Hudson Global(US:HSON)2025-08-08 21:06PART I – FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for Hudson Global, Inc. show a slight decrease in revenue and an increased net loss for the second quarter of 2025 compared to 2024, with improved cash flow from operations. Condensed Consolidated Statements of Operations For Q2 2025, revenue slightly decreased to $35.5 million, resulting in a wider net loss of $688 thousand, while the six-month period saw a narrowed net loss despite a revenue decline. Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $35,541 | $35,712 | $67,407 | $69,603 | | Operating Loss | $(211) | $(187) | $(1,935) | $(3,227) | | Net Loss | $(688) | $(441) | $(2,444) | $(3,339) | | Diluted Loss Per Share | $(0.23) | $(0.15) | $(0.82) | $(1.10) | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $55.6 million, driven by higher accounts receivable, while total liabilities also rose to $15.4 million, leading to a slight decrease in stockholders' equity. Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $16,837 | $17,011 | | Accounts receivable, net | $23,549 | $20,093 | | 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 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly improved to $0.7 million for the six months ended June 30, 2025, compared to $6.1 million in the prior year, with minimal impact from investing and financing activities. Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(663) | $(6,058) | | Net cash (used in) provided by investing activities | $(43) | $1,053 | | Net cash used in financing activities | $(31) | $(2,580) | | Net decrease in cash, cash equivalents, and restricted cash | $(144) | $(7,891) | Notes to Condensed Consolidated Financial Statements The notes detail the company's RPO business, a pending merger with Star Equity Holdings, strategic expansions, and the post-quarter acquisition of Alpha Consulting Group in Japan. - The company entered into a merger agreement with Star Equity Holdings, Inc. on May 21, 2025, which, if consummated, will transform Hudson into a diversified holding company262729 - On July 23, 2025, the company acquired Alpha Consulting Group ("ACG"), a Japan-based recruitment services provider, marking its entry into the Japanese market129 Disaggregation of Revenue (in thousands) | Revenue Source | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | RPO | $17,428 | $17,770 | $33,170 | $33,608 | | Contracting | $18,113 | $17,942 | $34,237 | $35,995 | | Total Revenue | $35,541 | $35,712 | $67,407 | $69,603 | - The company manages its business across three reportable geographic segments: Americas, Asia Pacific, and EMEA, with Asia Pacific being the largest segment by revenue ($40.7 million) for the six months ended June 30, 2025105109 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes a slight revenue decline in H1 2025 to challenging market conditions, while EBITDA loss improved, and the company maintains sufficient liquidity. - The company is facing challenging market conditions due to persistent inflation, higher interest rates, and decreased demand for labor in certain markets, which are expected to continue into the next quarter139140 - A pending merger with Star Equity Holdings, Inc. was announced on May 21, 2025, which, if completed, will transform the company into a diversified holding company137138 Financial Performance Highlights - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Revenue | $35.5M | $35.7M | $(0.2)M | -0.5% | | Adjusted Net Revenue | $18.6M | $17.6M | $1.0M | +5.8% | | EBITDA (loss) | $(0.2)M | $0.0M | $(0.2)M | N/A | | Net Loss | $(0.7)M | $(0.4)M | $(0.3)M | N/A | Financial Performance Highlights - H1 2025 vs H1 2024 | Metric | H1 2025 | H1 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Revenue | $67.4M | $69.6M | $(2.2)M | -3.2% | | Adjusted Net Revenue | $35.0M | $33.9M | $1.1M | +3.2% | | EBITDA (loss) | $(1.7)M | $(2.7)M | $1.0M | N/A | | Net Loss | $(2.4)M | $(3.3)M | $0.9M | N/A | Results of Operations - Americas The Americas segment reported revenue growth of 2% in Q2 2025 and 8% in H1 2025, driven by new contracting clients, leading to an improved EBITDA of $0.1 million for H1 2025. Americas Performance (in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $7.1 | $7.0 | $14.0 | $13.0 | | Adjusted Net Revenue | $6.3 | $6.3 | $12.3 | $12.1 | | EBITDA (loss) | $0.2 | $0.4 | $0.1 | $(0.5) | - For H1 2025, contracting revenue increased by 478% due to new client engagements, while RPO revenue decreased by 6% due to lower demand from existing clients155 Results of Operations - Asia Pacific Asia Pacific revenue decreased by 3% in Q2 2025 and 5% in H1 2025 on a constant currency basis, primarily due to a decline in contracting revenue in Australia, yet profitability significantly improved with H1 2025 EBITDA reaching $1.7 million. Asia Pacific Performance (in millions, constant currency) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $21.6 | $22.2 | $40.7 | $42.9 | | Adjusted Net Revenue | $8.8 | $7.5 | $16.0 | $13.9 | | EBITDA (loss) | $1.4 | $0.2 | $1.7 | $(0.4) | - In Australia, H1 2025 revenue declined 10% due to a 17% decrease in contracting revenue, partially offset by a 12% increase in RPO revenue167 Results of Operations - EMEA EMEA constant currency revenue increased by 6% in Q2 2025 but remained flat for H1 2025, with a 22% increase in contracting revenue offset by a 14% decrease in RPO revenue, resulting in an EBITDA loss of $1.3 million for H1 2025. EMEA Performance (in millions, constant currency) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $6.8 | $6.4 | $12.7 | $12.8 | | Adjusted Net Revenue | $3.5 | $3.8 | $6.7 | $7.8 | | EBITDA (loss) | $(0.7) | $0.2 | $(1.3) | $0.5 | - The increase in SG&A and Non-Op for H1 2025 was primarily the result of higher consultant staff costs192 Liquidity and Capital Resources As of June 30, 2025, the company maintained $17.5 million in cash and equivalents, with significantly improved operating cash flow and an undrawn Australian invoice finance facility, indicating sufficient liquidity for the next 12 months. Cash Position (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents, and restricted cash | $17.5 | $17.7 | - Net cash used in operating activities decreased by $5.4 million in H1 2025 compared to H1 2024, driven by more favorable working capital and a lower net loss206 - The company has access to a 4 million Australian dollar invoice finance credit facility, which was undrawn as of June 30, 2025209211 Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Hudson Global, Inc. is exempt from providing quantitative and qualitative disclosures about market risk. - As a smaller reporting company, Hudson Global, Inc. is not required to provide quantitative and qualitative disclosures about market risk222 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting. - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025223 - No material changes were made to the company's internal control over financial reporting during the six months ended June 30, 2025224 PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any pending legal proceedings expected to have a material adverse effect on its financial condition or results of operations. - The company reports no pending legal proceedings that would be reasonably expected to have a material adverse effect226 Item 1A. Risk Factors The company incorporates by reference risk factors from its 2024 Annual Report on Form 10-K and additional risks related to the pending merger from its Registration Statement on Form S-4. - Risk factors are incorporated by reference from the company's 2024 Form 10-K and the Form S-4 filed on July 23, 2025, related to the pending merger227 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any common stock during Q2 2025, with approximately $2.1 million remaining available under its authorized share repurchase program. - No shares were repurchased during the three months ended June 30, 2025228229 - As of June 30, 2025, approximately $2,118,651 remained available under the company's share repurchase program authorized on August 8, 2023229 Item 6. Exhibits The report includes key exhibits such as the merger agreement with Star Equity Holdings, CEO and CFO certifications, and iXBRL formatted financial statements. - Key exhibits filed include the merger agreement with Star Equity Holdings, Inc. and Sarbanes-Oxley certifications by the CEO and CFO233