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What changed in Star Equity Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Star Equity Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+181 added−177 removedSource: 10-K (2024-03-14) vs 10-K (2023-04-14)

Top changes in Star Equity Holdings, Inc.'s 2023 10-K

181 paragraphs added · 177 removed · 137 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeHudson’s RPO Recruitment services leverage the Company’s consultants, supported by the Company’s specialists, in the delivery of its proprietary methods to identify, select, and engage the best-fit talent for critical client roles. - 1 - Contracting: The Company provides RPO clients with a range of outsourced professional contract staffing services and managed service provider services offered sometimes on a standalone basis and sometimes as part of a blended total talent solution.
Biggest changeHudson’s RPO services leverage the Company’s consultants, supported by the Company’s specialists, in the delivery of its proprietary methods to identify, select, and engage the best-fit talent for critical client roles.
We are a Delaware corporation, and have operated as an independent publicly held company since April 1, 2003, when Monster Worldwide, Inc., formerly TMP Worldwide, Inc., spun off its eResourcing division. The Company delivers Recruitment Process Outsourcing (“RPO”), consisting of recruitment and contracting solutions tailored to the individual needs of primarily mid-to-large-cap multinational companies.
We are a Delaware corporation, and have operated as an independent publicly held company since April 1, 2003, when Monster Worldwide, Inc., formerly TMP Worldwide, Inc., spun off its eResourcing division. The Company delivers Recruitment Process Outsourcing (“RPO”) services, consisting of recruitment and contracting solutions tailored to the individual needs of primarily mid-to-large-cap multinational companies.
Through our website, we make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other reports and amendments to these reports that we file with or furnish to the Securities and Exchange Commission (“SEC”) in a timely manner after we provide them. - 3 -
Through our website, we make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other reports and amendments to these reports that we file with or furnish to the Securities and Exchange Commission (“SEC”) in a timely manner after we provide them. - 4 -
Specifically, of the Company’s employees, approximately 1,340 are client-facing consultants who sell and deliver the Company’s RPO services to its existing client base. The Company’s consultant population has deep expertise in specific functional areas and industry sectors, and provides broad-based recruitment and solution services based on the needs of each client on a regional and global basis.
Specifically, of the Company’s employees, approximately 960 are client-facing consultants who sell and deliver the Company’s RPO services to its existing client base. The Company’s consultant population has deep expertise in specific functional areas and industry sectors, and provides broad-based recruitment and solution services based on the needs of each client on a regional and global basis.
The Company employs approximately 1,440 people worldwide, including approximately 170 employees in the United States (“U.S.”) and 1,270 employees internationally. Hudson is dedicated to acquiring, investing in, and retaining top talent. Hudson RPO’s global and regional employees have vast training and expertise across human capital solutions.
The Company employs approximately 1,050 people worldwide, including approximately 120 employees in the United States (“U.S.”) and 930 employees internationally. Hudson is dedicated to acquiring, investing in, and retaining top talent. Hudson RPO’s global and regional employees have vast training and expertise across human capital solutions.
We are investigating acquisition opportunities to expand capabilities and capacity and utilize our net operating losses. We continue to explore all strategic alternatives to maximize value for stockholders, including without limitation, improving the market position and profitability of our services in the marketplace, and enhancing our valuation. We may pursue our goals through organic growth, strategic initiatives, or other alternatives.
We continue to explore all strategic alternatives to maximize value for stockholders, including without limitation, improving the market position and profitability of our services in the marketplace, and enhancing our valuation. We may pursue our goals through organic growth, strategic initiatives, or other alternatives.
We are not including the information contained on our website as part of, or incorporating it by reference into, this Form 10-K.
Available Information We maintain a website with the address www.hudsonrpo.com . We are not including the information contained on our website as part of, or incorporating it by reference into, this Form 10-K.
For the year ended December 31, 2022, the amounts and percentages of the Company’s total revenue from the core service offerings were as follows: Revenue $ in thousands Amount Percentage RPO Recruitment $ 97,700 48.6 % Contracting 103,217 51.4 % Total $ 200,917 100.0 % Clients The Company’s clientele includes mid-to-large-cap multinational companies and government agencies.
For the year ended December 31, 2023, the amounts and percentages of the Company’s total revenue from the core service offerings were as follows: Revenue $ in thousands Amount Percentage RPO $ 78,468 48.6 % Contracting 82,870 51.4 % Total $ 161,338 100.0 % Clients The Company’s clientele includes mid-to-large-cap multinational companies and government agencies.
The Company’s RPO delivery teams utilize state-of-the-art recruitment process methodologies and project management expertise in their flexible, turnkey solutions to meet clients’ ongoing business needs. The Company’s RPO services include complete recruitment outsourcing, project-based outsourcing, contingent workforce solutions, and recruitment consulting.
The Company’s RPO delivery teams utilize recruitment process methodologies and project management expertise to meet clients’ ongoing business needs. The Company’s RPO services include complete recruitment outsourcing, project-based outsourcing, contingent workforce solutions, and recruitment consulting for clients’ permanent staff hires.
Companies in this industry compete based on a number of parameters including degree and quality of candidate and position knowledge, industry expertise, global presence, scalability, service quality, and efficiency in completing assignments. Typically, companies with greater strength or scale in these areas generate higher margins.
Companies in this industry compete based on a number of parameters including degree and quality of candidate and position knowledge, industry expertise, global presence, scalability, service quality, and efficiency in completing assignments.
Our employee assistance programs offers additional support and information to our staff and a range of additional training modules were rolled out focusing on topics such as mental health awareness, health and wellness in the workplace, and keeping remote teams connected. In addition, the Company values a diverse workplace that honors inclusion and equity.
Our employee assistance programs offers additional support and information to our staff and a range of additional training modules were rolled out focusing on topics such as mental health awareness, health and wellness in the workplace, and keeping remote teams connected. All our employees play an important part in contributing to and shaping our culture.
Market Competition The markets for the Company’s services and products are highly competitive. There are few barriers to entry, so new entrants occur frequently, resulting in considerable market fragmentation.
Our business is dependent upon the continuation of these business relationships as well as new client development. Market Competition The markets for the Company’s services and products are highly competitive. There are few barriers to entry, so new entrants occur frequently, resulting in considerable market fragmentation.
For the year ended December 31, 2022, the amounts and percentages of the Company’s total revenue from the three reportable segments were as follows: Revenue $ in thousands Amount Percentage Americas $ 51,639 25.7 % Asia Pacific 118,149 58.8 % Europe 31,129 15.5 % Total $ 200,917 100.0 % Service Offerings The Company’s core service offering is RPO, consisting of RPO Recruitment and Contracting: RPO Recruitment: The Company provides complete recruitment outsourcing, project-based outsourcing, and recruitment consulting for clients’ permanent staff hires.
For the year ended December 31, 2023, the amounts and percentages of the Company’s total revenue from the three reportable segments were as follows: Revenue $ in thousands Amount Percentage Americas $ 31,254 19.4 % Asia Pacific 103,857 64.4 % Europe 26,227 16.2 % Total $ 161,338 100.0 % Service Offerings The Company’s core service offering is RPO, consisting of RPO and contracting services: RPO: The Company provides complete recruitment outsourcing, project-based outsourcing, and recruitment consulting for clients’ permanent staff hires.
These services draw upon a combination of specialized recruiting and project management competencies to deliver a wide range of solutions. Hudson-employed professionals - either individually or as a team - are placed with client organizations for a defined period of time based on specific business needs of the client.
Hudson-employed professionals - either individually or as a team - are placed with client organizations for a defined period of time based on specific business needs of the client.
For the years ended December 31, 2022 and 2021, the Company’s top 25 clients generated over 75% and 85% of the Company’s revenue, respectively. Two clients accounted for an aggregate of 50% of revenue in 2022, and three clients accounted for an aggregate of 65% of revenue in 2021.
For the years ended December 31, 2023 and 2022, over 85% and 75% of the Company’s revenue was generated by its top 25 clients, respectively. Two clients accounted for an aggregate of 50% of revenue in both 2023 and 2022. One client accounted for 20% or greater of accounts receivable as of December 31, 2023 and 2022.
Segment and Geographic Data Financial information concerning the Company’s reportable segments and geographic areas of operation is included in Note 15 of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K (this “Form 10-K”). Available Information We maintain a website with the address www.hudsonrpo.com .
Our employees are encouraged to participate in these learning modules and to complete a minimum of 30 minutes of learning each week. - 3 - Segment and Geographic Data Financial information concerning the Company’s reportable segments and geographic areas of operation is included in Note 16 of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K (this “Form 10-K”).
This acquisition has enhanced Hudson RPO’s global delivery capability by adding a substantial presence in India and the Philippines, fostering business in new markets, and further developing Hudson RPO’s technology recruitment capabilities. On October 1, 2020, Hudson completed its acquisition of Coit Staffing, Inc.
This acquisition has enhanced Hudson RPO’s global delivery capability by adding a substantial presence in India and the Philippines, fostering business in new markets, and further developing Hudson RPO’s technology recruitment capabilities. - 1 - Business Segments The Company operates directly in fourteen countries with three reportable geographic business segments: Americas, Asia Pacific, and Europe.
The platform also allows us to measure the Company’s impact through volunteer and CO2e reduction tracking and helps us to educate our employees by giving them access to talks from the leading innovators in ESG. We actively look for ways to connect our employees and encourage them to share their perspectives and experiences with one another.
The platform also allows us to measure the Company’s impact through volunteer and CO2e reduction tracking and helps us to educate our employees by giving them access to talks from the leading innovators in ESG. In addition, the Company values a diverse workplace that honors inclusion and equity.
Growth Strategy We focus on organically growing our RPO business, reducing overhead expenses as a percentage of revenue, and pursuing acquisition opportunities. We target driving organic growth in RPO by investing in people and technology, as well as sales and marketing, to leverage our existing strong reputation in the market.
We target driving organic growth in RPO by investing in people and technology, as well as sales and marketing, to leverage our existing strong reputation in the market. We are investigating acquisition opportunities to expand capabilities and capacity and utilize our net operating losses.
We see differences as a benefit; a diverse mix of minds enables us to create a workplace that fosters creativity, encourages adaptability, and drives innovation. All our employees play an important part in contributing to and shaping our culture.
We see differences as a benefit; a diverse mix of minds enables us to create a workplace that fosters creativity, encourages adaptability, and drives innovation. We actively look for ways to connect our employees and encourage them to share their perspectives and experiences with one another.
Tailored learning programs, in which diversity forms a cornerstone, have been created for all client-facing roles. Our employees are encouraged to participate in these learning modules and to complete a minimum of 30 minutes of learning each week.
Tailored learning programs, in which diversity forms a cornerstone, have been created for all client-facing roles.
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(“Coit Staffing”), which expanded its presence in the technology sector and established a Technology Group located in San Francisco. The Technology Group leverages its network and partnerships within the technology sector to seek out new customers and opportunities in other markets around the world.
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In addition, the Company provides RPO clients with a range of outsourced professional contract staffing services and managed service provider services offered sometimes on a standalone basis and sometimes as part of a blended total talent solution. These services draw upon a combination of specialized recruiting and project management competencies to deliver a wide range of solutions.
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In addition, the Technology Group operates jointly with Hudson RPO’s existing teams in the Americas, Asia Pacific, and Europe, to provide continuous access to knowledge regarding new and emerging technologies in the RPO, Managed Solutions Provider (“MSP”), and Total Talent Solutions space, enabling the Company to better serve its clients around the world.
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Hudson-employed professionals - either individually or as a team - are placed with client organizations for a defined period of time based on specific business needs of the client. In February 2024, Hudson RPO announced an expansion of its service offerings to include executive search in North America, focusing on Life Sciences and Human Resources.
