Heidrick & Struggles(US:HSII)2021-07-27 03:52Financial Data and Key Metrics Changes - The company reported record net revenue of $260 million in Q2 2021, representing a 79% year-over-year increase and a 34% sequential increase [6][26] - Adjusted EBITDA margin expanded by 590 basis points to 14.4%, with adjusted EPS of $1.14 more than tripling from the previous year and increasing over 30% sequentially [6][35] - Adjusted net income for Q2 2021 was $22.9 million, a 31.6% increase from Q1 2021 [36] Business Line Data and Key Metrics Changes - Executive Search net revenue was $224.1 million, up 24.8% from the previous quarter, with growth across all regions: Americas up 26.5%, Europe up 19.3%, and Asia Pacific up 25% [27] - Heidrick Consulting net revenue increased by 22% to $17.1 million, driven by a 74% increase in confirmations [30] - The newly established on-demand talent segment generated $18.7 million in revenue, reflecting over 50% growth year-over-year [31] Market Data and Key Metrics Changes - The company noted strong demand for services as clients adapt to post-pandemic challenges, with a significant increase in diverse placements, particularly at the Board level [15][16] - The integration of digital solutions has allowed the company to execute searches faster, reducing completion times by approximately 25% [49] Company Strategy and Development Direction - The company is focused on three growth initiatives: expanding search and consulting services, developing leadership solutions, and investing in new product development [20] - The acquisition of BTG is seen as a strategic move to enhance the company's offerings in the high-growth on-demand talent market [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the ongoing pandemic and geopolitical events, highlighting positive market trends and opportunities [17][40] - The company anticipates continued strong performance, with Q3 revenue guidance projected between $245 million and $255 million [40] Other Important Information - The company ended Q2 2021 with cash and cash equivalents of $237.8 million, a 27% increase from the previous year [37] - A dividend of $0.15 per share was announced for August, reflecting the company's strong financial position [36] Q&A Session Summary Question: Is the elevated war for talent yielding any uptick in revenue? - Management confirmed that there has been an uptick in revenue due to higher demand and confirmation trends, with notable increases in various regions [46] Question: Can you quantify the faster pace of executing searches enabled by technology? - Management indicated a 25% reduction in days to complete searches due to technology adoption, suggesting this may become the new norm [49] Question: How should we think about the cost of service line going forward with BTG? - Management explained that BTG will have a variable cost of service model, with expectations for margins to improve as the business scales [50][51] Question: How do you view the company's performance versus growth in the end markets? - Management believes the company is holding its own and possibly gaining market share, although specific metrics are difficult to quantify [64][68] Question: What are the implications of remote work on the Executive Search business? - Management noted that remote work has expanded the candidate pool and improved placement speed, indicating a lasting trend [60][61]