Recruiter.com Announces Second Quarter 2022 Results

ACCESSWIRE· Recruiter.com Group, Inc.
Recruiter.com Group, Inc.
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Quarterly Revenue Increased to $7.1M, up 62% y/y

NEW YORK, NY / ACCESSWIRE / August 15, 2022 / Recruiter.com Group, Inc. (NASDAQ:RCRT)(NASDAQ:RCRTW) ("Recruiter.com"), a recruiting solutions platform, today announced financial results for the second quarter of 2022, ended June 30, 2022.

"Recruiter.com delivered a strong quarter, growing revenues and margins while reducing operating expenses," said Evan Sohn, CEO of Recruiter.com. "Strong product market fit and solid hiring demand helped grow revenues by 62% y/y to $7.1 million and achieve 3.5% organic revenue growth sequentially."

"A sustained shift toward our software and on-demand services enabled our gross profit to more than double y/y to $2.9 million and expand our gross margin to 41.2%. During the quarter, we also focused on delivering operating efficiency, reducing our adjusted EBITDA loss to $397 thousand, a 70% sequential improvement. We are excited by the growth opportunities ahead of us and expect to cross the breakeven mark for positive adjusted EBIDTA before year-end."

Recent Highlights

  • Revenue for the second quarter of 2022 totaled $7.1 million, an increase of $2.7 million or 62%, compared to revenue of $4.4 million in the second quarter of 2021. Revenue growth was primarily driven by a 161% increase in the Recruiters on Demand business and continued growth in Software Subscriptions, which launched in 2021.

  • Gross profit for the second quarter of 2022 was $2.9 million, a 107% increase compared to $1.4 million gross profit in the comparable period of 2021. The gross profit margin expanded to 41.2% compared to 32.8% a year ago. The increase reflects the continued shift in the Company's sales mix to its faster-growing and higher-margin businesses.

  • Announced advancements to Recruiter.com AI that keep employer needs top of mind. Upgrades include improved search capability, email outreach, and a new candidate tracker dashboard allowing employers to review each candidate's background in one integrated view. When paired with the Recruiter.com Recruiters On Demand service, the solution delivers qualified and engaged candidates that have been screened and are "ready to interview."

Financial Results for the Second Quarter Ended June 30, 2022

Revenue for the second quarter of 2022 totaled $7.1 million, an increase of $2.7 million or 61%, compared to revenue of $4.4 million in the second quarter of 2021.

Gross profit for the second quarter of 2022 was $2.9 million, a 107% increase compared to $1.4 million gross profit in the comparable period of 2021. The gross profit margin expanded to 41.2% compared to 32.8% a year ago. The increase reflects the continued shift in the Company's sales mix to its faster-growing and higher-margin businesses.

Total operating expenses were $5.3 million, an increase of 36% compared to $3.9 million for the second quarter of 2021. The increase was primarily due to higher sales and marketing, product development, general and administrative expense, and higher amortization of intangibles of $917,000 compared to $675,000 in the year-ago period.

Recruiter.com had a net loss of $1.2 million in the second quarter of 2022 compared to net income of $3.5 million in the second quarter of 2021. The net loss in the second quarter of 2022 included non-cash depreciation and amortization expense of $917,000, bad debt expense of $345,000, and equity-based compensation expense of $669,000.

Liquidity and Capital Resources

On June 30, 2022, Recruiter.com had $1.7 million in cash and cash equivalents, and accounts receivable, net, of $4.3 million. There were 14,915,682 common shares outstanding at quarter-end.

Conference Call Details

Date: Monday, August 15th
Time: 4:30 pm ET / / 1:30 pm PT
Register at: https://www.webcaster4.com/Webcast/Page/2765/46178

To access the conference by phone:

U.S. Dial-in: 877-545-0320
International Dial-in: 877-545-0320
Passcode: 413648

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:

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:

Nicole Gallina
Corporate Communications
investors@recruiter.com

-Tables Follow-

Recruiter.com Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

June 30,

December 31,

2022

2021

(unaudited)

ASSETS

Current assets:

Cash

$

1,713,660

$

2,584,062

Accounts receivable, net of allowance for doubtful accounts of $1,184,809 and $934,219, respectively

4,261,232

5,650,668

Accounts receivable - related parties

-

49,033

Prepaid expenses and other current assets

393,211

546,079

Total current assets

6,368,103

8,829,842

Property and equipment, net of accumulated depreciation of $3,463 and $2,982, respectively