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Business Segments The Company operates directly in fourteen countries with three reportable geographic business segments: Americas, Asia Pacific, and Europe.
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This expansion, coupled with the Company’s existing RPO strategy, provides a comprehensive talent acquisition approach, enabling clients to develop streamlined and centralized hiring strategies within a flexible and scalable total talent solution. This service offering better positions the Company as a strategic partner helping clients to implement successful business strategies.
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One client accounted for 20% or greater of accounts receivable as of December 31, 2022 and two clients accounted for 10% or greater of accounts receivable as of December 31, 2021. Our business is dependent upon the continuation of these business relationships as well as new client development.
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On November 15, 2023, Hudson announced the appointment of Jacob “Jake” Zabkowicz as Global Chief Executive Officer for Hudson RPO. Mr. Zabkowicz leads the vision, strategy, and execution of Hudson RPO’s growth plan, while Jeff Eberwein, Chief Executive Officer of Hudson Global, Inc., continues to focus on capital allocation, acquisitions, corporate strategy, and maximizing shareholder value.
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Amid the COVID-19 pandemic, our employees’ health and safety have been one of our top priorities. In addition to providing employees with remote working opportunities, we have taken a range of precautions for those employees who were working in our offices.
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On October 31, 2023, Hudson completed its acquisition of Hudson Global Resources (Singapore) Pte. Ltd. (“Hudson Singapore”), a provider of recruitment services primarily to clients operating in Singapore. Hudson Singapore has a 30-year track record of senior placements and project recruitment work across Southeast Asia including Singapore, Malaysia, the Philippines, Vietnam, Thailand, and Indonesia.
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These included prioritizing personal space; modifying shared spaces with staggered seating to ensure a - 2 - physical distance from colleagues is maintained; implementing heightened cleaning measures; providing complimentary sanitization products; instituting cleaning standards; and reinforcing capacity protocols with strategically-placed signage.
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Hudson’s RPO services leverage the Company’s consultants, supported by the Company’s specialists, in the delivery of its proprietary methods to identify, select, and engage the best-fit talent for critical client roles.
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Contracting: The Company provides clients with a range of outsourced professional contract staffing services and managed service provider services offered sometimes on a standalone basis and sometimes as part of a blended total talent solution. These services draw upon a combination of specialized recruiting and project management competencies to deliver a wide range of solutions.
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Typically, companies with greater strength or scale in these areas generate higher margins. - 2 - Growth Strategy We focus on organically growing our RPO business, reducing overhead expenses as a percentage of revenue, and pursuing acquisition opportunities.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may not be successful in refocusing our core business and obtaining operational efficiencies or replacing revenues lost as a result of these strategic initiatives. - 4 - We may face risks related to potential or current acquisitions or dispositions of businesses.
Biggest changeWe cannot provide any assurance that we will be able to successfully execute these or other strategic initiatives or that we will be able to execute these initiatives on our expected timetable. We may not be successful in refocusing our core business and obtaining operational efficiencies or replacing revenues lost as a result of these strategic initiatives.
We have no significant proprietary technology that would preclude or inhibit competitors from entering the recruitment outsourcing market. We cannot provide assurance that existing or future competitors will not develop or offer services that provide significant performance, price, creative, or other advantages over our services.
We have no significant proprietary technology that would preclude or inhibit competitors from entering the recruitment outsourcing market. We cannot provide assurance that existing or future competitors will not develop or offer - 6 - services that provide significant performance, price, creative, or other advantages over our services.
Our certificate of incorporation and by-laws currently include provisions: • authorizing our Board of Directors to issue shares of our preferred stock in one or more series without further authorization of our stockholders; - 10 - • requiring that stockholders provide advance notice of any stockholder nomination of directors or any new business to be considered at any meeting of stockholders; and • providing that vacancies on our Board of Directors will be filled by the remaining directors then in office.
Our certificate of incorporation and by-laws currently include provisions: • authorizing our Board of Directors to issue shares of our preferred stock in one or more series without further authorization of our stockholders; - 11 - • requiring that stockholders provide advance notice of any stockholder nomination of directors or any new business to be considered at any meeting of stockholders; and • providing that vacancies on our Board of Directors will be filled by the remaining directors then in office.
We cannot assure that we will not experience these problems in the future, that our insurance will cover all claims, or that our insurance coverage will continue to be available at economically feasible rates. - 9 - Our ability to utilize net operating loss carryforwards may be limited. The Company has U.S. net operating loss carryforwards (“NOLs”).
We cannot assure that we will not experience these problems in the future, that our insurance will cover all claims, or that our insurance coverage will continue to be available at economically feasible rates. - 10 - Our ability to utilize net operating loss carryforwards may be limited. The Company has U.S. net operating loss carryforwards (“NOLs”).
The ability to borrow under the NAB Facility Agreement is limited to a percentage of eligible trade receivables up to a maximum of 4 million Australian dollars. Borrowings under this facility are secured by substantially all of the assets of the Australian Borrower. As of December 31, 2022, there were no amounts outstanding under the NAB Facility Agreement.
The ability to borrow under the NAB Facility Agreement is limited to a percentage of eligible trade receivables up to a maximum of 4 million Australian dollars. Borrowings under this facility are secured by substantially all of the assets of the Australian Borrower. As of December 31, 2023, there were no amounts outstanding under the NAB Facility Agreement.
In addition, our payment of principal and interest on any future indebtedness would reduce our cash available for operations. - 6 - In addition, a default, amendment, or waiver to our NAB Facility Agreement or a future agreement to avoid a default may result in higher rates of interest and could impact our ability to obtain additional borrowings.
In addition, our payment of principal and interest on any future indebtedness would reduce our cash available for operations. In addition, a default, amendment, or waiver to our NAB Facility Agreement or our Singapore Facility Agreement or a future agreement to avoid a default may result in higher rates of interest and could impact our ability to obtain additional borrowings.
Although the Company has business continuity plans and other safeguards in place, there is no assurance that such plans and safeguards will be effective. - 7 - Failure to attract and retain qualified personnel, management and advisors could negatively impact our business, financial condition, and results of operations.
Although the Company has business continuity plans and other safeguards in place, there is no assurance that such plans and safeguards will be effective. - 8 - Failure to attract and retain qualified personnel, management and advisors could negatively impact our business, financial condition, and results of operations.
While we have implemented measures to prevent security breaches and cyber incidents, our measures may not be effective, and any security breaches or cyber incidents could adversely affect our business, financial condition, and results of operations. - 8 - Our business depends on uninterrupted service to clients.
While we have implemented measures to prevent security breaches and cyber incidents, our measures may not be effective, and any security breaches or cyber incidents could adversely affect our business, financial condition, and results of operations. - 9 - Our business depends on uninterrupted service to clients.
Our clients’ demands for RPO recruiting and contracting services largely depend on the market conditions and the strength of the labor markets in the countries where we operate. In the second half of 2022, the market conditions were more challenging than anticipated due to the higher inflation, higher interest rates, and decreased demand for labor in certain markets.
Our clients’ demands for RPO and contracting services largely depend on the market conditions and the strength of the labor markets in the countries where we operate. In the second half of 2023, the market conditions were more challenging than anticipated due to the higher inflation, higher interest rates, and decreased demand for labor in certain markets.
We conduct direct operations in fourteen countries and face both translation and transaction risks related to foreign currency exchange. For the year ended December 31, 2022, approximately 76% of our revenue was earned outside of the U.S. Our financial results could be materially affected by a number of factors particular to international operations.
We conduct direct operations in fourteen countries and face both translation and transaction risks related to foreign currency exchange. For the year ended December 31, 2023, approximately 82% of our revenue was earned outside of the U.S. Our financial results could be materially affected by a number of factors particular to international operations.
We cannot provide any assurance that we will have positive cash flows or operating profitability in the future, particularly to the extent the global economy recovers slowly or slows down, or inflation increases. If our revenue declines or if operating expenses exceed our expectations, we may not be profitable and may not generate positive operating cash flows.
We cannot provide any assurance that we will have positive cash flows or operating profitability in the future, particularly to the extent the global economy slows down or enters recession, or inflation increases. If our revenue declines or if operating expenses exceed our expectations, we may not be profitable and may not generate positive operating cash flows.
As part of our growth strategy, we may pursue acquisition opportunities that we believe can complement or expand our current business activities or sell other businesses. Acquisition and disposition activity exposes us to a number of risks.
We may face risks related to potential or current acquisitions or dispositions of businesses. As part of our growth strategy, we may pursue acquisition opportunities that we believe can complement or expand our current business activities or sell other businesses. Acquisition and disposition activity exposes us to a number of risks.
Those conditions include slower employment growth or reductions in employment, which directly impact our service offerings. In addition, certain geopolitical events such as the war in Ukraine, the U.S./China trade tensions, and the ongoing COVID-19 pandemic, have caused significant economic, market, political, and regulatory uncertainty in some of the Company’s markets.
Those conditions include slower employment growth or reductions in employment, which directly impact our service offerings. In addition, certain geopolitical events such as the war in Ukraine, conflicts in the Middle East and the U.S./China trade tensions, have caused significant economic, market, political, and regulatory uncertainty in some of the Company’s markets.
Clients may, on very short notice, terminate, reduce, or postpone their recruiting assignments with us and, therefore, affect demand for our services. This could have a material adverse effect on our business, financial condition, and results of operations. - 5 - Our markets are highly competitive. The markets for our services are highly competitive.
Clients may, on very short notice, terminate, reduce, or postpone their recruiting assignments with us and, therefore, affect demand for our services. This could have a material adverse effect on our business, financial condition, and results of operations.
Our revenue can vary because our clients can terminate their relationship with us at any time with limited or no penalty. Our RPO business is significantly affected by our clients’ hiring needs and their views of their future prospects.
Our revenue can vary because our clients often run bid processes for RPO functions and can terminate their relationship with us at any time with limited or no penalty. Our RPO business is significantly affected by our clients’ hiring needs and their views of their future prospects.
Additionally, our international operations may also be adversely affected by political events, domestic or international terrorist events, hostilities or complications due to natural, nuclear, war or other disasters, including the ongoing Russian invasion of Ukraine and the remnants of the zero-COVID policy in China.
Additionally, our international operations may also be adversely affected by political events, domestic or international terrorist events, hostilities or complications due to natural, nuclear, war or other disasters, including the ongoing Russian invasion of Ukraine and the conflicts in the Middle East.
There may be volatility in our stock price. The market price for our common stock has fluctuated in the past and could fluctuate substantially in the future. For example, during 2022, the market price of our common stock reported on the NASDAQ Global Select Market ranged from a high of $44.00 to a low of $20.51.
There may be volatility in our stock price. The market price for our common stock has fluctuated in the past and could fluctuate substantially in the future. For example, during 2023, the market price of our common stock reported on the NASDAQ Global Select Market ranged from a high of $27.10 to a low of $14.66.
The loss of these customers or any material reduction in the amount of business we conduct with these customers, or any material adverse change in the financial condition of such customers, could materially and adversely affect our financial condition and results of operations.
Our business is dependent upon the continuation of these business relationships as well as new client development. The loss of these customers or any material reduction in the amount of business we conduct with these customers, or any material adverse change in the financial condition of such customers, could materially and adversely affect our financial condition and results of operations.
In addition, in connection with the challenging business environment, some of our customers have reduced demand, and certain other customers have eliminated our services on a temporary or permanent basis. We anticipate that the market conditions will continue to be challenging into 2023.
In addition, in connection with the challenging business environment, some of our customers have reduced demand, and certain other customers have eliminated our services on a temporary or permanent basis. We anticipate that the market conditions will continue to be challenging into 2024. The pricing pressures and global economic fluctuations are not limited to the periods of geopolitical events.
