Quarterly Revenue Increased 11% y/y to $7M
NEW YORK, NY / ACCESSWIRE / November 14, 2022 / Recruiter.com Group, Inc. (NASDAQ:RCRT)(NASDAQ:RCRTW) ("Recruiter.com"), an on-demand recruiting platform, today announced financial results for the third quarter of 2022, ended September 30, 2022.
"In the third quarter, Recruiter.com delivered solid revenue growth versus the prior-year quarter," said Evan Sohn, CEO of Recruiter.com. "During the quarter, we focused on improving operating efficiencies within our management, sales, and delivery functions. With our recently announced growth strategy being implemented, we are now focused on our segments with the strongest operating margins and client demand. The cost reductions are aimed to accelerate profitability and concentrate efforts on our strongest growth drivers."
"Revenues dipped slightly (2%) from the previous quarter due to a more volatile business climate. We remain steadfast on achieving profitability and are pleased with the improvement in net loss and reduction in operating expenses. This quarter is challenging, but we are focused on managing accordingly and continuing to explore strategic opportunities. We remain confident that our on-demand, flexible business model is well suited to the current environment."
Third Quarter 2022 Financial Highlights (Full Results in Tables Below)
- Revenue for the third quarter totaled $7.0 million, an 11% increase compared to revenue of $6.3 million in the third quarter of 2021, due primarily to an increase in the Recruiters on Demand business.
- Gross profit for the third quarter was $2.2 million, a 4.9% decrease compared to gross profit of $2.3 million in the third quarter of 2021, due primarily to the Company's continuing shift away from Permanent Placement.
- Total operating expenses for the third quarter were $7.6 million, a 14% decrease compared to operating expenses of $8.9 million in the third quarter of 2021, due primarily to the ongoing efficiencies gained from the integration of staff and asset acquisitions.
- Net loss for the third quarter was $5.6 million, a 26% improvement compared to a net loss of $7.6 million in the third quarter of 2021. The net loss in the third quarter of 2022 included non-cash amortization expense of $952 thousand, impairment expense of $2.129 million, and equity-based compensation expense of $766 thousand.
Conference Call Details
Date: Monday, November 14th, 2022
Time: 4:30 pm ET / / 1:30 pm PT
Register at: https://www.webcaster4.com/Webcast/Page/2765/47094
To access the conference by phone:
U.S. Dial-in: (800) 285-6670
International Dial-in: (713) 481-1320
Participant Access Code: Recruiter.com
About Recruiter.com Group, Inc.
Recruiter.com is an on-demand recruiting platform providing flexible talent acquisition solutions that scale from startups to the Fortune 100. With an on-tap network of thousands of recruiting professionals, advanced artificial intelligence sourcing software, and recruitment marketing automation, Recruiter.com helps businesses solve today's complex hiring challenges.
For investor information, visit https://investors.recruiter.com
Please follow social media channels for additional updates:
- LinkedIn Recruiter Network Group: https://www.linkedin.com/groups/42370/
- LinkedIn Company Page: https://www.linkedin.com/company/1240434
- Twitter Company Page: https://twitter.com/recruiterdotcom
- Facebook Company Page: https://www.facebook.com/RecruiterDotCom
Cautionary Note Regarding Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "predict," "forecast," "believe," "may," "estimate," "continue," "anticipates," "intend," "should," "plan," "could," "target," "potential," "is likely," "will," "expect" and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements primarily on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. Important factors that could cause actual results to differ from those in the forward-looking statements include continued demand for professional hiring, the accuracy of the Recruiter Index® survey, the impact of the COVID-19 pandemic on the job market and the economy as virus levels are again rising in many states, and the Risk Factors contained within our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2021. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update any forward-looking statements publicly, whether as a result of new information, future developments, or otherwise, except as may be required by law.
