Q4 2019 Earnings Call
Dead dead good day and welcome to the 5 one job ink fourth quarter and fiscal year 2019 conference call. All participants will be in listen-only mode. So do you need assistance? Please take my only comfort specialist by pressing the star key followed by zero after today's presentation. There will be an opportunity to ask questions to ask a question. You may press star and one on a touch-tone phone to withdraw your question, please press * then two dead.
I would now like to turn the conference over to Miss Linda Chen vice president and head of investor relations, please go ahead. Thank you Andrew and thank you all for attending this Telecom discuss unaudited Financial results for the fourth quarter and fiscal year 2019 ending December 31st, 2018 with me for today's call our president and chief executive officer and Kathleen Chen Chief Operating Officer and acting Chief Financial Officer. A press release containing fourth quarter and fiscal year 2019 results wage was issued earlier today and a copy may be obtained through our website at
Before we begin, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the private Securities litigation Reform Act of 1995. All forward-looking statements are based upon Management's expectations at the time of the statements and involve inherent risks and uncertainties that may cause actual results to differ materially off potential risks and uncertainties include but are not limited to those outlined in our public filings with the Securities and Exchange Commission, including our annual report on form 20-f any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements except as I am under applicable law. Also, I would like to remind you that during the course of this call. We will discuss non-gaap measures. Please refer to the press release for a description of the Dead.
on measures and their significant
Management and evaluating the company's financial performance reconciliation to the most directly comparable gaap. Financial measures are provided where available in the tables appended to the press release this conference call is being recorded and broadcasted on the internet and a replay will be available through our website at now. Turn the call over to Rick. Thank you Linda and welcome to today's call. I will begin with an overview of the fourth quarter and the full year 2019 followed by an assessment of current market conditions and Kathleen will continue with a detailed discussion of our financial results as well as provide our guidance for the first quarter of 2020.
Managing through soft demand due to macro slow down and trade tensions. We exited our Sadiq execution capabilities with discipline and diligence and to to achieve positive results for the fourth quarter and four year 2019.
Fourth quarter revenues, exceeded our forecast at one point 1 billion led by good performance of the other services segment which grew by 8%
Seasonal campus we come in activity wasn't stronger than we expected and not as affected by the soft demand for General hiring employers maintain their targeted graduating back pains to emphasize that commitment to long-term Thailand planning and development.
Customer adoption and usage of our BPO training and Assessment Services also remain resilient.
Our sales team continue to make good progress and cross-selling and combining various products in our portfolio to provide complete high value into any walk-ins to Employers in China.
As expected under the pressure of lingering economic uncertainty that weighted heavily on companies throughout 2019. Our online revenues increased 5% in the fourth quarter.
We saw a reduction in the number of you need employers primarily a man Lo activity small-size organizations that we have been shifting our strategic Focus away from home.
However, this effect was offset by approved Improvement of 9% which was driven by successful up selling two more established companies.
Okie strategic objective to increase Revenue per customers and changed in our priority remains to strengthen our ability to consistently service and then I'm on a time and you let customer base.
Prior Behavior we have observed over this past year in a tough. Macro backdrop have only further convinced us that customer quality and the depth of Engagement with English having jobs brain and logic longevity in the industry in China.
For the full year revenues increased 6% to our MB 4 billion.
Despite the materially unfavorable change in the demand environment in 2019. We were able to realize year-over-year growth in every quarter as we adapt wage conditions appropriately and tap into our why breath of services for other avenues to assist our customers and users.
With nimbleness and discipline, we generate operating income of over 1.2 billion operating margin was 30% in 2019 similar to 2017 and 2018 levels. Where did the market bring us headwinds or Tailwinds? We have the experience and commitment balance current cost control an important investment in the long-term opportunities that will pay 500 jobs passed for sustainable and profitable growth.
Yes, we begin 2020 will centrally be digging into our core strength and DNA to handle the impact of the Corona virus outbreak in China.
The extend the Chinese New Year holiday. Travel restrictions new workplace safety requirements and other measures implemented to contain the outbreak have significantly affected people movement and Mobility.
Although we have seen employers trying to make Swift action and make the necessary adjustments to get back to business. Each company's ability to respond to circumstances has been vastly different depending on geography industry and financial condition.
