenses
Salaries and benefits (1)	84,026		30,254		16,192		11,593		18,884		160,949
General and administrative (2)	10,782		7,874		3,934		3,095		5,660		31,345
Cost of services	—		—		—		24,090		3,342		27,432
Total segment operating expenses	94,808		38,128		20,126		38,778		27,886		219,726

Segment Adjusted EBITDA	41,871		3,353		3,195		(921)		(2,027)		45,471

Reconciling Items
Research and development expenses (3)	—		—		—		—		—		4,925
Global Operations Support expenses (3)	—		—		—		—		—		14,678
Total reconciling expenses	—		—		—		—		—		19,603

Adjusted EBITDA	$	41,871	$	3,353	$	3,195	$	(921)	$	(2,027)	$	25,868

(1) Includes base salaries, payroll taxes, retirement benefits, separation and stock-based compensation. Excludes contingent compensation, deferred compensation plan income or expense and reorganization costs as these income/expense items are not included within the Company's measure of segment profitability.

(2) Includes professional fees, business development travel, information technology, communication services, marketing, taxes and licenses, temporary labor, bad debt, and other operating expenses. Excludes depreciation, intangible amortization, earnout accretion and earnout fair value adjustments as these income/expense items are not included within the Company's measure of segment profitability.

(3) Excludes depreciation expense and deferred compensation plan income expense as these income/expense items are not included within the Company's measure of segment profitability.

Depreciation and amortization, and capital expenditures, by segment, are as follows:


	Three Months Ended March 31,
	2025		2024

























Depreciation and amortization
Executive Search
Americas	$	523	$	761
Europe	421		295
Asia Pacific	243		202
Total Executive Search	1,187		1,258
On-Demand Talent	1,498		1,966
Heidrick Consulting	575		642
Total segments	3,260		3,866
Research and development	1,437		754
Global Operations Support	150		170
Total depreciation and amortization	$	4,847	$	4,790

Capital expenditures
Executive Search
Americas	$	386	$	513
Europe	395		1,969
Asia Pacific	72		425
Total Executive Search	853		2,907
On-Demand Talent	71		217
Heidrick Consulting	109		828
Total segments	1,033		3,952
Research and development	1,625		1,839
Global Operations Support	76		382
Total capital expenditures	$	2,734	$	6,173

16. Guarantees

The Company has utilized letters of credit to support certain obligations, primarily for its office lease agreements. The letters of credit were made to secure the respective agreements and are for the terms of the agreements, which extend through 2034. For each letter of credit issued, the Company would have to use cash to fulfill the obligation if there is a default on a payment. The maximum amount of undiscounted payments the Company would be required to make in the event of default on all outstanding letters of credit is approximately $4.8 million as of March 31, 2025. The Company has not accrued for these arrangements as no event of default exists or is expected to exist.

17. Commitments and Contingencies

Litigation

The Company has contingent liabilities from various pending claims and litigation matters arising in the ordinary course of the Company’s business, some of which involve claims for damages that are substantial in amount. Some of these matters are covered in part by insurance. Based upon information currently available, the Company believes the ultimate resolution of such claims and litigation will not have a material adverse effect on its financial condition, results of operations or liquidity.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations as well as other sections of this quarterly report on Form 10-Q contain forward-looking statements within the meaning of the federal securities laws, including expectations regarding the Company's One Heidrick strategy and associated investment initiatives. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Forward-looking statements are not historical facts or guarantees of future performance, but instead represent only our beliefs, assumptions, expectations, estimates, forecasts and projections regarding future events, many of which, by their nature, are inherently uncertain and outside our control. Forward-looking statements may be identified by the use of words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “outlook,” “projects,” “forecasts,” "aim," and similar expressions. These statements include statements other than historical information or statements of current condition and may relate to our future plans and objectives and results. By identifying these statements for you in this manner, we are alerting you to the possibility that our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements.

