HeadHunter Review: growth company in the Russian market

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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, которая предлагает потенциальным работодателям и рекрутам платный доступ к обширной базе данных резюме и порталу объявлений о вакансиях. 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., действующих в российской экономике. 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.. По данным LiveInternet, количество ежемесячных посещений выросло с 20 млн человек в 2018 году до 21,9 млн в 2019 году и 22,5 млн в 2020 году, the current value of August 2021 — 29,3 million people.

Пользователи HeadHunter получают доступ к онлайн-платформе компании с помощью компьютеров и мобильных устройств. Basically use the desktop version, where you can access all the features, но тенденция последних лет указывает на то, that increasingly began to turn to the mobile application. For example, в 2020 году 71% average monthly unique users fell on mobile devices, and the number of app downloads on iOS and Android last year exceeded 28 million, что почти в 2 раза больше показателей 2018 года.

If you go to the company's revenues, то их структуру можно разделить на следующие части:

  1. По видам услуг.
  2. По географии клиентов.
  3. By customer type.

Доходы по видам услуг. Consists of four segments:

  1. 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.
  2. 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..
  3. Access to resume database. HeadHunter предоставляет доступ к своей базе резюме на основе подписки на срок от одного дня до двенадцати месяцев.
  4. 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.
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Income by geography of clients. Делятся на три подразделения:

  1. Москва и Санкт-Петербург.
  2. Other regions of Russia.
  3. Other. Данное направление состоит из иностранных клиентов в России и остальных клиентов в других странах.

Income by type of clients. Consists of three segments:

  1. Ключевые клиенты — это клиенты, who have ever posted more than 10 vacancies at the same time with HeadHunter or used a subscription for 180 days or more.
  2. Средние и малые счета — это небольшие компании, whose staff mainly consists of less than 100 employees.
  3. Other. Данное направление состоит из иностранных клиентов в России и остальных клиентов в других странах.

Revenue dynamics, billion rubles

Types of services2018201920201п2021
Vacancy announcements2,2283,1123,3421,700
Comprehensive subscriptions1,9462,2242,3721,022
Access to resume database1,4021,7621,8120,807
other services0,5420,6910,7550,382

Динамика доходов по видам услуг, billion rubles

Geography of clients2018201920201п2021
Москва и Санкт-Петербург3,8474,5614,6833,610
Other regions of Russia1,5842,2792,6412,398
Other0,6870,9480,9590,745

Динамика доходов по географии клиентов, billion rubles

Types of clients2018201920201п2021
Key clients2,2442,6472,9722,108
Средние и малые счета3,1874,1944,3523,899
Other0,6870,9480,9590,745

Dynamics of income by type of clients, billion rubles

What is the trick of the company

У HeadHunter есть две уникальные особенности: 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, с 2017 года по 2021 год, увеличился почти в 3 раза, with 4,734 to 13,913 billion rubles against the background of the growth of its market only by 73%. В 2021 году компания прогнозирует, что ее выручка в сравнении с 2020 годом прибавит еще 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..

Рентабельность компаний из разных секторов

EBITDANet profit
HeadHunter58%41%
«Yandex»7%1%
Mail.ru22%−7%
Qiwi36%25%
Х5 Retail Group8%5%
"Child's world"15%10%
"M Video"6%3%
MTS44%13%
Rostelecom40%8%

Share capital

HeadHunter's Main Corporate Events:

  1. 9 May 2019 the company held an IPO for years on Nasdaq, sold 18 750 000 ADR by price 13,5 $.
  2. 14 April 2020 The St. Petersburg Exchange allowed receipts of the online platform to trade.
  3. 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 $.
  4. 25 September 2020 Moscow Exchange allowed HeadHunter securities to trade.
  5. 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.
  6. 31 May 2021 year the online platform has increased its share to 65% in another service — Skillaz.
  7. 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 $.
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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 Fund31,9%
Goldman Sachs Group8,7%
Free-float59,4%

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

20180,36 $
20190,5 $
20200,55 $

0,36 $

results

HeadHunter — это история роста. Финансовые результаты компании кратно увеличились за последние несколько лет. 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.

Финансовые результаты за последние 5 лет, billion rubles

RevenueAdjusted EBITDAAdjusted net incomenet debt
20163,2861,6700,1134,584
20174,7342,2570,0765,421
20186,1182,8551,5383,577
20197,7893,9312,4093,040
20208,2824,1872,7334,909
6м20216,7523,6052,4532,453

Comparison with competitors

EV / EBITDAP / EP / Snet debt / EBITDA
HeadHunter32,8447,2217,070,43
«Yandex»41,17123,337,44−2,77
Mail.ru15Otric.3,210,88
UpworkOtric.Otric.13,55Otric.
ManpowerGroup11,1624,640,32−0,68
Robert Half International16,9326,722,09−0,84
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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, чем могут похвастаться не все российские и американские конкуренты компании.

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, с «Яндексом» и Mail.ru Group. At "Yandex", в отличие от HeadHunter, in addition to the main search units, there are strong secondary segments: taxi, game direction, социальные сети и другие цифровые сервисы.

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 — это уникальная компания для российского фондового рынка, которая к тому же занимает лидирующее положение в своей отрасли. Бизнес онлайн-платформы из года в год растет за счет цифровизации российского рынка труда. 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.

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