Good day, everyone. My name is Helen. I'll be your conference operator for today. At this time, I'd like to welcome everyone to the fourth quarter 2022 Heidrick & Struggles conference call. All lines have been put on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. If you would like to withdraw your question, please press star one again. As a reminder, today's call is being recorded. It is now my pleasure to turn the conference over to Miss Suzanne Rosenberg, Vice President of Investor Relations. Please go ahead, ma'am. Thank you, and welcome to our 2022 fourth quarter and fiscal year-end conference call. Joining me on today's call is our President and CEO, Krishnan Rajagopalan, and Chief Financial Officer, Mark Harris. We posted our accompanying slides on the IR homepage of our website at heidrick.com, and we encourage you to view these slides for additional context. Please note that in the materials presented today, we may refer to non-GAAP financial measures that we believe provide additional insight into underlying results. Reconciliations between these non-GAAP financial measures and the most comparable GAAP measures may be found in the earnings press release. Also, in our remarks, we may make certain forward-looking statements. We ask that you please refer to the safe harbor language also contained in today's press release. With that, Krishnan, I'll now turn the call over to you. Thank you, Suzanne. Good afternoon, everyone. 2022 was another excellent year for our company as we managed our business through heightened geopolitical threats and global economic uncertainty while successfully navigating the turn coming out of the pandemic and delivering for our clients. I'm pleased to report we surpassed $1 billion in annual net revenue for a second consecutive year and beat last year's record by 7% or 10% on a constant currency basis. We maintained our intense focus on profitability and delivered strong full-year operating margins of 10.5% and adjusted EBITDA margin of 12.7%. Our adjusted diluted earnings per share was $3.84 per share, which is meaningfully above the pre-pandemic levels. Overall, our strong performance was achieved even as we invested strategically in digital assets that we didn't have the previous year and despite unfavorable foreign exchange rates and a market slowdown. As we've discussed, the pace of business has been extraordinary over the past two years, and as expected, we've seen the market slow down from these extremes. Nevertheless, our business in January remained on pace with our strong fourth quarter performance, and we expect to continue operating above the heightened levels achieved during the pre-pandemic record years of 2018 and 2019. As a result of our team's efforts, we believe we're strongly positioned to deliver sustainable growth and great value to all our stakeholders. In 2022, we made significant progress on our financial, operational, and strategic objectives, which are paramount to the ongoing transformation of our firm. This progress is the result of the strategies we began implementing over the last few years, and we're seeing our efforts come to fruition. Executive Search continues to serve as a powerful cornerstone of our business. On-demand talent is gaining significant traction with clients. Heidrick Consulting is growing and enabling us to deepen our client relationships with our advisory services. We are successfully executing on a foundational roadmap with our digital assets as we pilot Heidrick Navigator with several clients. In 2022, our dedicated efforts to solidify Heidrick as a leader in providing compelling and differentiated solutions to our clients were further underscored when we advanced our strategy to achieve a more balanced revenue profile between our search and non-search businesses. As a reminder, the key focus of ours is to aggressively develop and grow our non-search businesses, both organically and inorganically, while maintaining the great strength we have in Executive Search. For context, historically, our search business has comprised more than 90% of our total revenue. In just the past two years, our revenue has shifted to 84% search and 16% non-search while still growing our Executive Search base. Now, with our recent acquisition of Atreus in the on-demand talent space, coupled with our growth expectations for this segment overall, we expect to accelerate the diversification of our revenue stream in the near term. With respect to our recent acquisition, Atreus is a leading provider of the on-demand talent in Germany, and this acquisition builds on the diversification strategy we amplified in 2021 when we acquired Business Talent Group, the leading player at the high end of on-demand talent in the U.S. Atreus allows for meaningful geographic and financial expansion of our on-demand talent business, thereby strengthening our overall efforts to diversify the full breadth of executive talent and leadership advisory services we offer to our clients. Drilling down on this a bit, on-demand talent presents an immense market opportunity for Heidrick. Of course, in today's tight labor market environment, on-demand is a compelling option for companies. Looking beyond today, this is still a nascent market, and we believe we're only in the first inning of how this business can create incredible value and impact. Many corporations have begun to experiment with on-demand talent, and they're seeing positive results, but relatively few are harnessing its full potential. We continue to see acceleration of demand and more opportunities for interim talent and project services as it provides our clients with immediate additional bandwidth with highly experienced professionals. Over time, we believe companies will look to on-demand talent as an option whenever they need to augment their talent