Nixxy, Inc. Q1 FY2022 earnings call

Management Statement and Operational Highlights:

• Financial Growth: Total revenue in Q1 2022 was $6.9 million, a 170% increase from Q1 2021. Gross profit was $2.7 million, up 200% from Q1 2021 with a gross profit margin of 39.2% vs. 28.7% in 2021. Net loss was $4.2 million in Q1 2022 vs. $6.3 million in Q1 2021.
• Business Segments: Recruiters on Demand segment is 61% of revenue, growing 339% YOY. Software segment is 15% of revenue, tripling YOY.
• Partnerships: Signed a partnership with Oyster, a global employment platform.
• Cash Management: Q1 cash burn improved 41% sequentially from Q4 2021, with cash on hand expected to be ~$2.8 million after factoring. Aim to reach monthly positive cash EBITDA by Q4 2022.
• Client Base: Grew client roster to over 641 unique customers, with 8 marquee clients spending over $125k monthly, and 27% of top 100 clients using multiple services.

Segment Performance:

• Recruiters on Demand: Revenue increased 339% year-over-year and now accounts for 61% of total revenue.
• Software and Career Community Platform: Revenues have more than tripled year-over-year and account for 15% of total revenue.

Guidance:

• Q2 Guidance: Projected revenue of $7.2 million, a 5% increase from Q1 2022, with sequentially improved adjusted EBITDA loss.
• Full Year 2022: Guidance for revenue over $30 million and achieving monthly positive cash EBITDA by Q4 2022.

Risks:

• Client Churn: Occasional churn of clients, especially in on-demand segment due to project completion or scaling.
• Recession Impact: Potential impact of recession on job market, though company expects continued demand for recruiters and talent, especially international.
• Debt Collection: Ongoing process with counterclaims related to debt collection, requiring patience.

Question and Answer: Q: How about software segment's sequential momentum and Recruiter on Demand margin?

A: Sales team focuses on land and expand, 27% of top 100 clients use multiple services. Software has good margins, on-demand segment has ~40% margins.

Q: Impact of Oyster partnership on revenues?

A: Oyster is a lead generator, sending clients needing talent to Recruiter.com, leading to more business.

Q: Seasonality and Q1 being low part of year?

A: Q1 is typically the low part of the year due to less hiring activity at the start, with software segment being smoother.

Q: Q1 margins and debt collection?

A: Small hangover from Q4, but mix of business and focus on profitable clients helped. Debt collection is a process with counterclaims, patience is appreciated.

Q: Gross margins outlook?

A: Focus on higher margin business like software, expecting gross margins in high 30s to low 40s, improving over time.