-

481

Intangible assets, net

8,579,904

9,741,832

Goodwill

7,683,198

7,718,842

Total assets

$

22,631,205

$

26,290,997

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

1,336,078

$

1,121,510

Accounts payable - related parties

25,931

163,672

Accrued expenses

1,378,696

1,285,339

Accrued compensation

900,162

1,551,162

Accrued interest

4,869

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

3,862,052

1,712,387

Refundable deposit on preferred stock purchase

285,000

285,000

Customer advances

426,136

-

Deferred revenue

523,631

746,449

Total current liabilities

8,841,616

7,562,897

Loans payable - long term portion

632,201

2,637,875

Total liabilities

9,473,817

10,200,772

Commitments and contingencies (Note 11)

Stockholders' Equity:

Preferred stock, Series E, $0.0001 par value; 775,000 shares authorized; 86,000 shares issued and outstanding as of June 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 June 30, 2022 and December 31, 2021, respectively

1,486

1,457

Shares to be issued, 587,945 shares as of June 30, 2022 and December 31, 2021

59

59

Additional paid-in capital

69,386,572

66,948,340

Accumulated deficit

(56,230,738

)

(50,859,640

)

Total Stockholders' Equity

13,157,388

16,090,225

Total Liabilities and Stockholders' Equity

$

22,631,205

$

26,290,997

Recruiter.com Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three and Six Months ended June 30, 2022 and 2021
(Unaudited)

Three

Months Ended

Three

Months Ended

Six

Months Ended

Six

Months Ended

June 30,

2022

June 30,

2021

June 30,

2022

June 30,

2021

Revenue (including related party revenue of $0, $0, $0 and $970, respectively)

$

7,112,450

$

4,380,894

$

13,981,103

$

7,545,439

Cost of revenue (including related party costs of $0, $212,279, $0 and $417,540, respectively)

4,183,478

2,946,084

8,361,549

5,200,994

Gross profit

2,928,972

1,434,810

5,619,554

2,344,445

Operating expenses:

Sales and marketing

158,040

75,006

276,796

132,549

Product development (including related party expense of $0, $54,696, $16,771 and $112,684, respectively)

89,473

75,004

682,859

145,664

Amortization of intangibles

917,239

675,095

1,925,712

834,268

General and administrative (including share-based compensation expense of $669,047, $1,112,834, $2,404,064 and $1,615,241, respectively, and related party expenses of $0, $106,149, $19,825 and $232,781, respectively)

4,097,397

3,062,597

9,193,101

5,608,502

Total operating expenses

5,262,149

3,887,702

12,078,468

6,720,983

Loss from operations

(2,333,177

)

(2,452,892

)

(6,458,914

)

(4,376,538

)

Other income (expenses):

Interest expense (including related party interest expense of $0, $18,193, $0 and $30,466, respectively)

(64,491

)

(1,592,822

)

(131,906

)

(3,020,410

)

Initial derivative expense

-

-

-

(3,585,983

)

Other income

3,713

-

14,527

-

Change in fair value of derivative liability

-

7,574,750

-

8,203,371

Gain on debt extinguishment

1,205,195

-

1,205,195

24,925

Grant income

-

-

-

3,382

Net recognized gain (loss) on marketable securities

-

(757

)

-

(534

)

Total other income (expenses)

1,144,417

5,981,171

1,087,816

1,624,751

(Loss) income before income taxes

(1,188,760

)

3,528,279

(5,371,098

)

(2,751,787

)

Provision for income taxes

-

-

-

-

Net (Loss) income

$

(1,188,760

)

$

3,528,279

$

(5,371,098

)

$

(2,751,787

)

Net (loss) income per common share - basic

$

(0.08

)

$

0.99

$

(0.36

)

$

(0.89

)

Net (loss) income per common share - diluted

$

(0.08

)

$

0.69

$

(0.36

)

$

(0.89

)

Weighted average common shares - basic

14,830,738

3,560,745

14,795,691

3,091,146

Weighted average common shares - diluted

14,830,738

5,879,481

14,795,691

3,091,146

Recruiter.com Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Six Months ended June 30, 2022 and 2021
(Unaudited)

Six Months

Ended

Six Months
Ended

June 30,

2022

June 30,
2021

Cash Flows from Operating Activities

Net loss

$

(5,371,098

)

