Bright spots surface despite recruiter revenue dip
Recruitment groups Kelly Services, Hudson Global and Staffing 360 Solutions are pointing towards a gradual recovery in their markets, despite declines in revenue and profits during the third quarter.
At Kelly, Q3 revenue decreased 18.1% to $1 billion as Covid-19 related demand declines persist, reflected in an operating loss of $2.4 million, or earnings of $7 million as adjusted, compared to earnings of $17 million last year as adjusted. Earnings per share were $0.42 or $0.29 as adjusted, compared to $0.43 last year as adjusted.
President and CEO Peter Quigley says revenue trends across all segments had shown some sequential improvement. “Our higher-margin specialties, such as outsourcing and consulting, science, and virtual call centre, proved to be particularly resilient,” he says. “We executed on our plan to adopt a new operating model, and we reported third quarter financial results by our five specialty business segments: Science, Engineering & Technology; Education; Professional & Industrial; OCG; and International. This is an important step forward in redefining Kelly as a specialty talent provider in skill sets modern organisations need to grow and thrive.”
Hudson Global reported third quarter revenue of $25.4 million, a small decrease of 1.4% from the third quarter of 2019 and 4.7% in constant currency. Adjusted net revenue of $9.1 million declined 20.4% from the third quarter of 2019 and 22.6% in constant currency, and the net loss was $1.2 million, or $0.41 per basic and diluted share, compared to net income of $0.4 million, or $0.12 per basic and diluted share, for Q3 2019.
Jeff Eberwein, Hudson Global CEO, says, while the business continued to be impacted by the challenging macroeconomic environment, they were positioned to respond quickly as activity began to rebound, and excited about their recent acquisition of Coit Group.
Staffing 360 Solutions
Staffing 360 Solutions reported third quarter revenue of $48.6 million, a decline of 27.7% from $67.3 million in the same period in 2019. Gross profit fell by 33.3% to $8.3 million. In the year to date, revenue declined 29.8% to $150.7 million and gross profit by 27.7% to $26.5 million.
Chairman and CEO Brendan Flood says, while overall third quarter results were not where they would like them to be, they had seen improvements in key metrics from Q2 to Q3, including revenue, gross profit, net loss and adjusted EBITDA. “Nearly $1 million of our $2.6 million net loss was Covid-related and our cash balance at the end of the quarter was $10.7 million, which includes $3.3 million of restricted cash,” he says.
“We are encouraged that we continue to achieve sequential week-over-week improvements in our overall business. We are cautiously optimistic these improvements will continue through the end of the year and beyond. Our contingent workforce head count is back to where it was at the beginning of March and we are hopeful to return to pre-Covid numbers by the end of the year.”
Specialist engineering and technology recruiter Gattaca has announced its preliminary results for the year ending July 31, including revenue of $538.7 million, a 15% decline compared to 2019, and net fee income (NFI) of $54.3 million, a 21% drop.
CEO Kevin Freeguard says: “Prior to the pandemic the demand for STEM skills, our core focus, was growing significantly and, whilst we remain cautious as to the timeframe for economic recovery and the potential impact of an extended second lockdown in England, we have been encouraged by the signs of increased activity in our core markets.”