Good afternoon, and welcome to Recruiter.com’s Fourth Quarter and Year-End 2021 Earnings Conference Call. This is Stephanie Prince from PCG Advisory. As a reminder, this call is being recorded and all participants are in a listen-only mode. We will open the call for questions and answers following the presentation. On the call today are Recruiter.com’s Chairman and CEO, Evan Sohn; and President and COO, Miles Jennings. The company would like to remind everyone that various remarks about future expectations, plans and prospects made on today’s call constitute forward-looking statement for the purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Recruiter.com cautions that these forward-looking statements are subject to risks and uncertainties that may cause their actual results to differ materially from those indicated including risks described in the company’s filings with the SEC. Any forward-looking statements made on this conference call speak only as of today’s date Thursday, March 31, 2022. Recruiter.com does not intend to update any of these forward-looking statements to reflect events or circumstances that occur after today. A replay of today’s conference call will be available through the Investor Relations section of Recruiter.com’s website at investors.recruiter.com. With that, I’d like to turn the call over to Recruiter.com’s Chairman and CEO, Evan Sohn for opening comments. Evan?

Thank you, Stephanie, and I’d like to welcome everyone on the call today. By every measure, Recruiter.com had a tremendous year in 2021. We grew revenue to over $22 million, a growth 160%. During the year, we uplifted to NASDAQ raised approximately $14 million in new capital, closed four key acquisitions built out our management team and a solid operational foundation, introduced several important new product segments and transformed our revenue mix. We began the year looking more like a traditional staffing company on top of a web-based media company and ended the year as a technology-led recruiting solutions company. Coincidentally, today is my third anniversary with the company having joined as Chairman of the Board in 2019. And I couldn’t be prouder of our accomplishments. Thank you to our team and everybody who has helped us get to this point. Before we get into more details, I’d like to briefly review our products and strategy for those new to Recruiter.com. Recruiter.com provides software and services to solve hiring challenges for employers. We deliver talent solutions to employers working with companies from startups to the Fortune 100. Our artificial intelligence powered software provides employers with a steady stream of qualified candidates for their open roles deliver to them in their manner of preference. This software works by scanning over 160 million profiles in the United States alone, matching their candidates for these open jobs and then campaigning to them to get their interest. For companies that need extra help hiring, we also provide freelance recruiters on an on demand or gig basis paid by the hour. Think of this like Uber for talent acquisition. We have recruiters on various projects at our clients getting paid for their services with no traditional head hunter fees. These are full or part-time positions…

Evan, thanks very much. Next slide. There you go. Recruiter.com had a strong fourth quarter. Revenue increased from $6.3 million in the third quarter to $8.4 million in the fourth, which was a 100% organic growth. Our higher margin, higher growth, software and marketplace subscriptions, and our Recruiter on Demand segments accounted for almost 75% of total revenue in our fourth quarter of 2021, compared to 66% of our total revenue in the third quarter. Our strongest growth was in two product lines during the fourth quarter, including software subscriptions, which grew 64% from the previous quarter sequentially. Recruiter on Demand our largest revenue segment was strong too with revenue increasing over 50%. Our gross profit dollars increased by 14% over the third quarter and 262% compared to last year’s fourth quarter. The gross margin percentage in Q4 was 31%, compared to 37% in the third quarter. This decrease in gross margin was primarily due to our first larger collections and bad debt issue. Specifically, we had to expense all of the costs related to one now former client, but we couldn’t recognize all of that revenue. Without this issue, our margins remained roughly steady. This collectability issue will also affect our revenue in Q1, although to a lesser degree. With numerous acquisitions and high organic growth, we were bound to have a collections issue. We used it as an opportunity to review and tighten up our customer financial controls and checks and balances on extending our customer’s credit. We’re confident that we’ve improved our credit evaluation process for the future. General and administrative expenses were up in the quarter, reflecting increases in compensation, reflecting our growth, an increase in stock-based compensation and the onetime bad debt expense of approximately $650,000 associated with the collection issue I just discussed. Next…

