Good afternoon, everyone, and welcome to the fourth annual Needham Consumer Tech and E-Commerce Conference. My name is Stefano Crist, a research associate at Needham & Company. Today, I'd like to introduce Tom Monahan, Chief Executive Officer, and Suzanne Rosenberg, VP of Investor Relations at Heidrick & Struggles International. As a reminder, the company will present, and then afterwards we'll have a Q&A. You could submit questions through the portal, and we'll try our best to answer them. Tom, please go ahead. Terrific. Thanks, Stef. First of all, thanks to everyone for joining this afternoon, or this evening, or this morning, depending on where you're located. We're excited to share the Heidrick story with you and look forward to Q&A. I thought I'd make a few overarching points about our business to frame how we're thinking about the opportunity in front of us and the right we have to win and grow in this marketplace. I'll spend a few minutes on these, and then we'll open up for Q&A. I'll start with, I think people know of, many people know of Heidrick & Struggles. We are, to the upper left, a preeminent global consultancy. We are focused very much on helping people make talent decisions at the top of the house, getting the right leaders in the right roles, leading in the right way. We built a business system and a lot of great relationships that enable us to have access to the top of the house, build a business system that delivers incredibly well on client needs in that environment, and we have a great platform to grow and scale. This is a tech conference, and like most businesses, a healthy dose of what makes us successful is the platform that our people operate on, and we can spend a little more time on that. Second thing is we confront a large and growing addressable market. In overly simplistic terms, the single most important lever for creating value at any company, anywhere, is the quality of leadership in place driving the business, and a couple of things make that both really important right now and harder to accomplish. On one hand, in a world where obviously technology matters more, where there's constant disruption, where people are being forced to make quick pivots in their business and be perpetually agile, the business plans depend ever more on having the right people in the right roles, which we call the era of the who and the how, because it's gotten harder and harder to predict the what. On the other side of the trade, it's also the world of talent is changing, and clients need help navigating that. Major demographic shifts, huge changes in what draws people to work and keeps them productive, et cetera. So we have a huge opportunity to sit between clients trying to execute strategy through talent on one hand and a complex world of talent and leadership on the other. To the bottom left-hand side of the page, we have a new leadership team in place. I joined the company early in 2024. Tom Murray came into the President role in early 2024. We've had the opportunity to bring new service line leaders into all our non-search business lines over this year, and we've continued to push really hard on putting the client at the center of what we do. We have an unmatched set of clients and an unmatched set of opportunities in those clients. We did a small restructuring in Q4 2024, sorry, Q2 2024, to accelerate growth, and you're seeing both growth and profit coming online nicely after that. Probably the most exciting thing about our business is the fact that we have the opportunity to both assemble a world-class group of exceptional professionals, the best in the business in front of a client, and to support them with great technologies that help us leverage and scale their work to bring new insights, new capabilities underneath this great client advice. We call that, we stole the term bionic value, but the idea that we're taking the best that our people have to offer and marrying it up with advances in technology and AI to really enhance the client experience is a powerful opportunity for us going forward. That is one of a couple levers we have for margin expansion. We know that they're, frankly, most of our business is a professional services business, and that doesn't have a lot of intrinsic scalability because clients need exceptional people. But by layering technology and by focusing on areas where we have distinctive and proprietary intellectual property and data assets that continue to grow, we can get a little more leverage out of our people, let them have even more client impact, and allow some of that flow through to margin expansion. And then finally, the business has a set of really attractive economic attributes. We have zero debt, we have strong free cash flow, we have smart and disciplined capital allocation, we have almost no revenue concentration at the client level. There's a lot of attractive economic characteristics in this business beyond the exceptional impact we created on our clients. So we're excited. It's an exceptional platform with exceptional assets, with tremendous people in front of clients, and a series of secular market tailwinds that make the decisions we support ever more important in our client size, which is a great place and great opportunity to build a business. I think I'll just stop there. Happy to go deep on any one of these dimensions you want to talk about. Sure. That was great, Tom. And just a reminder to the audience, feel free to submit any questions, and I'll try to get through them. Tom, maybe could you just start your own background and how you came into the CEO role and maybe how that syncs up with what the company needs and what you've been doing so far and, I guess, plans going forward? Thanks. Yeah, I think probably first and foremost, I've been a Heidrick client for more than 20 years. So this is a classic situation of coming to the other side of the table. And I have had the chance to lead a couple different organizations in the public and private markets. And through my relationship with Heidrick, I really saw how important getting the right people into the organization is. Any seasoned leader knows that if you look back across