Q4 2024 Hudson Global Inc Earnings Call
Speaker Change: Good morning, and welcome to the Hudson Global conference call for the fourth 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.
Speaker Change: 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 filed earlier 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.
Speaker Change: During the course of this conference call, references will be made to non-GAAP terms such as constant currency, Adjusted EBITDA, and Adjusted Earnings for Deluted Share.
Speaker Change: Reconciliation for these measures are included in our earnings release and quarterly slides, both posted on our website HudsonRPO.com
Speaker Change: I encourage you to access our earnings material at this time as they will serve as a hopeful reference guide during our call. Please note, today's conference is being recorded. I will now turn the call over to Jeff Eberwein, please go ahead.
Jeff Eberwein: Thank you, operator, and welcome everyone. First off, I apologize for my voice. Secondly, more importantly, we thank you for your interest in Hudson Global and for joining us today.
I'll start by reviewing our fourth quarter, 2024 results.
Speaker Change: then Matt Diamond or CFO will provide some additional details in our financials. Lastly, Jake Zabkowicz, Global CEO of our Hudson RPO business will provide us with an operations
Jeff Eberwein: Our fourth quarter, 2024 results reflect modest improvement over the prior year of
Jeff Eberwein: Overall, for the year, we were impacted by generally low levels of global hiring activity as well as unusually low attrition rates at certain clients.
Jeff Eberwein: Despite these challenges, we spent significant time in 2024, restructuring and repositioning our business for growth. I'll let Jake expand on some of these initiatives later on in the call.
Jeff Eberwein: In the fourth quarter of 2024, we reported revenue of 33.6 million down 2% year-rear in Austin, Crancy, while our adjusted net revenue was 17.6 million up 5.7% year-rear in Austin, Crancy.
Jeff Eberwein: Our 4th quarter, 2024, Justin Yvida was 0.9 billion out from a Justin Yvida of 0.1 billion a year ago.
Jeff Eberwein: In addition, we reported a net loss, 0.6 million, or 20 cents per dilute share versus net income of 0.7 million, or 23 cents per dilute share in the same period of last year.
Jeff Eberwein: Q4 2024 adjusted, net loss, pretty loose share was $0.5.
Speaker Change: I'm here to our adjusted net income for the loose share of a positive 4 cents in the fourth quarter of last year. Now I'll turn the call over to Matt Diamond to review some financial results by region as well as some additional financial details from the fourth quarter.
Thank you, Jeff, and good morning everyone.
Speaker Change: Q4 2024 revenue for our America's business increased 18% and adjusted net revenue increased to 5% year-over-year in constant currency.
Speaker Change: Q42024 revenue for our Asia-Pacific business decreased 10% while adjusted net revenue increased 6% year-over-year and constant currency.
Speaker Change: This contrast is attributable to a decline at a large MSP client where, as a reminder, adjusted net revenue margins are significantly lower than those of our RPO accounts.
Speaker Change: In Q4 2024, we reported adjusted EBITDA of 0.9 million which was flat versus adjusted EBITDA of 0.9 million a year ago.
Speaker Change: Q4 2024 revenue for RME of business increased 7% versus the prior quarter in constant currency and adjusted net revenue increased 5%.
Turning to some additional financial details.
Speaker Change: Bay Sales Outstanding was 51 days at December 31, 2024, compared to 56 days at September 30, 2024.
Speaker Change: The company generated $2.0 million of cash flow from operations during the fourth quarter of 2024 compared to $3.3 million of cash flow from operations in the fourth quarter of 2023.
Speaker Change: We ended the year with 17.7 million in cash, including 0.7 million of restricted cash.
Speaker Change: In connection with our acquisition activity in recent years, our balance sheet as of December 30, 2024 reflects 5.7 million of goodwill and 2.5 million of net amortizable intangible assets.
Speaker Change: The company's working capital, excluding cash, was 11.9 million compared to 12.0 million at December 31st, 2023.
Speaker Change: I'll now turn the call over to Jake to discuss our RPO business.
Jake Zabkowicz: Thank you, Matt. Good morning. Although we faced many challenges in 2024 that were largely out of our control, our business is better positioned for growth today than ever before. We restructured our organization and streamlined our operations including our sourcing, screening and onboarding procedures.
Jake Zabkowicz: We've also enhanced our go-to-market strategy by expanding our service offerings to existing and prospective clients alike. In 2024, we made multiple strategic clairs with the folks on further enhancing our geographical reach and service offerings.
Jake Zabkowicz: We recently launched our digital division on hired Stephanie Edwards's Chief Digital Officer to revolutionize our digital capabilities and enterprise strategies.
Jake Zabkowicz: to deliver innovative, efficient, cost-effective, and high-quality town solutions to our client's worldwide.
