Q3 2021 HeadHunter Group PLC Earnings Call

November 15, 2021

Welcome to our conference call. Please continue to stand by your conference will begin shortly.

[music].

Good day and welcome to today's third quarter 2021 financial results conference call. At this time all participants are in a listen only mode. There will be a presentation followed by question and answer session at which time. If you wish to ask a question you will need to press star one on your telephone keypad.

I also must advise you that this conference is being recorded today and I would now like to hand, the conference over to your first speaker today Armin Arctic Union. Thank you. Please go ahead Sir.

Thank you.

Hello, everyone and welcome to <unk> Com through group third quarter 2021 earnings call.

Joining me today to discuss our results army called Yougov, Our Chief Executive Officer, Dmitry. So genco forward the procedure predict Forbes and Gregory and we say, if our chief financial Officer.

Before we begin we'd like you to remind that today's discussion will contain forward looking statements.

Actual results may differ materially from the results predicted or implied by such statements and forward looking statements made today speak only to our expectations as of today, we undertake no obligation to publicly update or what.

Or revise these statements for a discussion of some of the risk factors that could cause actual results to differ please see the risk factors section in our most recent annual report on form 20-F filed with the SEC.

During this call we will be referring to something on my first financial measures. These non <unk> financial measures are not prepared in accordance with IRS.

A reconciliation of the non <unk> financial measures to the most directly comparable I first measures is provided in the earnings release, we issued today and the slide presentation each of which is available on our website at the investors. They choose those how are you.

Now I'd like to turn the call over to Mikhail.

Thank you IRA.

Good afternoon, everyone. Thanks for joining US today. This was an exceptionally strong quarter for our <unk>.

Our business development.

Wintry, Ann Gregoire, who will walk through.

Throw in details later.

But we have yet again managed to double our revenue base compared to 2020 and heat or major business Kpis.

As always user base strikes near historical records, it's essential to stay laser focused on productivity and adaptation of our plans for two distinct customer segments.

One of our key product priorities continues to be seamless and enjoyable experience for their own recruitment professionals from Sma's disc.

This customer category has been the key driver for our business growth and full and candidate migration to mobile devices. We are now observing similar trends in that area.

That is why we decided to come up with a food reworked important mobile application built on predictive interfaces, it's too early to draw any strong conclusions, but at the moment that we see this as a key conversions to use of targeted actions and then you.

Have improved by 10% to 22%.

By delivering high recruitment efficiency and business results for our clients.

On the job seeker side, we launched wide experiments was employee review functionality integrated with our strategic partner Dream job and that showed very encouraging engagement from both candidates and employers.

Even though it's in experimental phase yet.

Circa 15% of our bankruptcy is already have corporate or views.

We plan to scale with some scenarios across the entire customer base.

In the next few quarters.

Besides we have finally made the deals you do now.

And now we're institutionally wages to move alone or with joint straight to chip in a self employed market, where we continue to see major growth opportunities for us no alternative to Veeva to walk you through the key highlights over the third quarter. Thank you.

Thank you Michelle.

Good afternoon, and thank you for joining us on this call.

This quarter, our revenue was $4 7 billion in rubles, and we managed to sustain as Michel said people traveling in growth. Despite a much higher comparison base than in the second quarter.

Market conditions remain very strong we have significantly expand our business across the key strategic areas, including acquisition of small and medium businesses and monetization of key accounts.

Despite a significant increase in marketing spend our other cost items are significantly behind the top line expansion leading to elevated profitability in Q3, our adjusted EBITDA margin came at 64%.

This year with full O Conservative Capex policy, resulting in strong cash generation for shareholders. Our capex in Q3 as a central Arabian came in just sort of.

1%.

In terms of performance by operating segments.

Small and medium accounts revenue increased by 106% year on year, driven by both increase in number of paying customers and RPC grows acquisition of new clients explain circle 56 percentage points of revenue growth in small and medium segment.

Our total customer base reached 450000 client and this quarter already exceeding full year 'twenty two.

And key account segment average consumption growth and organizational initiatives what are the key drivers of our strong performance, notably average check in this segment increased by 71% year on year and that is largely explained by new monetization model for subscriptions gaining pace across the customer base.

Geographically revenue from Moscow and St. Petersburg increased by 98% year on year, while revenue from other regions of Russia went up by 110%, which is totally in line with our expansive strategy in Russian regions.

Program dynamics this quarter is somewhat similar to what we've seen in the second quarter.

Oh boy things remain the fastest growing area in the back of increased consumption in small and medium and key accounts in this competitive environment clients utilize advertising towards more intensively leading to even growing consumption per client is.

The total number of vacancies on the platform reached historical record of $1 1 million, which or 1 million are paid vacancies.

If you did the base access and the bundled subscriptions demonstrated 94 and 89% growth year on year, respectively. As you can see the growth in subscriptions is a tiny conversion with listing product thanks to monetization enhancement of the former.

Apart from our core products, we are very satisfied with the solid dynamics through our value added services, including recruitment automation branding products, our performance based solutions cleanly and grocery cruiser.

Steel has demonstrated yet another strong quarter with customer base expansion with revenue gain close to 300 global familiar rubles, representing a 200% growth year on year, and reaching EBITDA breakeven level first time in company history.

There's real value added services generated over half billion revenues in Q3, you didn't girl with a 136%.

Just underscores the market openness for innovative HR Tech solutions in today's challenging environment.

Now turning to our full year 'twenty to 'twenty one outlook.

This year as you understand there is a particular difficult to make a precise projections from the one hand, our business performance exceptionally strong end market backdrop is better or bus bottomed.

On the other hand, the pandemic staffs in Russia is far from being stable yet.

Taking those factors into consideration, we have decided to upgrade our full year 2021, and our book to 80, 184% revenue growth range, indicating or 15 billion revenues.

Hunter group and buckle nowadays.

Now here's Greg you had talked about over the Buick and cash flow metrics.

Yeah. Thanks, David.

Good afternoon, everyone.

Well I think give you some detail first allow our expenses, how large of a gamer and their third quarter 'twenty to 'twenty one.

Adjusted EBITDA margin extended at the milestone of 60%.

Consolidation of a lot of things give us a little more.

And by a stroke of four percentage points. So therefore, our organic segments margin was able fire in the ballpark of 64% chance.

It's a significant improvement compared to 56.6%. It was the same segments in the third quarter of 2020 at Waitrose explained all stay by the increase in our revenue.

At the same time with automobile Oh.

All acreage in the third quarter is usually the highest quarter of any year in terms of framing.

And consequently, it has the lowest expenses as a percentage of revenue ends up highest margin there.

Therefore, marginally in Q3 and somewhat elevated and we expect that to trend down in Q4, historically over the last two years margin in the fourth quarter was four two percentage points lower compared to third quarter.

Our total operating expenses, excluding depreciation and amortization or circa 2 billion roubles during the third quarter of 2021.

The increase of 69, 5% compared to the third quarter of 2020.

Adjusted for Accenture settled awards S. P O and M&A related costs operating expenses were around 1.9 billion, which was 18, 5% increase compared until the third quarter was 28 20.

