Will Recent Growth Strategies Should Cause Monster Worldwide’s Earnings To Rise In Q2?
Monster Worldwide (NASDAQ:MWW) is scheduled to release its financial results for the second quarter of 2015 on Thursday, July 30th. [1] We expect the second quarter results to be driven by the Careers-North America segment, as the company continued to face currency and macroeconomic challenges in its international business. Additionally, we think the company will report increases in traffic and engagement metrics during Q2, helped by its growth strategies of: 1) raising the number of job listings and candidate profiles; 2) leveraging social trends; and, 3) enhancing features across product lines. In terms of profitability, we think the company could report sequential increase in EBITDA margins, owing to implementation of cost cutting measures.
See our complete analysis for Monster
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While The North American Segment Could See Some Improvement, International Results Will Face Continued Challenges
We expect improvement in the Careers-North America segment during Q2 2015, driven by the recent booking increase in this geography. Bookings rose by 6% annually in this segment during the last quarter, and we expect a similar trend in these quarterly results as well. However, the Internet Advertising & Fees (IAF) business, which was recently included within the Careers-North America segment, could see continued challenges during the second quarter. We will keenly track the ongoing recovery within the North America segment, since the company initially rolls out many of its new initiatives in this market. This will be useful to forecast the future monetization impact of the company’s growth strategies.
On the other hand, we expect continued decline in the Careers-International segment, due to adverse currency impact and macroeconomic challenges in Europe. However, this could partially be offset by growth in the Asian region.
Progress Against Cost Cutting Initiatives And Growth Strategies Will Be Tracked
Monster is undertaking a cost reduction programme ‘Reallocate To Accelerate’, wherein it will cut its workforce by 300 positions, consolidate certain facilities, and limit discretionary spending across international geographies. Though 200 positions were impacted by the end of Q1, we are eager to see the current progress against these initiatives. The management has an EBITDA margin target of 18%-22% by Q4 2015 and, similarly, we have forecast margins to rise in our valuation model.
The company is also undertaking a slew of measures to reinvigorate its growth and expand its user base and engagement metrics. It has considerably expanded the number of job listings on its platform, from 250,000 in early 2014 to more than five million presently. Alongside, the company has implemented new social products including ‘Twitter Cards’ and ‘Monster social ads’, whose reach could have been extended across additional international markets during the second quarter. Talent Bin and Talent CRM are other products that Monster is working on actively, to improve its outlook. We expect Monster to report some lift in demand during the past quarter, helped by these growth initiatives.
Our $6.41 price estimate for Monster’s stock, is marginally above the current market price.
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
Notes:- Monster Worldwide Schedules Conference Call and Webcast to Discuss Second Quarter 2015 Financial Results, Monster Investor Relations, July 17, 2015 [↩]