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Monster Worldwide (NYSE:MWW)

Q3 2011 Earnings Call

October 27, 2011 8:30 am ET

Executives

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

Lori C. Chaitman - Former Vice President of Investor Relations

James M. Langrock - Chief Financial Officer, Chief Accounting Officer and Executive Vice President

Analysts

Douglas M. Arthur - Evercore Partners Inc., Research Division

Glenn Greene - Oppenheimer & Co. Inc., Research Division

Mark S. Mahaney - Citigroup Inc, Research Division

Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division

John R. Blackledge - Crédit Suisse AG, Research Division

Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division

John Janedis - UBS Investment Bank, Research Division

Timothy McHugh - William Blair & Company L.L.C., Research Division

James J. Janesky - Avondale Partners, LLC, Research Division

Operator

Good morning. My name is Shancey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Monster Worldwide Third Quarter 2011 Earnings Conference Call. [Operator Instructions] Thank you. I now would like to turn the call over to Ms. Lori Chaitman, VP of IR. Ma'am, you may begin your conference.

Lori C. Chaitman

Thank you. Good morning, and thank you for joining us on Monster Worldwide's Third Quarter 2011Earnings Conference Call. We will have formal remarks from Sal Iannuzzi, Chairman, President and Chief Executive Officer; and James Langrock, Executive Vice President and Chief Financial Officer. In addition to Sal and James, several members of our executive management team are available to answer your questions during the Q&A part of the call. They are Tim Yates, Andrea Bertone, Ted Gilvar, Patrick Manzo, 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 and 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?

Sal Iannuzzi

Good morning. Thank you, Lori. I will start with a high-level financial summary, discuss our near-term priority, the competitive environment and conclude with comments on the current macro environment and our guidance and outlook for the fourth quarter.

In my discussion of the financial highlights, I will focus on our pro forma results and exclude arbitrage lead generation in all percentages. In his comments, James will fully discuss the pro forma items including the $17.4 million net gain resulting from the release of funds held in escrow in connection with our acquisition of ChinaHR.

Consolidated bookings increased 20% year-over-year while bookings about Global Careers business increased 22%. Consolidated revenue increased 20% year-over-year and revenue of our Global Careers business increased 21%. Demonstrating our inherent operating leverage and our commitment to expand in investment management, operating margin increased by approximately 400 basis points to 10%. We will achieve our objective of dropping 50% of the annual revenue increase to the operating income line for the full year 2011. EPS was $0.13. EBITDA was $54 million. EBITDA margin was 21%.

In the current environment, we are pleased that EPS was above the midpoint, while bookings and revenue were near the low end of our range. Overall bookings and revenue held up reasonably well during July and August, and it wasn't until the last couple of weeks of September and now into October, that the macro uncertainties which had existed throughout the quarter translated and changed behavior on the part of our clients. James will give more details and the break down in his comments.

I like to elaborate on a number of our near-term and inter-related priorities. Our first priority is to fully capitalize on our recent investments in product and technology on a global basis. Over the past several years, we have invested to successfully upgrade our product offerings. Now our primary objective is to ensure that we are using that broad and refreshed product portfolio to maximize benefit of our clients and that we continue to win an increasing share of our clients' business. PRS and CAN continue to gain traction on a global basis and are very important in helping us retain and win new clients. No competitor on a global basis offers the equivalent products.

As you know, last quarter we launched SeeMore, a cloud-based service which allows our clients to use our patented system technology to manage their entire talent pool, regardless of the source. This unique product is receiving significant interest. We have closed a number of deals and are building a substantial pipeline.

BeKnown, our professional networking Facebook app, is steadily gaining momentum. While it's still early, we are pleased with the adoption we are seeing and by the reviews the application has received in the market. BeKnown has won a number of awards, including being named one of the top products of the year by HR Executive Magazine.

The second priority is to continue to gain share. While I've been in Monster, the competitive environment has been intense on a global basis. While it is impossible to point to one figure, to conclusively prove our share gains, we triangulate the data in several different ways including a comparison of our recent bookings and revenue gains compared to our estimate of our competitors' growth. All metrics support our conclusions that we are gaining global share.

