Hot Stock to watch: HeadHunter Group PLC (NASDAQ: HHR)

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HeadHunter Group PLC (NASDAQ: HHR) stock surged over 13.93% on June 1st, 2020 (Source: Google finance) after the company reported 18.6% rise in the revenue due to the increase in revenue in the Russia segment. Therefore, adjusted Net Income increased by 64.2% primarily on the back of an increase in revenue, and Adjusted Net Income Margin expanded to 30.8% from 22.2%, or by 8.6 ppts, of which 5.1 ppts due to an increase in net foreign exchange gain. The revenue in the Russia segment rose by 18.2% to ₽1,838 million for the three months ended March 31, 2020 compared to ₽1,556 million for the three months ended March 31, 2019. This is mainly due to an increase in prices which led to the increase in ARPC across all customer segments, which reflects an increase of 10% in the number of paying customers in the Small and Medium Accounts segment and a rise of 12% in the number of paying customers in the Key Accounts in Other Regions of Russia segment. However, the company posted lower than expected results for the first quarter of FY 20 due to effects of Covid-19.

Moreover, on the back of favorable FX effect and certain budget optimization initiatives, the company continues to deliver EBITDA margin expansion by circa 6% compared to Q1 2019 reaching 52.5%. Capex, excluding one-off expenses, was below 3% of revenue and the company has also put certain capital initiatives on hold until further clarity on the full impact of the COVID pandemic.

HHR in the first quarter of FY 20 has reported the adjusted earnings per share of 9 cents, missing the analysts’ estimates for the adjusted earnings per share of 14 cents. The company had reported the adjusted revenue of $25.6 million in the first quarter of FY 20, missing the analysts’ estimates for revenue of $27.1 million. The company’s key accounts revenue rose by 20.5%, mainly due to the strong ARPC growth on the back of new monetization and client base expansion in Russian regions. Moscow key accounts RPC got significantly affected by last two weeks of March where the company lost, the company estimate, several percentage growth points driven by reduced up-sell and new postings and value-added products.

Meanwhile, the company is seeing a significant improvement in financial across the board, especially in May when, for instance, decline in average daily cash flows compared to 2019 reduced by nearly 2 times over April, right. In Q1, the company had generated RUB942 million from operating activities compared to RUB375 million in Q1 last year.

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