hsii-20210630
false2021Q2000106660512/31P3YP3YP3Y00010666052021-01-012021-06-30xbrli:shares00010666052021-07-23iso4217:USD00010666052021-06-3000010666052020-12-31iso4217:USDxbrli:shares00010666052021-04-012021-06-3000010666052020-04-012020-06-3000010666052020-01-012020-06-300001066605hsii:ReimbursementsMember2021-04-012021-06-300001066605hsii:ReimbursementsMember2020-04-012020-06-300001066605hsii:ReimbursementsMember2021-01-012021-06-300001066605hsii:ReimbursementsMember2020-01-012020-06-300001066605us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-12-310001066605us-gaap:TreasuryStockMember2020-12-310001066605us-gaap:AdditionalPaidInCapitalMember2020-12-310001066605us-gaap:RetainedEarningsMember2020-12-310001066605us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001066605us-gaap:RetainedEarningsMember2021-01-012021-03-3100010666052021-01-012021-03-310001066605us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001066605us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001066605us-gaap:TreasuryStockMember2021-01-012021-03-310001066605us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-03-310001066605us-gaap:TreasuryStockMember2021-03-310001066605us-gaap:AdditionalPaidInCapitalMember2021-03-310001066605us-gaap:RetainedEarningsMember2021-03-310001066605us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-3100010666052021-03-310001066605us-gaap:RetainedEarningsMember2021-04-012021-06-300001066605us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001066605us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001066605us-gaap:TreasuryStockMember2021-04-012021-06-300001066605us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-06-300001066605us-gaap:TreasuryStockMember2021-06-300001066605us-gaap:AdditionalPaidInCapitalMember2021-06-300001066605us-gaap:RetainedEarningsMember2021-06-300001066605us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001066605us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2019-12-310001066605us-gaap:TreasuryStockMember2019-12-310001066605us-gaap:AdditionalPaidInCapitalMember2019-12-310001066605us-gaap:RetainedEarningsMember2019-12-310001066605us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-3100010666052019-12-310001066605us-gaap:RetainedEarningsMember2020-01-012020-03-3100010666052020-01-012020-03-310001066605us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2020-03-310001066605srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2020-03-310001066605us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001066605us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001066605us-gaap:TreasuryStockMember2020-01-012020-03-310001066605us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-03-310001066605us-gaap:TreasuryStockMember2020-03-310001066605us-gaap:AdditionalPaidInCapitalMember2020-03-310001066605us-gaap:RetainedEarningsMember2020-03-310001066605us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-3100010666052020-03-310001066605us-gaap:RetainedEarningsMember2020-04-012020-06-300001066605us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300001066605us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001066605us-gaap:TreasuryStockMember2020-04-012020-06-300001066605us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-06-300001066605us-gaap:TreasuryStockMember2020-06-300001066605us-gaap:AdditionalPaidInCapitalMember2020-06-300001066605us-gaap:RetainedEarningsMember2020-06-300001066605us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-3000010666052020-06-300001066605us-gaap:OtherNoncurrentAssetsMember2021-06-300001066605us-gaap:OtherNoncurrentAssetsMember2020-06-300001066605us-gaap:OtherNoncurrentAssetsMember2020-12-310001066605us-gaap:OtherNoncurrentAssetsMember2019-12-310001066605us-gaap:RestrictedStockUnitsRSUMember2021-04-012021-06-300001066605us-gaap:RestrictedStockUnitsRSUMember2020-04-012020-06-300001066605us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-06-300001066605us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-06-300001066605us-gaap:PerformanceSharesMember2021-04-012021-06-300001066605us-gaap:PerformanceSharesMember2020-04-012020-06-300001066605us-gaap:PerformanceSharesMember2021-01-012021-06-300001066605us-gaap:PerformanceSharesMember2020-01-012020-06-3000010666052020-01-012020-12-310001066605us-gaap:InvestmentsMember2020-12-310001066605us-gaap:LeaseholdImprovementsMember2021-06-300001066605us-gaap:LeaseholdImprovementsMember2020-12-310001066605us-gaap:FurnitureAndFixturesMember2021-06-300001066605us-gaap:FurnitureAndFixturesMember2020-12-310001066605us-gaap:ComputerEquipmentMember2021-06-300001066605us-gaap:ComputerEquipmentMember2020-12-310001066605hsii:OfficeLeasesMembersrt:MinimumMember2021-06-300001066605srt:MaximumMemberhsii:OfficeLeasesMember2021-06-300001066605hsii:OfficeLeaseMember2021-04-012021-06-300001066605hsii:OfficeLeaseMember2021-01-012021-06-300001066605hsii:EquipmentLeaseMembersrt:MinimumMember2021-06-300001066605srt:MaximumMemberhsii:EquipmentLeaseMember2021-06-30xbrli:pure0001066605us-gaap:CashMember2021-06-300001066605us