Q2 2024 Hudson Global Inc Earnings Call

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Operator: Good morning, and welcome to the Hudson Global conference call for the second quarter of 2024. Our call today will be led by Chief Executive Officer Jeff Eberwein, Chief Financial Officer Matt Diamond, and Global CEO of Hudson RPO Jake Zabkowicz. To ask a question, you may press star, then 1 on your telephone keypad.

Operator: Good morning, and welcome to the Hudson Global conference call for the second quarter of 2024. Our call today will be led by Chief Executive Officer Jeff Eberwein, Chief Financial Officer Matt Diamond, and Global CEO of Hudson RPO, Jake Zabkowicz.

Operator: Good morning and welcome to the Hudson Global conference call for the second quarter of 2024. Our call today will be led by Chief Executive Officer Jeff Eberwein, Chief Financial Officer Matt Diamond, and Global CEO of Hudson RPO, Jake Zabkowicz.

Operator: Please be advised that the statements made during the presentation include forward-looking statements under applicable securities laws. Such forward-looking statements involve certain risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statement. These risks are discussed in our Form 8K to be filed today and in our other filings made with the Securities and Exchange Commission, including our annual report on Form 10K. The company disclaims any obligation to update any forward-looking statements.

Operator: Please be advised that the statements made during the presentation include forward-looking statements under applicable securities laws. Such forward-looking statements involve certain risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements.

Speaker Change: These risks are discussed in our Form 8K to be filed today and in our other filings made with the Securities Exchange Commission, including our annual report on Form 10K. The company disclaims any obligation to update any forward-looking statements.

Operator: During the course of this conference call, references will be made to 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, HudsonRPO.com. I encourage you to access our earnings materials at this time, as they will serve as a helpful reference guide during our call. All participants will be in listen-only

Operator: During the course of this conference call, references will be made to non-GAAP terms.

Speaker Change: 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, hudsonrpo.com.

Operator: I encourage you to access our earnings materials at this time, as they will serve as a helpful reference guide during our call.

Operator: Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded.

Operator: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions.

Operator: To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I will now turn the call over to Jeff Eberwein.

Operator: To withdraw your question, please press star, then 2. Please note this event is being recorded. I will now turn the call over to Jeff Eberwein, who will start by reviewing the second quarter 2024 results, then Matt Diamond, our CFO, will provide some additional details on our financial results, and lastly, Jake Zabkowicz, Global CEO of our Hudson RPO business, will provide us with an update on our RPO business, including recent developments and milestones. Our second quarter 2024 results were impacted by the continuation of lower than normal hiring volumes at many of our clients in the markets we serve.

Jeffrey Eberwein: Thank you, operator, and welcome everyone. We thank you for your interest in Hudson Global and for joining us today. We will start by reviewing the second quarter 2024 results, then Matt Diamond, our CFO, will provide some additional details on our financial performance. Lastly, Jake Zabkowicz, Global CEO of our Hudson RPO business, will provide us with an update on our RPO business, including recent developments and milestones. Our second quarter 2024 results were impacted by the continuation of lower than normal hiring volumes at many of our clients in the markets we serve.

Jeff Eberwein: Thank you, Operator, and welcome everyone. We thank you for your interest in Hudson Global and for joining us today.

Operator: Our adjusted EBITDA for the second quarter was $0.7 million versus adjusted EBITDA of $2.6 million a year ago. For Q2 2024, adjusted net income per diluted share was $0.04 compared to net income per diluted share of $0.36 in the second quarter of 2023. Our Q2 2024 adjusted EBITDA was $0.3 million compared to adjusted EBITDA of $1.1 million in the second quarter of 2023. ACL's outstanding was 59 days at June 30th, 2024, compared to 52 days at March 31st, 2024.

Jeffrey Eberwein: For the second quarter of 2024, we reported revenue of $35.7 million, down 20% year-over-year in constant currency, while our adjusted net revenue was $17.6 million, down 22% year-over-year in cost. Our adjusted EBITDA for the second quarter was $0.7 million versus the adjusted EBITDA of $2.6 million a year ago. In addition, we reported a net loss of $0.4 million, or $0.15 per diluted share, versus net income of $0.6 million, or $0.18 per diluted share, in the same period last year.

Matt Diamond: I'll start by reviewing the second quarter 2024 results, then Matt Diamond, our CFO , will provide some additional details on our financials.

Jake Zabkowicz: Lastly, Jake Zabkowicz, Global CEO of our Hudson RPO business, will provide us with an update on our RPO business, including recent developments and milestones.

