Loss Narrows at Monster - Analyst Blog

Monster Worldwide, Inc. (MWW) reported revenues of $215 million in the first quarter of 2010, down 16% year over year. That decline is the lowest percentage decrease in five quarters. The results beat management expectations and mark the first sequential increase since the first quarter of 2008. Management saw solid improvement across all key geographic regions and all sales channels. Bookings growth was better than anticipated as a result of the improved global economy.

Headquartered in New York, Monster Worldwide, Inc. is an online recruitment firm of parent company Monster.com, the leading career website in the world. The company is also the largest advertising agency network for worldwide recruitment, and provides direct marketing services.

Approximately 42% of total revenues were generated through international operations. Total revenues were positively impacted by approximately $7 million from foreign exchange rates.

Total Careers revenues came in at $183 million, down 17% year over year but up 2% sequentially. Careers-North America generated revenues of $97 million, down 18.5% year over year but up 7% sequentially. Careers-International revenues decreased 17% year over year and were down 35% sequentially to $86 million. Excluding currency impacts, international segment revenues were essentially flat on a sequential basis and were negatively impacted by the slower recovery of Germany and the Netherlands.

Monster is seeing significant increases in renewal rates, repeat customers and new customers. Customers are increasing their purchases even before the economy goes into full recovery.

Small business segments in the U.S. are showing strong signs of recovery with quarterly e-com bookings growing 25% both sequentially and year over year. Management believes that small business growth is a precursor to recovery in medium and large businesses and, therefore, expects growth to pick up in these areas later in 2010.

Asia continues to show more robust improvement in the job market than other parts of the globe. However, Europe continues to lag.

Internet Advertising & Fees (IAF) revenues increased 3.1% to $33 million while bookings were up 12%. Revenues in IAF for the quarter were $1 million lower by 3% on a sequential basis, but 4% higher on a year-over-year basis.

Operating expense during the quarter was $239 million, a 12% sequential increase and a 6% year-over-year decrease.

Bookings increased 17% to $219 million year over year. This was the first year-over-year increase since the first quarter of 2008. Management believes that the improvement in global economies along with its efforts to improve the company's products and services have driven growth in this quarter.

Net loss came in at $24 million or 20 cents per share, compared to a loss of $10 million or 9 cents in the year-ago quarter. Excluding one-time items, Monster reported a net loss of 14 cents, lower than the Zacks Consensus Estimate of 16 cents.

During the quarter, Monster generated $36.2 million of cash from operations. Capital expenditures were $9 million, down from $15 million in the year-ago quarter and down from $10 million in the previous quarter. Monster ended the quarter with cash and equivalents of $291.1 million, up from $275.5 million at the end of the previous quarter.

As of March 31, 2010, deferred revenue balance was $305 million, essentially flat on a sequential basis and down 12% year over year.

Guidance

Going forward, management expects bookings to grow between 15% and 20% to $930 – $970 million. Revenues are projected at $890 – $925 million for 2010. Operating expenses are projected to increase around 3%-6% on a year-over-year basis. Loss per share is forecasted between 12 cents and 20 cents.

For the second quarter, management expects bookings between $202 million and 210 million, up 15% -20% year over year. Revenues are projected between $210 million and $220 million, down 2% – 6% year over year. Loss per share is forecasted at 2 cents to 6 cents.

Acquisition of HotJobs

Monster earlier announced that it entered into a definitive agreement with Yahoo! (YHOO) for acquiring the assets of Yahoo! HotJobs, a leading online recruitment website. The acquisition is expected to close in the third quarter.

With the addition of the HotJobs network of more than 600 daily and weekly newspapers, Monster's alliances with local papers will grow to approximately 1,000, giving Monster access to all 50 states.

The company expects to close the acquisition in the third quarter.

The HotJobs acquisition will add 6 to 12 cents to the bottom line by 2011 after paying Yahoo! for their traffic. Monster and Yahoo! have entered into a multi-year commercial traffic agreement, wherein Monster will become Yahoo!'s provider of career and job content on the Yahoo! Homepage in the United States and Canada.

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