And let me briefly discuss something a girl with forever.

Expert expense buckets.

First of all personnel expenses adjusted for exit yourself towards that's pure labor costs increased by 61 for sale here on a year and about one third of this growth is explained by consolidations our clubhouse kill us.

The other factor is where are the increase in our head count by circa 15% or 26 people over the last 12 months.

The increase in our sales team boneless us on tobacco exceeding their targets and dangerous inflation.

As a percentage will frame in your personnel expenses, excluding equity settled awards in this pure latest costs have decreased to 19, 3% in Q3 of 'twenty to 'twenty one.

For all 24, 3% in the third quarter of 2020 at improving the margin by five percentage points.

We think that in the fourth quarter, we will sustain this operating leverage and personnel expenses will be the key contributor to our margin expansion in the full year of 'twenty or 'twenty one.

Speaking about personnel expenses, our acreage yourself towards increased to 136, mainly on the rebel sales the third quarter of 'twenty to 'twenty, one compared to 56 for the third quarter of last year, all by circa 80 million.

This was mostly due to an <unk> 2021 I wish you well with established in July and the way we granted approximately 250000 units.

Circa eight for sample thing as total football Cup wash at tier two absent to approximately 100 of our employees.

Moving on to marketing expenses, they increased significantly by 140% year on year outpacing revenue growth.

The increase in marketing was mostly due to our decision to increase spending on both performance and brand awareness marketing in 'twenty or 'twenty one on the back of the increased demand for candidates.

In addition, approximately one third of physical force do you have to sort of pull out the consolidation.

As a percentage of revenue marketing increased to 12% in the third quarter of 'twenty to 'twenty, one compared to 10% in the third quarter of 2008, the way that you go.

Going forward for the full year 'twenty or 'twenty, one we think that the operating leverage potential in this bucket will be offset by our decision to increase spending.

I was at general and administrative expenses adjusted for S. P. O L. M&A related costs increased by 19% compared to the third quarter of last year.

The key drivers of this growth where are the additional surplus times kill us, which contributed almost Gulf off the growth in that bucket as well as an increase in subcontractor costs in our Russia segment due to the increase in revenue from other value added services and the increasing professional services.

As a percent they show framing your all other general and administrative expenses is just the tourists pure and then when they related costs or eight 4% relatively flat compared to land for sale in the third quarter acquainted with him.

And the full year to ensure plenty of well results. We expect this expense to remain relatively flat as a percentage of revenue compared to last year.

Now moving on to other key indicators, our capex in the third quarter of 'twenty to 'twenty, one has decreased to 49 million compared to $17 million in the third quarter of last year as we completed our most cholecyst renovation project last year on the back of increasing revenue as Jim already said Capex decreased towards circle once a sample craving.

In the third quarter this year compared to around 3% in the third quarter of 2020.

The Atlanta working capital as of the end of Q3 was negative $5 1 billion roubles compared to negative $3 8 billion as our fans of 2020 and the change was primarily due to customer blastosphere saved.

Income tax expense in the third quarter 'twenty to 'twenty, one was 548 million compared to 264 million in the third quarter of 2020.

The increase was driven by the increase in revenues and consecutive increase in the taxable profit.

The effective tax rate in Q3 was 23, 7% compared to the 31, one in the third quarter last year. This decrease was.

Wayne attributable to alone deductible is pure related expense last year in the third quarter.

Now I will turn into cash generation metrics in the third quarter of 'twenty to 'twenty. One we have generated significant $2 5 billion rubles from operating activities compared to Atlanta, hunkered down $2 million in the third quarter last year, primarily driven by the increase in sales.

Which generated $16 million of bolstering in western activity as compared to 15 million used in the third quarter last year, mainly on tobacco inquiries and interest income on cash deposits.

In financing activities, we used $2 four rebels since the third quarter of 2021, most of it away and never never announced dividends for the year 2020.

Compared to 2.1 P M.

The last year, which was also most answering but the bolter in dividend payout.

Net debt decreased from $5 billion I'll make 'twenty 'twenty year round to two 3 billion as all fans of Q3 in 'twenty or 'twenty, one primarily due to the increase in cash.

On the back of these inquiries on that that's anything crazy just to take it down our leverage is now 0.3 times adjusted EBITDA compared to 1.2 times adjusted EBITDA.

Twenty-twenty.

And.

Finally, starting from October 'twenty to 'twenty, one, we're making daily or any purchases of our adr's throw a broker in a form on the buyback program.

Program stipulates that you're in landmark until July 2022, our broker trip purchase eight hours were approximately $27 million in more or less equal daily installments of.

Accordingly as of November eight 2021, the most rational dates of the brokers reports obtainable, while we prepared with this release, we have repurchased 20, sorry, 52080 hours for circa $3 million.

This concludes our presentation of the results of the third quarter of 2021, and we are now opening the floor to your questions. Thank you.

Thank you we will now begin the question and answer session and a reminder, for those who wanted to ask a question just press the star and one on your telephone keypad and wait for your name to be announced once again star one if you wish to ask a question.

Yeah.

Thank you we have questions that came through the first question comes from the line of.

Love them.

Dan.

From Goldman Sachs. Your line is now open. Please go ahead.

Yes. Thank you very much for the call a couple of questions. So firstly, how do your direction I think over 2022 budget, Inc. Obviously, I know, it's probably too early but what are the key moving factor to keep in mind for where that growth and margins for the next year, obviously, the latest quite high but what are the key drivers that will be having that locked in effect.

In the medium term and maybe how would you split them out for the next year between volumes and price.

And my second question would be with regards to that mobile product for employers that can you elaborate what are the use cases, they're all populate that oh differentiate is that versus the competition, there and maybe broadly.

You are the product initiatives that are in the pipeline. Thank you.

Yeah.

Yes, all of this is good.

Hi.

I'm, sorry, I came on board.

Yeah sure I can quickly answer the first part of the the first question on the on the budgeting and how we think about next year, obviously you use.

I'm gonna be unduly surprised at it at this point of time, it's hard to give.

Give a precise or official guidance for next year and there definitely are sort of the moving parts.

Most of the regard to or the kind of food customer base. Our growth next year would be that would be a function of our oral mockery labor market situation development.

I think we're having brietzke at this point of time, if you would look into the Tucson thing to do and we have a.

Quite optimistic view on the healthy mix between our monetization and then the customer base expansion.

On monetization, it's a it's more kind of a reasonable already unpredictable because certainly used to that's already kind of keeps the in this year and we can more or less precisely calculate the impact for next year. Obviously, one of the major initiatives would be the kind of continuous.

The rollout of our new subscription model.

As I said this year this broader because there had been performing exceptionally well and are actually above our original expectations and the guidance we gave.

And think next next year, therefore, we will kind of upgrading our expectations. We believe that a this one a single kind of monetization that is that could define our offer for 7% of our revenue growth next year and on top of that you would have a the other pricing initiatives.

Gonna have a inflate prices starting from January not April this year, so it'll be some timing difference effect as well and so the price increase we expect to at least 10% growth in subscriptions and a bigger packages of job postings to expect sort of a 300% growth plus and of course.