Operator: our second quarter twenty pointy four results were impacted by the continuation of lower than normal hiring volumes at many of our clients in the markets we serve

Operator: For the second quarter of 2024, we reported revenue of $35.7 million, down 20% year-over-year in constant currency, while our adjusted net revenue was $17.6 million, down 22% year-over-year in constant currency.

Operator: Our adjusted EBITDA for the second quarter was $0.7 million versus adjusted EBITDA of $2.6 million a year ago.

Operator: In addition, we reported a net loss of $0.4 million or $0.15 per diluted share versus net income of $0.6 million or $0.18 per diluted share in the same period of last year.

Operator: Q2 2024 adjusted net income per diluted share was $0.04 compared to net income per diluted share of $0.36 in the second quarter of 2023.

Jeffrey Eberwein: Q2 2024 adjusted net income per diluted share was $0.04 compared to net income per diluted share of $0.36 in the second quarter of 2023. Now I'll turn the call over to Matt Diamond to review our financial results by region as well as some additional financial details from the second quarter.

mnine when: now 'll turn the call over to mnine when to review our financial results by regan as well as some additional financial details from the second quarter

Matthew Diamond: Thank you, Jeff, and good morning, everyone. Revenue for America's business decreased 19%, and adjusted net revenue decreased 24% year-over-year in constant currency. We reported adjusted EBITDA of 0.6 million for the quarter versus last year's break-even adjusted EBITDA. Revenue and Adjusted Net Revenue for our Asia-Pacific business both decreased 19% year-over-year in constant currency. In Q2 of 2024, we reported adjusted EBITDA of $0.8 million compared to adjusted EBITDA of $2.5 million a year ago. Revenue for our EMEA business decreased 24% versus the prior year quarter in constant currency, and adjusted net revenue decreased 23%.

Operator: Thank you, Jeff, and good morning, everyone.

Operator: revenue for our americass business decreased nineteen percent and adjusted net revenue decreased twenty-four percent year-over-year in compsant currency

Operator: We reported adjusted EBITDA of 0.6 million for the quarter versus last year's break-even adjusted EBITDA.

Speaker Change: revenue and adjusted net revenue for asia pacific business both decreasase nineteen percent year-over-year in constant currency

Operator: In Q2 of 2024, we reported adjusted EBITDA of $0.8 million compared to adjusted EBITDA of $2.5 million a year ago.

Operator: Revenue for our EMEA business decreased 24% versus the prior year quarter in constant currency. And adjusted net revenue decreased 23%.

Matthew Diamond: Our Q2 2024 adjusted EBITDA was $0.3 million compared to adjusted EBITDA of $1.1 million in the second quarter of 2023. Turning to some additional financial details for the second quarter. We ended the second border with $15.3 million in cash, including $0.6 million of restricted cash. The company used $4.3 million in cash flow from operations during the second quarter of 2024, compared to $2.6 million of cash generated from operations in the second quarter of 2023.

Operator: our q two two thousand and twenty-four adjusted ebitda was point three million compared to adjusted ebitda of one point one million in the second quarter of two thousand and twenty three

Operator: Turning to some additional financial details in the second quarter, we ended the second quarter with $15.3 million in cash, including $0.6 million of restricted cash.

Operator: The company used $4.3 million in cash flow from operations during the second quarter of 2024.

Operator: compared to $2.6 million of cash generated from operations in the second quarter of 2023.

Matthew Diamond: HCL's outstanding was 59 days at June 30, 2024, compared to 52 days at March 31, 2024. In connection with our acquisition activity in recent years, our balance sheet, as of March 31st, 2024, reflects $5.6 million of goodwill and $3.0 million of net amortizable intangible assets. The company's working capital, excluding cash, was $14.6 million, compared to $12.0 million at December 31, 2023.

Operator: HCI's outstanding was 59 days at June 30th, 2024, compared to 52 days at March 31st, 2024.

Operator: In connection with our acquisition activity in recent years, our balance sheet as of March 31, 2024 reflects $5.6 million of goodwill and $3.0 million of net amortizable intangible assets.

Operator: The company's working capital, excluding cash, was $14.6 million, compared to $12.0 million at December 31, 2023.

Jake Zabkowicz: I'll now turn the call over to Jake to discuss our RPO business. Thank you, Matt, and good morning. In the second quarter of 2024, we further expanded our geographical footprint and service offerings with the acquisition of Stryver, a UAE-based talent acquisition. On the organic growth front, we have prioritized our land and expand strategy within our existing client base and made notable progress on this initiative in the second quarter, where we added significant scope to a couple of our key existing clients. Lastly, we've made difficult but necessary decisions regarding reductions in our global workforce in response In addition to protecting our profitability, these cost-saving measures help us reorganize and optimize accounts within our organization so we're better positioned to respond to future increases and activity levels.

Jake Zabkowicz: I'll now turn the call over to Jake to discuss our RPO business.

