Q2 2023 Heidrick & Struggles International Inc Earnings Call

Participants

Krishnan Rajagopalan; President, CEO & Director; Heidrick & Struggles International, Inc.

Mark Robert Harris; Executive VP & CFO; Heidrick & Struggles International, Inc.

Suzanne Rosenberg; VP of IR; Heidrick & Struggles International, Inc.

Jack Wilson; Research Analyst; Truist Securities, Inc., Research Division

Kevin Mark Steinke; MD; Barrington Research Associates, Inc., Research Division

Presentation

Operator

Good afternoon, ladies and gentlemen. Welcome to the Heidrick & Struggles Q2 2023 Earnings Conference Call. (Operator Instructions) Please be advised that this call is being recorded. (Operator Instructions) And now at this time, I would like to turn things over to Ms. Suzanne Rosenberg, Vice President, Investor Relations. Please go ahead, ma'am.

Suzanne Rosenberg

Thank you, and welcome to our 2023 second quarter 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. Krishnan, I'll now turn the call over to you.

Krishnan Rajagopalan

Thank you, Suzanne. Good afternoon, everyone, and thank you for joining us today. We're pleased with our second quarter results, which marked a continuation of what we were beginning to see in the first quarter with business trending as anticipated. Revenue met our expectations and included the first full quarter of results from our recent acquisitions, Atreus in the On-Demand Talent segment and businessfourzero or B4Z in our Heidrick Consulting segment.
Of significance, even before the positive effects of these acquisitions, each of our business segments demonstrated organic sequential growth despite the ongoing macro uncertainty and an anticipated return to a more normalized levels of business performance. I'll let Mark go into the details later on the call.
Our steadfast focus on the execution of our strategy while maintaining strong profitability positions us well to navigate a choppy macro environment as well as manage the seasonality we typically see in the back half of the year.
From our perspective and where we operate, the market for leadership talent remains tight and continues to show strong fundamentals with encouraging demand signals. In addition, the pace of change within the organizations we serve is faster than ever, resulting in new and continued growth opportunities for Heidrick, which I will discuss in a few moments.
Now moving on to some financial highlights for the second quarter. While year-over-year comparisons are down given the record results we achieved in 2022, we are very pleased that revenue increased 13% sequentially, including 10% organic growth, and adjusted EBITDA increased 33% sequentially with an EBITDA margin of 13.4%, up 190 basis points from the first quarter, and adjusted diluted EPS was $0.73 versus $0.76 in the prior quarter.
Our results and continued diversification were further propelled by our recent acquisitions. Our well-defined M&A strategy has enabled both of these acquisitions to progress seamlessly, resulting in an immediate positive impact to our business. Overall, the business continues to operate at strong levels, resulting in a notable top line performance that translated into robust profitability. This focus on profitability allows us to fuel progress toward our overarching strategic goal of diversifying our revenue composition.
As I stated earlier, the market for leadership talent remains tight and the pace of change continues to accelerate. Across our entire enterprise, we see Boards and CEOs constantly shifting priorities and navigating crises in real time. And now more than ever, Boards and CEOs must act quickly and decisively. We see a few important trends cutting across the various business segments that are driving growth. For example, CEOs are prioritizing talent, leadership and culture. Succession planning continues to be a growing priority and is expanding in scope. There is an increasing focus on overall Board effectiveness.
Organizations are also prioritizing top team effectiveness and, of course, themes such as AI in cyber and potential changes in regulation will result in heightened need for those who bring relevant skills and insights into businesses and their Boards globally.
Now turning to each of our business segments. Beginning with Executive Search, this business posted sequential top line improvement on the heels of increased confirmation demand in the first quarter. As anticipated, this business moderately decreased from the record levels achieved last year, reflecting both the macro environment and the portfolio mix within verticals in which we operate. More specifically, we saw a slowdown in the financial services and technology markets, whereas industrial continued to experience strong demand.
We continue to see a solid market in Executive Search, given the level of change at the top as companies adapt to a new and changing operating environment. Demand has been most resilient at the very top in the roles of CEO, CFO and Board of Directors. Other burgeoning demand areas include a variety of tech and digital hybrid roles that are rapidly being created and cut across every industry practice.