Factors that may cause actual outcomes and results to differ materially from what is expressed, forecasted or implied in the forward-looking statements include, among other things, our ability to attract, integrate, develop, manage, retain and motivate qualified consultants and senior leaders; our ability to prevent our consultants from taking our clients with them to another firm; our ability to maintain our professional reputation and brand name; our clients’ ability to restrict us from recruiting their employees; our heavy reliance on information management systems; risks arising from our implementation of new technology and intellectual property to deliver new products and services to our clients; our dependence on third parties for the execution of certain critical functions; the fact that we face the risk of liability in the services we perform; the fact that data security, data privacy and data protection laws and other evolving regulations and cross-border data transfer restrictions may limit the use of our services and adversely affect our business; any challenges to the classification of our on-demand talent as independent contractors; the fact that increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted cyber-related attacks could pose a risk to our systems, networks, solutions, services and data; the fact that our net revenue may be affected by adverse macroeconomic or labor market conditions, including impacts of inflation and effects of geopolitical instability; the aggressive competition we face; the impact of foreign currency exchange rate fluctuations; our ability to access additional credit; social, political, regulatory, legal and economic risks in markets where we operate, including the impact of the ongoing war in Ukraine, the conflict between Israel and Hamas and any broader regional conflict in the Middle East, the risks of an expansion or escalation of those conflicts and our ability to quickly and completely recover from any disruption to our business; the impact from actions by the U.S. presidential administration and Congress; unfavorable tax law changes and tax authority rulings; our ability to realize the benefit of our net deferred tax assets; the fact that we may not be able to align our cost structure with net revenue; any impairment of our goodwill, other intangible assets and other long-lived assets; our ability to maintain an effective system of disclosure controls and internal control over our financial reporting and produce accurate and timely financial statements; our ability to execute and integrate future acquisitions; and the fact that we have anti-takeover provisions that make an acquisition of us difficult and expensive. We caution the reader that the list of factors may not be exhaustive. For more information on the factors that could affect the outcome of forward-looking statements, refer to our Annual Report on Form 10-K for the year ended December 31, 2024, under the heading "Risk Factors" in Item 1A, and any subsequent Company filings with the Securities and Exchange Commission ("SEC"). We caution the reader that the list of factors may not be exhaustive. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Executive Overview

Our Business. Heidrick & Struggles International, Inc. (the "Company," "we," "us," or "our") is a human capital leadership advisory firm providing executive search, consulting and on-demand talent services to businesses and business leaders worldwide to help them to improve the effectiveness of their leadership teams. We provide our services to a broad range of clients through the expertise of over 500 consultants located in major cities around the world. The Company and its predecessors have been leadership advisors for more than 70 years.

Our service offerings include the following:

Executive Search. We partner with our clients, respected organizations across the globe, to help them build and sustain the best leadership teams in the world, with a specialized focus on the placement of top-level senior executives. Through our unique relationship-based, data-driven approach, we help our clients find the right leaders, set them up for success, and accelerate their and their team’s performance.

We believe focusing on top-level senior executives offers several competitive advantages including access to and influence with key decision makers, increased potential for recurring search and consulting engagements, higher fees per search engagement, enhanced brand visibility, and a leveraged global footprint. Working at the top of client organizations also facilitates the attraction and retention of high-caliber consultants who desire to serve top industry executives and their leadership needs. Our executive search services derive revenue through the fees generated for each search engagement, which generally are based on the annual compensation for the placed executive. We provide our executive search services primarily on a retained basis.

We employ a global approach to executive search built on better insights, more data and faster decision making facilitated by the use of our Heidrick Leadership Framework and Heidrick Connect. Our Heidrick Leadership Framework allows clients to holistically evaluate a candidate's pivotal experience and expertise, leadership capabilities, agility and potential, and culture fit and impact, thereby allowing our clients to find the right person for the role. We supplement our Heidrick Leadership Framework through a series of additional online tools including our Leadership Accelerator, Leadership Signature and Culture Signature assessments. Heidrick Connect, a completely digital, always available client experience portal, allows our clients to access talent insights for each engagement, including the Heidrick Leadership Framework and other internally developed assessment tools. In response to working remotely, our Executive Search teams employed Heidrick Connect to operate effectively and efficiently while engaging virtually with our clients. Additionally, we have introduced upgrades to Heidrick Connect, resulting in greater flexibility, increased productivity and the ability to deliver more insights to our clients.

The executive search industry consists of several thousand executive search firms worldwide. Executive search firms are generally separated into two broad categories: retained search and contingency search. Retained executive search firms fulfill their clients’ senior leadership needs by identifying potentially qualified candidates and assisting clients in evaluating and assessing these candidates. Retained executive search firms generally are compensated for their services regardless of whether the client employs a candidate identified by the search firm and are generally retained on an exclusive basis. Typically, retained executive search firms are paid a retainer for their services equal to approximately one-third of the estimated first year compensation for the position to be filled. In addition, if the actual compensation of a placed candidate exceeds the estimated compensation, executive search firms often are authorized to bill the client for one-third of the excess. In contrast, contingency search firms are compensated only upon successfully placing a recommended candidate.

We are a retained executive search firm. Our search process typically consists of the following steps:

•Analyzing the client’s business needs in order to understand its organizational structure, relationships and culture, advising the client as to the required set of skills and experiences for the position, and identifying with the client the other characteristics desired of the successful candidate;

•Selecting, contacting, interviewing and evaluating candidates on the basis of experience and potential cultural fit with the client organization;

•Presenting confidential written reports on the candidates who potentially fit the position specification;

•Scheduling a mutually convenient meeting between the client and each candidate;

•Completing reference checks on the final candidate selected by the client; and

•Assisting the client in structuring compensation packages and supporting the successful candidate’s integration into the client team.

On-Demand Talent. Our on-demand talent services provide clients seamless on-demand access to top independent talent, including professionals with deep industry and functional expertise for interim leadership roles and critical, project-based initiatives. Our unique model delivers the right independent talent on demand by blending proprietary data and technology with a dedicated Talent Solutions team.