We have noticed that culprits in the Yangtze River delta area covering Shanghai and parts of town and province has as well as the Pearl River delta area in Guangdong Province have been early movers to resume operations.
Varicose such as e-commerce and education have fared better, but offline sectors, like real estate and auto have faced greater difficulties.
These are just preliminary observations and the situation is very fluid and dynamic.
However, we do feel that a trough has been passed in February and activity is beginning to build momentum in March.
if I was
Job, we are undeterred and continue to push forward with ways to serve and priors and the labor market in this extraordinary times.
I'll contact list communication tools such as chat and video interviewing plus our online assessment training and learning platforms are garnering needs to use the interest in customer adoption. We also helping companies transform traditional on-site events to digital job fairs that supports the entire recommend process including campaign promotion real-time participation and engagement resume submission, testing interviewing and on Bots.
It's a well-established a recognized leader in our industry. We have been sharing best practices in account management with the public and collaborating with government authorities to disseminate job opportunities during this outbreak.
On the national level five and job. What's the first online job board and knowledge and the Ministry of Education to contribute our services to the two for 365 days Initiative for new graduate hiring.
On the local government front we have offered our assistance to such areas as Shanghai and fujian province.
With conviction and patience. We are navigating short-term challenges to position five and job to Ram up quickly when conditions improve we have full confidence in the strength and resiliency of the Chinese economy and our robots fundamentals and ample Financial Resources will see us through this.
I will now pass the call over to Kathleen.
Thank you Rick in my following presentation. Please be aware that all Financial numbers are in a reporting currency of the Chinese Renminbi unless otherwise stated.
Our net revenues for the fourth quarter of 2019 were 1.1 $300 billion representing a 1.3% increase your over a year and off the guidance range. We provided back in November of last year.
As we expected due to the weak macro conditions that affected hiring demand our online revenues decreased 5% to $613 million in the fourth quarter.
However, we continue to make progress in our main strategic objective in deepening our engagement with high-quality accounts. And this has resulted in a further down in our pool of 9%
through increased adoption of more products and combinations of services across the five on job. HR ecosystem. We have seen a rising Trend in average wage are over the past three years.
our pool
Improvement remains our key Focus to drive growth of our online business over the long term.
Revenues for other HR Services increase 10% to $522 million in the fourth quarter led by the seasonal campus recruitment projects as well as greater usage of BPO training and Assessment Services.
Our seasonal campus recruitment activities are good activity despite the soft tone for General hiring as employers remain focused on planning for the future with regards to key Talent Pipeline and development.
Growth of our business training and Assessment Services reflected continued cross-selling efforts by our sales team.
Beginning January 1st of 2019. We have changed the presentation of government surcharges and included these amounts into cost of services wage. 2018 Figures were reclassified to conform to this new presentation.
Reflecting this change gross margin was 66.7% in the fourth quarter of 2019 compared with 69.5% in 2018. The increase in cost of services was primarily due to higher employee compensation expenses seasonal headcount additions wage. Well as Logistics costs such as venue rental and event declaration, which were related to providing our campus recruitment services.
Included in cost of services in the fourth quarter was share-based compensation expense of 5.5 million.
Sales and marketing expenses decreased 2% to $260 million in the fourth quarter due to discipline spending.
Although we maintained various advertising campaigns for brand marketing and product promotion. We control staff expenses and moderated our own sales hiring in 2019.
Included in sales and marketing expenses in the fourth quarter or share-based compensation expense of four point seven million.
In our preparations for 2020 that occur before the outbreak we did think commitments to advertising spend which will increase costs in the first quarter.
We continue to closely manage our costs and when will balance near-term spending against important Investments that will optimize future growth.
G&A expenses increased 15% to $100 million in the fourth quarter
The increase was mainly due to a larger provision for doubtful accounts, which corresponds prudently to the amount of receivables and prepayments in the balance sheet as well as long as compensation expense.
Based compensation expense included in G&A was 23.8 million in the fourth quarter of 2019 compared with nineteen Point 1 million in the year-ago quarter.
Our income from operations was $395 million in the fourth quarter of 2019 down about 7% from a record level in 2018, up 54% sequentially from the preceding quarter.
