Q2 2021 Hudson Global Inc Earnings Call
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Good morning, and welcome to the Hudson Global Conference call for the second quarter of 2021, our call. This morning will be led by Chief Executive Officer, Jeff Eberwein, and Chief Financial Officer, Bob Diamond. Please be advised that this day that's made that you have.
Preston take.
Chip Inc.
Boiler <unk> rule.
Such forward looking statements involve certain risks and uncertainties that may cause actual research to deeper materially from those contained in the program looking statements. These risks are discussed in our form 8-K filed today and in our filings made with the Securities and Exchange Commission, including our annual report on form 10.
The company disclaims any obligation to update any forward looking statements.
During the course of this conference call references will debate to non-GAAP terms, such as constant currency adjusted EBITDA and adjusted earnings per diluted share.
Conciliations for this measures are included in our earnings release and quarterly slides both posted on our web site Hudson <unk> Dot Com I encourage you to access our earnings materials at this time as they will serve as a helpful reference guide during our call I will now turn the call over to Jeff.
Wide.
Thank you operator and welcome everyone. We thank you for your interest in Hudson Global and for joining us today.
I'll start by reviewing the second quarter, 2021 highlights and Matt Diamond, our CFO, who will provide some additional details on our financial results.
I'll, then give an update on current business conditions.
For the second quarter of 2021, we reported revenue of $39.7 million up 41% year over year in constant currency.
Adjusted net revenue, formerly referred to as gross profit.
Was $15.1 million and increased 53% year over year in constant currency.
SG&A costs for $13.4 million in the first and the second quarter up 33% versus the same period last year in constant currency.
We reported adjusted EBITDA of $1.7 million up from an adjusted EBITDA loss of 2.4 million a year ago.
In addition, we reported a net loss of $100000 or for cents a share versus a net loss of $800000 for 27 cents a share in the same period last year.
We reported adjusted net income per share of <unk> 15 cents in the second quarter 2021 versus an adjusted net loss per share of 13 cents a year ago.
I'll now turn the call over to Matt Diamond, our CFO to review our financial results by region as well as provide some additional details from the second quarter.
Thank you, Jeff and good morning, everyone.
Our Asia Pacific business grew revenue, 32% in constant currency and grew adjusted net revenue 26% in constant currency.
Adjusted EBITDA of $1.4 million increased from adjusted EBITDA of 1.0 million a year ago.
Our Americas business grew revenue and adjusted net revenue of 139% and 159% in constant currency, respectively with approximately 40% of this increase attributable to organic growth with the remainder due to the acquisition of the quick group.
Adjusted EBITDA was zero point $5 million increased versus last year's adjusted EBITDA loss of 0.6 million.
Our EMEA business grew revenue, 39% in constant currency and.
And 30% in constant currency adjusted net revenue.
Adjusted EBITDA of zero point $6 million in Q2, 2021 increased compared to adjusted EBITDA of 0.1 million in Q2 of last year.
Lastly, we believe it's important to highlight that adjusted net revenue grew at a faster rate than SG&A in Q2 across each of our 3 regions.
This operational leverage we are seeing is critical to achieving our goal of growing adjusted EBITDA before corporate costs as a percentage of adjusted net revenue to 20% over the long term.
Turning to some additional financial details from the second quarter.
We ended Q2 with $24.5 million in cash and restricted cash day.
Day sales outstanding was 41 days at June 2021, slightly below DSO of 42 days that we had from June 2020.
In connection with the acquisition of quick group in the fourth quarter of 2020, our balance sheet as of June 30th 2021 reflects $2.1 million of goodwill and 1.2 million of net intangible assets.
The company's working capital excluding cash increased to $6.4 million in the second quarter of 2021 up from $4.5 million at the end of the fourth quarter of 2020.
As a reminder, in April 2019, we finalized a new credit facility in Australia to support the expected growth in working capital needs as a result of new client wins in that market, but we had nothing drawn on this facility at the end of Q2.
The company generated 1.0 million in cash flow from operations during the second quarter.
I'll now turn the call back over to Jeff to give some more perspective on our <unk> business and to review current trends in our business.
Thank you, Matt as everyone knows the COVID-19 pandemic created numerous challenges for our clients and business around the world last year.
In the second quarter of 2021, we saw some regions rebound strongly but others have yet to return to normal conditions.
Although the recovery thus far has been uneven our business exhibited strong growth in revenue adjusted net revenue and adjusted EBITDA across our 3 regions in the second quarter of 2021 versus the prior year quarter.
