HeadHunter Group PLC

Hello everyone and welcome to Headhunter Group third quarter 2021 earnings call. Joining me today to discuss our results are Mikhail Zhukov, our chief executive officer, Dmitry Sergiyenko, our deputy chief executive officer, and Gregory Moiseev, our chief financial officer. Before we begin, we would like you to remind that today's discussion will contain forward-looking statements. Actual results may differ materially from the results predicted or implied by such statements, and forward-looking statements may today speak only to our expectations as of today. We undertake no obligation to publicly update or revise these statements. For discussion of some of the risk factors that could cause actual results to differ, please see the risk factors section in our most recent annual report on Form 20F filed with the SEC. During this call, we'll be referring to some non-IFRS financial measures. These non-IFRS financial measures are not prepared in accordance with IFRS. A reconciliation of the non-IFRS financial measures to the most directly comparable IFRS measures is provided in the earnings released we issued today and the slide presentation, each of which is available on our website at investor.hh.ru. Now, I'd like to turn the call over to Mikhail.

Thank you, Aron. Good afternoon, everyone. Thanks for joining us today. This was an exceptionally solid quarter for our product and business development. Dmitry and Grigory will walk this through in detail later on, but we have yet again managed to double our revenue base compared to 2020 and hit all major business KPIs. As our user base strikes new historical records, it's essential to stay laser focused on product innovation and adaptation of our platform to distinct customer segments. One of our key product priorities continues to be seamless and enjoyable experience for non-recruitment professionals from SMAs. This customer category has been the key driver of our business growth and following candidate migration to mobile devices, we are now observing similar trends in that area. That is why we decided to come up with a fully reworked employee mobile application built on predictive interfaces. It's too early to draw any strong conclusions, but at the moment we see that the key conversions to user target actions in the new app have improved by 10-20%, thereby delivering high recruitment efficiency and business results for our clients. On the job seeker side, we launched wide experiments with employee review functionality integrated with our strategic partner DreamJob and that showed very encouraging engagement from both candidates and employers. Even though it's in experimental phase, yet circa 15% of our vacancies already have corporate reviews and we plan to scale functionality across the entire customer base. in the next few quarters. On the investment side, we have finally made the deal with Udo and now we're institutionally ready to move along our joint strategy in a self-employed market where we continue to see major growth opportunities for us. Now, I'll turn it to Dima to walk you through the key highlights of the third quarter. Thank you.

Thank you, Michelin. Good afternoon. Thank you for joining us on this call. This quarter our revenue was 4.7 billion rubles, and we managed to sustain, as Misha said, a triple-digit revenue growth despite a much higher comparison base than in the second quarter. Market conditions remain very strong. We have significantly expanded our business across the key strategic areas, including acquisition of small and medium businesses and monetization of key accounts. Despite a significant increase in marketing spend, our other cost items are significantly behind the top-line expansion, leading to elevated profitability. In Q3, our adjusted EBITDA margin came at 60.4%. This year, we follow conservative CapEx policy, resulting in strong cash generation for shareholders. Our CapEx in Q3 as a percentage of revenue came at just circa 1%. In terms of performance by operating segments, in small and medium accounts, revenue increased by 106% year-on-year, driven by both increase in number of paying customers and RPC growths. Acquisition of new clients explained circa 56 percentage points of revenue growth in small and medium segment. Our total customer base reached 450,000 clients and this quarter already exceeding full year 2020. In key account segment, average consumption growth and monetization initiatives were the key drivers of our strong performance. Notably, average check in this segment increased by 71% year-on-year and that is largely explained by the humanization model for subscriptions gaining pace across the customer base. Geographically, revenue from Moscow and St. Petersburg increased by 98% year-on-year, while revenue from other regions of Russia went up by 110%, which is totally in line with our expansive strategy in Russian regions. Product dynamics this quarter is somewhat similar to what we've seen in the second quarter. Job postings remain the fastest-growing area on the back of increased consumption in small and medium and key accounts. In this competitive environment, clients utilize advertising tools more intensely, leading to ever-growing consumption per client. As a result, the total number of vacancies on the platform reached a historical record of 1.1 million, of which over 1 million are paid vacancies. CV database access and bundle subscriptions demonstrated 94% and 89% growth year-on-year, respectively. As you can see, the growth in subscriptions is kind of converging with listing products thanks to monetization enhancement of the former. Apart from our core products, we are very satisfied with the solid dynamics of our value-added services, including recruitment automation, branding products, our performance-based solutions, ClickMe, and Virtual Recruiter. Skill has demonstrated yet another strong quarter of customer base expansion, with revenue came close to 300 million rubles, representing 200% growth year-on-year and reaching GB down-breaking level first time in company history. This group of value-added services generated over half billion revenues in Q3, yielding growth of 136%. This just underscores market openness for innovative HR tech solutions in today's challenging environment. Now, returning to our full-year 2021 outlook. This year, as you understand, is particularly difficult to make precise projections. From the one hand, our business performance is exceptionally strong and market backdrop is very robust. But from the other hand, the pandemic stats in Russia is far from being stable yet. Taking those factors into consideration, we've decided to upgrade our full year 2021 outlook to 81-84% revenue growth range, indicating over 15 billion revenues for Headhunter Group in total. Now here's Gregory to talk about our profitability and cash flow metrics.