Jacob Zabkowicz: Thank you, Matt, and good morning. In the second quarter of 2024, we further expanded our geographical footprint and service offerings with the acquisition of Stryver, a UAE-based talent acquisition firm. This acquisition, in addition to our acquisition of executive solutions in the first quarter, and our continued enhancements of internal talent, enable Hudson RPO to continue providing best-in-class service on a global scale. On the organic growth front, we have prioritized our land and expand strategy within our existing client base and made notable progress on this initiative in the second quarter, where we added significant scope to a couple of our key existing client relationships.

Jake Zabkowicz: Thank you, Matt, and good morning. In the second quarter of 2024, we further expanded our geographical footprint and service offerings with the acquisition of Stryver, a UAE-based talent acquisition firm.

Speaker Change: This acquisition, in addition to our acquisition of executive solutions in the first quarter, and our continued enhancements of internal talent enable Hudson RPO to continue providing best-in-class service on a global scale.

Jake Zabkowicz: On the organic growth front, we have prioritized our land and expand strategy within our existing client base and made notable progress on this initiative in the second quarter where we added significant scope to a couple of our key existing client relationships.

Jacob Zabkowicz: While the scope and scale of new business opportunities coming to market have been smaller than what we're used to seeing, we've been nimble and aggressive in pursuing all opportunities with the goal of expanding and deepening these relationships over time as hiring conditions improve. In general, we're seeing client executives taking longer to make decisions than we've seen historically, which is why the growth in our sales pipeline of potential opportunities has outpaced our opportunities converted to wins.

Jake Zabkowicz: While the scope and scale of new business opportunities coming to market have been smaller than what we're used to seeing, we've been nimble and aggressive in pursuing all opportunities with the goal of expanding and deepening these relationships over time as hiring conditions improve.

Jake Zabkowicz: In general, we're seeing client executives taking longer to make decisions than what we've seen historically, which is why the growth in our sales pipeline of potential opportunities have outpaced our opportunities converted to wins.

Jacob Zabkowicz: Lastly, we've made difficult but necessary decisions regarding reductions in our global workforce in response to the market conditions, as Jeff alluded to earlier. In addition to protecting our profitability, these cost-saving measures help us reorganize and optimize accounts within our organization so we're better positioned to respond to future upturns in activity levels. I'll now turn the call back over to Jeff for some closing remarks.

Jake Zabkowicz: lastly we've made difficult but necessary decisions regarding reductions in our global workforce in response to the markeket conditions is chaff alluded to earlier and addition to protect protecting our profitability these cost saving measures help us reorganize and optimize count within our organization who are better positioned to respond to future upterminate and activity levels

Jeff Eberwein: I'll now turn the call back over to Jeff for some closing remarks. We continue to believe our stock is undervalued and must continue to view share repurchases as an attractive use of capital. These repurchases were executed in both the open market as well as privately negotiated transactions, and we continue to look for cost-effective opportunities to shrink our share count over time on your telephone keypad. Once again, it is star then one. The first question comes from Mark Riddick with Sidoch when talking about the commentaries around the smaller scope and scale.

Jeff Eberwein: I'll now turn the call back over to Jeff for some closing remarks.

Jeffrey Eberwein: Thank you, Jake. Before opening the line to questions, I'd like to reinforce Jake's message that, despite today's talent environment, we're encouraged by the feedback we're receiving from our clients and are excited by our new business lens and robust sales pipeline. Furthermore, the results of the internal changes and cost-saving initiatives we've implemented across our entire organization should help our bottom-line results in the coming quarters. We are confident in our ability to deliver value to stockholders while serving the needs of existing and new clients going forward.

Jeff Eberwein: Thank you, Jake. Before opening the line to questions, I'd like to reinforce Jake's message that despite today's talent environment, we're encouraged by the feedback we're receiving from our clients and are excited by our new business lens and robust sales pipeline.

Speaker Change: Furthermore, the results of the internal changes and cost-saving initiatives we've implemented across our entire organization should help our bottom line results in the coming quarters.

Speaker Change: We're confident in our ability to deliver value to stockholders while serving the needs of existing and new clients going forward.

Jeffrey Eberwein: We continue to believe our stock is undervalued and must continue to view share repurchases as an attractive use of capital. Under our $5 million, Common Share $5 million Common Share Purchase Program initiated last year, we've repurchased to date over 150,000 shares for $2.5 million, including 87,000 shares for $1.5 million in the second quarter of 2024. These repurchases were executed in both the open market as well as privately negotiated transactions, and we continue to look for cost-effective opportunities to shrink our share count over time. Operator, could you please open the line for questions? We will now begin the question and answer session.