This growth was particularly strong in Australia, the U K and the Americas, whose economies have reopened and rebounded more so than economies in other areas.
I'm very proud of how well our team has responded to and capitalized on the rebound in demand for our services I'm also encouraged by our pace of new business wins, so far this year as well as the robust growth of our sales pipeline.
Importantly, I want to thank all of our highly dedicated employees for their flexibility hard work and dedication to our clients and business in the challenging conditions, we have been working through.
Operator could you. Please open the line for questions.
Thank you.
As a reminder to our participants to ask a question. Please press star 1 on your telephone again, Please press star 1 that's for.
For the piece that gives us a vehicle bile our Q&A lost there.
And first question is from Josh Vogel of Sidoti go ahead Sir.
Thank you good morning, Jeff and Matt.
Our first question.
We know that.
Teck is picking up nicely because of the Coyote acquisition in the past you've also highlighted by.
Life Sciences Health care financial and business services can you just get a little bit more insight into where you're seeing the strongest growth.
From an industry perspective, and same with the sales.
The prospects for Ya.
For Ya.
Sure.
In the U S.
What led us out of the recovery at least from our perspective.
We're.
It's a fast growing <unk>.
Companies and life Sciences, and technology, that's really than where a lot of our wins have taken place and the technology wins.
Have really been led by.
Quoit acquisition that we made about 9 months ago and that.
The team in the Americas that we already had is working really well with the Kuwait team and together working together they are starting to win bigger projects in the tech sector more international projects in the tech sector. So.
So that's really exciting to see.
I would say the other sectors are also emerging from COVID-19 starting to hire more.
Having a strong rebound.
But those those 2 that I, just talked about or have been the highlights.
Kind of off the bottom for us in the U S and.
Europe and the U K.
It's been a variety of different industries same thing for Australia, and Asia Pac and.
I would just say we were finding it more geographic than sector, where in our European business. The U K has had a very strong rebound continental Europe slower.
Just slower to reopen slower to start to ramp up hiring again definitely very far below pre pre COVID-19 levels similar in Asia Pac Australia has been very very strong.
And.
The other areas and in Asia Pac had not been.
As strong as as Australia has been the 1 exception that might be the Singapore Southeast Asia region, We're seeing some really strong really strong growth in that in that area.
Those are great insights, thank you and you really heavier.
You know a finger on the pulse of whats going on and a lot of those markets. So I.
I feel like the UK and Australia are.
Sides of the same coin.
You're seeing U K open up Australia, so having some lockdowns I'm just curious about you know, it's still kind of early here, but whats the chatter with clients around the the delta threat is that delaying signings and or potential ramps.
Not yet we're watching it.
Really really closely.
And the hope is that the.
Vaccine Rollouts continue.
And that many second wave third wave is.
Not nearly as bad as what happened last year, and I think not to minimize the health risk at all but I think.
Companies have just a better game plan in general for how to handle the situation.
And they're trying as best as they can too.
Return to normal meet their own clients' needs, we're trying to help them.
Their work force and meet them meet their hiring needs, but we're not yet seeing.
A.
So down in the pace of the recovery because of Delta, but we're watching it very closely.
Great and then thinking about the <unk>.
Adjusted net revenue and margin profile of the business right now are you seeing more recruitment or contracting opportunities in the pipeline volume.
We're seeing both.
And we so we think both of those areas of our business are going to have good growth.
In 'twenty.
1.2022 and over the long term.
And a lot of times. They go together, it's really about where in the client service business, where we're helping them with their talent procurement.
Need and.
Anything.
Revolving around their workforce.
And sometimes they need help with the contracting side of their business and that's how the relationship starts and it broadens from their other times. It starts with permanent recruiting and then we pick up the contracting business, we are seeing more and more clients want what we would call a total talent solution, where they want 1 partner to manage.
All of those things together and so we feel really strongly that being in both of those businesses is much better than just being in 1 of those businesses.
Say, a new trend that we're seeing is a rapid response so.
Our traditional business has been larger enterprise deals, where it's typically a 3 year contract. It takes a long time to win that business. There's a lot of thought that goes into how many people are going to be on the account and what exactly are they going to do what's the scope of work what.
What services are we going to provide.
And.
Especially in that really fast moving sectors like tech and life Sciences.
That whole cycle is much much shorter and it's much more about.
What quality people.