capabilities. Why? On-demand talent offers unique advantages relative to traditional alternatives. In many cases, it's the quickest way for companies to obtain the expertise they need. It allows companies to be more agile and flexible with capacity and cost. It allows them to access a level of talent that they may not be able to attract as effectively with a full-time hire. It may be easier for companies to manage or integrate on-demand talent, and it may just be less expensive cost proposition. It's truly a powerful alternative, and we believe most companies are only beginning to realize the full benefits. Importantly, the need for on-demand talent solutions isn't geographically bound. We believe there are significant opportunities for scale and reach globally. Beyond organic growth, we anticipate bolt-on M&A will be a tool for scaling this business as we continue to implement our strategy by identifying targets that align with our strategic vision, fit our culture, and deliver strong returns to our shareholders. At an operational level, our business made meaningful strides and is well positioned for 2023. I'll provide a little context by segment. To start, Executive Search revenue and confirmations in the fourth quarter were down against the extraordinary performance last year, but remained well above the pre-pandemic levels. Globally, we remain focused on growing search efficiently by optimizing our go-to-market strategy and deepening client relationships across all industries. I think it's also important to note that at the board and C-suite level where we operate, there is still very much a war for talent being driven by the burgeoning demand in areas such as digital transformation, DE&I, ESG, sustainability, and private equity, along with a variety of tech and digital hybrid roles which are continuing to emerge in every industry practice. In 2023, we expect Executive Search to continue to operate at a very healthy level as these broader market themes continue. In our On-Demand talent segment, we saw revenue decline slightly, both sequentially and year-over-year in Q4. On a full- year basis, revenue reached $91 million versus $67 million for the nine-month stub period in 2021. The fourth quarter performance was somewhat impacted by economic headwind, overall, we continue to see strong demand across industries as clients get more comfortable with the benefits of high-end on-demand talent and use it for situations ranging from growth to performance improvement and transformations. During the second half of 2022, we made additional investments in sales and marketing, we expect to experience the benefits of this in the coming quarters. As I mentioned earlier, we believe on-demand talent has a robust value proposition, particularly during the economic downturn. There are long-term trends that favor growth in this segment. We expect on-demand talent to expand and grow its total revenue contribution in 2023, both organically and with the recent acquisition of Atreus. Shifting to Heidrick Consulting. This business is on a strong growth trajectory and continues to garner strong demand driven by clients needing help with identifying and developing future-ready leaders, culture, purpose, and organization, as well as defining and implementing pragmatic DE&I programs. In addition to revenue increases in both the quarter and the year, Heidrick Consulting meaningfully improved its margins and narrowed its operating loss. A key driver of the improvement we have seen in this business is a deliberate strategic shift from more transaction-oriented projects to longer-term client journeys. As the fluid macroeconomic environment persists, we expect retention, team development, return to office issues, and culture enhancements to remain at the forefront of our clients' priorities, providing ample opportunity to sustain strong growth within Heidrick Consulting. Turning to our digital assets, we're very excited about Heidrick Navigator, our digital platform currently in beta testing with several clients. We designed Navigator to serve as a digital solution for companies to help manage their leadership team holistically as an asset, and enables clients to systematically assess talent versus the ad hoc manual approaches that exist today. Navigator aids clients in areas such as succession planning and developing rising leaders, among many other scenarios, using analytics and AI to make key leadership decisions. We have received positive feedback in the market and from our beta clients as we work with them to implement and operationalize the platform. We look forward to the opportunities Navigator brings to our business as we believe its potential scale and growth prospects are unique and differ from other businesses. More specifically, our Navigator business will operate predominantly as a subscription-based model versus a more traditional consulting and engagement-led model. That said, Heidrick Navigator will require some time to build a distinguished user base and to sign contracts increase and total value rises. We expect the platform to meaningfully contribute to top and bottom line results. We anticipate our broader ongoing investments in R&D will continue to provide us needed digital assets and intellectual property to support the firm as a whole. We believe that a portion of these investments will continue to be dedicated to further developing Heidrick Navigator as we launch and incubate this part of our business. In 2023, we plan to continue to build on the operational excellence we are delivering on today. While our business experienced some headwinds in the second half of 2022, we're still running well beyond the pre-pandemic levels and are confident in our ability to remain at strong levels throughout 2023. We believe that our diversification strategy not only strengthens our