Our operating margin was 34.8% and excluding share-based compensation expense. It would have been 37.8%
In the fourth quarter, we completed an investment in Whalley University group limited which successfully listed on the Hong Kong Stock Exchange in November of 2019. The accounting treatment for this investment is a fair value mark-to-market assessment based on quality closing stock price at the end of each reporting.
As this change in fair value is unreal lies and not indicative of 5-1 jobs Core Business operations. We are providing non-gaap results that exclude the effect of em marked to market gains and losses related to the Quality Investments going forward.
In the fourth quarter. We also recorded an impairment of $98 million related to a minority Equity investment in a provider of on-demand work opportunities.
Excluding share-based compensation expense lost from foreign currency translation the change in the fair value of equity Securities Investments and impairment of long-term Investments as well as the related tax effect of these items non-gaap adjusted net income attributable to 5 one job with $430 million in the fourth quarter.
Non-gaap adjusted fully diluted EPS was 6.33 or 91 cents per share.
Now for the full year results total revenues for 2019 increased 6% to 4 billion.
Our online revenues grew 2% to 2.47 billion and comprise 62% of net revenues.
The growth was driven by higher arpu which was partially offset by a decline in employers, which was reflective of macro challenges in 2019 as well as our own decision to remain selective with a customer base.
In executing our strategic plan. We have increased average online spending by 95% from about $3,300 per employer in 2015 to 58 and fifty per employee in 2019. We will continue to pursue a high-quality growth strategy that emphasizes productivity and efficiency improvements.
Or other HR Services revenues grew 13% to 1.53 billion in 2019. This segment showed resiliency to economic conditions and we successfully drove customer adoption of these value-added services.
Gross profit increased 3% in 2019 to 2.78 billion and income from operations increase 5% to 1.2 billion.
Our operating margin was 30.1% slightly lower than last year's 30.4%
excluding share-based compensation expense operating margin was 33.3% and 10 basis points higher than 2018 as we efficiently manage call log in an uncertain environment.
Non-gaap adjusted net income attributable to five job increased 8% to 1.48 billion in 2019.
Non-gaap adjusted fully diluted EPS for 2019 was 22.24 or 3.19.
And finally turning to our guidance for the first quarter of 2020 the extended Chinese your holiday and the impact of the Corona virus outbreak has significantly affected activities in the hiring market and our Revenue visibility in the near-term.
Natural sentiment and conditions remain very Dynamic not only in China, but globally as well in recent weeks.
As such we are providing a wider range in our forecast for this coming quarter.
Based on what we currently see our net revenues Target is in the estimated range of $725 to $775 million a year or decrease of 15 to 20%
For the non-gaap fully diluted EPS Target. Our estimated range is between 1.70 and 2.2 per share. Please note that this non-gaap EPS target range does not include share-based compensation expense foreign currency translation the change in the fair value of equity Securities Investments nor they related tax effect of these items.
And total share-based compensation expense is expected to be between $36 and $38 for the first quarter of 2020.
Guidance for earnings-per-share is provided on a non-gaap basis due to the inherent difficulty in forecasting. The future impact of certain items such as a gains losses from foreign currency translation and the changes in the fair value of Investments. We are not able to provide a Reconciliation of these non-gaap items to expect it reported gaap earnings per sure without unreasonable effort due to the unknown effect and potential significance of such future impact and changes.
Reflect our current forecast which is subject to change.
This concludes our presentation and we would be happy to take your questions at this time operator, please go ahead.
We will now begin the question-and-answer session to ask you a question. You may press * then 1 on your touchtone phone. If you are using the speaker phone, please pick up your handset before pressing the keys this at any time. Your question has been addressed and you would like to withdraw your question, please press * then two at this time. We will pause momentarily to assemble our roster.
The first question comes from Alicia of City, please. Go ahead. Hi. Good morning, Kathleen and Linda. Thanks for taking my question and wishing you well and save have a a few questions number one. Is that could you elaborate how resilient will the HR Services back during these coronavirus environment? Well, we'll get help us together to the delay in the hiring which will significantly impact our online recruitment service. So if you could give us a bit of the color in terms of the breakdown from the first quarter guidance, like how should we think about in terms of the magnitude of the decline for the Thursday one Revenue versus the other HR revenues?