All of this these components will go on top of those I already mentioned the institution model.

We actually made good progress in upgrading our backend infrastructure and the business logic or monetization this year.

And next year, we're going to be more in dance on the differentiation by my professions rules regions, that's what else the Gila incremental check growth and also may actually help us differentiate between small medium businesses and then kick off so well monetization. It's it looks very robust next year only on the customer.

So I think it's again, it's probably going to be mature debate at the moment it looks quite strong cried, but again this deviations of older quite quickly. So it's really hard and I will defer to comment on expenses to distribution.

Okay.

Yeah, Hello for me, we are kind of in the middle of the bid.

Bush at a social right now and the.

As weird as we discuss our we definitely see it several.

Areas for growth.

The numerous sensitive.

Assessable initiative for the 20th related to <unk> and.

Certainly it doesn't make sense from our point of view to kind of just a couple more just for the sake hopefully it hurts our profitability. It therefore demos Seth we're not prepared to.

Give any guidance at this point on.

Oh on the 'twenty to 'twenty at all actually.

In both.

Revenue growth and margins.

I can say is that the budget will therefore play kind of thing served on our investment.

Importantly in terms of in terms of the expenses.

I think.

Oh I think also importantly to kind of understand again that the 2021 was the year of very steep revenue growth.

And some clients in some areas we're struggled for resources so.

Kind of.

Not the best reference points as well for their future planning.

Yeah. So I guess, that's that's the.

Ah Okay. The equivalent I can give you on there all day of March upfront.

I think they're saying I think we can move onto the second question from smaller on our when our new mobile App.

I can say that we can.

Historically, we were a little bit dismissive on a kind of a mobile platform for it in Blair's goes we saw very limited our use cases.

Most of our or most of our clients extra preferred to use our mobile a mobile interface why while actually just a blurry in mobile devices, but not in the in the in the App functionality, while they just continue to use this storm so just to repeat it we didn't invest as much.

In that area.

And lost a few years, especially during COVID-19 the debt situation has significantly changed in our view.

We saw peak up in demand and the usage and are predominantly for them, obviously small and medium businesses from non recruitment professionals and this is how actually we'd be designed at these new apps. So that that's clearly designed for a very easy simply fly to workflow with the kind of call to action.

Roche when we a lot of predictive actions when you don't need to feel all of the details then the machine you're using some machine learning instruments and began to trying to predict the answer is I intend going to minimize the questions. We ask that that's clear to target that the SME usage.

At the same time, we are we try to kind of.

Sector and they incorporate the functionality that is usually very popular among the key accounts as well like for example, working with Lockheed.

And the integration of the Etfs and for example, communication platform that we introduced in our job seeker platform earlier. This year, we actually did the same for <unk>.

It's because it is becoming kind of core and functional knowledge.

And then also are we believe the dollar new app, especially on Android platform going to be much more stable.

And.

All the metrics that we've collected over the last one half month since the launch of the Android platform and shows us that yeah, that's actually the game.

And the B, we'll get it again, it's early to draw some sworn conclusions yet right and there are a lot of product work required for this new app.

But we already see upwards of 90% an improvement in conversions, especially in our registration and purchases et cetera, and for small and medium business support we believe that that would be quite helpful. For all the key metrics then efficiency levels last one overall for the for this category.

Yeah.

Okay. Thank you so much.

Thanks, a lot.

Thank you and the next question comes from Ivan Kim from <unk> Capital. Your line is now open. Please go ahead.

Hi, Yes, good afternoon I.

Yes, three questions from my side. Please firstly on.

On the fourth quarter.

We didn't see any.

Any impact on job postings on your platform in November, but if you can just comment on what sort of framework like down had will have on your numbers so far.

Secondly on Skus.

What sort of growth outlook.

You foresee for 'twenty two for SKU with some particular ballpark very wide ranges or directionally that would be a great and related question to that is.

Whether you consider further expansion into adjacencies.

It gives us a skew us experience shows.

Inquiries your tickets or Russell Mark Mesler with one small acquisition. So just wondering there was real good deal obviously, but if you think.

About expansion there more aggressively in 'twenty, two and Adjacencies. Thank you very much.

I think so and.

These questions. The first one in November will them.

No of course, we saw a deceleration in our billing and billings and bookings so that week of Nonworking base. Luckily. It was just a just a week well, but for the majority of regions of course in certain in certain regions are extended to the Jordan. So we so there's certain underperforming.

And they're in the shorter term products, especially sure subscription small packages so job postings. So.

Total kind of day, one of a rough a rough terms, we lost that we historically, 25% percentage points of growth compared to the previous the week before the wound down.

That that is clearly a better be sure that we absorbed the last year when we were on a constant.

One working mode right in June on an enemy.

And that just shows that the business has been adopted the largest stand to be in operating in this environment for more than a year radio and especially in key accounts, we saw very little.

Disruption.

And we most of our clients and and begun to prices just continued durations as normal.

But of course in that small and medium businesses there there wasn't an impact.

But it was not no not as severe as we saw in previous slowdowns.

That's only on the a little down and I think on the fourth quarter.

Otherwise, it's gone so far quarter to date performance is quite quite encouraging.

But no one knows what to expect in the next one months and cough right. So the risk of a restrictive measures are at least go high and is not binary there's no debt type theory, either there or whatnot. It reaches that they can so local decision so it actually having impact on certain regions.

Hi, it's quite hard to predict exactly a impact in the first quarter.

On the skew us a the fourth quarter traditionally the strongest quarter you may expect that this lush contours did they sign a they tend to be assigned.

And they kind of lost last minute when.

When the budget is allocated to the <unk>.

Barkman kind of goals.

And historically I think two or three years in a row the fourth quarter was the strongest.

Generally we believe that they should post a so called 400 million revenues this year.

But there are certain big contracts.

With very large enterprises that are underway, yeah that that's for me kind of be seeing factor here right. So because everything should sleep next next quarter.

Therefore, I think skew us at this point of time or when they acquire new customers are quite intense away. They are a bit less predictable and then compared to 500.

But we expect a strong quarter.

And the the last one I think is to acquire the right. The right. One it's exactly in line with our thinking that in today's environment, we see a lot of opportunities in the in adjacent areas and many of them could be actual tackled in a quicker and more efficient way of why some small early stage acquisitions.

And we actually were quite active in on the surcharge for these type of assets Weightless keyless dreamed yogurt, you do et cetera. So b I would say I would guide them on their own quite high yeah like acquisitions.

On the next two to three years pursuing these opportunities.

Yeah.

Great. Thank you very much.

Thank you and the next question comes from the line of Luke.

<unk> from Morgan Stanley. Your line is now open. Please go ahead.

Thank you for letting me on the call and congratulations on a strong set of results and I just had a question on market share dynamics given your strong revenue performance. This quarter I just wondered if you could comment a bit on what you were seeing in the regions in particular.

Has the policy changed that dynamic a bit as well, particularly around Siberia region, and do you feel that youre gaining share at this point in time, and then I've just got a follow up after that thank you.

Yeah sure.