Can you put on my account and can they start yesterday.
So theres different names for that in the industry, but it looks and feels different than the <unk>.
Slower moving traditional enterprise piece of the business.
Great. Thank you and I wanted to shift gears a little bit.
Good pace of new business wins, a robust sales pipeline understanding that you have to invest.
Ahead of before seeing.
Other revenue really come in but when we think about investments, how and where should we expect to see this between over the balance of the year between investing in people sales and marketing and even perhaps technology.
Yeah really great question Joshua.
Historically, we've talked about.
The need to invest in sales marketing and technology.
And to be honest that was partly a function of <unk>.
Investments that should have been made a long time ago. So we're really just.
Catching up in some ways and that is a an important theme.
An important investment we've been making for several years now and we feel like we're really starting to see the benefits of that we feel like we're very well positioned.
Coming out of Covid.
Just all the efforts we had made on that front and so we're continuing to invest in those areas, but I'd say most of those investments have already been made and we're really seeing the benefits of it so.
As a percentage of revenue those investments.
What will probably decline overtime, even if theyre going up in absolute dollars and as we grow it's really about hiring.
Talented people, who can work with our clients.
So our head count is growing at a pretty rapid pace, but it's really people more on the solution delivery side, who are working with our clients on that talent procurement function.
As opposed to.
Sales marketing and tech, but where we're investing in both.
Alright, great.
Just 1 last 1.
It's apparent in the numbers that Kuwait is a very very.
Good boost in the Americas.
Appears to be performing very well, maybe even ahead of expectations and give some thoughts on that but just the usual checking here also on the M&A pipeline.
That's about what youre seeing and whether something would be more appealing from a specialty or industry perspective, like Kuwait was or geography, which quite was as well, but I'm. Just curious what types of potential deals are you seeing in the pipeline and what do you have a day.
The bigger appetite for.
Yeah really really good question, Josh you know something we think about all the time and.
I think is important on that topic to really stick to first principles.
And we want to do something that adds shareholder value. That's our first principle and second principle is.
Something that is accretive to our clients and our business and our team.
You don't have to do anything, but if we find things to do to fit that fit those criteria.
We we will pursue them I think another really important criteria is.
What's the industrial logic can we look at an acquisition target and say inside of Hudson, we can double or triple what they are doing.
Because of our global infrastructure and that has been playing out in the Kuwait transaction. It's I think we can strongly say it is.
Operating at a higher level and winning more business because it's part of Hudson. So that gets to the 1 plus 1 equal 3 so that has been meeting and even exceeding our expectations and so in a perfect world.
Maybe we would find an acquisition like that to do once a year and it would be in that 5 to 10 million zone.
If we found more to do and we did 2 or 3 in a year I think our team could handle that they're giving me dirty looks while I say that but.
But if we went 3 years and we didn't find anything that fit our criteria. We wouldnt, we wouldnt do anything so it's all about being in the market looking having those conversations staying in touch with potential targets.
As you as you know.
From just discussed just from following the industry and following other companies.
For a transaction to be completed.
All the stars have to line up in the buyers' expectations and sellers' expectations have to be in the same zip code and sometimes they are and sometimes they're not so we would we would love to do an acquisition like coil.
Once a year to just accelerate our growth, but we're going to stick really firmly to our criteria and all of that said another way, we're not going to be.
Buy something just to get bigger.
I appreciate all of those insights.
Certainly impressive performance coming out of Covid here.
I'll hop back into queue. Thank you.
Thanks for asking questions.
And our next question is from Walter Schenker of <unk> Partners. Please go ahead ask your question.
Hi.
It's a question about the company buyback, Jeff Obviously, you continue under your program to buy stock.
We are experiencing share creep.
Which all public companies do and Theres nothing wrong with that if fee.
Insiders the border issued a few shares of stock for the quarter was 2 million 906 versus <unk> 39, a year ago, we generated $1 million of cash in the quarter.
Why isn't too and I realize it's a decision of the board why wouldn't the company be using the cash flow for the ample cash position to at least offset share creep given we have $1.7 left in the buyback.
Yes, really really good question.
Alter and something and good morning by the way and something we.
Think about.
And discuss and debate all the time. So it is very much top of mind I'd, just say a couple of things to that we did issue some shares to the Kuwait team is.
As part of that acquisition.
So thats the single biggest reason for the for the share creep are.
Are the shares that we issued on October <unk> and that.
Net acquisition has worked out.
