Monster (NYSE:MWW) announced its earnings for Q2 2012, with revenue falling more than 12% year-over-year to $270 million. It also reported a 4% year-on-year reduction in bookings at $242 million. It saw lower revenue in each segment, but the International Careers businesses showed the lowest percentage decline. The Internet Advertising and Fees (IAF) segment of the business and currency translation losses were the major contributors to the lower revenues. Currency translation related losses amounted to $9.2 million on a year-over-year basis whereas IAF revenues fell to $20 million from $34 million. In defense of the latter, however, $11 million worth of reduction was due to Monster’s decision to stop engaging in arbitrage lead generation activity. Without that, the reduction would be worth $3 million. ((Monster Worldwide Management Discusses Q2 2012 Results – Earnings Call Transcript, SeekingAlpha))
Bleak economic outlook is an ongoing worry
In accordance with our our earnings preview article, Monster management conceded that the uncertain and weak economic conditions in Europe and Asia continued to act as headwinds. To mitigate the adverse effects, the company is focusing on bringing new products to the market while keeping a check on operating expenses and protecting profitability. The desire to curtail operating expenses is reflected in the reduction in salary and related expenses which went down by 19% on a year-over-year basis and 13% over the previous quarter.
On the positive side, Monster said that its Power Resume Search product powered by the 6Sense technology was garnering a lot of client interest with some major deals concluded this quarter. The company wishes to concentrate on accelerating market-wide product adoption through aggressive marketing. Monster also succeeded in increasing bookings in North America by 14% on a year-over-year basis by concentrating on the Government Solutions, Staffing and Newspaper verticals.
We have a $9 Trefis price estimate for Monster, which stands around 50% above its current market price. Career Services in North America and international markets account for most of its value.
We were somewhat disappointed with no mention of or questions on competition from LinkedIn or Facebook. We would have been interested in knowing Monster management’s assessment of the same.