<img class="aligncenter" src="https://daytradergt.com/wp-content/uploads/2021/10/9f2917ddd75eea7a5643cf897d73cca6.png" alt="Обзор HeadHunter: компания роста на российском рынке" />
HeadHunter (MOEX: HHRU) is the leading online recruitment platform in Russia and the CIS with an average monthly audience of 22.5 million people in 2020. According to Similarweb, the Russian company is also listed as the second in the ranking of the website about work and employment in the world.
Business of the company
HeadHunter's main activity is related to the online platform, which offers potential employers and recruits paid access to an extensive resume database and job posting portal. Besides, the company is constantly working on further integration of its own additional services into its main products, to improve the efficiency of the entire ingestion process.
HeadHunter has a very diversified customer base.. It represents most industries., operating in the Russian economy. And this base is also growing.: the number of solvent customers over the past three years has increased by 39% — up to 351 thousand, and the overall resume database has been added 33% and increased to 48.2 million units. All this had a positive impact on the average monthly traffic.. According to LiveInternet, the number of monthly visits increased from 20 million people in 2018 to 21.9 million in 2019 and 22.5 million in 2020, the current value of August 2021 — 29,3 million people.
HeadHunter users access the company's online platform using computers and mobile devices. Basically use the desktop version, where you can access all the features, but the trend of recent years indicates that, that increasingly began to turn to the mobile application. For example, in 2020 71% average monthly unique users fell on mobile devices, and the number of app downloads on iOS and Android last year exceeded 28 million, which is almost 2 times more than in 2018.
If you go to the company's revenues, then their structure can be divided into the following parts:
- By type of service.
- By client geography.
- By customer type.
Income by type of service. Consists of four segments:
- Vacancy announcements. HeadHunter Clients: legal entity, natural persons, IP, government agencies and others - buy the right to place on the online platform a certain number of ads for their vacancies for a certain period of time.
- Comprehensive subscriptions. The company provides access to its resume database and allows clients to post job postings on its website on a subscription basis for a specific period of one day to twelve months..
- Access to resume database. HeadHunter provides access to its resume database on a subscription basis for a period of one day to twelve months.
- other services. This direction is a product, aimed at improving the efficiency of basic recruitment services, including display advertising, HR-branding, HR-analytics, lead generation, offline HR events and premium services for job seekers.
Income by geography of clients. Divided into three divisions:
- Moscow and St. Petersburg.
- Other regions of Russia.
- Other. This direction consists of foreign clients in Russia and other clients in other countries.
Income by type of clients. Consists of three segments:
- Key customers are customers, who have ever posted more than 10 vacancies at the same time with HeadHunter or used a subscription for 180 days or more.
- Medium and small accounts are small companies, whose staff mainly consists of less than 100 employees.
- Other. This direction consists of foreign clients in Russia and other clients in other countries.
Revenue dynamics, billion rubles
| Types of services | 2018 | 2019 | 2020 | 1п2021 |
|---|---|---|---|---|
| Vacancy announcements | 2,228 | 3,112 | 3,342 | 1,700 |
| Comprehensive subscriptions | 1,946 | 2,224 | 2,372 | 1,022 |
| Access to resume database | 1,402 | 1,762 | 1,812 | 0,807 |
| other services | 0,542 | 0,691 | 0,755 | 0,382 |
Dynamics of income by types of services, billion rubles
| Geography of clients | 2018 | 2019 | 2020 | 1п2021 |
|---|---|---|---|---|
| Moscow and St. Petersburg | 3,847 | 4,561 | 4,683 | 3,610 |
| Other regions of Russia | 1,584 | 2,279 | 2,641 | 2,398 |
| Other | 0,687 | 0,948 | 0,959 | 0,745 |
Dynamics of income by customer geography, billion rubles
| Types of clients | 2018 | 2019 | 2020 | 1п2021 |
|---|---|---|---|---|
| Key clients | 2,244 | 2,647 | 2,972 | 2,108 |
| Medium and small accounts | 3,187 | 4,194 | 4,352 | 3,899 |
| Other | 0,687 | 0,948 | 0,959 | 0,745 |
Dynamics of income by type of clients, billion rubles
What is the trick of the company
HeadHunter has two unique features: rapid growth and high profitability.
Fast growth. HeadHunter is the leader of its segment and grows faster than other competitors: revenue of the online platform over the past five years, from 2017 to 2021, increased almost 3 times, with 4,734 to 13,913 billion rubles against the background of the growth of its market only by 73%. In 2021, the company predicts, that its revenue compared to 2020 will add another 63-68%.
High profitability. HeadHunter is one of the leaders of the Russian online market in terms of EBITDA margin and net profit. These two values demonstrate the company's performance – how much it will receive "EBITDA / net profit" per unit of revenue..
Profitability of companies from different sectors
| EBITDA | Net profit | |
|---|---|---|
| HeadHunter | 58% | 41% |
| «Yandex» | 7% | 1% |
| Mail.ru | 22% | −7% |
| Qiwi | 36% | 25% |
| Х5 Retail Group | 8% | 5% |
| "Child's world" | 15% | 10% |
| "M Video" | 6% | 3% |
| MTS | 44% | 13% |
| Rostelecom | 40% | 8% |
Share capital
HeadHunter's Main Corporate Events:
- 9 May 2019 the company held an IPO for years on Nasdaq, sold 18 750 000 ADR by price 13,5 $.
- 14 April 2020 The St. Petersburg Exchange allowed receipts of the online platform to trade.
- 15 July 2020 Goldman Sachs Group through its structure ELQ Investors VIII Limited sold 5 million shares of the company at a price 20,25 $.
- 25 September 2020 Moscow Exchange allowed HeadHunter securities to trade.