During the last several weeks of September, some clients deferred making purchase decisions, some shortening the terms of their contracts, while others simply reduced their spend. Naturally, we tried to determine whether this is a deferral or reduction is caused by anything Monster is doing. Unfortunately -- I'm sorry, uniformly, clients report that they are not shifting spend to competitors. And we have learned that Monster's broad product offering actually helps during these tough periods, and we are able to win more of the clients' available budget. We believe the slowdown we experienced in September was primarily the result of external macro factors. This conclusion is further confirmed by the fact that the slowdown was seen first in our e-Comm channels on a global basis, often a leading indicator, and by the fact that the slowdown with sales on a global basis, even in markets like Korea where Monster dominates.

Our third priority is to steadily increase our operating margins and regrow. As most of you know, during the great recession of 2008, we continued to invest in technology and new products, which we are now selling into the market. As we came out of the recession over the past 2 years, we committed to steadily improving the company's operating margin, and we continue to be fully committed to that improvement going forward. Today, we have the right product portfolio in place, the sales staff necessary to support our existing and potential new clients and the infrastructure to support the increased levels of business. As a result, our operating margin will be substantially improved in 2011 and reach double digits in the fourth quarter.

We accomplished this increase in operating margin while retaining and in fact increasing our investment in sales. During the year, we shifted resource from product and technology, which was necessary to develop new products and rebuild the infrastructure to sales. And we plan to accelerate their reallocation during the fourth quarter. To drive top line growth in our established markets, we do not need to commit significant amounts of additional resource. As a result, revenue increases, margins, will expand.

Now I'd like to turn to our outlook and guidance for the fourth quarter. When we provided guidance for the full year, the bookings and revenue in 2011 were both increased between 20% and 25%. The consensus forecast for 2011 with the real U.S. GDP growth would accelerate from the second half 2010 growth of 2%, to 3% to 4% for 2011. It was also presumed that there will be progress throughout the year. That unfortunately is not what happened. The GDP growth for the first 6 months was 1%. Despite the slower than anticipated U.S. and global economic growth, our business performed well, with bookings for the first 9 months of 23% over last year.

Right now, however, there is increasing uncertainty and fear that we may experience another recession. Faced with this heightened lack of confidence, firms around the world are scaling back their hiring plan and more carefully controlling their spending. This is a natural response and is certainly what we are doing here at Monster as we manage through this period. We are positioning ourselves offensively and defensively. On the offense, we are accelerating the percentage of our balance committed to sales and marketing, aimed at continuing to gain share. On defense, during the fourth quarter we will take action to significantly reduce the run rate of our operating expenses going into 2012. While some of this expense reduction will be achieved during the fourth quarter, and it is reflected in our guidance, most of this benefit will be in 2012 and will fuel an increase in operating margin.

The combination of these 2 actions, reducing run rate of operating expense while retaining our sales and marketing firepower, can be accomplished because of the investments in product and technology we have made in prior years. While we certainly hope that the current political and economic delays will improve in the months ahead, we believe it is prudent to manage our business on the assumption that it will not. Therefore, global bookings in the fourth quarter will be approximately flat on a year-over-year basis. While this deceleration in the fourth quarter growth caused by the current economic funk is tremendously disappointing, sequentially, bookings will be up 23% or $50 million. By comparison, during 2008, fourth quarter bookings were up only $10 million on a sequential basis. We expect revenue to increase in the range of 3% to 7% and we expect EPS to be in the range of 11% to 15% -- sorry, $0.11 to $0.15.

I would like to be clear about 2 things. First, the current environment, in no way crosses your mind, when we saw 2008. At that time, clients on a global basis stopped most hiring and announced significant layoff across-the-board portfolio of clients. That is not the case now. While we are seeing -- what we are seeing is the reduction in hiring plans or a desire to defer spending decisions, not a full stop of hiring and headcount reduction. Second, although we can't predict the timing, we do expect that the global economies will turn and improve. And when they turn, our business has significant growth potential. Even in the slow growth economies of the past 2 years we have had significant growth, 22% bookings growth in 2010 and 23% bookings growth year-to-date in 2011. When the situation improves, and it will, we will be ready to grow our business.

As a concrete indication of this confidence in our future, I and a number of our members of senior management added to our stock holdings during the quarter by acquiring shares in the open market. Last quarter, we commented that we were not initiating a share buyback because we were keeping our powder dry. At that time, our stock was around $15. We thought the stock was undervalued then and represents an even greater value now. Today, I'm pleased to confirm that our Board of Directors on Tuesday decided that we had kept our powder dry long enough and approved the share buyback of up to $250 million to be executed over the next 18 months.