Heidrick Consulting. We partner with organizations through Heidrick Consulting to unlock the power of their people. Our tools and experts use data and technology designed to bring science to the art of human capital development and organizational design. Our services allow our clients to accelerate their strategies and the effectiveness of individual leaders, teams and organizations as a whole.

Heidrick Consulting offers our clients impactful approaches to human capital development through a myriad of solutions, ranging from leadership assessment and development, team and organization acceleration, digital acceleration and innovation,

diversity and inclusion advisory services, and culture shaping. Applying our deep understanding of the behaviors and attributes of leaders across many of the world’s premier companies, we guide our clients as they build a thriving culture of future-ready leadership. These premium services and offerings, which complement our Executive Search expertise, significantly contribute to our ability to deliver a full-service human capital consulting solution to our clients.

Our consulting services generate revenue primarily through the professional fees generated for each engagement which are generally based on the size of the project and scope of services. Our Heidrick Consulting teams have pivoted to create new digital solutions for Leadership Assessments, Team Acceleration, and Organization and Culture Acceleration that can be delivered virtually.

We also remain focused on expanding our revenue streams beyond our executive search business through the investment in the diversification of our product offerings, namely our One Heidrick strategy, and soon to include Heidrick Digital. Through these diversified solutions, we intend to meet our clients' growing talent and human capital needs by providing a more comprehensive suite of offerings.

Key Performance Indicators

We manage and assess our performance through various means, with primary financial and operational measures including net revenue, Adjusted EBITDA and Adjusted EBITDA margin. These non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance prepared in accordance with United States generally accepted accounting principles ("GAAP"). Executive Search and Heidrick Consulting performance is also measured using consultant headcount. Specific to Executive Search, confirmed search (confirmation) trends, consultant productivity and average revenue per search are used to measure performance. Productivity is as measured by annualized Executive Search net revenue per consultant.

Revenue is driven by market conditions and a combination of the number of executive search engagements, consulting projects, on-demand projects and the average revenue per search or project. With the exception of compensation expense and cost of sales, incremental increases in revenue do not necessarily result in proportionate increases in costs, particularly operating and administrative expenses, thus creating the potential to improve Adjusted EBITDA and Adjusted EBITDA margin.

The number of consultants, confirmation trends, number of searches or projects completed, productivity levels and the average revenue per search or project will vary from quarter to quarter, affecting net revenue, Adjusted EBITDA and Adjusted EBITDA margin.

The Company evaluates performance and allocates resources based on the CODM’s review of (1) net revenue and (2) net income before interest, taxes, depreciation and amortization, as adjusted, to the extent they occur, for earnout accretion, earnout fair value adjustments, contingent compensation, deferred compensation plan income or expense, certain reorganization costs, impairment charges and restructuring charges, or Adjusted EBITDA. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of revenue in the same period.

Consolidated and the subtotal of Executive Search Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures and have limitations as analytical tools. They should not be viewed as a substitute for financial information determined in accordance with GAAP and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. In addition, they may not necessarily be comparable to non-GAAP performance measures that may be presented by other companies.

We believe the presentation of these non-GAAP financial measures provides meaningful supplemental information and a more complete understanding of our ongoing operating results, including underlying trends. These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect our ongoing business in a manner that allows for meaningful period-to-period comparison and evaluation. We also believe that these non-GAAP financial measures, when considered together with our GAAP financial measures, provide management and investors with additional information for comparison of our operating results with the operating results of other companies.

Our Compensation Model

At the consultant level, there are fixed and variable components of compensation. Individuals are rewarded for their performance based on a system that directly ties a portion of their compensation to the amount of net revenue for which they are responsible. A portion of the reward may be based upon individual performance against a series of non-financial measures. Credit towards the variable portion of a consultant’s compensation is earned by generating net revenue for winning and executing work. Each quarter, we review and update the expected annual performance of all consultants and accrue variable compensation accordingly. The amount of variable compensation that is accrued for each consultant is based on a tiered payout model. Overall, Company performance determines the amount available for total variable compensation. The more net revenue that is generated by the consultant, the higher the percentage credited towards the consultant’s variable compensation and thus accrued by our Company as expense.

The mix of individual consultants who generate revenue can significantly affect the total amount of compensation expense recorded, which directly impacts operating margin. As a result, the variable portion of the compensation expense may fluctuate significantly from quarter to quarter. The total variable compensation is discretionary and is based on Company-wide financial targets approved by the Human Resources and Compensation Committee of the Board of Directors. We pay annual bonuses in the first half of the year following the year in which they are earned.

Results of Operations

(In the following tables, totals and sub-totals may not equal the sum of individual line items due to rounding. All tables are in thousands, except percentages.)