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2021-06-300001066605us-gaap:FairValueInputsLevel1Member2021-06-300001066605us-gaap:CashMember2020-12-310001066605us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2020-12-310001066605us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Member2020-12-310001066605us-gaap:FairValueInputsLevel1Member2020-12-310001066605us-gaap:InvestmentsMemberus-gaap:FairValueInputsLevel1Member2021-06-300001066605us-gaap:FairValueInputsLevel2Member2021-06-300001066605us-gaap:FairValueInputsLevel2Memberus-gaap:OtherCurrentAssetsMember2021-06-300001066605hsii:AssetsDesignatedForRetirementAndPensionPlansMemberus-gaap:FairValueInputsLevel2Member2021-06-300001066605us-gaap:OtherCurrentLiabilitiesMemberus-gaap:FairValueInputsLevel2Member2021-06-300001066605us-gaap:OtherPensionPlansDefinedBenefitMemberus-gaap:FairValueInputsLevel2Member2021-06-300001066605us-gaap:OtherCurrentAssetsMember2021-06-300001066605hsii:AssetsDesignatedForRetirementAndPensionPlansMember2021-06-300001066605us-gaap:InvestmentsMember2021-06-300001066605us-gaap:OtherCurrentLiabilitiesMember2021-06-300001066605us-gaap:OtherPensionPlansDefinedBenefitMember2021-06-300001066605us-gaap:InvestmentsMemberus-gaap:FairValueInputsLevel1Member2020-12-310001066605us-gaap:FairValueInputsLevel2Member2020-12-310001066605us-gaap:FairValueInputsLevel2Memberus-gaap:OtherCurrentAssetsMember2020-12-310001066605hsii:AssetsDesignatedForRetirementAndPensionPlansMemberus-gaap:FairValueInputsLevel2Member2020-12-310001066605us-gaap:OtherCurrentLiabilitiesMemberus-gaap:FairValueInputsLevel2Member2020-12-310001066605us-gaap:OtherPensionPlansDefinedBenefitMemberus-gaap:FairValueInputsLevel2Member2020-12-310001066605us-gaap:FairValueInputsLevel3Member2020-12-310001066605us-gaap:GoodwillMemberus-gaap:FairValueInputsLevel3Member2020-12-310001066605us-gaap:OtherCurrentAssetsMember2020-12-310001066605us-gaap:GoodwillMember2020-12-310001066605hsii:AssetsDesignatedForRetirementAndPensionPlansMember2020-12-310001066605us-gaap:OtherCurrentLiabilitiesMember2020-12-310001066605us-gaap:OtherPensionPlansDefinedBenefitMember2020-12-310001066605hsii:EuropeAndAsiaPacificMember2020-12-310001066605hsii:ContingentCompensationMemberus-gaap:FairValueInputsLevel3Member2020-12-310001066605hsii:ContingentCompensationMemberus-gaap:FairValueInputsLevel3Member2021-06-300001066605hsii:ContingentCompensationMemberus-gaap:FairValueInputsLevel3Member2021-01-012021-06-300001066605hsii:AcqusitionEarnoutAccrualsMemberus-gaap:FairValueInputsLevel3Member2021-06-3000010666052021-04-010001066605hsii:OnDemandTalentMember2021-06-300001066605hsii:OnDemandTalentMember2021-01-012021-06-300001066605hsii:OnDemandTalentMember2021-04-012021-06-300001066605srt:AmericasMemberhsii:ExecutiveSearchMemberMember2021-06-300001066605srt:AmericasMemberhsii:ExecutiveSearchMemberMember2020-12-310001066605hsii:OnDemandTalentMember2021-06-300001066605srt:EuropeMemberhsii:ExecutiveSearchMemberMember2020-12-310001066605srt:AsiaPacificMemberhsii:ExecutiveSearchMemberMember2020-12-310001066605srt:AmericasMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605srt:EuropeMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605srt:AsiaPacificMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605srt:EuropeMemberhsii:ExecutiveSearchMemberMember2021-06-300001066605srt:AsiaPacificMemberhsii:ExecutiveSearchMemberMember2021-06-300001066605hsii:ExecutiveSearchMemberMember2021-06-300001066605hsii:ExecutiveSearchMemberMember2020-12-310001066605hsii:OnDemandTalentMemberus-gaap:CustomerRelationshipsMember2021-04-012021-06-300001066605hsii:OnDemandTalentMemberus-gaap:SoftwareAndSoftwareDevelopmentCostsMember2021-04-012021-06-300001066605hsii:OnDemandTalentMemberus-gaap:TradeNamesMember2021-04-012021-06-300001066605us-gaap:CustomerRelationshipsMember2021-04-012021-06-300001066605us-gaap:CustomerRelationshipsMember2021-06-300001066605us-gaap:CustomerRelationshipsMember2020-12-310001066605us-gaap:TradeNamesMember2021-04-012021-06-300001066605us-gaap:TradeNamesMember2021-06-300001066605us-gaap:TradeNamesMember2020-12-310001066605us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2021-04-012021-06-300001066605us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2021-06-3000010666052020-10-012020-12-3100010666052020-05-282020-05-280001066605hsii:LaborAndRelatedExpensesMember2021-04-012021-06-300001066605hsii:LaborAndRelatedExpensesMember2020-04-012020-06-300001066605hsii:LaborAndRelatedExpensesMember2021-01-012021-06-300001066605hsii:LaborAndRelatedExpensesMember2020-01-012020-06-300001066605us-gaap:GeneralAndAdministrativeExpenseMember2021-04-012021-06-300001066605us-gaap:GeneralAndAdministrativeExpenseMember2020-04-012020-06-300001066605us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-06-300001066605us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-06-300001066605us-gaap:RestrictedStockUnitsRSUMember2020-12-310001066605us-gaap:RestrictedStockUnitsRSUMember2021-06-300001066605srt:ExecutiveOfficerMemberus-gaap:PerformanceSharesMember2021-01-012021-06-300001066605srt:ExecutiveOfficerMemberus-gaap:PerformanceSharesMembersrt:MinimumMember2021-01-012021-06-300001066605srt:MaximumMembersrt:ExecutiveOfficerMemberus-gaap:PerformanceSharesMember2021-01-012021-06-300001066605us-gaap:PerformanceSharesMember2020-12-310001066605us-gaap:PerformanceSharesMember2020-06-300001066605us-gaap:PerformanceSharesMember2021-06-300001066605us-gaap:PhantomShareUnitsPSUsMember2020-12-310001066605us-gaap:PhantomShareUnitsPSUsMember2021-01-012021-06-300001066605us-gaap:PhantomShareUnitsPSUsMember2020-06-300001066605us-gaap:PhantomShareUnitsPSUsMember2021-06-300001066605us-gaap:EmployeeSeveranceMembersrt:AmericasMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-04-012021-06-300001066605us-gaap:EmployeeSeveranceMembersrt:EuropeMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-04-012021-06-300001066605srt:AsiaPacificMemberus-gaap:EmployeeSeveranceMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-04-012021-06-300001066605us-gaap:EmployeeSeveranceMemberhsii:HeidrickConsultingMemberus-gaap:OperatingSegmentsMember2021-04-012021-06-300001066605us-gaap:EmployeeSeveranceMemberus-gaap:CorporateNonSegmentMember2021-04-012021-06-300001066605us-gaap:EmployeeSeveranceMember2021-04-012021-06-300001066605us-gaap:FacilityClosingMembersrt:AmericasMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-04-012021-06-300001066605us-gaap:FacilityClosingMembersrt:EuropeMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-04-012021-06-300001066605srt:AsiaPacificMemberus-gaap:FacilityClosingMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-04-012021-06-300001066605us-gaap:FacilityClosingMemberhsii:HeidrickConsultingMemberus-gaap:OperatingSegmentsMember2021-04-012021-06-300001066605us-gaap:FacilityClosingMemberus-gaap:CorporateNonSegmentMember2021-04-012021-06-300001066605us-gaap:FacilityClosingMember2021-04-012021-06-300001066605srt:AmericasMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-04-012021-06-300001066605srt:EuropeMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-04-012021-06-300001066605srt:AsiaPacificMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-04-012021-06-300001066605hsii:HeidrickConsultingMemberus-gaap:OperatingSegmentsMember2021-04-012021-06-300001066605us-gaap:CorporateNonSegmentMember2021-04-012021-06-300001066605us-gaap:EmployeeSeveranceMembersrt:AmericasMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605us-gaap:EmployeeSeveranceMembersrt:EuropeMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605srt:AsiaPacificMemberus-gaap:EmployeeSeveranceMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605us-gaap:EmployeeSeveranceMemberhsii:HeidrickConsultingMemberus-gaap:OperatingSegmentsMember2021-01-012021-06-300001066605us-gaap:EmployeeSeveranceMemberus-gaap:CorporateNonSegmentMember2021-01-012021-06-300001066605us-gaap:EmployeeSeveranceMember2021-01-012021-06-300001066605us-gaap:FacilityClosingMembersrt:AmericasMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605us-gaap:FacilityClosingMembersrt:EuropeMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605srt:AsiaPacificMemberus-gaap:FacilityClosingMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605us-gaap:FacilityClosingMemberhsii:HeidrickConsultingMemberus-gaap:OperatingSegmentsMember2021-01-012021-06-300001066605us-gaap:FacilityClosingMemberus-gaap:CorporateNonSegmentMember2021-01-012021-06-300001066605us-gaap:FacilityClosingMember2021-01-012021-06-300001066605us-gaap:OtherRestructuringMembersrt:AmericasMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605us-gaap:OtherRestructuringMembersrt:EuropeMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605srt:AsiaPacificMemberus-gaap:OtherRestructuringMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605us-gaap:OtherRestructuringMemberhsii:HeidrickConsultingMemberus-gaap:OperatingSegmentsMember2021-01-012021-06-300001066605us-gaap:OtherRestructuringMemberus-gaap:CorporateNonSegmentMember2021-01-012021-06-300001066605us-gaap:OtherRestructuringMember2021-01-012021-06-300001066605srt:AmericasMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605srt:EuropeMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605srt:AsiaPacificMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605hsii:HeidrickConsultingMemberus-gaap:OperatingSegmentsMember2021-01-012021-06-300001066605us-gaap:CorporateNonSegmentMember2021-01-012021-06-300001066605us-gaap:EmployeeSeveranceMembersrt:AmericasMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2019-09-302021-06-300001066605us-gaap:EmployeeSeveranceMembersrt:EuropeMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2019-09-302021-06-300001066605srt:AsiaPacificMemberus-gaap:EmployeeSeveranceMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2019-09-302021-06-300001066605us-gaap:EmployeeSeveranceMemberhsii:HeidrickConsultingMemberus-gaap:OperatingSegmentsMember2019-09-302021-06-300001066605us-gaap:EmployeeSeveranceMemberus-gaap:CorporateNonSegmentMember2019-09-302021-06-300001066605us-gaap:EmployeeSeveranceMember2019-09-302021-06-300001066605us-gaap:FacilityClosingMembersrt:AmericasMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2019-09-302021-06-300001066605us-gaap:FacilityClosingMembersrt:EuropeMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2019-09-302021-06-300001066605srt:AsiaPacificMemberus-gaap:FacilityClosingMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2019-09-302021-06-300001066605us-gaap:FacilityClosingMemberhsii:HeidrickConsultingMemberus-gaap:OperatingSegmentsMember2019-09-302021-06-300001066605us-gaap:FacilityClosingMemberus-gaap:CorporateNonSegmentMember2019-09-302021-06-300001066605us-gaap:FacilityClosingMember2019-09-302021-06-300001066605us-gaap:OtherRestructuringMembersrt:AmericasMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2019-09-302021-06-300001066605us-gaap:OtherRestructuringMembersrt:EuropeMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2019-09-302021-06-300001066605srt:AsiaPacificMemberus-gaap:OtherRestructuringMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2019-09-302021-06-300001066605us-gaap:OtherRestructuringMemberhsii:HeidrickConsultingMemberus-gaap:OperatingSegmentsMember2019-09-302021-06-300001066605us-gaap:OtherRestructuringMemberus-gaap:CorporateNonSegmentMember2019-09-302021-06-300001066605us-gaap:OtherRestructuringMember2019-09-302021-06-300001066605srt:AmericasMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2019-09-302021-06-300001066605srt:EuropeMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2019-09-302021-06-300001066605srt:AsiaPacificMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2019-09-302021-06-300001066605hsii:HeidrickConsultingMemberus-gaap:OperatingSegmentsMember2019-09-302021-06-300001066605us-gaap:CorporateNonSegmentMember2019-09-302021-06-3000010666052019-09-302021-06-300001066605srt:MinimumMember2021-06-300001066605srt:MaximumMember2021-06-300001066605us-gaap:EmployeeSeveranceMember2020-12-310001066605us-gaap:FacilityClosingMember2020-12-310001066605us-gaap:OtherRestructuringMember2020-12-310001066605us-gaap:EmployeeSeveranceMember2021-06-300001066605us-gaap:FacilityClosingMember2021-06-300001066605us-gaap:OtherRestructuringMember2021-06-300001066605us-gaap:EmployeeRelatedLiabilitiesCurrent2021-06-300001066605hsii:AccruedSalariesAndBenefits2021-06-300001066605us-gaap:EmployeeRelatedLiabilitiesCurrent2020-12-310001066605hsii:AccruedSalariesAndBenefits2020-12-310001066605us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2020-12-310001066605us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2020-12-310001066605us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2021-01-012021-06-300001066605us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2021-01-012021-06-300001066605us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-06-300001066605us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2021-06-300001066605us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2021-06-300001066605srt:AmericasMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2020-04-012020-06-300001066605srt:AmericasMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2020-01-012020-06-300001066605srt:EuropeMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2020-04-012020-06-300001066605srt:EuropeMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2020-01-012020-06-300001066605srt:AsiaPacificMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2020-04-012020-06-300001066605srt:AsiaPacificMemberus-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2020-01-012020-06-300001066605us-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-04-012021-06-300001066605us-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2020-04-012020-06-300001066605us-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2021-01-012021-06-300001066605us-gaap:OperatingSegmentsMemberhsii:ExecutiveSearchMemberMember2020-01-012020-06-300001066605hsii:OnDemandTalentMemberus-gaap:OperatingSegmentsMember2021-04-012021-06-300001066605hsii:OnDemandTalentMemberus-gaap:OperatingSegmentsMember2021-01-012021-06-300001066605hsii:HeidrickConsultingMemberus-gaap:OperatingSegmentsMember2020-04-012020-06-300001066605hsii:HeidrickConsultingMemberus-gaap:OperatingSegmentsMember2020-01-012020-06-300001066605us-gaap:OperatingSegmentsMember2021-04-012021-06-300001066605us-gaap:OperatingSegmentsMember2020-04-012020-06-300001066605us-gaap:OperatingSegmentsMember2021-01-012021-06-300001066605us-gaap:OperatingSegmentsMember2020-01-012020-06-300001066605us-gaap:CorporateNonSegmentMember2020-04-012020-06-300001066605us-gaap:CorporateNonSegmentMember2020-01-012020-06-300001066605srt:AmericasMember2021-04-012021-06-300001066605srt:AmericasMember2021-01-012021-06-300001066605srt:EuropeMember2021-04-012021-06-300001066605srt:EuropeMember2021-01-012021-06-300001066605srt:EuropeMember2020-01-012020-06-300001066605srt:EuropeMember2020-04-012020-06-300001066605srt:AsiaPacificMember2021-01-012021-06-300001066605srt:AsiaPacificMember2020-04-012020-06-300001066605srt:AsiaPacificMember2020-01-012020-06-300001066605hsii:HeidrickConsultingMember2021-04-012021-06-300001066605hsii:HeidrickConsultingMember2021-01-012021-06-3000010666052021-07-13