Really well so.
We're happy with that that's a high class problem to have I guess I would say.
And I would strongly encourage you to look at our history, you know a lot of companies talk about buying back stock.
Maybe they offset share creep, but we've shrunk our share count in absolute terms by.
A huge number.
I think something like 16%.
Since the beginning of 2019 in absolute terms.
So a lot of companies talk about buybacks don't do them or maybe talk about buybacks and do just enough to offset.
The creep, but we've actually strunk, our share count in absolute terms and we've done it every way a company can possibly do it we've done a tender offer we've done open market purchases through 2018 plan, we've done a block trades with shareholders, who wanted to exit.
And we're going to continue to think about all of those tools in the toolkit use those tools in the toolkit.
Be opportunistic and so.
I'd just say we are a company that believes and buying back stock, especially when we're cheap we think that's the most accretive thing to do on our NAV per share basis.
Dino I, just I would just tell you to stay tuned and take some comfort in our in our past behavior.
Okay. Thanks, a lot and congratulations on the business moving forward strongly thanks. Thanks Walter.
Okay.
And as a reminder to our phone participants if you wish or if you wanted to ask a question. Please press star 1 again, please press star 1.
And our question next question is from Josh Vogel of Sidoti. Please go ahead Sir.
Hey, just a follow up thank you.
About the new client wins.
And I know you touched on this but.
Are you seeing more true.
Basically what's the split between those larger enterprises versus the emerging growth companies.
What does that what does the mix look like there. Thank you.
Yes, that's it.
A good question I don't have an exact percentage for you.
And it it wouldn't be an apples to apples comparison, because we didn't have.
Kuwait a year ago at this time and they specialize in the fast moving.
Kind of mid sized technology sector, thats experiencing really fast growth right now, but in the in the U S.
Really healthy mix between those kind of clients and larger let's.
Let's say a fortune 500.
Type of clients.
But where our sales pipeline and backlog are really exciting and it's a lot of different sectors a lot of different geographies.
And just taking a step back from all of that.
It's really helpful to us to have clients and potential clients that see their need for a partner when our sales team are meeting with clients talking about their needs.
1 of the biggest hurdles they have to overcome is when a client says oh, okay. Everything you do is great.
But we can just do all of this on our own.
We don't need you. Thank you very much and if you think about what.
Big companies or all companies have gone through over the last year with dealing with COVID-19 dealing with <unk>.
Transitioning to our.
Remote fully remote partially on a remote workforce.
Another big theme is all of the technology tools that are available. These days in HR and talent assessment talent procurement add on top of that.
Every company that we speak to is working on their diversity and inclusiveness hiring and retention.
Programs and now everybody is well.
Ramping back up to varying degrees.
So.
My point is the everything we've gone through over the last year and a half.
<unk> has really made companies see their need for a partner and highlighted the benefits that are trusted partner like us.
Can really bring to a client and that.
So there is definitely a cyclical rebound I think theres something stronger that's more secular where clients more so than ever before see their need for a partner and see the value of the services.
That we can provide value the expertise that our team has developed over 20 years.
And that's what this gives us a lot of confidence about our business going forward.
That's great.
They're running theme here, especially in the U S. Our supply constraints and when we see these faster moving condensate sales and ramp cycle engagements are you having trouble finding the talent.
Yes, but we're being more creative and opening the center in Tampa has been really helpful and we the success of that.
Uh huh.
Has led us to want to have more centers like that and I think we have a.
Slide in our Investor deck of the places that are under consideration so.
We really think Thats, an important part of our model going forward is developing a center of excellence.
And in an area, where theres just so many benefits to it so we're going to open more centers like that and a disproportionate amount of our hiring is going to be.
In places like that but there's a there's a mad scramble for talent.
And.
In the business of recruiting talent and so if we can't recruit talent to come to work for Hudson to work for our clients. We're in the wrong business. In this this is what we do this is what we're good at and.
I think where we're doing a good job.
Great well. Thank you again for taking all my questions and good luck over the balance of the year.
Thank you.
And that concludes today's question and answer session I will now turn the call over to our CEO, Jeff Eberwein for closing remarks.
Well. Thank you again for joining us today and for your interest in Hudson Global We look forward to next quarter's call and in the meantime, if you have any questions or contact information is on our press releases and our website in our investor deck and.
Talk again soon thanks.
Thank you for joining the Hudson Global second quarter Conference call. Today's call has been recorded and will be available on our investors section of our web site Hudson IPO dotcom. Thanks, everyone.