a decade or five years, the most important decisions you make are about people. Who do I put in what role? How do I support them? How do I help them do their job better? That's really what great corporate performance is about. And I had the experience, having had that experience and having done a lot of research around what the key levers of driving corporate performance are. I came to the conclusion many people do, which is it's all about great leaders in the right roles. I think part of the reason that that's kind of why Heidrick was so exciting for me, the chance to come in and influence leadership at scale is incredibly powerful. To do it in a franchise that has incredible access and incredible people is incredible. And it's also wonderful to have the opportunity to think about how you grow and scale the business. And I think that's to the extent that I can support our exceptional professionals. I've had the opportunity to grow and scale different businesses, always people-based businesses, but always finding ways to leverage technology and IP in underneath those people. Our business is pretty simple. I'm not a huge Star Wars fan, so this may not be the appropriate analogy, but our business is pretty simple. Actually, great Jedi Knights and great lightsabers for them to go be effective with. We have a lot of fantastic Jedi Knight people in our business who are day-to-day having huge impact on clients. And my job is to come in and make sure we're arming them with the tools, the solutions, the technologies, and the IP to differentiate themselves and our firm even more. So I think my background being in that world of saying, "Okay, we've got great people. How do we lever them with technology? How do we lever them with product? How do we lever them with great IP?" seem to be a good mix and good match for what Heidrick needed at this point in its development. Yep. I like the analogy. You also mentioned you have a new president, Tom Murray. Could you maybe tell us his background, how he came to the role, and maybe his strengths that complement yours? Sure. Tom, prior to taking the President role, was leading our flagship search business. So he is deeply engaged in understanding what makes us differentiated and powerful in that marketplace. But it's also worth noting that prior to Tom coming into the business six years ago, he was a client for a long time. So he brings a good complement to me in understanding how we do what we do, but I think we have a shared view of the impact of what we do. We were both in situations where we saw the incredible impact that great partnership with Heidrick could have on corporate performance. So I think we bring not that our people already don't keep the client at the center, but I think we see our jobs as helping them do that in an ever more effective way. That's great. So maybe more just on the demand environment, can you just tell us what you're seeing there now and maybe some of the longer-term secular forces that you think about as well? Yeah. I think, look, I always joke that if I was a perfect macro forecaster, I wouldn't have to run businesses full of people. I could just run a global macro fund and be done with it. But look, what we hear from our clients right now is not any different than what we're all seeing, which is the U.S. continues to be a very strong platform in the global economy. We've seen some challenges in some European markets, and Asia-Pacific is a complex region with different dynamics happening in different places. But on balance, we've seen some pretty consistently good signals coming out of that over the past. We talked about this in the Q3 report. Look, I think peeking over the horizon into 2025, when we think about business plan, we always say you have no particular reason to guess that the next year is going to be different than this one. So let's start by assuming it's the same everywhere and build a company that can thrive in all weather patterns because you want to be resilient and ready for different things. We do think there appears to be some pent-up demand in private capitals and maybe some deal volume that comes, and that could change what we're seeing in the marketplace. I think the broader trends, though, are rather than trying to guess at sort of next year's macro, probably I'll anchor on a few trends we see clients worried about regardless of kind of macro swings and roundabouts. A few of them that we'll point to. One is clients, ironically, are coming to the same conclusion that it is harder and harder to predict the future. Think about this conference. I know it's only the third year, but if we had had this conference five years ago and asked what you had asked me what we saw on the horizon in the coming year, I wouldn't have guessed pandemic. I wouldn't have guessed after even if I guessed pandemic right. I wouldn't have guessed war for talent after pandemic. I would have been wrong about that. Probably wouldn't have picked inflation. All the things that became the challenges in front of leaders would have been inherently unpredictable. Wouldn't have predicted the advent and rapid adoption of LLM models. I mean, you just sort of look and say our crystal balls are getting cloudier and cloudier. And so clients are spending a lot more time saying, "Hey, I need leaders who can be resilient and creative and agile under lots of different circumstances because I'm not sure what no matter what job I think I'm hiring them for, I know that could change." Second scenario we see is blurring industry distinctions. And by that, I mean you'll walk into an industrial client and it will turn out that they're really looking for a technologist because they're transforming their business into an industrial tech business. You can walk into a consumer client and realize their play has an embedded finance angle to it. So the historical boundaries between industries have really been blurred, and our ability to work effectively across industry turns out to be really, really important to be able to say, "We can bring expertise from different industries together. We can help you understand the pools of talent that you could access across