The Company also could be adversely affected if key personnel or a significant number of employees were to become unavailable due to a COVID-19 pandemic in our market areas.
The Company also could be adversely affected if key personnel or a significant number of employees were to become unavailable due to health concerns.
Our profitability and growth depend on the success of our global RPO business, which is subject to a variety of business risks and uncertainties. We are focused on our global RPO business.
The strategic transaction process may disrupt our business including diverting management’s attention from ongoing business concerns. - 5 - Our profitability and growth depend on the success of our global RPO business, which is subject to a variety of business risks and uncertainties. We are focused on our global RPO business.
Higher than expected inflation in most markets, rising interest rates, and the continuing impact of the war in Ukraine, as well as new variants of the COVID-19 virus, have led to significant market disruption, including further wage inflation, increased operating costs, staffing challenges, reduced consumer confidence, and limited capital market accessibility that impact our business.
Higher than expected inflation in most markets and rising interest rates, have led to significant market disruption, including further wage inflation, increased operating costs, staffing challenges, reduced consumer confidence, and limited capital market accessibility that impact our business. The inflationary environment and related interest rate impacts continue to have a significant adverse impact on the economy and market conditions.
We have been engaged in strategic initiatives to refocus on our core business to maximize long-term stockholder value, to improve our cost structure and efficiency, and to increase our selling efforts and the development of new business.
We have been engaged in strategic initiatives to maximize long-term stockholder value, to improve our cost structure and efficiency, and to increase our selling efforts and the development of new business, as well as to consider potential additional businesses that we believe could be beneficial and create value for our stockholders.
For the years ended December 31, 2022 and 2021, the Company’s top 25 clients generated over 75% and 85% of the Company’s revenue, respectively. Two clients accounted for an aggregate 50% of revenue in 2022, and three clients accounted for an aggregate 65% of revenue in 2021.
For the years ended December 31, 2023 and 2022, over 85% and 75% of the Company’s revenue was generated by its top 25 clients, respectively. Two clients accounted for an aggregate of 50% of revenue in both 2023 and 2022. One client accounted for 20% or greater of accounts receivable as of December 31, 2023 and 2022.
Finally, debt incurred under the NAB Facility Agreement bears interest at the variable receivable finance indicator rate, plus a margin of 1.60% per annum. Any increase in interest expense could reduce the funds available for operations. Our investment strategy subjects us to risks. From time to time, we make investments as part of our growth plans.
Any increase in interest expense could reduce the funds available for operations. - 7 - Our investment strategy subjects us to risks. From time to time, we make investments as part of our growth plans.
We also may not realize all of the anticipated benefits of acquisitions of Karani and HnB, or potential future strategic transactions, which could adversely affect our business, financial condition and results of operations.
We also may not realize all of the anticipated benefits of acquisitions, or potential future strategic transactions, which could adversely affect our business, financial condition and results of operations. Our ability to achieve certain benefits from acquisitions of businesses will depend in large part upon our ability to successfully integrate such businesses in an efficient and effective manner.
The inflationary environment and related interest rate impacts continue to have a significant adverse impact on the economy and market conditions. These factors may impact labor markets and the demand for workforce, available borrowing capacity, cash flow protection, and more. As a result, our business, financial condition, and results of operations may be negatively affected.
These factors may impact labor markets and the demand for workforce, available borrowing capacity, cash flow protection, and more. As a result, our business, financial condition, and results of operations may be negatively affected. We may not be able to successfully execute our strategic initiatives or meet our long-term financial goals.
We can provide no assurances that we will enter into any agreements in connection with potential acquisitions or dispositions or as to the timing of any potential strategic transactions. The strategic transaction process may disrupt our business including diverting management’s attention from ongoing business concerns.
We may not be able to integrate any such businesses smoothly or successfully, and the process may take longer than expected. We can provide no assurances that we will enter into any agreements in connection with potential acquisitions or dispositions or as to the timing of any potential strategic transactions.
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The pricing pressures and global economic fluctuations are not limited to the periods of U.S./China trade tensions and the COVID-19 pandemic. After a partial recovery in 2021, economic conditions in most of the world’s major markets slowed down in 2022.
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In addition, many of our larger clients run regular bid processes for their RPO requirements, requiring us to compete for new opportunities with existing clients. Even if our client relationships remain strong, we are repeatedly subject to open bid processes for new business or prior to the renewal of existing business.
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Our business may be adversely affected by the ongoing COVID-19 pandemic. The continual spread of COVID-19 and the emergence of new variants has caused a broad impact globally, including restrictions on travel and quarantine policies put into place by businesses and governments, adversely affecting the economies and financial markets of many countries, and resulting in an economic downturn.
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If we fail to meet the criteria set by our clients for new opportunities or for the renewal of existing services that we provide, or if our competitors are able to offer comparable service levels at reduced cost, our business may suffer. Our markets are highly competitive. The markets for our services are highly competitive.
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The economic downturn, as well as the uncertainty regarding the duration, spread and intensity of the pandemic, has led to labor shortages, supply restrictions, and inflationary pressures. Considering the rapidly evolving landscape, it is difficult to predict the demand for our services in the near future.
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On May 5, 2022, Hudson Global Resources (Singapore) Pte. Ltd. (“Singapore Borrower”), which the Company acquired on October 31, 2023, and the Hong Kong and Shanghai Banking Corporation Limited (“HSBC”), entered into an invoice finance credit facility agreement (the “HSBC Facility Agreement”).
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The pandemic has had and may continue to have a negative impact on our business, including our results of operation. We may not be able to successfully execute our strategic initiatives or meet our long-term financial goals.
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The HSBC Facility Agreement allows the Singapore Borrower to borrow funds up to a maximum of 1 million Singapore dollars, based on a percentage of eligible trade receivables. As of December 31, 2023, there were no amounts outstanding under the HSBC Facility Agreement.
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We cannot provide any assurance that we will be able to successfully execute these or other strategic initiatives or that we will be able to execute these initiatives on our expected timetable.
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Finally, debt incurred under the NAB Facility Agreement bears interest at the variable receivable finance indicator rate, plus a margin of 1.60% per annum. Debt incurred under the Singapore Facility Agreement bears interest at the bank’s internal cost of capital plus margin of 3.5% per annum.
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Our ability to achieve certain benefits from acquisitions of businesses will depend in large part upon our ability to successfully integrate such businesses in an efficient and effective manner. We may not be able to integrate any such businesses smoothly or successfully, and the process may take longer than expected.
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Issues relating to the use of new and evolving technologies, such as Artificial Intelligence (“AI”) and Machine Learning (“ML”) present challenges for our business and may result in liability.
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As of December 31, 2022, one client accounted for 20% or greater of accounts receivable. As of December 31, 2021, two clients accounted for 10% or greater of accounts receivable.
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A quickly evolving social, legal and regulatory environment may cause us to incur increased operational and compliance costs, including increased research and development costs, or divert resources from other development efforts, to address potential issues related to usage of AI and ML.
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The ongoing COVID-19 pandemic also has resulted in increased travel restrictions and the extended shutdown of certain businesses in the countries in which we operate.
Added
As with many cutting-edge innovations, AI and ML present new risks and challenges, and existing laws and regulations may apply to us in new ways, the nature and extent of which are difficult to predict. We incorporate AI and ML into our offerings for use cases that could potentially impact civil, privacy, or employment benefit rights.
Removed
We have identified a material weakness in our internal control over financial reporting which could, if not remediated or if we identify additional material weaknesses or other adverse findings in the future, impair our ability to report accurate and timely financial information, adversely affect investor confidence, and have a material and adverse effect on our financial condition and results of operations.
Added
Failure to adequately address issues that may arise with such use cases could negatively affect the adoption of our solutions and subject us to reputational harm, regulatory action, or legal liability, which may harm our financial condition and operating results.
Removed
Management identified an error related to the accounting treatment of a discretionary bonus paid by the Company on behalf of a customer.
Added
Potential government regulation related to AI, including relating to ethics and social responsibility, may also increase the burden and cost of compliance and research and development.
Removed
The effect of this error is an understatement of revenue and direct contracting costs and reimbursed expenses in the amount of $5.762 million for the three- and six-month periods ended June 30, 2022 and the nine-month period ended September 30, 2022.
Added
Employees, customers, or customers’ employees who are dissatisfied with our public statements, policies, practices, or solutions related to the development and use of AI and ML may express opinions that could introduce reputational or business harm, or legal liability. In addition, our RPO business may be disrupted by new emergent tools that threaten our established business practices.
Removed
The Company intends to restate its unaudited condensed consolidated financial statements for the Non-Reliance Periods as soon as practicable by filing amendments to the Company’s Quarterly Reports on Form 10-Q for the fiscal quarters ended June 30, 2022 and September 30, 2022, to correct this error.
Added
If our clients invest heavily in obtaining or designing and implementing their own systems for recruitment using AI and ML, they may have reduced demand for our services. It is too early to determine the extent to which AI and ML may impact our business, but it is possible that these tools may negatively impact our business.
Removed
The error had no impact on the Company’s consolidated balance sheet, consolidated statement of cash flows, net income, the presentation of the non-GAAP metric EBITDA, or any other accounts for such periods.
Added
Data security and integrity are critically important to the businesses we own and manage, and cybersecurity incidents, including cyberattacks, breaches of security, unauthorized access to or disclosure of confidential information, business disruption, or the perception that confidential information is not secure, could result in a material loss of business, regulatory enforcement, substantial legal liability and/or significant harm to our reputation, which could have a material adverse effect on our business, financial condition and results of operations.
Removed
As a result of the error, we identified a material weakness in the design and implementation of internal controls over the revenue recognition process, specifically the failure to properly evaluate whether the Company was to be considered the principal or the agent in a non-routine transaction involving a discretionary bonus paid by the Company on behalf of a customer.
Added
Improper access to, misappropriation, destruction or disclosure of confidential, personal or proprietary data could result in significant harm to our reputation or the reputation of any of the businesses we own.
Removed
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Added
We collect, store and transmit a large amount of confidential company information on hundreds of millions of businesses, including financial information and personal information, as well as certain consumer information and credit information.
Removed
Management is committed to maintaining a strong internal control environment and believes its remediation efforts will represent an improvement to the control environment. Management is developing new controls and anticipates that the new controls, as implemented and when tested for a sufficient period of time, will remediate the material weakness.
Added
We operate in an environment of significant risk of cybersecurity incidents resulting from unintentional events or deliberate attacks by third parties or insiders, which may involve exploiting highly obscure security vulnerabilities or sophisticated attack methods.
Removed
If we are not successful in implementing these remediation measures or in developing other internal controls, it may impair our ability to report accurate and timely financial information.
Added
One of our significant responsibilities is to maintain the security and privacy of our employees’ and clients’ confidential and proprietary information and the confidential information about clients’ employees’ compensation, health and benefits information and other personally identifiable information.
Removed
These remediation measures may be time consuming and costly and there is no assurance that the measures we take will remediate the material weakness identified or be sufficient to avoid potential future material weaknesses.
Added
Although our businesses have not incurred material losses or liabilities to date as a result of any breaches, unauthorized disclosure, loss or corruption of their data or inability of their clients to access their systems, such events could result in intellectual property or other confidential information being lost or stolen, including client, employee or business data, disrupt their operations, subject them to substantial regulatory and legal proceedings and potential liability and fines, result in a material loss of business and/or significantly harm their reputation.
Removed
Further, we will not be able to fully assess whether the steps we are taking will remediate the material weakness in our internal control over financial reporting until we have completed our implementation efforts and sufficient time passes in order to evaluate their effectiveness.
