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Recruiter.com Announces Second Quarter 2022 Results

Monday, August 15, 2022 4:10 PM
Recruiter.com Group, Inc.
Topic:
Earnings

Quarterly Revenue Increased to $7.1M, up 62% y/y

NEW YORK, NY / ACCESSWIRE / August 15, 2022 / Recruiter.com Group, Inc. (NASDAQ:RCRT)(NASDAQ:RCRTW) ("Recruiter.com"), a recruiting solutions platform, today announced financial results for the second quarter of 2022, ended June 30, 2022.

"Recruiter.com delivered a strong quarter, growing revenues and margins while reducing operating expenses," said Evan Sohn, CEO of Recruiter.com. "Strong product market fit and solid hiring demand helped grow revenues by 62% y/y to $7.1 million and achieve 3.5% organic revenue growth sequentially."

"A sustained shift toward our software and on-demand services enabled our gross profit to more than double y/y to $2.9 million and expand our gross margin to 41.2%. During the quarter, we also focused on delivering operating efficiency, reducing our adjusted EBITDA loss to $397 thousand, a 70% sequential improvement. We are excited by the growth opportunities ahead of us and expect to cross the breakeven mark for positive adjusted EBIDTA before year-end."

Recent Highlights

  • Revenue for the second quarter of 2022 totaled $7.1 million, an increase of $2.7 million or 62%, compared to revenue of $4.4 million in the second quarter of 2021. Revenue growth was primarily driven by a 161% increase in the Recruiters on Demand business and continued growth in Software Subscriptions, which launched in 2021.
  • Gross profit for the second quarter of 2022 was $2.9 million, a 107% increase compared to $1.4 million gross profit in the comparable period of 2021. The gross profit margin expanded to 41.2% compared to 32.8% a year ago. The increase reflects the continued shift in the Company's sales mix to its faster-growing and higher-margin businesses.
  • Announced advancements to Recruiter.com AI that keep employer needs top of mind. Upgrades include improved search capability, email outreach, and a new candidate tracker dashboard allowing employers to review each candidate's background in one integrated view. When paired with the Recruiter.com Recruiters On Demand service, the solution delivers qualified and engaged candidates that have been screened and are "ready to interview."

Financial Results for the Second Quarter Ended June 30, 2022

Revenue for the second quarter of 2022 totaled $7.1 million, an increase of $2.7 million or 61%, compared to revenue of $4.4 million in the second quarter of 2021.

Gross profit for the second quarter of 2022 was $2.9 million, a 107% increase compared to $1.4 million gross profit in the comparable period of 2021. The gross profit margin expanded to 41.2% compared to 32.8% a year ago. The increase reflects the continued shift in the Company's sales mix to its faster-growing and higher-margin businesses.

Total operating expenses were $5.3 million, an increase of 36% compared to $3.9 million for the second quarter of 2021. The increase was primarily due to higher sales and marketing, product development, general and administrative expense, and higher amortization of intangibles of $917,000 compared to $675,000 in the year-ago period.

Recruiter.com had a net loss of $1.2 million in the second quarter of 2022 compared to net income of $3.5 million in the second quarter of 2021. The net loss in the second quarter of 2022 included non-cash depreciation and amortization expense of $917,000, bad debt expense of $345,000, and equity-based compensation expense of $669,000.

Liquidity and Capital Resources

On June 30, 2022, Recruiter.com had $1.7 million in cash and cash equivalents, and accounts receivable, net, of $4.3 million. There were 14,915,682 common shares outstanding at quarter-end.

Conference Call Details

Date: Monday, August 15th
Time: 4:30 pm ET / / 1:30 pm PT
Register at: https://www.webcaster4.com/Webcast/Page/2765/46178

To access the conference by phone:

U.S. Dial-in: 877-545-0320
International Dial-in: 877-545-0320
Passcode: 413648

About Recruiter.com Group, Inc.

Recruiter.com is an on-demand recruiting platform providing flexible talent acquisition solutions that scale from startups to the Fortune 100. With an on-tap network of thousands of recruiting professionals, advanced artificial intelligence sourcing software, and recruitment marketing automation, Recruiter.com helps businesses solve today's complex hiring challenges.

For investor information, visit https://investors.recruiter.com

Please follow social media channels for additional updates:

Cautionary Note Regarding Forward-Looking Statements:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "predict," "forecast," "believe," "may," "estimate," "continue," "anticipates," "intend," "should," "plan," "could," "target," "potential," "is likely," "will," "expect" and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements primarily on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. Important factors that could cause actual results to differ from those in the forward-looking statements include continued demand for professional hiring, the accuracy of the Recruiter Index® survey, the impact of the COVID-19 pandemic on the job market and the economy as virus levels are again rising in many states, and the Risk Factors contained within our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2021. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update any forward-looking statements publicly, whether as a result of new information, future developments, or otherwise, except as may be required by law.