The following table summarizes, for the periods indicated, our results of operations as a percentage of revenue before reimbursements (net revenue):


	Three Months Ended March 31,
	2025		2024
Revenue
Revenue before reimbursements (net revenue)	100.0	%	100.0	%
Reimbursements	1.4		1.5
Total revenue	101.4		101.5

Operating expenses
Salaries and benefits	66.8		65.8
General and administrative expenses	14.6		15.6
Cost of services	10.6		10.3
Research and development	2.3		2.2


Reimbursed expenses	1.4		1.5
Total operating expenses	95.6		95.3

Operating income	5.7		6.1

Non-operating income (loss)
Interest, net	1.4		1.5
Other, net	(0.9)		1.0
Net non-operating income	0.5		2.5

Income before income taxes	6.2		8.6

Provision for income taxes	1.5		3.4

Net income	4.7	%	5.3	%

The following table sets forth, for the periods indicated, a reconciliation of Adjusted EBITDA to net income:


	Three Months Ended March 31,
	2025			2024
Revenue before reimbursements (net revenue)	$	283,578		$	265,197

Net income	13,306			14,032
Interest, net	(3,955)			(4,086)
Other, net	2,566			(2,571)
Provision for income taxes	4,311			8,899
Operating income	16,228			16,274

Adjustments
Depreciation	3,179			2,493
Intangible amortization	1,668			2,297
Earnout accretion	481			466
Earnout fair value adjustments	942			—
Acquisition contingent consideration	2,821			1,988
Deferred compensation plan	(358)			2,350
Reorganization costs	4,161			—


Total adjustments	12,894			9,594

Adjusted EBITDA	$	29,122		$	25,868
Adjusted EBITDA margin	10.3		%	9.8		%

Revenue and Adjusted EBITDA by segment are as follows:


	Three Months Ended March 31,
	2025		2024
Revenue
Executive Search
Americas	$	144,404	$	136,679
Europe	45,391		41,481
Asia Pacific	23,595		23,321
Total Executive Search	213,390		201,481
On-Demand Talent	42,564		37,857
Heidrick Consulting	27,624		25,859
Revenue before reimbursements (net revenue)	283,578		265,197
Reimbursements	3,864		3,901
Total revenue	$	287,442	$	269,098


	Three Months Ended March 31,
	2025		2024
Adjusted EBITDA
Executive Search
Americas	$	44,222	$	41,871
Europe	5,042		3,353
Asia Pacific	3,035		3,195
Total Executive Search	52,299		48,419
On-Demand Talent	400		(921)
Heidrick Consulting	(2,096)		(2,027)
Total segment Adjusted EBITDA	50,603		45,471
Research and Development	(4,624)		(4,925)
Global Operations Support	(16,857)		(14,678)
Total Adjusted EBITDA	$	29,122	$	25,868

Three Months Ended March 31, 2025, Compared to the Three Months Ended March 31, 2024

Total revenue. Consolidated total revenue increased $18.3 million, or 6.8%, to $287.4 million for the three months ended March 31, 2025, from $269.1 million for the three months ended March 31, 2024. The increase in total revenue was primarily due to the increase in revenue before reimbursements (net revenue) described below.

Revenue before reimbursements (net revenue). Consolidated net revenue increased $18.4 million, or 6.9%, to $283.6 million for the three months ended March 31, 2025, compared to $265.2 million for the three months ended March 31, 2024. Foreign exchange rate fluctuations negatively impacted results by $0.5 million, or 0.6%. Executive Search net revenue was $213.4 million for the three months ended March 31, 2025, an increase of $11.9 million, or 5.9%, compared to the three months ended March 31, 2024. The increase in Executive Search net revenue was primarily due to a 5.3% increase in the number of executive search confirmations compared to the prior year period. On-Demand Talent net revenue was $42.6 million for the three months ended March 31, 2025, an increase of $4.7 million, or 12.4%, compared to the three months ended March 31, 2024. The increase in On-Demand Talent revenue was primarily due to an increase in the volume of On-Demand projects. Heidrick Consulting net revenue was $27.6 million for the three months ended March 31, 2025, an increase of $1.8 million, or 6.8%, compared to the three months ended March 31, 2024. The increase in Heidrick Consulting revenue was primarily due to an increase in leadership assessment consulting engagements compared to the prior year period.

The number of Executive Search and Heidrick Consulting consultants was 427 and 91, respectively, as of March 31, 2025, compared to 424 and 95, respectively, as of March 31, 2024. Executive Search productivity, as measured by annualized net Executive Search revenue per consultant, was $2.0 million and $1.9 million for the three months ended March 31, 2025, and 2024, respectively. The average revenue per executive search was $137,000 and $136,000 for the three months ended March 31, 2025, and 2024, respectively.

Salaries and benefits. Consolidated salaries and benefits expense increased $15.1 million, or 8.6%, to $189.5 million for the three months ended March 31, 2025, compared to $174.4 million for the three months ended March 31, 2024. Fixed compensation increased $4.2 million due to increases in separation costs, base salaries and payroll taxes, retirement and benefits costs, and talent acquisition and retention costs, partially offset by decreases in expenses related to our deferred compensation plan, and stock compensation. Variable compensation increased $10.9 million due to higher bonus accruals related to increased consultant productivity. Foreign exchange rate fluctuations positively impacted results by $0.3 million, or 0.5%.

