HeadHunter Group PLC (NASDAQ:HHR) Q2 2020 Earnings Conference Call - Final Transcript

Aug 27, 2020 • 09:00 am ET

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HeadHunter Group PLC (NASDAQ:HHR) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Mikhail Zhukov

around and shift to the market towards online personnel hiring.

Now let me turn the word to Dmitry to walk you through the key highlights of the second quarter.

Executive
Dmitry Sergienkov

Thank you, Mikhail, and hello, everyone. As Mikhail described, it has been a fairly difficult and volatile quarter for the whole Company. So, we started April at the point of the highest uncertainties, and all operating financial metrics were falling with clients freezing their recruitment business going out of operation, etc. So, since then, we've seen significant improvement in recruitment sentiment overall, leading to a strong upward trend across all KPIs. So that in the end of the quarter, we reached pre-pandemic levels in the vast majority of business segments. And most importantly, our revenue hit last year level, so we turned back to top-line growth from July onwards.

Eventually, we finished the quarter at high end of the guidance ranges that we provided earlier this year. Our Q2 revenue was down just 19%. Due to discretionary nature of our cost base, we were able to adjust our budgets and demonstrated a pretty sound profitability with EBITDA margin of 45%. Capex was below 2% of revenue, hence we put most of the non-essential capex initiatives on hold, including office renovation.

As to the performance by product type, please turn to Page 4. Bundled Subscriptions another time proved to be highly robust and predictable part of our revenue stream. By design, bundles are sold in longer durations, like six months and longer, and therefore continued generating strong revenue streams, defying non-working periods.

CV Database Access is sold in all durations with one and seven days durations being quite popular among small and medium businesses, and this client category was hit hardest. So CV Database Access revenue experienced a deeper contraction than Bundled.

The most under-performing product was Job Postings. As you know, many companies from all categories actually scaled back their recruitment activity during this period. Notable resilience of value-added services is explained by high share of subscription-based revenue from branding products in particular, also a spike in demand in the performance-based products like virtual recruiter that was caused by upswings in delivery on online grocery market, booming during the quarantine period.

Turning now to Q2 results by customer segment, as Pages 5 to 7. We generally saw revenue decelerating across all customer segments, except Key Accounts in the Russian region. So this client category consumes disproportionately higher share of long-term bundled subscriptions performing great over the crisis. Revenue from Key Accounts in Moscow and St. Petersburg, however, declined as COVID impact in Moscow, St. Petersburg were more severe, lockdown measures more strict. Hiring freeze led to ARPC decline and temporary churn of smaller key accounts, the majority of which have already turned back to our platform.

Small and Medium segment has been the most affected as you know, especially in traditional industries, such as HoReCa, offline service, apparel, non-food retail, resulting in overall revenue decline of 28%. As mentioned before, now,