client relationships, but also lessens the cyclical nature of our business as our higher growth, complementary businesses are less severely impacted by slowdowns or recessionary conditions. We project that the strategy, together with the support and strength of our balance sheet, will allow us to continue executing and progressing our strategic vision for the company. Of course, none of this would be possible without our amazing team of people around the world. We continue to maintain a strong culture of developing terrific talent in-house and promoting from within. I'm pleased to share that in 2022 we named 23 exceptional individuals to partner and 31 to principal. These are incredibly talented colleagues who clearly demonstrated what it takes to run fast and deliver results. I could not be more excited about the quality of our team at Heidrick. To close, our 2022 performance advantageously positions Heidrick to continue delivering strong results anchored by our powerful search business. We remain steadfast on furthering our strategic path. We look forward to leveraging our M&A playbook across future opportunities. As we strive for a well-balanced business portfolio, our focus will be on growth and diversification, which reflects our clients' need for a broader, more comprehensive set of solutions for talent and human capital challenges at the executive and board level. With that, I'll turn the call over to Mark. Thank you, Krishnan. Good afternoon to our investors, employees and analysts. Today, I'd like to begin with an overview of some of our 2022's key performance metrics, which reflect another terrific year delivered by the Heidrick team. I'll go into the fourth quarter financial results, discuss our strong balance sheet, share our Q1 outlook, and close with some final comments on the future. Following that, we're happy to take your questions. Before turning to 2022, I want to congratulate all of the Heidrick team on the exceptional achievement of $1.1 billion in consolidated net revenue, the highest level in our company's history, and a 7% increase from last year's record achievement. With a clear vision in place and flawless execution by our incredible teams, it is an exciting time to be at Heidrick as we progress towards our goals and continue building for our future. Given our current success, coupled with our financial strength, we are set up perfectly to prudently invest in growth through innovation and differentiation. We see attractive opportunities emerging, which we intend to capitalize on in 2023, while maintaining our disciplined, opportunistic approach to capital allocation to maximize shareholder returns. Let me now share some of the full-year highlights of 2022. First, I'd like to congratulate each of our segments for achieving record revenue and delivering impressive year-over-year growth. Executive Search revenue increased 4% to nearly $902 million, reaching a historical high with all regions increasing on a constant currency basis and the majority of our industry practices exhibiting growth over the prior year. On-demand talent segment revenue grew from approximately $67 million- $91 million, or 37%, demonstrating the power of the combined Heidrick platform. We're extremely excited about the future of on-demand talent, including our recent acquisition of Atreus, which furthers our growth prospects in the global interim talent space. In Heidrick Consulting, we saw revenue increase 19% to a record-breaking $80 million, while confirmation values increased 15% and search-referred work was up 6%. Profitability also remained strong with adjusted EBITDA of $136.7 million and adjusted EBITDA margin of 12.7%. Now let me turn to the fourth quarter, which was strong across the board. Net revenue for the fourth quarter was $235.7 million. In Executive Search, net revenue was $192.7 million, with declines in each region when compared to the fourth quarter of 2021. Given the fourth quarter of 2021 is a very tough comparison, we posted a strong $2.3 million in productivity per consultant for 2022 versus $2.4 million last year. As a reminder, over time, we believe productivity will modulate between $1.8 million and $2 million per consultant, 12% over 2019 pre-pandemic levels. On-demand talent recorded revenue of $22.4 million, which is a slight decline versus the prior year period. As Krishnan mentioned, we have aligned our sales and marketing resources to meet the heightened demand in this business, and we expect to see the impact of these investments later this year. In addition, we're particularly excited to have added Atreus to our on-demand talent portfolio, which provides us with an excellent partner to expand our platform in Europe. Given the large total addressable market for Heidrick's on-demand talent services, we believe we will see considerable growth here for the foreseeable future. Turning to Heidrick Consulting, fourth quarter net revenue rose to $20.7 million, up 11.6% compared to the prior year period. Up 17.5% on a constant currency basis. Coupled with revenue growth in the fourth quarter, this segment also cut its operating loss in half in the fourth quarter of 2022 when compared to the prior year period as we generated strong scale to this business. We continue to see strong demand for future-ready leaders and culture, with retention dynamics being a big topic for our clients. We're particularly encouraged by the strength in Heidrick Consulting backlog, with year-end backlog up 22% in December 2021, which bodes well for 2023. We believe Heidrick Consulting is uniquely positioned to tackle client demand with the current market environment. We foresee strong growth in this segment as we move forward. Let me turn to operating expenses. With lower comparative quarterly net revenue naturally comes lower compensation variable costs. Consolidated