Jeff Eberwein: We continue to believe our stock is undervalued and must continue to view share repurchases as an attractive use of capital.

Jeff Eberwein: under our five million

Jeff Eberwein: Common Share $5 million Common Share Purchase Program initiated last year. We've repurchased to date over 150,000 shares for $2.5 million, including 87,000 shares for $1.5 million in the second quarter of 2024.

Jeff Eberwein: These repurchases were executed in both the open market as well as privately negotiated transactions and we continue to look for cost effective opportunities to shrink our share count over time.

Speaker Change: operator could you please open the line for questions

Operator: We will now begin the question and answer session. To ask a question, you may press the star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. Once again, it is star then one to ask a question. The first question comes from Mark Riddick with Sidoti.

Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad.

Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: if at any time your question has been addressed and you would like to withdraw your question please press star than two

Jeff Eberwein: once again it is star than one to ask youa question

Speaker Change: The first question comes from Mark Riddick with Sidoti. Please go ahead.

Mark Riddick: thank good morning

Marc Riddick: So I was wondering if we could start with, understandable with sort of, you know, client behavior lately. I was wondering if you could talk a little bit about the, when talking about the comments around the smaller scope and scale. Can you talk about maybe some of the things that folks are kind of willing to be active with currently and maybe some of the things you feel like they're sort of pushing off?

Mark Riddick: Good morning.

Mark Riddick: So I was wondering if we could start with, understandable with sort of, you know, client behavior lately. I was wondering if you could talk a little bit about the

Mark Riddick: when talking about the, I think, the commentaries around the smaller scope and scale. Can you talk about maybe some of the things that folks are kind of willing to be active with currently and maybe some of the things you feel like they're sort of pushing off?

Jeffrey Eberwein: Sure, Jake, why don't you handle that one?

Jeff Eberwein: Can you talk about maybe some of the things that folks are kind of willing to be active with currently and maybe some of the things you feel like they're sort of pushing off? Good morning, sir. How are you?

Jeff Eberwein: Sure, Jake, why don't you handle that one.

Jacob Zabkowicz: Morning. Good. You?

Mark Riddick: Good morning, sir. How are you?

Marc Riddick: Really good, thank you. Great question. So what we're seeing in the market right now is a little bit of a hesitation, and some have coined it the great hesitation, where the scope and scale of new business is out there, but when it really comes to the finalization of what's being offered or what's being needed, that scope has significantly shrunk, where we have seen the level of smaller deals, say between 500 to 1,500 hires increase, and a little bit of a slowdown or hesitation on those larger deals of, say, 5,000 plus hires.

Mark Riddick: Good morning. Good. Yourself?

Speaker Change: Thank you, great question. So what we're seeing in the market right now is a little bit of a hesitation and some have coined it the great hesitation where

Speaker Change: The scope and scale of new business is out there, but when it really comes to the finalization of what's being offered or what's being needed, that scope has significantly shrunk, where we have seen the level of smaller deals, say between 500 to 1,500 hires, increase.

Speaker Change: and a little bit of a slowdown or hesitation on those larger deals of, say, 5,000 plus hires. We do still see those opportunities in the market, but those are taking a little bit longer than what we normally see in our sales cycle, and that's impacting, obviously, our new logo revenue growth at this point in time.

Marc Riddick: We do still see those opportunities in the market, but they are taking a little bit longer than we normally see in our sales cycle, and that's obviously impacting our new logo revenue growth at the moment, but we do expect that to pick up.

Jeffrey Eberwein: Mark, when Jake was talking about hires, he was talking about annual hiring levels, so $5,000 would be like a three-year contract where we're pricing it and budgeting it on 5,000 hires per year going forward.

Speaker Change: Time. But we do expect that to pick up in Q3 and Q4.

Speaker Change: and Mark Winn, Mark Winn and Jacob Zabkowicz.

Speaker Change: when jay was talking about hier you talking about annual hiring level so five thousand it would be like a three contract where or pricing in and budgeting at on five thousand higher per year goon course

Marc Riddick: And then, are you getting any sense as far as feedback as to clients' receptivity to engage with RPO, or are you getting a sense of those who are considering shifting to maybe folks who have not been in the space before as a measure of efficiency going forward?

Speaker Change: Are you getting any sense as far as...

Speaker Change: feedback as to clients' receptivity to engage with RPO, or are you getting a sense of those who were...

Speaker Change: are considering shifting to maybe folks who have not been in the space before as a measure of efficiency going forward.

Jacob Zabkowicz: Mark, I would say from the standpoint of that, we're seeing really no changes from the behaviors of first new year clients that have decided to go out to RPO versus existing clients and either expanding or contrasting. So it's not a notable change.