Thank you, Miles. As many of you know, Recruiter.com creates its own research in addition to analyzing general market conditions. We then present this data to various outlets like on my monthly CNB segment – CNBC segment before the jobs report. We see here, our Recruiter Sentiment Index taken from a monthly survey of recruiters in our network. Since the beginning of the pandemic, you could see that sentiment continued to improve until Omicron hit the United States. After declining for a couple of months in the depth of winter, sentiment rebounded in March as the COVID pandemic continues to recede. It is now back to 3.7 out of 5 new last month, we partnered with Revelio Labs to include job demand data. Interesting to note recruiters are now number two, on the list of the most in demand jobs. It was number three on our last call. There are a series of key macro industry trends that we believe will support our continued growth. These include the reopening of the economy. With an unemployment rate of 4% and over 11 million jobs open in January, there’s an immediate demand for recruiting solutions. The great resignation is another significant trend that you’ve probably heard about on the news. It’s continuing. An estimated 4.3 million people quit their jobs in January of 2022 and current polls show that four out of five American workers are looking to make a job change. Then there is the job hopper economy where an estimated 60% of millennials say they’re willing to leave their job within the first six months. According to economists this trend is expected to have a lasting impact on work tenures going forward. And last is the overall demand for recruiters. According to LinkedIn, there are over 300,000 open jobs for…

Hi, everyone. Thanks for joining. This is the host. [Operator Instructions] Okay, it looks like we have one question. You can go ahead and talk now.

Yes. Hi. This is Alan Clay for Maxim. Nice to hear you guys. And the momentum you have. Could you talk a little on the recruiter on-demand, what the momentum you’re seeing there? And what’s kind of and how you’re thinking about the outlook there?

Sure. Again, thank you, Alan and really appreciate your support certainly over these last few months. Recruiter on-demand is really an exciting business. Companies of all sizes really have a choice. They can either hire on their own, they could do it themselves, or they could use a HeadHunter to do it for them. And what we’ve really seen in this on-demand space are companies large and small want to bring an in-house recruiter without the long-term expense of an in-house recruiter. And we do this in an on-demand basis, very much like some of the freelance platforms like Upwork and Fiverr. And of course, I mentioned before, like the Uber for talent acquisition. And what we’re seeing is companies – the larger companies, the more sophisticated companies are leveraging our on-demand platform to augment their in-house teams to really address influx or increases of demand perhaps on a sporadic basis. We expect this to continue and it’s also incredibly specialized. The recruiter that a pharmaceutical company requires is a different recruiter than a technology company requires. And what we’re doing now, Alan is actually taking that downstream and helping companies – smaller companies with this – with the on-demand recruiting space as well. So we’re very optimistic about the long-term opportunities for our on-demand platform. Operator, do you want to take the next question. Alan, did that answer your question?

That’s great. Could I ask a couple more or...

Sure.

Okay, great. For software subscription, I know that’s a new – that’s a bigger focus. Can you talk about kind of how you’ve changed the resources you’re putting behind that and how you’re thinking about the outlook there?

Sure. Look, the future of talent acquisition, at the end of the day here, recruiting is still about a human interaction. We’re not called no recruiter, we’re called Recruiter.com. So we really believe that talent acquisition is a human interaction. But what we want to see happen is that 80% of the time proverbially, of course, one should be spent in meaningful conversations with candidates and hiring managers and 20% of the time sourcing and engaging those candidates. Our software combined with our services and our on-demand services are part of that sourcing and engaging candidate process. So companies, again large and small are subscribing to our software like a traditional SaaS platform, and we're delivering for them a warm and engaged candidates. Our AI software has access to over 160 million U.S. profiles just in – that's in the U.S. alone. So think about just every working adult in the U.S. that we have access to. And we engage our software on behalf of our clients, whether they're pharmaceutical clients, technology clients, law firms and everything that's in between. It really is an incredible piece of technology and I'm glad you – I'm glad you raised it because it's been a very significant focus of our investment, certainly in 2022 as we expect to drive more and more revenue through our software throughout the year. In fact, as we're shifting to a software led company, our whole platform is going to be driven by our software itself. So we're going to see the rest of our company utilize our own software throughout the very different lines of business that we have. And again, if you think about it now, we were have three – three major segments. We have self-service on our platform. We have the real – a small business offering for the smaller companies or the divisions inside of larger companies. And then we have a full on enterprise solution suite as well. Thank you, Alan. So there's another call from – operator, do you want to let that person in 203 for…

Okay. Alan, I'm just going to mute you here to go on the next person. Thank you. Now I'm going to allow the 4686 number to ask their question. [Operator Instructions]

There you go.

Hi there. Okay. Just very, too high tech for me. Sorry. Hi guys. It's Lisa Thompson at Zacks.

Hi Lisa.

Could you a little bit talk about how the past year has progressed as far as demand and how you see it going forward? Is it a situation where more and more people are finding out about you and using you and so growth just keeps increasing? Or you at a point do you think where you're actually going to see seasonality in your business?

