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
Grigorii Moiseev

in personnel and other expenses and the increase in marketing due to our decision to intensify activities towards the end of the quarter as we saw recovery in job seeker and employer activity.

I will briefly go line by line. Personnel expenses, as I think we have told you on our previous call, in the second quarter, we have put our new hirings on hold, reduced performance based and discretional bonuses, cancelled corporate events and other benefits, such as training and education. At the same time, we retained our full team and base salaries of our employee. As a result, we achieved approximately RUB60 million of cost savings in personnel expenses, which were partially offset by pressure from wages indexation effective from the first quarter of 2020, and the 31 new employees mostly hired prior to the second quarter.

In addition, our share-based expenses have decreased and our IPO-related bonus hasn't occurred in this year. And as a result, our total personnel expenses in the second quarter 2020 decreased by RUB52 million or by 8.7% compared to the second quarter of 2019. In spite of this reduction in ruble amount, as a percentage of revenue, our personnel expenses have increased to 35.2% in the second quarter 2020 or approximately 4 percentage points on the back of decrease in revenue in this quarter, specifically. Also, I think important to add is we are now gradually removing our restrictions on bonus payments and other HR expenses and allowing for limited hiring in the second half of this year.

Now moving on to marketing expenses. We have reduced our marketing expense during the toughest period of the pandemic in April. And then, as we saw a recovery in job seeker and employer activity towards the end of the quarter, we decided that this was an opportunity to gain new audience and market share, and significantly increased our marketing spend in June. As a result, our marketing expense increased by RUB13 million or by 6% on a year-on-year basis in the second quarter of 2020. And as a percentage of revenue, marketing expense increased to 15.3% or by approximately 4 percentage points. We believe that this is a temporary increase on the back of low revenue in this quarter. And subject to revenue recovery, we shall see lower marketing expense as a percentage for revenue in the second half of the year.

Our other costs have decreased by 44.6% in the second quarter of 2020, so very sizable decrease primarily due to the IPO-related professional services of RUB126 million not occurring in this year. Excluding these IPO-related expenses, other costs also decreased by approximately 8% in the second quarter 2020, which was a result of approximately RUB40 million cost savings achieved in office maintenance, delivery and travel expenses, which were partially offset by a RUB26 million increase in the D&O insurance as we no longer classify these expenses as IPO-related adjustable item. In spite of this 8% decrease in ruble amount, other costs increased