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New Work SE — Earnings Release 2020
May 7, 2020
303_ip_2020-05-07_57bf792d-b9fd-44dc-b624-c991724d0223.pdf
Earnings Release
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Q1 2020 Results Presentation
HAMBURG, 7 MAY 2020
EXECUTIVE SUMMARY Q1 2020
- Like-for-like revenues & EBITDA continue to grow, however COVID-19 impacts from March onwards
- B2C proving stable
- Our B2B E-Recruiting business is growing, but is less robust than B2C
- Our long-term (post-COVID-19) outlook is unchanged
- Meanwhile (during the COVID-19 crisis), we continue to build our value proposition and strengthen our customer relationships
WORK LIKE-FOR-LIKE REVENUES & EBITDA CONTINUE TO GROW STRONGLY, HOWEVER COVID-19 IMPACTS FROM MARCH ONWARDS
OUR C-SIDE BUSINESS CONTINUES TO GROW NICELY
Workplace Insights Hununu8 in 000s*
NEW WORK SE | Q1 2020 RESULTS PRESENTATION
WOR
OUR B2B BUSINESS IS GROWING, BUT IS IMPACTED BY COVID-19
* Excl. Prescreen and Honeypot
NEW WORI
LONG TERM OUTLOOK UNCHANGED - DEMOGRAPHICS WILL CONTINUE TO TIGHTEN GERMAN LABOUR MARKET
POST-COVID-19 ASSUMPTIONS
Strong increase in open vacancies expected, resulting in greater demand for employees
* IAB on development of unemployment rates in 2020 ** Management assumption for worst case scenario
COVID-19 is causing an economic dip and increasing unemployment rates
Impact of COVID-19 expected to be overcompensated by demographics
WITH STRONG C-SIDE ACCESS IN D-A-CH WE REMAIN IN UNIQUE POSITION TO OFFER OUR LEADING RECRUITING SOLUTIONS POST-COVID-19
in C-Side access (www.XING.com)
in employer branding (kununu)
in active recruiting (XTM)
in tech talent access in Europe (Honeypot)
in expat access / worldwide (InterNations)
MEANWHILE WE CONTINUE TO BUILD OUR VALUE PROPOSITION AND STRENGTHEN OUR CUSTOMER RELATIONSHIPS WITH NEW PREMIUM OFFERING
EXAMPLES OF NEW VALUE
An exclusive self-assessment test with our partner LINC
Access to educational videos from partners
New exclusive content with Harvard Business Manager
FURTHERMORE WE IMPROVED OUR B2B OFFERING BY LAUNCHING THE EMPLOYER SEAL WITH HHL LEIPZIG AND IMPROVED THE XTM
- New Work Employer Seal rewards companies that $\bullet$ create employee-centric work environments
- Measurable facets of New Work scientifically developed $\bullet$ between HHL & New Work SE
- Employee as well as employer reviews are taken into $\bullet$ account and have to pass the academic analysis
XTM with new "Talent Radar" & "Current Employer" Modules
| Discover hidden talent | Insights on current employers | ||||||
|---|---|---|---|---|---|---|---|
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O. Its rational combinant | KING E-Raccalding |
- "Hidden talent" recommendations for recruiters based on new screening algorithm
- More candidate "insights" for recruiters
- Recruiters receive insights into employer fluctuation and employee movements
WE ACTIVELY STRENGTHEN CUSTOMER RELATIONSHIPS DURING THE COVID-19 SITUATION
B2C
400 experts publish content on XING News to help people navigate through the current situation
wehelpfreelancers initiative companies to pre-book / pay for freelancer services
kununu launched employer transparency ticker
B2B E-RECRUITING
Free of charge job ads for essential and high-demand jobs
Free of charge TalentpoolManager
XTM free for 30 days
Free services for 360 customers
XING Events started online events training
Q1 2020 FINANCIAL HIGHLIGHTS
- · CONTINUED GROWTH IN Q1, BUT BUSINESS IMPACTED FROM COVID-19
- Main Q1 non-fins and revenues are up
- Q1 EBITDA up on like-4-like basis
- · STRONG CASH-FLOW IN Q1
- · APRIL SHOWS COVID-19 IMPACT
- · BUSINESS MODEL IN GENERAL COMPARATIVELY RESILIENT