And then the second questions wanted to know is how should we think about the second quarter will the delay and you know the post office of the hiring continue and affect the second quarter or will that be actually a positive benefiting in the second quarter giving all the pushback from first cue and off any color in terms of how the trend looks like in in terms of the second half Outlook and then lastly the rate you mentioned about, you know a few industry that is positively found negatively impact. What about the financial services i t and also the technology company. How are those effects are faring versus what you're seeing for, you know, that could be seen that one real estate versus the more positive on the education side. Thank you.
Thank you for the questions Alicia. I'll answer the first two questions you mentioned and I'll let Rick actually then take over after that to answer the questions you had around the sort of the industry off variances. If you will just the overall, I mean in terms of the guidance for the first quarter in terms of the online revenues vs. Others, we are expecting not the impact may be more significant to some degree for some of our other HR services that could be more delivered offline. For example with em Training Services or some of our placement services or any other kind of event-driven or project driven activities that has more offline component to it off while online recruitment will actually be relatively sheltered against that so that would be how the impact would be as you can imagine since the end of June.
when Chinese
Essentially instituted policies to lock down a essentially most of the population across China and to avoid the movement across a different provinces to protect Public Health. It has actually significantly impacted the way people are able to return to work and what kind of activities can be conducted in terms of delivery of services. So that is the picture in terms of the impact on our business. So I would say that in some rate that online may be slightly a sheltered versus some of the offline businesses that could be provided but you know overall I think the sentiment and in terms of the ability for companies to come back and to restart the year is being delayed across the board. So it will have impact across all product segments for us. So that's the number one dead.
Secondly kind of looking out to the second quarter and second half the year to be honest. I think this is becoming something that's a lot more Global than it is just a Chinese specific issue. So because of that, I think it's very difficult to speak to a longer-term because I think while we believe that the worst stage is probably behind us off China. It is unclear how the global picture will potentially come back to affect maybe demand and the companies in China as well. And of course it will also be Eminence he's involved in this as well so that you know interesting enough as you I'm sure have noted in media, you know, while you know Apple has announced that they're closing all Global stores outside of China, which is a new development this past week and you know, and that was something that maybe people didn't expect and so while China has kind of restarted and we ope
So I think it's a little bit too early to call the second half or even the second quarter. But at this point in time, I think we're a cautious and we'll have to kind of continue to call people updated. I think that even if there is a quicker recovery in China and some of the global situation now, we'll have a little bit of weight on that. So, um, I think we are cautiously optimistic about China returning to more normal in a shorter-term. But the global impact is something that we can't speak to yet. So that's our current assessment of the situation and then I'll turn over to Rick to maybe answer a little bit more about them industry impact and Alicia. I think we have to separate the these industries in the different factors or segments are on the financial one. I think the stay on banks are pretty much back to back to normal. I actually had visits from different banks, you know to see how we're doing.
and I think this is a government mandate to get all the government officials and also stay on and
Is a management to come out and see to visit customers and kind of see how the economy's going. I think for the stay on sector. I think it's normal for the private sector wage. Probably slow also for the it and Tech sector for the large companies many things are moving online, you know last week there was an announcement from by the ministry of human resources that online labor contract signing will be legal. This is the first time an official statement has been made that online or the government is very keen to move many things on night and I think in the longer-term certainly this would help some of the larger it and tech companies. However, I T and tag is probably not one of the coolest industries that will come back to full Staffing levels.
As you know, the government has regulations and restrictions in terms of how many people can come back to the office each week. You know, we are at around 50% Staffing level now, although I am able to work from home for many many of our Engineers, but I tend tax sector and not the parity Industries to to kind of return to normal kind of took what they schedule so it's a little bit slow but we are seeing there many many things are moving online. I think that will be for the for the larger tech companies. I think they would benefit from it in the medium wage. That's more things going online for the startup and small companies. I'm sure it's difficult because I think the cash flow impact is is very significant. And and I and I think the question is whether they survive this this downturn or not. So so in general I think finance and I T Tech are doing okay and the larger companies are doing much better job.
And the the smaller ones but overall it's not in these two industries are not the ones that that are kind of back to normal in the in the first, you know in the first priority and the government took a plan.
That thank you and Kathleen. Can I just quickly follow a couple quick things one? Is that happening on the other HR Services? What about the VPO? I thought the VPO is a bit more resilient could actually help a little bit and then if you could also maybe give us a little bit color in terms of your eminency versus the domestic Enterprise contributions to either the employee account, or maybe the the revenues I thank you.