Luke Thanks progression.

Well the regional business is performing stronger than in terms of growth than in the in the capital cities, then Moscow and St Petersburg, as well higher than our percentage growth.

And in particular in this plot the region in euros, and then say beta it's one of the strongest area is where we have the probably the biggest market share even compare to muscle.

What needs to be made a survey.

And that actually is going to.

It resulted in the quick with installation in fact that we delivered over 95% of all obligations in are.

Are you considering book for example, right. So it's like the whole the whole market daily versus just 5%. If you take out the awesome support them. So it's a very very strong a strong regions.

The blood is a slightly underperforming had hunter man I think we always guided this week was there deprived are certain benefits of a national wide when he theft of marketing that we are enjoying a and therefore their revenue is not growing as fast as head Hunter. So we kind of.

Grabbing share from their plot them, but combined with Zurich lather collectively we differently in a strong position. So I think that actually we can some looks lot of monetization potential as well for us.

Okay. Thanks, and then just in terms of marketing spend that you mentioned that there are certain regional product. Okay. So you're targeting mobley quote out of white collar would you split it like that in terms of any.

Any color that would be useful.

Yeah No question Gregory.

Really I don't think I can give.

Give you the kind of details by market and cello or by segment because for kind.

Kind of competition are reasonable will prefer not to go into so much detail right but.

What I, probably will account show here is that and.

In the second quarter of this year and then the third as well we are a stressful and marketing on both.

Our brand awareness formats, such as outdoor complaint for instance, and performance marketing.

As well.

Yes, when we see a kind of a high demand for candidates.

And also on the back of kind of floor T V gel job seekers.

So we think it makes all the sales tool.

I'll spend more for what else like position to balance with demand for it but artificial shea our top two customers or essentially paying extra nowadays forget the records go in.

We are.

Frankly, increasing across our across the board.

For instance, we had less significant outdoor campaign in basketball recently, and we saw a sizable increase in the.

Top of mind brand awareness by circa 8%.

Poor I'd say eight percentage points, probably up to a six 6%.

According to our west where her.

We're also seeing traffic going up it's around.

Between 20, and 30% as we increase more in digital.

And then just all channels.

So it's across the board rather successful shake.

Great. Thank you very much that's very clear.

Thank you and the next question comes from the line of Dmitry.

That's all from Wood <unk> Company. Your line is now open. Please go ahead.

Oh, yeah. Thank you very much for the opportunity to ask questions I have two please.

First one can you please breakdown the revenue grow fourth quarter after COVID-19.

Basically what came as a result of Oh plot that skew us a what came from the organic growth and what.

What came from the.

Labor market that said so to speak the other question is on the gig economy.

Could maybe comment on how.

How big do you see the total addressable market opportunity here.

Like what's the opportunity now.

How big could it become once the transition from the gray market to the legal one will occur. Thank you.

And good morning, I'll handle both Hum on the on the first one if we try to decompose this a the growth in quarter one 2%.

Absolutely tourists to one 4 billion.

Yeah, we are going to actually split up.

Yeah.

Rule basis that are.

Regarding growth and kind of more sustainable organic right. So.

And so those would be the fact, we are it is it always leads is arbitrary right because it depends on what we just said that the base for last year.

But we estimate that it's around 15% out of 103%.

M, which is the call who are kind of 15, new in that is explained by little base. So the percentage is obviously going down compared to Q2 for this reason.

Then I'm more or less equal impact a game a drive from our inorganic growth around 15% over 350 million and that's colleagues impact from SKU lessons apply the consolidation this year.

And then so effectively if you take out these two buckets are 30%, then remaining 70% or $1 7 billion.

Both could be also broken into three major organic growth buckets are always something heading into consideration first monetization a second client base expansion and the sword that consumption real time, so the first.

Planes circle, 40%, well, that's $1 7 billion.

That's monetization oaklawn base because of price differentiation.

And coupled with the effect of the new subscription model. The key contributors Howard just said that the paper conduct products.

Exceptional wells this year.

Then, 25% a 1.7 billion relates to increase the consumption of our services that that's a big impact on the market situation and laid before shortage.

And their general lull candidate activity in the market discussed last time, some part of it probably diminish over time, so it's kind of semi semi sustainable.

Because we see that for example, a small and medium businesses, they consume twice, whereas the bigger.

If I could just then usually do.

And the remaining 35% is the customer base expansion predominantly small and medium businesses, but don't you regions. So that that's driven by online adoption all of our marketing investments and B to b channels, our product adoption platform adoption et cetera, and that's the most encouraging numbers broken coast man, that's just helping us too.

To grow the base, which we can monetize.

Future.

So generally if you compare Q2 are the low base effect went down the amortization effect.

Went up that'd be the other buckets, you made more or less the same.

In the second the second question was on the on the gig economy, Yeah, I think we.

Based upon this but yeah I'm happy to repeat that generally we see globally that the independents will inbound workforce constitutes up to 40%, we're not Ottawa and I never thought of a center.

Labor Force is quite stable and measure if if you look at so what I say, even there, including the unofficial gray market, that's only 15%.

And of course, the like 95% of that 15%.

Currently in the Green zone.

They were very limited incentives created and upon the legislation changed in some 18 base, we saw huge intake and the legislation of is itself a registered.

So we believe at the moment there are and of course to be the official statistics around 2 million are self employed.

And we expect actually this number to grow are they 10 10 X after printing Neil N and the next five years.

That's a huge emerging market for us.

It is highly dynamic and theyre not only diebold looms doesn't matter, but also the business model that could be applied to matters because it's so if you compare with our traditional kind of permanent work, it's much easier in this market to consummate the transaction because its more frequent frequent market. It's it's quite similar to what we've seen in Maastricht.

<unk>.

And therefore, it's much easier to cut and transaction processing payroll processing. Some admin work. So it is very sticky potentially if you. If you are happy if you're successful in on boarding care, especially big enterprises and so that's our strategy together with you do.

We are.

Additionally declared this a strategic partnership in June then we try to kind of test this solution with the clients and interaction with exceptional so.

So we decided to invest in you do as a minority partner at this stage, but of course, it's a strategic type of transaction for US we are having in securing all the necessary best best to control in the future.

Consolidated business should it extra takeoff, Indiana, but we are really optimistic and in the end this.

Temporary market contingent market could be bigger and monies returns then they permanent sourcing market.

Thank you very much very clear.

Thank you and no further questions that came through I would now like to call them.

Back to your speakers Dmitry.

Your line is now open Sir you May go ahead.

Yeah, I think yes.

Yeah, there's a few people a few remarks there for the first of all yes.

Thanks for your participation and this is the last quarterly call for this year, yeah time flies by quickly.

Needless to say that it's been there now for any quarter for US right in terms of the financial result is probably the best quarter, We've had since we've gone public.

It's really nice to see how our strategy execution of folding and we showcased how we can really continue to grow client volumes, while concurrently early I'll differentiate monetization. So it speaks of the das or the logical the market I'll just speak to the kind of pricing power in a rising although our competitive position.

But what's even more encouraging I think that kind of stems from the the question.