Added
If they are unable to efficiently manage the vulnerability of their systems and effectively maintain and upgrade their system safeguards, they may incur unexpected costs and certain of their systems may become more vulnerable to unauthorized access. - 12 - ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Removed
In addition, until we remediate the material weakness, or if we identify additional material weaknesses in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated.
Removed
In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, and our stock price may decline as a result. For further discussion of the material weakness, see Item 9A. Controls and Procedures. ITEM 1B.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeITEM 2. PROPERTIES All of the Company’s operating offices are located in leased premises. Our principal executive office and headquarters are located at 53 Forest Avenue, Suite 102, Old Greenwich, CT 06870, where we occupy space with approximately 2,000 aggregate square feet. - 11 - The Company maintains offices in the Americas, Asia Pacific, and Europe.
Biggest changeITEM 2. PROPERTIES All of the Company’s operating offices are located in leased premises. Our principal executive office and headquarters are located at 53 Forest Avenue, Suite 102, Old Greenwich, CT 06870, where we occupy space with approximately 2,000 aggregate square feet. The Company maintains offices in the Americas, Asia Pacific, and Europe.
In the Americas, the Company maintains 2 leased locations with approximately 7,300 aggregate square feet; in Asia Pacific, the Company maintains 6 leased locations with approximately 30,800 aggregate square feet; and in Europe, the Company maintains 1 leased location with approximately 1,200 aggregate square feet.
In the Americas, the Company maintains 2 leased locations with approximately 7,300 aggregate square feet; in Asia Pacific, the Company maintains 7 leased locations with approximately 31,800 aggregate square feet; and in Europe, the Company maintains 1 leased location with approximately 1,200 aggregate square feet.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+6 added−2 removed1 unchanged
Biggest changeISSUER PURCHASES OF EQUITY SECURITIES The Company’s purchases of its common stock during the fourth quarter of fiscal 2022 were as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a) October 1, 2022 - October 31, 2022 — $ — — $ 572,226 November 1, 2022 - November 30, 2022 — $ — — $ 572,226 December 1, 2022 - December 31, 2022 — $ — — $ 572,226 Total — $ — — $ 572,226 (a) On July 30, 2015, the Company announced that its Board of Directors authorized the repurchase of up to $10 million of the Company’s common stock.
Biggest changeISSUER PURCHASES OF EQUITY SECURITIES The Company’s purchases of its common stock during the fourth quarter of fiscal 2023 were as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a) October 1, 2023 - October 31, 2023 — $ — — $ 4,799,292 November 1, 2023 - November 30, 2023 6,897 $ 16.20 6,897 $ 4,687,560 December 1, 2023 - December 31, 2023 4,495 $ 16.39 4,495 $ 4,613,877 Total 11,392 $ 16.28 11,392 $ 4,613,877 (a) On July 30, 2015, the Company announced that its Board of Directors authorized the repurchase of up to $10,000 of the Company’s common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET FOR COMMON STOCK The Company’s common stock was listed for trading on the NASDAQ Global Select Market during 2022 under the symbol “HSON.” As of January 31, 2023, there were approximately 192 holders of record of the Company’s common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET FOR COMMON STOCK The Company’s common stock was listed for trading on the NASDAQ Global Select Market during 2023 under the symbol “HSON.” As of January 31, 2024, there were approximately 149 holders of record of the Company’s common stock.
Market Price High Low 2022 Fourth quarter $ 38.00 $ 20.51 Third quarter $ 36.97 $ 27.54 Second quarter $ 44.00 $ 30.03 First quarter $ 42.09 $ 24.23 2021 Fourth quarter $ 30.99 $ 15.55 Third quarter $ 19.90 $ 15.46 Second quarter $ 19.90 $ 16.55 First quarter $ 18.27 $ 10.36 DIVIDENDS In the last few years, the Company has not paid dividends, and there are no current plans to declare common stock dividends.
Market Price High Low 2023 Fourth quarter $ 20.25 $ 14.66 Third quarter $ 24.00 $ 18.74 Second quarter $ 24.03 $ 17.88 First quarter $ 27.10 $ 20.70 2022 Fourth quarter $ 38.00 $ 20.51 Third quarter $ 36.97 $ 27.54 Second quarter $ 44.00 $ 30.03 First quarter $ 42.09 $ 24.23 DIVIDENDS In the last few years, the Company has not paid dividends, and there are no current plans to declare common stock dividends.
Removed
The authorization does not expire. As of December 31, 2022, the Company had repurchased an aggregate of 465,178 shares for a total cost of approximately $9.4 million under this authorization. In 2022 under this authorization, the Company repurchased 32,615 shares of its common stock on the open market for $1,131.
Added
The actual number of stockholders is greater than this number of holders of record and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
Removed
In the fourth quarters of 2022 and 2021, no repurchases of shares were made. From time to time, the Company may enter into a Rule 10b5-1 trading plan for purposes of repurchasing common stock under this authorization. ITEM 6. RESERVED - 13 -
Added
On August 8, 2023, the Company’s Board of Directors authorized a new stock repurchase program for up to $5,000 of the Company’s outstanding shares of common stock. This authorization does not expire. The Company has repurchased shares from time to time as market conditions warrant.
Added
Under the new stock repurchase program, the Company intends to repurchase shares through open market purchases, privately negotiated transactions, block purchases, or otherwise in accordance with applicable federal securities laws, - 15 - including Rule 10b-18 of the Securities Exchange Act of 1934 (the “Exchange Act”).
Added
Further details can be found in Note 12 to the Consolidated Financial Statements in Item 8 included in Part II of this Form 10-K. For the year ended December 31, 2023, the Company repurchased a total of 48,234 shares of its common stock on the open market for a cost of $959.
Added
Of these shares, 27,277 shares were repurchased under the July 30, 2015 authorization for $573, and 20,957 were repurchased under the August 8, 2023 authorization for $386.
Added
As of December 31, 2023, under the July 30, 2015 and August 8, 2023 authorizations combined, the Company had repurchased an aggregate of 513,412 shares for a total cost of $10,387, completing the July 30, 2015 authorization and leaving $4,614 available for purchase under the August 8, 2023 authorization. ITEM 6. RESERVED

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

83 edited+11 added−11 removed48 unchanged
Biggest changeYear Ended December 31, 2022 2021 As As Currency Constant $ in thousands reported reported translation currency Revenue: Americas $ 51,639 $ 28,797 $ (60) $ 28,737 Asia Pacific 118,149 118,597 (8,761) 109,836 Europe 31,129 21,813 (2,301) 19,512 Total $ 200,917 $ 169,207 $ (11,122) $ 158,085 Adjusted net revenue (a) : Americas $ 48,990 $ 27,087 $ (55) $ 27,032 Asia Pacific 34,278 28,561 (1,915) 26,646 Europe 15,942 12,509 (1,307) 11,202 Total $ 99,210 $ 68,157 $ (3,277) $ 64,880 SG&A and Non-Op (b) : Americas $ 44,407 $ 25,294 $ (108) $ 25,186 Asia Pacific 26,708 23,104 (1,532) 21,572 Europe 14,452 11,500 (1,194) 10,306 Corporate 2,888 3,351 — 3,351 Total $ 88,455 $ 63,249 $ (2,834) $ 60,415 Operating income (loss): Americas $ 4,298 $ 1,689 $ (24) $ 1,665 Asia Pacific 8,378 6,785 (469) 6,316 Europe 1,726 1,309 (137) 1,172 Corporate (5,065) (5,389) — (5,389) Total $ 9,337 $ 4,394 $ (630) $ 3,764 Net income, consolidated $ 7,129 $ 3,227 $ (370) $ 2,857 EBITDA (loss) (c) : Americas $ 4,877 $ 1,801 $ (25) $ 1,776 Asia Pacific 7,282 5,452 (384) 5,068 Europe 1,501 1,007 (112) 895 Corporate (2,905) (3,352) — (3,352) Total $ 10,755 $ 4,908 $ (521) $ 4,387 - 16 - (a) Represents Revenue less the Direct contracting costs and reimbursed expenses caption on the Consolidated Statements of Operations.
Biggest changeYear Ended December 31, 2023 2022 As As Currency Constant $ in thousands reported reported translation currency Revenue: Americas $ 31,254 $ 51,639 $ (98) $ 51,541 Asia Pacific 103,857 118,149 (4,643) 113,506 Europe 26,227 31,129 (126) 31,003 Total $ 161,338 $ 200,917 $ (4,867) $ 196,050 Adjusted net revenue (a) : Americas $ 30,141 $ 48,990 $ (71) $ 48,919 Asia Pacific 33,675 34,278 (1,294) 32,984 Europe 16,451 15,942 184 16,126 Total $ 80,267 $ 99,210 $ (1,181) $ 98,029 SG&A and Non-Op (b) : Americas $ 31,171 $ 44,407 $ (257) $ 44,150 Asia Pacific 27,608 26,708 (1,014) 25,694 Europe 14,866 14,452 152 14,604 Corporate 2,959 2,888 — 2,888 Total $ 76,604 $ 88,455 $ (1,119) $ 87,336 Operating income (loss): Americas $ (2,514) $ 4,298 $ (43) $ 4,255 Asia Pacific 6,894 8,378 (328) 8,050 Europe 1,988 1,726 25 1,751 Corporate (4,985) (5,065) — (5,065) Total $ 1,383 $ 9,337 $ (346) $ 8,991 Net income, consolidated $ 2,198 $ 7,129 $ 218 $ 7,347 EBITDA (loss) (c) : Americas $ (704) $ 4,877 $ (55) $ 4,822 Asia Pacific 5,859 7,282 (272) 7,010 Europe 1,582 1,501 34 1,535 Corporate (3,074) (2,905) — (2,905) Total $ 3,663 $ 10,755 $ (293) $ 10,462 (a) Represents Revenue less the Direct contracting costs and reimbursed expenses caption on the Consolidated Statements of Operations.
The transaction prices contain both fixed fee and variable usage-based consideration. Variable usage-based consideration is constrained by candidates accepting offers of permanent employment. We recognize revenue on the fixed fee as the performance obligations are satisfied and usage-based fees as the constraint is lifted. We do not incur incremental costs to obtain our RPO recruitment contracts.
The transaction prices contain both fixed fee and variable usage-based consideration. Variable usage-based consideration is constrained by candidates accepting offers of permanent employment. We recognize revenue on the fixed fee as the performance obligations are satisfied and usage-based fees as the constraint is lifted. We do not incur incremental costs to obtain our RPO contracts.
As a practical expedient, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an expected original duration of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. - 25 - Income Taxes We account for income taxes using the asset and liability method in accordance with Accounting Standards Codification (“ASC”) 740, “ Income Taxes. ” This standard establishes financial accounting and reporting standards for the effects of income taxes that result from an enterprise’s activities.
As a practical expedient, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an expected original duration of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. - 27 - Income Taxes We account for income taxes using the asset and liability method in accordance with Accounting Standards Codification (“ASC”) 740, “ Income Taxes. ” This standard establishes financial accounting and reporting standards for the effects of income taxes that result from an enterprise’s activities.
Off-Balance Sheet Arrangements None. - 24 - Contingencies From time to time in the ordinary course of business, the Company is subject to compliance audits by U.S. federal, state, local, and foreign government regulatory, tax, and other authorities relating to a variety of regulations, including wage and hour laws, unemployment taxes, workers’ compensation, immigration, and income, value-added, and sales taxes.
Off-Balance Sheet Arrangements None. - 26 - Contingencies From time to time in the ordinary course of business, the Company is subject to compliance audits by U.S. federal, state, local, and foreign government regulatory, tax, and other authorities relating to a variety of regulations, including wage and hour laws, unemployment taxes, workers’ compensation, immigration, and income, value-added, and sales taxes.