For the three months ended March 31, 2025, we had an average of 2,210 employees compared to an average of 2,224 employees for the three months ended March 31, 2024.

As a percentage of net revenue, salaries and benefits expense was 66.8% for the three months ended March 31, 2025, compared to 65.8% for the three months ended March 31, 2024.

General and administrative expenses. Consolidated general and administrative expenses increased $0.1 million, or 0.1%, to $41.4 million for the three months ended March 31, 2025, compared to $41.4 million for the three months ended March 31, 2024. The increase in general and administrative expenses was due to professional fees, expenses related to information technology, bad debt, and marketing costs, partially offset by decreases in business development travel, intangible amortization, office occupancy costs, taxes and licenses, and hiring fees. A fair value adjustment was made to increase the Atreus earnout by $0.9 million during the three months ended March 31, 2025. Foreign exchange rate fluctuations positively impacted results by less than $0.1 million, or 0.1%.

As a percentage of net revenue, general and administrative expenses were 14.6% for the three months ended March 31, 2025, compared to 15.6% for the three months ended March 31, 2024.

Cost of services. Consolidated cost of services increased $2.6 million, or 9.6%, to $30.1 million for the three months ended March 31, 2025, compared to $27.4 million for the three months ended March 31, 2024. The increase in cost of services was primarily due to an increase in the volume of On-Demand Talent and consulting projects. Foreign exchange rate fluctuations positively impacted results by less than $0.1 million, or 0.2%.

As a percentage of net revenue, cost of services was 10.6% for the three months ended March 31, 2025, compared to 10.3% for the three months ended March 31, 2024.

Research and development. Due to the rapid pace of technological advances and digital disruption many of our clients are experiencing, we believe our ability to compete successfully depends increasingly upon our ability to provide clients with

timely and relevant technology-enabled products and services. As such, we are focused on developing new technologies to enhance existing products and services, and to expand the range of our offerings through research and development (“R&D”), licensing of intellectual property and acquisition of third-party businesses and technology. We plan to utilize the results of our R&D efforts to develop and enhance new and existing services and products across our current offerings in Executive Search, Heidrick Consulting and On-Demand Talent, and for products and services in new segments that we may embark upon in the future from time to time, such as our new digital product Heidrick Navigator. Consolidated R&D expense increased $0.7 million, or 11.8%, to $6.4 million for the three months ended March 31, 2025, compared to $5.7 million for the three months ended March 31, 2024. R&D expenses consist of expenses related to payroll, employee benefits, stock-based compensation, other employee expenses and third-party professional fees associated with new product development.

Adjusted EBITDA. Consolidated Adjusted EBITDA was $29.1 million for the three months ended March 31, 2025, an increase of $3.3 million, or 12.6%, compared to $25.9 million for the three months ended March 31, 2024. Adjusted EBITDA margin was 10.3% for the three months ended March 31, 2025, compared to 9.8% for the three months ended March 31, 2024.

Net non-operating income. Net non-operating income was $1.4 million for the three months ended March 31, 2025, compared to $6.7 million for the three months ended March 31, 2024.

Interest, net, was $4.0 million of income for the three months ended March 31, 2025, compared to $4.1 million of income for the three months ended March 31, 2024, primarily due to lower interest rates offset by higher marketable securities balances.

Other, net, was $2.6 million of expense for the three months ended March 31, 2025, compared to $2.6 million of income for the three months ended March 31, 2024. The expense for the three months ended March 31, 2025, is primarily due to unrealized losses on our deferred compensation plan. The income for the three months ended March 31, 2024, is primarily due to unrealized gains on our deferred compensation plan and foreign exchange gains. The majority of the Company's investments, including those held in the Company’s deferred compensation plan, are recorded at fair value.

Income taxes. See Note 13, Income Taxes, to the Company's Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q..

Executive Search

Americas

The Americas segment reported net revenue of $144.4 million for the three months ended March 31, 2025, an increase of 5.7% compared to $136.7 million for the three months ended March 31, 2024. The increase in net revenue was primarily due to a 3.6% increase in the number of executive search confirmations. All practice groups, with the exception of Financial Services, exhibited growth over the prior period. Foreign exchange rate fluctuations negatively impacted results by $0.4 million, or 0.8%. There were 221 Executive Search consultants in the Americas segment at March 31, 2025, compared to 220 at March 31, 2024.

Salaries and benefits expense increased $4.1 million, or 4.8%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. Fixed compensation decreased $0.9 million due to decreases in expenses related to our deferred compensation plan, stock compensation, and talent acquisition and retention costs, partially offset by increases in base salaries and payroll taxes, and retirement and benefits costs. Variable compensation increased $5.0 million due to higher bonus accruals related to increased consultant productivity.

General and administrative expenses decreased $0.4 million, or 3.7%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, due to decreases in office occupancy costs, bad debt, business development travel, resource library, marketing costs, and communication services, partially offset by increases in expenses related to information technology, professional fees, and the use of external third-party consultants.

