Monster Worldwide's CEO Discusses Q4 2010 Results - Earnings Call Transcript

| About: Monster Worldwide, (MWW)

Monster Worldwide (NYSE:MWW)

Q4 2010 Earnings Call

January 27, 2011 5:00 pm ET

Executives

Sal Iannuzzi - Chairman, Chief Executive Officer, President, Member of Special Committee Investigating Stock Option Practices and Member of Special Litigation Committee Addressing Civil Litigation Matters

Lori Chaitman -

Timothy Yates - Executive Vice President and Director

Analysts

Tobey Sommer - SunTrust Robinson Humphrey Capital Markets

Douglas Arthur - Evercore Partners Inc.

Craig Huber -

Alexia Quadrani - JP Morgan Chase & Co

Mark Marcon - Robert W. Baird & Co. Incorporated

John Janedis - UBS Investment Bank

Glenn Greene - Oppenheimer & Co. Inc.

Timothy McHugh - William Blair & Company L.L.C.

Mark Mahaney - Citigroup Inc

Operator

Good afternoon. My name is K.C., and I will be your conference operator today. At this time, I would like to welcome everyone to the Monster Worldwide Fourth Quarter 2010 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Lori Chaitman, Vice President of Investor Relations. Ms. Chaitman, please proceed.

Lori Chaitman

Good afternoon, and thank you for joining us on Monster Worldwide's Fourth Quarter 2010 Conference Call. We will have formal remarks from Sal Iannuzzi, Chairman, President and Chief Executive Officer; and Tim Yates, Executive Vice President and Chief Financial Officer.

In addition to Sal and Tim, several members of our executive management team are available to answer your questions during the Q&A part of the call. They are Andrea Bertone, Darko Dejanovic, Ted Gilvar, James Langrock, Michael Miller, Lise Poulos, and Mark Stoever.

Before we begin, I'd like to remind you that except for historical information, the statements made during this conference call constitute forward-looking statements under applicable securities laws. Such forward-looking statements involve certain risks and uncertainties, including statements regarding the company’s strategic direction, prospects and future results.

Certain factors, including factors outside of our control, may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which we operate, risks associated with acquisitions or dispositions, competition and the other risks discussed in our Form 10-K and our other filings made with the Securities and Exchange Commission. With that, I'd like to turn the call over to Sal for his comments.

Sal Iannuzzi

Good evening, and thank you all for joining us for our fourth quarter and 2010 year-end conference call. 2010 was a year in which we made significant progress in executing our strategic plan for rebuilding Monster. Financial performance improved consistently throughout the year, and we either exceeded or were at the higher end of the annual financial expectations outlined last year.

Financial highlights for the year and the quarter, including HotJobs. Full-year bookings increased 23%. Fourth quarter bookings were up by 28% year-over-year and 40% sequentially. Revenue for the year increased 1% including HotJobs. As you all know, the lag between bookings and revenue growth was the direct result of the depth and length of the business downturn. Because of the strong bookings performance throughout the year, the fourth quarter’s bookings and revenue growth have become more comparable.

Revenue growth in the fourth quarter increased 21% compared to last year. Loss per share for the year was $0.07 and the fourth quarter was a $0.06 profit. Our most profitable quarter in eight quarters. EBITDA for the year was $109 million and in the fourth quarter, it was $43 million.

These strong financials are direct results of the many improvements made over the past several years. We now offer to clients on a global basis the best combination of the ability to reach the talent market and the ability to precisely and efficiently identify the right candidate to fill their job openings.

I want to briefly highlight some of our accomplishments during 2010. Our career end network became the industry's largest recruitment focus and network, now reaches 1/3 of the U.S. Internet population. It has become increasingly important to our clients, with 50% more of our clients purchasing CAN products during 2010 than 2009. We rolled out CAN in a number of European countries. In response to customer demand, we also launched CAN Direct, an innovative product which allows customers to syndicate their job advertisement directly from their talent management system into our ad network and then drive traffic directly back to their career website.

We successfully launched the 6Sense-powered resume search, or PRS product, in North America. The U.K., France are in beta and in Australia. The North American PRS continues to ramp and is an increasingly important part of our overall solution. In France, while still early, we are seeing adoption rates similar to the U.S. And in the U.K., we made a strategic decision to focus initially on the enterprise market and adoption rates have been strong in this segment. Our net markets for rolling out PRS are Germany, the Netherlands and China.

We completed the HotJobs acquisition and the Yahoo! traffic deal, transactions that significantly increased our U.S. customer base and talent pool. We will integrate the two sites as planned in the next few weeks and we will be adding thousands of new customers. We successfully launched Monster in Brazil, a large market where we expect significant growth in the coming years. We recently signed a traffic deal with Yahoo! in Brazil, which we expect will more than triple our existing traffic in that country. And we are currently working on similar traffic deals with Yahoo! in other Latin American countries.

We continue to expand our operations and important growth markets in Asia, including China, India and Korea. Bookings in 2010 in Asia Pac increased 46% on a year-over-year basis. We are piloting our 6Sense suite with a number of key commercial clients and early feedback is very positive.