Just received from them for one year.

When it Jason markets, even in these challenging kind of came to the board we clearly see.

That the process of kind of rethinking and upgrading their all of which are a function in each of our funding within an organization. So coupled with the equivalent directions ingredient online. So this creates a unique window opportunities beyond our traditional market boundaries.

This is already evidenced in our results in a value added service performance, including Skewer dynamics are in our experiments with dream jobs and you do so we just wanted to stress that for us as the market leader.

Traditional market, it's really important what are the best positioned to kind of catch this opportunity. It's important strategic task that's going to lead the next wave for which our tech development in Russia.

That's our ambition and the gold whenever he used to come thanks for your attention have a great week Goodbye.

Thank Y our 11th conference for today. Thank you all for participating you may now disconnect.

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Hello, everyone and welcome to head Hunter Group third quarter 2021 earnings call.

Joining me today to discuss our results are Michael Joseph Our Chief Executive Officer, the minerals junk of our Deputy Chief Executive Officer, and Gregory and we say, if our chief financial Officer.

Before we begin we'd like you to remind that today's discussion will contain forward looking statements.

<unk> results may differ materially from the results predicted or implied by such statements and forward looking statements made today speak only to our expectations as of today.

We undertake no obligation to publicly update or what.

On this call we will be referring to something on my first financial measures. These non <unk> financial measures are not prepared in accordance with I for us.

A reconciliation of the non my first financial measures to the most directly comparable <unk> measures is provided in the earnings release, we issued today and the slide presentation each of which is available on our website at the investor deck that shows the value now.

Now I'd like.

To turn the call over to Mikhail.

Thank you IRA.

Good afternoon, everyone. Thanks for joining us today.

This was an exceptionally solid quarter for our product and business development.

And Gregoire, who will walk through.

Through in detail later on but we have yet again manage to double our revenue base compared to 2020 and heat or major business Kpis.

As our user base strikes near historical records, it's essential to stay laser focused on product innovation and adaptation of our planning for two distinct customer segments.

One of our key product priorities continues to be seamless and enjoyable experience for those recruitment professionals from sma's.

This customer category has been the key driver for our business growth and Poland candidate migration to mobile devices. We are now observing similar trends in that area that is why we decided to come up with a food, but he worked in Florida mobile application built on predictive interfaces.

It's too early to draw any strong conclusions, but at the moment, we see the key conversions to user target actions in the U S have.

We have improved by 10% to 20%.

By delivering high recruitment efficiency and business results for our clients.

On the job seeker side, we launched wide experiments with employee review functionality integrated with our strategic partner Dream job and that showed very encouraging engagement from both candidates and employers.

Even though it's in experimental phase yet.

Circa 15% of our back office already have corporate reviews.

We plan to scale some scenarios across the entire customer base.

The next few quarters.

One side, we have finally made the deals you do.

Our institution really wages to move alone or with joint strategy and a self employed market, where we continue to see major growth opportunities for US no alternative Zimmer to walk you through key highlights of the third quarter. Thank you.

Thank you Michelle.

Good afternoon, and thank you for joining us on this call.

This quarter, our revenue was $4 7 billion rubles, and we managed to sustain as Mr set of triple digit revenue growth. Despite a much higher comparison base than in the second quarter.

Market conditions remain very strong we have a significantly expand our business across the key strategic areas, including acquisitions of small and medium businesses and monetization of key accounts.

Despite the significant increase in marketing spend our other cost items are significantly behind the topline expansion leading to elevated profitability in Q3, our adjusted EBITDA margin came at 264%.

This year, we follow Conservative Capex policy, resulting in strong cash generation for shareholders. Our capex in Q3 as a percentage of revenue came in just sort of 1%.

In terms of performance by operating segments.

Our total customer base reached 450000 client and this quarter already exceeding full year 'twenty two.

And key account segment average consumption growth and when these initiatives were the key drivers to our strong performance, notably average check in this segment increased by 71% year on year and that is largely explained by new monetization model for subscriptions gaining based across the customer base.

Product dynamics this quarter is somewhat similar to what we've seen in the second quarter job postings remain the fastest growing area in the back of increased consumption in small and medium in key accounts in this competitive environment clients utilize advertising towards more intensively leading to ever growing consumption per client as a result of the total number of vacancies donut.

Last form reached historical record of $1 1 million, which or 1 million are date vacancies.

But typically the base access and the bundled subscriptions demonstrated 94% 89% growth year on year, respectively. As you can see the growth in subscriptions is a kind of conversion with listing product. Thanks to monetization enhancement of the former.

<unk> has demonstrated yet another strong quarter with customer base expansion with revenue game goes through 300, durable 1 million rubles, representing a 200% growth year on year, and reaching EBITDA breakeven level first time in company history.

This group of value added services generated over half billion revenues in Q3, you didn't grow with a 136%.

It just underscores the market openness for innovative HR Tech solutions in today's challenging environment.

Now turning to our full year 2021 outlook.

This year as you understand these particular difficult to make a precise projections and so on the one hand, our business performed exceptionally strong end market backdrop was better bus.

But on the other hand, the pandemic stats in Russia, it's far from being stable yet.

Taking those factors into consideration, we have decided to upgrade our full year 'twenty to 'twenty, one outlook to 80, 184% revenue growth range, indicating or a decent 1 billion revenues with what Hunter group and buckle Nowadays.

Now here's Gregg are you talking about stability and cash flow metrics.

Yes, Thanks, David.

Good afternoon, everyone.

Thank you Bill so that they will first of all our expenses are largesse.

Give him a sale in the third quarter of 'twenty, one the adjusted EBITDA margin expanded the milestone of 60%.

Consolidation of levels of blood timescale us marching up by circa four percentage points. So therefore, our organic segment margin was even higher in the ballpark of 64%.

It's a significant improvement compared to 56.6% in the same segments in the third quarter of 'twenty to 'twenty one.

It was explained I wont stay by the increase in our revenue.

At the same time with automobile.

She was on record.

Third quarter is usually the highest quarter of any year in terms of framing.

And consequently it.

Has the lowest expenses as a percentage of revenue ends up highest margin therefore.

Therefore margin and feel free to somewhat elevated and we expect them to trend, though in Q4.

Historically over the last two years margin in the fourth quarter was four two percentage points lower compared to third quarter.

Our total operating expenses, excluding depreciation and amortization or circa 2 billion. The rebels in the third quarter of 2021.

The increase of 69, 5% compared to the third quarter of 2020.

Adjusted for excellent yourself towards Spo and M&A related costs operating expenses were around one 9 billion, which was 85% increase compare it until the third quarter was 20 at twin chip and.

And let me briefly discuss something a growth driver and the key expert expense buckets.

First of all personnel expenses at Justice corrected yourself, all the warrants and that's pure related costs increased by 61% year on year.

One third of this growth is explained by the consolidation of our quality and scale of.

The other factor is where are the increase in our head count by circa 15% or 26 people over the last 12 months and then crazy in our sales team boneless us on the back of exceeding your targets and wages inflation.

