Monster Worldwide Inc. (MWW) reported earnings of 8 cents per share in the first quarter of 2013, ahead of the Zacks Consensus Estimate by a penny. However, earnings per share (“EPS”) declined 20.0% from the year-ago quarter, primarily due to lower revenues and operating margin contraction.
Quarter Details
Revenues declined 9.3% year over year to $211.9 million in the first quarter. This was well short of the Zacks Consensus Estimate of $216.0 million. Results were impacted by year-over-year declines in revenues at Monster Careers (down 9.7% year over year) and Internet Advertising & Fees (down 5.4% year over year).
Moreover, Monster witnessed year-over-year revenue declines across all of its geographies. Revenues from North America and Asia-Pacific were down 3% and 10% from the year-ago quarter, respectively. Revenues from European operations were also down 20% year over year.
Monster reported non-GAAP operating income of $15.4 million, which was down 22% from the year-ago quarter. Operating margins declined 110 basis points to 7.3%, primarily due to a 110 basis point increase in operating expenses, as a percentage of revenue.
However, operating expenses declined 8.2% from the year-ago quarter to $196.6 million. The year-over-year decline in salaries & related (down 13% year over year) and office & general expenses (5% year over year) led to the decrease in operating expenses.
Non-GAAP net income decreased 24.4% from the year-ago quarter to $8.7 million.
Monster ended the quarter with cash and cash equivalents of $130.9 million versus $148.2 million at the end of the previous quarter. Monster used $8.6 million cash for operating activities.
Corporate Restructuring Initiative
Monster reported a pre-tax restructuring charge of $13 million in continuing operations and $6 million in loss from discontinued operations during the first quarter. These were related to Monster’s corporate restructuring initiative.
Guidance
Due to the uncertain macroeconomic environment and the restructuring actions undertaken by the company, Monster did not provide any guidance for bookings and revenues. Nevertheless, the company provided earnings guidance in the range of 6 cents to 10 cents per share for the second quarter of 2013. The Zacks Consensus Estimate for the second quarter is pegged at 8 cents per share.
Recommendation
Monster’s results continued to be affected by reluctant recruiters due to the sluggish macroeconomic environment. Monster continues to face significant competition from social and professional networking websites such as LinkedIn Corp. (LNKD) and Facebook (FB) as well as from traditional advertising companies such as Omnicom Group (OMC). Increasing competition is expected to hurt profitability going forward. However, the corporate restructuring initiative is expected to boost margins going forward.
Currently, Monster has a Zacks Rank #4 (Sell).
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