As we noted, this application leverages our 6Sense search capability. It enables our customers to efficiently search, manage and analyze resumes in their databases that come from any source. The product will be launched midyear and we're excited about its potential. We do not believe there is compatible offering in the marketplace.

All of our enhancements have a common theme, they are designed: One, to increase our audience and as a result, our pool of job seekers; two, to enhance the likelihood that a job seeker will become an applicant; and three, to help employers and job seekers to find the right match all on a global basis.

As a result of these product enhancements, Monster has become substantially broader and different from the traditional job board. To evaluate the success of our offering, we had our clients look at a broad set of metrics that simply unique visitor or job posting volume, which are generally associated with a traditional job board.

For example, CAN and CAN Direct may drive traffic directly to our clients’ career sites will not result in unique visitors to Monster or a traditional posting. We increasingly help our clients understand the full value of our offering by providing advanced and local tools through our partnerships with jobs to web. Of course, the volume of traditional postings is a part of our overall package.

Recently, there's been some buzz in the market about a decline in new postings at the traditional job board. Our data does not bear this out. Although we have always cautioned against running a direct correlation between job postings and Monster's bookings and revenue on a short-term basis, we do point out that including January, we have had 12 consecutive months of growth on a year-over-year basis in new job postings, most of which have been in the double-digits.

While I am pleased with our execution during 2010 and look forward to an even better year ahead in 2011, our bookings and revenues in the fourth quarter were at the lower end of guidance. For the fourth quarter, bookings were $330 million, a 28% increase compared to last year. Revenue was $258 million, a year-over-year increase of 21%. Earnings per share of $0.06 was the midpoint of the range and compares to a $0.01 loss per share last year.

EBITDA was $43 million, a significant improvement over last year. There was nothing fundamental which resulted in a bookings in revenue being at the low end of the range. But rather an unusual confluence of short-term events. Since we provided guidance in late October, currency translations had a negative impact of $3 million on bookings. In addition, a number of isolated factors came together in December, which caused us to lose approximately $5 million in booking right at the end of the year.

Contributing factors included the weather throughout Europe and Northeastern United States. A number of our customers simply could not get to work during the last weeks of the year, and were unable to execute sales agreements. In addition, since the U.S. Government had not approved the budget and was operating under a continuing resolution, a number of governmental contracts were not consummated. While some of this business has been pushed into future quarters, some of the short-term transactional business may be lost.

Turning to 2011. As we head into new year, we are well-positioned to achieve our financial goals. While significant uncertainties remain in the global macro economies, most forecasters continue to call the progressive improvement. Around the world our clients have increased budgets for recruiting and are beginning to increase their hiring. Most clients tell us that their hiring needs are increasingly specialized and targeted, and that they are receptive to increasing their business with Monster.

I am sure we have all read about new tools used by recruiting to identify talents. Recruiters have one objective, to quickly identify the right candidate for the right job. Everything we have invested in over the past several years is squarely aimed at fulfilling that objective. We believe, and our results verify, that we are able to compete and win against all competitors in the market. With that in mind, I want to reiterate our financial expectation to 2011. Bookings and revenue are expected to grow in the 20% to 25% range year-over-year. EPS will be in the range of $0.36 to $0.48 per share in 2011.

Before I pass over the call to Tim, I'd like to make a couple of organizational announcements. First, I'm pleased to announce that we have made the strategic decision to integrate our European and North American sales organizations under one leader, Andrea Bertone. Many of you have met Andrea over the last several years. Andrea joined the company in 1996 and has been in a leadership position in our European operations since 2003.

Andrea has done an exceptional job solidifying our market position across Europe, bringing Monster to the number one or two market share position in the many countries we serve. Kathy Paladino, who was heading North American sales, has decided to leave the company and we wish Kathy the best of luck in her new endeavor.

Second, James Langrock has been appointed Executive Vice President and Chief Financial Officer. James will assume these responsibilities in addition to his principal accounting officer responsibility.

Tim will continue as an executive Vice President and Board member, and will be fully involved as he has been in the senior management of the company. James has worked closely with Tim and me since joining Monster as Chief Accounting Officer in 2008, and before that, for over four years, at Simple Technology, where he served as Vice President and Chief Accounting Officer.

We have been planning for this transition internally for some quite some time, and believe the timing is right to make the change. Many of you have already met James and will be seeing more of him in the future.

And for better or for worse, you'll continue to see Tim, particularly in investors meetings, and perhaps even in this forum. Now I'd like to turn it over to Tim to provide some additional financial details on the fourth quarter results and our outlook for Q1 in 2011. Tim?

Timothy Yates

Thank you, Sal. Good evening, everyone. Today, I will primarily be reviewing the results of the fourth quarter and using slides to guide the conversation. I will provide color on the performance of HotJobs, but we are not specifically breaking out its results.

Turning to Slide 1, or Q4 pro forma income statement. Bookings of $330 million were up 28% year-over-year and up 40% sequentially. Sal has discussed the business reasons why bookings were at the lower end of the range and in addition, bookings were negatively impacted by $5 million of currency translation versus last year.