Turning to On-Demand Talent. We are very excited by the strong acceleration in this business from last year, primarily driven by strategic acquisition. In addition to significantly contributing to the segment's revenue growth, the acquisition of Atreus is helping us establish and grow our presence in Continental Europe.
Integration is well underway, particularly on the sales side, and our integration management office is leading a strong team with a clearly defined road map. It remains clear that On-Demand Talent is a strong avenue for growth and revenue diversification for Heidrick as it complements our other segments and offerings. Additionally, as the economy in various industries continue to transform, there's a growing market for On-Demand Talent solutions, where flexible, independent talent is valued.
Given the opportunities that we see today, we are reshaping this business to best serve our clients and continue to stay at the front line of their needs. We're supporting the business through investment, particularly in sales and marketing, while opportunistically expanding its geographic footprint. We remain enthusiastic on On-Demand Talent's expansion and see meaningful runway for the segment moving forward.
Lastly, our Heidrick Consulting segment saw a strong organic sequential revenue growth. Year-over-year growth was also robust and primarily driven by acquisition. The integration of B4Z is proceeding smoothly. We've already deployed integrated go-to-market teams on several opportunities. Overall, Heidrick Consulting is seeing good demand signals. And despite some projects being delayed or put on hold, we don't see cancellations and are encouraged by our record strong backlog for this segment. Given the current market conditions, particularly with the tight job market, clients are especially focused on assessment, development, retention and culture. Ensuring a strong talent pipeline, especially retaining good leaders, has become an imperative. In response to this, we are seeing increased demand for leadership development programs, especially around the themes of agility and employee engagement.
Turning now to our overall strategy. We remain focused on building and offering our clients the next generation of talent and leadership advisory services that will help them achieve higher performance through their leaders and teams. Our strategy centers on diversification, both organically and inorganically, within the 2 primary areas that Heidrick already serves as clients.
First, acquiring talent, the pillars of which are Executive Search and our On-Demand Talent business; and second, improving the effectiveness of leaders, teams and organizations, which encompasses both Heidrick Consulting and our developing portfolio of digital assets. Strategically, we continue to invest in digital assets, where we're focused on helping companies manage and develop their leadership talent as an asset, systematically and holistically at scale using technology.
We're bullish on our first digital asset, Heidrick Navigator, which is currently being beta tested with a select group of multibillion dollar global clients. Heidrick Navigator is strongly resonating with these clients by helping them automate and optimize the task of evaluating the effectiveness of leaders, identifying new leaders and succession planning. We continue to make progress, and we're working to incorporate feedback and further shape the product for its efficient launch in the near future. We've also begun to aggressively pursue a direct sales organization in conjunction with our direct channel as we pivot towards monetization.
In addition to Heidrick Navigator, we continue to make appropriate investments in our digital capabilities and technologies throughout the company, including gen AI. Importantly, we continue to integrate technology at the core of our business, enabling each of our segments to be more effective and efficient.
In closing, we are encouraged by the pace of business, and we see signs of strong fundamentals to support our current operating levels. From our view, the talent market is tight, and easing inflation could translate to further demand catalyst. We are confident in our strategy, focused on growth and diversification that solves for client needs on complex issues and provides broader comprehensive solutions for talent and human capital challenges at the executive level.
Separately, we are very pleased to welcome John Berisford to our Board of Directors, expanding the Board to 8 members, 7 of whom are independent. John most recently was an executive with S&P Global, serving as President of S&P Global Ratings and formally was their Chief Human Resources Officer. John brings Heidrick a wealth of experience as a transformative business and HR leader who will serve us well as we continue to diversify our business and innovate for the future.
Finally, a big thank you to the Heidrick team for their continued hard work and incredible dedication to our clients. I would now like to turn the call over to Mark.