Just on the h r o business in terms of the actual service levels a recurring so that is not going to be under too much attack for now unless, you start to take steps to reduce their Workforce. So that is something that I think, you know, we'll need to see going forward. But fortunately I do believe that we are working with larger companies. May I think that we are better a buffer against the sort of the cash crunch that many of the smaller companies would be subject to so I think that is the situation
M&T the M&C. I mean, I don't think that today there is actually going to be any difference in to any companies how they react in the short term because like I said what's happening and developed globally is something that's very recent which is you know, really in the last week. If you will that some of the government's globally have Jerry take action. So I don't think that we're seeing a differential between MSG versus Chinese companies today yet, but I think that, you know, let's kind of roll forward another, you know couple of weeks or a month from now then I think we'll probably have more color for you. But I think you know, we talked with larger companies we tend to actually feel like we're better protected against this situation where cash reserves become a very big part of your viability if you wage and so that is something that we feel that we should be better off in but there's no kind of specific component or difference in in terms of how companies are behaving yet at this point. Yep.
So we'll see if that pans out if the global impact continues to kind of spillover back into China.
Thank you. Thank you.
The next question comes from Ken of Jeffries, please. Go ahead. Sure. Thanks for taking my questions. Congratulations on the song Brazil and I have one healthy and site. My first question is on calls our cost control in this call has been real tough, especially under the sales and marketing. Can you help us understand the part of the package plans or that is fixed and terrible and under the service of like how can we see the control the absolute amount of the calls and in the first quarter or even in the rest of 2017 and not my second question is on the unit employers by industry. Can I ask our break down and which are the ones that have been impacted more and which are the ones that have been benefit? Thanks.
Hi, thank you for the questions just in terms of sales marketing costs in general cost control issues. I think for the first quarter they may be marketing campaigns. And other than that we would have already committed to prior to the outbreak that we will have to continue to move ahead on so in the short-term, you know, there may be some cost in the cost structure that we just need to be able to absorb which is reflected in our guidance overall. But I think historically we have always been very very self very cost-conscious and to make sure that we aligned our cost structure to revenue levels. The Corona virus outbreak is a very unique situation. I've never experienced a significant amount of time where the companies you know is a the country if you will will shut down if you will, so it is actually a difficult thing to plan before or Thursday.
and your cost during that but I think
We're committed to making sure that we continue to look at our you know, people structure. We want to make sure that we are sensitive to our our staff and to make sure that they continue to be able to work with them. But I think that it is something that we're managing and you know from our perspective as a management. We are also taking pay cuts this interim to make sure that we continue to actually have the resources to support our employees more than ourselves if you will to some degree and to make sure that we responsibly spending and controlling our costs. So I think in the short term think that we are being very Vigilant but they are some costs in the first quarter that will need to proceed as before because as you will call that for our our business Chinese yes, or post Chinese unit has historically been the peak. Sales and marketing actually ramps up during this time. So it is the the timing is a little bit awkward for us on that perspective so that Thursday
It is on the employer side. You know, I don't think again, I don't think that this is something that's hitting Industries differently too much in the short term because essentially from the end of January till, you know, almost end of February, I think the entire country was really operating and you know, very low levels if you will and you know for the most part I would say even probably seventy percent in the company wasn't even able to get you know, staff back to the the offices or the factories because of you know the lock down. So I think it is not affecting, you know companies that differently I think now, you know, it's been about three weeks when people have started to return for work, which I would say that the first worker activity wage really the week of February 24th. So, is there something that is very early on and we're monitoring it right now. Like I said earlier, I don't think it's impacting.
People that differently in terms of you know, you know, there's not anyone that's really back at Full Steam. So, you know, that's something the recovery will take time. So we're keeping a close eye on that and we'll have to give people more color when we have more color a couple more maybe a month or so, you know later in the game.