I would now like to turn the call over to James for his comments, and then I'll come back with some closing comments.

James M. Langrock

Thank you, Sal, and good morning, everyone. Turning to Slide 4, our third quarter pro forma income statement. Bookings were $264 million, 20% year-over-year gain. Global Careers increased 22% on a year-over-year basis. Bookings were favorably impacted by 4% of currency translation. Please recall that all percentage changes exclude the arbitrage lead gen activity, which we stopped last quarter.

Revenue was $259 million, a 20% year-over-year increase, and was favorably impacted by 4% of currency. Total operating expense was $233 million, a 3% reduction on a sequential basis. Currency had a negative 3% impact on operating expenses. Operating income was $26 million compared to $17 million last quarter. Currency had a net positive impact on operating income of $2.5 million. Interest in other was negative $1.5 million. Equity income was a loss of $400,000. EPS was $0.13 compared to $0.09 last quarter and $0.02 in last year's third quarter.

Now I'd like to turn to Slide 5, which is our pro forma adjustment reconciliation. The adjustments are: A $17.4 million reduction to operating expense resulting from the release of funds held in escrow in connection with our acquisition of ChinaHR; $2 million of severance cost related to the arbitrage lead gen activities.

Slide 6 is a non-GAAP expense trend slide. Salaries and related at $129 million was essentially flat on a sequential basis. Small increase in salary run rates was largely offset by reduced incentive compensation. Marketing at $47 million was a 5% decrease on a sequential basis, but a 16% increase on a year-over-year basis. This increase on a year-over-year basis is consistent with our shift of resources into sales and marketing. Offers and general at $57 million represented a 7% sequential decrease. This quarter, approximately 50% of our increased revenue dropped to the operating income line when excluding arbitrage lead gen. We anticipate being around 50% on a full-year basis. While we think that excluding the paid led gen activity from each period is the fairest way to look at this metric, we'd also point out that approximately 70% of the incremental year-over-year third quarter revenue increased converted to the operating income line on an as-reported basis.

Slide 7 is our bookings and revenue trend summary. Bookings during the third quarter were $264 million, 20% year-over-year increase. The 22% increase in our Global Careers business was partially offset by a 7% decrease in IAF. North America career bookings were up 17%. Within North America, we had particularly strong increases in our government and newspaper businesses. Slower growth in our telesales, field sales and e-Comm channel and a decrease year-over-year in our staffing channel.

Europe's bookings increased 25% year-over-year, again fueled by strong growth in Germany of 46%. While the U.K. market continues in a slow growth mode, growth in the Netherlands picked up significantly. Asia Pacific bookings increased 32% during the quarter led by a 40% increase in China and a strong performance in India. As Sal noted in his comments, the Korean business slowed somewhat this quarter but still posted strong growth of 25% during the quarter. Developing markets bookings increased 88% of still small pace, and we are building critical mass in the important Latin American markets.

Slide 8 displays a result of our operating segments. Global Careers revenue increased 21% year-over-year, while operating margins increased by 2.5% sequentially. Careers-North America revenue increased 13% and Careers-International revenue was up 32%. Operating margins in both North America and International segments improved on a sequential basis. The International segment continues to bear the cost of investments we are making in China as well as developing markets. The operating margin of the international segment, excluding these investments, would be 20%. In the IAF segment, last quarter we stopped engaging in the arbitrage lead gen business. As expected, there was no impact in operating income. And as a result, operating margin improved by approximately 400 basis points. Operating margin in all segments improved sequentially.

Slide 9 highlights the key cash flow and balance sheet metrics. During the quarter, pro forma EBITDA was $54 million, an 11% sequential and 51% year-over-year increase. GAAP EBITDA was $69 million. Capital expenditures were $13 million. Deferred revenue was $354 million, 30% increase on a year-over-year basis and an 8% decrease on a sequential basis. Net cash, which is our gross cash less total debt outstanding, increased to $99 million and total liquidity increased to $295 million.