Mark Robert Harris

Thank you, Krishnan, and good afternoon and evening to everyone on today's call. Today, I'll start off with a review of our second quarter results, which came in within our expectations with revenue at the midpoint of our guidance.
While business is slower than the frantic pace of last year, we're pleased with today's current market performance and remain laser-focused on delivering strong profitability to our shareholders. Importantly, as Krishnan mentioned, you can see the underlying fundamental strength of our business through the sequential balance via contributions by all lines of business.
As a reminder, second quarter results include the full quarter performance related to our acquired Atreus and B4Z businesses. In addition, the second quarter GAAP results include a $7.2 million noncash goodwill impairment charge, which I will comment on shortly, and a $3.4 million charge related to operational reorganizations that is accounted for in our salaries and benefits.
My comments today will adjust for the impairment as this is onetime in nature and not expected to be in the future results or comparative periods. Lastly, for purposes of today's call, I'm going to focus more on the sequential comparison of the business as I believe this provides a more meaningful indication of current underlying business trends, particularly given the current macro environment, versus comparing to prior year's record performance that we anticipated would abate in 2023.
On a consolidated basis, second quarter revenue was $271.2 million or 13.3% above first quarter 2023 results. Even before the impact of acquisitions, we delivered 10% sequential organic net revenue growth, thus demonstrating we had strong growth from our legacy businesses and not all from acquisitions. In Executive Search, revenue grew 8.6% sequentially to $206.8 million.
Looking at our regional performance sequentially, we saw increases in each region except for Asia Pacific. Specifically, American search revenue was up 8.8%, Europe was up 17% and Asia Pacific was down 6.5%. The strong overall revenue performance reflects increased confirmation demand we saw in the first quarter of 2023. However, confirmations were down 5.2% sequentially in the second quarter, which will likely translate into a slower revenue in the third quarter as we enter seasonally slower time for this segment.
Consultant productivity on a trailing 12-month basis in the second quarter was $2 million compared to $2.1 million in the first quarter of 2023. As you may recall, we made previous comments that we expect the new long-term trend of consultant productivity to be in the range of $1.8 million to $2 million. Whereas pre-COVID, this is more around $1.5 million to $1.7 million. This shift has been driven by post-COVID, where technology has been enhanced, embraced and accepted by the market.
Turning to On-Demand Talent. Revenue was up 26.1% sequentially to $39.2 million and up 3.7% with only organic growth. As Krishnan mentioned, we're reshaping this business for the shifting opportunities that we're seeing and did record some associated reorganization costs that we do not expect to see moving forward. Specifically, we realigned the organization and made some key leadership changes to the business, enhanced our hiring process, and overhauled and streamlined our internal processes and technologies to move our businesses forward. We expect these changes to be fully in effect for the year 2024, if not before.
Heidrick Consulting second quarter revenue grew 42.3% sequentially to $25.2 million and up 27.7% with only organic growth. Our clients remain engaged with us in accelerating their performance culture, particularly as it relates to talent retention, strategy, purpose and execution. Both revenue and confirmation value grew on a sequential quarter comparison.
While we're seeing some client deferment of project delivery, demand remains strong and our strategy of partnering with our clients on longer and deeper journeys has kept us close to the top of the house, providing us a positive outlook for the balance of the year. In addition, our recent acquisition of B4Z is expected to meaningfully contribute to the segment's revenue once it reaches its full potential under the Heidrick Consulting umbrella. Overall, we look forward to further scaling Heidrick Consulting while achieving appropriate levels of profitability.
Turning to operating expenses, including our recent acquisitions, we saw salary and benefits increase 12.6% from prior quarter. Variable compensation increased $18.5 million sequentially due to the higher level of production and fixed compensation increased $1.5 million sequentially, primarily due to new acquisitions and reorganization costs, offset by decreases in RSU amortization, retirement and benefit costs and the deferred compensation plan.