$

(2,751,787

)

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation and amortization expense

1,926,194

834,845

Bad debt expense

363,702

58,726

Gain on debt extinguishment

(1,205,195

)

(24,925

)

Equity based compensation expense

2,404,064

1,615,241

Recognized loss on marketable securities

-

534

Warrant modification expense

152,244

-

Loan principal paid directly through grant

-

(2,992

)

Amortization of debt discount and debt costs

-

2,486,111

Initial derivative expense

-

3,585,983

Change in fair value of earn-out liability

26,604

-

Factoring discount fee and interest on factoring agreement

45,413

-

Change in fair value of derivative liability

-

(8,203,371

)

Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable

134,002

(2,032,275

)

Decrease (increase) in accounts receivable - related parties

49,033

(5,602

)

Decrease (increase) in prepaid expenses and other current assets

34,821

(186,329

)

(Decrease) increase in accounts payable and accrued liabilities

(357,932

)

1,900,033

(Decrease) increase in accounts payable - related parties

(137,741

)

410,040

Increase in customer advances

426,136

-

(Decrease) increase in deferred revenue

(222,818

)

425,383

Net cash used in operating activities

(1,732,571

)

(1,890,385

)

Cash Flows from Investing Activities

Capitalized internal use software

(763,785

)

-

Cash and receivables acquired

-

220,153

Cash paid for acquisitions

-

(249,983

)

Net cash used in investing activities

(763,785

)

(29,830

)

Cash Flows from Financing Activities

Proceeds from notes

-

250,000

Proceeds from convertible notes

-

2,153,200

Deferred offering costs

-

(473,896

)

Payments of notes

(1,101,400

)

(11,193

)

Proceeds from factoring agreement

3,380,362

-

Repayments of factoring agreement

(653,008

)

-

Repayments of sale of future revenues

-

(10,904

)

Net cash provided by financing activities

1,625,954

1,907,207

Net decrease in cash

(870,402

)

(13,008

)

Cash, beginning of period

2,584,062

99,906

Cash, end of period

$

1,713,660

$

86,898

Supplemental disclosures of cash flow information:

Cash paid during the period for interest

$

59,622

$

159,325

Cash paid during the period for income taxes

$

-

$

-

Supplemental schedule of non-cash investing and financing activities:

Original issue discount deducted from convertible note proceeds

$

-

$

342,554

Debt costs deducted from convertible note proceeds

$

$

334,800

Intangible assets acquired

$

-

$

7,066,165

Notes and accrued interest converted to common stock

$

$

356,689

Common stock issued/to be issued for asset acquisitions

$

-

$

4,956,948

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

$

-

$

373,070

Liabilities assumed in acquisition

$

-

$

89,089

Warrant derivative liability at inception

$

-

$

5,960,059

Accounts receivable owed under factoring agreement collected directly by factor

$

927,376

$

-

Purchase price measurement period adjustment to goodwill and accounts receivable

$

35,644

$

-

The following table presents a reconciliation of net loss to Adjusted EBITDA (loss):

Three months Ended June 30,

2022

2021

Net Income (loss)

$

(1,188,760

)

$

3,528,279

Interest expense and finance cost, net

64,491

1,592,822

Depreciation & amortization

917,431

675,384

EBITDA (loss)

(206,838

)

5,796,485

Bad debt expense

345,202

41,763

Gain on debt extinguishment

(1,205,195

)

-

Loss (gain) on change in fair value of derivative

-

(7,574,750

)

Stock-based compensation

669,047

960,334

Adjusted EBITDA (Loss)

$

(397,784

)

$

(776,168

)

Six months Ended June 30,

2022

2021

Net loss

$

(5,371,098

)

$

(2,751,787

)

Interest expense and finance cost, net

131,906

3,020,410

Depreciation & amortization

1,926,194

834,845

EBITDA (loss)

(3,312,998

)

1,103,468

Bad debt expense

363,702

58,726

Gain on debt extinguishment

(1,205,195

)

(24,925

)

Initial derivative expense

-

3,585,983

Loss (gain) on change in fair value of derivative

-

(8,203,371

)

Stock-based compensation

2,404,064

1,615,241

Adjusted EBITDA (Loss)

$

(1,750,427

)

$

(1,864,878

)

SOURCE: Recruiter.com Group, Inc.



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