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Hudson Global, Inc. (NASDAQ:HSON) Q1 2023 Earnings Call Transcript

Hudson Global, Inc. (NASDAQ:HSON) Q1 2023 Earnings Call Transcript May 14, 2023

Operator: Good morning, and welcome to the Hudson Global Conference Call for the First Quarter of 2023. Our call today will be led by Chief Executive Officer, Jeff Eberwein and Chief Financial Officer, Matt Diamond. Please advise that statements made during the presentation include forward-looking statements under applicable securities laws. Such forward-looking statements involve certain risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These risks are discussed in our Form 8-K filed today and with other filings made with the Securities and Exchange Commission, including our annual report on Form 10-K. The company disclaims any obligation to update any forward-looking statements.

During the course of this conference call, references will be made to non-GAAP terms such as constant currency, adjusted EBITDA, adjusted earnings per diluted share. Reconciliations for these measures are included in our earnings release and in our quarterly slides, both posted on our website, hudsonrpo.com. I encourage you to access the earnings material at this time as the reserve as a helpful restaurant guide during this call. I will now turn the conference over to Jeff Eberwein.

Jeff Eberwein: Thank you, operator, and welcome, everyone. We thank you for your interest in Hudson Global and for joining us today. I’ll start by reviewing the first quarter 2023 highlights, and Matt Diamond, our CFO, will provide some additional details on our financial results. I’ll then give an update on current business conditions. For the first quarter of 2023, we reported revenue of $43 million, down 13% year-over-year in constant currency. Adjusted net revenue was $22 million and decreased 12% year-over-year in constant currency. SG&A costs were $21 million in the first quarter, up 5% versus the same period last year in constant currency. We reported adjusted EBITDA of $1.1 million, down 77% in constant currency versus a year ago.

In addition, we reported net income of $0.4 million or $0.11 per share versus net income of $3 million or $0.97 per diluted share in the same period last year. We reported adjusted net income per diluted share of $0.22 in the first quarter of 2023 versus $1.23 a year ago. I will now turn the call over to Matt Diamond, our CFO, to review our financial results by region as well as some additional financial details from the first quarter.

Matt Diamond: Thank you, Jeff, and good morning, everyone. Revenue and adjusted net revenue for our Americas business decreased 36% and 35%, respectively, in constant currency. Breakeven adjusted EBITDA decreased versus last year’s adjusted EBITDA of $3.5 million. Revenue for our Asia-Pacific business decreased 8% year-over-year in constant currency and adjusted net revenue grew 9% in constant currency. Adjusted EBITDA of $1.7 million decreased from adjusted EBITDA of $2.4 million a year ago. Our EMEA business grew revenue 16% and adjusted net revenue 31% in constant currency. Adjusted EBITDA of $0.5 million in the first quarter of 2023 increased from adjusted EBITDA of $0.3 million a year ago. Turning to some additional financial details from the first quarter, we ended Q1 with $22.3 million in cash and restricted cash.

Day sales outstanding was 53 days at March 2023, up from DSO of 47 days at March 2022. In connection with the acquisition of Coit Group in the Fourth Quarter of 2020, Karani in the Fourth Quarter of 2021, and Hunt & Badge in the third quarter of 2022, our balance sheet as of March 31, 2023, reflects $4.9 million of goodwill and $4.3 million of net amortizable intangible assets. The company’s working capital, excluding cash, increased significantly to $12.7 million in the first quarter of 2023 from $7.3 million at the end of 2022. The company used $5 million in cash flow from operations during the first quarter. The cash flow use was due to seasonal moves in working capital that we typically see in Q1 as well as a $2 million outflow for the final earn-out payment related to the Coit acquisition.

I’ll now turn the call back over to Jeff to give some more perspective on our RPO business and to review current trends in our business.

Jeff Eberwein: Thank you, Matt. In the first quarter of 2023, lower hiring activity, particularly in the technology sector, led to declines in revenue, adjusted net revenue, and adjusted EBITDA versus the prior year quarter. Activity and other sectors remained stable, and we’ve seen a number of new business wins thus far in 2023. Importantly, our experienced leadership team has a history of navigating different market cycles and continues to respond quickly to changes in the market to protect our profitability. We are confident in our ability to manage the business in this environment and remain well positioned to respond to the needs of our clients going forward. I want to thank all of our highly dedicated employees for their flexibility, hard work, and dedication to our clients and business and the challenging conditions we’ve been working through. Operator, can you please open the line for questions?