As a percentage of net revenue, salary and benefits was 66% versus 66.4% in the prior quarter. General and administrative expenses increased $6.2 million to $40.5 million or 14.9% of net revenue compared to 14.3% of net revenue in the first quarter of 2023. The modest increase is primarily the result of business development, professional fees, intangible amortization and earn-out costs in the quarter. In a more normalized environment, we would expect to see G&A as a percentage of net revenue to be approximately 15% or slightly lower. So we're pleased with these results.
Lastly, we remain focused on progressing the development of Heidrick Navigator and our other digital assets through R&D spend. R&D spend for the second quarter was $5.7 million or 2.1% of net revenue versus $5.5 million or 2.3% of net revenue in the first quarter of 2023. The spending is consistent with prior quarters and for the full year, we continue to expect R&D to be approximately $25 million.
As we continue to incorporate M&A activity into our business model, we must also record the noncash charges related to purchase accounting. Therefore, in terms of underlying profitability, we view adjusted EBITDA as the best proxy of our operating performance of the business and we'll use this more going forward as we are doing internally.
In the second quarter, adjusted EBITDA increased 33% sequentially to $36.4 million compared to $27.5 million in the first quarter of 2023. Adjusted EBITDA margin increased 190 basis points to 13.4% from 11.5% in the prior quarter as well. On a segment basis, Executive Search finished the quarter with adjusted EBITDA up 11.3% to $53.9 million compared to $48.4 million in the first quarter of 2023. On-Demand Talent recorded adjusted EBITDA gain of $2.6 million versus a loss of $1.3 million in the prior quarter, primarily driven by acquisition. And Heidrick Consulting narrowed its adjusted EBITDA loss to $1.6 million from a $2.7 million loss in the prior quarter, primarily driven by organic improvements. Finally, adjusted income for the quarter was $15 million, and adjusted diluted earnings per share was $0.73.
Now I'll turn to the balance sheet. At the end of the second quarter, our cash and marketable securities sequentially increased by $34.3 million to $239 million compared to $204.7 million at the end of the first quarter. We continue to believe our greatest returns will come from reinvesting our cash in the business, particularly in growth of On-Demand Talent and our digital portfolio.
Moving forward, whether it's pressure on corporate spending, we are still seeing good demand signals and strong fundamentals across our business lines. Therefore, we expect the second half to be similar to what we've experienced in the first half of 2023, coupled with seasonality. That said, turning to our third quarter 2023 revenue guidance, we expect to range between $245 million and $265 million, which reflects typical summer seasonality patterns from the second quarter.
As a reminder, our diversification strategy provides us with new businesses that carry different macro risk profiles, which tends to be less cyclical. So while our guidance contemplates a slowdown in Executive Search, we do expect to see stronger relative performances from On-Demand Talent and Heidrick Consulting.
I'd like to conclude today's call by outlining how the evolution of our strategy will impact our financial results as we move forward. As we continue to leverage our distinguished Executive Search business and grow our adjacent segments, we would, of course, expect to see top line expansion. This means increased revenue diversification, less cyclicality in revenue and thus making revenue more stable.
While new businesses are growing and will carry lower margins versus Executive Search and therefore will decrease our margins overall, they will add aggregate dollars to the bottom line. This, coupled with not increasing share count or adding leverage to pay for these acquisitions, will be EPS accretive over time. Thus, as we continue to focus on organic and inorganic growth opportunities, we'll leverage our healthy balance sheet and proven M&A strategy. Of note, our M&A strategy is predicated on finding opportunities that are strategically and culturally aligned, present high cash-on-cash returns and are additive to our EPS after integration expenses roll off.
In conclusion, we look forward to continuing this journey and throughout this transformation, we remain dedicated to delivering strong returns to our shareholders. Finally, before turning the call over to the operator for Q&A, just a minor housekeeping item. Given various calendar and scheduling obligations, we are targeting Wednesday, October 25, for our third quarter earnings conference call, which is different from our usual Monday calls. This is the only time we expect to make this change.
With that, Krishnan and I would be glad to take your questions.