salaries and benefits expense of $156.8 million in the quarter was down $47.3 million versus the prior year period and represented 66.5% of net revenues compared to 71.5% in the fourth quarter of 2021. Looking at general and administrative expenses, we saw a decrease of 24% to $35.5 million compared to the fourth quarter of 2021. Sequentially, expenses increased due to higher travel and entertainment costs, as well as expenses associated with Atreus acquisition process. In the fourth quarter, G&A margin settled in at 15.1% compared to 16.4% in the fourth quarter of 2021. Moving forward, we should expect to see G&A as a percentage of net revenue of approximately 15%, maybe slightly lower. Additionally, we saw R&D costs of $6.1 million in the quarter, in line with our annual expectations of $20 million. We anticipated R&D will continue to be an important aspect of our changing business, particularly in the development of Heidrick Navigator, and we expect R&D investment to be approximately $25 million in 2023. Our goal is that the benefits from our R&D efforts will be utilized across our future offerings, such as our digital asset business, Executive Search, Heidrick Consulting, and on-demand talent segment. Adjusted EBITDA was $30.9 million compared to $36.8 million in the fourth quarter of 2021, with an adjusted EBITDA margin of 13.1%, slightly higher than the 12.9% adjusted EBITDA margin recorded in the fourth quarter of 2021. In Executive Search, adjusted EBITDA was $56.1 million compared to $57.8 million in the prior year period. On-demand talent recorded adjusted EBITDA loss of $1.4 million versus a gain of $2.1 million in the prior year period. In Heidrick Consulting, adjusted EBITDA loss of $2.1 million, narrowed by more than half from a loss of $4.8 million in the prior year period. We finished the fourth quarter with an effective tax rate of approximately 30%, leading to adjusted net income of $16.1 million compared to $20.8 million from the prior year period, and adjusted diluting earnings per share of $0.78 versus $1.02 in the fourth quarter of 2021. The decrease in bottom line metrics is largely the result of R&D spending coupled with step down in revenue. Turning to our balance sheet, at December 31st, we ended the quarter with cash and cash equivalents and marketable securities of $621.6 million, which is $76 million more than last year. As we discussed before, the company's cash position typically builds through the year as employee bonuses are accrued, which are mostly paid out in the first half of the year, along with their associated taxes and related costs. Before I turn to expectations for the first quarter, I'd like to reiterate how pleased we are with the acquisition of Atreus, which closed on February 1st. As you can see in today's press release, we acquired Atreus for initial consideration of $33.5 million, which was paid in the first quarter of this year. We'll make future payments in 2023 upon the completion of Atreus's 2022's statutory audit. In 2026, the former shareholders of Atreus are eligible to receive an additional payment subject to achievement of certain agreed upon financial metrics. Moving forward, Atreus' financials will be included in our on-demand talent segment beginning in February. Let me turn to the first quarter 2023 guidance. Given we expect a return to more normalized run rate within Heidrick's projected revenue and effective productivity and acknowledging external macro factors, particularly with the foreign exchange interest rate environment, we believe our first quarter net revenue will be in the range of $235 million-$255 million. As we look forward, we remain committed to the ongoing transformation of Heidrick through our diversification strategy and moving towards a 50/50 revenue split between our search and non-search businesses. We expect to maintain a strong Executive Search position while we considerably grow and expand our on-demand talent, Heidrick Consulting, and digital asset businesses. As we move through this transition, we expect Heidrick to take on new and exciting initiatives, while also being active in M&A to further grow our business and expand our new geographies. In conclusion, Krishnan and I know that at the outset we're very pleased with our performance in 2022, but moreover, we look forward to continuing to progress against our goals and further our transformation efforts to deliver maximum shareholder value. With that, Krishnan and I would be glad to take your questions. Thank you. Again, if you do have a question at this time, that will be star one on your telephone. We'll pause for just a moment. We'll hear first today from Kevin Steinke with Barrington Research Good morning, or I'm sorry, good afternoon. Congratulations on the solid results. Wanted to just start off first by asking about the on-demand talent segment. Obviously, you know, you remain bullish long term on the growth prospects there. You know, you did reference a bit of some project delays related to the economy. Is there anything more you could expand on there? At the same time, I think you noted that you expected that business to grow organically in 2023. Can you also comment on that and, you know, how much do you see those new sales and marketing resources contributing to that growth? Yeah. Kevin, hi, Krishnan here. Thank you. Yeah. I mean, I think what we, what we saw and what you feel in these markets and, is, you know, the general slowdown in decision-making, which causes even projects like on-demand talent to slow down a bit. That's some of what we started experiencing. I fully expect that as we, as we come out of this, that optionality of on-demand talent will be the first one that companies would be able to pull on as well. We're expecting it to rebound from that perspective. We've added more sales capability