Speaker Change: Despite the challenging global calendar environment, we continue to consistently deliver best-in-class service to a growing number of clients on a global scale. For the full year, we secured approximately 56 million of the just net revenue from renewals and extensions at existing clients, plus approximately 7 million in new global winds.
Speaker Change: Our efforts are evidence and by a myriad of recognitions that we're proud to have received.
Jeff Eberwein: including the 16th consecutive year ranking among the H.O.A. today, magazine Baker Dozen, list of top enterprise RPO providers, the 12th consecutive year as a top RPO provider and APAC, and the 8th consecutive year as a top RPO provider in a meal. I'll now turn the call back over to Jeff for some closing remarks.
Thank you, Jake.
Jeff Eberwein: Before opening the line to questions, I'd like to reinforce Jake's message that despite operating a challenging global talent environment, we improved our internal operations and have simultaneously made growth investments as well as realized cost savings across our entire organization.
Jeff Eberwein: DC should improve our top and bottom line results in the coming quarters.
Jeff Eberwein: Our talented team continues to provide excellent service and maintain a high levels of client satisfaction. We're encouraged by the size and breadth of our sales pipeline and believe we are poised to convert this pipeline into actual sales.
Speaker Change: Once Marcin conditions and proof, operator, can you please open the line for questions.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.
Do a draw your question, please press star then two.
Speaker Change: Again, it's star one to ask a question. At this time, we will pause momentarily to assemble our roster.
Speaker Change: Our first question today is from Marc Riddick with Sedoti. Please go ahead.
Thank you morning.
Speaker Change: I wanted to see if we could spend a little time going over I guess when we last
Speaker Change: spoke it was, I guess when you reported three two results just right after the election if I recall.
Speaker Change: Maybe it's been a little bit of time discussing the men environment that you're seeing and maybe whether there's some differentiation geographically or bio industry vertical, you know, since the election and, you know, given everything that's taking place now with terms and the like and how you feel that's.
Impact and Client, the man turns at this point.
Yeah, Jake, why don't you handle that one?
Speaker Change: Yeah, Marc, good morning and thanks for the question. I think a couple of things coming out of Q4 of last year, we definitely felt a momentum and an uptake of client behavior. We felt a, you know, some positivity of growth and, you know, hiring activity in that necessary in one specific area or geography.
Speaker Change: But in specific pockets within clients, commercial has always been a growing piece, technology is hit and miss and bouncing back on the functional area.
Speaker Change: But now coming into Q1 and what we're looking at now is there's still that momentum but there's a little bit of hesitation still.
Speaker Change: and uncertainty in the market. And that uncertainty is having our partners question some of their hiring initiatives and hiring volumes, but still a more positive viewpoint than what we saw in beginning of 2024, a year ago today.
Speaker Change: Okay, great. And then in a pair of remarks, there's the commentary on the investments for future growth. Can you talk a little bit about maybe what you might be looking at for 2025 and then how that might play into CapEx levels of ease of the maintenance versus growth?
Speaker Change: Jake Washer, you're going to ask that one as well. Yeah, Marc, another great question. Thank you. So, in 2024, our growth strategy was really focused on a couple different factors, right? You know, if you take one pillar of M&A.
Speaker Change: and acquiring two businesses in the Middle East. And M&A will continue to be a growth strategy for us as we look at companies to help support our both our geographical expansion and also our product portfolio expansion.
Speaker Change: The other thing we did in 2024 is we really enhanced our go-to-market and our commercial sales team, even more than doubling our sales team size in 2024 to make sure that we can
Speaker Change: Touch every geography that our clients are asking us to touch as well as enhancing our support in our sales and management functions.
Speaker Change: So we're going to continue to be able to do that as we look for 2025 and then onward.
Speaker Change: But the other piece of the puzzle, Marc, I think we spoke about last time, is about our organic roasts.
Speaker Change: and we're really excited about this and what I mean by organic growth is looking at our current market share or share wallet with our existing partners.
to be able to accommodate their needs in other geographies.
Speaker Change: and so we're really excited about that. We're expanding that with our digital product portfolio, as I mentioned earlier, with a hiring of stuff that works in launching Hudson Digital.
Speaker Change: So as we look at the digital side of the house, the digital will be able to really give us a more of an improved, tentative and hiring manager experience.
We're going to be able to automate routine tasks.
Speaker Change: We're going to create more value for our clients, and we can't forget that we're in the business of people. We want to make sure that the experience on both the candidate and hiring managers is top notch, and that is going to come through with our digital footprint and our digital solution as we move forward.
Speaker Change: Okay, great. And then I was wondering if you could spend a little time on
Talked a little bit about Jordan.
with Cassie Usage and prioritization.
Maybe you can talk a little bit about what the...