those industries and come up with solutions that a single industry lens would not create for you." A third thing is we're seeing real challenges in the nature and shape of high-end talent. If you sort of look at it, we've built this new on-demand talent business, and that reflects both client need. An example, every client has various events that happen once, and they don't want to add someone to the top of their org chart. Let's imagine a client that's going through a carve-out. They're going through a spinoff. They're going to have to architect a group of transition services agreements. Being able to pull in an on-demand finance team that can architect those for you and get them set up and then let the company split would be incredibly powerful. But there's also a lot of people who want to work that way. We're seeing high-end talent that wants to, the phrase "gig economy" got overused, but the idea there's high-end talent that wants to work on a project basis, either for lifestyle reasons, for interest reasons, or whatever. So that's a third. And we find clients showing up and saying, "Hey, how do we access that capability?" I think the fourth and final thing that we think is really shaping how clients are changing is they're moving away from thinking about leadership decisions as events and thinking about them as systematic, always-on processes. So rather than saying, "Oh my gosh, we're only going to think about CEO succession when the CEO tells us he or she is going to retire," instead, they're saying, "We're going to think about CEO succession all the time. It's going to be a multi-year process. We're going to be looking at talent through lots of different lenses," and that creates opportunity for us to be a lot stickier, to be a partner with them in a multi-year journey, and to bring more data, more analytics to bear in that conversation, so those are four big secular trends that I think are powering growth in our business, and again, they're not showing up everywhere at all, clients, but they do show up consistently across our various client conversations. Yeah. No, that was really great detail. Appreciate it. And maybe taking a step back, just Heidrick overall, can we just talk about the current mix of the business? It's still largely search. Maybe what else there is, and do you see that mix changing over time? Sure. The business is roughly 70%, just a little over 70% search. So more than two-thirds search, probably roughly 25%-28%, what I'll call search complements. And those tend to fall in two buckets. One is the on-demand talent business that I mentioned. And on-demand talent is exactly what its name says, which is a great example is a client called me, I'm going to say about six months ago now, and said, "Oh my gosh, I've got a crisis. We've got a revenue issue. We're going to need a new Chief Commercial Officer." And kind of with a marketing flavor, "We'll need a Chief Commercial Officer with a marketing flavor. Can you guys get us one?" And the answer is, "Of course." So we do. But we did ask, "How much of a crisis? Is this like a long-term succession management, or this is you're going to miss next quarter?" And it was very much in the miss next quarter bucket. And our On-Demand Talent team was able to go find a terrific leader to get involved in that company almost immediately, within weeks, on an assignment to go help that company solve that problem. And this exceptional leader has done it a few different places, a few different times. So we were able to kind of really help that client solve an urgent problem. And you can safely assume that client feels incredibly grateful that we solved that problem, and we become the search partner of choice. And so by solving a critical and urgent need like that, you buy yourself a lot of goodwill and create a lot of good outcomes. So that's the On-Demand Talent business. It's the recognition that the labor market is changing. There are people who want to work that way. But client needs also come up that that's the exact right way to solve a problem. Our third major business line is Heidrick Consulting, which really we have a number of different services, all of which complement our flagship search business. But think of them basically in two buckets. One is I'll call it assessments and leadership intelligence. How do I make decisions about people? We bring incredibly sophisticated assessors to that business. They build and leverage a series of tools to get that work done. Sometimes it's pretty intensive. Spend a half day with our very best assessor. Sometimes we leverage technology to reach dozens, if not hundreds of people. But we give you data and counsel you and give you insights about how to make decisions about people. That's a decent chunk of what you'd find in Heidrick Consulting. The other side of that is how do I make decisions about people? The other side is performance, purpose, and culture, where we help them get more from their people. So how do we get our teams aligned, working on the right stuff? How do we prioritize critical initiatives to make sure they get done? How do we think about aligning everyone against a core purpose, core mission? How do we work the same way? How do we become a culture where people are interdependent and focused on the right goals? So consulting really has both of those sides. On one hand, help me evaluate my talent. On the other hand, help me get the most out of it. Help me get those people aligned and performing at a high level. You can imagine the assessment and intelligence offer travels pretty closely with search, either as part of the search process itself, using our great assessment capability to evaluate candidates along with our great search partners, or subsequently where someone gets put in a new job and says, "Okay, what do I got? Tell me about the team I'm supposed to lead now." So those businesses are great complements to what we do. There's a wonderful symbiosis with our other businesses in that on one hand, we get great leaders into chair, and then on the other hand, we help make those leaders incredibly successful by helping them build teams, by helping them mobilize and