The Americas segment reported Adjusted EBITDA of $44.2 million for the three months ended March 31, 2025, an increase of $2.4 million, or 5.6%, compared to $41.9 million for the three months ended March 31, 2024. Adjusted EBITDA margin was 30.6% for the three months ended March 31, 2025, compared to 30.6% for the three months ended March 31, 2024.

Europe

The Europe segment reported net revenue of $45.4 million for the three months ended March 31, 2025, an increase of 9.4% compared to $41.5 million for the three months ended March 31, 2024. The increase in net revenue was primarily due to a 7.5% increase in the number of executive search confirmations. The Global Technology Services and Consumer practice groups exhibited growth over the prior year period. Foreign exchange rate fluctuations positively impacted results by less than $0.1 million, or 0.6%. There were 128 Executive Search consultants in the Europe segment at March 31, 2025, compared to 125 at March 31, 2024.

Salaries and benefits expense increased $2.2 million, or 7.4%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. Fixed compensation increased $0.4 million due to increases in base salaries and payroll taxes, and retirement and benefits costs, partially offset by decreases in separation costs, talent acquisition and retention costs, and stock compensation. Variable compensation increased $1.8 million due to higher bonus accruals related to increased consultant productivity.

General and administrative expense increased $0.1 million, or 1.4%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, due to increases in professional fees, hiring fees, expenses related to information technology, and marketing costs, partially offset by a decrease in business development travel.

The Europe segment reported Adjusted EBITDA of $5.0 million for the three months ended March 31, 2025, an increase of $1.7 million, or 50.4%, compared to $3.4 million for the three months ended March 31, 2024. Adjusted EBITDA margin was 11.1% for the three months ended March 31, 2025, compared to 8.1% for the three months ended March 31, 2024.

Asia Pacific

The Asia Pacific segment reported net revenue of $23.6 million for the three months ended March 31, 2025, an increase of 1.2% compared to $23.3 million for the three months ended March 31, 2024. The increase in net revenue was primarily due to a 7.1% increase in the number of executive search confirmations. The Financial Services and Industrial practice groups exhibited growth over the prior period. Foreign exchange rate fluctuations negatively impacted results by $0.2 million, or 2.2%. There were 78 Executive Search consultants in the Asia Pacific segment at March 31, 2025, compared to 79 at March 31, 2024.

Salaries and benefits expense increased $1.1 million, or 6.7%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. Fixed compensation increased $1.2 million due to increases in retirement and benefits costs, separation costs, and talent acquisition and retention costs, partially offset by decrease in base salaries and payroll taxes, and stock compensation. Variable compensation decreased $0.2 million due to the mix of consultants earning bonus accruals.

General and administrative expenses decreased $0.2 million, or 3.6%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, due to decreases in business development travel, and taxes licenses, partially offset by an increase in bad debt.

The Asia Pacific segment reported Adjusted EBITDA of $3.0 million for the three months ended March 31, 2025, a decrease of $0.2 million, or 5.0%, compared to $3.2 million for the three months ended March 31, 2024. Adjusted EBITDA margin was 12.9% for the three months ended March 31, 2025, compared to 13.7% for the three months ended March 31, 2024.

On-Demand Talent

The On-Demand Talent segment reported net revenue of $42.6 million for the three months ended March 31, 2025, an increase of 12.4% compared to $37.9 million for the three months ended March 31, 2024. The increase in On-Demand Talent revenue was primarily due to an increase in the volume of On-Demand projects. Foreign exchange rate fluctuations negatively impacted results by less than $0.1 million, or 0.2%.

Salaries and benefits expense increased $1.6 million, or 12.3%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. Fixed compensation increased $1.0 million due to increases in separation costs, retirement and benefits costs, talent acquisition and retention costs, and stock compensation, partially offset by a decrease in base salaries and payroll taxes. Variable compensation increased $0.7 million due to higher bonus accruals related to increased productivity.

General and administrative expense increased $1.1 million, or 20.9%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, due to increases in professional fees, office occupancy costs, and bad debt, partially offset by decrease in intangible amortization and hiring fees. A fair value adjustment was made to increase the Atreus earnout by $0.9 million.

Cost of services increased $2.7 million, or 11.4%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to an increase in the volume of On-Demand Talent projects.

The On-Demand Talent segment reported Adjusted EBITDA of $0.4 million for the three months ended March 31, 2025, an increase of $1.3 million compared to an Adjusted EBITDA loss of $0.9 million for the three months ended March 31, 2024. Adjusted EBITDA margin was 0.9% for the three months ended March 31, 2025, compared to (2.4)% for the three months ended March 31, 2024.

Heidrick Consulting

The Heidrick Consulting segment reported net revenue of $27.6 million for the three months ended March 31, 2025, an increase of 6.8% compared to $25.9 million for the three months ended March 31, 2024. The increase in net revenue was primarily due to increases in leadership assessment consulting engagements compared to the prior year period. Foreign exchange rate fluctuations negatively impacted results by less than $0.1 million, or less than 0.1%. There were 91 Heidrick Consulting consultants at March 31, 2025 compared to 95 at March 31, 2024.