Please see “FORWARD-LOOKING STATEMENTS” for a discussion of the uncertainties, risks, and assumptions associated with these statements. This MD&A also uses the non-generally accepted accounting principle measure of earnings before interest, taxes, depreciation and amortization (“EBITDA”). See Note 15 to the Consolidated Financial Statements in Item 8 for EBITDA segment reconciliation information.
Please see “FORWARD-LOOKING STATEMENTS” for a discussion of the uncertainties, risks, and assumptions associated with these statements. This MD&A also uses the non-generally accepted accounting principle measure of earnings before interest, taxes, depreciation and amortization (“EBITDA”). See Note 16 to the Consolidated Financial Statements in Item 8 for EBITDA segment reconciliation information.
The Company believes that it has sufficient liquidity to satisfy its needs through at least the next 12 months, based on the Company’s financial position as of December 31, 2022. The Company’s near-term cash requirements during 2023 are primarily related to the funding of the Company’s operations.
The Company believes that it has sufficient liquidity to satisfy its needs through at least the next 12 months, based on the Company’s financial position as of December 31, 2023. The Company’s near-term cash requirements during 2024 are primarily related to the funding of the Company’s operations.
Revenue Recognition The Company recognizes revenue for our RPO recruitment over time in an amount that reflects the consideration we expect to be entitled to and have an enforceable right to payment in exchange for our services. The client simultaneously receives and consumes the benefits of the services as they are provided.
Revenue Recognition The Company recognizes revenue for our RPO business over time in an amount that reflects the consideration we expect to be entitled to and have an enforceable right to payment in exchange for our services. The client simultaneously receives and consumes the benefits of the services as they are provided.
The amount by which the fair value of consideration transferred as the purchase price exceeds the net fair value of assets acquired and liabilities assumed is recorded as goodwill. Acquisitions that do - 26 - not meet the definition of a business under the ASC are accounted for as asset acquisitions.
The amount by which the fair value of consideration transferred as the purchase price exceeds the net fair value of assets acquired and liabilities assumed is recorded as goodwill. Acquisitions that do - 28 - not meet the definition of a business under the ASC are accounted for as asset acquisitions.
The NAB Facility Agreement does not have a stated maturity date and can be terminated by either the Australian Borrower or NAB upon 90 days written notice. As of December 31, 2022, there were no amounts outstanding under the NAB Facility Agreement.
The NAB Facility Agreement does not have a stated maturity date and can be terminated by either the Australian Borrower or NAB upon 90 days written notice. As of December 31, 2023, there were no amounts outstanding under the NAB Facility Agreement.
For matters that reach the threshold of probable and estimable, the Company establishes reserves for legal, regulatory, and other contingent liabilities. The Company did not have any reserves as of December 31, 2022 and 2021, respectively.
For matters that reach the threshold of probable and estimable, the Company establishes reserves for legal, regulatory, and other contingent liabilities. The Company did not have any reserves as of December 31, 2023 and 2022, respectively.
GAAP financial measures, and summarize the impact of foreign currency exchange rate adjustments on the Company’s operating results for the years ended December 31, 2022 and 2021.
GAAP financial measures, and summarize the impact of foreign currency exchange rate adjustments on the Company’s operating results for the years ended December 31, 2023 and 2022.
The following table summarizes the cash flow activities for the years ended December 31, 2022 and 2021: For The Year Ended December 31, $ in millions 2022 2021 Net cash provided by operating activities $ 9.5 $ 2.5 Net cash used in by investing activities (1.3) (6.3) Net cash used in financing activities (2.0) — Effect of exchange rates on cash, cash equivalents, and restricted cash (0.7) (0.3) Net increase (decrease) in cash, cash equivalents, and restricted cash $ 5.4 * $ (4.1) *Does not sum due to rounding Cash Flows from Operating Activities For the year ended December 31, 2022, net cash provided by operating activities was $9.5 million, as compared to $2.5 million of net cash provided by operating activities for the same period in 2021, resulting in an increase in net cash provided by operating activities of $7.0 million.
The following table summarizes the cash flow activities for the years ended December 31, 2023 and 2022: For The Year Ended December 31, $ in millions 2023 2022 Net cash provided by operating activities $ 0.3 $ 9.5 Net cash used in by investing activities (2.2) (1.3) Net cash used in financing activities (2.5) (2.0) Effect of exchange rates on cash, cash equivalents, and restricted cash — (0.7) Net (decrease) increase in cash, cash equivalents, and restricted cash $ (4.3) * $ 5.4 * *Does not sum due to rounding Cash Flows from Operating Activities For the year ended December 31, 2023, net cash provided by operating activities was $0.3 million, as compared to $9.5 million of net cash provided by operating activities for the same period in 2022, resulting in a decrease in net cash provided by operating activities of $9.1 million.
See Note 6 to the Consolidated Financial Statements in Item 8 for further information regarding deferred tax assets and valuation allowances.
See Note 7 to the Consolidated Financial Statements in Item 8 for further information regarding deferred tax assets and valuation allowances.
This MD&A discusses the results of the Company’s RPO business for the years ended December 31, 2022 and 2021. - 14 - Current Market Conditions Our clients’ demands for RPO recruiting and contracting services largely depend on the market conditions and the strength of the labor markets in the countries where we operate.
This MD&A discusses the results of the Company’s RPO business for the years ended December 31, 2023 and 2022. Current Market Conditions Our clients’ demands for RPO and contracting services largely depend on the market conditions and the strength of the labor markets in the countries where we operate.
The increase in total adjusted net revenue as a percentage of revenue was attributed to the greater mix of higher margin RPO recruitment revenue to contracting revenue in 2022 (as contracting is generally a lower margin service offering), compared to 2021.
The increase in total adjusted net revenue as a percentage of revenue was attributed to the greater mix of higher margin RPO revenue to contracting revenue in 2023 (as contracting is generally a lower margin service offering), compared to 2022.
Financial Performance The following is a summary of the Company’s financial performance highlights for the years ended December 31, 2022 and 2021.
Financial Performance The following is a summary of the Company’s financial performance highlights for the years ended December 31, 2023 and 2022.
The increase was primarily due to higher consultant staff costs. SG&A and Non-Op, as a percentage of revenue, was 23% in 2022, compared to 20% in 2021. The increase was principally due to the lower mix of contracting revenue, where the majority of costs are reflected in adjusted net revenue.
The increase was primarily due to higher consultant staff costs. SG&A and Non-Op, as a percentage of revenue, was 27% in 2023, compared to 23% in 2022. The increase was principally due to the lower mix of contracting revenue, where the majority of costs are reflected in adjusted net revenue.
This MD&A includes the following sections: • Executive Overview • Results of Operations • Liquidity and Capital Resources • Contingencies • Critical Accounting Estimates • Recent Accounting Pronouncements • Forward-Looking Statements Executive Overview The Company’s objective is to increase value to the Company’s stockholders by providing global RPO solutions to customers.
This MD&A includes the following sections: • Executive Overview • Results of Operations • Liquidity and Capital Resources • Contingencies • Critical Accounting Estimates • Recent Accounting Pronouncements • Forward-Looking Statements Executive Overview The Company’s objective is to increase value to the Company’s stockholders by providing global Recruitment Process Outsourcing (“RPO”) solutions to customers.
As of December 31, 2022, the Company’s gross liability for income taxes associated with uncertain tax positions was $0.4 million. The Company’s unrecognized tax benefits, if recognized in the future, would affect the Company’s annual effective income tax rate. See Note 6 to the Consolidated Financial Statements in Item 8 for further information regarding unrecognized tax benefits.
As of December 31, 2023, the Company’s gross liability for income taxes associated with uncertain tax positions was $0.1 million. The Company’s unrecognized tax benefits, if recognized in the future, would affect the Company’s annual effective income tax rate. See Note 7 to the Consolidated Financial Statements in Item 8 for further information regarding unrecognized tax benefits.
The Company has no financial guarantees, outstanding debt or other lease agreements or arrangements that could trigger a requirement for an early payment or that could change the value of our assets.
Other than as described above, the Company has no financial guarantees, outstanding debt or other lease agreements or arrangements that could trigger a requirement for an early payment or that could change the value of our assets.
Additionally, we will continue to monitor capital markets for opportunities to repurchase shares, and consider other actions designed to enhance value to our stockholders, as well as review information regarding potential acquisitions and provide information to third parties regarding potential dispositions of assets or business lines, from time to time.
Additionally, we will continue to monitor capital markets for opportunities to repurchase shares, and consider other actions designed to enhance value to our stockholders, as well as review information regarding potential acquisitions or combinations, both within the RPO business line as well as other businesses, and provide information to third parties regarding potential dispositions of assets or business lines, from time to time.
Such factors, risks, uncertainties, and assumptions include, but are not limited to, (1) global economic fluctuations, (2) rising inflationary pressures and interest rates, (3) the adverse impacts of the coronavirus, or COVID-19 pandemic, (4) the Company’s ability to successfully achieve its strategic initiatives, (5) risks related to potential acquisitions or dispositions of businesses by the Company, (6) the Company’s ability to operate successfully as a company focused on its RPO business, (7) risks related to fluctuations in the Company’s operating results from quarter to quarter, (8) the loss of or material reduction in our business with any of the Company’s largest customers, (9) the ability of clients to terminate their relationship with the Company at any time, (10) competition in the Company’s markets, (11) the negative cash flows and operating losses that may recur in the future, (12) risks relating to how future credit facilities may affect or restrict our operating flexibility, (13) risks associated with the Company’s investment strategy, (14) risks related to international operations, including foreign currency fluctuations, political events, natural disasters or health crises, including the ongoing COVID-19 pandemic and the Russian invasion of Ukraine conflict, (15) the Company’s dependence on key management personnel, (16) the Company’s ability to attract and retain highly skilled professionals, management, and advisors, (17) the Company’s ability to collect accounts receivable, (18) the Company’s ability to maintain costs at an acceptable level, (19) the Company’s heavy reliance on information systems and the impact of potentially losing or failing to develop technology, (20) risks related to providing uninterrupted service to clients, (21) the Company’s exposure to employment-related claims from clients, employers and regulatory authorities, current and former employees in connection with the Company’s business reorganization initiatives, and limits on related insurance coverage, (22) the Company’s ability to utilize net operating loss carryforwards, (23) volatility of the Company’s stock price, (24) the impact of government regulations, (25) restrictions imposed by blocking arrangements, and (26) a material weakness in our internal control over financial reporting could have a significant adverse effect on our business and the price of our common stock.
Such factors, risks, uncertainties, and assumptions include, but are not limited to, (1) global economic fluctuations, (2) the Company’s ability to successfully achieve its strategic initiatives, (3) risks related to potential acquisitions or dispositions of businesses by the Company, (4) the Company’s ability to operate successfully as a company focused on its RPO business, (5) risks related to fluctuations in the Company’s operating results from quarter to quarter due to various factors such as rising inflationary pressures and interest rates, (6) the loss of or material reduction in our business with any of the Company’s largest customers, (7) the ability of clients to terminate their relationship with the Company at any time, (8) competition in the Company’s markets, (9) the negative cash flows and operating losses that may recur in the future, (10) risks relating to how future credit facilities may affect or restrict our operating flexibility, (11) risks associated with the Company’s investment strategy, (12) risks related to international operations, including foreign currency fluctuations, political events, natural disasters or health crises, including the Russia-Ukraine war, the Hamas-Israel war, and potential conflict in the Middle East, (13) the Company’s dependence on key management personnel, (14) the Company’s ability to attract and retain highly skilled professionals, management, and advisors, (15) the Company’s ability to collect accounts receivable, (16) the Company’s ability to maintain costs at an acceptable level, (17) the Company’s heavy reliance on information systems and the impact of potentially losing or failing to develop technology, (18) risks related to providing uninterrupted service to clients, (19) the Company’s exposure to employment-related claims from clients, employers and regulatory authorities, current and former employees in connection with the Company’s business reorganization initiatives, and limits on related insurance coverage, (20) the Company’s ability to utilize net operating loss carryforwards, (21) volatility of the Company’s stock price, (22) the impact of government regulations, (23) restrictions imposed by blocking arrangements, (24) risks related to the use of new and evolving technologies, and (25) the adverse impacts of cybersecurity threats and attacks.