Sure. Thank you Kenneth a quick follow-up question on the margins understand it in the first quarter. We have committed some marketing campaigns because of this quarter, but if you look to the same quote all the rest of 2070 understand the recommended amount would be impacted by the forest, but how the margin ignore the the enhance the marketing campaign called up because I would really look at last year even though the Macos big mountain is still resilient. Do we see this train again? And the response 2020? Thank you. I unfortunately it is too early to speak. It is difficult to predict what you know demand levels are because I think for the most part to be honest 5 on jobs biggest cost structure is people and our ability to think about how to plan or the demand levels Peg two people the important so it is a little bit early for us, but we are committed to being disciplined and we will actually make a
adjustments as needed, but it's
Too early to speak on what it's going to look like for the rest of twenty-twenty given that everyone is just starting to come back to work at this month. So, you know, we'll keep everyone updated and we will be committed to being disciplined on our cost which I think we have a track record of and so hopefully we can share more information with people as information come to life.
Sure. Thank you very much.
The next question comes from Eddie one of Morgan Stanley, please.
Hi management. Thank you for taking my question. So my question is regarding the investment. If you look at the last year, I think we have made a Strategic investment. Well sitting overage have been listed. So if you looking forward, we will still do kind of you know, this kind of Strategic investment. In fact last year and which areas in you know, within the recruitment segments. Do you think you know, we will be more focused on thank you. Thank you for the question on the m&a side in general. I think the Strategic Outlook and in terms of corporate development strategies unchanged and I think that you know, what we've been working on is to Parts really is continue to build out and round out the HR ecosystem so that we can continue to bring a fuller. Yep.
Comprehensive Suite of services and products to our customers. So in from that perspective, whether it's recruiting training, you know some of the Outsourcing flexwork, you know, any two Choice related to the efficiencies and the efficacy of you know, serving our customers that is something we continue to work on and I don't believe that our own vision and our strategy would have changed because of this current situation. So that is where we are on that and then the second component is really commitment to training and education which is really talk about developing and building a talent pipeline for our employers if you will because we believe that you know, fundamentally people are the most important Capital to the development of the future Workforce, which actually is going to be the key differentiator for a company's success. So that is the second area. We continued focus on I think that you know, we are very fortunate that phone number.
And job is actually well capitalized and we have actually a strong reserve of cash on hand that perhaps actually they will be even more interesting opportunities at this difficult time. I think as many companies will have to think about how they reposition themselves but the future and hopefully if they will be interesting opportunities that will be unlocked as well. So that's who we are.
Hey, thank you. May I have a very quick up, you know quick question regarding the competition as we look, you know in the past few years. I think none of the new wage is is trying to you know, disrupted the overall, uh, you know industry but our market share is maintained quite well. So because of you know, the colonel virus impact this year's what is your some more color of the you know competitive landscape in this, you know industry for now. Is there any chance that you know, because our long history, you know, compiler Advantage so we can kind of, you know, just face out of the you know, you know destruction temps, you know in a year or do you think you know this kind of competition will continue to last maybe in the next few years. Thank you.
My belief is a competition will always exist to some degree. But you know, it keeps everyone honest in a way, right but I I do think that we are very well positioned right now. He's given our cash resources and funding and everything else to survive, you know, short-term fluctuations, whether it's demand or you know, Market sentiment, you know, a lot of other things and I don't feel like we are very different from our so-called competitors who tend to be focused on single product line or single streams. If you also I think it's a different way to go to market if you will, I think that you know, we feel that we have been able to continue to again integrate and build a broader and more comprehensive Suite of services which then can actually help us lock in customers for long term because I think we could be the the one-stop-shop if you will and again, that's something that I don't believe that our competitor has been able to do and I think they're converging.
To kind of playing catch-up for the most part but you know, I think that you know, we're very fortunate that I think we are in a position to be able to ride out the storm if you will, and we will be able to build plan for the longer term which is something that many other companies who are maybe continue to burn through a lot of cash research trying to sustain or a valid business model. They may not have that luxury and so that changes the picture quite significantly
Thank you. Thank you. Thank you very much for next question comes from Charleston of State Investments, please go ahead.
Hi, good morning. Thank you very much for taking the time to answer my questions. I have three that okay, and I'd like to ask them one by one. The first one is slightly more short-term, but just walk in terms of what you're seeing with your customers and they are sort of hiring and spending budgets. Has there been any sort of resource declined and also in that respect, you know, just in terms of the allocation Trend. I'm not seeing it concentrating on some of the fewer bigger providers. Thank you.