motivate their teams. And that's how this all comes together to create value for clients. That makes sense, and it sounds like cross-selling is an opportunity. Could you maybe talk about that and maybe a portion of your clients that use multiple Heidrick segments and what that can be, looking three to five, maybe more, years down the road? Yeah. At the simplest level, search is a lot bigger than the other two. So if you knew nothing else, you'd say there's opportunity to get clients to adopt some of those other service lines, which is great. And there's also plenty of opportunity to keep growing search. So this isn't an either/or. So I think we don't tend to think about it as cross-selling. We tend to think about it as partnering to meet client need because our service lines all have natural linkages between them. If you're kicking off a search, often the client says, "How will you incorporate your assessment capabilities into the search process?" So there's just a natural linkage there. If you're doing, let's say, a team assessment in our consulting division, invariably you find talent gaps that come back to search, where if you come in and say, "Look, you got a real gap in this region. You got a real gap in this function," that generates work for search. Similarly, if we're doing some work at a client and they say, "Gee, we're standing up a new business unit. Can you help us figure out what type of leaders need to be in place?" Almost invariably, you find places where they need some help right now. Conceptually, down the road, they may want to add full-time staff. But if they're standing up a new business, that new leader might need supplemental help in finance or might need supplemental help in HR. And that's where our On-Demand Talent business comes in. So we think a lot about making sure the service lines link to each other in the normal course of supporting a client. And that's the design architecture has been to say it would be if you think about the high-quality search work we do. If we're doing a Fortune 500 CEO search, we're working with the board. The board doesn't buy anything else. They're not going to. You can't really cross-sell into that environment. Instead, you can develop a great relationship, understand the CEO's mandate so that when they land, you're talking about how to make them successful with the next sets of decisions they have to make. They're going to want to assess their team. They're going to want to fill gaps using on-demand talent. They've got some major corporate initiatives they want to drive against, and we should be in a position to support them. So in terms of the opportunity, there's huge opportunity. What should it look like over time? It's an interesting question. I do think the business will continue. Just by definition, smaller businesses will grow faster than search. Lower base, more white space, that's true. But search also has a tremendous amount of growth opportunity. So I don't know what clients will direct us over the long term, but if we're at, call it, 75, 25 today, it's certainly going to look more like 65, 35 as the years unfold. But I hope it gets there in a really healthy way, which is I hope search continues to grow and makes it hard for the other businesses because even if they're going faster, the pie is growing. So we tend not to forecast that. But I expect you'll see the smaller, newer businesses grow faster. But I know our search leadership, and they are prideful people, and they are going to make that very hard by continuing to grow their business as well. Sure. And just going off the conversation of growth, you mentioned opportunities for margin expansion in your prepared remarks. How do you balance growth versus profitability? Yeah. I think it's a professional services business, right? So the way you grow is you add exceptional people. So we always, and the way you grow margin over time is you make those people more productive through investments in technology, through investments in IP, by getting them leveraged in the business system. So it's keeping a careful eye on both. The business does have some intrinsic margin expansion opportunities. Obviously, if you doubled the business, I don't think you'd hire a second CEO. So I think I'm pretty scalable. Our intellectual property and the people who do some of that work and build that and the data underneath them is quite scalable. As we continue to grow, let's say that assessments business, which has a lot of IP and technology at its core, even with the great assessors in that business, there's still a little margin expansion just from their getting the leverage and support from that platform. Same with search. We're investing in technology to support search. But I think it's more of an incremental margin growth. I don't think there's 1,000 basis points swipe ready to go. I think it's making sure that we get more leverage out of our exceptional professionals so that they get more productive through technology, through data, through intellectual property. And at the same time, we're adding great new people in. And so the offsets should all produce a great profit profile. But I think it's incremental on both sides. Got it. That makes sense. And you mentioned a lot of the underlying data. Can you just talk about your digital strategy, how being tech-enabled differentiates you from competitors and maybe another buzzword, but how AI can impact the business? We'll have forever. Yeah. I mean, I think, look, it gets back to what my framing remarks I said. There's this shift from talent decisions being mostly art to mostly science, right? And our teams, this is what Heidrick has done for decades, which is bringing rigor, bringing analysis, and now increasingly bringing data to decisions about talent. And there's all sorts of ways that we've invested heavily to create technology platforms that help both our people do work better and help decisions that clients make get better. Think about two sides of it, right? What data are we giving clients, and how can they make better decisions? And then how do we scale our people up to tools that help them do their work? And the opportunities here continue