Daily News
View All NewsOn Assignment Q1 revenue beats forecast
On Assignment Inc. (NYSE: ASGN) reported first-quarter revenue rose to $582.0 million, beating the top end of its forecast of $555.0 million and marking the fourth consecutive quarter of accelerating revenue growth.
Revenue rose 35.3% year over year in the first quarter. However, revenue rose 17.7% on a pro forma basis, which treats the acquisitions of marketing/creative staffing firm Creative Circle and a small life sciences business in Europe — both acquired in the second quarter of 2015 — as if they had occurred at the beginning of 2015.
Excluding the contribution from the acquisitions, revenue rose 16.9% year-over-year to $502.7 million.
In constant currency, first-quarter revenue rose 17.8% on a pro forma basis.
The Calabasas, Calif.-based company ranks as the 11th-largest US staffing firm. Top segments served include IT and life sciences.
Creative Circle’s results are included in On Assignment’s Apex segment, where revenue rose 46.4% to $433.1 million. On a pro forma basis, Apex revenue rose 20.8%. Creative Circle added $76.3 million in revenue to the first quarter and the life sciences business added $3.0 million in revenue for the first quarter.
| (US$ thousands) | Q1 2016 | Q1 2015 | % change |
| Revenue | $582,040 | $430,045 | 35.3% |
| Gross profit | $187,782 | $135,875 | 38.2% |
| Gross margin | 32.3% | 31.6% | |
| Net income | $17,401 | $39,135 | -55.5% |
Quote
“We continue to see signs that the ongoing debate regarding the ‘on demand’ workforce or ‘gig-economy’ is accelerating the usage of contract labor,” President and CEO Peter Dameris said in a conference call with analysts. “‘Fractionalization of human capital’ by using the staffing industry’s services is the only way to avoid the risk of misclassification of employees as independent contractors. Our customers have and are realizing this and that is why we believe the secular growth opportunities for the entire professional staffing industry are so attractive. We also believe that we are well positioned to service our customers IT needs as technology rapidly evolves and is adopted.”
Dameris continued: “While we are sensitive to and conscious of the fears of an economic slowdown in the US, to date, we have not seen a significant change in our customers’ normal purchasing behavior for our contract assignment services. We continue to see solid demand from the end markets we serve and continue to benefit from the improved productivity of the additional headcount that we added during our hiring surge in the second half of 2014 and 2015. Those productivity levels are in-line with our expectations.”
Revenue by segment
| (US$ thousands) | Q1 2016 | Q1 2015 | % change |
| Apex | $433,155 | $295,971 | 46.4% |
| Oxford | $148,885 | $134,074 | 11.0% |
Permanent placement revenue
| (US$ thousands) | Q1 2016 | Q1 2015 | % change |
| Apex | $11,041 | $4,298 | 156.9% |
| Oxford | $21,447 | $19,606 | 9.4% |
| Consolidated | $32,488 | $23,904 | 35.9% |
Gross margin by segment
| Q1 2016 | Q1 2015 | |
| Apex | 29.1% | 27.1% |
| Oxford | 41.4% | 41.6% |
Average bill rates
| Q1 2016 | Q1 2015 | |
| Apex | $55.74 | $54.07 |
| Oxford | $101.77 | $103.90 |
| Consolidated | $62.04 | $62.06 |
Guidance
On Assignment estimates second-quarter revenue of between of $592.0 million to $602.0 million.
Share price and market cap
Shares in On Assignment rose 11.84% in early afternoon trading today to $38.27. The company had a market cap of $2.04 billion, according to Yahoo!