Company Contact:
Corporate Communications
investors@recruiter.com
-Tables Follow-
Recruiter.com Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash |
$ | 8,542 | $ | 2,584,062 | ||||
Accounts receivable, net of allowance for doubtful accounts of $1,300,172 and $934,219, respectively |
4,524,970 | 5,650,668 | ||||||
Accounts receivable - related parties |
- | 49,033 | ||||||
Prepaid expenses and other current assets |
403,256 | 546,079 | ||||||
Total current assets |
4,936,768 | 8,829,842 | ||||||
Property and equipment, net of accumulated depreciation of $4,085 and $2,982, respectively |
69,433 | 481 | ||||||
Intangible assets, net |
6,642,453 | 9,741,832 | ||||||
Goodwill |
7,101,084 | 7,718,842 | ||||||
Total assets |
$ | 18,749,738 | $ | 26,290,997 | ||||
Liabilities and Stockholders' Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 1,577,373 | $ | 1,121,510 | ||||
Accounts payable - related parties |
- | 163,672 | ||||||
Accrued expenses |
1,326,381 | 1,285,339 | ||||||
Accrued compensation |
889,328 | 1,551,162 | ||||||
Accrued interest |
38,249 | 19,726 | ||||||
Contingent consideration for acquisitions |
- | 578,591 | ||||||
Deferred payroll taxes |
81,728 | 81,728 | ||||||
Other liabilities |
17,333 | 17,333 | ||||||
Loans payable - current portion, net |
4,300,891 | 1,712,387 | ||||||
Refundable deposit on preferred stock purchase |
285,000 | 285,000 | ||||||
Deferred revenue |
520,241 | 746,449 | ||||||
Total current liabilities |
9,036,524 | 7,562,897 | ||||||
Loans payable - long term portion |
226,740 | 2,637,875 | ||||||
Total liabilities |
9,263,264 | 10,200,772 | ||||||
Commitments and contingencies (Note 11) |
||||||||
Stockholders' Equity: |
||||||||
Preferred stock, Series E, $0.0001 par value; 775,000 shares designated; 86,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021 |
9 | 9 | ||||||
Common stock, $0.0001 par value; 100,000,000 shares authorized; 14,851,146 and 14,566,420 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively |
1,486 | 1,457 | ||||||
Shares to be issued, 587,945 shares as of September 30, 2022 and December 31, 2021 |
59 | 59 | ||||||
Additional paid-in capital |
72,000,289 | 66,948,340 | ||||||
Accumulated deficit |
(62,515,369 | ) | (50,859,640 | ) | ||||
Total Stockholders' Equity |
9,486,474 | 16,090,225 | ||||||
Total Liabilities and Stockholders' Equity |
$ | 18,749,738 | $ | 26,290,997 | ||||
The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements.
Recruiter.com Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three and Nine Months ended September 30, 2022 and 2021
(Unaudited)
| Three | Three | Nine | Nine | |||||||||||||
| Months Ended | Months Ended | Months Ended | Months Ended | |||||||||||||
| September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||
Revenue (including related party revenue of $0, $0, $0 and $970, respectively) |
$ | 6,967,642 | $ | 6,257,882 | $ | 20,948,745 | $ | 13,803,321 | ||||||||
Cost of revenue (including related party costs of $0, $212,279, $0 and $417,540, respectively) |
4,776,192 | 3,953,660 | 13,137,741 | 9,154,654 | ||||||||||||
Gross Profit |
2,191,450 | 2,304,222 | 7,811,004 | 4,648,667 | ||||||||||||
Operating expenses: |
||||||||||||||||
Sales and marketing |
342,622 | 138,442 | 619,418 | 270,991 | ||||||||||||
Product development (including related party expense of $8,636, $38,473, $25,407 and $151,157, respectively) |
467,605 | 465,141 | 1,150,464 | 610,805 | ||||||||||||
Amortization of intangibles |
952,170 | 842,934 | 2,877,882 | 1,677,202 | ||||||||||||
