The Caldwell Partners International Inc. (TSX: CWL) reported a “suppressed hiring environment” impacted business in its fiscal third quarter ended May 31. Professional fee revenue fell 37.5% in the quarter to C$25.9 million (US$19.1 million) at the Toronto-based provider of direct-hire and executive search services. Still, net earnings at Caldwell rose 8.0%.

“Although retained executive search experienced a significant improvement in the third quarter, demand continues to remain below last year as well as pre-pandemic levels, indicating that executive search has yet to fully exit the current negative economic cycle,” according to a Caldwell regulatory filing.

However, CEO John Wallace noted professional fees were up year over year and the company returned to profitability.

“At Caldwell, our executive search team has drawn on their experience and expertise to deliver strong results in a slower market,” Wallace said in a press release. “We have leveraged our capabilities and industry diversification, we have managed to the cycle, and by growing our partner team by 12% over last year — when we posted record-high revenue — we are very well-positioned as search volumes recover.”

Professional fees in the company’s Caldwell executive search operations fell 19.0% year over year in the first quarter to C$21.5 million (US$15.8 million). The decrease was 22.7% in constant currency.

The Caldwell division saw a 14.7% decrease in the number of assignments and a lower average fee per assignment of C$150 (US$110), down from C$177 (US$130) in the year-ago quarter.

However, professional fees in the company’s IQTalent segment fell 70.7%, and the company noted the on-demand hiring market in the US continues to be suppressed. Total professional fees at IQTalent were C$4.5 million (US$3.3 million).

IQTalent provides on-demand talent acquisition augmentation as a managed service to clients, who are typically in-house talent acquisition departments. Services include research, sourcing and full lifecycle recruiting services.

IQTalent’s operations had been largely concentrated on the technology and early-stage companies that were hardest hit by the economic slowdown, according to The Caldwell Partners. IQTalent cut staff by 113 people in the first quarter, which resulted in severance costs of C$2.3 million. In the second quarter, IQTalent furloughed 21 employees. IQTalent’s software business and related development team were also spun off into to a separate entity called IQRecruit Inc.

Share price and market cap

Shares in Caldwell were up 14.81% to C$1.24 (US$0.94) as of noon Eastern time today in Toronto; they were 30.53% above their 52-week low, according to FT.com. The company had a market cap of C$27.98 million (US$21.1 million).