Revenue of $258 million is up 21% year-over-year and 12% sequentially. The fact that bookings were at the lower end of the range also had a negative impact on revenue and in addition, revenue was negatively impacted by $3 million of currency translation versus last year.

Total operating expense of $246 million was up 16% year-over-year and 9% sequentially, primarily reflecting the inclusion of HotJob's expenses. Interest and other expense was $835,000, somewhat better than normal as a result of a gain on a small investment.

Equity loss, primarily reflecting our investment in CareerOne Australia, improved to a loss of $359,000. EBITDA was $43 million, net income was $7.1 million and earnings per share was $0.06. During the quarter, HotJobs performed consistently with our expectations on the bookings, revenue and operating expense line. As the two businesses have come together and even before the sites have been fully integrated, HotJobs clients are increasingly taking advantage of Monster's core product portfolio and some of them are doing their business at Monster in addition to or instead of at HotJobs.

We are successful in retaining HotJobs’ clients and we believe they are seeing the value of the combination. The amount of business we are doing with HotJobs’ clients is well within the parameters of which the acquisition was predicated.

Slide 2 is our GAAP to non-GAAP reconciliation. The larger reconciling items were: $3.3 million revenue adjustment resulting from purchase accounting relating to our acquisition of HotJobs; $6.6 million of pro forma expenses, of which $4.7 million is on the office in general line, representing costs associated with the HotJobs transaction. We continue to forecast the total of $30 million in one-time acquisitions and integration costs related to HotJobs.

To date, we have incurred $24 million of the $30 million, and the remaining $6 million will mostly be incurred in the first quarter. In total, pro forma adjustments were negative $6.6 million after-tax in the quarter.

Turning to Slide 3, which is the Q4 2010 pro forma expense trends slide. The breakdown of expenses was the following. Total salary and related expense was $126 million, up 6% sequentially, primarily caused by a full quarter of HotJobs expense and by increases in incentive compensation, including commissions.

Marketing expense was $64 million, up 25% sequentially, primarily as a result of our Yahoo! traffic deal. As Sal noted in his comments, we look at our traffic and reach from a number of different perspectives, not simply by the volume of unique visitors. During the quarter, Yahoo! traffic performed consistently with our expectations, again prior to the full integration of the sites.

The payment for traffic to Yahoo! is based on the volume of unique visitors and the number of expressions of interest, which is the start of the application process. EOIs are of greater value to our clients. During the quarter, the great majority of the Yahoo! traffic expense was for EOIs. Office and general expense was $56 million, up 2% or $1 million from the prior quarter. Total headcount in the quarter was 5,847 compared to 5,792 at the end of Q3.

Slide 4 is bookings and revenue trend. Bookings increased 28% year-over-year to $330 million. Our global careers channels had very strong bookings growth during the quarter of 30% offset in part by a slower growth in our IAF business. North American careers, the largest absolute dollar contributor, experienced 35% year-over-year growth and we experienced strong results in virtually all region and channels.

Asia careers, the smallest absolute dollar contributor, also experienced 35% year-over-year growth. Within Asia, Korea remains our strongest contributor on a percentage-growth basis with bookings up 48%. We also experienced strong bookings growth in India, which grew 38% and China, which grew 26%.

Europe careers increased 20%, negatively impacted by 9% of currency translation, with all major countries experiencing bookings growth. During the fourth quarter, Sweden remained our largest percentage contributor, up 52%. Bookings in Germany, our largest European market, continue to build momentum with an increase of 35%.

Other countries that increased in the double-digit range include France, Belgium, Italy, Switzerland and Austria. Bookings in the U.K. and Netherlands continued to lag the growth rates in the rest of the European markets for a variety of reasons, primarily including slower the economic growth in England and the fact that both England and the Netherlands have large service industries, particularly including the financial services sector.

We continue to experience strong renewal, win-back and new customer results around the world, which we believe reflects not only the strengthening in the global economies, but also increasing competitive wins in the marketplace. During the full year in North America and Europe, we booked business with more than 160,000 accounts, including a significant number of new and win-back accounts. Pricing during the quarter was relatively stable and we continue to receive the 30% premium pricing on PRS.

Slide 5 shows the results of our operating segments. As much of the information on this slide has already been discussed, I will use it to review the results of our IAF business as well as the trends in our operating margins. IAF continues to be a challenge as both its bookings and revenue lag our Global Careers Business. Revenue during the quarter was down 7% sequentially and 4% year-over-year. Within that, display was up 19% while lead gen was down 16%.

Lead gen continues to be negatively impacted by reductions in military recruiting, which affects our military.com site, the largest contributor to the IAF segment. In addition, our core profit education clients continue to operate in a difficult environment.

High quality organic Lead Generation business is attractive to clients and profitable for Monster, but organic traffic is currently limited. We could buy additional traffic and in the short run increase bookings and revenue, but this revenue would come at substandard margins, and we do not believe it will be prudent to take this business on in the short term. We continue to assess all ways to improve the revenue trajectory and the margins of this segment.