Q&A Session

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Operator: [Operator Instructions] And the first question comes from Edward Reilly with EF Hutton.

Operator: Thank you. And the next question comes from Marc Riddick with Sidoti & Company.

Operator: Thank you. And the next question comes from Gabe Sanchez, a private investor.

Operator: [Operator Instructions] And if there is nothing more, I would like to return the floor to Jeff Eberwein for any closing comments.

Jeff Eberwein: Well, thank you, operator, and thank you for your questions today, very good questions. We appreciate you joining us. We appreciate your interest in the company and feel free to contact us any time by using the information in our press release or on our Investor Relations website, and we look forward to next quarter’s update call. Have a good day, everybody.

Operator: Thank you and thank you for joining the Hudson Global first quarter conference call. Today’s call has been recorded and will be available on the Investors section of our website, hudsonrpo.com.

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The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

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What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

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  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

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AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

AI is eating the world—and the machines behind it are ravenous.

Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. In fact, AI is already pushing global power grids to the brink.

Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:

Where will all of that energy come from?

AI is the most electricity-hungry technology ever invented. Each data center powering large language models like ChatGPT consumes as much energy as a small city. And it’s about to get worse.

Even Sam Altman, the founder of OpenAI, issued a stark warning:

“The future of AI depends on an energy breakthrough.”

Elon Musk was even more blunt:

“AI will run out of electricity by next year.”

As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes. Power grids are strained. Electricity prices are rising. Utilities are scrambling to expand capacity.

And that’s where the real opportunity lies…

One little-known company—almost entirely overlooked by most AI investors—could be the ultimate backdoor play. It’s not a chipmaker. It’s not a cloud platform. But it might be the most important AI stock in the US owns critical energy infrastructure assets positioned to feed the coming AI energy spike.

As demand from AI data centers explodes, this company is gearing up to profit from the most valuable commodity in the digital age: electricity.

The “Toll Booth” Operator of the AI Energy Boom

  • It owns critical nuclear energy infrastructure assets, positioning it at the heart of America’s next-generation power strategy.
  • It’s one of the only global companies capable of executing large-scale, complex EPC (engineering, procurement, and construction) projects across oil, gas, renewable fuels, and industrial infrastructure.
  • It plays a pivotal role in U.S. LNG exportation—a sector about to explode under President Trump’s renewed “America First” energy doctrine.

Trump has made it clear: Europe and U.S. allies must buy American LNG.

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As Trump’s proposed tariffs push American manufacturers to bring their operations back home, this company will be first in line to rebuild, retrofit, and reengineer those facilities.

AI. Energy. Tariffs. Onshoring. This One Company Ties It All Together.

While the world is distracted by flashy AI tickers, a few smart investors are quietly scooping up shares of the one company powering it all from behind the scenes.

AI needs energy. Energy needs infrastructure.

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This company has its finger in every pie—and Wall Street is just starting to notice.

Wall Street is noticing this company also because it is quietly riding all of these tailwinds—without the sky-high valuation.

While most energy and utility firms are buried under mountains of debt and coughing up hefty interest payments just to appease bondholders…

This company is completely debt-free.

In fact, it’s sitting on a war chest of cash—equal to nearly one-third of its entire market cap.

It also owns a huge equity stake in another red-hot AI play, giving investors indirect exposure to multiple AI growth engines without paying a premium.

And here’s what the smart money has started whispering…

The Hedge Fund Secret That’s Starting to Leak Out

This stock is so off-the-radar, so absurdly undervalued, that some of the most secretive hedge fund managers in the world have begun pitching it at closed-door investment summits.

They’re sharing it quietly, away from the cameras, to rooms full of ultra-wealthy clients.

Why? Because excluding cash and investments, this company is trading at less than 7 times earnings.

And that’s for a business tied to:

  • The AI infrastructure supercycle
  • The onshoring boom driven by Trump-era tariffs
  • A surge in U.S. LNG exports
  • And a unique footprint in nuclear energy—the future of clean, reliable power

You simply won’t find another AI and energy stock this cheap… with this much upside.

This isn’t a hype stock. It’s not riding on hope.

It’s delivering real cash flows, owns critical infrastructure, and holds stakes in other major growth stories.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.

As an investor, you want to be on the side of the winners, and AI is the winning ticket.

The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.

From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.

This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.

By investing in AI, you’re essentially backing the future.

The future is powered by artificial intelligence, and the time to invest is NOW.

Don’t be a spectator in this technological revolution.

Dive into the AI gold rush and watch your portfolio soar alongside the brightest minds of our generation.

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