as we referenced before, not only to what we call our hybrid channel, but also outside of that to be able to drive that. We should be able to see some good organic growth from OT as a result of those actions. Great. Thank you. With regard to the Atreus acquisition, can you just maybe give us a little more color, if possible, on how the deal came about? You know, have you been looking at that company a while and, you know, just maybe how the process and, valuation and everything came together for you? Sure. Happy to take that question. It's the typical process of what we do with a lot of the companies that we kind of look at. One, we like to kind of internally source that. We've got a great business development group that looked at lots of parts around the world in terms of on-demand talent, really kind of doing a heat map, trying to make sure we understand kind of where the good places, good locations are that would be able for us to springboard into. We really found, as it pertains to Atreus, you know, a real outstanding partner through preliminary conversations. As you kind of imagine, Kevin, it just kind of takes a life of its own where, you know, the engagement becomes more in-depth. We get a lot of good back and forth, then, of course, we go into our full mode of looking at due diligence, looking at the models, thinking to ourselves how the business can kind of come together. What we always look for is that 1 + 1 equals three or better, with what already we had a good strong foundation in the acquisition of BTG. That's really kind of what brought it all together. Then, you know, the economics of the deal, the structure of the deal are just something that's always kind of live and goes through its normal course and process. I think we got to really an excellent agreement for both parties. And we strongly believe Germany is, you know, our first critical step of, you know, looking at Europe and really taking a strong step into Europe. We already had a very good step with BTG and what they were developing in Europe, et cetera. This really kind of puts an excellent team together to let us penetrate that market even more. That's our goal. Okay, great. Yeah, that leads to my next question. I was going to ask if you view, you know, Atreus and then their offerings as leverageable across more of continental Europe, or is that more of a Germany-specific offering? You know, so could you comment on that or, you know, maybe the potential for other acquisitions in that space within Europe? Yeah. It's a great question. Look, it's predominantly Germany. Having said that, there are projects that emanate out of Germany that they have done in international locations as well. If we really wanna scale it inside of another geography, you'll need the talent in that geography to be able to do it. We think that the leverage points of places like Atreus really are, you know, one along the client side, okay? There are so many clients that they're working with that we can even leverage with BTG, and we're beginning to do that already, where German clients who have a presence in the United States or in the UK, being able to work with them in a more seamless fashion. There's lots of client leverage that we'll get as a result of that. Okay, great. Just wanted to ask, you know, more broadly too about the macroeconomic environment, and if you've seen any changes in the pace of decision-making on the Executive Search side. I think you referenced that you expect 2023 to be a healthy year for that business. Just, you know, any a little bit more of uncertainty creeping into the minds of clients? You know, is this a kind of war for talent? You know, pretty much a good hedge against that, I suppose. Yeah. Look, I think that, you know, if we take a step back, you know, 2021 and a lot of 2022 were I use the analogy we're running 100 miles an hour. Okay? You know, things as we referenced in the fourth quarter there, you know, slowed down. You know, they slowed down to a point where we're still running faster than we ran in 2018 and 2019, which were darn healthy years. We continue to see that in our numbers. Okay? I think that's sort of how we're feeling right now as to what the pace looks like. We think that some of the thematic issues, like you referenced there, the war for talent, the underneath there kind of the themes of transformation, of digital, of sustainability, of ESG, DE&I, you know, all of these things and, you know, things like private equity are still continuing to charge the market quite a bit. There is momentum in there, and we feel good about that. That's what we're speaking to. It isn't clearly the 100 miles an hour of 2021 or 2022, but still healthy levels of Executive Search work that we're seeing. The decision-making is taking a little bit longer, but that's part of that process of slowing down. All right. Thank you. That's helpful. Just lastly, I wanted to ask about Heidrick Navigator, and you mentioned some good ongoing pilots with clients. Just how are you thinking about, you know, progress or timeline to a broader rollout? Yeah, that's. Thank you for that question as well. Look, I think that Heidrick Navigator, we're really excited about it. We've got, you know, we started with a couple betas, and now it's expanded beyond that, and there's a strong pipeline behind there as well. I just wanna, again, reiterate what is it. It's a digital solution for clients that's gonna help them manage their leadership population holistically as an asset. Okay, that's traditionally managed in a reasonably ad hoc way through Excel files and PowerPoint decks, et cetera. Some clients are pretty excited to think about this asset, which they all value so much in a different manner. That's the exciting thing. We've actually gotten quite positive feedback in the market from our beta clients, in