GEE Group(JOB) - 2025 Q3 - Quarterly Results

Financial Highlights GEE Group reported declining Q3 and YTD FY2025 revenues, improved gross margins, reduced SG&A, a net loss from continuing operations, and maintained strong liquidity Q3 & YTD FY2025 Key Financial Metrics (Continuing Operations) | Metric | Q3 2025 | Q3 2024 | YoY Change | YTD 2025 | YTD 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Consolidated Revenues | $24.5 million | $27.0 million | -9% | $73.0 million | $80.8 million | -10% | | Gross Profit | $8.7 million | $9.2 million | -5% | $25.0 million | $27.0 million | -7% | | Gross Margin | 35.4% | 34.1% | +1.3 percentage points | 34.2% | 33.4% | +0.8 percentage points | | SG&A Expenses | $9.0 million | $9.8 million | -8% | $26.7 million | $29.5 million | -9% | | Loss from Continuing Ops | $(0.4) million | $(18.1) million | N/A | $(34.0) million | $(20.5) million | N/A | | Adjusted EBITDA | $(25) thousand | $(329) thousand | N/A | $(918) thousand | $(1.0) million | N/A | - The decrease in consolidated revenues was primarily attributed to volatile macroeconomic conditions, high interest rates, and client caution, leading to elongated hiring cycles and fewer job orders; artificial intelligence (AI) replacing certain tasks contributed to a lesser extent[4] - Gross margins improved year-over-year for both the three and nine-month periods, mainly due to a higher mix of direct hire placement revenues, which have a 100% gross margin[4] - The Industrial Staffing Services segment was sold during the quarter and its results are reclassified as discontinued operations, with the sale resulting in a net gain of $133 thousand[1][5] Balance Sheet and Liquidity as of June 30, 2025 | Metric | Value | | :--- | :--- | | Cash Balances | $18.6 million | | ABL Credit Facility Availability | $6.6 million (undrawn) | | Net Working Capital | $24.1 million | | Current Ratio | 4.2 | | Long-Term Debt | Zero | | Shareholders' Equity | $50.4 million | | Net Book Value per Share | $0.46 | | Net Tangible Book Value per Share | $0.23 | Management Commentary and Business Outlook Management focuses on adapting the business plan with new revenue opportunities, AI tools, and expense reduction, expecting gradual demand improvement - CEO Derek E. Dewan stated the company is adjusting its business plan to navigate the challenging environment by targeting new revenue, using AI to boost efficiency, and cutting expenses[10] - The company has implemented and incorporated AI into its strategic plan to enhance recruiting and sales, and to support clients' own AI implementation needs[10] - The demand environment for the remainder of 2025 is expected to be volatile but gradually improve; the company plans to increase market share through several initiatives[12] - Aggressive AI-assisted sales process - Increased use of offshore recruiting to maximize fill rates - Expansion into value-added services like HR consulting, IT statement of work (SOW) projects, and resource process outsourcing (RPO) - On January 3, 2025, the company acquired Hornet Staffing, Inc. to enhance its ability to compete for business from Fortune 1000 companies, leveraging Hornet's expertise with MSPs and VMSs and its offshore recruiting team[11] Non-GAAP Financial Measures and Reconciliations The company uses non-GAAP measures like Adjusted EBITDA and free cash flow for performance evaluation, with detailed GAAP reconciliations provided - The company uses non-GAAP measures like adjusted net loss, EBITDA, adjusted EBITDA, and free cash flow for internal evaluation of operating performance, financial planning, and other management purposes[15] Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA (in thousands) | Description | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss from continuing operations | $(401) | $(18,105) | $(34,041) | $(20,541) | | Non-cash goodwill impairment | - | $14,201 | $22,000 | $14,201 | | Non-GAAP EBITDA | $(270) | $(524) | $(1,728) | $(2,533) | | Non-GAAP Adjusted EBITDA | $(25) | $(329) | $(918) | $(1,028) | Reconciliation to Non-GAAP Free Cash Flow (in thousands) | Description | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,884) | $(1,117) | | Acquisition of property and equipment | $(16) | $(58) | | Non-GAAP free cash flow | $(1,900) | $(1,175) | Financial Statements This section presents GEE Group's unaudited consolidated financial statements, including Q3 and YTD FY2025 statements of operations and balance sheets Consolidated Statements of Operations GEE Group's net revenues decreased for the nine months ended June 30, 2025, resulting in a significant loss from continuing operations due to a goodwill impairment Consolidated Statements of Operations Highlights (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $24,523 | $27,048 | $73,043 | $80,774 | | Contract staffing services | $21,301 | $23,761 | $64,310 | $71,977 | | Direct hire placement services | $3,222 | $3,287 | $8,733 | $8,797 | | Gross Profit | $8,681 | $9,229 | $24,967 | $26,958 | | Goodwill impairment charge | $0 | $14,201 | $22,000 | $14,201 | | Loss from Operations | $(544) | $(20,717) | $(24,537) | $(24,303) | | Loss from Continuing Operations | $(401) | $(18,105) | $(34,041) | $(20,541) | | Consolidated Net Loss | $(423) | $(19,286) | $(34,234) | $(21,849) | | Diluted EPS (Continuing Ops) | $(0.00) | $(0.17) | $(0.31) | $(0.19) | Consolidated Balance Sheets As of June 30, 2025, GEE Group's total assets decreased to $60.6 million, primarily due to reduced goodwill, while maintaining strong cash and shareholders' equity Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Current Assets | | | | Cash | $18,622 | $20,735 | | Accounts receivable, net | $11,752 | $12,751 | | Total current assets | $31,678 | $35,401 | | Non-Current Assets | | | | Goodwill | $24,762 | $46,008 | | Total Assets | $60,564 | $95,902 | | Current Liabilities | | | | Total current liabilities | $7,566 | $9,322 | | Total Liabilities | $10,169 | $11,691 | | Total Shareholders' Equity | $50,395 | $84,211 | | Total Liabilities & Equity | $60,564 | $95,902 | Corporate Information GEE Group Inc. provides specialized staffing solutions and will host an investor webcast to discuss results, with standard forward-looking statement disclaimers - GEE Group provides professional staffing services in information technology, engineering, finance, accounting, and healthcare through brands like Access Data Consulting, Agile Resources, Omni-One, Paladin Consulting, Scribe Solutions, and various SNI brands[30] - The company will host an investor webcast and conference call on Thursday, August 14, 2025, at 11 a.m. EDT to discuss the fiscal 2025 third quarter and YTD results[8] - The press release contains forward-looking statements subject to risks and uncertainties, and readers are advised to consult the company's SEC filings for a more detailed understanding of these risk factors[31][32]