Monster Worldwide Inc.
) broke even (including stock based compensation but excluding
one-time items) in the second quarter of 2014, missing the Zacks
Consensus Estimate by 3 cents, primarily due to a year-over-year
decline in revenues. Shares of Monster Worldwide were down 2.17%
(12 cents) following the earnings release.
Revenues declined 2.8% year over year to $194.4 million in the
second quarter and missed the Zacks Consensus Estimate of $199.0
million as well. On a year-over-year basis, results were impacted
by declines in revenues at Monster Careers (down 1.8% year over
year to $178.6 million) and Internet Advertising & Fees (down
13% year over year to $15.9 million).
Revenues in the Careers North America segment were $110.3 million,
up 0.5% year over year. Revenues in the International Careers
segment were $68.3 million, down 5.3% on a year-over-year basis.
Careers Total segment revenue was $178.6 million, down 1.8% from
the year-ago quarter while IAF segment revenue was $15.9 million in
the reported quarter, down 13% on a year-over-year basis.
From a geographical perspective, revenues from Europe were down 5%
year over year. APAC revenues were down 6% on a year-over-year
basis, primarily due to a tough macroeconomic environment in India.
Korea continues to hold its own in a macroeconomic environment that
has shown slight improvement.
Currently, Monster provides access to resumes of over 150 million
candidates with an additional 200 million yet to be commercialized.
Mobile accounted for 35% of the total traffic in the reported
Engagement on the market-leading résumé search platform was up
significantly with user messaging growing every week by over 25%.
In Jul 2014, the company had commercially launched three new
and exciting products in North America including TalentBin by
Monster, Monster Twitter Cards and Talent CRM. All of the products
received rave reviews from the market, which is a major positive
for the company.
Operating expenses increased 3.4% from the year-ago quarter to
$189.7 million. While salaries & related increased (up 15.4%
year over year), the other components of operating expenses
decreased. Office & general expenses (down 3.1% year over year)
and marketing and promotion expenses (down 13.9% year over year)
lowered overall operating expenses.
Monster reported operating income of $4.7 million versus operating
income of $16.5 million reported in the year-ago quarter. Operating
margin contracted 580 basis points (bps) to 2.8% from 8.2% in the
year-ago quarter due to lower revenue base.
Net income from continuing operations (including stock based
compensation but excluding all one-time items) was $34.0 million or
breakeven compared to $11.8 million or 10 cents per share reported
in the year-ago quarter.
Monster Worldwide, Inc - Earnings Surprise |
Balance Sheet & Cash Flow
Monster had $18.9 million in cash from operating activities in
comparison to cash outflow of $8.6 million in the prior quarter.
Free cash flow was $8.2 million. Deferred revenue was $341.9
million, which remained flat sequentially.
Monster Worldwide repurchased 2 million shares of common stock in
the reported quarter. The company has repurchased approximately 25%
of outstanding shares over the last twelve months.
Monster expects the bottom like to range from breakeven to earnings
of 4 cents per share in the third quarter. The Zacks Consensus
Estimate is pegged at 6 cents per share, which is above the higher
end of management's guidance.
The company expects to generate operating cash flow between $15.0
million and $25.0 million on a quarterly basis going forward.
Management expects to generate between $75 million to $95 million
of cash flow from operations in 2014.
The partnership with H&Q is believed to aid the company in
extending its footprint in South Korea. Additionally, Monster's
core business is showing signs of improvement and exhibiting robust
potential for cash flow generation. Additionally, the company's
corporate restructuring initiative is expected to boost margins,
Additionally, we believe that the new strategy of realigning the
business along the three pillars will drive growth and
profitability in the long term.
Mobile has been the primary area of focus for Monster for some time
and the fact that the penetration of smartphones is increasing
should be considered a major positive going forward.
However, the company continues to face significant competition from
professional and social networking websites such as Facebook (
) and LinkedIn (
) as well as from traditional advertising companies such as Omnicom
Currently, Monster has a Zacks Rank #3 (Hold).
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