Speaker Change: The acquisition pipeline might be looking like that, maybe you just general thoughts on...
Speaker Change: Maybe what's out there, evaluation levels and whether it's about the same or maybe a little more or less attractive than it was maybe six months ago.
Speaker Change: Yeah, Marc, this is Jeff, a good question. So our first priority is
is Internal Growth Projects, like we highlight the...
Speaker Change: over $3 million we spent in future growth, enhancing things that's over and above maintenance levels. We think those investments have an incredibly high ROI and are...
Speaker Change: Often better return and lower risk than doing an acquisition, but they are in a little bit.
Speaker Change: So, you know, there's a few geographic areas we would like to enhance. And so, we're always looking. There are.
You know, often some interesting things out there.
and the evaluation.
Speaker Change: Part is important, but also important is the cultural fit and the 1 plus 1 equals 3 aspects. We have to look at something and say...
Speaker Change: You know, inside of Hudson, can we double or triple this business? You know, is it really more valuable inside of Hudson than if they just continue as a standalone or...
Speaker Change: You know, they're still a gap between the bid-ass spread, you know, what we think the value is and what sellers think the value is, and we can be creative.
that we're seriously looking at at this time.
Speaker Change: Okay, and then I wanted to touch a little bit on maybe what you're seeing for lead time.
Speaker Change: Friends with RPO. I wasn't sure if the client had since he has been any, how should we think about maybe how that is now versus historically within RPO?
Yeah, Jake, why don't you...
Yeah, turn on that one, Marc.
Speaker Change: Marc, great question again. And what I would share with you is that the sales cycle has not only changed a lot for an enterprise RPO client.
Speaker Change: That's still sitting. We're from 9 to call it 14, 16 months from the RFP initiation to potential signature and start. There's a lot of factors that go into it. What we saw in 2024 was a lot of hurry up and wait.
Speaker Change: and what I mean by that is we had clients and potential partners go out and ask for proposals.
Speaker Change: He had multiple conversations thinking about their hiring volumes for 2024 into the future years.
Speaker Change: and then what would come to fruition was a fraction of that hiring volume and that hiring initiative.
Speaker Change: I hope and at the confidence that we will start to see more decisions coming in 2025 as things were put on hold in 2024 and it's been all set then of 2023 but only the time we'll tell at the market in the conditions but we are better poised.
Speaker Change: to not only react, but to answer and to consult with our clients by the investments that we've made this last year, which we're extremely excited about.
Excellent, thank you very much.
Speaker Change: The next question is from David Sikfried, a private investor. Please go ahead.
Good morning guys, how are you today?
Speaker Change: Thank you for taking my call. I notice the biggest RPO spend comes out of America and the markets. Do you see these markets as your biggest growth target?
Speaker Change: Yeah, David, I'll pick that one. So if you think about our current, you know, we're Hudson RPOs today, you know, we are a dominant force in our APAC region and through recognitions, through revenue and through clients.
Speaker Change: and if you look at the Americas and the Indian market, there's a huge opportunity for growth and expansion in both of those markets, both from a new local perspective and organic perspective. And they're going to be our focus.
Speaker Change: across the board in the future years to come. And we're investing heavily in those markets right now as well with operational leaders, with sales and our go-to-market team and strategies
Speaker Change: So, you are harps and correct that those are huge growth markets for us.
Speaker Change: but I also don't want to forget about specific areas in our APAC market that we're seeing significant opportunities as well.
Speaker Change: such as Southeast Asia, Japan, Manila area is always a strong growth area for us. But the US and the American market is key as well as the Indian market and you can continue to see our focus and growth in those areas.
that trend continuing, particularly with new logo wins.
Speaker Change: Well, dude, I hope that our new local wins go, you know, increases with that as the market picks up and the investment that we're making.
but are definitely our renewals and expansions.
Speaker Change: We are a better position right now to expand with our current client base and again from a geographical expansion and from a product portfolio expansion.
Speaker Change: We're seeing a huge increase in rate requests for more talent intelligence and that is looking at market mapping, looking at factors that will impact their overall talent acquisition strategy. We're seeing an increase in the digital request.
Speaker Change: Right, how to leverage AI as part of the overall process, how to think about your count ecosystem and be able to respond and enhance that client's and that partner's talent agenda.
Speaker Change: So when we look at the growth trajectory, the hope and the drive of our team is continuing on the upper trajectory, and the pipeline is encouraging as we continue to move forward.
Speaker Change: Okay, good. I think I have read somewhere that the attrition rate right now is about 4%.
Speaker Change: which is low and that you anticipate irreverting back to high single digits or maybe low double digits. Are you beginning to see that trend take place or is that, how do you see that happening over the next few quarters?