Company Contact:

Nicole Gallina
Corporate Communications
investors[email protected]

-Tables Follow-

Recruiter.com Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

June 30, December 31,
2022 2021
(unaudited)
ASSETS
Current assets:
Cash
$1,713,660 $2,584,062
Accounts receivable, net of allowance for doubtful accounts of $1,184,809 and $934,219, respectively
4,261,232 5,650,668
Accounts receivable - related parties
- 49,033
Prepaid expenses and other current assets
393,211 546,079
Total current assets
6,368,103 8,829,842
Property and equipment, net of accumulated depreciation of $3,463 and $2,982, respectively
- 481
Intangible assets, net
8,579,904 9,741,832
Goodwill
7,683,198 7,718,842
Total assets
$22,631,205 $26,290,997
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$1,336,078 $1,121,510
Accounts payable - related parties
25,931 163,672
Accrued expenses
1,378,696 1,285,339
Accrued compensation
900,162 1,551,162
Accrued interest
4,869 19,726
Contingent consideration for acquisitions
- 578,591
Deferred payroll taxes
81,728 81,728
Other liabilities
17,333 17,333
Loans payable - current portion
3,862,052 1,712,387
Refundable deposit on preferred stock purchase
285,000 285,000
Customer advances
426,136 -
Deferred revenue
523,631 746,449
Total current liabilities
8,841,616 7,562,897
Loans payable - long term portion
632,201 2,637,875
Total liabilities
9,473,817 10,200,772
Commitments and contingencies (Note 11)
Stockholders' Equity:
Preferred stock, Series E, $0.0001 par value; 775,000 shares authorized; 86,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021
9 9
Common stock, $0.0001 par value; 100,000,000 shares authorized; 14,851,146 and 14,566,420 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
1,486 1,457
Shares to be issued, 587,945 shares as of June 30, 2022 and December 31, 2021
59 59
Additional paid-in capital
69,386,572 66,948,340
Accumulated deficit
(56,230,738) (50,859,640)
Total Stockholders' Equity
13,157,388 16,090,225
Total Liabilities and Stockholders' Equity
$22,631,205 $26,290,997

Recruiter.com Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three and Six Months ended June 30, 2022 and 2021
(Unaudited)

Three
Months Ended
Three
Months Ended
Six
Months Ended
Six
Months Ended
June 30,
2022
June 30,
2021
June 30,
2022
June 30,
2021
Revenue (including related party revenue of $0, $0, $0 and $970, respectively)
$7,112,450 $4,380,894 $13,981,103 $7,545,439
Cost of revenue (including related party costs of $0, $212,279, $0 and $417,540, respectively)
4,183,478 2,946,084 8,361,549 5,200,994
Gross profit
2,928,972 1,434,810 5,619,554 2,344,445
Operating expenses:
Sales and marketing
158,040 75,006 276,796 132,549
Product development (including related party expense of $0, $54,696, $16,771 and $112,684, respectively)
89,473 75,004 682,859 145,664
Amortization of intangibles
917,239 675,095 1,925,712 834,268
General and administrative (including share-based compensation expense of $669,047, $1,112,834, $2,404,064 and $1,615,241, respectively, and related party expenses of $0, $106,149, $19,825 and $232,781, respectively)
4,097,397 3,062,597 9,193,101 5,608,502
Total operating expenses
5,262,149 3,887,702 12,078,468 6,720,983
Loss from operations
(2,333,177) (2,452,892) (6,458,914) (4,376,538)
Other income (expenses):
Interest expense (including related party interest expense of $0, $18,193, $0 and $30,466, respectively)
(64,491) (1,592,822) (131,906) (3,020,410)
Initial derivative expense
- - - (3,585,983)
Other income
3,713 - 14,527 -
Change in fair value of derivative liability
- 7,574,750 - 8,203,371
Gain on debt extinguishment
1,205,195 - 1,205,195 24,925
Grant income
- - - 3,382
Net recognized gain (loss) on marketable securities
- (757) - (534)
Total other income (expenses)
1,144,417 5,981,171 1,087,816 1,624,751
(Loss) income before income taxes
(1,188,760) 3,528,279 (5,371,098) (2,751,787)
Provision for income taxes
- - - -
Net (Loss) income
$(1,188,760) $3,528,279 $(5,371,098) $(2,751,787)
Net (loss) income per common share - basic
$(0.08) $0.99 $(0.36) $(0.89)
Net (loss) income per common share - diluted
$(0.08) $0.69 $(0.36) $(0.89)
Weighted average common shares - basic
14,830,738 3,560,745 14,795,691 3,091,146
Weighted average common shares - diluted
14,830,738 5,879,481 14,795,691 3,091,146