(b) SG&A and Non-Op is a measure that management uses to evaluate the segments’ expenses, which include the following captions on the Consolidated Statements of Operations: Salaries and related, Office and general, Marketing and promotion, and Other income (expense), net. Corporate management expenses are included in the segments’ other income (expense). (c) See EBITDA reconciliation in the following section.
(b) SG&A and Non-Op is a measure that management uses to evaluate the segments’ expenses, which include the following captions on the Consolidated Statements of Operations: Salaries and related, Office and general, Marketing and promotion, and Other income (expense), net.
In Continental Europe, for the year ended December 31, 2022, total adjusted net revenue decreased by $0.1 million, or 7%, compared to the same period in 2021.
In Continental Europe, for the year ended December 31, 2023, total adjusted net revenue decreased by $0.3 million, or 21%, compared to the same period in 2022.
Operating Income and EBITDA - Europe Year Ended December 31, 2022 2021 Change in amount Change in % $ in millions As reported Constant currency Europe Operating income: $ 1.7 $ 1.2 $ 0.6 47 % EBITDA $ 1.5 $ 0.9 $ 0.6 68 % EBITDA as a percentage of revenue 5 % 5 % N/A N/A Operating income was $1.7 million for the year ended December 31, 2022, compared to $1.2 million for 2021.
Operating Income and EBITDA - Europe Year Ended December 31, 2023 2022 Change in amount Change in % $ in millions As reported Constant currency Europe Operating income: $ 2.0 $ 1.8 $ 0.2 14 % EBITDA $ 1.6 $ 1.5 $ — 3 % EBITDA as a percentage of revenue 6 % 5 % N/A N/A Operating income was $2.0 million for the year ended December 31, 2023, compared to $1.8 million for 2022.
The increase in EBITDA for the year ended December 31, 2022 was principally due to the factors noted above.
The decrease in EBITDA for the year ended December 31, 2023 was principally due to the factors noted above.
Operating Income and EBITDA - Asia Pacific Year Ended December 31, 2022 2021 Change in amount Change in % $ in millions As reported Constant currency Asia Pacific Operating income $ 8.4 $ 6.3 $ 2.1 33 % EBITDA $ 7.3 $ 5.1 $ 2.2 44 % EBITDA as a percentage of revenue 6 % 5 % N/A N/A Operating income was $8.4 million for the year ended December 31, 2022, compared to $6.3 million for 2021.
Operating Income and EBITDA - Asia Pacific Year Ended December 31, 2023 2022 Change in amount Change in % $ in millions As reported Constant currency Asia Pacific Operating income $ 6.9 $ 8.1 $ (1.2) (14) % EBITDA $ 5.9 $ 7.0 $ (1.2) (16) % EBITDA as a percentage of revenue 6 % 6 % N/A N/A Operating income was $6.9 million for the year ended December 31, 2023, compared to $8.1 million for 2022.
The Company defines the term “constant currency” to mean that financial data for previously reported periods are translated into U.S. dollars using the same foreign currency exchange rates that were used to translate financial data for the current period.
Constant currency compares financial results between periods as if exchange rates had remained constant period-over-period. The Company defines the term “constant currency” to mean that financial data for previously reported periods are translated into U.S. dollars using the same foreign currency exchange rates that were used to translate financial data for the current period.
The following are discussed in reported currency Corporate expenses, net of corporate management expenses For the year ended December 31, 2022, corporate expenses were $2.9 million compared to $3.3 million for 2021, a decrease of $0.4 million, or 13%. The decrease was primarily due to lower professional fees and stock compensation expense, partially offset by higher corporate allocations.
The following are discussed in reported currency Corporate expenses, net of corporate management expenses For the year ended December 31, 2023, corporate expenses were $3.0 million compared to $2.9 million for 2022, a increase of $0.1 million, or 2%. The increase was primarily due to higher professional fees, partially offset by lower compensation expenses.
Net cash used in investing activities in 2022 primarily reflects the cash paid of $0.8 million on August 2022 for the acquisition of HnB, while net cash used in investing activities in 2021 reflects the cash paid of $6.0 million on October 29, 2021 for the acquisition of Karani (see Note 4 to Consolidated Financial Statements in Item 8 for additional information.) Cash Flows from Financing Activities For the year ended December 31, 2022, net cash used in financing activities was $2.0 million.
Net cash used in investing activities in 2023 primarily reflects the cash paid of $2.1 million in October 2023 for the acquisition of Singapore, while net cash used in investing activities in 2022 reflects cash paid of $0.8 million in August 2022 for the acquisition of HnB (see Note 5 to the Consolidated Financial Statements in Item 8 for additional information.) Cash Flows from Financing Activities For the year ended December 31, 2023, net cash used in financing activities was $2.5 million, compared to 2.0 million in 2022.
SG&A and Non-Op - Asia Pacific Year Ended December 31, 2022 2021 Change in amount Change in % $ in millions As reported Constant currency Asia Pacific SG&A and Non-Op $ 26.7 $ 21.6 $ 5.1 24 % SG&A and Non-Op as a percentage of revenue 23 % 20 % N/A N/A For the year ended December 31, 2022, SG&A and Non-Op increased $5.1 million, or 24%, compared to 2021.
SG&A and Non-Op - Asia Pacific Year Ended December 31, 2023 2022 Change in amount Change in % $ in millions As reported Constant currency Asia Pacific SG&A and Non-Op $ 27.6 $ 25.7 $ 1.9 7 % SG&A and Non-Op as a percentage of revenue 27 % 23 % N/A N/A For the year ended December 31, 2023, SG&A and Non-Op increased $1.9 million, or 7%, compared to 2022.
For the full year 2023, the Company expects to make capital expenditures of less than $1 million, which includes the Company’s lease obligations. The Company is closely managing its capital spending and will perform capital additions where economically prudent, while continuing to invest strategically for future growth.
For the full year 2024, the Company expects to make capital expenditures of less than $0.5 million. The Company is closely managing its capital spending and will perform capital additions where economically prudent, while continuing to invest strategically for future growth.
SG&A and Non-Op, as a percentage of revenue, was 44% for the year ended December 31, 2022, compared to 38% for 2021.
SG&A and Non-Op, as a percentage of revenue, was 47% for the year ended December 31, 2023, compared to 45% for 2022.
Liquidity and Capital Resources As of December 31, 2022, cash and cash equivalents and restricted cash totaled $27.5 million, as compared to $22.1 million as of December 31, 2021.
Liquidity and Capital Resources As of December 31, 2023, cash and cash equivalents and restricted cash totaled $23.2 million, as compared to $27.5 million as of December 31, 2022.
In Continental Europe, for the year ended December 31, 2022, total revenue was $1.7 million, compared to $1.9 million for 2021, a decrease of $0.2 million, or 12%. The decrease was due to lower demand from existing recruitment clients.
In Continental Europe, for the year ended December 31, 2023, total revenue was $1.4 million, compared to $1.8 million for 2022, a decrease of $0.3 million, or 19%. The decrease was due to lower demand from existing recruitment clients.
The increase in operating income was principally due to the change in adjusted net revenue, as described above. For the year ended December 31, 2022, EBITDA was $7.3 million, or 6% of revenue, compared to EBITDA of $5.1 million, or 5% of revenue, in 2021.
The increase was principally due to the adjusted net revenue gains, as described above. For the year ended December 31, 2023, EBITDA was $1.6 million, or 6% of revenue, compared to EBITDA of $1.5 million for 2022.
Basic and diluted earnings per share were $2.37 and $2.27, respectively for the year ended December 31, 2022, compared to basic and diluted income per share of $1.11 and $1.07 in 2021.
Basic and diluted earnings per share were $0.72 and $0.70, respectively for the year ended December 31, 2023, compared to basic and diluted income per share of $2.37 and $2.27 in 2022.
SG&A and Non-Op - Americas Year Ended December 31, 2022 2021 Change in amount Change in % $ in millions As reported As reported Americas SG&A and Non-Op $ 44.4 $ 25.3 $ 19.1 76 % SG&A and Non-Op as a percentage of revenue 86 % 88 % N/A N/A For the year ended December 31, 2022, SG&A and Non-Op increased $19.1 million, or 76%, compared to 2021, while SG&A and Non-Op as a percentage of revenue decreased from 88% to 86%.
SG&A and Non-Op - Americas Year Ended December 31, 2023 2022 Change in amount Change in % $ in millions As reported As reported Americas SG&A and Non-Op $ 31.2 $ 44.4 $ (13.2) (30) % SG&A and Non-Op as a percentage of revenue 100 % 86 % N/A N/A For the year ended December 31, 2023, SG&A and Non-Op decreased $13.2 million, or 30%, compared to 2022, while SG&A and Non-Op as a percentage of revenue increased from 86% to 100%.
In the U.K., total adjusted net revenue for the year ended December 31, 2022, increased $4.9 million, or 51%, compared to the same period in 2021. The change in the U.K. was primarily driven by an increase in RPO recruitment adjusted net revenue of $4.8 million, or 53%.
In the U.K., total adjusted net revenue for the year ended December 31, 2023, increased $0.7 million, or 5%, compared to the same period in 2022. The change in the U.K. was primarily driven by an increase in RPO adjusted net revenue of $0.7 million, or 5%.
Higher than expected inflation in most markets, rising interest rates and the continuing impact of the Russian invasion of Ukraine, as well as new variants of the COVID-19 virus, have led to significant market disruption, including further wage inflation, increased operating costs, staffing challenges, reduced consumer confidence, and limited capital market accessibility that impact our business.
Higher than expected inflation in most markets and rising interest rates have led to significant market disruption, including further wage inflation, increased operating costs, staffing challenges, reduced consumer confidence, and limited capital market accessibility that impact our business.
The effective tax rate for the year ended December 31, 2022 was 24.6%, compared to 25.7% for 2021.
The effective tax rate for the year ended December 31, 2023 was 14.4%, compared to 24.6% for 2022.
This summary should be considered in the context of the additional disclosures in this MD&A which further highlight the Company’s results by segment. • Revenue was $200.9 million for the year ended December 31, 2022, compared to $169.2 million for 2021, an increase of $31.7 million, or 19%.
This summary should be considered in the context of the additional disclosures in this MD&A which further highlight the Company’s results by segment. • Revenue was $161.3 million for the year ended December 31, 2023, compared to $200.9 million for 2022, a decrease of $39.6 million, or 20%.
Net Income Net income was $7.1 million for the year ended December 31, 2022, compared to net income of $3.2 million for 2021, an increase in net income of $3.9 million.
Net Income Net income was $2.2 million for the year ended December 31, 2023, compared to net income of $7.1 million for 2022, a decrease in net income of $4.9 million.
Adjusted net revenue - Asia Pacific Year Ended December 31, 2022 2021 Change in amount Change in % $ in millions As reported Constant currency Asia Pacific Adjusted net revenue $ 34.3 $ 26.6 $ 7.6 29 % Adjusted net revenue as a percentage of revenue 29 % 24 % N/A N/A For the year ended December 31, 2022, RPO recruitment adjusted net revenue increased by $6.9 million, or 29%, while contracting adjusted net revenue increased by $0.7 million, or 23%, compared to the same period in 2021. - 19 - In Australia, adjusted net revenue increased by $7.1 million, or 34%, for the year ended December 31, 2022, compared to the same period in 2021.