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2021

OR

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

For the transition period from _______ to _______

Commission File Number 0-25837
HEIDRICK & STRUGGLES INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-2681268
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification Number)
233 South Wacker Drive-Suite 4900
Chicago, Illinois
60606-6303
(Address of Principal Executive Offices)

(312) 496-1200
(Registrant’s Telephone Number, Including Area Code)

Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange On Which Registered
Common Stock, $0.01 par valueHSIIThe NASDAQ Stock Market LLC

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer," “smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer 
¨
  Accelerated filer 
Non-Accelerated filer 
¨
  Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

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

As of July 23, 2021, there were 19,529,323 shares of the Company’s common stock outstanding.



HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
 
  PAGE
PART I.
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 6.



PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
June 30,
2021
December 31,
2020
 (Unaudited) 
Current assets
Cash and cash equivalents$237,832 $316,473 
Marketable securities 19,999 
Accounts receivable, net of allowances of $7,381 and $6,557, respectively
168,504 88,123 
Prepaid expenses25,040 18,956 
Other current assets33,781 23,279 
Income taxes recoverable5,447 5,856 
Total current assets470,604 472,686 
Non-current assets
Property and equipment, net22,682 23,492 
Operating lease right-of-use assets77,840 92,671 
Assets designated for retirement and pension plans14,001 14,425 
Investments35,365 31,369 
Other non-current assets26,706 24,439 
Goodwill137,401 91,643 
Other intangible assets, net10,903 1,129 
Deferred income taxes36,564 35,958 
Total non-current assets361,462 315,126 
Total assets$832,066 $787,812 
Current liabilities
Accounts payable$17,789 $8,799 
Accrued salaries and benefits198,120 217,908 
Deferred revenue41,915 38,050 
Operating lease liabilities27,572 28,984 
Other current liabilities19,042 23,311 
Income taxes payable13,356 1,186 
Total current liabilities317,794 318,238 
Non-current liabilities
Accrued salaries and benefits53,553 56,925 
Retirement and pension plans56,919 53,496 
Operating lease liabilities75,993 86,816 
Other non-current liabilities28,254 4,735 
Total non-current liabilities214,719 201,972 
Total liabilities532,513 520,210 
Commitments and contingencies (Note 18)
Stockholders’ equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued at June 30, 2021 and December 31, 2020
  
Common stock, $0.01 par value, 100,000,000 shares authorized, 19,585,777 shares issued, 19,529,323 and 19,359,586 shares outstanding at June 30, 2021 and December 31, 2020, respectively
196 196 
Treasury stock at cost, 56,454 and 226,191 shares at June 30, 2021 and December 31, 2020, respectively
(2,002)(8,041)
Additional paid in capital228,116 231,048 
Retained earnings70,514 40,982 
Accumulated other comprehensive income2,729 3,417 
Total stockholders’ equity299,553 267,602 
Total liabilities and stockholders’ equity$832,066 $787,812 

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
1



HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2021202020212020
Revenue
Revenue before reimbursements (net revenue)$259,981 $145,603 $453,637 $317,084 
Reimbursements1,254 2,232 2,329 5,598 
Total revenue261,235 147,835 455,966 322,682 
Operating expenses
Salaries and benefits186,054 104,658 327,417 225,747 
General and administrative expenses27,353 30,846 54,721 62,223 
Cost of services14,675 1,115 16,131 1,978 
Impairment charges 32,970  32,970 
Restructuring charges3,193  7,054  
Reimbursed expenses1,254 2,232 2,329 5,598 
Total operating expenses232,529 171,821 407,652 328,516 
Operating income (loss)28,706 (23,986)48,314 (5,834)
Non-operating income (expense)
Interest, net35 (339)117 340 
Other, net3,033 3,076 6,115 (1,359)
Net non-operating income (expense)3,068 2,737 6,232 (1,019)
Income (loss) before income taxes31,774 (21,249)54,546 (6,853)
Provision for income taxes11,009 4,484 18,949 10,214 
Net income (loss)20,765 (25,733)35,597 (17,067)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment5 1,486 (688)(2,230)
Net unrealized gain (loss) on available-for-sale investments 15  (15)
Other comprehensive income (loss), net of tax5 1,501 (688)(2,245)
Comprehensive income (loss)$20,770 $(24,232)$34,909 $(19,312)
Weighted-average common shares outstanding
Basic19,510 19,298 19,449 19,245 
Diluted20,115 19,298 20,197 19,245 
Earnings (loss) per common share
Basic$1.06 $(1.33)$1.83 $(0.89)
Diluted$1.03 $(1.33)$1.76 $(0.89)
Cash dividends paid per share$0.15 $0.15 $0.30 $0.30 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
2



HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
 
   Additional
Paid in
Capital
Retained EarningsAccumulated
Other
Comprehensive
Income
Total
Common StockTreasury Stock
SharesAmountSharesAmount
Balance at December 31, 202019,586 $196 226 $(8,041)$231,048 $40,982 $3,417 $267,602 
Net income— — — — — 14,832 — 14,832 
Other comprehensive loss, net of tax— — — — — — (693)(693)
Common and treasury stock transactions:
Stock-based compensation— — — — 2,991 — — 2,991 
Vesting of equity awards, net of tax withholdings— — (138)4,951 (8,041)— — (3,090)
Cash dividends declared ($0.15 per share)
— — — — — (2,905)— (2,905)
Dividend equivalents on restricted stock units— — — — — (167)— (167)
Balance at March 31, 202119,586 $196 88 $(3,090)$225,998 $52,742 $2,724 $278,570 
Net income— — — — — 20,765 — 20,765 
Other comprehensive income, net of tax— — — — — — 5 5 
Common and treasury stock transactions:
Stock-based compensation— — — — 2,861 — — 2,861 
Vesting of equity awards— — (23)808 (808)— —  
Re-issuance of treasury stock— — (9)280 65 — — 345 
Cash dividends declared ($0.15 per share)
— — — — — (2,926)— (2,926)
Dividend equivalents on restricted stock units— — — — — (67)— (67)
Balance at June 30, 202119,586 $196 56 $(2,002)$228,116 $70,514 $2,729 $299,553 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
3



HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
   Additional
Paid in
Capital
Retained EarningsAccumulated
Other
Comprehensive
Income
Total
Common StockTreasury Stock
SharesAmountSharesAmount
Balance at December 31, 201919,586 $196 420 $(14,795)$228,807 $91,083 $3,824 $309,115 
Net income— — — — — 8,666 — 8,666 
Adoption of accounting standards— — — — — (332)— (332)
Other comprehensive loss, net of tax— — — — — — (3,746)(3,746)
Common and treasury stock transactions:
Stock-based compensation— — — — 2,614 — — 2,614 
Vesting of equity awards, net of tax withholdings— — (109)3,838 (5,388)— — (1,550)
Cash dividends declared ($0.15 per share)
— — — — — (2,876)— (2,876)
Dividend equivalents on restricted stock units— — — — — (126)— (126)
Balance at March 31, 202019,586 $196 311 $(10,957)$226,033 $96,415 $78 $311,765 
Net loss— — — — — (25,733)— (25,733)
Other comprehensive income, net of tax— — — — — — 1,501 1,501 
Common and treasury stock transactions:
Stock-based compensation— — — — 1,320 — — 1,320 
Vesting of equity awards— — (48)1,685 (1,685)— —  
Re-issuance of treasury stock— — (15)529 (183)— — 346 
Cash dividends declared ($0.15 per share)
— — — — — (2,891)— (2,891)
Dividend equivalents on restricted stock units— — — — — (105)— (105)
Balance at June 30, 202019,586 $196 248 $(8,743)$225,485 $67,686 $1,579 $286,203 

4



HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 Six Months Ended
June 30,
 20212020
Cash flows - operating activities
Net income (loss)$35,597 $(17,067)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization12,042 4,467 
Deferred income taxes(1,139)380 
Stock-based compensation expense5,852 3,934 
Accretion expense related to earnout payments181  
Gain on marketable securities(1)(122)
Loss on disposal of property and equipment115 275 
Impairment charges 32,970 
Changes in assets and liabilities, net of effects of acquisition:
Accounts receivable(70,980)(17,013)
Accounts payable2,497 2,145 
Accrued expenses(24,292)(129,842)
Restructuring accrual(4,663)(1,480)
Deferred revenue2,878 (2,673)
Income taxes recoverable and payable, net12,515 6,755 
Retirement and pension plan assets and liabilities1,436 1,275 
Prepaid expenses(5,982)(4,541)
Other assets and liabilities, net(18,399)(4,228)
Net cash used in operating activities(52,343)(124,765)
Cash flows - investing activities
Acquisition of business, net of cash acquired(31,969) 
Capital expenditures(2,706)(4,556)
Purchases of marketable securities and investments(1,671)(71,419)
Proceeds from sales of marketable securities and investments20,315 62,467 
Net cash used in investing activities(16,031)(13,508)
Cash flows - financing activities
Proceeds from line of credit 100,000 
Cash dividends paid(6,065)(5,997)
Payment of employee tax withholdings on equity transactions(3,090)(1,550)
Acquisition earnout payments (2,789)
Net cash (used in) provided by financing activities(9,155)89,664 
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash(1,112)(4,350)
Net decrease in cash, cash equivalents and restricted cash(78,641)(52,959)
Cash, cash equivalents and restricted cash at beginning of period316,489 271,719 
Cash, cash equivalents and restricted cash at end of period$237,848 $218,760 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

5



HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All tables in thousands, except per share figures)
(Unaudited) 

1.    Basis of Presentation of Interim Financial Information

The accompanying unaudited Condensed Consolidated Financial Statements of Heidrick & Struggles International, Inc. and subsidiaries (the “Company”) have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Significant items subject to estimates and assumptions include revenue recognition, income taxes, interim effective tax rate and the assessment of goodwill, other intangible assets and long lived assets for impairment. Estimates are subject to a degree of uncertainty and actual results could differ from these estimates. In the opinion of management, all adjustments necessary to fairly present the financial position of the Company at June 30, 2021 and December 31, 2020, the results of operations for the three and six months ended June 30, 2021 and 2020 and its cash flows for the six months ended June 30, 2021 and 2020 have been included and are of a normal, recurring nature except as otherwise disclosed. These financial statements and notes are to be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on February 24, 2021.

2.    Summary of Significant Accounting Policies

A complete listing of the Company’s significant accounting policies is discussed in Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Revenue Recognition

See Note 3, Revenue.

