RCRT: Q1 2022 Starts the Year With 117% Revenues Growth and Declining Losses

By Lisa Thompson

NASDAQ:RCRT

READ THE FULL RCRT RESEARCH REPORT

In Q1 Recuiter.com RCRT continued its march to higher revenues and cash flow breakeven aided by its more than doubling of revenues and a gross margin improvement of 10.5 percentage points. This combined with working to keep expenses down, is showing that the company could reach its goal of EBITDA breakeven by Q4 2022 and no need to raise additional capital. By watching expenses, reducing DSO, its new factoring arrangement, and reducing its cash burn of $400,000 a month, it can grow itself out of its negative cash flow position. The company also continues to pursue the recovery of the $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 an EV/2022 Sales of 0.5x times compared to the blended multiple of 3.2 times of its peers. We believe growth, expanding margins, the elimination of cash burn, and more analyst coverage, could increase the stock's appeal and cause price appreciation.

The Revenue Mix Continues to Shift to Higher Margin Products in Q1 2022

Revenues for Q1 2022 came in at $6.9 million versus $3.2 million in Q1 2021. This is growth of 117% versus the year ago quarter and was completely organic. Most of the upside came in revenues from its core Recruiter on Demand platform, which contributed 61% of revenue in Q1 and grew to $3.2 million in revenues versus $957,000 in revenues in Q1 2021. Software subscriptions added $700,000 to revenues in the quarter and it is a business that only launched in Q2 of 2021 and contributes approximately 90% gross margins compared to a company average closer to 35%. Permanent placement fees grew 661% to $304,000. Consulting and staffing declined in Q1 by $740,000 as the company focused on higher margin business.

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