Adjusted net revenue - Asia Pacific Year Ended December 31, 2023 2022 Change in amount Change in % $ in millions As reported Constant currency Asia Pacific Adjusted net revenue $ 33.7 $ 33.0 $ 0.7 2 % Adjusted net revenue as a percentage of revenue 32 % 29 % N/A N/A For the year ended December 31, 2023, RPO adjusted net revenue increased by $0.8 million, or 3%, while contracting adjusted net revenue decreased by $0.1 million, or 4%, compared to the same period in 2022.
Interest expense and fees incurred on the NAB Facility Agreement were $18 thousand and $20 thousand for the years ended December 31, 2022 and 2021, respectively. The Company was in compliance with all financial covenants under the NAB Facility Agreement as of December 31, 2022.
Interest expense and fees incurred on the NAB Facility Agreement were $17 and $18 for the years ended December 31, 2023 and 2022, respectively. The Company was in compliance with all financial covenants under the NAB Facility Agreement as of December 31, 2023. On May 25, 2022, Hudson Global Resources (Singapore) Pte. Ltd.
GAAP financial measure is provided in the table below: Year Ended December 31, $ in thousands 2022 2021 Net income $ 7,129 $ 3,227 Adjustments to net income Provision for income taxes 2,331 1,117 Interest income, net (83) (33) Depreciation and amortization expense 1,378 597 Total adjustments from net income to EBITDA 3,626 1,681 EBITDA $ 10,755 $ 4,908 - 17 - Results of Operations: Americas (reported currency) Revenue - Americas Year Ended December 31, 2022 2021 Change in amount Change in % $ in millions As reported As reported Americas Revenue $ 51.6 $ 28.8 $ 22.8 79 % For the year ended December 31, 2022, RPO recruitment revenue increased by $22.4 million, or 83%, while contracting revenue increased by $0.5 million, or 26%.
GAAP financial measure is provided in the table below: Year Ended December 31, $ in thousands 2023 2022 Net income $ 2,198 $ 7,129 Adjustments to net income Provision for income taxes 370 2,331 Interest income, net (372) (83) Depreciation and amortization expense 1,467 1,378 Total adjustments from net income to EBITDA 1,465 3,626 EBITDA $ 3,663 $ 10,755 - 19 - Results of Operations: Americas (reported currency) Revenue - Americas Year Ended December 31, 2023 2022 Change in amount Change in % $ in millions As reported As reported Americas Revenue $ 31.3 $ 51.6 $ (20.4) (39) % For the year ended December 31, 2023, RPO revenue decreased by $19.0 million, or 39%, while contracting revenue decreased by $1.4 million, or 59%.
The increase resulted principally from the Company’s higher net income in 2022, partially offset by less favorable working capital comparisons to the prior year. Cash Flows from Investing Activities For the year ended December 31, 2022, net cash used in investing activities was $1.3 million, as compared to $6.3 million in 2021.
The decline was principally from the Company’s lower net income in 2023, along with less favorable working capital comparisons to the prior year. Cash Flows from Investing Activities For the year ended December 31, 2023, net cash used in investing activities was $2.2 million, as compared to $1.3 million in 2022.
SG&A and Non-Op - Europe Year Ended December 31, 2022 2021 Change in amount Change in % $ in millions As reported Constant currency Europe SG&A and Non-Op $ 14.5 $ 10.3 $ 4.1 40 % SG&A and Non-Op as a percentage of revenue 46 % 53 % N/A N/A For the year ended December 31, 2022, SG&A and Non-Op increased $4.1 million, or 40%, compared to 2021.
SG&A and Non-Op - Europe Year Ended December 31, 2023 2022 Change in amount Change in % $ in millions As reported Constant currency Europe SG&A and Non-Op $ 14.9 $ 14.6 $ 0.3 2 % SG&A and Non-Op as a percentage of revenue 57 % 47 % N/A N/A For the year ended December 31, 2023, SG&A and Non-Op increased $0.3 million, or 2%, compared to 2022.
In Australia, for the year ended December 31, 2022, revenue increased $5.8 million, or 6%, compared to 2021. The increase was primarily in RPO recruitment revenue, which increased by $6.4 million, or 34%, partially offset by contracting revenue, which decreased by $0.6 million, or 1%.
In Australia, for the year ended December 31, 2023, revenue decreased $9.6 million, or 9%, compared to 2022. The decline was primarily in contracting revenue, which decreased by $10.7 million, or 14%, partially offset by RPO revenue, which increased by $1.1 million, or 5%.
Adjusted net revenue - Europe Year Ended December 31, 2022 2021 Change in amount Change in % $ in millions As reported Constant currency Europe Adjusted net revenue $ 15.9 $ 11.2 $ 4.7 42 % Adjusted net revenue as a percentage of revenue 51 % 57 % N/A N/A For the year ended December 31, 2022, adjusted net revenue increased by $4.7 million, or 42%, driven by an increase in RPO recruitment revenue of $4.7 million, or 43%, compared to the same period in 2021.
Adjusted net revenue - Europe Year Ended December 31, 2023 2022 Change in amount Change in % $ in millions As reported Constant currency Europe Adjusted net revenue $ 16.5 $ 16.1 $ 0.3 2 % Adjusted net revenue as a percentage of revenue 63 % 52 % N/A N/A For the year ended December 31, 2023, adjusted net revenue increased by $0.3 million, or 2%, driven by an increase in RPO revenue of $0.4 million, or 3%, compared to the same period in 2022.
The difference between operating income and EBITDA for the years ended December 31, 2022 and 2021 was principally due to corporate management expenses. - 20 - Europe (constant currency) Revenue - Europe Year Ended December 31, 2022 2021 Change in amount Change in % $ in millions As reported Constant currency Europe Revenue $ 31.1 $ 19.5 $ 11.6 60 % For the year ended December 31, 2022, RPO recruitment revenue increased by $5.2 million, or 45%, while contracting increased by $6.4 million, or 81%, compared to 2021.
The difference between operating income and EBITDA for the years ended December 31, 2023 and 2022 was principally due to corporate management expenses. - 22 - Europe (constant currency) Revenue - Europe Year Ended December 31, 2023 2022 Change in amount Change in % $ in millions As reported Constant currency Europe Revenue $ 26.2 $ 31.0 $ (4.8) (15) % For the year ended December 31, 2023, contracting revenue decreased by $4.5 million, or 32%, while RPO revenue decreased by $0.3 million, or 2%, compared to 2022.
Adjusted net revenue - Americas Year Ended December 31, 2022 2021 Change in amount Change in % $ in millions As reported As reported Americas Adjusted net revenue $ 49.0 $ 27.1 $ 21.9 81 % Adjusted net revenue as a percentage of revenue 95 % 94 % N/A N/A For the year ended December 31, 2022, RPO recruitment adjusted net revenue increased $21.8 million, or 82%, while contracting adjusted net revenue increased $0.1 million, or 18%, compared to 2021.
Adjusted net revenue - Americas Year Ended December 31, 2023 2022 Change in amount Change in % $ in millions As reported As reported Americas Adjusted net revenue $ 30.1 $ 49.0 $ (18.8) (38) % Adjusted net revenue as a percentage of revenue 96 % 95 % N/A N/A For the year ended December 31, 2023, RPO adjusted net revenue decreased $18.6 million, or 38%, while contracting adjusted net revenue decreased $0.3 million, or 64%, compared to 2022.
As of December 31, 2022, $14.4 million of the Company’s cash and cash equivalents noted above was held in the U.S. and the remainder was held internationally, primarily in Australia ($6.3 million), Hong Kong ($1.1 million), China ($1.0 million), India ($1.0 million), the U.K. ($0.9 million), Belgium ($0.6 million), Singapore ($0.4 million), Switzerland ($0.4 million), and the Philippines ($0.3 million).
As of December 31, 2023, $9.3 million of the Company’s cash and cash equivalents noted above was held in the U.S. and the remainder was held internationally, primarily in Australia ($6.0 million), the U.K.
On a constant currency basis, EBITDA increased $6.4 million in 2022 compared to 2021. The Karani Acquisition positively contributed EBITDA of $2.0 million. • Net income was $7.1 million for the year ended December 31, 2022, compared to a net income of $3.2 million for 2021. On a constant currency basis, net income increased $4.3 million in 2022.
On a constant currency basis, EBITDA decreased $6.8 million in 2023 compared to 2022. • Net income was $2.2 million for the year ended December 31, 2023, compared to a net income of $7.1 million for 2022. On a constant currency basis, net income decreased $5.1 million in 2023.
To meet the Company’s objective, the Company engages in the following initiatives: • Facilitating growth and development of the global RPO business through strategic investments in people, innovation, and technology; • Building and differentiating the Company’s brand through its unique outsourcing solutions offerings; and • Improving the Company’s cost structure and efficiency of its support functions and infrastructure.
To meet the Company’s objective, the Company engages in the following initiatives: • Facilitating growth and development of the global RPO business through strategic investments in people, innovation, and technology; • Building and differentiating the Company’s brand through its unique outsourcing solutions offerings; and • Improving the Company’s cost structure and efficiency of its support functions and infrastructure. - 16 - We continue to explore all strategic alternatives to maximize value for the Company’s stockholders, including without limitation, improving the market position and profitability of our services in the marketplace, and enhancing our valuation.
The change in the Company’s effective tax rate compared to 2021 is primarily related to the reduction and effective lapsing of statutes for certain historic foreign uncertain tax positions and the mix of income and losses in different jurisdictions taxed at different rates, as well as changes in valuation allowances in the U.S. and in our foreign subsidiaries.
The change in the Company’s effective tax rate compared to 2022 is primarily related to recognition of deferred tax assets in Belgium and Canada, the reduction and effective lapsing of statutes for certain historic foreign uncertain tax positions and foreign tax rate differences, as well as changes in valuation allowances in the U.S. and certain foreign jurisdictions.
Liquidity and Capital Resources Outlook As of December 31, 2022, the Company had cash and cash equivalents on hand of $27.1 million. The Company also has the capability to borrow an additional 4 million Australian dollars under the NAB Facility Agreement. In addition, the Company has a promissory note outstanding of $1.3 million, in connection with the Karani Acquisition.
Liquidity and Capital Resources Outlook As of December 31, 2023, the Company had cash and cash equivalents on hand of $22.6 million. The Company also has the capability to borrow an additional 4 million Australian dollars under the NAB Facility Agreement and an additional 1 million Singapore dollars under the HSBC Facility.
Asia Pacific (constant currency) Revenue - Asia Pacific Year Ended December 31, 2022 2021 Change in amount Change in % $ in millions As reported Constant currency Asia Pacific Revenue $ 118.1 $ 109.8 $ 8.3 8 % For the year ended December 31, 2022, RPO recruitment revenue increased by $6.8 million, or 27%, and contracting revenue increased by $1.5 million, or 2%, compared to 2021.
Asia Pacific (constant currency) Revenue - Asia Pacific Year Ended December 31, 2023 2022 Change in amount Change in % $ in millions As reported Constant currency Asia Pacific Revenue $ 103.9 $ 113.5 $ (9.6) (9) % For the year ended December 31, 2023, contracting revenue decreased by $10.7 million, or 13%, while RPO revenue increased by $1.0 million, or 3%, compared to 2022.
The majority of the Company’s offshore cash is available to it as a source of funds, net of any tax obligations or assessments. The Company believes that future external market conditions remain uncertain, particularly access to credit, rates of near-term projected economic growth, and levels of unemployment in the markets in which the Company operates.
The Company believes that future external market conditions remain uncertain, particularly access to credit, rates of near-term projected economic growth, and levels of unemployment in the markets in which the Company operates.