Salaries and benefits expense increased $2.7 million, or 13.7%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. Fixed compensation increased $0.1 million due to increases in talent acquisition and retention costs, and separation costs, partially offset by decrease in base salaries and payroll taxes. Variable compensation increased $2.7 million due to higher bonus accruals related to increased productivity.

General and administrative expenses decreased $0.9 million, or 13.9%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, due to decreases in business development travel, office occupancy costs, and intangible amortization, partially offset by increases in professional fees.

Cost of services decreased $0.1 million, or 3.2%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, due to third party contractor event expenses in prior year that did not reoccur in the current year.

The Heidrick Consulting segment reported an Adjusted EBITDA loss of $2.1 million for the three months ended March 31, 2025, an improvement of $0.1 million, or 3.4%, compared to an Adjusted EBITDA loss of $2.0 million for the three months ended March 31, 2024. Adjusted EBITDA margin was (7.6)% for the three months ended March 31, 2025, compared to (7.8)% for the three months ended March 31, 2024.

Global Operations Support

Salaries and benefits expense increased $3.3 million, or 36.0%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, due to increases in separation costs, variable compensation, base salaries and payroll taxes, retirement and benefits costs, and talent acquisition and retention costs, partially offset by decreases in stock compensation and our deferred compensation plan.

General and administrative expenses increased $0.3 million, or 4.8%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, due to increases in expenses related to information technology, marketing expenses, and professional fees, partially offset by decreases in taxes and licenses, communication services, business development travel, and resource library.

Global Operations Support reported an Adjusted EBITDA loss of $16.9 million for the three months ended March 31, 2025, a decrease of $2.2 million, or 14.8%, compared to an Adjusted EBITDA loss of $14.7 million for the three months ended March 31, 2024. Adjusted EBITDA margin was (5.9)% for the three months ended March 31, 2025, compared to (5.5)% for the three months ended March 31, 2024.

Liquidity and Capital Resources

General. We continually evaluate our liquidity requirements, capital needs and availability of capital resources based on our operating needs. We believe that our available cash balances, funds expected to be generated from operations and funds available under our committed revolving credit facility will be sufficient to finance our operations for at least the next 12 months and the foreseeable future, as well as to finance the cash payments associated with our cash dividends and stock repurchase program.

We pay annual bonuses in the first half of the year following the year in which they are earned. Employee bonuses are accrued throughout the year and are based on our performance and the performance of the individual employee.

Lines of credit. On March 17, 2025, the Company entered into the Third Amendment to the Credit Agreement, dated as of October 26, 2018 by and among the Company, Bank of America, N.A., as administrative agent, and the lenders party thereto. The Third Amendment provides that Lenders will make available to the Borrowers a committed revolving credit facility in an aggregate amount of $100 million, which includes a sublimit of $25 million for letters of credit and a sublimit of $10 million for swingline loans, with a $75 million expansion feature. The Amended Credit Agreement matures on March 17, 2030, extended from July 13, 2026.

Cash, cash equivalents and marketable securities. Cash, cash equivalents and marketable securities at March 31, 2025, December 31, 2024, and March 31, 2024, were $324.7 million, $563.5 million and $252.8 million, respectively. The $324.7 million of cash, cash equivalents and marketable securities at March 31, 2025, includes $170.6 million held by our foreign subsidiaries. A portion of the $170.6 million is considered permanently reinvested in these foreign subsidiaries. If these funds were required to satisfy obligations in the U.S., the repatriation of these funds could cause us to incur additional U.S. income taxes or foreign withholding taxes.

Cash flows used in operating activities. Cash used in operating activities was $232.2 million for the three months ended March 31, 2025, primarily reflecting a decrease in accrued expenses of $199.3 million and an increase accounts receivable of $45.6 million, partially offset by net income net of non-cash charges of $18.3 million. The decrease in accrued expenses is primarily due to cash bonus payments related to 2024 of $317.8 million, partially offset by 2025 bonus accruals.

Cash used in operating activities was $203.4 million for the three months ended March 31, 2024, primarily reflecting a decrease in accrued expenses of $182.6 million and an increase in accounts receivable of $41.1 million, partially offset by net income net of non-cash charges of $21.3 million. The decrease in accrued expenses is primarily due to cash bonus payments related to 2023 of $289.8 million, partially offset by 2024 bonus accruals.

Cash flows provided by investing activities. Cash used in investing activities was $73.1 million for the three months ended March 31, 2025, primarily due to purchases of marketable securities and investments of 118.7 million and capital expenditures of $2.7 million, partially offset by proceeds from the sale of marketable securities of $48.3 million.

Cash provided by investing activities was $54.7 million for the three months ended March 31, 2024, consisting of proceeds from the sale of marketable securities and investments of $66.3 million, partially offset by purchases of marketable securities and investments of $5.4 million, and capital expenditures of $6.2 million.