Recruiter.com Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Six Months ended June 30, 2022 and 2021
(Unaudited)

Six Months
Ended
Six Months
Ended
June 30,
2022
June 30,
2021
Cash Flows from Operating Activities
Net loss
$(5,371,098) $(2,751,787)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization expense
1,926,194 834,845
Bad debt expense
363,702 58,726
Gain on debt extinguishment
(1,205,195) (24,925)
Equity based compensation expense
2,404,064 1,615,241
Recognized loss on marketable securities
- 534
Warrant modification expense
152,244 -
Loan principal paid directly through grant
- (2,992)
Amortization of debt discount and debt costs
- 2,486,111
Initial derivative expense
- 3,585,983
Change in fair value of earn-out liability
26,604 -
Factoring discount fee and interest on factoring agreement
45,413 -
Change in fair value of derivative liability
- (8,203,371)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable
134,002 (2,032,275)
Decrease (increase) in accounts receivable - related parties
49,033 (5,602)
Decrease (increase) in prepaid expenses and other current assets
34,821 (186,329)
(Decrease) increase in accounts payable and accrued liabilities
(357,932) 1,900,033
(Decrease) increase in accounts payable - related parties
(137,741) 410,040
Increase in customer advances
426,136 -
(Decrease) increase in deferred revenue
(222,818) 425,383
Net cash used in operating activities
(1,732,571) (1,890,385)
Cash Flows from Investing Activities
Capitalized internal use software
(763,785) -
Cash and receivables acquired
- 220,153
Cash paid for acquisitions
- (249,983)
Net cash used in investing activities
(763,785) (29,830)
Cash Flows from Financing Activities
Proceeds from notes
- 250,000
Proceeds from convertible notes
- 2,153,200
Deferred offering costs
- (473,896)
Payments of notes
(1,101,400) (11,193)
Proceeds from factoring agreement
3,380,362 -
Repayments of factoring agreement
(653,008) -
Repayments of sale of future revenues
- (10,904)
Net cash provided by financing activities
1,625,954 1,907,207
Net decrease in cash
(870,402) (13,008)
Cash, beginning of period
2,584,062 99,906
Cash, end of period
$1,713,660 $86,898
Supplemental disclosures of cash flow information:
Cash paid during the period for interest
$59,622 $159,325
Cash paid during the period for income taxes
$- $-
Supplemental schedule of non-cash investing and financing activities:
Original issue discount deducted from convertible note proceeds
$- $342,554
Debt costs deducted from convertible note proceeds
$ $334,800
Intangible assets acquired
$- $7,066,165
Notes and accrued interest converted to common stock
$ $356,689
Common stock issued/to be issued for asset acquisitions
$- $4,956,948
Notes payable and accrued interest exchanged for debentures
$ $252,430
Accounts payable paid with common stock
$- $140,000
Accrued compensation paid with common stock
$- $16,425
Warrant derivative liability extinguished
$- $373,070
Liabilities assumed in acquisition
$- $89,089
Warrant derivative liability at inception
$- $5,960,059
Accounts receivable owed under factoring agreement collected directly by factor
$927,376 $-
Purchase price measurement period adjustment to goodwill and accounts receivable
$35,644 $-

The following table presents a reconciliation of net loss to Adjusted EBITDA (loss):

Three months Ended June 30,
2022 2021
Net Income (loss)
$(1,188,760) $3,528,279
Interest expense and finance cost, net
64,491 1,592,822
Depreciation & amortization
917,431 675,384
EBITDA (loss)
(206,838) 5,796,485
Bad debt expense
345,202 41,763
Gain on debt extinguishment
(1,205,195) -
Loss (gain) on change in fair value of derivative
- (7,574,750)
Stock-based compensation
669,047 960,334
Adjusted EBITDA (Loss)
$(397,784) $(776,168)
Six months Ended June 30,
2022 2021
Net loss
$(5,371,098) $(2,751,787)
Interest expense and finance cost, net
131,906 3,020,410
Depreciation & amortization
1,926,194 834,845
EBITDA (loss)
(3,312,998) 1,103,468
Bad debt expense
363,702 58,726
Gain on debt extinguishment
(1,205,195) (24,925)
Initial derivative expense
- 3,585,983
Loss (gain) on change in fair value of derivative
- (8,203,371)
Stock-based compensation
2,404,064 1,615,241
Adjusted EBITDA (Loss)
$(1,750,427) $(1,864,878)

SOURCE: Recruiter.com Group, Inc.

Topic:
Earnings
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