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Good morning, and welcome to the Hudson Global Conference call for the second quarter of 2021, our call. This morning will be led by Chief Executive Officer, Jeff Eberwein, and Chief Financial Officer, Mark Diamond. Please be advised that this day isn't much Nathan.
Right.
Sure.
For women school as such.
Such forward looking statements involve certain risk and uncertainties that may cause actual researched the deeper materially from those contained in the forward looking statements. These risks are discussed in our form 8-K filed today and in our filings made with the Securities and Exchange Commission, including our annual report on form 10-K.
The company disclaims any obligation to update any forward looking statements.
During the course of this conference call referenced festival debate for non-GAAP terms, such as constant currency adjusted EBITDA and adjusted earnings per diluted share reconciliations for these measures are included in our earnings release and quarterly slides both posted on our website Hudson RP O that.
I encourage you to access our earnings materials at this time as they will serve as a helpful reference guide during our call I will now turn the call over to Jeff Eberwein.
Thank you operator and welcome everyone.
Thank you for your interest in Hudson Global and for joining us today.
I'll start by reviewing the second quarter 2021 highlights and Matt Diamond our CFO will provide some additional details on our financial results.
I will then give an update on current business conditions.
For the second quarter of 2021, we reported revenue of $39.7 million up 41% year over year in constant currency.
Adjusted net revenue, formerly referred to as gross profit was $15.1 million and increased 53% year over year in constant currency.
SG&A costs for $13.4 million in the first day in the second quarter up 33% versus the same period last year in constant currency.
We reported adjusted EBITDA of $1.7 million up from an adjusted EBITDA loss of point for a million a year ago.
In addition, we reported a net loss of $100000 or for cents a share versus a net loss of $800000 or 27 cents a share in the same period last year.
We reported adjusted net income per share of <unk> 15.
In the second quarter 2021 versus an adjusted net loss per share of 13 cents a year ago.
I'll now turn the call over to Matt Diamond, our CFO to review our financial results by region as well as provide some additional details from the second quarter.
Thank you, Jeff and good morning, everyone.
Our Asia Pacific business grew revenue, 32% in constant currency and grew adjusted net revenue 26% in constant currency.
Adjusted EBITDA of $1.4 million increased from adjusted EBITDA of 1.0 million a year ago.
Our Americas business grew revenue and adjusted net revenue of 139% and 159% in constant currency, respectively with approximately 40% of this increase attributable to organic growth with the remainder due to the acquisition of the quick group.
Adjusted EBITDA was zero point $5 million increased versus last year's adjusted EBITDA loss of zero point $6 million.
Our EMEA business grew revenue, 39% in constant currency.
And 30% in constant currency adjusted net revenue.
Adjusted EBITDA of <unk> 6 million in Q2, 2021 increased compared to adjusted EBITDA of 0.1 million in Q2 of last year.
Lastly, we believe it's important to highlight that adjusted net revenue grew at a faster rate than SG&A in Q2 across each of our 3 regions.
Operational leverage we are seeing is critical to achieving our goal of growing adjusted EBITDA before corporate costs as a percentage of adjusted net revenue to 20% over the long term.
Turning to some additional financial details from the second quarter.
We ended Q2 with $24.5 million in cash and restricted cash.
Day sales outstanding was 41 days at June 2021, slightly below DSO of 42 days that we had from June 2020.
In connection with the acquisition of quite group in the fourth quarter of 2020, our balance sheet as of June 30th 2021 reflects $2.1 million of goodwill and $1.2 million of net intangible assets.
The company's working capital excluding cash increased to $6.4 million in the second quarter of 2021 up from $4.5 million at the end of the fourth quarter of 2020.
As a reminder, in April 2019, we finalized a new credit facility in Australia to support the expected growth in working capital needs as a result of new client wins in that market, but we had nothing drawn on this facility at the end of Q2.
The company generated 1.0 a million dollars in cash flow from operations during the second quarter.
I'll now turn the call back over to Jeff to give some more perspective on our <unk> business and to review current trends in our business.
Thank you, Matt as everyone knows the COVID-19 pandemic created numerous challenges for our clients and business around the world last year.
In the second quarter of 2021, we saw some regions rebound strongly but others have yet to return to normal conditions.
Although the recovery thus far has been uneven our business exhibited strong growth in revenue adjusted net revenue and adjusted EBITDA across our 3 regions in the second quarter of 2021 versus the prior year quarter.
