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Russia – HeadHunter Q2 revenue rises but IPO costs hit net income

17 September 2019

Russian job board HeadHunter Group plc (HHR: NSDQ), reported revenue yesterday of RUB 1.90 billion (USD 29.6 million) for the second quarter ended 30 June 2019, an increase of 25.7% compared to the previous year.

HeadHunter launched its IPO earlier this month and began trading shares on the US Nasdaq Stock Market.

(RUB millions) Q2 2019 Q2 2018 Change Q2 2019 (USD millions)
Revenue 1,902 1,513 25.7% 29.6
Net Income 275 322 -14.4% 4.2
Adjusted EBITDA 989 727 36.0% 15.4

The company said revenue growth came primarily from its Russian segment.

HeadHunter said net Income was down as the positive impact from its operations was offset by the expenses it incurred in relation to its IPO. Adjusted EBITDA was up primarily due to the increase in revenue.

The company organises its operating segments based on the geography of its operations. The operating segments include “Russia,” “Belarus,” “Kazakhstan” and other countries. As each segment, other than Russia, individually comprises less than 10% of the group’s revenue, for reporting purposes, HeadHunter combines all segments other than Russia into the “Other segments” category.

In April 2019, Russia’s Federal Antimonopoly Service filed an antitrust case against HeadHunter and two other job boards. FAS said the terms of use for the three job boards’ services contain clauses banning the use of automated recruitment software when working with the firms. Last week the FAS said it dropped cases against the two other job boards Superjob and Rabota.ru after it found there were no violations. However, the watchdog said its case against HeadHunter is still open. HeadHunter has previously said it complies with Russia’s laws.

Revenue by geography

RUB millions) Q2 2019 Q2 2018 Change Change (USD millions)
Russia 1,758 1,409 24.7% 27.3
Other 143 104 38.2% 2.2

The Russia segment revenue increase was primarily due to the growth in the number of small and medium accounts, the increase in average revenue per customer in key accounts in Moscow and St. Petersburg, and by price increases.

“We are pleased to announce another strong set of operational and financial results for the second quarter of 2019, despite the ongoing economic slowdown and the impact of several holidays in May” said Mikhail Zhukov, Chief Executive Officer of HeadHunter Group PLC.

Based on its recent performance, HeadHunter currently expects revenue to grow in the range of 27% to 30% year-over-year and its Adjusted EBITDA Margin to be between 48% and 50% for the year 2019.

In trading yesterday HeadHunter Group shares closed at USD 21.00, up 5.53% on the day and 1.30% below its 52-week high of USD 21.28, set on 16 September 2019. Based on its current share price the company has a market value of USD 995.0 million.

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