MWW's Q2 Earnings In Line, Rev Lags
Monster Worldwide Inc. (MWW) reported earnings of 9 cents per share in the second quarter of 2013, in line with the Zacks Consensus Estimate. However, earnings per share declined 10.0% from the year-ago quarter, primarily due to lower revenues.
Quarter Details
Revenues declined 10.9% year over year to $200.1 million in the second quarter and lagged the Zacks Consensus Estimate of $202.0 million, primarily due to revenue declines in Europe business. Results were impacted by year-over-year declines in revenues at Monster Careers (down 11.3% year over year) and Internet Advertising & Fees (down 6.7% year over year).
Moreover, Monster witnessed year-over-year revenue declines across most of its geographies. Although revenues from North America were up marginally on a year-over-year basis, revenues from Europe and Asia-Pacific were down 22.0% and 8.0% from the year-ago quarter, respectively.
Monster reported non-GAAP operating income of $16.5 million, which was down 4.3% from the year-ago quarter. Operating margins expanded 50 basis points (bps) to 8.2%, primarily due to a 50 bps decline in operating expenses, as a percentage of revenues.
Operating expenses declined 11.5% from the year-ago quarter to $183.6 million. The year-over-year decline in salaries & related (down 10.4% year over year), office & general expenses (down 9.6% year over year) and marketing and promotion expenses (down 15.6% year over year) dragged the operating expenses lower.
Non-GAAP net income from continuing operations decreased 11.8% from the year-ago quarter to $9.6 million.
Monster ended the quarter with cash and equivalents of $79.3 million versus $130.9 million at the end of the previous quarter. Monster had $15.4 million from cash for operating activities. During the quarter, Monster repurchased 4.4 million shares for $23.0 million.
Guidance
The company expects third quarter earnings to range from 6 cents to 10 cents per share.
Recommendation
Monster’s results continued to be affected by reluctant recruiters due to the sluggish macroeconomic environment. The company continues to face significant competition from social and professional networking websites such as LinkedIn Corp. (LNKD) and Facebook (FB) as well as from traditional advertising companies such as Omnicom Group (OMC).
However, the corporate restructuring initiative is expected to boost margins, going forward. Moreover, the expected gradual improvement in the unemployment rate will be beneficial for the company.
Currently, Monster has a Zacks Rank #2 (Buy).
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