fact, not only endorsing our work but even serving as a reference for us to get other pilots. That's exciting. What we're gonna do is, we'll be focused in 2023 on continuing to ensure the success of the beta clients and growing that beta client group in a pipeline of early adopters. We'll continue to provide, you know, commentary on market feedback, our beta program, early adopter pipeline as the year progresses, with the expectation to begin to share commentary on bookings and other key business metrics in early 2024 as we grow the revenue of this business. Bookings will translate in this kind of a subscription-based model to revenue a little bit over time. That's roughly the timing of what we're trying to get done here. Great. Thanks a lot for the insight. I'll turn it over. Thanks, Kevin. We'll hear next now from Marc Riddick with Sidoti. Hi. Good afternoon. Hey, Marc. I wanted to touch a little bit on one of the things that was mentioned was some of the increase in activity around travel and meeting folks in person if I heard that correctly. I wonder if you could touch a little bit on that, maybe if we're seeing, is there much of a differentiation in pickup either by industries, geographies or like? Maybe you could put a little bit more on that since I was sort of curious as to, you know, where we're getting to see more folks who want to be seen face-to-face. Yeah, Marc, I'll try to tackle that, and Krishna can kinda chime in. What we're starting to see is definitely where we're trying to get back in front of our clients. We feel that it is important to do that. We've started to see a pickup in terms of those travel costs. Having put that into its context, it's still not the same levels of 2018 and 2019, so we still believe the G&A side of it, as I made in my prepared remarks, gonna be around 15% as a percentage of revenue, maybe a little bit less. It's not gonna go back up to the 20s. Nonetheless, we still think it's a very important part to see our clients, to be in front of them. I think with candidates, you know, again, I still think Zooms are the first wave, as they go through the interview processes, maybe the second part of it. Obviously towards the final, the final part of the interview process, it's becoming more of a live meeting with candidates, et cetera. We're just starting to see a little bit more of that, but certainly not to the old levels. Our best gut based on conversations, I still think people are in two to three times a week for the most part. We're still gonna see some activity where we can try to go in and see our clients, but because there's a more limited window to do so, where people were in Monday through Friday, now they're in two or three days, and they're really busy those two and three days, it puts a natural kind of hedge on that getting too out of control. Right. Excellent. I was wondering if you could touch a little bit on, I mean, certainly the, you know, the headlines have been out there for quite some times as far as layoffs, particularly in the tech space and maybe more so lately in financials. I wonder if you could talk a little bit about, you know, what you're seeing in talent availability from those actions or perhaps other things and maybe sort, you know, what you're expecting to see maybe, you know, without too much of a crystal ball, but, you know, what we're expecting to see as far as talent availability through the year. Yeah. It's Krishnan here, Marc. Thanks for that question. Sure. Look, I think the majority of those layoffs aren't at the level that we operate at, okay? Number one. We're not seeing that level of candidate appear on our radar screen, okay? Having said that, I think that in the cases where VPs and others are being touched by these kinds of layoffs, we are seeing that emerge. I think in the tech sector, things have slowed down as, you know, they ramped up so fast that it needed to slow down and people are trying to make more strategic choices now. It doesn't mean there's no hiring going on in tech, just to be clear. It's just a slower process right now and very strategic in terms of choices that they're making rather than hiring multiple people, you know, in one fell swoop. That's what really what we're beginning to see happen. I guess depending on what happens in the economy and what level the layoffs get to, we'll see what happens with the availability. We still see in our, in our space, we're still seeing the war for talent occurring inside of the spaces that Heidrick operates in today. Great. I was wondering if you could touch a little bit, and I may have missed this, so forgive me if I did. What if you touch a little bit about your current views on the potential acquisition pipeline availability, valuations and the like? Sure, Marc. To try to answer that better, can you give me just a little more color of what you're looking for? Sure. What I'm looking at, potential targets, and sort of maybe, you know, what you're seeing out there as far as what's available and, you know, whether valuations have, are about the same as they were three to six months ago, or, you know, are folks getting a little more rational with their expectations or no? Yeah. Well, rationality. Well, obviously, look, we just did a deal with Atreus, and I would say that that was a very rational deal on both parties. I think both parties did a fine job of coming to a good agreement that benefits them both. In terms of our pipeline, our pipeline remains, you know, again, strong with interest rates going up, cost of capital going up, companies that may not be as mature, you know, as we are, et cetera, and are in need of capital or balance sheet. It definitely points them in a direction towards us. I think there is some rationality. I think it's still very much a mix. In my experience, to really get what I would call market