It's an excellent question and again thank you. Let's first address the first question. More and more people are learning about us because we were a media company. So we run the largest network for recruiters and HR professionals. We have 3.5 million social media touch-points, 48,000 Twitter followers. But one of the areas that we've really invested in 2021 is really in our marketing department, really just an incredible team, doing great work, we publish articles every day, webinars, et cetera, and we're driving more and more leads through to our sales team, which we also grew throughout 2021. And so we're really benefiting from that exposure. We've spent a lot of time and money on SEO on ensuring that we're driving lots of traffic to our website and our various microsites and are really able to really benefit from the URL that we have and all the traffic that we're generating. In terms of demand, not a day goes by where you don't talk about or read about the war for talent or the talent shortage or attrition rates or hiring rates. And we're part of that conversation. We are really at the epicenter of that conversation in terms of not just the articles, but the exposure that we have in various media channels and podcasts, et cetera. And we're helping customers and clients really address and deal with those problems. Those problems aren't going away. These are not – these are not episodic problems. These are going to be systemic problems. And so we really work with companies that have, that maybe historically we're only churning 15% of their employees are now churning 30% of their employees. So it's a very serious number and we're really part of that overall process. In terms of seasonality, you raise a great question. We acquired four companies in 2021 and we're being very prudent in really recognizing that there could be some seasonality at some of the businesses that we acquired, and we're taking that very seriously as good stewards of capital.

So thank you, Lisa. Really appreciate the question. Do you have a follow up?

Okay. Yes. Given that we're at March 31st and the first quarter's over. What are your feelings of how this quarter turned out compared to this December quarter? Does everyone do this hiring at the end of the year or everybody wait for a new budget in January? Should we expect sequentially up revenues?

So at this time we're not giving any guidance for 2022 and not for Q1 either. Our acquisitions are not even one-year old and we really want to see if there's seasonality in their business areas. And so that's probably – that's probably what we'll talk about in terms of guidance. The impact of the lost revenue that we did talk about in the call is a onetime impact and we're quickly replacing that revenue with new clients and new software subscriptions. When I look at our – what our growth has been even with that revenue loss, I'm really very proud of our team's accomplishments and the solid traction that we developed with our products. I'm looking forward to 2022.

Okay. Do you have a feel at this point when you're going to reach cash breakeven?

Excellent. We're very focused on achieving profitability and managing our operating expenses. And so our monthly operating expenses have decreased over the last few months, as we realized the expense synergies from our 21 acquisitions – our 2021 acquisitions, not that we made 21, from the acquisitions that we made in 2021. Our cash burn is very, very manageable and we're getting more predictable with each passing month.

So that's a no answer. Okay. Do you have any idea what revenue level you need to reach to get there or did I pretend…

I think we talked about that. Yes, we actually talked about that at the Q3 number. Our operating expenses are below $1.3 million on a monthly basis when you're extracting out amortization and stock based compensation. We've been managing that really, really well. And if our gross margins are somewhere in the 40% range, you could sort of run the numbers and we're hovering near there. So we're both keeping our expenses controlled while investing in our software development and our marketing and our sales at the same time growing our – managing the growth of our revenue in line with ensuring that we could achieve profitability by managing our overall expenses.

Okay. I don't see anyone else with their hand raised at this time. Please raise your hand if you do have a question. Okay. It looks like someone else has a question on the phone. Go ahead.

Hi. It's Alan again. For the bad debt that impacted 4Q, you said there'll be something impact in 1Q also. Is it possible to give us a sense of what that might be?

I wish Judy was on the call. Our Chief Financial Officer, she was really close to those numbers and she couldn't make it right now. Miles, do you want to just take this off?

Yes. I can speak to that a little bit.

Okay, great. Thank you.

Yes. With our on demand business, it does involve the cost of labor of our recruiters and talent position professionals that were putting out on a gig basis. And so we did incur some, I would say kind of non-material costs related to labor in January and that trailed off in before February. So non-material, but there's still some trailing impact.

So it would be reasonable to assume it'd be less of an impact probably in 1Q than it was in 4Q?

Yes. Very much so. Yes. We're talking less than $250,000 in cost.

Thanks, Alan.

Okay. It looks like no one else at this time is raising their hand for a question.

Excellent. So just to conclude, just want to thank everyone for joining the call. We – I looked to how many attendees we had at this earnings call and it's, I think twice as many as we had last call. So I think that's a good trend, and I want to thank everyone for your continued support and if anyone needs additional information you could reach me at evanatrecruiter.com. You could also go check out our Investor website, which is investors.recruiter.com. I want to thank everyone for joining us today and everyone have a good evening.