Speaker Change: It's another great question, and if you think about the last three years during the great resignation, attrition,
in 21 and 22 was at all-time record highs.
Speaker Change: in Lifetime Highs, in some instances, in some areas and geographies, in 2023, that pendulum slipped and shifted, and we saw very low attrition in 23 and 24, and partially because the previous years, you had such high attrition that people made jumps and made moves.
Speaker Change: So, we are starting to see the pendulum shift back to more that center mass and then normalcy. How fast will that happen? There's a lot of macroeconomics and factors that we just can't control. And obviously a lot of changes in different geographies across the board, but we are starting to see in pockets.
Speaker Change: that attrition started to normalize and obviously the attrition normalizes hiring lines pick up which will obviously help our business overall.
Speaker Change: But not to mention too, we will keep them out close eye as clients look for, you know, help around internal mobility and skills-based tiring and consulting on, you know, what are the skills for the future that we're currently participating with many of our partners today.
Speaker Change: Okay, so I got two more questions. One other question, the September Investor presentation.
Speaker Change: I think I mentioned right now we're about 20,000 annual hires. The goal is over the next three years to reach 60,000 annual hires.
Speaker Change: in the growth of the RPO clients by 50 percent. Is that still the goal?
Speaker Change: David, very much so. We want to continue to grow organically with our partners and increasing our share of all of them and showing them that Hudson RPO is their partner of choice.
Speaker Change: across the entire count spectrum. And with our current client base, we have a great opportunity to be able to do that. Again, as we bring on and made investments, both in our operational talent and also our go-to-market talent.
Speaker Change: The number of clients we are, our go-to-market team is definitely hunting for new local partners and signing new local contracts.
Speaker Change: into our business today, which we are also excited about. But we are doing it a thoughtful and careful approach. We're making sure that we don't jeopardize.
Speaker Change: The quality of service that our clients have come to known Hudson Art PO to be able to deliver.
Speaker Change: We have many partners that have been with us for 12, 13, 14 years that are that's unheard of in our industry, right? And so we want to continue to provide that quality level of service in the level of service to our clients.
So, let's go.
Speaker Change: Long-winded answer, sir, to your simple question, we do still have that growth trajectory in mind and definitely targets to keep that pace.
Speaker Change: So in first three quarters, you bought back 154,000 shares, just an average cost of about 16. Nothing was repurchased in fourth quarter.
Speaker Change: So, I mean, the price is where it is right now. Where do you see, do you have any goals for 2025 when it comes to repurchase activity?
Jeff Eberwein: Yeah, this is Jeff, I can talk about that. Yeah, it's...
Jeff Eberwein: You know, we say it's a soft goal, just because it's, you know, there's things outside our control, you know, sometimes the window isn't open. And the most efficient way we have found to buy back stock, especially in meaningful quantities, is through negotiated transactions.
Jeff Eberwein: So if a shareholder needs to exit or needs to reduce a position we have a standard agreement that they can sign.
Jeff Eberwein: that if it allows us to trade any time, even if the window was closed.
Jeff Eberwein: and we have found that's the most efficient way to buy that stock overtime, and we didn't have any of those in Q4.
The 10% threshold is what's allowed by our NOL.
So you can think of that as a maximum.
Jeff Eberwein: that we would do in any one calendar year, but I would say that, you know, that was a soft goal in 2024. We didn't quite hit it, but it's, you know, another soft goal that we have in 2025. We think our stock is significantly undervalued.
Jeff Eberwein: by a very long stretch, so as long as that's the case.
We're going to have that as a softball too.
by Rackett, significant amount of...
Jeff Eberwein: Stock every year, but like I said, it's, you know, there's some things outside our control. You need a willing.
We're a willing buyer, you need a willing seller.
Jeff Eberwein: at least some of the negotiated deals. In the past, we have bought in the open market. You know, that is difficult giving, given how liquid our stock is and the 10p18 rules. We have done tender offers in the past and I would just say all those.
Jeff Eberwein: Tools are in the toolkit and are ones we consider all the time.
Okay, excellent.
Jeff Eberwein: Well, very good and it sounds like we're making a nice progress and thank you for the time.
Thank you. Thank you David.
Jeff Eberwein: Again, if you have a question, please press star then one.
Jeff Eberwein: Showing no further questions is concludes our question and answer session. I would like to turn the conference back over to Jeff Eberwein for any closing remarks.
Jeff Eberwein: Well, thank you. Very good questions today. We really appreciate the interest in the company and the dialogue, the Q&A. We're always open to hearing from you. The contact information is in our press release as well as our...
Jeff Eberwein: Investor, presentations, we look forward to talking to you next quarter and thanks again for your interest in the company.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Pedigo Sound General務衛 Production Marriott Script, Direction The Grape Vine