During the quarter, as funding spreads in the European Bank markets widen, we took the precautionary step of drawing down $100 million on our revolving credit facility and then warehousing this liquidity in U.S. Treasury instruments. From a financial point of view, we are pleased that EPS was above the midpoint of our range, despite revenue coming in near the low end. In addition, during the quarter, our cash generation was strong and continued to improve. As Sal stated earlier, for the fourth quarter, bookings will be approximately flat, revenue will increase in the range of 3% to 7%. We are taking action to significantly reduce the operating expense run rate in the fourth quarter. While some of this benefit will be realized in Q4, we anticipate that most of the expense reduction will impact 2012. As a result, EPS will be in the range of $0.11 to $0.15. Now I'd like to turn back to Sal.

Sal Iannuzzi

Thank you, James. In summary, we face this period of economic uncertainty in the best competitive and financial position of recent years. We remain focused on leveraging our key competitive strengths of global scale, broad product portfolio, large seeker audience and multiple sourcing strategy. We are in a much stronger position than in 2008 to weather a protracted period of economic weakness, should that occur, and we will prosper and grow with a little help from the economy. I remain extremely confident with Monster's future, and I'd now like to open the call up to questions. Thank you very much.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Jim Janesky with Avondale Partners

James J. Janesky - Avondale Partners, LLC, Research Division

I'd like to review your comments about market share gains. Where do you see those gains coming from and at what point did you sense the slowdown? And could that slowdown of contract size and the length of the contract, could that continue potentially into 2012?

Sal Iannuzzi

I'll answer the second part of your question first, if that's okay. I think first of all, we are not giving guidance certainly at this point with regards to 2012 for the simple fact it's just too difficult to predict. We do not have a basis at this point. As you might imagine, we had an enormous difficulty trying to -- given the change that occurred, particularly in September and across such a wide geographic area to be able to triangulate on what we think is the most likely scenario for Q4. So I think we will have to see if there's been some good news, I guess, this morning both with regard to Europe and that GDP growth here in the U.S. It seems to be growing at a faster growth than it had been for the first 2 quarters of the year. So we'll just have to wait and see. With regard to competition, I think that the best information that we have, and we have said this numerous times in the past, it's very difficult to ascertain exactly what's going on with regard to the marketplace and market share. But the best way we can triangulate on it is the conversations, the comments that we're having with our customers, that we gain from our customers. And the assurances that we have, really, a broad swath of customers that we are getting an increasing share of wallet. In other words, the spend may be decreasing or maybe pausing, but our share of what they are willing to commit seems to be either staying steady or in a number of cases growing. So that's the best information that we can triangulate on these. The decline that we saw in September was very -- as I've said before, very widespread. It involves virtually all geography. It involves both small, very small, medium size and large business. It started and accelerated in the e-Comm business which traditionally has been an indication of slowdown in the economy. They are small business that retreats first and caught up with us in our larger businesses in the latter part of September.

Operator

Your next question is from the line of Glenn Greene.

Glenn Greene - Oppenheimer & Co. Inc., Research Division

If you could comment on North America organic growth in the quarter. It looked to me like it slowed pretty materially if you sort of adjust for the tail of the HotJobs acquisition from last year, maybe below mid-single digits which seem notably slower than CareerBuilder. And was wondering, related to that, could you also comment on North America expectations for both revenue growth and bookings in the fourth quarter?

James M. Langrock

This is James. So if you take the bookings growth in North America was 17%. Then you realized there was some HotJobs in both periods, so our best estimate is that we were low- to mid-double digits on an organic basis from a bookings standpoint in Q3. Now revenue was 13% in Q3 and if you -- what we did last time, if you adjust for -- we have the -- we said last time that CAN adjusted. If you adjusted that you're up around 15% to 16% Careers-North America. So again, you're in that same low- to mid-double digits. And when you look at revenue, you've got to be careful because there are swings in revenue quarter-to-quarter, and that's why we book more of the health of the business on the bookings side.

Glenn Greene - Oppenheimer & Co. Inc., Research Division

And the fourth quarter expectations?