As a percentage will frame in your personnel expenses, excluding equity settled awards in this pure related costs have decreased to 19, 3% in Q3 of 'twenty to 'twenty one.

For all 24, 3% in the third quarter of 2020.

Program margin by five.

<unk> percentage points.

We think that in.

The fourth quarter, we will sustain this operational leverage and personnel expenses will be the key contributor to our margin expansion in the full year of 2021.

Speaking of all personnel expenses, our acreage yourself towards increased to 136 million of the rebels sales the third quarter of 'twenty to 'twenty, one compared to <unk> 56 for the third quarter last year, all by circa $80 million.

All St Jude Tau and <unk>, 2020, one I wish you well, we established in July and the way we granted approximately 250000 units.

Circa 8% posting a total overall capacity here.

To approximately 100 of our employees.

Moving on to marketing expenses, they increased significantly by 140% year on year outpacing revenue growth.

The increase in marketing was mostly due to our decision to increase spending on both performance and brand awareness marketing in 'twenty or 'twenty, one on the back of increased demand for candidates.

An additional approximate one third of this growth was due to soft ball to consolidation.

As a percentage of revenue marketing increased to 12% in the third quarter of 2021 compared to 10% in the third quarter of 2020 to.

Going forward for the full year 'twenty or 'twenty, one we think that the operating leverage potential in those buckets will be offset by our decision to increase spending.

Other general and administrative expenses adjusted for S. P O L M&A related costs increased by 19% compared to the third quarter of last year.

The key drivers of this growth where are the additional surplus and kill us which contributed almost called off the golf in the bucket as well as an increase in subcontractor costs in our Russia segment due to the increase in revenue from other value added services and the increasing professional services is.

As a percentage of framing your other general and administrative expenses adjusted horsepower and then when they related costs or eight 4% relatively flat compared to land for sale in the third quarter appointed Jim.

And the full year to range of 21 results. We expect this expense bucket to remain relatively flat as a percentage of revenue compared to last year.

Moving on to other key indicators, our capex in the third quarter was 2021 has decreased to $49 million compared to $70 million in the third quarter of last year as we completed our most courses for generational project last year.

The bulk of the increase in revenue as Jim already said capex decreased towards circa 1% of revenue in the third quarter.

This year compared to around 3% in the third quarter of 2012 and Jim.

The Atlanta working capital as of the end of Q3 was negative $5 1 billion roubles compared to negative $3 8 billion as our fans of 2020 and the change was primarily due to customer losses for saved.

Income tax expense during the third quarter of 2021 was 548 million compared to 264 million in the third quarter of 2020.

The increase was driven by the increase in revenues and consecutive increase in the taxable profit.

The effective tax rate in Q3 was 23, 7% compared to the 31, one in the third quarter last year.

Korea was.

Wayne attributable to alone deductible is pure related expense last year not to occur in the third quarter.

Now I will turn into cash generation metrics in the third quarter of 'twenty to 'twenty. One we have generated significant $2 5 billion rubles from upstream activities compared to Atlanta Hotel 2 million in the third quarter last year, primarily driven by the increase in sales.

60.

16 million robo investing activity as compared to 15 million used in the third quarter last year, mainly on tobacco the increase in interest income on cash deposits.

Financing activities, we used to for getting on the ruble stands in third quarter of 2021, most agile way and there are there are announced dividends for the year 2020.

They're told to one P M.

For the last year, which was also most answering but it's a little too individually play out.

Our net debt decreased from 5 billion also a 'twenty 'twenty year round to $2 3 billion as all fans of Q3, 'twenty or 'twenty, one primarily due to the increase in cash on.

On the back of recent Crazy, that's anything crazy just to get them all.

Our leverage is now 0.3 times adjusted EBITDA compared to 1.2 times adjusted EBITDA.

The 'twenty to 'twenty.

E R M.

Finally, as starting from October 'twenty to 'twenty, one, we're making daily or any purchases of our adr's throw a broker in a forum on almost all of them are less buyback program. The.

The program stipulates that you're in land months until June 2022, our broker trip purchase eight arris for approximately $27 million in more or less equal daily installments.

Accordingly as of November eight 'twenty to 'twenty, one the most rational dates of the brokers to report obtainable, while we prepared press release, we have repurchased 20, sorry, 52008, the Rs or circa $3 million.

This concludes our presentation of the results of the third quarter of 2021, and we are now opening the floor to your questions. Thank you.

Thank you we will now begin the question and answer session and a reminder, for those who wanted to ask a question just press star and one on your telephone keypad and wait for your name to be announced once again start N. One if you wish to ask any question.

Thank you we have questions that came through the first question comes from the line of.

Yeah Dan.

Dan.

From Goldman Sachs. Your line is now open. Please go ahead.

Yes. Thank you very much for the call a couple of questions. So firstly, how do your direction I think over 2022 budgeting, obviously I know, it's probably too early but what are the key moving factor to keep in mind over the growth and margins for the next year. Obviously the basis is quite high but what are the key drivers that will be having that locked in effect.

In the medium term and maybe how would you split them out for the next year between volumes and pricing.

And my second question would be with regards to that mobile product for employers that can you elaborate on what are the use cases, there how populated that's a hell of a differentiator is that versus the competition, there and maybe broadly.

You are the product initiatives that are in the pipeline. Thank you.

Yeah.

Yes, all of this is good.

Hi, I'm.

Sorry go ahead.

Yeah sure I can quickly answer the cause.

First part of the first question on the on the budgeting and how we think about next year, obviously you use.

So I'm gonna be unduly surprised at it at this point of time, it's really hard to give.

Give a precise or official guidance for next year and there definitely are certain moving parts.

Mostly with regards to or the kind of customer base growth next year would be that would be a function of our oral mockery liberal market situation development.

I think we're having <unk> at this point of time, if you like.

The only thing to do and we have a.

Quite optimistic view on the healthy mix between our monetization and then the customer base expansion.

On monetization, it's a it's more kind of visible already in predictable because certainly used to that we already kind of kicked in this year and we can more or less precisely calculate the impact for next year. Obviously, one of the major initiatives would be the kind of continuous.

The rollout of our new subscription model as I said this year. This broader because there had been performing exceptionally well and are actually above our original expectations and the guidance we gave.

And I think next next year. Therefore, we also kind of upgrading our expectations. We believe that a this one a single kind of monetization is that could define offer for 7% of our revenue growth next year and on top of that you would have a the other pricing initiatives.

Inflate prices starting from January not April this year, so it'll be some timing difference effect as well.

And so the price increase we expect to at least 10% growth in subscriptions and a b get packages of job postings to expect sort of a 20% gross plus.

And of course, the oldest these components will go on top of those I already mentioned the subscription model and we actually made good progress in upgrading our backend infrastructure and the business logic or monetization this year.

Next year, we're going to be more intense on the differentiation to buy my professions rules regions, that's what else the Gila incremental check growth and also may actually help us differentiate between small medium businesses and then in key accounts. So one monetization. It's it looks very robust next year.

And the customer base I think it's again, it probably wouldn't be much of a debate at the moment it looks quite strong cried, but.

Distributions are all quite quickly.

