Cheezhead Recruiting News and Opinion

It goes without saying that these are formidable times for the talent industry. As companies prune or hack at more low-hanging fruit, job boards, recruitment ad agencies, talent software companies, and search firms have been forced to cut jobs, close offices, reduce marketing spend, and rethink the way they do business.

It seems we hold our breath as each quarter passes during this interminable recession. One by one, recruiting-focused companies have tallied up their gains and losses, with each placing their own optimistic spin on the future. Is the worst behind us, or is their more hell to come?

After sitting in on dozens of Q1 earnings calls and reporting varying results, I can’t say with certainty that we’ve seen the worst, despite today’s better-then-expected BLS findings that show the pace of job loss is slowing.

For example, consider the staffing agencies and search firms. They’ve absorbed the most heavy-handed blows, and many report they see no signs that the recession is waning. Adecco said their net profit slumped 83 percent in the first quarter and revenues declined by double-digits in western Europe and the United States. In conjunction with their earnings release, Adecco submitted a statement that said they do not expect to see a reversal of loss anytime soon.

Manpower disclosed that their first-quarter net income plummeted 97% due to a deteriorating global market. Despite this staggering loss, Jeffrey Joerres, Chairman and Chief Executive Officer, said that he has seen signs of stabilization in some regions. “In the U.S. and French markets, we have experienced revenue stability over the last five weeks. The European geography, in general, has declined and continued to do so throughout the first quarter.”

Korn/Ferry reported their fee revenue came to $136.2 million, down 32.3% from the same period a year ago. Company execs disclosed an astounding 33.5% reduction in the number of executive search engagements. However they did say that cost-cutting actions (notably restructuring) are easing the extent of their losses, noting that such measures enabled them to keep $289.9 million in the bank.

After reporting a crippling 25% decrease in revenue, Kelly Services informed their investors that they will continue to close and consolidate offices in the UK in an effort to contain costs.

However, not all of these staffing firms ended up in the red. Although Spherion reported a significant decline in revenue, they’ve managed to keep their losses in check. Roy Krause, Spherion’s CEO, said, “Based upon cost reduction actions taken and with stabilizing trends, we can continue to pay down debt and are better positioned to achieve our 2% EBITDA margin goals for the remaining quarters in 2009.”

While job boards have disclosed substantial declines in revenue, their financial snapshots were not as bleak as staffing firms.

CareerBuilder posted North American revenue of $141 million for Q1. A company spokesperson said, “While the industry is trending down year over year, CareerBuilder’s decline has been significantly less than that of our competitors.”

They’re referring to Monster, whose total revenue declined 31% to $254 million, compared with $366 million in the comparable quarter of 2008. Even though Monster reported worldwide layoffs totaling 700 and a freeze on bonuses throughout 2009, their break-even quarter was better than the doom many insiders prophesied.

Dice Holdings reported a 25% decline in revenue. Despite this, Scott Melland, CEO, said that they were able to achieve solid profitability by moderating job seeker marketing and enforcing other cost-cutting measures.

If there is a bright spot to look to for signs of hope, look no further than the talent software companies.

Taleo just disclosed total revenue for the first quarter was $48.1 million, an increase of 34% on a year-over-year basis. They also reportedly signed 147 new small and medium-sized customers during Q1.

SuccessFactors’ CEO Lars Dalgaard said during their financial call that they delivered year-over-year revenue growth of 50% and were able to sustain their commitment to cash flow positive operations despite a general reduced spend on software products and services.

Stepstone Solutions reported EUR 4.6 million cash from operations, down from EUR 6.8 million from Q1 2008. Despite this loss, the company said that monthly recurring revenue has increased substantially and attributed this to a growing customer base and minimal churn in monthly subscriptions.

On a smaller scale, reps for MrTed, which offers the free applicant tracking system SmartRecruiters that debuted seven months ago, say they have added nearly 1000 small businesses to their client list

So what do all these numbers tell us? Most of the company execs reporting on losses said that the next two quarters or more will continue to be dismal. However, new reports that show the shedding of jobs is slowing coupled with the increasingly optimistic observations from experts indicate that we may have hit rock bottom and can only go up from here.

What we do know is the inevitable comeback, which will be laborious and weak, cannot be achieved without the contributions of many of the aforementioned companies. Even though they were taken down with the recession, the strongest of these will revel in the recovery.

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