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View All NewsHeidrick net revenue up 3.8% in constant currency; exec search revenue rises 8.3%
Fourth-quarter net revenue rose 3.8% in constant currency at Heidrick & Struggles International Inc. (NASD: HSII), driven by strong year-over-year growth in executive search. Net revenue exceeded the high end of the company’s guidance of $160 million at the Chicago-based executive search, leadership consulting and culture-shaping firm.
The company reported an operating loss of $18.8 million in the fourth quarter, which included a non-cash impairment charge of $11.6 million related to its leadership consulting business and restructuring charges of $15.7 million for a previously announced restructuring to reduce overall costs and improve efficiency; the charges consist of employee-related costs associated with a global workforce reduction of approximately 14%, professional services fees, and expenses associated with consolidating or closing three of its offices — one in each region.
Heidrick’s general counsel and chief administrative officer stepped down in January.
| (US$ thousands) | Q4 2017 | Q4 2016 | % change | % change constant currency |
| Net revenue | $169,380 | $159,821 | 6.0% | 3.8% |
| Reimbursements | $4,916 | $4,743 | 3.6% | |
| Total revenue | $174,296 | $164,564 | 5.9% | |
| Net loss/income | ($39,208) | $493 | nm |
Quote
“Our record net revenue in 2017 was driven by the growth of Executive Search in all three regions and by Leadership Consulting,” said Krishnan Rajagopalan, president and CEO. “We also made significant strides in lowering the run rate of our general and administrative and business support expenses. These actions allow us to shift the focus of our capital to investments that support the growth of our businesses, including technology, while helping the firm achieve improved operating margins on a more sustained basis.”
Net revenue by segment and geography
| Q4 2017 | Q4 2016 | % change | % change constant currency | |
| Executive search | ||||
| Americas | $91,351 | $82,805 | 10.3% | |
| Europe | $34,812 | $29,972 | 16.1% | 7.8% |
| Asia Pacific | $22,743 | $21,892 | 3.9% | 2.5% |
| Total executive search | $148,906 | $134,669 | 10.6% | 8.3% |
| Leadership consulting | $11,257 | $15,603 | -27.9% | |
| Culture shaping | $9,217 | $9,549 | -3.5% |
Full-year results
| (US$ thousands) | 2017 | 2016 | % growth |
| Net revenue | $621,400 | $582,390 | 6.7% |
| Reimbursements | $18,656 | $18,516 | 0.8% |
| Total revenue | $640,056 | $600,906 | 6.5% |
| Net loss/income | -$48,635 | $15,413 | nm |
Guidance
Heidrick forecasts consolidated first-quarter net revenue of between $150 million and $160 million, which represents a year-over-year increase of 7.1% to 14.3%.
Share price and market cap
Shares in Heidrick rose 1.77% to $25.90 as of 11:07 a.m. Eastern time today. The company had a market cap of $486.55 million.