Cost of Services

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

Marketable Securities

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

Restricted Cash

The following table provides a reconciliation of the cash and cash equivalents between the Condensed Consolidated Balance Sheets and the Condensed Consolidated Statement of Cash Flows as of June 30, 2021 and 2020, and December 31, 2020 and 2019:
June 30,December 31,
2021202020202019
Cash and cash equivalents$237,832 $218,760 $316,473 $271,719 
Restricted cash included within other non-current assets16  16  
Total cash, cash equivalents and restricted cash$237,848 $218,760 $316,489 $271,719 

6



Earnings (Loss) per Common Share

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

The following table sets forth the computation of basic and diluted earnings (loss) per share:
Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Net income (loss)$20,765 $(25,733)$35,597 $(17,067)
Weighted average shares outstanding:
Basic19,510 19,298 19,449 19,245 
Effect of dilutive securities:
Restricted stock units498  593  
Performance stock units107  155  
Diluted20,115 19,298 20,197 19,245 
Basic earnings (loss) per share$1.06 $(1.33)$1.83 $(0.89)
Diluted earnings (loss) per share$1.03 $(1.33)$1.76 $(0.89)
Weighted average restricted stock units and performance stock units outstanding that could be converted into approximately 229,000 and 30,000 common shares, respectively, for the three months ended June 30, 2020, and 392,000 and 84,000 common shares, respectively, for the six months ended June 30, 2020, were not included in the computation of diluted earnings (loss) per share because the effects would be anti-dilutive.

Reclassifications

Certain prior year amounts have been recast as a result of the Company's presentation of Cost of services in the Condensed Consolidated Statements of Comprehensive Income (Loss). The reclassifications had no impact on net income (loss), net cash flows or stockholders' equity.

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in Operating Lease Right-of-Use Assets, Operating Lease Liabilities - Current and Operating Lease Liabilities - Non-Current in our Condensed Consolidated Balance Sheets. The Company does not have any leases that meet the finance lease criteria.

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

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

7



Recently Issued Financial Accounting Standards

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance is intended to provide temporary optional expedients and exceptions to the guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is effective March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

Recently Adopted Financial Accounting Standards

On January 1, 2021, the Company adopted ASU No. 2019-12, Simplifying the Accounting for Income Taxes. The guidance simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Accounting Standards Codification ("ASC") 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The adoption had no impact on the Condensed Consolidated Statement of Comprehensive Income, Condensed Consolidated Balance Sheet, Condensed Consolidated Statement of Cash Flows and Condensed Consolidated Statement of Changes in Stockholders' Equity in any period presented.

3.    Revenue

Executive Search

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

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

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

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

8



Heidrick Consulting

Revenue is recognized as performance obligations are satisfied by transferring a good or service to a client. Heidrick Consulting enters into contracts with clients that outline the general terms and conditions of the assignment to provide succession planning, executive assessment, top team and board effectiveness and culture shaping programs. The consideration the Company expects to receive under each contract is generally fixed. Most of the Company's consulting contracts contain one performance obligation, which is the overall process of providing the consulting service requested by the client. The majority of our consulting revenue is recognized over time utilizing both input and output methods. Contracts that contain coaching sessions, training sessions or the completion of assessments are recognized using the output method as each session or assessment is delivered to the client. Contracts that contain general consulting work are recognized using the input method utilizing a measure of progress that is based on time incurred on the project.
The Company enters into enterprise agreements with clients to provide a license for online access, via the Company's Culture Connect platform, to training and other proprietary material related to the Company's culture shaping programs. The consideration the Company expects to receive under the terms of an enterprise agreement is comprised of a single fixed fee. The enterprise agreements contain multiple performance obligations, the delivery of materials via Culture Connect and material rights related to options to renew enterprise agreements at a significant discount. The Company allocates the transaction price to the performance obligations in the contract on a stand-alone selling price basis. The stand-alone selling price for the initial term of the enterprise agreement is outlined in the contract and is equal to the price paid by the client for the agreement over the initial term of the contract. The stand-alone selling price for the options to renew, or material right, are not directly observable and must be estimated. This estimate is required to reflect the discount the client would obtain when exercising the option to renew, adjusted for the likelihood that the option will be exercised. The Company estimates the likelihood of renewal using a historical analysis of client renewals. Access to Culture Connect represents a right to access the Company’s intellectual property that the client simultaneously receives and consumes as the Company performs under the agreement, and therefore the Company recognizes revenue over time. Given the continuous nature of this commitment, the Company utilizes straight-line ratable revenue recognition over the estimated subscription period as the Company's clients will receive and consume the benefits from Culture Connect equally throughout the contract period. Revenue related to client renewals of enterprise agreements is recognized over the term of the renewal, which is generally twelve months. Enterprise agreements do not comprise a significant portion of the Company's revenue.

On-Demand Talent

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

Contract Balances

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

Unbilled receivables: Unbilled revenue represents contract assets from revenue recognized over time in excess of the amount billed to the client and the amount billed to the client is solely dependent upon the passage of time. This amount includes revenue recognized in excess of billed executive search retainers and Heidrick Consulting fees.

Contract assets: Contract assets represent revenue recognized over time in excess of the amount billed to the client and the amount billed to the client is not solely subject to the passage of time. This amount primarily includes revenue recognized for
9



upticks and contingent placement fees in executive search contracts.

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

The following table outlines the changes in the contract asset and liability balances from December 31, 2020 to June 30, 2021:
June 30,
2021
December 31,
2020
Change
Contract assets
Unbilled receivables, net$17,434 $9,907 $7,527 
Contract assets12,145 9,745 2,400 
Total contract assets
29,579 19,652 9,927 
Contract liabilities
Deferred revenue$41,915 $38,050 $3,865 

During the six months ended June 30, 2021, the Company recognized revenue of $31.7 million that was included in the contract liabilities balance at the beginning of the period. The amount of revenue recognized during the six months ended June 30, 2021, from performance obligations partially satisfied in previous periods as a result of changes in the estimates of variable consideration was $21.8 million.