- 24 november 2020 the company signed an agreement to purchase the Service "Salary-ru" for 3.5 billion rubles. "Salary-ru" is one of the largest services for job search in the Urals and Siberia.
- 31 May 2021 year the online platform has increased its share to 65% in another service — Skillaz.
- 7 June 2021 Goldman Sachs Group, through its ELQ Investors VIII Limited structure, and Elbrus Capital Fund sold 4 500 000 HeadHunter shares at the price 37 $.
All these events led to this, that the current authorized capital of HeadHunter is 50 635 720 ADR and that the company is traded on three exchanges at once: on NASDAQ and St. Petersburg Stock Exchange under the ticker symbol HHR and on the Moscow Exchange under the ticker symbol HHRU.
Shareholder structure
| Elbrus Capital Fund | 31,9% |
| Goldman Sachs Group | 8,7% |
| Free-float | 59,4% |
31,9%
Dividend policy
The company doesn't have a long history of dividend distribution.. HeadHunter's dividend policy implies a payment of at least 50% adjusted net income, the actual distribution rate for the last three years is 75%
IN 2021 year online platform shows phenomenal results. Adjusted net profit for H1 2021 — RUB 2.452 billion, or 48 P per share. If the company retains its current share of the distribution of adjusted net income for dividends — 75%, — then for the first 6 months of 2021, the dividend policy will be paid in 36 R, and if HeadHunter reduces the norm to 50% - 24 R.
Dynamics of dividend payments
| 2018 | 0,36 $ |
| 2019 | 0,5 $ |
| 2020 | 0,55 $ |
0,36 $
results
HeadHunter is a growth story. The company's financial results have multiplied over the past few years. 2020 the year for the online platform was not easy against the backdrop of the pandemic and quarantine restrictions in Russia. All this caused an outflow of customers in the 2nd quarter of 2020, but in Q4 2020, HeadHunter returned to its previous growth trajectory..
Basic Drivers for Fast Recovery: strong subscription-based business model, gradual recovery from the crisis of the domestic economy and radical transformation of the behavior of the population, which has moved from offline to online channels. As for the current, 2021 of the year, then it is for HeadHunter record growth.
Financial results for the last 5 years, billion rubles
| Revenue | Adjusted EBITDA | Adjusted net income | net debt | |
|---|---|---|---|---|
| 2016 | 3,286 | 1,670 | 0,113 | 4,584 |
| 2017 | 4,734 | 2,257 | 0,076 | 5,421 |
| 2018 | 6,118 | 2,855 | 1,538 | 3,577 |
| 2019 | 7,789 | 3,931 | 2,409 | 3,040 |
| 2020 | 8,282 | 4,187 | 2,733 | 4,909 |
| 6м2021 | 6,752 | 3,605 | 2,453 | 2,453 |
Comparison with competitors
| EV / EBITDA | P / E | P / S | net debt / EBITDA | |
|---|---|---|---|---|
| HeadHunter | 32,84 | 47,22 | 17,07 | 0,43 |
| «Yandex» | 41,17 | 123,33 | 7,44 | −2,77 |
| Mail.ru | 15 | Otric. | 3,21 | 0,88 |
| Upwork | Otric. | Otric. | 13,55 | Otric. |
| ManpowerGroup | 11,16 | 24,64 | 0,32 | −0,68 |
| Robert Half International | 16,93 | 26,72 | 2,09 | −0,84 |
Arguments for
Rapid growth. Over the past 5 years, the revenue of the online platform has grown on average by 24% in year. In 2021, its growth rate will increase, according to management forecasts, up to 63—68%. Main causes: organic business growth, acquisition of shares in other services — "Salary-ru" and Skillaz, — after which their results began to be displayed in the income of HeadHunter, and the low base of 2020.
High profitability. The company shows excellent results: EBITDA margin — 58%, profitability on net profit — 41%, – which allow it to prove its investment attractiveness. Its current high valuation is justified by its high level of income..
Positive financial results. HeadHunter is growing and steadily bringing profit, what not all Russian and American competitors of the company can boast of.
Low debt burden. As of June 30, 2021, the company's net debt amounted to RUB 2.592 billion, and the net debt/EBITDA multiple — 0,43. The absence of debt helps the company to buy up competitors and distribute almost all earned net profit to dividends.
Baibek. 30 September 2021 HeadHunter announced the launch of a share repurchase program worth up to 3 billion rubles, which is equivalent 1,66% of the total capitalization of the company. The buyback will be valid from October 11, 2021 to August 10, 2022.
Arguments against
Low diversification. HeadHunter's entire business is built around its own online recruitment platform., which makes the company less resistant to crisis in its industry in comparison, for example, with Yandex and Mail.ru Group. At "Yandex", unlike HeadHunter, in addition to the main search units, there are strong secondary segments: taxi, game direction, social networks and other digital services.
Appreciation. The company's multipliers are not low.: EV / EBITDA more 30, P / S more 15. In addition, if you compare the capitalization of the online platform at 180 billion with all the company's assets., which amount to only 21 billion rubles, then the meaning of "capitalization" / assets" will turn out about 10.
Dividend yield. Even with the high — 75% — the ratio of the distribution of adjusted net profit dividend yield less than 1%. But to his credit, HeadHunter is worth acknowledging., that dividend payments are uncharacteristic for IT companies, which show growth rates of more than 20%.
Outcome
HeadHunter is a unique company for the Russian stock market, which also occupies a leading position in its industry. The business of the online platform is growing from year to year due to the digitalization of the Russian labor market. A small level of capital expenditures and a low debt burden allow the company to distribute almost all earned net profit to dividends..
As an object for investment HeadHunter should be considered only by topics, who is looking for growth stories and believes in further reformatting of the Russian economy.