rationality to your pipeline, you need a bit of slowdown to be a little bit more special, longer in tail. People start to realize that it's not just, you know, it's not gonna impact me or it's not gonna impact valuations for long. It'll come right back. I'll try to hold my breath and wait for it to pass. That's always kind of the trick of waiting to see if that kinda comes into fold. We definitely have conversations within, you know, Executive Search, Heidrick Consulting, with on-demand talent, with lot of different types of companies in different industries that, you know, we look at all the time. I will say it's gotten a little bit better, but I still think it's got a way to go, and I think only time, potentially with uncertainty, which is really what this market is right now, especially the numbers that have just been coming out, you know, still make it look very uncertain in terms of two hikes, four hikes, six hikes, who knows? People know it's going up, so cost of capital is certainly not gonna get cheaper. Gotcha. I appreciate it. Thank you very much. Thank you, Marc. Thanks, Marc. Once again, for questions, that is star one at this time. We'll move on to Tobey Sommer with Truist Securities. Thanks. I was wondering if you could start out by maybe telling us what you're hearing from your best and biggest clients about their demand, and I imagine at least some of those buy across your business units. Sure. Yeah. You know, Tobey, I think if I start with tech, we're basically seeing it go a bit slower. I think there are topics inside tech that are still quite hot, AI, things like that, where there's hiring going on. There's a lot of functional hiring still happening inside of the tech industry as well. Likely some of the growth ideas are a bit slower than they were in the past. Inside of industrial, we're seeing, you know, with everything that all the conversations happening around energy, about energy transitions, there's lots of work that's going on and momentum inside of that. I think with sort of tech enabling industrial companies, there's lots of work going inside of that. Those are themes that are that seem to be pretty strong. We're seeing a lot of CEO-related activity in the consumer space, probably more so than we've seen in a while. That's, that's a theme that's inside there. Private equity is still operating at a higher level than it was pre-pandemic, is what I'd want you to know for us as we see it. It isn't at the frothy levels that it was in 2021, but it's still operating at a pretty strong level over there. In healthcare life sciences, medical devices, healthcare services, things like that, are pretty strong. Biotech is trying to find its way, is what I'd say. Those are strong areas. In financial services, you know, we continue to see work in the payment space. As a team of something that's strong growth. Probably the one that's sort of going a bit slower is the banking sector, but the rest of the sector is insurance. Insurance is still quite hot. There's a lot of activity going in there. We've got it organized sector by sector, but that gives you an idea of some of the work that we're seeing. Thank you. How do you go about assessing the sort of classic build versus buy in your capital deployment? Cause you've opted to continue to assemble on-demand businesses via acquisition, yet are pursuing an internal approach for Navigator. How were those sort of conclusions the right ones from your perspective? Let me try to tackle that a little bit, Tobey, and then I'll have Krishnan jump in. In terms of the on-demand talent side of it, we absolutely look at both, okay? We look at both internal build as well as a buy, and we look at it both in terms of an ROI for our shareholders and what makes the most sense, but also the expedient, you know, of making sure that we're competitive. For example, you know, when you take a look at Germany and Atreus, you know, to build the time it would take to drop the revenues, the process, the systems, the people, you know, that could be a three to five-year journey. You can accelerate that journey by combining yourself and coming together with a great partner like Atreus, which does two things. One, yes, it accelerates you, but it also from a competitive advantage point of view, takes what we consider a very key business and kind of ties it on with us right away versus trying to build them at the same time, potentially, you know, them partnering with one of our competitors or with somebody who can become one of our competitors. A lot goes into that thought. A lot of discussion happens at the board level, with management teams trying to make sure we're really executing on the right decision. The other element, Krishnan, maybe you wanna jump in on. Yep. Sure. Yeah. On something like Heidrick Navigator, I mean, number one, we don't think there's another asset out there that does what we're trying to do. Buying it really wasn't a choice. Having said that, you know, there's some things we're good at. We have the IP, we have the insight on a variety of these topics that we think we can bring. We partner, as we referenced before, you know, we partner with a world-class human capital AI firm, Eightfold AI, to be able to drive this solution. Heidrick's not necessarily the tech group that's building this. We have a exclusive partnership with them to be able to build it and do that. We do think about that from that context, but we've got a lot of IP, we've got a lot of insight, and this is an idea that is being, you know, well received in the marketplace, and there's no solution to go buy. Perfect. It's a numbers question that I may have missed, and I apologize if I did, but what's embedded in your revenue guidance for the first quarter? What's organic revenue or you could just give us the specific Atreus and other acquired