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World – Hudson Global reports slightly improved operating loss in Q4

27 February 2015

Global talent solutions company Hudson Global (HSON: NSDQ) reported revenue for the fourth quarter ending 31 December 2014 of USD 136.7 million, an increase of 2.8% in constant currency compared with the same quarter last year. 

  Q4 2014 Q4 2013 Change CC
Revenue USD 136.7 million USD 140.0 million -2.4% +2.8%
Gross Profit USD 83.4 million USD 87.2 million -4.3% +6.4%
Operating Income (loss) (USD 6.1 million) (USD 6.4 million) N/A N/A

On an annual basis, Hudson Global achieved revenue of USD 581.2 million, an increase of 3.5% in constant currency from USD 562.6 million in 2013. 

  FY 2014 FY 2013 Change CC
Revenue USD 581.2 million USD 562.6 million +3.3% +3.5%
Gross Profit USD 358.3 million USD 353.1 million +1.5% +7.1%
Operating Income (loss) (USD 17.5 million) (USD 27.2 million) N/A N/A

Manolo Marquez, Chairman and CEO of Hudson Global, commented: “We delivered our fourth consecutive quarter of constant currency revenue and gross margin growth. In 2014, we realised double-digit constant currency growth in recruitment process outsourcing (RPO), talent management, and permanent recruitment. We have made meaningful progress in the company’s transformation, narrowed our focus on our core business lines with the sale of Legal eDiscovery and further strengthened our path to profitability.”

“Stephen Nolan, Hudson CFO, added: “We are encouraged by the growth we are experiencing in most of our key markets and the benefits of our cost reduction actions. With strong liquidity and a focus on core markets, we are committed to delivering positive adjusted EBITDA in 2015.”

During the fourth quarter, the company continued to implement its strategy narrowing its focus on core businesses, which resulted in the divestment of its Legal eDiscovery business. To better align the organisational model and support profitable growth in core areas, the company continued driving cost reductions in the expense base, particularly in support and real estate.

The Hudson Board of Directors has approved restructuring charges of up to USD 11.1 million to be taken by the third quarter of 2015. This includes USD 4.1 million approved in December 2014 for real estate optimisation costs, including real estate related to the company's former Legal eDiscovery business.

The geographical breakdown of Hudson’s revenue was as follows:

Millions Q4 2014 Q4 2013 Change FY 2014 FY 2013 Change
Americas USD 11.7 USD 12.3 -5.2% USD 50.1 USD 51.9 -3.3%
Asia Pacific USD 58.4 USD 55.4 +5.3% USD 246.9 USD 232.7 +6.1%
Europe USD 66.6 USD 72.2 -7.2% USD 284.2 USD 278.0 +2.2%
Total USD 136.7 USD 140.0 -2.4% USD 581.2 USD 562.6 +3.3%

In the fourth quarter, gross margin from the Americas increased by 8% compared with Q4 2013. The growth was driven by a 46% increase in RPO, but partially offset by a 19% decline in IT. The company continues to support some standard costs in the Americas following the November 2014 sale of its Legal eDiscovery business for USD 23 million. The costs were approximately USD 500,000 in Q4 2014.

Hudson Asia Pacific’s gross margin increased by 21% in constant currency between Q4 2013 and Q4 2014, marking the fourth consecutive quarter of gross margin growth when compared with the same quarter the previous year.

Permanent recruitment gross margin increased by 40%, with RPO gross margin growth of 17%, against Q4 2013. The growth stemmed primarily from China and Australia, which reported gross margin growth of 52% and 16%, respectively.

Gross margin in Europe decreased by 5% in constant currency in Q4 2013, compared with last year. Permanent recruitment and talent management in Continental Europe reported gross margin growth of 1%, driven by Belgium, but it was offset by softer results in the UK as a result of particularly strong permanent recruitment in Q4 2013.

Looking forward and given current economic conditions, Hudson Global expects first quarter 2015 revenue of between USD 115 million and USD 125 million.

In trading yesterday, the company’s share price closed down 4.5% at USD 2.77, a decrease of 22.6% compared with a year ago. Based on its current share price, the company has a market value of USD 92.9 million.