This growth was particularly strong in Australia, the U K and the Americas.
Whose economies have reopened and rebounded more so than economies in other areas.
I'm very proud of how well our team has responded to and capitalized on the rebound in demand for our services are also encouraged by our pace of new business wins, so far this year as well as the robust growth of our sales pipeline.
Importantly, I want to thank all of our highly dedicated employees for their flexibility hard work and dedication to our clients and business in the challenging conditions, we have been working through.
Operator could you. Please open the line for questions.
Thank you.
As a reminder to our participants to ask a question. Please press star 1 on your telephone again, Please press star 1 that's for.
For the piece that gives us we compile all the Q&A roster.
And other first question is from Josh Vogel of Sidoti <unk> go ahead Sir.
Thank you good morning, Jeff for Matt.
Our first question are you know we know that.
Teck is picking up nicely because of the Kuwait acquisition in the past you've also highlighted.
Life Sciences health care financial and business services.
Can you just get a little bit more insight into where you're seeing the strongest growth.
From an industry perspective, and same with the sales.
Or the prospects.
Okay.
Sure.
In the U S.
What let us out of the recovery at least from our perspective we're.
Let's say fast growing.
Companies and life Sciences, and technology, that's really been where a lot of our wins have taken place and the technology wins.
Have really been led by.
The Covid acquisition that we made about 9 months ago and the team in the Americas that we already had is working really well with the Kuwait team and together working together they are starting to win bigger projects in the tech sector more international projects in the tech sector.
So that's really exciting to see.
I would say the other sectors are also.
Emerging from Covid, starting to hire more having a strong rebound.
But those those 2 that I, just talked about or have been the highlights.
From kind of off the bottom for us in the U S and.
Europe and the U K.
It has been a variety of different industries are same thing for Australia, and Asia Pac and.
I would just say we were finding it more geographic than sector, where in our European business.
He has had a very strong rebound continental Europe slower.
Just slower to reopen slower to start to ramp up hiring again definitely very far below pre COVID-19 levels similar in Asia Pac Australia has been very very strong.
And other.
The other areas and in Asia Pac had not been as strong as as Australia has been 1 accepting that might be the Singapore Southeast Asia region. We're seeing some really strong really strong growth in that in that area.
Those are great insights. Thank you and you really have your.
You know a finger on the pulse of what's going on and in a lot of those markets. So you know I feel like the U K and Australia or are you now.
You know sides of it.
Same coin but.
Seeing U K open up Australia, so having some lockdowns I'm just curious about you know, it's still kind of early here, but whats the chatter with clients around the the delta threat is that delaying signings and or potential ramps.
Not yet we're watching it really really closely.
And the hope is that the vaccine Rollouts continue.
And that any second wave third wave is not nearly as bad as what happened last year, and I think not not to minimize the health risk at all but I think.
Companies have a just a better game plan in general for how to handle the situation.
And they're trying as best as they can too.
Returned to normal meet their own clients' needs, we're trying to help them.
Manage their work force and meet them meet their hiring needs, but we're not yet seeing.
A.
Slowdown in the pace of the recovery because of Delta, but we're watching it very closely.
Great and then thinking about the adjusted net revenue and margin profile of the business right. Now are you seeing more recruitment are contracting opportunities in the pipeline for 1.
Where we're seeing both.
And we so we think both of those areas of our business are are going to have good growth in.
In 'twenty 1.
1.2022 and over the long term.
And a lot of times they go together.
It's really about where in the client service business, where we're helping them with their talent procurement.
Needs and.
Anything.
Revolving around their workforce.
And sometimes they need help with the contracting side of their business and that's how the relationship starts and it broadens from their other times. It starts with permanent recruiting and then we pick up the contracting business, we are seeing more and more clients want what we would call a total talent solution, where they want 1 partner to manage.
All of those things together and so we feel really strongly that being in both of those businesses is much better than just being in 1 of those businesses I would say a new trend that we're seeing is a rapid response so.
Our traditional business has been larger enterprise deals, where it's typically a 3 year contract. It takes a long time to win that business. There's a lot of thought that goes into how many people are going to be on the account and what exactly are they going to do what's the scope of work what are what services are we going to provide.
And.
Especially in the really fast moving sectors like Tech and life Sciences.
That whole cycle is much much shorter and it's much more about what quality people.
Can you put on my account and can they start yesterday.
