Earnings Call, Q2 2021, 8-18-21

Company Updates Q2 2021 Earnings Call

Aug 19, 2021 / by Group, Inc. (Nasdaq: RCRT, RCRTW), an on-demand recruiting platform, announced its results of operations for the second quarter ended June 30, 2021. The Company hosted a conference call on Wednesday, August 18th, at 4:30 pm EST to discuss its financial results. The full transcript and audio of the conference call follow:

Earnings Call Audio:'s full quarterly results can be found on the filings page of the investor relations website at and as filed with the SEC at


Full Transcript


Good afternoon, ladies and gentlemen, and welcome to the Second Quarter 2021 Earnings Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation.

It is now my pleasure to turn the floor over to your host, Chairman and CEO, Evan Sohn. Sir, the floor is yours.

Evan Sohn - Chairman and Chief Executive Officer,

Thank you, operator. On the call today are’s CFO, Judy Krandel; and President and COO, Miles Jennings. The company also would like to remind everyone that various remarks about future expectations, plans and prospects constitute forward-looking statements for the purposes of safe harbor provision under the Private Securities Litigation Reform Act of 1995. cautions that these forward-looking statements are subject to risks and uncertainties that may cause their actual results to differ materially from those indicated, including risks described in the company’s filings with the SEC. Any forward-looking statements made on this conference call speak only as of today’s date, Wednesday, August 18, 2021. And does not intend to update any of these forward-looking statements to reflect events or circumstances that occur after today. A replay of the conference call will also be available on’s website.

And thank you again, operator, for the introduction. And to everyone on the call today, welcome to our first quarterly earnings call as a Nasdaq listed company. It’s been a very exciting time for us. In addition to completing our uplist on June 30, we had a very successful over-subscribed uplist round led by [Gunner & Associates] [ph], raising approximately $13.8 million to fuel our overall growth moving forward.

Before we get into some of the specific details of our Q2 performance, I’d like to take a step back and provide an overview of for those that are new to our story. is at the epicenter of all that is going on in the talent acquisition market. When you think of recruiting, you might have used a headhunter to help fill a role, paying them 20% of the salary, or you may have seen as on television from or ZipRecruiter that are focused more on the Do-It-Yourself job-posting model.

When companies are hiring, they really figure out if they want to recruit on their own, if they want to have someone help them. We give them a total solution. We have the largest network of on-demand recruiters that can help companies hire. And we offer our cutting-edge recruiting software to make companies recruit talent faster.

So we provide people, recruiters on an on-demand basis. Think of it like Uber for recruiting. We currently have over 200 recruiters on assignment, ranging from large Fortune 100 companies to small businesses and everything in between. We also provide tools and technology solutions to complement our network. And these tools are used by everyone, from start-up companies to some of the largest Fortune 100 type enterprises.

During the second quarter, we continued our shift towards software and on-demand recruiting. We are reorienting the company toward a high-margin growth-oriented business. We are excited to report that our on-demand recruiting service grew 88% quarter-over-quarter in Q2, while our new software subscription delivered over $175,000 in recurring revenue.

We expect strong growth throughout the second half of 2021 and beyond, as we advance our mission of revolutionizing recruiting and talent acquisition into a rapid on-demand service. I will now turn the call over to our CFO, Judy Krandel, to go over our financial highlights in more detail. Judy?

Judy Krandel - Chief Financial Officer,

Thanks, Evan. Our revenue for the second quarter of 2021 was $4.4 million, an increase of 38% from the first quarter of 2021 and an increase of 136% from the prior year period. This increase resulted primarily from growth in our Recruiters on Demand business and the introduction of Software Subscriptions. Recruiters on Demand now represented 41% of our revenue in the second quarter, up from only 3% of our revenue in the prior year period. Software Subscriptions were 4% of our total revenue in the quarter.

Our gross profit in the second quarter was $1.4 million, or a gross margin of 32.8%. This compares to 28.7% gross margins in the first quarter of 2021 and 23.5% gross margins in the second quarter of 2020. The increase in gross margin reflects the shift in the mix in sales for the period, as our Recruiters on Demand revenue and Software Subscriptions have higher gross margins and our staffing revenue.

We had total operating expense of $3.9 million in the second quarter, up from $1.9 million in the second quarter of 2020. The increase in operating expense was primarily due to the higher general and administrative expense as well as higher amortization of intangibles expense.

Our general and administrative expense was $3.1 million in the second quarter, and it did include $1.1 million of non-cash stock-based compensation. The year-over-year increase in G&A was primarily attributable to increased compensation, supporting and related to the growth of our Recruiters on Demand business, and the addition of employees from our recent acquisitions of Scouted, Upsider, and OneWire.

Net income in the second quarter of 2021 was $3.5 million, or $0.99 per share, which did include $7.5 million in non-cash income. After adjusting for bad debt expense, the gain in fair value of derivatives and stock-based compensation, our adjusted EBITDA loss was $776,000 for the quarter. As Evan mentioned, we completed our uplist capital raise in early July, and as of August 11, our cash balance was $8.9 million.