Impairment expense |
2,129,101 | 2,530,325 | 2,129,101 | 2,530,325 | ||||||||||||
General and administrative (including share-based compensation expense of $765,743, $1,928,646, $3,415,670 and $3,543,887, respectively, and related party expenses of $0, $25,121, $19,825 and $112,149, respectively) |
3,717,357 | 4,882,762 | 12,910,457 | 10,491,264 | ||||||||||||
Total operating expenses |
7,608,854 | 8,859,604 | 19,687,322 | 15,580,587 | ||||||||||||
Loss from Operations |
(5,417,404 | ) | (6,555,382 | ) | (11,876,318 | ) | (10,931,920 | ) | ||||||||
Other income (expenses): |
||||||||||||||||
Interest expense (including related party interest expense of $0, $0, $0 and $30,466, respectively) |
(208,351 | ) | (167,728 | ) | (340,257 | ) | (3,188,138 | ) | ||||||||
Initial derivative expense |
- | - | - | (3,585,983 | ) | |||||||||||
Change in fair value of derivative liability |
- | (887,791 | ) | - | 7,315,580 | |||||||||||
Gain on debt extinguishment |
- | - | 1,205,195 | 24,925 | ||||||||||||
Grant income |
- | - | - | 3,382 | ||||||||||||
Net recognized loss on marketable securities |
- | (890 | ) | - | (1,424 | ) | ||||||||||
Other expense |
(610 | ) | (38,285 | ) | 13,917 | (38,285 | ) | |||||||||
Total other income (expenses) |
(208,961 | ) | (1,094,694 | ) | 878,855 | 530,057 | ||||||||||
Loss before income taxes |
(5,626,365 | ) | (7,650,076 | ) | (10,997,463 | ) | (10,401,863 | ) | ||||||||
Provision for income taxes |
- | - | - | - | ||||||||||||
Net Loss |
$ | (5,626,365 | ) | $ | (7,650,076 | ) | $ | (10,997,463 | ) | $ | (10,401,863 | ) | ||||
Deemed dividends |
(658,266 | ) | - | (658,266 | ) | - | ||||||||||
Net loss attributable to common shareholders |
$ | (6,284,631 | ) | $ | (7,650,076 | ) | $ | (11,655,729 | ) | $ | (10,401,863 | ) | ||||
Net loss per common share - basic and diluted |
$ | (0.38 | ) | $ | (0.56 | ) | $ | (0.74 | ) | $ | (1.57 | ) | ||||
Weighted average common shares -basic and diluted |
14,851,146 | 13,592,644 | 14,814,379 | 6,624,388 | ||||||||||||
The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements.
Recruiter.com Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Nine Months ended September 30, 2022 and 2021
(Unaudited)
| Nine Months Ended | Nine Months Ended | |||||||
| September 30, | September 30, | |||||||
| 2022 | 2021 | |||||||
Cash Flows From Operating Activities |
||||||||
Net loss |
$ | (10,997,463 | ) | $ | (10,401,863 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation and amortization expense |
2,881,967 | 1,678,067 | ||||||
Bad debt expense |
479,065 | 79,305 | ||||||
Gain on debt extinguishment |
(1,205,195 | ) | (24,925 | ) | ||||
Equity based compensation expense |
3,415,670 | 3,543,887 | ||||||
Warrant modification expense |
152,244 | 12,624 | ||||||
Recognized loss on marketable securities |
- | 1,424 | ||||||
Loan principal paid directly through grant |
- | (2,992 | ) | |||||
Amortization of debt discount and debt costs |
135,161 | 2,503,160 | ||||||
Impairment expense |
2,129,101 | 2,530,325 | ||||||
Initial derivative expense |
- | 3,585,983 | ||||||
Change in fair value of derivative liability |
- | (7,315,580 | ) | |||||
Factoring discount fee and interest |
150,117 | - | ||||||
Change in fair value of earn-out liability |
26,604 | 102,116 | ||||||
Changes in assets and liabilities: |
||||||||
Increase in accounts receivable |
(1,273,012 | ) | (3,517,385 | ) | ||||
Decrease in accounts receivable - related parties |
49,033 | 15,043 | ||||||
Increase in prepaid expenses and other current assets |
(64,221 | ) | (53,823 | ) | ||||
