The world of work has been transformed over the last few years, with the changes accelerated by the recent coronavirus (COVID-19) pandemic which has made Working from Home the new watchword.
If work has changed, so has the world of talent acquisition, with interviews now mostly all being done online, and video resumes and online job specifications becoming the norm.
One company at the forefront of this change in North America is Recruiter.com Group Inc., which is helping to streamline the hiring process for employers and job seekers alike. The company’s diverse network of over 30,000 independent recruiters helps organizations reduce recruiting costs and shorten recruiting cycles with access to on-demand recruiting and artificial intelligence (AI) and video technology.
Essentially, Recruiter.com aggregates smaller hiring firms and independent recruiters under a common platform and provides them with access to more clients and technology. Clients include big names like Dentsu, ADP, Pfizer (NYSE:PFE) and other major enterprises. The company provides companies small and large with access to on-demand teams of virtual recruiters armed with AI-powered candidate sourcing tools.
Clients can engage recruiters on an hourly or monthly basis through Recruiter.com On Demand, subscribe to the AI Software or they can post recruiting jobs on Recruiter.com - its job board is launching in September 2021.
Proactive sat down with Recruiter.com CEO Evan Sohn to learn more about this innovative company.
Proactive: Recruiter.com aggregates smaller hiring firms and independent recruiters under a common platform. What does this provide them with?
Evan Sohn: So the best way to think about us really is like an Uber for recruiters. There's a major talent shortage going on in the US today, really around the world, and the entire hiring space is really about to be reinvented. The way things happened previously really doesn’t exist anymore and what we're doing at Recruiter.com is providing a platform for thousands and thousands of freelance recruiters who all come together to deliver their talent acquisition services to companies large and small, which they do on an on-demand basis for our clients.
To make them even better we give them an incredible tool set of artificial intelligence (AI) powered software that could scour the internet for candidates, from everything from high-level scientists to truck drivers, and engage with them. We do this to really live up to our tagline of ‘Recruit talent faster’.
The company's network has now grown to over 30,000 recruiters. How much further can it grow?
Recruiter com is really a destination site for recruiters. We publish articles every day on recruiting – on methodologies, tips, tricks, etc. There are hundreds of thousands, if not over a million of recruiters around the planet and we actually run the largest network for recruiters on LinkedIn. The Recruiter.com network has over 850,000 people in it.
The interesting thing is that recruiting, unlike real estate, has no license. There is no certified recruiter, unfortunately, though we do training programs so anyone can become a recruiter. I think as you start to look at the gig economy, the percentage of folk that have a side hustle recruiting is actually phenomenal. Everyone knows somebody, and that individual could be a candidate to somebody else. So I think there really is a very interesting model where people will start being talent acquisition professionals, getting trained and doing that as a side hustle.
To answer your question, therefore, we're adding people every week, we're adding more every month, and we expect that number to grow pretty significantly.
Recruiter.com has also been on the acquisition front in 2021, recently acquiring the Technology Solutions business of Uncubed as well as Software-as-a-Service (SaaS) based recruiting and sourcing platform, OneWire. Are further sizeable acquisitions planned?
We actually announced in our S-1 that we're going to do a few acquisitions. We now have an incredible stack of technology companies, from job board technology to AI software, really all-round tech to allow us to ‘Recruit talent faster’. So I think we're pretty much complete on the technology side.
Therefore if we're doing further acquisitions, we're going to be looking at building-out our overall client base, or bringing in people from a talent acquisition perspective. So it could be a company that actually brings some really interesting talent, or it might be a new sector.
The company’s recent second-quarter results highlighted the growth in your Recruiters on Demand business and the introduction of software subscriptions. Are these a big focus going forward?
Yes, actually they are the biggest focus going forward. We've been on NASDAQ now for almost two months and in our first 10Q, published on time a few weeks ago, the results were stellar, with sequential quarter-over-quarter growth of 38%. But as you mentioned, it is Recruiters on Demand which is really our core business - that's our Uber for recruiters. That business actually grew by 88% sequentially, and quarter-over-quarter our software revenue went from $0 at the beginning of the year to $175,000 in recurring revenues. And while our operating margins went up, our loss went down. So everything is really moving in the right direction.
What do you think you bring as CEO to the company?
My background really is in technology companies and not at all in an operating role. But it's really been a thrill to bring my decades of experience to Recuiter.com, and it's something that I dream about at night and wake up in the morning and think about all the time.
I'm a salesperson, so I’m very, very revenue-led. We spend more time talking about revenue opportunities and customer acquisitions and how do we drive more revenue. I think that discipline inside of a company that's on a mission to really invent a very large space is actually pretty novel. I don't dream about product functionality or engineering, I dream about how we can help our customers and I have a great philosophy.