Question and Answer Session

Operator

(Operator Instructions) We'll take our first question this afternoon from Kevin Steinke of Barrington Research.

Kevin Mark Steinke

Good afternoon. I wanted to start off by asking about the pace of change accelerating. You mentioned that a couple of times, Krishnan, in your opening remarks. And maybe if you could just talk about some of the factors or the broader macro trends you're seeing that are accelerating the pace of change when organizations are looking at their leadership teams.

Krishnan Rajagopalan

Yes. Kevin, thanks for that question. Multiple things that we are seeing regarding pace of change and how companies are looking at it. Like even if you look at something like succession planning, which typically that word was reserved for the CEO, it's now being applied to the entire C-suite. So that's a broad sweeping change that's going on, how to think about succession for the entire C-suite as well and how to think about that over multiple years. Such is one example of something which is changing rather fast in our world if we look at that over the last couple of years.
If we look at technology, it could go a different way in making decisions and how to make decisions. We're going to see an increased pace of change in the incorporation of gen AI and things like that into decision-making processes of executive teams and the implications of that and what that means for leadership teams as well. So these are the kinds of things that we are definitely seeing that are going on out there that -- and digital transformation, these are all continuing, and there's an urgency about it that these things go much, much faster for us right now.

Kevin Mark Steinke

Okay. I also wanted to ask about the On-Demand Talent segment. I think you used the phrase that you're reshaping the On-Demand Talent segment. Just if you could expand on that. Is that just more referring to your investments in the sales team? Or is there something more kind of going beyond or going on there as you develop that segment to meet the demand in the future?

Krishnan Rajagopalan

Yes. Let me start with that. And then Mark, if you got something, you can jump in. So one of the things we're doing is we are realigning the sales function that we have there with the talent function and bringing those closer together rather than keeping them as a slightly separate organization. So that's the realignment that we're really talking about. And we think that's going to create a lot of synergy as well as expertise that we need to be able to drive that. We do continue to invest in the sales go-to-market function over there as well as you alluded to. So that's another big thing that we're doing in that space. So we feel like between all of those things, we'll be able to address market needs much faster and with far more expertise as a result of that. So those are 2 things that we are doing.

Kevin Mark Steinke

Okay. I also wanted to ask about the digital products you're investing in and specifically Navigator. You've said it's resonating very well with your pilot clients. You also mentioned building out a direct sales organization for digital. Just wondering if you envision using that sales organization to go after maybe organizations that you're currently not working with in any fashion or if you see the best opportunity is to cross-sell to existing clients. I think that would be, given your relationships, kind of maybe an easier path ahead. But just on maybe any comments on how you plan to penetrate the market with your digital offerings?

Krishnan Rajagopalan

Super. Yes. So you're hitting on a bunch of themes over there. So we kind of referred to working with Heidrick as almost the Heidrick channel, okay? And so we've got a set of clients and relationships that we work with. And we typically make those introductions in the beginning parts of those sales through our search and consulting and other relationships, as you can imagine. We do believe that for a bit more of a technical sale like this, we need to augment that with some expertise, so there is some additional expertise that's coming in there to be able to manage that process and get everything done with that. There's lots of requirements on privacy, as you can imagine, just to name one big category that you've got to walk your way through, contracts, et cetera.
The stand-alone sales force as well that we're building is about outside the Heidrick sales channel predominantly, okay? We see a very large market that's there that's actually asking us for exactly the same set of solutions and how do we prosecute that. So we build that slowly. We first leverage the Heidrick channel, but at the same time, we're starting to build that muscle for sales as well.

Kevin Mark Steinke

Okay. Great. You mentioned on a sequential basis, search confirmations being down about 5%. And I guess, would you just attribute that primarily to seasonality going into the summer season or anything in the macro environment perhaps contributing to that?

Mark Robert Harris

Kevin, it's Mark. I'll try to take that one. So in terms of the slowdown that we saw about the 5%, I think it was a little bit -- there was a little bit of a nuance in April that we experienced. That was a bit of an interesting glitch. That really, again, could be pointed as a lot of holidays coming together, a lot of spring breaks, and then we saw some of that made up in May. So I think that was kind of where the original gap was kind of created. I think what's been pleasantly surprising is the -- what I'd call the relative strength of the second quarter, that is still very much further ahead than 2018 and 2019 pre-COVID levels, but certainly not where 2022 and 2021 were.
So we talked about toward the end of the year, we said we knew those were going to be our goalposts, and we'd probably be somewhere in the middle is our best guess. I think that's the nice part is we are coming in pretty much where we would expect to be. The seasonality element that you've mentioned is really more of a Q3 phenomenon. So we gave the guidance range of $245 million, $265 million. Let's just use the $255 million midpoint from the $271 million that we just completed.
And again, you would expect and we've seen that July is already starting to slow down considerably. Mainly because people are going on summer holiday, we would expect August, especially in Europe, to be weaker than average just because it's August and it's Europe and they take their time off. And then we'd expect September to have a nice strengthening return, so to speak. So I think it was -- the way that I would kind of step back and think is to say that, look, we haven't seen tremendous weakness. Yes, weaker than last year, but not tremendous weakness, so we'll continue to monitor and watch what the Fed is going to do in their next meeting and see how that could cause essentially -- cause some hiccups. But right now, I think we're very pleased with the performance of the year. And at least based on what we're seeing in our future, we're still very happy with the market given the conditions and the headwinds we're facing.

