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Shifts In The Online Jobs Market

Posted on Thursday, Dec 9th 2010

The Monster Employment Index has been on the rise and the November Index reported the tenth consecutive month of growth, reporting 13% growth over the year. Compared with October, the index slipped two points to 134 attributed to seasonal trends. More recently, though, for the week ended November 27, the U.S. jobless claims rose by 26,000 to a seasonally adjusted 436,000, and analysts claim that the number is making a slow recovery. The four-week moving average of claims stood at 431,000, the lowest since August 2008.

Monster’s Financials
Amid such positive growth, online recruiter, Monster.com (NYSE:MWW) reported a stellar third quarter. Q3 revenues of $229 million exceeded the market’s expectations of $226.5 million and grew 7% over the previous year. EPS of $0.02 was also ahead of the Street’s projected EPS of $0.01. During the quarter, the company saw bookings grow 26% over the year.

For the current quarter, Q4, Monster is projecting revenues of $258-$272 million compared with the market’s projected $251.8 million. EPS of $0.04–$0.08 is in line with the Street’s expected EPS of $0.05. For the year, Monster expects revenue of $919 million-$933 million, with a loss of $0.05–$0.09 per share. The Street was projecting revenues of $908.5 million with a loss of $0.09 per share.

For 2011, the company is projecting revenue and bookings growth of 20%–25%.

Monster’s Global Expansion
Monster has been working on deploying their unique solutions in international markets. Their Power Resume Search (PRS), a solution developed using technology acquired from Trovix two years ago and launched in America to positive reviews last year, was extended in the U.K. last quarter. In Q3, PRS accounted for 45% of search bookings in North America and 40% in the U.K. The company recently introduced it in France and plans to deploy it in more countries in the coming year.

Additionally, they also plan to extend their Career Ad Network, which is the largest recruitment-focused ad network targeting both active and passive seekers, to 14 of their top global markets in the coming years.

Monster’s Growing Competition
Despite these strategies, Monster has been losing ground in the U.S. In June of this year, Indeed.com surpassed Monster.com and as of October reported 12.6 million unique visitors, compared with Monster.com’s 11.1 million unique visitors. Over the year, Monster.com reported a 15% decline in visitors compared with Indeed.com’s 1.9% gain. Indeed.com is also slowly catching up with the U.S. market leader, Careerbuilder.com, which had more than 13.9 million unique visitors for October and reported a 17.9% drop over the year. While these numbers include only the parent site information and do not include the larger network, it is still a significant win for Indeed.

A year ago, Indeed surpassed page views and in October recorded 334 million page views compared with CareerBuilder’s 311 million and Monster’s 205 million. Interestingly, according to ComScore, in October, Indeed was ahead of both CareerBuilder and Monster parent sites in terms of unique visitors. I do hope that Monster is watching the numbers and is willing to tap into its $166 million cash reserves to acquire players such as eLance, oDesk, Guru, Ladders, and SimplyHired. Monster cannot really afford to buy LinkedIn, which has over a billion-dollar valuation at this point. And I don’t think LinkedIn would be interested in being acquired by Monster, either.

Monster’s stock is trading at $24.08 with a market capitalization of $3.1 billion. It touched a 52-week high of $24.63 earlier this week.

The Employment Indices in India too are reporting growth. Naukri’s Job Speak, the employment index for India, for the month of October reported an improvement of 6 points over the previous month to 949 and grew 27% over the year. Compared with September, the oil and gas sector improved by 12%, followed by the auto sector’s 6% growth and IT enabled service’s 1% growth.

Naukri’s Financials
During the quarter, Naukri’s parent company, Infoedge, saw revenues grow 29% over the year to Rs 71 crores (~$15.6 million) with margins rising to 18.6% compared with 15.5% a year ago. Infoedge’s recruitment vertical contributed 83% of their revenues and reported growth of 28% over the year to Rs 69 crores (~$15.18 million) with Naukri’s top line growing 32% over the year. For Naukri, EBITDA margins grew to 49% from 36% a year ago.

During the quarter, the number of resumes on Naukri increased to 23 million from 18.7 million a year ago. The company averaged additions of 13,300 daily and 35,000 resumes modified daily. In the quarter, the number of paid customers grew by 16.5% to 21,100 over the year. Naukri continued to report 60% market share in the quarter.

Naukri’s Competition
Earlier last quarter, Naukri’s competitor, ABC Consultants, launched their senior management–focused product, HeadHonchos.com. It is expected to compete directly with Naukri’s Naukri Confidential. But, Naukri’s management continued to undermine competition and did not seem too worried with ABC’s offering. They indicated they are willing to wait and watch for the market’s reactions to the two sites.

Their stock is trading at Rs 635.65 (~ $14). It touched a 52-week high of Rs 1,150 (~$25.29) in August of this year.

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