Hudson Global(HSON) - 2025 Q2 - Quarterly Results

Q2 2025 Performance and Strategic Overview Hudson Global's Q2 2025 saw a slight revenue dip but strong adjusted net revenue growth and improved profitability, driven by strategic acquisitions and investments Financial Highlights In the second quarter of 2025, Hudson Global reported a slight revenue decrease of 0.5% to $35.5 million, but saw a 5.8% increase in adjusted net revenue to $18.6 million. The company's net loss widened to $0.7 million from $0.4 million year-over-year. However, on an adjusted basis, net income per diluted share improved significantly to $0.12 from $0.04, and adjusted EBITDA nearly doubled to $1.3 million Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change | Constant Currency Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $35.5M | $35.7M | -0.5% | -0.2% | | Adjusted Net Revenue | $18.6M | $17.6M (implied) | +5.8% | +5.1% | | Net Loss | ($0.7M) | ($0.4M) | Increased Loss | N/A | | Diluted Loss Per Share | ($0.23) | ($0.15) | Increased Loss | N/A | | Adjusted Net Income Per Diluted Share | $0.12 | $0.04 | +200% | N/A | | Adjusted EBITDA | $1.3M | $0.7M | +85.7% | N/A | - The company ended the second quarter with a total cash position of $17.5 million, including restricted cash[7] Management Commentary and Strategy Management attributes the growth in adjusted net revenue to a modest business upturn, especially in the Asia Pacific region. The company is focused on a growth strategy involving organic expansion, strategic acquisitions, and cross-regional integration. Key activities in the first half of 2025 include strategic hires, the acquisition of Alpha Consulting Group in Japan and McKinsey CMO Group (CMRG), and a $1.4 million investment in sales, marketing, and technology. Additionally, a definitive merger agreement was signed with Star Equity Holdings, which is expected to create value through increased scale and cost synergies - Strategic initiatives in H1 2025 included key hires and two acquisitions: Alpha Consulting Group to enter the Japanese market and McKinsey CMO Group (CMRG) to enhance recruitment marketing[5] - The company invested approximately $1.4 million in sales, marketing, and technology during the first half of 2025 to support future growth[5] - A definitive merger agreement was signed with Star Equity Holdings (Nasdaq: STRR) in May 2025, pending shareholder approval. The merger is expected to increase size, diversify revenue, and eliminate redundant public company costs[6] Regional Performance Hudson Global's Q2 2025 regional performance showed strong adjusted net revenue growth in Asia Pacific, mixed results in Americas, and a decline in EMEA Americas The Americas region reported a 2% increase in revenue to $7.1 million in Q2 2025. However, adjusted net revenue saw a slight decrease of 1% to $6.3 million. EBITDA fell to $0.2 million from $0.4 million, while adjusted EBITDA saw a modest increase to $0.7 million Americas Q2 2025 Performance (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $7.1M | $7.0M (approx) | +2% | | Adjusted Net Revenue | $6.3M | $6.3M (approx) | -1% | | EBITDA | $0.2M | $0.4M | -50% | | Adjusted EBITDA | $0.7M | $0.6M | +16.7% | Asia Pacific The Asia Pacific region demonstrated strong growth in profitability. While revenue decreased by 3% to $21.6 million, adjusted net revenue grew significantly by 17% to $8.8 million. EBITDA surged to $1.4 million from $0.2 million, and adjusted EBITDA more than doubled to $1.9 million from $0.8 million in the prior-year quarter Asia Pacific Q2 2025 Performance (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $21.6M | $22.6M | -3% (const. currency) | | Adjusted Net Revenue | $8.8M | $7.6M | +17% (const. currency) | | EBITDA | $1.4M | $0.2M | +600% | | Adjusted EBITDA | $1.9M | $0.8M | +137.5% | Europe, Middle East, and Africa ("EMEA") The EMEA region experienced mixed results with a 6% increase in revenue to $6.8 million, but a 9% decrease in adjusted net revenue to $3.5 million. The region swung to an EBITDA loss of $0.7 million and an adjusted EBITDA loss of $0.4 million, compared to positive contributions in the same period last year EMEA Q2 2025 Performance (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $6.8M | $6.1M | +6% (const. currency) | | Adjusted Net Revenue | $3.5M | $3.6M | -9% (const. currency) | | EBITDA | ($0.7M) | $0.1M | Loss vs. Profit | | Adjusted EBITDA | ($0.4M) | $0.3M | Loss vs. Profit | Corporate Financial Position Hudson Global maintained a strong cash position and improved operating cash flow in Q2 2025, while continuing its share repurchase program and protecting its NOL carryforwards Corporate Costs Corporate costs for Q2 2025 were $0.9 million, remaining flat compared to the prior year. These figures exclude non-recurring expenses, which amounted to $0.6 million in Q2 2025 and $0.2 million in Q2 2024 - Corporate costs were approximately flat year-over-year at $0.9 million in Q2 2025[13] - Non-recurring corporate expenses increased to $0.6 million in Q2 2025 from $0.2 million in Q2 2024[13] Liquidity and Capital Resources The company maintained a solid liquidity position, ending Q2 2025 with $17.5 million in cash. A notable improvement was seen in cash flow from operations, which was a positive $0.1 million, compared to a significant outflow of $4.3 million in the same quarter of the previous year - The company held $17.5 million in cash, including $0.7 million in restricted cash, at the end of Q2 2025[14] - Cash flow from operations was an inflow of $0.1 million in Q2 2025, a significant turnaround from an outflow of $4.3 million in Q2 2024[14] Shareholder Programs Hudson Global continues to execute its $5 million share repurchase program, having bought back $2.9 million worth of shares to date with $2.1 million remaining. The company also highlights its valuable $240 million U.S. Net Operating Loss (NOL) carryforward, which is protected by a rights agreement limiting individual stock ownership to 4.99% without board approval - Under its $5 million share repurchase