Operator

We'll go next now to Tobey Sommer at Truist Securities.

Jack Wilson

Yes. This is Jack Wilson on for Tobey Sommer. I also started off with -- can we dig into sort of the Executive Search confirmations and productivity per consultant? You sort of mentioned that paradigm shift from sort of that higher level in terms of revenue. Can we just start there?

Mark Robert Harris

Yes. Let me try to hit on the productivity side of it. So if you remember back in the really busy days of '21 and '22, our consultant productivity was showing up at, trailing 12 months, around $2.6 million. And we made comments when reporting out that number that, that was very much unsustainable, that it would break the team to try to maintain something at that level. We gave our view that really, the new norm will be somewhere between $1.8 million and $2 million, and that is different than the $1.5 million, $1.7 million we saw pre-COVID. And that's just because the post-COVID world that they discussed was just very different than what we were experiencing. Zoom is very much embraced. The travel is very much down. Last mile still has travel pertaining to it but not at the beginning stages of searches, et cetera.
We saw our days to close go from approximately 180 days to sub 150 days. So we've seen a nice change of that pace. And that just means people can do more by still maintaining a reasonable balance. So again, the $2 million is right at the top end of that $1.8 million, $2 million guidance that we kind of gave way back when. And so I'm just trying to make sure we're cautious people by so stating that again, if that falters to $1.8 million to $2 million, that's exactly in the sweet spot that we think what we would call our full engagement for our search consultants to be at a reasonable full capacity.

Jack Wilson

That makes a lot of sense. Is there any variance in that sort of by region?

Mark Robert Harris

Yes, absolutely. And you expect the U.S. region to be much higher than that just because of the way that our compensation levels in Executive Search, et cetera, Europe would obviously fall right behind that. And of course, Asia would be further behind that just because of the economics. Also, the mix makes a big difference too, so it's a fair question and challenge, which is again a lot more in the U.S. in terms of -- and I'm just going to talk about norms, not necessarily the current state. But GTS and financial services are where you get a lot more average retainers that are typically higher as well as [optics]. And obviously, those are the 2 parts that are suffering right now in the current market.
Europe, a little bit better on the industrial and consumer, their mix side of it. So keep in mind, it's not just absolute because that is true, a CEO in the U.S. certainly gets paid more than, on average, a CEO in Europe. But the mix also makes a play in terms of what's going on in the market, the strength. So again, our team in Germany are doing a fabulous job with their play and their strength, et cetera. So it really plays a big difference between country mix, between industrial mix. And that really kind of plays out, but they're absolutely very different in the 3 regions.

Jack Wilson

All right. So on the German point, would you be able to sort of size the contribution or the expected contribution from the acquisitions in sort of the second half of the year?

Mark Robert Harris

I'm sorry. In terms of EBITDA?

Jack Wilson

Revenue and EBITDA.

Mark Robert Harris

I mean so I think we gave some pretty good numbers in terms of just overall in terms of where the -- by each segment of what the contribution was between organic and/or inorganic. And really, it was more of a question that was really kind of been asked in our last earnings call. So I wanted to give you a flavor. We're not going to go into various specifics on each of our acquisitions. We don't do that. Nor do we break it out that way anywhere in our segment reporting because we just don't look at it that way. But I think you get a good sense that, look, the acquisitions are helping. But it's the -- really the legacy organic side that's really performing also very, very well right now.

Operator

(Operator Instructions) And it appears we have no further questions this afternoon. Mr. Rajagopalan, I'd like to turn the conference back to you for any closing comments.

Krishnan Rajagopalan

Thank you, everyone, for your participation and continued support. As we mentioned earlier, we're encouraged by our results, and we continue to see good demand signals despite a broader macro uncertainty that continues to exist. In tandem with navigating the economic challenges, we remain focused on growing our business and continuing to execute on our diversification strategy. We look forward to speaking with you again next quarter. Thank you.

Operator

Again, ladies and gentlemen, thank you all for joining the Heidrick & Struggles Q2 2023 Earnings Conference Call. Again, thank you all for joining. Wish you all a great evening. Goodbye.