The increase was principally due to the adjusted net revenue gains partially offset by higher SG&A and Non-Op, as described above. For the year ended December 31, 2022, EBITDA was $1.5 million, or 5% of revenue, compared to EBITDA of $0.9 million for 2021.
The decrease in operating income was principally due to the change in SG&A and Non-Op, as described above. For the year ended December 31, 2023, EBITDA was $5.9 million, or 6% of revenue, compared to EBITDA of $7.0 million, or 6% of revenue, in 2022.
Management uses this measurement to evaluate capital needs and working capital requirements. Similar to constant currency, EBITDA should not be considered in isolation or as a substitute for operating income or net income prepared in accordance with U.S. GAAP or as a measure of the Company’s profitability.
Similar to constant currency, EBITDA should not be considered in isolation or as a substitute for operating income or net income prepared in accordance with U.S. GAAP or as a measure of the Company’s profitability. EBITDA is derived from net income (loss) adjusted for the provision for (benefit from) income taxes, interest expense (income), and depreciation and amortization.
For the year ended December 31, 2022, the effective tax rate difference from the U.S. federal statutory rate of 21% was primarily attributable to the mix of income and losses in different jurisdictions taxed at different rates, as well as changes in valuations allowances in the U.S. and in our foreign subsidiaries.
For the year ended December 31, 2022, the effective tax rate difference from the U.S. federal statutory rate of 21% was primarily attributable to changes in valuations allowances in the U.S. and certain foreign subsidiaries, which reduces or eliminates the effective tax rate on current year profits or losses, foreign tax rate differences, and non-deductible expenses.
The increase in EBITDA for the year ended December 31, 2022 was principally due to factors noted above. The difference between operating income and EBITDA for the years ended December 31, 2022 and 2021 was principally due to foreign currency exchange and corporate management expenses.
The difference between operating income and EBITDA for the years ended December 31, 2023 and 2022 was principally due to foreign currency exchange, corporate management expenses, and the one-time client administrative costs of $0.2 million.
Interest Income, Net Net interest income was $0.1 million and $0.0 million for the years ended December 31, 2022 and 2021, respectively.
Depreciation and Amortization Expense Depreciation and amortization expense was $1.5 million and $1.4 million for the years ended December 31, 2023 and 2022, respectively. Interest Income, Net Net interest income was $0.4 million and $0.1 million for the years ended December 31, 2023 and 2022, respectively. The increase was due to higher interest rates.
In the U.K., for the year ended December 31, 2022, revenue increased by $11.8 million, or 67%, to $29.4 million from $17.6 million in 2021. The change was driven by higher RPO recruitment revenue of $5.4 million, and higher contracting revenue of $6.4 million.
In the U.K., for the year ended December 31, 2023, revenue decreased by $4.4 million, or 15%, to $24.8 million from $29.2 million in 2022. The decrease was principally driven by lower contracting revenue of $4.5 million.
The increases in RPO recruitment revenue were primarily due to higher demand from existing clients, as well as the implementation of new client contracts, while the decrease in contracting revenue was due to lower volume from existing clients.
The decreases in contracting revenue was due to lower volume from existing clients, while the increase in RPO revenue were primarily due to higher demand from existing clients, as well as the implementation of new client contracts. In Asia, revenue increased $0.4 million, or 5%, for the year ended December 31, 2023, compared to 2022.
The increase in net cash used in financing activities was attributable to the common stock repurchased, for an aggregate of $1.1 million in 2022, payment on a note of $0.6 million associated with the Karani Acquisition, and payments of $0.3 million in taxes in connection with the net issuance of common stock upon the vesting of restricted stock units. - 23 - Invoice Finance Credit Facility On April 8, 2019, the Company’s Australian subsidiary (“Australian Borrower”) entered into an invoice finance credit facility agreement (the “NAB Facility Agreement”) with National Australia Bank Limited (“NAB”).
The increase in net cash used in financing activities was mostly attributable to higher loan repayments of $0.6 million related to the Karani Acquisition, partly offset by lower repurchases of common stock of $0.2 million in 2023 compared to the previous year. - 25 - Invoice Finance Credit Facility On April 8, 2019, the Company’s Australian subsidiary (“Australian Borrower”) entered into an invoice finance credit facility agreement (the “NAB Facility Agreement”) with National Australia Bank Limited (“NAB”).
Stronger foreign currencies in other markets compared to the U.S. dollar during a reporting period cause local currency results of the Company’s foreign operations to be translated into more U.S. dollars. COVID-19 Pandemic The continuing impact of COVID-19 and its variants around the world continues to present significant risks to the Company.
The continued economic uncertainty has also resulted in volatility in global currencies. Stronger foreign currencies in other markets compared to the U.S. dollar during a reporting period cause local currency results of the Company’s foreign operations to be translated into more U.S. dollars.
Other income (expense), Net Net other income was $0.0 million for the year ended December 31, 2022, as opposed to net other expense of $0.1 million for the same period in 2021. - 22 - Provision for (benefit from) Income Taxes The provision for income taxes for the year ended December 31, 2022 was $2.3 million, on $9.5 million of pre-tax income, compared to a provision from income taxes of $1.1 million on $4.3 million of pre-tax income for 2021.
The increase in income was primarily due to a benefit payout of $1.1 million, partially offset by one-time client administrative costs of $0.2 million. - 24 - Provision for (benefit from) Income Taxes The provision for income taxes for the year ended December 31, 2023 was $0.4 million, on $2.6 million of pre-tax income, compared to a provision from income taxes of $2.3 million on $9.5 million of pre-tax income for 2022.
For the year ended December 31, 2022, EBITDA was $4.9 million, or 9% of revenue, compared to EBITDA $1.8 million, or 6% of revenue, in 2021. The increase in EBITDA was due to the same factors noted above. The difference between operating income and EBITDA for the year ended December 31, 2021, was primarily due to corporate management expenses.
The difference between operating income and EBITDA for the year ended December 31, 2023, was primarily due to the proceeds of $1.1 million noted above.
We anticipate that the market conditions will continue to be challenging into 2023. After a partial recovery in 2021, economic conditions in most of the world’s major markets slowed down in 2022.
In 2023, the market conditions continued to be challenging due to higher inflation, higher interest rates and decreased demand for labor in certain markets. We anticipate that the market conditions will continue to be challenging into 2024. Economic conditions in most of the world’s major markets slowed down in 2023.
The increase in SG&A and Non-Op was due to higher staff consultant costs, advertising and marketing expenses, travel and - 21 - entertainment costs, and training and conferences in the current year. SG&A and Non-Op, as a percentage of revenue, was 46% in 2022 compared to 53% in 2021.
The increase in SG&A and Non-Op was due to higher staff consultant costs, foreign currency exchange and one-time client administrative costs of $0.2 million, partially offset by advertising and marketing expense and travel and entertainment costs in - 23 - the current year. SG&A and Non-Op, as a percentage of revenue, was 57% in 2023 compared to 47% in 2022.
Use of EBITDA (Non-GAAP Financial Measure) Management believes EBITDA is a meaningful indicator of the Company’s performance that provides useful information to investors regarding the Company’s financial condition and results of operations. EBITDA is considered by management as an indicator of operating performance and the most comparable measure across the regions in which we operate.
Corporate management expenses are included in the segments’ other income (expense). - 18 - (c) See EBITDA reconciliation in the following section. Use of EBITDA (Non-GAAP Financial Measure) Management believes EBITDA is a meaningful indicator of the Company’s performance that provides useful information to investors regarding the Company’s financial condition and results of operations.
In the second half of 2022, the market conditions were more challenging than anticipated due to the higher inflation, higher interest rates and decreased demand for labor in certain markets. In addition, in connection with the challenging business environment, some of our customers have reduced demand, and certain other customers have eliminated our services on a temporary or permanent basis.
In addition, in connection with the challenging business environment, some of our customers have reduced demand, and certain other customers have eliminated our services on a temporary or permanent basis. These conditions and expected future inflation and potential interest rate increases could have material adverse impacts on various aspects of our business in the future.
Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations. For the discussion of reportable segment results of operations, the Company uses constant currency information. Constant currency compares financial results between periods as if exchange rates had remained constant period-over-period.
Constant Currency (Non-GAAP Financial Measure) The Company operates on a global basis, with the majority of its revenue generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations. For the discussion of reportable segment results of operations, the Company uses constant currency information.
In Asia, adjusted net revenue increased $0.5 million, or 9%, for the year ended December 31, 2022, compared to 2021. The increase in Asia was primarily driven by new client wins and higher demand from existing clients in China.
The increase in RPO - 21 - adjusted net revenue primarily reflected the implementation of a new contract win, while the decrease in contracting adjusted net revenue was due to lower demand from existing clients. In Asia, adjusted net revenue decreased $0.1 million, or 2%, for the year ended December 31, 2023, compared to 2022.
The increase was principally due to higher staff costs of $23.8 million, higher advertising and marketing expenses of $1.8 million and higher travel and entertainment costs of $0.9 million. • EBITDA was $10.8 million for the year ended December 31, 2022, compared to EBITDA of $4.9 million for 2021.
The increase was principally due to higher staff costs as a percentage of revenue, partially offset by a $1.1 million benefit payout in the Americas. • EBITDA was $3.7 million for the year ended December 31, 2023, compared to EBITDA of $10.8 million for 2022.
Adjusted net revenue as a percentage of revenue, for the year ended December 31, 2022, was 29%, compared to 24% for 2021.
The Hudson Singapore Acquisition positively contributed 1 percentage point to the adjusted net revenue performance (see Note 5 to the Consolidated Financial Statements in Item 8). Adjusted net revenue as a percentage of revenue, for the year ended December 31, 2023, was 32%, compared to 29% for 2022.
The decrease in SG&A and Non-Op as a percentage of revenue was primarily due to year-to-date gains in adjusted net revenue outpacing higher consultant staff costs driven by the Company’s investments in the sales team and industry marketing activities. - 18 - Operating Income and EBITDA - Americas Year Ended December 31, 2022 2021 Change in amount Change in % $ in millions As reported As reported Americas Operating income $ 4.3 $ 1.7 $ 2.6 155 % EBITDA $ 4.9 $ 1.8 $ 3.1 171 % EBITDA as a percentage of revenue 9 % 6 % N/A N/A Operating income growth of $2.6 million was primarily due to the stronger adjusted net revenue results and lower SG&A and Non-Op as a percentage of revenue, partially offset by amortization expense of $0.5 million associated with the acquisitions of Coit Staffing and Karani.
SG&A and Non-Op in 2023 included proceeds received in early 2024 of $1.1 million related to a benefit payout. - 20 - Operating Income and EBITDA - Americas Year Ended December 31, 2023 2022 Change in amount Change in % $ in millions As reported As reported Americas Operating (loss) income $ (2.5) $ 4.3 $ (6.8) (158) % EBITDA $ (0.7) $ 4.9 $ (5.6) (114) % EBITDA as a percentage of revenue (2) % 9 % N/A N/A Operating loss of $2.5 million decreased compared to operating income of $4.3 million in 2022 primarily due to declines in adjusted net revenue and higher SG&A and Non-Op as a percentage of revenue.
The Karani Acquisition contributed 31 percentage points to the adjusted net revenue growth (see Note 4 to the Consolidated Financial Statements in Item 8). Total adjusted net revenue, as a percentage of revenue, increased to 95% for 2022, compared to 94% for 2021, primarily attributable to the higher mix of RPO recruitment to contracting revenue in 2022 compared to 2021.
The decreases in RPO and contracting adjusted net revenue were due to the same factor noted above under “Revenue – Americas”. Total adjusted net revenue, as a percentage of revenue, increased to 96% for 2023, compared to 95% for 2022, primarily attributable to the higher mix of RPO to contracting revenue in 2023 compared to 2022.

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