Our overall operating margin was 4.6% in the quarter compared to 2.4% in the third quarter. Our combined Careers business had an operating margin of 8.4% compared to 7.8% in Q3. And within that, Careers North American margin decreased to 15%, primarily as a result of increased incentive compensation and an increase in marketing expense.

Careers International margin was positive as anticipated as the recent increases in bookings are now flowing through to revenue. IAF operating margin was 1.7% and corporate expenses were $7.6 million, representing 3% of total revenue. Last quarter, corporate expenses were $11.6 million and as noted previously, these expenses will fluctuate from quarter-to-quarter but do not have a significant upward bias.

Slide 6 is key balance sheet and cash flow items. GAAP EBITDA was $33 million. Pro forma EBITDA was $43 million, a 17% EBITDA margin. Net cash provided by operations was $32 million, essentially flat with last year's fourth quarter. Capital expenditures were $20 million, up somewhat as a result of our South Boston data center, which began operation last week, and is designed to provide additional capacity to support HotJobs and new products including the Enterprise suite.

Deferred revenue was $376 million, a 20% sequential increase and a 23% increase compared to last year's levels. These strong increases were partially offset by $5 million of negative currency translation. Net cash was $39 million and total liquidity comprised of gross cash and credit available was $328 million.

To summarize the quarter and the year. We are disappointed that fourth quarter bookings and revenue were at the bottom of the range, but as Sal has noted in his commentary, we do not believe that this was caused by any fundamental changes in our business. To the contrary, strong bookings growth of 28% in the quarter and 23% for the year give us confidence that our strategy is working.

During this important transition year, as revenue begins to catch up with the increase in bookings, we carefully managed operating expense, and as a result operating profit improved each quarter through the year. As we look forward, we expect continued growth in bookings and revenue and significant leverage on the bottom line. Under our base case plan and forecast, we remain fully committed to the continuing improvements in operating income and operating margins with at least 50% of our incremental revenue dropping to the operating income line during 2011.

With that said, I would like to now provide guidance for the full year and Q1. Slide 7 is full-year guidance. To reiterate Sal's comments, we currently expect that bookings in 2011 will be in the range of $1.191 billion to $1.241 billion, a 20% to 25% year-over-year increase. Revenue in the range of $1.103 billion to $1.149 billion will also be a 20% to 25% increase. Earnings per share in the range of $0.36 to $0.48 per share. At the midpoint of the range, this would represent an increase of $0.49 over 2010.

Slide 8 summarizes our first quarter guidance. We currently expect that during the quarter, bookings will be in the range of $259 million to $269 million, an increase of 18% to 23%. Revenue will be between $254 million and $265 million, a comparable 18% to 23% increase. First quarter EPS will be in the range of $0.01 to $0.04 versus a loss of $0.14 in the first quarter of 2010. Now I would like to turn the call back to Sal.

Sal Iannuzzi

Thanks, Tim. The investments we have made over the past three years are paying off and it’s evident in our 2010 results. But we still have plenty of room for improvement. In 2011 as the economy slowly improves, we will continue to aggressively execute our plan.

On a global basis, our customers will become increasingly knowledgeable of our product portfolio. We will continue to improve and innovate on that product portfolio, and we will continue to aggressively manage the business. This will result in an increase in market share and attainment of our financial results.

Before we take questions, I want to thank our customers, employees and shareholders for their ongoing support. I'd also like to take a moment to make a few comments with regards to both Tim and James.

I want to thank Tim for being our CFO over the past three years. When he came onboard, the promise was for only one year and I'm very grateful. I'm also grateful that I will continue to have the privilege of working with him in the years to come. While having James in his new role, both Tim and I have the utmost trust in James and his judgment, and we look forward to having him as part of our team in the future. With that, let's open up for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question will come from Alexia Quadrani with JP Morgan.

Alexia Quadrani - JP Morgan Chase & Co

Can you remind us what percentage of your customer base is somewhat government-related, and if you could tell us if any of the weakness you saw late in the fourth quarter has been reversed at all so far in Q1?

Sal Iannuzzi

In terms of the overall percentage, government business, James is pulling that information out so I don't give you the wrong number, but it is, in the overall scheme of the business of Monster’s revenue in any one quarter, it is not a huge number. The transactions that were pushed -- and because the government -- I've been also given the number, it's 5% on a global basis. The transactions that have been held up for the government as you know is still operating under a continuing resolution. Those transactions have not closed yet. We have every reason to believe that they will come in the next several months or perhaps, it's possible that one may push into Q2. It's very difficult to predict particularly given what's going on in Washington at this moment. But you haven't asked us, but I'll take a moment to tell you anyway. Our belief from what we see and what our pipeline is for our government business in Q1, we're comfortable that the business should perform, barring any event that would just –that would take us all by surprise. We expect Q1 to not have any real impact. I think the government and the people in government have understood now with how to maneuver, how to work within the confines of the continuing resolution and that the issue really shouldn't reoccur.

Operator

Our next question will come from Doug Arthur form Evercore.

Douglas Arthur - Evercore Partners Inc.