Sal Iannuzzi

As we've said, I think that on the whole, we're calling it flat right now. I think that that's largely due here in North America and Europe. I think the situation is a little bit better and it has been in Europe, but it's a matter of a few percentage points. I think that the phenomenon that we've seen developed in September is continuing in October. They were only about 3 weeks now into the quarter, but it certainly seems to be continuing and continues to be broad for us. My expectation is you really won't see a material difference between the United States particularly, and Europe in Q4. But on the whole, I think the best we can see it right now we probably have growth that's flat to Q4 of last year. But as I noted in my comments, we do expect to see the type of growth that we're accustomed to Q3 versus Q4. We expect business to grow about $60 million sequentially. Now the other thing, Glenn, that I really want to emphasize is that in '08, when things really started to hit the wall, the drop-off in business to growth between Q3 and Q4 was virtually flat. There was very little sequential growth. We do not have that situation. This time, I think that there is, without question, a pause. People are waiting to see what happens. I'm doing the same thing with our vendors. We would love them to commit for the longer-term, we just can't see that far. If those clouds part, we get some clarity. Then no longer will we be willing to commit more. But I believe and from what we've been told by many customers, they will be willing to resume to commit. But right now, everybody -- things seem to be going into more of a wait-and-see attitude rather than one of commitment for the long haul.

Operator

Your next question is from the line of Tim McHugh of William Blair.

Timothy McHugh - William Blair & Company L.L.C., Research Division

First, I wanted to ask if you can talk a little bit more about China. First of all, I missed the explanation on the charge and kind of the reversal there, and I guess just why it happened. And then gross seem to pick up a little bit. Is that just getting to easier comparisons or anything special that you would call on about that?

Sal Iannuzzi

No. I think that China is doing a little bit better, but it moves quite a bit. As based on the economic news, there are weeks during Q3, I can tell you, where China was dropping. And then as news improved in certain weeks, it would pick up again. And we ended up doing a little bit better. But obviously, we're very pleased with the increase in business that we've experienced there. The reason for the adjustment, okay, that's incurred is -- though very simply is this, when we were -- as you may recall, we had a long-standing arrangement with the venture capital people in China to acquire the remaining approximately 60% of ChinaHR months ahead of investment, which covered a little bit more than 40%. We own a little bit more than 40%. We had significant difficulty in closing that transaction because of the issues in the business. We finally reached the point where we thought that not closing will significantly damage the business going forward. And so therefore we have an unusually large escrow established to protect ourselves in case there were other issues that would come up that we haven't yet recognized or reduced the purchase price from. We reduced the purchase price initially of the expected number by over $50 million. We established escrow of $40 million and now over the past year, we've had some rather interesting negotiations which culminated in us getting -- bringing back the amount of money that we're talking about here. The accounting is such that we're required to bring it through, expense if you will, and reduce our expense load. It is an aberration. I really do not view it as the correct way of showing it. I think it's a reduction of my purchase price, plain and simple. But we followed, obviously, the proper accounting and brought it forward. It will not be recurring. We are done with regard to that acquisition and any issues that stem with the venture capital firm. And now we're 100% focused on growing our business.

Timothy McHugh - William Blair & Company L.L.C., Research Division

Okay. And then one more question, if I might. You kind of commented, I think, on one of the previous questions that you didn't think the current environment is similar to 2008 mainly because you expect -- I think your comment was you expect solid sequential growth still in the fourth quarter and you didn't see that in 2008. I guess my question would be how much visibility do you have into that for the fourth quarter? I thought historically you've talked about December being really a disproportional amount of the booking for Q4. Is that based -- are you making the comment based on your pipeline? Or I guess just how confident you feel that, that is the case?

Sal Iannuzzi

Well, beyond the forecasting, and if there ever was a quarter where I would have liked not to give guidance at all, it was this one. Because what I've been saying to my comments today, the uncertainty that's out there is enormous. And is it possible that we do worse than flat? The answer is yes. Is it possible that we do better? The answer is probably equally yes. The issue that we -- what we see what's different, in 2008, there was a tremendous amount of rhetoric out there, probably most likely in the United States driven by the election and the economy just hit a wall. Trading market ceased. Businesses literally just stopped buying. They didn't reduce. They didn't scale back. We were talking about gee, let's wait and see. They just stopped. Okay. This time, we are not seeing that. What we are seeing is a less of a buy, a less of a commitment, reduced the amount of spend, of commitment to spend and with the notion that's quite a bit of discussion about if things clarify, we'll be back to buy more. But right now, we want to hold. And there is -- the concern is added agree though that customers are actually as they buy less, we do discount based on volume. Customers are actually willing to pay a bit more because they are buying less and preserve [indiscernible] in this case, because of the level of uncertainty that's out there. And as much as I would prefer that they commit and buy, I have to be honest, that's exactly what I'm doing with my vendors at this point. Okay. Trying to navigate through this period and see where we really come out at the other end. So it's a wait-and-see. Back then, there was no clarity, people were just saying hey, stop altogether.