This concludes the summary of our second quarter results. And I would now like to turn the call back over to Evan.

Evan Sohn - Chairman and Chief Executive Officer,

Thank you, Judy. Our strengthened balance sheet should easily carry us through the next 12 months as we continue to execute our growth strategy and scale operations. I couldn’t be more proud of our entire team and the tireless work they’ve put into the position as for the long-term sustained growth. Before I make my closing comments, I’d like to pass the call over to Miles Jennings to provide some more insight into our second quarter operational highlights. Miles?

Miles Jennings - Founder and President,

Thanks so much, Evan. We really had a very exciting quarter in Q2. And I also just want to thank all of the staff and everyone who helped put in all the work to make it happen. We’re now positioned at the forefront of recruiting technology with the resources to execute our growth plan. At a product level, we now have our own advanced AI technology, recruitment marketing software, job board creation software, and a network of now over 30,000 recruiters, which we announced recently.

Most importantly, we’re delivering what our clients actually want for both high growth startups and some of the largest Fortune 100 companies, we’re giving them great results and also helping them get great hires and recruit very talented staff. They’re staying with us with these clients and oftentimes expanding with us. We have a set of happy clients and a very high demand for talent in the job market. So we really believe we’re in a great place to continue our growth story.

One of the biggest challenges facing the economy right now is the shifting dynamics of the job market. It’s in the news all the time, companies are having a hard time finding talent, we’ve all seen this. Incredibly tight job market in highly skilled labor, a shift from in-person to remote work opening up the work from anywhere theme, the lack of hourly workers is especially in the news. Those hourly workers seeking to re-enter the job market and the increased voluntary employment churn resulting in the potential for a great resignation of employees.

We’re addressing these challenges head on with our On Demand recruiting solution, which we believe re-invents the way recruiting is done, empowering companies large and small to extend their in-house hiring teams with experienced freelance Recruiters on Demand along with AI-driven candidate search and engagement software tools.

As Evan mentioned, our On Demand revenue line was very strong, growing 88% this quarter, so we’re really starting to see the start of a very clear product market fit. A major operational highlight for us, of course, this in the second quarter was our June 30th listing on Nasdaq. This was a big milestone for the company, which opens up quite a few new opportunities for us moving forward. We want to take this time to thank our investors, all stakeholders, our bankers, and the rest of our team, including the lawyers for our successful listing process.

Another key highlight for the quarter was our acquisition of OneWire, a leading SaaS-based financial services recruiting and sourcing platform. This acquisition included the OneWire SaaS platform as well as the candidate matching service called Matchbook. The acquisition of OneWire brings hundreds of thousands of highly skilled financial services and banking professionals into’s growing database of candidates and portfolio of proprietary recruiting tech.

Following this acquisition, we began to integrate our people and assets to create a unified subscription-based hiring solution, allowing employers to source financial services candidates on their own or tap into our network of On Demand recruiting professionals for hiring help.

We also formed a partnership with WeWork this quarter in April, to bring On Demand hiring services to the WeWork startup ecosystem. With just under half of WeWork’s member population being small to medium sized businesses and startups,’s new flex membership program has the unique opportunity to help WeWork’s community hire high caliber AI match and video screen talent, all done at their own pace On Demand. As noted by both Evan and Judy, our oversubscribed offering completed in conjunction with our uplist to Nasdaq actually closed in July, so it’s not reflected in our quarterly results as you review our 10-Q.

The upsized offering of 2.4 million units, each included one share of common stock in one warrant, at a price of the public of $5 per unit, it raised gross proceeds of $12 million before deducting underwriting discounts and other expenses. We also closed the sale of an additional 360,000 shares of common stock in July, pursuant to the exercise of our underwriter’s over-allotment option, raising additional gross proceeds of about $1.8 million. And so with the primary offering in total, we raised gross proceeds of about $13.8 million.

Also after the quarter-end, we acquired the technology division of Uncubed and Finalist, which gives us proprietary job board creation technology. This will really help us scale our marketplace and allow us to rapidly enter new sectors in the future. The purchase also included MediaBistro, which is a leading high traffic website and community for media, content and creative professionals. Chris Johnson, their very talented CEO joined our executive team and will now lead our Marketplace division. With these 2 acquisitions, we now have strong sector experience, in particular in media and financial services.

Another important highlight on the personnel side since quarter end was the appointment of Xuan Smith as Chief Technology Officer. Xuan as a Stanford University grad, he has over a decade of technology leadership roles at startups as well as very top-tier consulting firms. As recruiting and hiring shift toward leveraging artificial intelligence and big data, Xuan’s going to be a big asset in helping position itself to meet this tremendous market opportunity.