Sal, you had a very nice bump up in international growth in the quarter. Really, the first meaningful one, this cycle. Assuming that -- and you went into some of the detail on that, assuming that momentum continues, what are sort of your broad thoughts about profitability outside of North America in '11?

Sal Iannuzzi

I see the profitability both here in North America and outside of North America to be going up significantly. The great thing about our model and of our enterprise, and this is true certainly in the United States and in Europe, it was true in places like Brazil where we are totally in an investment mode at this point is we've navigated through, thankfully, the recession. We've brought down our costs globally, by several hundred million dollars. And we have, what we've been able to do and we have not laid off excessively. So while we may add some cost in some areas, we do not need to add very much. So the bottom line is that we will be able to, we believe, contribute significantly to profitability from this point forward. I think the last time and I reiterate it this time, we expect approximately 50% of all increase in revenue will flow to the bottom line. And that's why we're able to give the guidance of $0.36 to $0.48. If you take that midpoint and you take $0.42, take the $0.42 plus the $0.07 we lost in 2010, that would be a turnaround for the company of approximately $0.49 so call it $0.50 or so. So we think because we've got the basic costs covered that most -- a good portion of the increase will be able to be to returned to the shareholders. Tim?

Timothy Yates

And Sal, obviously the 50% is on the consolidated company. There are two relatively significant investments going on inside the international segment, which will continue to keep during 2011, the operating margins somewhat lower in the International segment albeit improved. And those are China, where the results are ramping up quickly but we’re still -- the profitability is still lagging the rest of our portfolio because it's newer investment for us and Brazil, which is a smaller dollars but also new investment. So it had some impact but overall, the International segment profitability increases significantly.

Sal Iannuzzi

Just to add one more to Tim's comment, we also have investments in places like Mexico, Turkey all smaller numbers and that, taken as a segment, that will contribute, although a smaller dollar amount, to bring it all down.

Operator

Our next question comes from Mark Mahaney with Citigroup.

Mark Mahaney - Citigroup Inc

I wanted to ask a product question about Power Resume Search. Could you talk about the traction you're seeing with that product to date in North America and then the status of rolling that product out internationally?

Sal Iannuzzi

Sure. In North America, we are seeing approximately 50% or so of our search activity, now being Power Resume Search. As you recall, as we introduced the product, moved it in, it was in the 30% range, moving up towards the 40s and now it's just about half of our activity in North America. In France, where we introduced it approximately a quarter and a half ago to be exact, we see the ramp-up going very well. I think we learned a few things from the introduction in the United States and were able to capitalize on that as we went into Europe and into France and the results have been good. The acceptance is very high. In the U.K., as I noted in my comments, we've decided to really focus on our commercial clients, our enterprise clients, and more and there the acceptance is also going extremely well. I think that going forward, we have plans -- we're in beta in Australia. Probably come out of beta I believe, most likely this next quarter. And I think that what we'll be doing is introducing it to the Netherlands and Germany sometime around the middle of the year. Our intent right now is to introduce it in China sometime in the beginning of the first part of 2012. So the ramp-up, the introduction, is going well. We are also drawing up plans, we need to decide introduction into the Spanish-speaking countries but we haven't decided on a date there yet. Hopefully, we will be able to update you on that next quarter. But PRS of $0.06 in its entirety, not just the search capability but also the introduction of it as a technology to be used on databases, not only Monster’s database or client database, but much more broadly is going very well and we anticipate introducing that sometime in the late second quarter, maybe the beginning of the third quarter, depending on whatever enhancements we wish to continue to make, to make sure that we introduce it to the marketplace in the proper way. I then want to remind everyone on the call that in the numbers that we have given, in other words our forecast for 2011, it does not include any revenue for -- it does include revenue for PRS but it does not include revenue for the selling of the technology, for other uses for companies. That's not part of that equation.

Operator

Our next question will come from John Janedis with UBS.

John Janedis - UBS Investment Bank

Could you talk a little bit more about the bookings assumptions this year? Meaning, I think at the midpoint or so of Q1 in the guidance, you're at about 20%, so it seems like you're assuming some reacceleration for the balance of the year to get to that 20% to 25% range. What are you seeing that gives you the comfort in a reacceleration in bookings during the course of the year as the comps toughen?