- $\cdot$ FY OUTLOOK: REVENUES $\epsilon$ 275-285M; EBITDA MARGIN ~30%
- $\cdot$ DIVIDEND PROPOSAL UNCHANGED: $\epsilon$ 2.59 PER SHARE
Q1 2020: REPORTED NUMBERS DISTORTED BY XO EFFECTS AND A PORTFOLIO ADDITION (HONEYPOT)
| Q1 2020 | Q1 2019 | Q1 2020 vs. Q1 2019 |
Q4 2019 | Q1 2020 vs. Q4 2019 |
|
|---|---|---|---|---|---|
| Abs. | Abs. | Rel. | Abs. | Rel. | |
| Service revenues | 68.9 | 62.6 | 10% | 73.2 | (6%) |
| Other operating income | 0.6 | 4.8 | (87%) | 0.3 | 102% |
| Capitalized own work | 6.6 | 5.6 | 16% | 5.6 | 17% |
| Costs before capitalization | (60.1) | (55.4) | (9%) | (57.4) | (5%) |
| EBITDA | 15.9 | 17.7 | (10%) | 21.7 | (26%) |
| Margin | 23% | 28% | $(5\%pts)$ | 30% | $(6\%pts)$ |
| D&A | (12.3) | (5.9) | (108%) | (13.3) | 7% |
| Financial result | 5.6 | 1.5 | 270% | 4.9 | 14% |
| Taxes | (2.0) | (4.1) | 51% | (1.6) | (27%) |
| Net income | 7.2 | 9.2 | (22%) | 11.7 | (38%) |
| EPS | 1.28 | 1.64 | (22%) | 2.11 | (38%) |
Q1 2020 PRO-FORMA P&L: 12% EBITDA GROWTH VS PRO-FORMA Q1 2019
| Q1 2020 reported |
Honeypot Start-up losses |
CSO severance payment |
COVID-19 Impairment |
Earn-Out adjustments M&A Transactions |
IFRS changes in value of financial assets |
Q1 2020 Pro-Forma |
Q1 2019 Pro-Forma |
Q1 2020 Pro- Forma vs. Q1 2019 Pro- Forma |
|
|---|---|---|---|---|---|---|---|---|---|
| Abs | Abs. | Rel | |||||||
| Service revenues | 68.9 | 0.6 | 68.3 | 62.6 | 9% | ||||
| Other operating income | 0.6 | 0.0 | 0.6 | 1.1 | (44%) | ||||
| EBITDA | 15.9 | (1.7) | (1.2) | 18.8 | 16.9 | 12% | |||
| D&A | (12.3) | (0.4) | (5.8) | (6.1) | (5.9) | (3%) | |||
| Financial result | 5.6 | (0.2) | 7.4 | (1.5) | (0.1) | (0.3) | 60% | ||
| Taxes | (2.0) | 0.8 | 0.4 | 0.5 | (3.6) | (3.7) | 2% | ||
| Net income | 7.2 | (1.6) | (0.8) | (5.8) | 7.4 | (1.0) | 9.0 | 7.0 | 29% |
| EPS | 1.28 | (0.28) | (0.14) | (1.03) | 1.31 | (0.18) | 1.60 | 1.25 | 29% |
Q1 2020 adjusted for Honeypot related effects (impairment, change in earn-outs and start-up losses) & redundancy payments for board member $\bullet$ Alastair Bruce and changes in the value of financial assets
Q1 2019 adjusted for one-time effect related to new office rental agreement, the kununu US step up and changes in value of financial assets $\bullet$
B2C AND B2B E-RECRUITING SEGMENT MARGINS STABLE GIVEN INVESTMENTS, MARKETING SOLUTIONS & EVENTS IMPACTED BY TOPLINE DEVELOPMENT DUE TO COVID-19
| Segment EBITDA Q1 2020 |
Q1 2020 Margin |
Q1 2019 Margin |
Comment | |
|---|---|---|---|---|
| B 2 C | 7.4 | 29% | 29% | Investments in new products |
| B2B E-Recruiting | 25.4 | 66% | 70% | |
| B2B Marketing Solutions & Events | 0.8 | 17% | 30% | Negative COVID-19 effects |
| kununu International | (0.2) | Neg | Neg | |
| Tech, Central Services & Other | (17.4) | Neg | Neg | |
| Total EBITDA | 15.9 | 23% | 28% |
*EBITDA Margin = EBITDA / Service Revenue
Rounding differences possible
Q1 2020: B2C AND B2B E-RECRUITING STABLE/GROWING; MARKETING SOLUTIONS & EVENTS IMPACTED BY COVID-19
16
Q1 2020 COST DEVELOPMENT
Investment in product/tech org & sales/marketing
- SEM
-
B2B E-Recruiting media campaign
-
Payment processing
- Travel & entertainment
- Other
Q1 2020: OPERATING CASH FLOW OF € 32.4M
| Q1 2020 | Q1 2019 | Q1 2020 vs. Q1 2019 |
Q4 2019 | Q1 2020 vs. Q4 2019 |
|
|---|---|---|---|---|---|
| Abs. | Abs. | Abs. | Abs. | Abs. | |
| EBITDA | 15.9 | 17.7 | (1.8) | 21.7 | (5.7) |
| Interest / tax / other | (2.0) | (2.3) | 0.3 | (1.1) | $-0.9$ |
| Change in net working capital | 18.4 | 17.1 | 1.3 | (4.2) | 22.7 |
| Non-cash changes from changes in basis of consolidation |
0.0 | (3.8) | 3.8 | 0.0 | 0.0 |
| Operating cash flow excl. organiser cash | 32.4 | 28.8 | 3.6 | 16.3 | 16.1 |