Jeff Eberwein: Mark, I would say from the standpoint of that, we're seeing really no changes from the behaviors of a first new year.

Speaker Change: clients that have decided to go out to RPO versus...

Speaker Change: existing clients and either expanding or contrasting. So it's not a notable change. What I would share with you is that RPO still is a is a avenue of cost savings and scalability to many of our partners and clients.

Jacob Zabkowicz: What I would share with you is that RPO still is an avenue of cost savings and scalability to many of our partners and clients. We're seeing that in a lot of our base, where we're actually expanding into other geographies, as I mentioned earlier, other remote geographies that they do not have the scale or flexibility to expand into those regions. So as far as the first year and or clients taking their business back in-house, we're not seeing a major trend or shift than what we've seen in the past.

Speaker Change: we're seeing that in a lot of our base

Speaker Change: where we're actually expanding to other geographies, as I mentioned earlier, other remote geographies that they do not have the scale or flexibility to expand into those regions. So, as far as the first year,

Speaker Change: and or clients taking their business back in-house, we're not seeing a major trend or a shift than what we've seen in the past.

Marc Riddick: And then I wanted to, I wasn't, bear with me, I was double-checking on thinking about, maybe you could talk a little bit about tax rate, I guess, in 2Q, I think that was maybe a little higher than, or maybe there was...

Speaker Change: And then I wanted to, I wasn't, bear with me, I was double checking on thinking about, maybe you could talk a little bit about tax rate, I guess in 2Q, I think that was maybe a little higher, or maybe there was something in there that maybe we're missing.

Matthew Diamond: Yeah, Mark, our tax rate is notoriously hard to predict because of our mix of business, and the best guidance I can give you is just to use, you know, a blend of statutory rates across the countries. We do business in the U.S., at a lower rate than Australia. And we don't pay any tax in the U.S., so our tax rate in the U.S. is zero.

Speaker Change: Yeah Mark, our tax rate is notoriously hard to predict because of our mix of business and the best guidance I can give you is just to use

Speaker Change: the blend of statutory rates across the countrytri'es we knew business the u usis

Speaker Change: lower than australia soand we don't pay any tax in the u s so our taxrate the u s is zero so really ties in the business mix

Marc Riddick: So it really ties into business mix. That's probably the best advice I can give you. And then our 10Q is going to come out after the close today, and there'll be some more disclosure in the 10Q. And if that doesn't answer any questions you have, I would say give Matt Diamond, our CFO, a call. Okay. I'm sure it will.

Speaker Change: That's probably the best advice I can give you, and then our 10Q is going to come out after the close today, and there will be some more disclosure in the 10Q, and if that doesn't answer any questions you have, I would say give Matt Diamond our CFO a call.

Jeff Eberwein: Okay, I'm sure it will. And then, I guess one other thing, so I was sort of thinking about maybe thoughts around the share repurchase activity and thoughts there for, you know, for the remainder of the year. I guess we're about, what, halfway through the authorization, somewhere in that ballpark. The thing I would leave you with is that we think we're at the bottom and we're starting to recover. For example, this is the first quarter in a long time where we've had quarter over quarter net revenue growth, and we think that's going to continue.

Speaker Change: 's not under i'm sure

Marc Riddick: And then I guess one other thing. So I was sort of thinking about maybe thoughts around the share repurchase activity and thoughts there for, you know, for the remainder of the year. I guess we're about, what, now halfway through the authorization, somewhere in that ballpark?

Jeff Eberwein: And then I guess one other thing, so I was sort of thinking about maybe thoughts around the

Jeff Eberwein: share repurchase activity and thoughts there for for the further remainder of the i guess we're about what now halfway through the authorization somewhere in that ballkpark

Jeffrey Eberwein: Yeah, that's right, Mark. So, I think the biggest thing I would leave you with is that we think we're at the bottom, and we're starting to recover. For example, this is the first quarter in a long time where we've had quarter over quarter net revenue growth, and we think that's going to continue. So we think our stock is cheap for some time. The window was finally open in Q2, and we found some willing sellers.

Jeff Eberwein: Yeah, that's right, Mark. So we, I think the biggest...

Jeff Eberwein: thing I would leave you with is that we think we're at the bottom and we're starting to recover For example, this is the first quarter in a long time or we've had quarter over quarter net revenue growth

Jeff Eberwein: So we've thought our stock is cheap for some time, and you know the window was finally open in Q2, and we found some willing sellers, and so we were able to be a little more active in Q2 than we have been in the past. And I would just say we have a soft goal of what it was on January 1st, and it'll depend on the window being open, and it'll depend on our ability to... Good question.

Jeff Eberwein: and you know the window was finally open in Q2 and we found some willing sellers and so we were able to be a little more active in Q2 than we were.