It's really hard and I will defer to comment on expenses.

Yeah Hum for me.

We are kind of in the middle of the budget session right now and.

As we had it was when we discuss we definitely see Ya.

Several.

Areas for growth.

There are numerous sensitive for us.

Festival initiatives for the 20th right you too.

And.

Certainly it doesn't make sense from our point of view to kind of just a couple more just for the sake hopefully you for a job profitability chip therefore demos.

Seth we're not prepared to.

Do you have any guidance at this point on.

On the 2020 at all actually.

And both of them.

Revenue growth for Laurent yes.

I can say is that the budget.

Therefore play kind of thing served on our investment.

In terms of.

In terms of the expenses.

I think.

Oh I think also importantly to kind of understand again, the 2021 was the year of various T PA revenue growth.

And the.

Some clients in some areas we struggled for resources so.

Probably a kind of.

Not the best reference points as well for their future planning.

Yep, So I guess, that's that's the.

Ah Okay. The equivalent that can give you on there all day of March upfront.

I think they're saying I think we can move onto the second question from Shlomo on our when our new mobile.

On a product.

I can say that were.

Historically, we were a little bit dismissive on kind of mobile platform for it in Blair's goes we saw a very limited our use cases.

And most of our or most of our clients extra preferred to use our mobile a.

Mobile interface.

Well actually.

While in mobile devices, but not in the in the App functionality well. They just continue to use desktop. So historically, we didn't invest much in that area.

And lost a few years, especially during COVID-19 that that situation has significantly changed in our view, we saw peak up in demand and the usage and predominantly for them, obviously small and medium businesses from non recruitment professionals and this is how actually we designed these new.

So that's clearly designed for a very easy simplified workflow with the kind of call to action approach when a lot of predictive actions. When you don't need to feel all the details and the machine you're using some machine learning instruments and backend trying to kind of predict eat answers right.

And kind of minimize the questions. We ask that that's clear to target that that the SMA usage.

At the same time, we are we try to kind of.

Sector and they incorporate the functionality that is usually very popular among the key accounts as well like it was up there working with ease and the integration of the Etfs and for example, communication platform that we introduced in our job seeker platform earlier this year.

Are we actually did the same for where app.

Is because it's becoming kind of core functionality.

And also while we believe that our new app, especially on Android platform I'm going to be much more stable.

The kind of all the metrics that we collected over the last one half months since the launch of the Android platform and shows us that yeah, that's actually the games.

And the B, we'll get it again, it's early to draw some strong conclusions yet I didn't do a lot of product work required for this new app.

But we already see after a 20% improvement in conversions, especially in our registration and purchases et cetera, and for small and medium business support.

We believe that that would be quite helpful for all the key metrics and efficiency of our platform overall for the for this category.

Okay. Thank you so much.

Yeah.

Thanks, a lot.

Thank you and the next question comes from Ivan Kim from <unk> Capital. Your line is now open. Please go ahead.

Hi, yes, good afternoon.

Yes, three questions from my side. Please firstly.

On the fourth quarter.

We didn't see.

Any impact on job postings on your platform in November, but if you can just comment on what sort of impact like down had will have on your numbers so far.

Secondly on Skus.

What sort of growth outlook.

<unk> for Q4 2002 for Skulason particular.

Ballpark very wide ranges or directionally that would be great.

Great and related question to that.

Is whether you consider further expansion through adjacencies.

Because there's a skew us experience shows you.

Inquiries your tickets or restaurant, Mark Mesler with one small acquisition. So just wondering there was real good deal obviously, but if you think.

About expansion there more aggressively in 'twenty, two and Adjacencies. Thank you very much.

I think so Ryan.

I know these questions.

The first one in November will them.

No of course, we saw a deceleration in the billing.

Billings and bookings so that week of Nonworking base. Luckily It was just a just a week, but for the majority of regions of course in certain regions are extended to.

So we so there's certain underperformance in there in the shorter term products, especially for subscriptions more packages so job postings.

Tell us kind of a day on a rough a rough terms, we lost that we historically, 25% percentage points of growth compared to the previous the week before the wound down.

That that is clearly a better be sure that we absorbed the last year. When we were on a constant and one working mode right in June on an enemy.

And that just shows that the business has been adapted to the largest stand there would be an operating in this environment for more than a year already and especially in key accounts, we saw very little.

Disruption.

And we most of our clients and and begun to prices just continued durations as normal.

But of course in that small and medium businesses there there wasn't an impact.

But it was not as severe as we saw in previous slowdowns.

That's only on the wound down and I think on the fourth quarter.

Otherwise, it's gone so far quarter to date performance is quite quite encouraging.

But no one knows what to expect in the next one month's of cough right. So the risk of a restrictive measures are at least go height and is not binary it's not that takes you either they are or not.

The regions that they can so local decision so it's actually having impact on certain regions.

It's quite hard to predict exact impact in the first quarter.

On a scale us the fourth quarter traditionally the strongest quarter.

I expect that this lush contracts that they signed a they tend to be assigned.

And they kind of lost the last minute.

The budget is allocated to the department kind of Google.

And historically I think two or three years.

And the role the fourth quarter was the strongest.

Generally we believe that they should post a so called 400 million revenues this year.

But there are certain big contracts.

With very large enterprises that are underway that actually may kind of be seeing factor here I suppose anything should sleep next our next quarter.

Therefore, I think skew us at this point of time, when they acquire new customers to quite intensively they are a bit less predictable and then compare it to a headhunter.

But we expect the strong quarter.

And the last one I think is quite the right. The right one it's exactly in line with our thinking that in today's environment, we see a lot of opportunities in the in adjacent areas and many of them could be actual tackled in a quicker and more efficient way why are some small early stage acquisitions.

And virtually were quite active in on the surcharge for this type of asset light like ski loss dreamed yogurt, you do et cetera. So I would say I would guide them on quite high yeah like acquisitions are kind of in the next two to three years pursuing these opportunities.

Yeah.

Great. Thank you very much.

Thank you and the next question comes from the line of Luke.

<unk> from Morgan Stanley. Your line is now open. Please go ahead.

Thank you for letting me on the call and patients are not on a strong set of results and I just had a question on market share dynamics given your strong revenue performance. This quarter I was just wondering if you could comment a bit on what you were seeing in the regions in particular.

What is the path to change that dynamic a bit as well, particularly around the bay area region.

Do you feel that you.

We're gaining share at this point in time, and then I've just got a follow up after that thank you.

Sure Luke Thanks progression.

Well the regional business is performing stronger than in terms of growth than in the capital cities, then Moscow and St Petersburg, as well higher than our percentage growth.

And in particular in this plot the region in euros, and then say beta it's one of the strongest area is where we have the probably the biggest market share even compare to muscle.

We recently made a survey.

And that they're actually going to ease.

Resulted then the quick with installation in fact that we delivered over 95% of all obligations in are.

Are you considering book for example, right. So it's like the whole the whole market delay versus just 5%. If you take out the ottens or bought them. So it's a very very strong a strong regions.