To be honest, I think most of the demand has sort of been delayed if you also it's it's not there's not full visibility into how people are looking at the longer-term because these are pretty short term shock that's happening. What we can say is that we have seen since you know the week of depth 24th, which is the week that people have started to come back to work that you know demands to ramp up. So that's a good sign other than that is is too early to say what the longer-term will look like.
Okay, great. Thank you. And just the the allocation split I mean, is there a sense that they are focusing more of their pledges on fewer providers? So it's too hard to say. I don't think people are I mean people are very still kind of ramping them spending not very much. I don't think they're spreading incentive spending with more people. If you will often. See you go to the people that are occurred to you that you have a longer-term relationship with so that's what we would expect.
Okay, great. Thank you. Secondly. This is just a bit more the long-term strategy which is like to understand, you know our rationale for focus on high-quality customers and shrinking a customer pool. So one hand I I understand where it's coming from. The pie is not growing my books focusing on the high-quality customers, but on the other hand, I think one of our main competitors Thursday evening for is, you know, some of the volume game where your number of resumes drives more employers to get platform which drives more resumes and create sort of a virtuous cycle. I'm just wondering just just your average sort of going in a slightly different direction and you know, it's is there a risk of you know, losing the customers who are trying to keep because when they see your competitor having, you know twice the number of estimates you have for example of that happening isn't there so just your comments on that.
Yeah, let me correct a maybe a misunderstanding. I don't believe any of our competitors has more resume than us in terms of resume numbers on the user side. We continue to really lead them almost so I don't I don't think that that number you've quoted is actually correct in terms of the customer side if you will. Yes, there's a very different strategy that we've gone to them within the last three years. I think historically I think we've all started with this so-called Market grab volume game, which is just you know, any customer is a customer and there but you know all colors are not equal and certainly not equal in size or spending or viability. And so I think that we choose to actually focus our resources on what we believe on the higher-quality customers who have longer-term viability who have the ability for us to upsell and increase our spending with us and that you know, and you know smaller number of customers, but yep.
Given the same amount of users out there that we continue.
The top. So in terms of yield per customer technically is even higher so I don't believe that our competitors are out dissing us on the user side. It is actually on the customer said that because of the difference in strategy. We've actually chosen different roads to actually a different outcome. So that is a very conscious choice and has no bearing on our ability to acquire and continue to develop relationship with a user's and resumes if you will
Okay, okay understood and just lastly again sort of a long-term strategy question. I'm just in terms of the margins and Investments we're making so if I could get a parrot know you'll not against various. Both locally. And globally, I mean you are probably the higher-margin company that we've seen before which speaks about, you know, the the truck. A franchise. So obviously the ability to control and manage cards are very same time, you know, just wanted to understand maybe how does the management assess whether they're making enough investment. So I understand that the technology is not particularly difficult or expensive but yet some peers are, you know having low margins because they're investing intensely. I mean, could you just maybe share how do you assess investment? And how do you make sure you're you're doing enough? Thank you.
Well, it's it's kind of an interesting question. It's sort of like, you know, if we make too much money people may think that we're not investing enough, but if we don't make money money and then people will feel like we are not being disciplined but I think you know aside from all that and I can I completely appreciate and understand the the question and in the sense that I think would be try to be very disciplined and Bell thinking about 4 every single investment that we met we try to think of it as how does that add to the total picture if you were we're not making a financial investment per se and it's l so that's kind of a hurdle a sort of a reality check that we would go through ourselves when we actually approached it. A lot of times people can make a month, but that doesn't have any integration to their Core Business and that, you know, maybe that if we had lower that standard or the bar maybe we could have actually made more Investments and birth.
Think that's you know, that that's maybe how it's coming out. If you will in terms of the cost structure. We're actually a pretty unique company because we do actually try to go to market with a unique one single sales force supported by many product Specialists and selling a lot of things across a boar. Where's our competitors are tend to be again more sort of a single companies whether it's recruitment, or maybe it's PPO or it's training, you know, we have a lot of competitors in different market segments, but we actually run this one ourselves. So I think there are some efficiencies wage leverages in our model which is pretty unique and they are not really any Global competitors that are adopting the same strategy. So I think maybe that's kind of how it comes out if you will.
Okay.
Sure. Thank you very much for your time. Thank you. Thank you.
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