Jeffrey Eberwein: And so we're able to be a little more active in Q2 than we were in the past. And I would just say we have a soft goal of repurchasing 10% of our shares this year versus what it was on January 1st. And, you know, it'll depend on the window being open. It'll depend on our ability to find some willing sellers where we can do a privately negotiated transaction. Those are the most efficient, by the way, because buying on an open market is we're subject to 10b18 rules and there are volume limitations, and you know, so how much the SOC is trading has a big impact on how much we're able to buy back.

Jeff Eberwein: In the past, and I would just say we have a soft goal of

Jeff Eberwein: repurchasing 10% of our shares this year versus

Jeff Eberwein: reappearance or death penalty, I think it is an important issue and I have come today to try to explain to you what it was on January 1st, and the It will depend on the window being open, depend on our ability

Speaker Change: find some willing sellers where we can do a privately negotiated a transaction those are the most efficient by the way because buying an open market is or subject to ten be eighten rle that it s there's volume limitations then

Speaker Change: You know, so how much the SACWIS trading has a big impact on how much we're able to buy back.

Marc Riddick: Okay, excellent. I appreciate it. Thank you very much.

Speaker Change: Okay, excellent. I appreciate it. Thank you very much.

Operator: Thanks, Mark. That concludes today's question and answer session. I will now turn the call over to Jeff Eberwein for closing remarks. All right.

Operator: That concludes today's question and answer session. I will now turn the call over to Jeff Eberwein for closing remarks.

Mark: Good question. Thanks, Mark.

Operator: That concludes today's question and answer session. I will now turn the call over to Jeff Eberwein for closing remarks.

Jeffrey Eberwein: Operator, should we hold it open for another minute in case somebody has a question? just in case someone wants to get in the queue. Sure. Again, if anyone has a question, please press star then 1.

Speaker Change: Operator, should we hold it open for another minute in case somebody has a question?

Operator: Certainly.

Speaker Change: Just in case someone wants to get in the queue.

Jeff Eberwein: Sure. Again, if anyone has a question, please press star then 1.

Jeff Eberwein: Well, hearing none, I just want to say thanks for joining us today. Thank you for your interest in Hudson Global. Feel free to contact us anytime using the contact information found in our press release or on our investor relations website. We look forward to the next quarterly update call. Have a good day, everybody.

Jeffrey Eberwein: All right. Well, hearing none, I just want to say thanks.

Jeff Eberwein: All right, well, hearing none, I just want to say,

Jeff Eberwein: Thanks for joining us today. Thank you for your interest in Hudson Global. Feel free to contact us anytime using the contact information found in our press release or on our investor relations website. We look forward to the next quarter's update call. Have a good day, everybody.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good morning and welcome to the Hudson Global Conference call for the second quarter of 2024. Our call today will be led by Chief Executive Officer Jeff Eberwein, Chief Financial Officer Matt Diamond, and Global CEO of Hudson RPO Jake Zabkowicz. Please be advised that the statements made during the presentation include forward-looking statements under applicable securities laws, such forward-looking statements involve certain risks and uncertainties that may cause actual results differ materially from those contained in the forward-looking statements.

Operator: These risks are discussed in our Form 8K to be filed today and in our other filings made with the Securities Exchange Commission, including our annual report on Form 10K. The company disclaims any obligation to update any forward-looking statements. During the course of this conference call, references will be made to non-gap terms, such as constant currency, adjusted EBITDA, and adjusted earnings per diluted share.

Operator: Reconciliation for these measures are included in our earnings release and quarterly slides, both posted on our website HudsonRPO.com.

Operator: I encourage you to access our earnings materials at this time, as it will serve as a helpful reference guide during our call. All participants will be in listen-only mode. Should you need assistance, please signally conference specialists by pressing star-than-0 on your telephone keypad.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star-than-one on your telephone keypad. To withdraw your question, please press star-than-two. Please note this event is being recorded.

Jeffrey Eberwein: I will now turn the call over to Jess Eberwine. Thank you, operator, and welcome everyone. We thank you for your interest in Hudson Global and for joining us today.

Jeffrey Eberwein: I'll start by reviewing the second quarter 2024 results.

Matthew Diamond: Then Matt Dheim and our CFO will provide some additional details on our financials.

Jeffrey Eberwein: Lastly, Jake Zenquids Global CEO of our Hudson RPO business will provide us with an update on our RPO business, including recent developments and milestones. Our second quarter 2024 results were impacted by the continuation of lower than normal hiring volumes at many of our clients in the markets we serve. For the second quarter of 2024, we reported revenue of 35.7 million, down 20% year-over-year in customer currency, while our adjusted net revenue was 17.6 million, down 22% year-over-year in customer currency.