Sal Iannuzzi

I'm sure Tim and James will have comments on the question also. You have to remember that in 2010, Q1 growth was 17% and virtually each quarters thereafter, it ramped up, culminating in Q4 of an increase of 28% year-on-year. I think that barring snowstorms and plague and other events that occurred all in the last couple of weeks of the year, I think that, that momentum, every indication that we have, tells us that, that momentum is continuing and in some places, accelerating. So I think that we feel comfortable in saying that the growth will continue in 2011. It should increase in velocity and therefore, again, I wish we could say whether it will be 20% or whether it will be 25% or 24%, or whatever. But I think that it is very reasonable for us to expect accomplishing that range, given the momentum we see. And I'll give you a little bit more color on that, we had a dinner in New York a few weeks where we invited -- we wanted reintroduced Monster and reintroduce some of the things that we've been doing, including the 6Sense technology. And we had approximately 45 or so senior executives, including CEOs from a number of companies, at the dinner. And it gave us an opportunity, there were a number of Monster people, Tim, James, myself, virtually everyone around the table here was talking to different groups of customers and without question and, of course, the Board, the momentum, the expectation of people in that room regarding, not just Monster but regarding their investment in talent was positive. Certainly, much more positive than we've heard it in a long time. The momentum had been building during 2010 but now, there seems to be a much more hopeful, much more open dialogue about needs and increasing staff. There was not one company that I heard of that was reducing its need for talent, and every company that I've checked on and we've debriefed the people that were there for Monster, every company indicated that they plan to hire more aggressively next year than this year. Now, all of that is just color, time will tell. And obviously, we're all operating under the cloud that something can happen out there, whether it be effecting the macro economy, whatever it might be, and what would change things. But based on what we see, assuming that things stay the way we see -- they are today. We have quite a bit of confidence in the projection. Tim?

Timothy Yates

Yes, I think we have the overall phenomenon in the first quarter being historically weaker than their two other particular things which do have an impact, the first is in our government business we talked about and what we have in our pipeline for Q1, we're comfortable of but because of the way the government has fallen throughout the year, there are some more significant bookings anticipated in later quarters during the year. Secondly, inside IAF, military, and IAF as we noted, is an area we're spending a lot of time on now. But inside IAF, we do anticipate some pickup in overall military recruitment as a function of the improvement in the overall job market and the veterans coming back from the war. So that's not a big number, it's just a little piece, but every little piece adds up to an increase in the momentum.

Operator

Our next question will come from Mark Marcon from Baird.

Mark Marcon - Robert W. Baird & Co. Incorporated

Just want to go back to the bookings and then I have a couple of follow-ups. Just on the bookings, are you anticipating for the first quarter that any of that business that didn't get done at the end of fourth quarter would fall into the first quarter, and if that were to occur, wouldn't that lead to an improvement in terms of the year-over-year growth that we all understand the seasonality of the business and we're all talking about year-over-year growth rates here.

Sal Iannuzzi

The way I view it, first of all, that business that was, say dropped, the majority of it occurred literally in the last two weeks of the year. As you know, Q4 is our biggest quarter. December is our biggest month and every week in December, particularly the last two weeks, it's a phenomenon that I was surprised when I first got here, I continue to be surprised at, those two weeks at the end of the year are very, very significant. They're the heavier bookings week, really of the year. The issue, as I noted in my comment, was there was some events both in Europe, travel in Northern Europe became very difficult, travel in the United States the week between Christmas and new year became very difficult, and it was a short week to begin with, which we had anticipated. And people simply couldn't get to work. Some of that and we're talking about our customers. We run a B2B business. And unless we can get contracts signed, I can't book it as revenue. We also had a situation, and I'm just giving you an example, in Northern England, in Glasgow, slightly earlier in the quarter where there was an ice storm that shutdown, literally, the city of Glasgow for several days. That had some impact, and of course, the FX we talked about. Now, the way I view it, and this is not -- it's the best estimate and I've looked at this very closely as you might expect the fact that there's any fundamental reason that something has changed that we didn't get closer to the middle of our guidance and we simply did not see that. It's really attributable to these events. Having said that, we certainly expect some of these transactions will come to us. Difficult to tell whether they'll come in Q1 or they may push out even a little bit further into Q2. There are customers that like to book business at the end of the fourth quarter because they think that we want to book business and are looking for greater discount and what have you, it's a game that's played every year. And you know, the opportunity has sort of passed, so they're never in a hurry necessarily to re-up, they don't have to re-up immediately. They may wait a little bit. It's very hard to peg. There is some business, however, for example, the [indiscernible] call center in Glasgow, there is some business that is lost; it is not going to come back. My best guesstimate right now is if you resume that number is the $5 million, that's the number I certainly think of it at, that we missed because of these events, I think about three, roughly three of it will come back sometime in the first, second quarter whenever people decide to do the business. And I think about approximately $2 million is lost. It's much more transactional, less strategic, and that opportunity, that's just gone. So to answer the question, shouldn't that make Q1, more robust? It might a little bit but to count that right now would be over estimating or overreaching, I think we'd rather stay where we are. And if it happens, great. If not, so be it.

Operator

Our next question will come from Tim McHugh from William Blair.

Timothy McHugh - William Blair & Company L.L.C.

First, can you, Tim, talk about, I'm not sure if you talked about this, if I missed it, but the seasonality of marketing with the Yahoo! traffic deal and the typical Q1 increase, how should we think about marketing in Q1 and then across the year with that new agreement in there? And then just to clarify, the $3 million of currency impact you mentioned, first, was that bookings or revenue and just to be clear, that was kind of since you gave guidance and relative to your expectations or was that on a year-over-year basis?

Timothy Yates

So the $3 million currency was on bookings and it was related to when we gave guidance, the change when we gave the guidance at the end of the year. It was basically around the euro. So that was $3 million. As it relates to marketing, I would think you can assume that what the marketing was this quarter would be in line and that is, we're not doing the Super Bowl this year so you won't see the dramatic spike in Q1 that you did last year.