The block is a slightly underperforming headhunter man I think we always guided this week was there deprived are certain benefits of a national wide when he theft of marketing that we are enjoying a and therefore their revenue is not growing as fast as head Hunter. So we kind of.

Grabbing share from their plot them, but combined with Zurich lather collectively we differently in a strong position. So I think that that actually kind of unlocks a lot of monetization potential as well for us.

Yeah.

Okay. Thanks, and then just in terms of marketing spend that you mentioned that there are certain regional.

So you're targeting more blue collar and white collar would you split it like that and tightened.

That would be useful.

Yeah No question Gregory.

Really I don't think I can give you the kind of details by market and cello or by segment because poor.

Competition reasons, we prefer not to go into so much detail right, but.

What I probably can't show here is that.

In the second quarter of this year and then the third as well we are a stressful and marketing on both.

Brand awareness formats, such as outdoor complaint for instance, and performance marketing.

As well.

Yes, we see a kind of high demand for candidates.

And also on the back of kind of low acuity of Jobseekers. So we think it makes all the sales tool.

Spend more for what else acquisition tool balance with demand for it but our official Shea our top two customers or essentially paying extra nowadays forget the Richardson will go in.

So are we are.

Frankly, increasing across our across the board.

Plus we had less significant outdoor campaign.

Basketball recently, and we saw a sizable increase in the top.

Top of mind brand awareness by circa 8%.

Or let's say eight percentage points, probably up to a six 6%.

According to all of our west where her.

We're also seeing traffic going up it's around.

Between 20, and 30% as we increase more in digital.

And then just all channels.

So it's across the board rather successful shake.

Great. Thank you very much that's right right.

Thank you and the next question comes from the line of Dmitry <unk> from Wood <unk> Company. Your line is now open. Please go ahead.

Oh, yes. Thank you very much for the opportunity to ask questions I have two please the first one could you. Please break down the revenue growth fourth quarter was supposed to what it was.

Basically what came as a result of Oh plot that skew us.

What came from the organic growth and what.

What came from the.

Labour market.

The other question is on the gig economy, if you could maybe comment on how.

How big do you see the total addressable market opportunity here.

Like what's the opportunity now.

How big could it become once the translation.

Gray market to the legal one will occur thank you.

And good morning, I'll handle both.

The first one if we try to decompose this a the growth in the third quarter 100 Hooper, 3%.

Or in absolute terms to one 4 billion.

Yeah, we are going to actually split up.

Low base effect there then.

Now regarding growth and kind of more sustainable organic right. So our intent would be just that we have is it always leads is arbitrary right.

It depends on what you just said that the base for last year.

But we estimate that it's around 15% out of 103%.

Which is equal to 250, new in that is explained by a little bit so the percent that she's obviously going down compared to Q2.

For this reason.

Ben I'm more or less equal impact a game or a drive from our inorganic growth around 15% over 350 million and that's colleagues impact from SKU lessons apply the consolidation this year.

And then so essentially if you take out. These two buckets are 30% then remaining 70% or $1 7 billion rubles could be also broken into three major organic growth buckets are always I think heading into consideration first monetization second client base expansion and the sword that consumption real time.

So the first explains the circle, 40% lead one 7 billion.

That's monetization Oaklawn base, so of course, a price differentiation.

And coupled with the effect of the new subscription model.

Key contributors Howard just said that the paper conduct products are performing exceptionally well this year.

Then 25%.

One 7 billion relates to increased consumption of our services.

That's.

The impact of the market situation in late before shortage.

And their general lull candidate activity in the market discussed last time, so part of it probably diminish over time, so it's kind of semi semi sustainable.

Because we see that for example, a small little business as they consume twice, whereas the bigger product packages than you usually do.

And the remaining 75% is the customer base expansion predominantly small and medium businesses predominantly regions. So that that's driven by online adoption of our marketing investments and b to b channels, our product adoption platform adoption et cetera, and that's the most encouraging numbers broken coast.

Just helping us to grow the base, which we can monetize in future.

So generally if you compare Q2 are the low base effect went down the amortization effect.

Wind up that'd be the other buckets, you made more or less the same.

In the second the second question was on the on the gig economy, Yeah, I think we will.

<unk> touched upon this but yeah I'm happy to repeat that generally we see a globally that the independents will inbound workforce constitutes up 200% or not Ottawa and on average 30% to our labor force, that's called quite a stable and a measure if if you look good.

Do you know what I say, even there, including the unofficial gray market, that's only 15%.

And of course, the like 95% of that 15%.

Currently in the Green zone.

They were very limited incentives created and upon the legislation changed in some 18 base, we saw huge indeed and the legislation is itself a registered.

So we believe at the moment there are going to be the official statistics around 2 million are self employed.

And we expect actually this number to grow say.

10, 10 X 20, Neil N and the next five years.

That's a huge emerging market for us.

It is highly dynamic and not only are the volumes doesn't matter, but also the business model that could be applied to matters because it. So if you compare with our traditional kind of permanent work, it's much easier in this market to consummate the transaction because its more frequent frequent market, it's quite similar to what we've seen in mass recruitment.

And therefore, it's much easier to cut and transaction processing payroll processing. Some admin work. So it is very sticky potentially if if you. If you are happy if you're successful in on boarding care, especially the big enterprises.

That's our strategy together with you do.

We are.

Kind of officially declared this strategic partnership in June then we try to kind of test. This a solution with the clients and interaction with exceptional so we decided to invest in you do as a minority partner at this stage, but of course, it's a strategic type of transaction for US we were having.

And securing all the necessary best best to control in the future.

Consolidated business should that extra takeoff Indians, but we are really optimistic.

In the analyst.

The temporary market contingent market could be bigger in monetary terms, then the permanent sourcing market.

Thank you very much very clear.

Thank you and no further questions that came through I would now like the conference back to your speakers Dmitry.

Your line is now open Sir you May go ahead.

Yeah, I think yeah.

Yeah, there's a few people a few remarks, there first of all.

Thanks for your participation and this is blocked a quarterly call for this year, yeah time flies by quickly.

Needless to say that it's been there now for any quarter for US right in terms of financial result is probably the best quarter, We've had since we've gone public.

It's really nice to see how our strategy execution of holding as we showcased how we can really continue and grow client volumes, while concurrently rolling out differentiated monetization. So it speaks of the das will be aligned to the market I just speak there'll be kind of pricing power and horizon go although our competitive position.

But what's even more encouraging I think that kind of stems from the the question.

Just received from for one year.

When adjacent markets even in these challenging kind of came to the board we clearly see.

That the process of kind of rethinking and upgrading their all of which are a function and HR funding within an organization so coupled with the equivalent directions.

<unk> online. So this creates a unique window opportunities beyond our traditional market boundaries.

This is already evidenced in our results in the belly of the service performance, including SKU as dynamics are in our experiments with dream jobs and you do so we just want to stress that for us as the market leader.

No market is really important.

Positioned to kind of casualties opportunity, it's important strategic desk, that's going to lead the next wave for which our tech development in Russia.

Our ambition and the goal for years to come.

Thanks for your attention have a great week bye bye.

Q3 2021 HeadHunter Group PLC Earnings Call

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