So theres different names for that in the industry, but it looks and feels different than the <unk>.
Slower moving traditional enterprise piece of the business.
Great. Thank you and I wanted to shift gears a little bit.
Good piece of new business wins, a robust sales pipeline understanding that you have to invest.
Ahead of before seeing.
Other revenue really come in but when we think about investments, how and where to we expect to see this between over the balance of the year between investing in people sales and marketing and even perhaps technology.
Yeah really great question Joshua.
Historically, we've talked about.
The need to invest in sales marketing and technology and to be honest.
That was partly a function of investments that should have been made a long time ago. So we're really just.
Catching up in some ways and that is a an important theme.
An important investment we've been making for several years now and we feel like we're really starting to see the benefits of that we feel like we're very well positioned.
Coming out of Covid.
Just all the efforts we have made on that front and so we're continuing to invest in those areas, but I'd say most of those investments that have already been made and we're really seeing the benefits of it so.
As a percentage of revenue those investments.
What will probably decline over time, even if theyre going up in absolute dollars and as we grow it's really about hiring.
Really talented people, who can work with our clients.
So our head count is growing at a pretty rapid pace, but it's really people more on the solution delivery side, who are working with our clients on that talent procurement function.
As opposed to.
Sales marketing and tech, but where we're investing in both.
Alright, great.
Just 1 last 1.
It's apparent in the numbers that are quite is very very good boost in the Americas.
Appears to be performing very well, maybe even ahead of expectations and give some thoughts on that but just the usual check in here also on the M&A pipeline, you know thoughts about what youre seeing and whether something would be more appealing from a specialty or industry perspective, like Kuwait was or geography, which court was as well, but I'm just curious you know what.
Some potential deals are you seeing in the pipeline and what do you ever.
The bigger appetite for.
Yeah really really good question, Josh you know something we think about all the time and.
I think is important on that topic to really stick to first principles.
And we want to do something that adds shareholder value that's our.
First principle and second principle is.
Something that is accretive to our clients and our business and our team. So we don't have to do anything, but if we find things to do to fit that fit those criteria.
We will pursue them I think another really important criteria is.
The industrial logic can we look at an acquisition target and say inside of a Hudson, we can double or triple what they are doing.
Because of our global infrastructure and that that has been playing out in the Kuwait transaction. It's I think we can strongly say it is operating at a higher level and winning more business because it's part of Hudson. So that gets to the 1 plus 1 equal 3 so that has been meeting and even <unk>.
Seeding, our expectations and so in a perfect world.
Maybe we would find an acquisition like that to do.
Once a year and it would be in that 5 to 10 million zone.
If we found more to do and we did 2 or 3 in a year I think our team could handle that.
They're giving me dirty looks while I say that but.
But if we went 3 years and we didn't find anything that fit our criteria. We wouldnt, we wouldnt do anything so it's all about being in the market looking having those conversations staying in touch with potential targets.
As you as you know.
From just discuss just from following the industry and following other companies.
For a transaction to be completed.
All the stars have to line up and the buyer's expectations and sellers' expectations have to be in the same zip code and sometimes they are and sometimes they're not so we would we would love to do an acquisition like Kuwait.
Once a year to just accelerate our growth, but we are going to stick really firmly to our criteria and all of that said another way, we're not going to be.
Buy something just to get bigger.
I appreciate all those insights and.
Certainly impressive performance coming out of Covid here.
I'll hop back into queue. Thank you.
Thanks for asking questions.
And our next question is from Walter Schenker of <unk> Partners. Please go ahead ask your question.
Hi.
It's a question about the company buyback.
Jeff Obviously, you continue under your program to buy stock we are experiencing share creep.
Which all public companies do and Theres nothing wrong with that if the.
Yep.
Insiders the border issued a few shares of stock for the quarter was 2 million 906 versus <unk> 39, a year ago, we generate a million of cash in the quarter why isn't too and I realize it's a decision of the board why wouldn't the company be using the cash flow for the ample cash position.
<unk> to at least offset share creep given we have a $1.7 left in the buyback.
Really really good question, Walter and something and good morning by the way and something we.
Think about.
And discuss and debate all the time. So it is very much top of mind and I'd just say a couple of things to that we did issue some shares to the Kuwait team.
As part of that acquisition.
So that's the single biggest reason for the for the share creep.
Are the shares that we issued on October 1 and a net.
Net acquisition has worked out.