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

4.    Credit Losses

The Company is exposed to credit losses primarily through the provision of its executive search and consulting services. The Company’s expected credit loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of clients' trade accounts receivables. Due to the short-term nature of such receivables, the estimate of amount of accounts receivable that may not be collected is primarily based on historical loss-rate experience. When required, the Company adjusts the loss-rate methodology to account for current conditions and reasonable and supportable expectations of future economic and market conditions. The Company generally assesses future economic conditions for a period of sixty to ninety days, which corresponds with the contractual life of its accounts receivables. Additionally, specific allowance amounts are established to record the appropriate provision for clients that have a higher probability of default. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of clients' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. The Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and determined that the estimate of credit losses was not significantly impacted.

The activity in the allowance for credit losses on the Company's trade receivables is as follows:
Balance at December 31, 2020$6,557 
Provision for credit losses2,727 
Write-offs(1,877)
Foreign currency translation(26)
Balance at June 30, 2021$7,381 
10




The fair value and unrealized losses on available for sale debt securities, aggregated by investment category and the length of time the security has been in an unrealized loss position, are as follows:
Less Than 12 MonthsBalance Sheet Classification
Balance at December 31, 2020Fair ValueUnrealized LossCash and Cash EquivalentsMarketable Securities
U.S. Treasury securities$31,997 $1 $31,997 $ 

There were no available for sale debt securities in a loss position at June 30, 2021.

5.    Property and Equipment, net

The components of the Company’s property and equipment are as follows:
June 30,
2021
December 31,
2020
Leasehold improvements$41,232 $40,320 
Office furniture, fixtures and equipment15,147 14,816 
Computer equipment and software24,726 25,544 
Property and equipment, gross81,105 80,680 
Accumulated depreciation(58,423)(57,188)
Property and equipment, net$22,682 $23,492 

Depreciation expense for the three months ended June 30, 2021 and 2020 was $1.7 million and $1.9 million, respectively. Depreciation expense for the six months ended June 30, 2021 and 2020 was $3.5 million and $4.1 million, respectively.

6.    Leases

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

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

Office leases have remaining lease terms that range from less than one year to 12.0 years, some of which also include options to extend or terminate the lease. Most office leases contain both fixed and variable lease payments. Variable lease costs consist primarily of rent escalations based on an established index or rate and taxes, insurance, and common area or other maintenance costs, which are paid based on actual costs incurred by the lessor. The Company has elected to utilize the available practical expedient to not separate lease and non-lease components for office leases.

As part of the Company's restructuring plan, a lease component related to one of the Company's offices was abandoned and the useful life of the associated right-of-use asset was shortened to correspond with the cease-use date. As a result of the change in the useful life, approximately $3.5 million and $7.5 million of right-of-use asset amortization was accelerated and recorded in Restructuring charges in the Condensed Consolidated Statements of Comprehensive Income (Loss) and Depreciation and amortization in the Condensed Consolidated Statements of Cash Flows during the three and six months ended June 30, 2021, respectively.

Equipment leases, which are comprised of vehicle and office equipment leases, have remaining terms that range from less
11



than one year to 4.8 years, some of which also include options to extend or terminate the lease. The Company's equipment leases do not contain variable lease payments. The Company separates the lease and non-lease components for its equipment leases. Equipment leases do not comprise a significant portion of the Company's lease portfolio.

Lease cost components included within General and Administrative Expenses in our Condensed Consolidated Statements of Comprehensive Income (Loss) were as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Operating lease cost$4,908 $6,186 $9,775 $12,447 
Variable lease cost1,077 1,771 2,305 3,844 
Total lease cost$5,985 $7,957 $12,080 $16,291 

Supplemental cash flow information related to the Company's operating leases is as follows for the six months ended June 30:
20212020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$17,407 $15,599 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$898 $10,095 

The weighted average remaining lease term and weighted average discount rate for operating leases as of June 30, is as follows:
20212020
Weighted Average Remaining Lease Term
Operating leases5.8 years4.6 years
Weighted Average Discount Rate
Operating leases3.41 %3.77 %

The future maturities of the Company's operating lease liabilities as of June 30, 2021, for the years ended December 31 is as follows:
Operating Lease Maturity
2021$13,204 
202226,315 
202324,049 
202414,132 
20256,715 
Thereafter30,212 
Total lease payments114,627 
Less: Interest(11,062)
Present value of lease liabilities$103,565 

7.    Financial Instruments and Fair Value

Cash, Cash Equivalents and Marketable Securities

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

12



The Company's cash, cash equivalents, and marketable securities by significant investment category are as follows:
Cash and Cash Equivalents
Balance at June 30, 2021
Cash$137,915 
Level 1(1):
Money market funds99,917 
Total Level 199,917 
Total$237,832 

Fair ValueBalance Sheet Classification
Amortized CostUnrealized GainsUnrealized LossesFair ValueCash and Cash EquivalentsMarketable Securities
Balance at December 31, 2020
Cash$230,490 $— 
Level 1(1):
Money market funds53,986 — 
U.S. Treasury securities51,996 1 (1)51,996 31,997 19,999 
Total Level 151,996 1 (1)51,996 85,983 19,999 
Total$51,996 $1 $