This is a summary of the first quarter fiscal 2008 earnings call conducted by Monster Worldwide (MNST) on May 1, 2008
Management:
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Chairman of the Board, President, CEO Salvatore Iannuzzi
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Chief Financial Officer, Executive Vice President, Director Timothy T. Yates
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Vice President, Investor Relations Robert Jones
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Global Chief Information Officer and Head of Product Darko Dejanovic
Key Investor Issues
- Revenue increased by 13% to $370 million.
- Earnings were $22.59 million or 18 cents a share, down 42.8% from $39.5 million or 30 cents a share in the prior year.
- The firm repurchased 3.0 million shares of its common stock for an aggregate cost of $79 million.
First Quarter Highlights
Total revenue grew 13% to $370 million from $329 million in the prior year, with growth led by International at a 44% increase to $153 million.
- North American Careers revenue was $184 million, flat with the prior year.
- Internet Advertising & Fees revenue was $34 million compared with $39 million in last year''s first quarter.
- The deferred revenue balance grew 16% to $522 million over last year''s balance of $450 million.
Income was $22.59 million or 18 cents a share, down from $39.48 million or 30 cents a share aided by a $3 million benefit from foreign exchange rates as margins dropped from 23.7% to 12.4% and expenses rose 25%.
- Included in income from continuing operations 5 cents per diluted share from costs associated with the restructuring plan and the ongoing stock option investigation.
- Excluding these costs, income from continuing operations was $29 million, or 24 cents per diluted share, compared to $46 million, or 35 cents per diluted share in the prior year.
- The firm had $499 million of cash, cash equivalents and securities held for sale compared with $578 million at December 31, 2007.
Cash generated from operating activities was $78 million, essentially flat with the prior year period.
- Capital expenditures totaled $21 million in the first quarter of 2008.
- During the quarter, the Company repurchased 3.0 million shares of its common stock for an aggregate cost of $79 million.
- Total operating expenses went by 25% as the rebranding activities cost about $31 million.
-Europe had an injection of $13 million which reduced its margins from about 17% to about 8%
The number of organic site visits increased by 26% in March alone.
- Monster made some significant search engine optimization changes on its site over the past few months. Those changes are resulting in a much higher number of organic search visits to the Monster site.
- Product refinements have also made it easier for the employers to do business with us.
- Features were created that better match quality candidates with existing job openings.
- Monster redesigned its e-commerce capability by moving to a more consultative selling engine online.
Investment in technology is critical to success.
- A complete overhaul of the Monster site security has been done, which has transformed Monster from a laggard to an industry leader.
- The firm has mitigated its North American and European operations into one common technology platform, to make the platforms more efficient and truly global. This will make Monster more efficient and also allow for the significant increase in development speed.
- Monster opened a new IT facility which allows the significant increase of capacity and provide for back-up capability in the event of an emergency. This also allows us to respond quickly to changing business requirements.
- The firm also upgraded its security protocols and adopted vigorous new processes, including 220 application level enhancements.
- The analyzed rate of voluntary attrition has decreased 25% from 2007.
Operational Highlights:
- Over the past 12 months in the U.S, of the 13 million companies that employ between one and nine people, Monster did business with only about 1%.
- Of the 1.7 million companies that employ between 10 and 500 employees, the firm has done business in the past 12 months with only about 4%.
- Of the 31,000 companies with over 500 employees, the firm has only served 25%.
- If pursued relentlessly, growth in market share will lead to organic growth in revenues.
The $31 million rebranding costs incurred were an anomaly
- Beginning last fall Monster substantially stepped up its marketing efforts and brand investment.
- These activities were partly responsible for reducing margins in Europe from about 17% to 8%