Jeffrey Eberwein: Our adjusted EBITDA for the second quarter was 0.7 million versus the adjusted EBITDA of 2.6 million a year ago. In addition, we reported a net loss of 0.4 million, or 15 cents per diluted share versus net income of 0.6 million or 18 cents per diluted share in the same period of last year. Q2, 2024 adjusted net income per diluted share was 4 cents compared to net income per diluted share of 0.36 cents in the second quarter of 2023.

Matthew Diamond: Now, turn the call over to Matt Diamond to review our financial results by Reacon as well as some additional financial details from the second quarter. Thank you, Jeff, and good morning, everyone. Revenue for our America's business decreased 19 percent and adjusted that revenue decreased 24 percent year over year in constant currency.

Matthew Diamond: We reported adjusted the EBITDA of 0.6 million for the quarter versus last year's break even adjusted EBITDA. Revenue and adjusted net revenue for our Asia-Pacific business both decreased 19 percent year over year in constant currency. In Q2 of 2024, we reported adjusted EBITDA of 0.8 million compared to adjusted EBITDA of 2.5 million a year ago. Revenue for our America's business decreased 24 percent versus the prior year quarter in constant currency and adjusted net revenue decreased 23 percent.

Matthew Diamond: Our Q2 of 2024 adjusted EBITDA was 0.3 million compared to adjusted EBITDA of 1.1 million in the second quarter of 2023.

Matthew Diamond: Turning to some additional financial details in the second quarter, we ended the second quarter with 15.3 million in cash, including 0.6 million of restricted cash. The company used 4.3 million in cash flow from operations during the second quarter of 2024, compared to 2.6 million of cash generated from operations in the second quarter of 2023. 8000 outstanding was 59 days at June 30th, 2024 compared to 52 days at March 31st, 2024. In connection with our acquisition activity in recent years, our balance sheet as of March 31st, 2024 reflects 5.6 million of goodwill and 3.0 million of net amortizable, intangible assets.

Matthew Diamond: The company's working capital, excluding cash, was 14.6 million compared to 12.0 million at December 31st, 2023.

Jacob Zabkowicz: I'll now turn the call over to Jade to discuss our IPO business. Thank you, Matt and good morning. In the second quarter of 2024, we further expanded our geographical footprint and service offerings with the acquisition of Striver, a UAE-based talent acquisition firm. This acquisition, in addition to our acquisition of executive solutions in the first quarter, and our continued enhancements of internal talent enable Hudson RPO to continue providing best in class service on a global scale.

Jacob Zabkowicz: On the organic growth front, we have prioritized our land and expand strategy within our existing client base and made notable progress on this initiative in the second quarter, where we added significant scope to a couple of our key existing client relationships. While the scope and scale of new business opportunities coming to market have been smaller than what we're used to seeing, we've been nimble and aggressive in pursuing all opportunities with the goal of expanding and deepening these relationships over time as higher in conditions improve.

Jacob Zabkowicz: In general, we're seeing client executives taking longer to make decisions than what we've seen historically, which is why the growth in our sales pipeline of potential opportunities have all paced our opportunities to burn it to wins.

Jacob Zabkowicz: Lastly, we've made difficult but necessary decisions regarding reductions in our global workforce in response to the market conditions that Jeff alluded to earlier. In addition to protecting our profitability, these cost saving measures help us reorganize and optimize a town within our organization so we're better positioned to respond to future upterm and activity levels.

Jeffrey Eberwein: I'll now turn the call back over to Jeff for some closing remarks. Thank you, Jake. Before opening the line to questions, I'd like to reinforce Jake's message that despite today's talent environment, we're encouraged by the feedback we're receiving from our clients and are excited by our new business winds and robust sales pipeline.

Jeffrey Eberwein: Furthermore, the results of the internal changes and cost-stating initiatives we've implemented across our entire organization should help our bottom line results in the coming orders for confident in our ability to deliver value to stockholders while serving the needs of existing and new clients going forward. We continue to believe our stock is undervalued and thus continue to view share repurchases as an attractive use of capital. Under our 5 million, common share, 5 million dollar common share repurchase program initiated last year, we've repurchased to date over 150,000 shares for 2.5 million, including 8,000 shares for 1.5 million in the second quarter of 2024. These repurchases were executed in both the open market, as well as privately negotiated transactions, and we continue to look for cost-effective opportunities to shrink our share account over time.

Operator: Operator, could you please open the line for questions? We will now begin the question and answer session. To ask a question, you may press star than one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you are than one, you ask a question.

Marc Riddick: The first question comes from Mark Ridic with Siddhoti. Please go ahead. Thank you, morning. Good morning. So I was wondering if we could start with understandable, sort of client behavior lately. I was wondering if we talk a little bit about the, when talking about the, I think the commentaries around the smaller scope and scale.