| Investment $-$ operating | (9.2) | (8.0) | (1.2) | (9.0) | (0.2) |
| Investment $-$ acquisitions & joint venture | 0.0 | (2.5) | 2.5 | 0.0 | 0.0 |
| Investment - financial assets | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Interests paid, lease liabilities, FX rate diff. & rest | (1.5) | (1.2) | (0.3) | (2.0) | 0.5 |
| Cash-flow excl. dividends & organiser cash | 21.7 | 17.1 | 4.6 | 5.4 | 16.4 |
| Regular dividend | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Special dividend | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Cash-flow excl. organiser cash | 21.7 | 17.1 | 4.6 | 5.4 | 16.4 |
| Effects organiser cash | (0.7) | 2.8 | (3.5) | (3.5) | (2.8) |
| Cash-flow incl. organiser cash | 21.0 | 19.9 | 1.2 | 1.9 | 19.2 |
APRIL W/COVID-19 SHOWS STABLE NON-FINS AND RENEWAL BUSINESS BUT NEGATIVE IMPACT ON NEW AND TRANSACTIONAL BUSINESSES
| FIRST MONTH OF COVID-19 | POST-COVID-19 | LONG-TERM | |
|---|---|---|---|
| B 2C | Member adds slightly down yoy Activity up yoy, esp. News Premium: Existing payer base rather stable Premium: New business slightly down r |
Member growth and activity back to normal $\blacksquare$ Overproportional job search activity expected |
|
| B 2 B E-RECRUITING |
Existing subscriber base with stable renewals New subscription business significantly down New business passive recruiting significantly down |
Depending on macro economy in general Scarce candidate segments most likely w/faster recovery |
Long-term outlook unchanged due to megatrend "Demographics" |
| MARKETING SOLUTIONS 8 EVENTS |
Marketing Solutions transactional, slightly down Events generally strongly affected п |
Marketing Solutions back to normal XING Events: depending on social distancing policy. Virtual events potential new opportunity |
OUR BUSINESS MODEL IS COMPARATIVELY RESILIENT; NEW OUTLOOK
RESILIENCE
SUBSCRIPTION BASED REVENUES
~80% subscription based, mainly auto-renewal
GRANULARITY OF CUSTOMER BASE
Very diversified user and customer base
UP-FRONT PAYMENT Subscription packages are usually paid upfront
DIGITAL OPERATIONS Majority of operations are purely digital
OUTLOOK
OUTLOOK UPDATE BASED ON COVID-19 EFFECT Revenues: € 275 - 285M EBITDA margin: ~30%
DIVIDEND PROPOSAL UNCHANGED $\epsilon$ 2.59 PER SHARE
THANK YOU THOMAS!
THANK YOU FOR YOUR ATTENTION.
NEW WORK SE | Q1 2020 RESULTS PRESENTATION
NEGATIVE INVESTED CAPITAL FROM SHAREHOLDERS' PERSPECTIVE Excl. event organiser cash and NWC in $\epsilon$ m
Rounding differences possible
CONSENSUS, INVESTOR INFORMATION & CONTACT DETAILS
NEW WORK SE CONSENSUS & IR STATS
| Consensus collected by IR | 2020e | 2021e | 2022e |
|---|---|---|---|
| Service revenues | 278.4 | 308.6 | 361.8 |
| EBITDA | 87.4 | 98.9 | 115.7 |
| Margin | 31% | 32% | 32% |
| D&A | $-39.7$ | $-41.8$ | $-43.1$ |
| EBIT | 47.7 | 57.1 | 72,7 |
| Margin | 17% | 18% | 20% |
| Net income | 30.1 | 38.1 | 48.2 |
| EPS in $\epsilon$ | 5.37 | 6.78 | 8.58 |
| DPS in $\epsilon$ | 1.99 | 2.56 | 3.19 |
| Analyst coverage | Berenberg, Commerzbank, Deutsche Bank, Hauck & Aufhäuser, MM Warburg, Pareto Securities |
|---|---|
| Shares | 5,620,435 |
Average trading volume per day (XETRA) & market cap (in €bn)
| Burda Digital SE (DE) | 50.0 % |
|---|---|
| Oppenheimer (US) | 4.7 % |
| Mawer (CAN) | 3.3% |
| DWS | 3.1% |
| Rest | 38.9% |
Numbers based on last filing - current shareholdings can differ
INVESTOR RELATIONS CONTACT DETAILS & SOCIAL MEDIA CHANNELS
Patrick Moeller
Director Investor Relations NEW WORK SE Dammtorstrasse 30 20354 Hamburg Germany
Tel.: +49 (0)40 419 131-793 Fax.: +49 (0)40 419 131-44 (Please use this number to submit "WpHG notifications")
E-mail: [email protected]