Nixxy, Inc. Q4 FY2021 earnings call

• Evan Sohn highlighted 2021 was a tremendous year with revenue growth, acquisitions, capital raise, and transformation from a traditional staffing company to a technology-led recruiting solutions company.
• Miles Jennings discussed fourth quarter revenue growth, gross profit, EBITDA loss, and focus on profitability. He mentioned the shift from lower margin staffing revenue to higher margin software, on demand, and marketplace revenue. Also, noted the impact of a bad debt issue on margins and the need to tighten customer financial controls.
• Key operational highlights included acquisitions of Novo Group and Uncubed, product innovations like Amplify, AI software, and career communities, and growth in customer base with diverse clients.

In 2021, Recruiter.com's revenue grew 160% to over $22 million. The product segment performance showed a significant shift in revenue mix. On demand accounted for 62% of revenue by year-end, staffing was under 20%, and software subscription was over 9%. Fourth quarter revenue was $8.4 million, a 34% increase from the previous quarter. Gross profit in the fourth quarter was $2.6 million, up 14% from the previous quarter. However, gross margin in Q4 was 31% compared to 37% in Q3 due to a bad debt issue related to a former client.

• No specific 2022 guidance provided yet. Acknowledged acquisitions are not yet a year old, so monitoring seasonality in acquired businesses. The onetime bad debt impact in Q1 will be lesser than in Q4. Focus on shifting to higher margin segments and achieving profitability by continuing to grow revenue and manage operating expenses.

• Collections issue and bad debt from a former client affected Q4 and Q1 revenue. Need to tighten customer financial controls and credit evaluation processes. Potential seasonality in the business areas of acquired companies.

Q: Could you talk a little on the recruiter on-demand, what the momentum you’re seeing there? And what’s kind of and how you’re thinking about the outlook there?

A: Recruiter on-demand is an exciting business. Companies of all sizes are using it, with larger and more sophisticated companies leveraging it to augment in-house teams. Outlook is optimistic as it's a specialized space and we're expanding to smaller companies too.

Q: Given that we're at March 31st and the first quarter's over. What are your feelings of how this quarter turned out compared to this December quarter? Does everyone do this hiring at the end of the year or everybody wait for a new budget in January? Should we expect sequentially up revenues?

A: At this time, no guidance for 2022 or Q1. Acquisitions are not yet a year old, so monitoring seasonality. The onetime bad debt impact is a one-time issue and we're replacing that revenue with new clients and software subscriptions.

Q: Is it possible to give us a sense of what the bad debt impact might be in 1Q also?

A: With the on demand business, there were non-material labor costs in January that trailed off before February. The impact in Q1 will be less than $250,000, much lesser than in Q4