Along with Xuan’s appointment, our former CTO and my original Co-Founder, Ashley Saddul, was appointed to the position of Chief Web Officer, and he is going to focus on really making an impact in growing our web presence.

Now, I’ll pass the call back to Evan, for some final closing comments.

Evan Sohn - Chairman and Chief Executive Officer,

Thank you, Miles. We are confident and steadfast in our ability to rapidly scale our business and continue to recruit talent faster.

I want to thank our shareholders for their continued support and thank everyone on the call today for their time and interest in We would like to now open up the call for questions and I ask the operator to see if there are any questions from the attendees.


Absolutely. Thank you. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] Okay, we have no questions in queue. [Operator Instructions] Okay, we have a question coming from Walter Schenker from MAZ. Walter, your line is live.

Q: Yes. But it’s a comment first, which is as a matter of practice, I believe it’s inappropriate to wait 2 days after you report to do a conference call. There may have been special circumstances, but I think in the future would be much appreciated by shareholders, myself included, if you have a conference call on the day you report, or if you report after the close early the morning thereafter, instead of waiting 2 days to hear you discuss what happened in the quarter.

Evan Sohn - Chairman and Chief Executive Officer,

Thanks. Thank you, Walter. We will certainly take that under advisement. There were some scheduling conflicts in terms of getting a call scheduled. And we also felt that as our first phone call as a Nasdaq-listed company, we didn’t want to be bundled together with all the other companies that were filing on Monday. So we filed on Monday and scheduled the call for Wednesday, but certainly we’ll take your comments under consideration going forward. So thanks and I appreciate your continued support, both under – either comments as well as your investment.

Q: And just now it’s actually, that was a comment. Now it’s a question. At what broad level, I’m not asking you when you’re going to get there, but as you look at your business, what level of revenues is required to get to cash flow breakeven?

Evan Sohn - Chairman and Chief Executive Officer,

It’s an excellent question. And let’s take a step back just for a second. The answer is around $3 million of monthly revenue, that gets us around there. If you look at our numbers now, we’re certainly vectoring towards that direction. At the beginning of the year, Walter, we really set out with a couple of objectives, one was to uplist in Nasdaq with a successful uplist round and having a positive, a pretty substantial positive treasure chest in our bank account.

So I’m glad we accomplished those 2 first things. The third was to really have a scalable revenue model that lets us grow with more aggressive operating margins, as well as a model that delivers faster to the bottom line. And as Miles and Judy both reported, our growth of our on-demand business, both in terms of on-demand people and on-demand tools is really driving those incremental gross margins at a much faster rate than we even as had expected at the beginning of the year.

And finally, we really want to be cashflow positive on a cash-in/cash-out basis before the end of the year. And we’re certainly focused on that. We have a very trim operation. And again, we’re really focused a lot on delivering incremental revenue at a lower operating expense model. So we’re certainly moving in that direction.

The good news, Walter, is if you look at the results, we’re burning less money month over month, quarter over quarter. And it’s not just because we reduced our operating expenses, but really increased our revenues and increased our overall margins, without affecting lots of operating expenses

We do have the burden of being a public company. And a company of our size, that is a substantial burden. We want to make sure we could deliver quality reports on a regular basis. So we have added to our financial team to really make sure we can stay in compliance. We’re also using proceeds from our round to increase our overall sales team and marketing team, and then making some additional investments. But, yeah, we’re still tracking to be close towards cashflow positive before the end of the year. So, Walter, I hope that answers your questions.

And again, thank you so much. You are our first question as a Nasdaq public company. So thank you, Walter.

Q: You’re welcome.

Okay. [Operator Instructions] Okay, we have no remaining questions in queue. I’d like to turn the floor back to CEO, Evan Sohn, and team, for closing remarks.

Evan Sohn - Chairman and Chief Executive Officer,

Thank you very much, operator. And really, I want to thank everyone for joining us on our first quarterly conference call as a Nasdaq company. As Miles indicated in the call, we really are at the epicenter of the overall job market, whether it’s talking about the job market on various media, as you might have seen me in various places. We are really serving as a guide to helping our clients, both large and small, as they address the challenges that’s facing just about every company, which is how to be [source routine] [ph] and hire talent faster.

We’re in this unprecedented world as we are still struggling with the overall pandemic. But not a day goes by where you don’t hear about the jobs and candidates of jobs. And we are really helping companies address this need by allowing them to both either recruit like an expert, leveraging our on-demand recruiters or leveraging our tools as well. And we really appreciate you joining us on our call today and we look forward to sharing with you on our continued success in the months, quarters and years to come.

So thank you very much, everyone. And I’ll turn it back to the operator to close the call out.


Thank you, ladies and gentlemen. This does conclude today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

For general informational purposes only. This announcement shall not constitute an offer to sell securities.

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 "forecasts" "believe," "may," "estimate," "continue," "anticipate," "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, 2020. 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 publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law.

Tags: Company News

Written by Miles Jennings

CEO of