By Lisa Thompson
READ THE FULL RCRT RESEARCH REPORT
In the 1st quarter Recuiter.com RCRT continued its march towards higher revenues and a balanced cash flow, helped by its turnover which more than doubled and a gross margin improvement of 10.5 percentage points. This, combined with efforts to reduce expenses, shows that the company could achieve its target of breaking even EBITDA by the fourth quarter of 2022 and that it does not need to raise additional capital. By monitoring expenses, reducing DSO, his new factoring arrangement, and reducing his cash burn by $400,000 per month, he can get out of his negative cash position. The company also continues to pursue collection of $1.4 million owed to it by a former partner.
Despite the prospect of a recession in our future and a bear market to reduce wealth, the need for employees continues unabated. Unemployment is low, churn is high, and demand is still strong for Recruiter.com. Recruiter.com now trades at an enterprise value of $19 million, or EV/2022 revenue of 0.5x the combined multiple of 3.2x that of its peers. We believe that growth, margin expansion, elimination of cash burn, and more analyst coverage could increase the stock’s appeal and lead to price appreciation.
Revenue mix continues to shift towards higher margin products in Q1 2022
Revenue for the first quarter of 2022 was $6.9 million compared to $3.2 million in the first quarter of 2021. This is a growth of 117% over the prior year quarter and entirely organic. Most of the rise came from revenue from its core Recruiter on Demand platform, which contributed 61% of Q1 revenue and hit $3.2 million in revenue from $957,000 in Q1 revenue. 2021. Software subscriptions added $700,000 to revenue in the quarter and it’s a business that only launched in the second quarter of 2021 and contributes around 90% of gross margins compared to an average closer to 35%. Permanent investment expenses increased by 661% to $304,000. Consulting and staffing decreased by $740,000 in the first quarter as the company focused on higher-margin businesses.
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