Really well so we're happy with that that's a that's a high class problem to have I guess I would say.
And I would strongly encourage you to look at our history, you know a lot of companies talk about buying back stock, maybe they offset share creep, but we've shrunk our share count in absolute terms by a huge number I think something like 16.
Percent.
Since the beginning of 2019 in absolute terms.
So a lot of companies talk about buybacks don't do them or maybe talk about buybacks and do just enough to offset.
The creep, but we've actually strunk, our share count in absolute terms and we've done it every way a company can possibly do it we've done a tender offer.
Done open market purchases through 10 be 18 plan, we've done a block trades with shareholders, who wanted to exit and we're going to continue to think about all of those tools in the toolkit use those tools in the toolkit.
Be opportunistic and so I would just say, we're a company that believes and buying back stock, especially when we're cheap we think that's the most accretive thing to do on an NAV per share basis, and Dino I just I would just tell you to stay tuned and take some comfort.
And our and our past behavior.
Okay. Thanks, a lot and congratulations on the business moving forward strongly thanks. Thanks Walter.
Okay.
As a reminder to our phone participants if you wish or if you wanted to ask a question. Please press star 1 again, please press star 1.
And our question next question is from Josh Vogel of Sidoti. Please go ahead Sir.
Hey, just a follow up thank you.
Thinking about the new client wins.
And I know you touched on this but are you seeing more true.
Basically what's the split between those larger enterprises versus the emerging growth companies.
What does the mix look like there. Thank you.
Yeah. That's that's that's a good question I don't have an exact percentage for you.
And it it wouldn't be an apples to apples comparison, because we didn't have.
A year ago at this time and they specialize in the fast moving.
Kind of mid sized technology sector, that's experiencing really fast growth right now, but in the in the U S.
Really healthy mix between those kind of clients and larger.
Let's say a fortune 500.
Type of clients.
But where are our sales pipeline and backlog are really exciting and it's a lot of different sectors a lot of different geographies.
And just taking a step back from all of that.
It's really helpful to us to have clients and potential clients that.
See their need for a partner when our sales team are meeting with clients talking about their needs.
1 of the biggest hurdles they have to overcome is when a client says oh, okay. Everything you do is great.
But we can just do all of this on our own.
We don't need you. Thank you very much and if you think about what.
Big companies or all companies have gone through over the last year with dealing with COVID-19 dealing with <unk>.
Transitioning to our.
Remote fully remote partially a remote workforce.
Another big theme is all of the technology tools that are available. These days in HR and talent assessment talent procurement add on top of that.
Every company that we speak to is working on their diversity and inclusiveness hiring and retention.
Programs and now everybody is well.
Ramping back up to varying degrees.
So.
My point is the everything we've gone through over the last year and a half.
<unk> has really made companies see their need for a partner and highlighted the benefits that I trusted partner like us.
Can really bring to a client and that.
And then so that so there is definitely a cyclical rebound I think theres something stronger that's more secular where clients more so than ever before see their need for a partner and see the value of the services.
We can provide value the expertise that our team has developed over 20 years.
And that's what this gives us a lot of confidence about our business going forward.
That's great.
They're running theme here, especially in the U S. Our supply constraints and when we see these faster moving condensate sales and ramp cycle engagements are you having trouble finding the talent.
Yes, but we're being more creative and opening the center in Tampa has been really helpful and we the success of that.
Has led us to want to have more centers like that and I think we have a slide in our investor deck of the places that are under consideration so.
We really think that's an important part of our model going forward is developing a center of excellence.
And in an area, where there's just so many benefits to it so we're going to open more centers like that and a disproportionate amount of our hiring is going to be.
In places like that but there's a there's a mad scramble for talent.
And.
The business of recruiting talent and so if we can't recruit talent to come to work for Hudson to work for our clients who were in the wrong business and this is what we do this is what we're good at and I think where we're doing a good job.
Great well. Thank you again for taking all my questions and good luck over the balance of the year.
Thank you.
And that concludes today's question and answer session I will now turn the call over to our CEO, Jeff Eberwein for closing remarks.
Well. Thank you again for joining us today and for your interest in Hudson Global.
We look forward to next quarter's call and in the meantime, if you have any questions or contact information is on our press releases and on our website in our investor deck.
And talk again soon thanks.
Thank you for joining the Hudson Global second quarter Conference call. Today's call has been recorded and will be available on our investors section of our web site Hudson IPO Dot com. Thanks, everyone.