Sal Iannuzzi

I think that what we've decided to do this year with regard to the Bowl is -- because we want to redirect the Bowl is a terrific opportunity. It has brought us good results. It is though largely a branding mechanism and helps our brand recognition. We decided this year that our resources really didn't need another shot of adrenaline with regard to the brand, but we really need to get out, but later in the year, and re-focus some of our marketing towards getting the message out of Monster, our technology, our technology sales and those offerings. We just thought it was a better way to get the message out there and it's very, very difficult, and we couldn't figure out a way to do it and in the middle of the Super Bowl, in a 30-second spot, which would cost us somewhere around $7 million or $8 million that we'd be able to convey the message about our technology while everybody is enjoying the game and having a beer. So we decided to just punt on that. So having said that, there is the traditional spike in expenses in Q1 due to things like FICA, just costs that come at the beginning of the year and which are traditional. So there will be that. Unfortunately, we couldn't do anything to avoid the social security but the Bowl and the marketing was a decision much more in our control that we could do.

Timothy Yates

And you didn't ask this question but just on the revenue -- the impact on revenue was about $1.5 million to $2 million on our guidance using the rates as of October and where it wound out for the year. So it was about $3 million on bookings, about $1.5 million, $2 million on revenue, the negative impact on the FX.

Sal Iannuzzi

The FX was quite simple, we just got surprised by the spike, which happened somewhere in the middle of the fourth quarter. And I think it was mid November. We had anticipated some weakening but we just didn't expect the shot that the euro took to be as significant as it happened. That's purely a misjudgment on our part. And that's it.

Operator

Our next question will come from Tobey Sommer from SunTrust.

Tobey Sommer - SunTrust Robinson Humphrey Capital Markets

I wanted to ask you a question about your assumptions and guidance for the full-year 2011. To allow us to interpret future economic and labor market data points. I think after the third quarter guidance, you’d said status quo labor market, if we get that improving jobs number in February, March, April, improving meaning more than recent trend, is that indeed kind of an improvement relative to the assumptions in your guidance or is that consistent with things that are already embedded in the guidance?

Sal Iannuzzi

I'll answer first and Tim and James I’m sure will have more to add. I think that we've built into our guidance into the 20% to 25% increase. We built in some expectation that the macroeconomic picture will continue to improve. Having said that, there was one comment this morning out there that the GDP in the United States appeared to be growing at 3% to 3.5%. If that continues to heat up, then Monster, it's certainly possible, I wouldn't include it in any numbers, but it's certainly possible that our performance will benefit from that but I think right now given what we see, a steady improvement, the stability in the unemployment number and for a lot of reasons, I hope it improves from the 9%. Assuming that it continues to hover roughly in that range, plus or minus a percentage point or so, I think the range we've given is prudent.

Timothy Yates

I think if memory serves me right, at the time we said that what we did say was based on progressively improving economies but nothing spectacular, I think the GDP growth around that time was about 2.5% forecasted for the U.S. Now it seems to be firming up a little bit. Obviously, that would be helpful but I would also say two things. One is that there's still tremendous cost currents from day-to-day and week-to-week about what the real economic situation in the country is. That's on the negative side. On the positive side, we don't think we need a heroic increase in unemployment to achieve our objectives.

Operator

And our last question will come from Glenn Greene from Oppenheimer.

Glenn Greene - Oppenheimer & Co. Inc.

The first maybe you can sort of talk about the sales force, sort of management change organizational realignment and related to that, does that have anything to do with sort of the bookings trends you did see in the fourth quarter but basically more importantly, the strategic rationale for it.

Sal Iannuzzi

Absolutely. The change had absolutely zero to do with the whatever you perceived the shortcoming to be in bookings. They hadn't happened yet. Having said that, when we decided to bring Kathy on board as I think I spoke at the time, I said that Kathy had a good deal of experience with regard to technology and the selling of technology. This company has two really strong strategic positions. One is innovation and the technology and going to market with that. Another strong leg on the stool is that we are the only player that is truly international. And I decided during the quarter that it was to our advantage, also based from what I was seeing from customers, that we centralize the sales efforts at least between the Europe and the United States with Andrea. Andrea has deep experience, he's been in this business well over 10 years. He’s had tremendous success in the U.K., and I’m sorry, in Europe as a whole. And I thought that was the right decision. And I also decided that we could do other things with regards to the technology and how we brought the technology to market and Kathy decided that she should seek other opportunities. It was really as simple as that. It had nothing to do with the $4 million, $5 million. Put it this way, I couldn't run this company and I couldn't have people supporting me if I made a change because of $5 million on a $330 million number.

Glenn Greene - Oppenheimer & Co. Inc.

I thought you'd say that. Related to that, as we think about the bookings guidance of 20% to 25% for '11, any way to sort of give a little color between North America versus International. Do you expect one area to grow somewhat faster, or both sort of culture blame that 20% to 25% range?

Timothy Yates

Right now, we're forecasting both of them to be in the 20% to 25% range, both North America and Europe.