Cash flows used in financing activities. Cash used in financing activities was $6.4 million for the three months ended March 31, 2025, consisting of dividend payments of $3.2 million, employee tax withholding payments on equity transactions of $2.9 million, and debt issuance costs of $0.4 million.

Cash used in financing activities was $6.1 million for the three months ended March 31, 2024, consisting of dividend payments of $3.2 million and employee tax withholding payments on equity transactions of $2.9 million.

Contractual obligations. Our lease portfolio is comprised of operating leases for office space and equipment. As of March 31, 2025, we had aggregate future lease payment obligations of $123.3 million, with $17.7 million payable within 12 months. Associated with our lease portfolio, we have asset retirement obligations for the retirement of tangible long-lived assets related to our obligation at the end of the lease term to return office space to the landlord in its original condition. As of March 31, 2025, we had asset retirement obligations of $3.5 million, with less than $0.1 million payable within 12 months.

In addition to lease-related contractual obligations, we also have liabilities related to certain employee benefit plans. These liabilities are recorded in our Consolidated Balance Sheet at March 31, 2025. The obligations related to these employee benefit plans are described in Note 12, Employee Benefit Plans, and Note 13, Pension Plan and Life Insurance Contract, in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 3, 2025. As of March 31, 2025, we did not have a liability for uncertain tax positions.

Application of Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our Condensed Consolidated Financial Statements, which have been prepared using accounting principles generally accepted in the United States of America. Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on March 3, 2025, and in Note 2, Summary of Significant Accounting Policies, in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. If actual amounts are ultimately different from previous estimates, the revisions are included in our results of operations for the period in which the actual amounts become known.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or if changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements. Management believes its critical accounting policies that reflect its more significant estimates and assumptions relate to revenue recognition, income taxes, interim effective tax rate, assessment of goodwill for impairment, and contingent consideration. See Application of Critical Accounting Policies and Estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 3, 2025.

Recently Issued and Adopted Financial Accounting Standards

The information presented in Note 2, Summary of Significant Accounting Policies, to our Condensed Consolidated Financial Statements within this Quarterly Report on Form 10-Q is incorporated herein by reference.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Currency market risk. With our operations in the Americas, Europe, and Asia Pacific, we conduct business using various currencies. Revenue earned in each country is generally matched with the associated expenses incurred, thereby reducing currency risk to earnings. However, because certain assets and liabilities are denominated in currencies other than the U.S. dollar, changes in currency rates may cause fluctuations in the valuation of such assets and liabilities. As the local currency of our subsidiaries has generally been designated as the functional currency, we are affected by the translation of foreign currency financial statements into U.S. dollars. A 10% change in the average exchange rate for currencies of all foreign countries in which we operate would have increased or decreased our net income by approximately $0.6 million for the three months ended March 31, 2025. For financial information by segment, see Note 15, Segment Information, in the Notes to Condensed Consolidated Financial Statements within this Quarterly Report on Form 10-Q.

ITEM 4. CONTROLS AND PROCEDURES

(a)Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rules 13a-15(e) and 15d-15(e), that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Management of the Company, with the participation of the principal executive officer and the principal financial officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2025. Based on the evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2025.

(b) Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f) that occurred during the three months ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information presented in Note 17, Commitments and Contingencies, to our Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference.

Item 1A. Risk Factors

The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024, under the heading “Risk Factors,” any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price. There have been no material changes to the Company’s risk factors from those set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 3, 2025.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

None.

Item 6. Exhibits

Incorporated by Reference

Exhibit
No.

Exhibit Description

Form

Exhibit

Filing Date/Period End Date

*10.1

Third Amendment to Credit Agreement, dated March 17, 2025, by and among Heidrick & Struggles International, Inc, the Foreign Subsidiary Borrowers party thereto, the other Subsidiary Guarantors party thereto, the Lenders party thereto and Bank of America, N.A., as administrative agent

10.2

Separation Agreement between Heidrick & Struggles International, Inc. and Sarah Payne, dated February 2, 2025 **†

10-K

10.47

3/3/2025

*31.1

Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

*31.2

Certification of the Company’s Executive Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

***†32.1

Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

***†32.2

Certification of the Company’s Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data Files because its XBRL tags are embedded within the Inline XBRL document

*101.SCH

Inline XBRL Taxonomy Extension Schema Document

*101.CAL

Inline XBRL Taxonomy Calculation Linkbase Document

*101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

*101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

*101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

*104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)



*			Filed herewith.
**			Denotes a management contract or compensatory plan or arrangement.
†			Certain portions of this exhibit have been redacted.
***†			Furnished herewith.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 5, 2025



			Heidrick & Struggles International, Inc.
			(Registrant)


			/s/ Nirupam Sinha
			Nirupam Sinha
			Chief Financial Officer (Duly authorized on behalf of the registrant and in his capacity as Principal Financial and Accounting Officer)

HEIDRICK & STRUGGLES INTERNATIONAL INC 10-Q