Monster Beats On Earnings
Monster Worldwide, Inc. (MWW), parent company of Monster.com, reported revenues of $215 million in the second quarter of 2010, down 4% year over year but essentially flat on a sequential basis.
The decline is the lowest percentage decrease since the third quarter of 2008. The results came within management’s guidance range of $210 million – $220 million but fell short of the Zacks Consensus Estimate of $216 million.
Net loss came in at $3 million or 2 cents per share, compared to a loss of $1.4 million or one cent per share in the year-earlier quarter. Excluding special items, Monster posted breakeven earnings, better than the Zacks Consensus Estimate of a loss of 5 cents.
Management saw solid improvement across all key geographic regions and all sales channels. Bookings growth of 19% was better than anticipated as a result of the improved global economy. The majority of the increase in bookings was driven by a 57% increase in Asia. Bookings in Europe and Asia grew 20% and 16%, respectively.
Monster is also the largest advertising agency network for worldwide recruitment, and provides direct marketing services. Management indicated that the strong bookings trends suggest positive sentiment among global customers regarding business investments and plans to expand their personnel strength in the coming quarters.
Approximately 43% of total revenues were generated through international operations. Total revenues were negatively impacted by approximately $0.8 million from unfavorable movements in foreign exchange rates.
Total Careers revenues came in at $184 million, down 3% year over year but flat sequentially. Careers – North America generated revenues of $97 million, down 5% year over year but flat sequentially. Careers – International revenues decreased 2% year over year but increased 1% sequentially to $87 million. Excluding currency impacts, international segment revenues were essentially flat on a sequential basis and were negatively impacted by the slow recovery in Germany and the Netherlands.
Revenues from Internet Advertising & Fees of $31 million declined 6.0% both on a year over year and sequential basis.
Margins
Operating expense of $213 million was down 11% sequentially and down 1% on a year-over-year basis. Monster reduced its headcount by 453 million in the quarter bringing the total to 5,546. Salary and related expenses were down 6% year over year due to a reduction in employee benefit expenses during the quarter. Marketing expense was down 21% sequentially.
During the quarter, Monster generated $6.7 million of cash from operations significantly down from $36.2 million in the previous quarter. Capital expenditures were $11.9 million, up from $9 million in the previous quarter. Monster ended the quarter with cash and equivalents of $297.0 million, down from $291.1 million, at the end of the previous quarter.
Guidance
Going forward, Monster reiterated that bookings will grow between 15% and 20% to $930 – $970 million in 2010. Bookings have been negatively impacted by currency movements but are getting offset by increased customer demand. Revenues are projected at $890 – $925 million for 2010. Loss per share is forecasted between 12 cents and 20 cents.
For the third quarter, Monster expects bookings between $215 million and $210 million, up 16% -21% year over year. Revenues are projected between $218 million and $228 million, up 1% – 6% year over year. This will be the first increase in revenues since the third quarter of 2008. Earnings per share are forecasted in the range of a loss of 2 cents to a profit of 2 cents.
Monster earlier announced that it has entered into a definitive agreement with Yahoo! (NASDAQ:YHOO) for acquiring the assets of Yahoo! HotJobs, a leading online recruitment website. The HotJobs acquisition, which is expected to close in the third quarter, will add 6 to 12 cents to the bottom line by 2011.
The economic downturn had adversely impacted business in the last two years. We remain encouraged by management’s efforts to revamp business by constantly introducing innovative products along with cost-reductions. Monster eliminated over $200 million of operating costs over the last three years.
Management continues to see signs of encouragement for its business in 2010. While the impact of these positive developments will not be felt in 2010, we expect the company should return to profitability in 2011.
The results did not have much impact on the share price. Shares of Monster were up 0.20% in after-hours trading to close at $13.36. In regular trading, the stock gained 4.63% to close at $4.74.