Sal Iannuzzi

The beauty of the strength of the franchise too though is that as hesitant and as much as I dislike giving guidance and we're all of that school here, whether it's James or Tim, because of the very nature of the business, regardless of everything, there's always some unpredictability. The fact that we are so diversified geographically and there are so many economies and they all don't behave the same way at the same time, it gives us even a little bit more confidence in the number because if Europe produces a little bit better and there were some signs that indicate that, that might happen, it’ll pick up if the United States drags. Asia and its growth levels are such that this past year we benefit from Korean growing at 46%. That helps cover up the Netherlands, which for a whole host of other reasons, just didn’t grow at that fast a rate. So the mixture of the global reach of the company actually gives us more confidence but I think right now, based on what we can see, our crystal ball is only so good, we really are thinking about and the evidence that we're looking at, the analysis we've done, kind of indicates it'll be pretty much even. Before we move on -- do we have any more questions? Before we move on, a couple of comments I'd like to make. Recently there's been some articles, I think all of us can guess a little bit as to why they've been written and what they were intended to do, I won't get into that. But there is some points I'd like to make about noise out there about companies using different technologies and not using Monster anymore. And quite a bit of it is probably the price we pay for being the largest company in our industry. A lot of it gets tagged at Monster. In one of these articles that recently appeared and this was in the past couple of days. One of the companies mentioned was that they were cutting back and this is the second time or the third time that someone was quoted from that company, and this was a large, a very large, consulting firm. And now, I won't mention the name because it's inappropriate for me to use the name of a customer, we have a policy we just don't do that. But someone from that customer’s, I have no idea what level they are or where they reside within that company, said that they were reducing the amount of business they were doing with Monster and other job boards. Earlier in the year, they came out and said that they were no longer using Monster or other job boards. For the record, I can't talk about when people say things in a vague way but I can talk about them in a very specific way. That company has increased their activity with Monster over the past year by 87%. So where this noise comes from and what drives it so people can have quotes, [indiscernible] reports to prove a point and make it up. I don't know. But the reality is, what I just said, their spend with Monster, and this is a big customer, is up 85%. Secondly, another company, and this is a major, one of the biggest, if not the biggest staffing company in the world, indicated earlier in the year, and it was re-reported a couple of days ago that they were pulling back and going to different either professional media sites or social media sites to do their recruitment. And indicated that their spend and reliance on job boards, if Monster indeed is considered a job board, was being diminished. That same company increased their spend with us last year by over 150%. So I could go on, I could give you a few more examples but it's getting late and I think everyone has places to go, the weather is not good at least here in New York. But the point I want to make is very simple. For whatever reason, and we can all speculate, for whatever reason, there's a lot of information and it amazes me because of all of the industries I've ever been in, banking, technology, et cetera, there's always been some degree of misinformation but this one really provides a tremendous amount of entertainment for me in giving me challenges of false statements that are made by people who have absolutely no understanding of what their own companies are really doing. The numbers I just gave you are parts of the financial records of Monster. And believe me, we spend a lot of time to make sure those financial records are as close to perfect as humanly possible. So I just want to comment on that because as you read these things, as you see these things, you could easily be confused. I would be. And I just want to clear the air a little bit. With that, Tim suggested and I agree, if anyone has any follow-up questions, either other questions on other subjects or on what I just said, I would be more than happy to take it.

Operator

We do have a question from Craig Huber. [Access 342]

Craig Huber -

When you think about you're marketing and promotion spend for this new year, how much investors think that should probably be up in your budget here, if you're looking for revenues up 20%, 25%, is it reasonable for that line to be up say 15 plus percent?

Timothy Yates

I think the best way to look at it is look at our Q4 spend because that includes a full quarter of HotJobs. So I think if you’re to use that as your basis, that's probably a good indicator of what the quarterly spend will be on a go-forward basis.

Craig Huber -

But will the seasonality be similar to what it's been historically?

Timothy Yates

We don't have the Super Bowl in Q1 this quarter so it should be a little more linear than it has been in the past.

Craig Huber -

You mentioned early on in your prepared remarks about your own data for new job postings in the U.S. I think you said it was up, with your data, each of the last 12 months year-over-year, I think you said it was up in the month of January, the best you can tell us so far, we're not quite done yet. Can you tell us how much has that number actually been up over the last 12 months year-over-year? And how much is January or even December up year-over-year?

Timothy Yates

Our internal data has our postings up for the past 12 months going up -- we don't give our internal data but the outside service is looking at because if you're talking about, I guess, the last weeks you've seen the new postings for Monster being down on an outside service that they are looking at their data, because if you look at their data, our total available postings have been increasing, but our new postings on theirs have been decreasing. So we've been increasing in double-digits for most of the time for the past 12 months.

Operator

We have no further questions.

Sal Iannuzzi

I want to thank everyone very much for joining us on the call. For those of you in the Northeast, hopefully you get home safe. Have a good evening and thank you very much.

Operator

Ladies and gentlemen, thank you for your participation in today's Monster Worldwide Fourth Quarter 2010 Earnings Conference Call. You may now disconnect.

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