Increase in accounts payable and accrued liabilities |
(146,406 | ) | 642,427 | |||||
Decrease in accounts payable and accrued liabilities - related parties |
(163,672 | ) | (687,460 | ) | ||||
Deferred payroll taxes |
- | (135,699 | ) | |||||
Increase in other liabilities |
- | 2,840 | ||||||
(Decrease) increase in deferred revenue |
(226,208 | ) | 456,824 | |||||
Net cash used in operating activities |
(4,657,214 | ) | (6,985,702 | ) | ||||
Cash Flows From Investing Activities: |
||||||||
Cash and receivables acquired |
- | 230,855 | ||||||
Capitalized software development costs |
(1,325,491 | ) | - | |||||
Cash paid for acquisitions; net of cash acquired |
- | (2,304,528 | ) | |||||
Purchase of property and equipment |
(73,037 | ) | - | |||||
Net cash used in investing activities |
(1,398,528 | ) | (2,073,673 | ) | ||||
Cash Flows From Financing Activities: |
||||||||
Proceeds from notes |
2,135,000 | 250,000 | ||||||
Proceeds from convertible notes |
- | 2,153,200 | ||||||
Deferred offering costs |
- | (78,038 | ) | |||||
Payments of loans |
(1,323,773 | ) | (156,131 | ) | ||||
Repayments of sale of future revenues |
- | (10,904 | ) | |||||
Proceeds from factoring agreement |
5,613,871 | - | ||||||
Repayments of factoring agreement |
(2,944,876 | ) | - | |||||
Offering Costs |
- | (1,651,889 | ) | |||||
Proceeds from sale of common stock and warrants |
- | 13,800,000 | ||||||
Net cash provided by financing activities |
3,480,222 | 14,306,238 | ||||||
Net increase (decrease) in cash |
(2,575,520 | ) | 5,246,863 | |||||
Cash, beginning of period |
2,584,062 | 99,906 | ||||||
Cash, end of period |
$ | 8,542 | $ | 5,346,769 | ||||
Supplemental disclosures of cash flow information: |
||||||||
Cash paid during the period for interest |
$ | 208,351 | $ | 175,580 | ||||
Cash paid during the period for income taxes |
$ | - | $ | - | ||||
Supplemental schedule of non-cash investing and financing activities: |
||||||||
Accounts receivable owed under factoring agreement collected directly by factor |
$ | 1,955,289 | $ | - | ||||
Purchase price measurement period adjustment to goodwill and accounts receivable |
$ | 35,644 | $ | - | ||||
Original issue discount deducted from convertible note proceeds |
$ | - | $ | 342,554 | ||||
Debt discount on warrants granted with notes |
$ | 1,032,842 | $ | - | ||||
Debt costs deducted from convertible note proceeds |
$ | - | $ | 334,800 | ||||
Loans issued as consideration for acquisitions |
$ | - | $ | 4,750,000 | ||||
Notes and accrued interest converted to common stock |
$ | - | $ | 4,647,794 | ||||
Common stock issued/to be issued for asset acquisitions |
$ | - | $ | 8,241,082 | ||||
Notes payable and accrued interest exchanged for debentures |
$ | - | $ | 252,430 | ||||
Accounts payable paid with common stock |
$ | - | $ | 140,000 | ||||
Accrued compensation paid with common stock |
$ | - | $ | 16,425 | ||||
Warrant derivative liability extinguished |
$ | - | $ | 10,182,476 | ||||
Write off of right-of-use asset and lease liability |
$ | - | $ | 103,953 | ||||
Earn-out liability consideration for acquisition |
$ | - | $ | 1,668,297 | ||||
Shares issued for Upsider earn-out liability |
$ | - | $ | 1,394,768 | ||||
Deferred offering costs charged to additional paid-in capital |
$ | - | $ | 78,038 | ||||
Warrant derivative liability at inception recorded as debt discount |
$ | - | $ | 2,374,076 | ||||
The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements.
SOURCE: Recruiter.com Group, Inc.
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