to be significant. In overly simplistic terms, if you think about what AI can do, it helps you merge and draw meaning from unstructured data sets that used to be separate swim lanes, and you can start to, if you look at some of the work our teams are doing, you can take different categories of information and form holistic views about a person or a business decision, so historically, in our business, assessment data and performance data and career history and role definitions were in different categories, and what AI lets you do is begin to see how those categories interact to create even more compelling talent decisions, so we have invested to create something called the Navigator Platform. It's an AI-first platform that supports our digital assessment business. It supports our leadership intelligence business. And at its core, what it does at its core is allows leaders to tap more sources of data and understand relationships between historically separate categories of data to get to ever better talent decisions. And these are high-leverage decisions. You get the right person into a role. You can do incredible stuff. And it also allows you, as we're talking about, clients are moving from an episodic talent, let's do a talent plan, to how do we look at the talent plan across time? It would be impossible to technology and AI in particular make it much easier to have an always-on picture of talent because as you make decisions in your business, how does that change your succession opportunities? When you bring people in, does it create more succession resilience? If people depart, how does that affect your opportunities? To some degree, technology lets us, I don't want to say simply, but technology lets us do a better job reflecting the way clients want to work, which is they want to work in an always-on environment that's as dynamic where their understanding of talent is as dynamic as the markets that they participate in. Got it. No, that makes sense. And you talked about in your prepared remarks, cash on the balance sheet, no debt. Maybe just big picture thoughts around capital allocation, whether that be M&A or share repurchases, just any thoughts there? Yeah. It's a good high-class problem to have. The business generates capital. It operates often with negative working capital. So that's a good position to be in. We think about the capital that the business generates as serving three purposes. One, first and foremost, there is some cyclicality in any business with exposure to talent markets, right? There are times when clients get nervous and don't want to make big talent bets or add new people. And you can see that reflected. And therefore, making sure we've always got enough of a buffer to pay our people to attract and keep and invest in our people is thing one. Thing two, the second category is invest in the business, both organically and selective bolt-on acquisitions that beef up core competencies we have. We've done a lot to add rich new capabilities. So job one is organic growth, but there'll still be tuck-ins that look really attractive because they take one of our existing offer lines and move us forward quickly or get us into a geography that we know we can use some more capability in or take us a little deeper down an industry where we see a gap that we want to fill. So we will absolutely do small tuck-ins, but first job is organic. And then third is returning capital to shareholders. We're a dividend payer. As we create capital and we first invest in the business and create buffers in the business, we do still have capital to return to shareholders. Our preferred vehicle to date has been the dividend, but we always have our eyes open and always have our ears open to listen to investors as we generate more capital going forward to understand what their priorities are and how we should fit our capital plans into that. Got it. Looks like we're coming up to the end of time. So maybe one more question. You'll be hosting the company's first Investor Day on December 3rd. Can you tell us why do this event now and maybe a sneak peek of what you plan to cover? Yeah. I think why do it now? Look, Tom and I have been in seat for not quite a year, but coming up on it. We have new leaders who've been in their seats. And so we've continued to advance the company's strategy, and it struck us as a good time to have that conversation with investors. And we've never done one before. And I think one person's view of the value of an Investor Day, I get to show off my great people, which is a chance for investors to meet some of the exceptional leaders in this business. Two, one is I found valuable in other environments is taking people deeper into what we actually do. We do incredible work with clients. So taking people through client case studies. And to your question, how do these service lines fit together in the client's eyes? So, that first thing, great people. Second, wonderful opportunity to get into the client work and how that client work is supported by the portfolio we've constructed. And third, there's a great opportunity to do some. I don't want to call it show and tell, but I can talk about digital tools all day long on an earnings call, but unless we actually show you what they are and how they work, it all just sounds interesting. So it's an opportunity to get people in a room and run them through some demos, let them see how this works, and let them understand how the investments we've made support our future growth and support great client impact. Those are the three reasons to do it. Timing, it's a good time of year because we've got about, Tom and I, about a year's worth of work behind us, and we think we're in a good position to reflect on what we see, what work is behind us. As always, there's a lot more work ahead. How will we prioritize that, and how should that come together into a platform that creates value for, first and foremost, clients, but also colleagues and, importantly, shareholders? No, that's great, and I think a great way to wrap up the call. Tom and Suzanne, thank you so much for your time. Hope you enjoy the conference, and talk to you soon. Thanks so much.