revenue, and we'll back it out? What would you consider organic? The reason I ask the question, I'm not trying to be a bit silly, but we've had other acquisitions that we've had in the past as well. We've had Business Talent Group now for a couple years as well as partnerships. Are you meaning just the Atreus since that's really the latest? Anything that's been acquired in the last 12 months that wasn't present in the year ago period, I think is the classic definition. Yeah. I mean, for the most part that's simply Atreus, and that would be in our on-demand talent segment. The way that I would, you know, kinda give you some thoughts around that, we disclosed, I believe, $61 million in 2021 revenue. You would expect, you know, on a growth rate to 2023, since we know there'll be headwinds, you know, high single low double-digit type growth rates from that point, data point will probably put you in the right ballpark for 2023. Do remember we closed on February first, so 11/12 of that, Tobey, if you will. The last 12 months, that's pretty much been it. We've had, acquisitions Executive Search side that pertain to some of our Nordic regions, et cetera, but they're pretty small, so I don't think they're really meaningful in terms of what we're looking at. Okay. Do you have an expectation you could share with us for capital expenditures that for internal R&D and software development that'll roll through the income statement and be capitalized this year? Capitalized. That's a good question. We talked about this year, again, probably the range of $20 million-$25 million kinda throwing to the P&L. I think on the capitalized side of it, we probably look more around the $5 million-$10 million would be on the capitalization that strictly pertain to capitalized software development costs that we would have on there. Those would typically be amortized, again, three to five years, depending on which part of the software that we're looking at in the longevity and the useful life, but those would probably be about the right numbers. Okay. Last one for me. How do you think about cyclicality? You've got a portfolio of businesses that you're expanding and you're coming out with a service here that'll be a subscription. Do you think your expansion areas are sort of not cyclical or cyclical in a different way than the Cornerstone search business? Yeah. I mean, I think there's a couple questions there. One cyclicality, one, you know, if the wind blows, you know, kind of, you know, which one faces no pressure, which one faces a little bit of pressure, which one faces a lot of pressure. I think that we're building things that definitely face less pressure that we see, you know, in correlation to macro headwinds. Okay? I think the on-demand business, as it matures, has the potential to have a different cycle associated with it as well. Because as we're saying, we're in the first inning of that game, and as the adoption of that grows and continues, it's gonna have a different cycle, we believe, than what it has today. That's yet to be proven, okay? It's, it's in the, in the early stages in terms of how people start using that as a, you know, comes to the market. You know, the subscription model business, you know, that's, one that, you know, the headwinds that typically those face once they get up and running is on new subscriptions and new clients. That's a, it's a different kind of cycle, that, that all those companies face. You know, the first goal is to build that high-value user base that we'll have. I don't know if that's helpful. Thanks. That is helpful. If I could sneak in one more. Sure. If there is a little bit more oscillation in the average revenue per consultant in Executive Search, and we sort of bounce around that band that you said we expect to settle in between $1.8 and in the low $2s. How do we think about margins in that context? Is there a significant difference in the either the segment or corporate margin at a $1.8, $2, or $2.2? No, I think when you look at it from a segment point of view, I would not expect a meaningful difference in Executive Search or the enterprise, as much. As you know, we would do two things, Tobey. I think the first one is we would assess the longevity of that oscillation, and if we felt like it was permanent, right, those are different actions than temporary. Our view. This happened during COVID, where we felt like 2021 was gonna, you know, come back strong. Now, clearly it came back stronger than we anticipated, but still, it came back strong. Our view is even if there is a mild or short or low depth of recession, that 2024 will be a good bounce back year for the most part, and we've got our reasons for believing it. My comment is, I think it'd be very temporary at that level if it were to break through the bottom end of that band. We wanna make sure that we don't, you know, again, be, you know, a penny wise and a pound foolish, to make sure that we've got the team ready to go for 2024, to be able to execute on that strategy. That strategy, in my opinion, paid off very, very well for us in 2021 and 2022. Thank you. Sure. With no other questions at this time, I'd like to turn things back to Krishnan for closing remarks. Thank you. Look, just if I summarize, we're extremely pleased with the results that we announced today. We continue to operate in a dynamic market that's got very consistent demand for human capital services across many offerings. We're working hard to continue to deliver exceptional value to our Heidrick clients and growth to our Heidrick shareholders, all within the framework of a clear strategic vision. We thank you for joining, and we look forward to updating you on the next quarter call. Thank you. Again, that will conclude today's conference. Thank you all for joining us. 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