Marc Riddick: Can you talk about maybe some of the things that folks are kind of willing to be back with currently, and maybe some of the things you feel like they're sort of pushing off?

Jacob Zabkowicz: Sure, Jay, why don't you handle that?

Jacob Zabkowicz: Good morning. Sorry, how are you? Morning. Good, yourself. Really good. Thank you.

Jacob Zabkowicz: Great question. So what we're seeing in the market right now is a little bit of a hesitation, and some of the great hesitation where the scope and scale of new business has is out there, but when it really comes to the finalization of what's being offered or what's being needed, that scope has significantly shrunk, where we have seen the level of smaller deals safe between 500 to 1500 hires increase, and a little bit of a slowdown or hesitation on those larger deals of, say, 5,000 plus hires.

Jacob Zabkowicz: We do still see those opportunities in the market, but those are taking a little bit longer than what we normally see in our sales cycle, and that's impacting obviously our new local Revenue Growth at this point in time, but we do expect that to pick up in Q3 and Q4. Marc Riddick, when Jake was talking about higher, he's talking about annual hiring level. So 5,000 would be like a 3-year contract where we're pricing it and budgeting it on 5,000 higher per year going forward.

Jacob Zabkowicz: Okay, and then are you getting any sense as far as feedback as to clients' receptivity to engage with RPO or are you getting a sense of those who are considering shifting to maybe folks who have not been in the space before as a measure of efficiency going forward? Marc, I would say that from a standpoint of that, we're seeing really no changes from the behaviors of a first-new-year clients that have decided to go out to RPO versus existing clients and either expanding or contrasting.

Jacob Zabkowicz: So it's not a notable change. What I would share with you is that RPO still is a avenue of cost savings and scalability to many of our partners and clients. We're seeing that in a lot of our base where we're actually expanding into other geographies, as I mentioned earlier, other remote geographies that they do not have the scale or flexibility to expand into those regions. So as far as the first-year clients taking their business back in-house, we're not seeing a major trend or shift than what we've seen in the past.

Matthew Diamond: Okay, and then I wanted to, I wasn't there with me. I was double checking on thinking about, and maybe you could talk a little bit about tax rate. I guess in the N2Q, I think that was maybe a little higher than, or maybe there was something in there that maybe we're missing. Yeah, Marc, our tax rate is notoriously hard to predict because of our... It makes a mix of business. And the best guidance I can give you is just to use a blend of statutory rates across the countries.

Matthew Diamond: We do business in the US is lower than Australia. And we don't pay any tax in the US. So our tax rate in the US is zero. So it really ties into business mix. That's probably the best advice I can give you. And in our N2Q, it's going to come out after the closed day. And there'll be some more disclosure in the N2Q. And if that doesn't answer any questions, you have... I would say get Matt Diamond or CFO call. I'm sure the world. Yeah.

Matthew Diamond: And then I guess one other thing. I was sort of thinking about maybe thoughts around the share of purchase activity and thoughts there for the remainder of the year. I guess we're about what now halfway through the authorization to more in that ballpark. Yeah, that's right, Marc. So we, I think the biggest thing I would leave you with is that we think we're at the bottom and we're starting to recover. For example, this is the first quarter and a long time where we've had quarter or the quarter met revenue growth and we think that's going to continue.

Matthew Diamond: So we've thought our stock is cheap for some time. And the window was finally open in Q2 and we found some willing sellers and so we're able to be a little more active in Q2 than we were in the past. And I would just say we have a soft goal of repurchasing 10% of our shares this year versus what it was on January 1st. And it'll depend on the window being open, it'll depend on our ability to find some willing sellers or we can do a privately negotiated transaction.

Matthew Diamond: Those are the most efficient, by the way, because buying an open market is, we're subject to 10 to 18 rules and there's volume limitations and we'll be, you know, so how much the stock is trading has a big impact on how much we're able to buy back?

Marc Riddick: Okay, excellent. I appreciate it. Thank you very much. Good questions. Thanks, Marc.

Operator: That concludes today's question and answer session.

Jeffrey Eberwein: I will now turn the call over to Jeff Eberwine, Reclosing remarks. Our prayer should we hold it open for another minute? In case anybody has a question? Certainly. This in case someone wants to get in the queue. Sure. Again, if anyone has a question, please press star then one. All right.

Jeffrey Eberwein: Well, hearing none, I just want to say thanks for joining us today. Thank you for your interest in Hudson Global. Feel free to contact us anytime. He's in the contact information found in our press release or on our investor relations website. We look forward to the next quarter's update call. Have a good day, everybody.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.