NIXX

• The company experienced a 2% sequential revenue decline in on-demand recruiting solutions, with tech start-ups slowing hiring and a large enterprise client pausing spend (resuming early next year). Permanent placement business declined as fewer companies retained full-time talent acquisition staff.
• Healthcare industry shows robustness, and the company intends to pursue more clients there.
• Strategic plan refocused on profitable growth: simplified business by aligning around largest and most profitable on-demand product lines, concentrated marketing efforts; implemented a 30% reduction in staff operational expenses to take advantage of the light operational demand of the on-demand business model; adjusted strategy to prioritize near-term profitability over long-term speculative value creation by evaluating and reducing certain R&D expenses not providing immediate revenue growth; announced a strategic partnership with Talend Inc., a leading career platform.

• Expect 12% year-over-year revenue growth for fiscal year 2022, which is 100% organic.
• Anticipate a more challenging quarter in Q4 2022 for revenue as the company optimizes for profitability over growth, aiming to close the year at approximately $25 million.
• Expect to achieve positive monthly adjusted EBITDA early in Q1 2023, having refocused resourcing and efforts on most successful business lines.

In the third quarter of 2022, Recruiter.com's revenue totaled $6.97 million, an 11% increase compared to the third quarter of 2021. Gross profit was $2.2 million, a 4.9% decrease from the comparable period in 2021. Gross margin percentage fell to 31.45% from 36.82% in Q3 2021. Total operating expenses for Q3 were $7.6 million, a 14% decrease from Q3 2021. Net loss for Q3 was $5.6 million, a 26% improvement from Q3 2021. The company shifted away from permanent placement to focus on the on-demand business, which led to the changes in gross profit and margin. Revenue for on-demand recruiting solutions saw an approximate 2% sequential decline due to factors like technology start-ups slowing hiring and a large enterprise client pausing spend.

• Moderate decline in demand for on-demand recruiting solutions due to technology-oriented start-ups slowing hiring activity.
• One large enterprise customer stopped all contracted vendor spend temporarily.
• Permanent placement business declined as fewer companies opted to retain full-time talent acquisition staff.
• Macro conditions such as the capital cycle of tech investments causing previous hiring projects to be put on hold.

Q: How do the recent staff cuts affect the operating expense run rate and what reductions will be seen?

A: Evan Sohn stated that the on-demand business model has light operational demand, and they cut about 30% of staff operational expenses, focusing more on on-demand revenue and less on less strategic revenue, with the cuts not impacting the day-to-day business.

Q: Confirmation of 12% revenue growth target for fiscal year?

A: Evan Sohn confirmed that there will be a 12% year-over-year increase in revenue, which is 100% organic.

Q: Color on current pipeline, especially international deals?

A: Evan Sohn mentioned international revenue for Q3 was under 5%, with an initial pullback due to market dynamics, and healthcare revenue is more U.S. centric as healthcare is typically locally delivered.