program effective August 2023, the company has purchased 175,041 shares for $2.9 million, with $2.1 million remaining[15] - The company possesses a valuable asset of $240 million in U.S. Net Operating Loss (NOL) carryforwards as of December 31, 2024, protected by a shareholder rights plan[16] Financial Statements and Reconciliations This section provides detailed financial statements including income statements, balance sheets, and reconciliations of non-GAAP measures like Adjusted EBITDA and Adjusted Net Income Condensed Consolidated Statements of Operations For the three months ended June 30, 2025, the company's revenue was $35.5 million, a slight decrease from $35.7 million in the prior year. Total operating expenses were marginally lower at $35.8 million, resulting in an operating loss of $0.2 million. The net loss for the quarter widened to $0.7 million, or ($0.23) per share, compared to a net loss of $0.4 million, or ($0.15) per share, in Q2 2024 Q2 2025 Income Statement Summary (in thousands) | Line Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $35,541 | $35,712 | | Total operating expenses | $35,752 | $35,899 | | Operating loss | ($211) | ($187) | | Net loss | ($688) | ($441) | | Diluted loss per share | ($0.23) | ($0.15) | Condensed Consolidated Balance Sheets As of June 30, 2025, Hudson Global had total assets of $55.6 million, up from $52.6 million at the end of 2024. The increase was driven primarily by higher accounts receivable. Total liabilities also increased to $15.4 million from $12.2 million, while total stockholders' equity slightly decreased to $40.1 million Balance Sheet Summary (in thousands) | Line Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $16,837 | $17,011 | | Total current assets | $43,293 | $40,140 | | Total assets | $55,577 | $52,583 | | Total current liabilities | $14,256 | $11,222 | | Total liabilities | $15,447 | $12,155 | | Total stockholders' equity | $40,130 | $40,428 | Segment Analysis and Non-GAAP Reconciliation This section reconciles the company's GAAP net loss to the non-GAAP measure of Adjusted EBITDA. For Q2 2025, the net loss of $0.7 million was adjusted for taxes, interest, D&A, stock-based compensation, and non-recurring fees to arrive at an Adjusted EBITDA of $1.3 million. The Asia Pacific region was the largest contributor to positive Adjusted EBITDA, while EMEA and Corporate segments were detractors Q2 2025 Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Amount | | :--- | :--- | | Net loss | ($688) | | Provision from income taxes | $345 | | Interest income, net | ($54) | | Depreciation and amortization | $245 | | EBITDA (loss) | ($152) | | Stock-based compensation expense | $243 | | Non-recurring severance and professional fees | $1,039 | | Other non-operating adjustments | $186 | | Adjusted EBITDA | $1,316 | Constant Currency Reconciliation The company provides a constant currency analysis to show underlying business trends without the impact of foreign exchange fluctuations. For Q2 2025, the reported revenue decline of 0.5% was a 0.2% decline in constant currency. More significantly, the reported 5.8% growth in adjusted net revenue was a 5.1% growth on a constant currency basis, indicating solid underlying operational performance Q2 2025 Constant Currency Impact (in thousands) | Metric | As Reported (2025) | As Reported (2024) | Constant Currency (2024) | % Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $35,541 | $35,712 | $35,628 | -0.2% | | Total Adjusted Net Revenue | $18,635 | $17,615 | $17,738 | +5.1% | Adjusted Net Income Per Share Reconciliation This table reconciles GAAP net loss to non-GAAP adjusted net income. For Q2 2025, the GAAP net loss of $0.7 million, or ($0.23) per share, was adjusted for $1.0 million in non-recurring severance and professional fees (after tax). This resulted in an adjusted net income of $0.4 million, or $0.12 per diluted share, a significant improvement from $0.04 in the prior year Q2 2025 Reconciliation to Adjusted Net Income Per Share | Line Item | Net Income (in thousands) | Per Diluted Share | | :--- | :--- | :--- | | Net loss (GAAP) | $(688) | $(0.23) | | Non-recurring fees (after tax) | $1,039 | $0.35 | | Adjusted net income (Non-GAAP) | $351 | $0.12 | Important Disclosures This section outlines critical legal and financial disclaimers, including forward-looking statements and specific information regarding the proposed merger with Star Equity Holdings Forward-Looking Statements This section contains the standard "safe harbor" statement, cautioning investors that statements in the press release that are not historical facts are forward-looking and subject to risks and uncertainties. It lists numerous risk factors, including economic conditions, the ability to achieve strategic initiatives, and specific risks related to the proposed merger with Star Equity Holdings - The press release includes forward-looking statements concerning future financial conditions and business prospects, which are subject to significant risks and uncertainties[19] - Key risks highlighted include global economic fluctuations, risks related to the proposed merger with Star Equity Holdings, competition, and reliance on information systems[19] Merger Solicitation and Information This section provides legal disclosures related to the proposed merger with Star Equity Holdings. It clarifies that the press release is considered solicitation material and is not a substitute for official SEC filings. Investors are strongly urged to read the S-4 Registration Statement and the joint Proxy Statement/Prospectus for complete and important information about the transaction - This press release is deemed solicitation material regarding the proposed merger with Star Equity Holdings[21] - Investors are urged to read the official Registration Statement on Form S-4 and the Proxy Statement/Prospectus, which contain important information about the merger[21] - Official documents related to the merger are available for free on the SEC's website (sec.gov) and Hudson's investor relations website[23]