Hudson Global(US:HSON)2022-11-13 17:54Financial Data and Key Metrics Changes - For Q3 2022, the company reported revenue of $49 million, a 16% increase year-over-year in constant currency [4] - Adjusted net revenue was $24.2 million, up 42% year-over-year in constant currency [4] - SG&A costs were $21.2 million, a 49% increase compared to the same period last year in constant currency [4] - Adjusted EBITDA was $3 million, an 8% increase in constant currency year-over-year [4] - Net income was $1 million or $0.30 per share, down from $1.5 million or $0.49 per share in the same period last year [4] - Adjusted net income per diluted share was $0.58, compared to $0.78 a year ago [4] Business Line Data and Key Metrics Changes - The Americas business saw revenue and adjusted net revenue growth of 69% and 70% in constant currency, respectively [6] - Adjusted EBITDA for the Americas increased to $1.8 million from $1.4 million year-over-year [6] - Asia Pacific revenue was roughly flat year-over-year in constant currency, while adjusted net revenue grew 12% [6] - EMEA business revenue grew by 36% and adjusted net revenue by 51% in constant currency, with adjusted EBITDA increasing to $0.4 million from $0.2 million year-over-year [7] Market Data and Key Metrics Changes - The company ended Q3 with $22.7 million in cash and restricted cash [8] - Days sales outstanding (DSO) increased to 50 days in September 2022, up from 39 days in September 2021 [8] - Working capital, excluding cash, increased to $10.2 million in Q3 2022 from $7.8 million at the end of 2021 [9] Company Strategy and Development Direction - The company is focusing on enterprise RPO work, which comprises approximately 75% of its business, and is seeing robust activity in this area despite some operational challenges [12][13] - The company aims to win more enterprise RPO clients, particularly from larger companies that are increasingly recognizing the value of RPO solutions [21][22] - The company is also monitoring acquisition opportunities but is cautious about high sales price expectations in the current market [32][33] Management's Comments on Operating Environment and Future Outlook - Management noted that the third quarter results were impacted by unfavorable foreign exchange rates, a reduction in project RPO work, and a slowdown in hiring activity in the technology sector [11] - Despite these challenges, the sales pipeline remains strong, particularly in the healthcare sector, which is expected to drive future growth [12][42] - Management anticipates that the fourth quarter may be flat to down compared to Q3 due to seasonality and ongoing weakness in the tech sector [41] Other Important Information - The company repurchased approximately 1.1 million shares in Q3 2022 and has reduced its share count by 13% since the beginning of 2019 [5] - The company has $600,000 remaining under its 10 million common share repurchase program [5] Q&A Session Summary Question: Discussion on the company's cost structure in light of the labor market - Management indicated that about 70% of revenue equates to variable costs, with fixed costs primarily in management, sales, and marketing [16][18] Question: Opportunities for acquisitions in the current environment - Management sees more opportunities for enterprise RPO with larger companies, especially those that have not previously utilized RPO services [21][22] Question: Talent retention and headcount management - Management is actively looking for talent, particularly in the enterprise RPO segment, and has redeployed recruiters from the technology sector to other growing areas [29] Question: Update on acquisition multiples and pipeline - Management noted that while there are more opportunities in the acquisition marketplace, sales price expectations remain high [32][33] Question: Use of cash for share repurchases - Management believes share repurchases are a good use of capital when the stock is undervalued and has taken advantage of open windows for buybacks [36][38] Question: Seasonal trends in revenue - Management confirmed that Q4 is typically slower than Q3, with expectations of a flat to down performance due to seasonality and tech sector weakness [40][41]