Of course, it's very revenue-oriented, which is that I want to be a client's first phone call. And that really sets the stage for the relationship that I want Recruiter.com to have with our customers. We want to be the first one they contact when they want to use a third party to help them with their talent acquisition needs. I want to be their first phone call. I think that discipline and that drive for success really permeates Recruiter Com.
I've been CEO now since June of 2020 and the results speak for themselves. We have a great shareholder base, but it's not just me, I've really been able to bring together a great team. We're over 60 people now and throughout the company we have just a fantastic team. My skill set is really bringing out the best in people and that is being leveraged to the best of my ability.
At the same time, I am one of the co-founders of the Ira Sohn Conference Foundation. Ira was my brother who died in 1993 from cancer. He was a Wall Street trader and his boss and friends started the Ira Sohn Conference in 1995. Since that time we’ve raised over $95 million for pediatric cancer and other related child diseases around the world. So I’ve always had my hands, sort of, in the financial community as well, and in that regard it’s really nice to tie the two together.
What should Recruiter.com investors expect in the near to medium term?
I would say that we are a start-up on NASDAQ, so I would hope that our historical shareholders will look at it that way.
We're going to grow up on NASDAQ. We all think of NASDAQ as the home of giant companies like Microsoft and Apple, which are now behemoths but actually they started as small-cap companies on the index, and we're part of that small-cap culture on NASDAQ.
We're really excited to execute on our plans of growth on the revenue side and to grow as a company in terms of our overall market share and valuation. And I would expect that our shareholders certainly have the same vision for our long term returns. At the end of the day, we are in the right place at the right time, with the right company. We have grown, we finished our uplift round, we have cash in the bank, enough to fuel our growth towards profitability. And I cannot be more excited for people to come on the journey.
At the same time we are at the epicenter of all the things that are going on in the job market. I'm on CNBC talking about it, and on Yahoo Live, and it's very exciting to be part of that conversation.
If you thought about it a year-plus ago when the world started to shut down, you would have said companies like Netflix (NASDAQ:NFLX), Doordash and Peloton were going to reap the benefits of a shutdown.
When you think of reopening the economy now you're looking at the job market, and you can't read an article in a newspaper without hearing about jobs. So we are one of the companies at the epicenter of a job market that is never going to go back to normal. This market is going to see more churn and work from home, indeed work from anywhere. And we're bracing for the great resignation, that's becoming the great reshuffle. All these things are happening on a regular basis, so it's an incredible time to be a Recruiter.com company.
Probably the last thing I would say to our shareholders is that if you roll the clock ahead five years from now there will be a Recuiter.com. We have that billion-dollar brand name and my responsibility, and I tell this to the board and to shareholders, is to really unlock the potential of that brand.
One would have to ask is it now the time for a company called Recruitrer.com. You're going to see this massive changing of jobs in terms of candidates as they move around from company to company and reshuffling and this isn't going away. We're not returning to a normal where all of a sudden every Millennial is going to say: Hey, you know what, I'm only going to stay in this job for the rest of my life like my great grandfather did. That's just not going to happen anymore. We're going to see people moving around much, much faster and at a much more fluid pace. And anytime there's movement in the job market, the talent acquisition professionals are the ones that reap the benefits.
So it's good to be part of that company, to be Recruiter.com that's reinventing this $120 billion space by providing on-demand recruiters and talent acquisition professionals to companies of all sizes, with tools, and is really just primed for success.
So how should investors value Recruiter.com?
So it's really interesting, and it's probably my biggest headwind, because on the one hand we are a software company. We have subscription software, like a DocuSign, because we're in the business process automation side; we run some job boards like OneWire and Mediabistro - and we're going to have our own shortly - so we look like Zip Recruiter because of that; and we are an on-demand freelance platform like Fiber.
We’re also a destination site like Realtor.com, because we are a brand name company, and get lots of organic traffic. And then we also do some hybrid models, we have subscription services and do some direct hire, etc. So how do you pigeonhole Rectuiter.com as a multiple of EBITA?
The reality is that it is a hybrid. And if you take a look at our 10Q, we actually start bucketising our revenue into segments and each of those segments has its own valuation associated with it, which is really why we broke it out. Looking at those numbers, our on-demand revenue should probably trade at around 22 times gross profit; our software revenue should be valued at around 20 times; our marketplace revenue - which is really our job board and other revenues - should be trading at around 6 or 7 times, like Zip Recruiter. And then finally, the rest of our business - our staffing and some of our direct current business - is probably anywhere from 0.75 to 1.00 times revenue, which looks like a Korn Ferry or something like that.
So I think the right way to look at it is to really do this hybrid model to truly deliver the valuation for Recruiter.com. And if you ran the numbers, then you would say that we are an incredibly undervalued company. So I think as we continue to execute against our plans and deliver the results that we've been delivering, the financial community will start to wake up to our true valuation.
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