Operator

Your next question is from the line of John Janedis of UBS.

John Janedis - UBS Investment Bank, Research Division

Sal, the trajectory of the bookings are flat and revenue in that 3% to 7% range, this morning as you said. But I'm wondering if the trend continues into next year, can you talk in more detail about how you're thinking on the cost side and how that 50% incremental margin you talked about over a multiyear period ends up showing up?

Sal Iannuzzi

Sure. I think I mentioned in my comments and I think you've heard it before previous conversations is that where we are, we're in a much stronger position today than we were several years ago. Our product portfolio is full. We really do provide a wide berth of solutions to our customers. The heavy lifting in terms of strengthening the infrastructure of the company is largely behind us. Okay. Having said that, you'd always like to do more. But whereas before, it was absolutely essential that we did it. Now it's more in the area of nice to have. In this kind of an environment, the nice to have gets pushed to the side. Okay. I think that we have opportunity while maintaining our strength and actually the intent is to invest more heavily in our selling power. Okay. And to be more precise in the -- I mean, in terms of boots on the street, sales people as well as in marketing to invest more heavily. But at the same time, take costs as the company and other area. We are studying that as we speak. We will take action depending on how the situation evolves. That will determine the severity of those action. But we are committed to bringing the numbers down, the cost down significantly. And over the next -- you won't see a benefit as I said in my comments. You won't see the benefit in Q4 in a significant way. You will see it in 2012.

Operator

Your next question is from the line of Doug Arthur of Evercore.

Douglas M. Arthur - Evercore Partners Inc., Research Division

Sal, can you update us on trends in Germany? And then secondly, sort of longer range, as your product offering gets more sophisticated and more toward an enterprise solution orientation, when you get into one of these environments, I mean are those slower booking sales in the sense that it's a longer lead time and therefore, it has an adverse effect on bookings at a time like this?

Sal Iannuzzi

I think, first of all with regard to Germany, Germany is growing at a conservative level. It still by far the most significant growth level in Europe. Germany has been growing very strongly for quite a period of time now. So the comparable get tougher and tougher. But having said that, as everyone knows, it's still the engine of growth in Europe and it is continuing to be the engine of growth for us. Have we seen a bit of softening in the numbers? Yes, but very slight. The issue in Europe is largely in other countries which was soft before. As we said, for example, the United Kingdom has been slow, single-digit growth for a number of quarters now. And this past quarter, it softened even further. So that's why on balance, the growth is rather limited and why the forecast is what it is. Can you repeat and then, operator, please allow the repeat of the other part of the question.

Operator

One moment, please.

Sal Iannuzzi

I'm sorry, operator. I have it, you don't have to repeat it. With regards to the solutions though, we have been preparing and we have started to sell solutions and those longer discussions sells, if you will, for a period of time now where it's no longer the beginning. We're sort of maturing in going in that direction. It's hard to tell whether we're in the middle or still in the first or third of it, or however you want to think about it. But we're moving along those lines. Yes, those sales of a broad solution tend to take a longer period of time, as we said in the past. However, they tends to be stickier in the sense that you really are providing solutions, you're selling technology, et cetera. They are longer in duration which our customer -- it's a much tighter bond, if you will, with the customer. So I think that over time, there will be -- one will offset the other, it will be sort of a wash. Okay. So I do not view -- I would decline our conservatism regarding bookings at least for Q4. It's not predicated on that. It is really just the negative headwinds that we're getting and what we’re hearing from a fairly wide berth of customers, all sizes and in many geographies. That's what's causing the slowdown.

Operator

Your next question is from the line of John Blackledge of Credit Suisse.

John R. Blackledge - Crédit Suisse AG, Research Division

Two quick questions. First, if you can just give some more color on cutting the FX run rate and does this imply FX could be down in 2012? And then on the booking side, North America, Europe, Asia were all up fairly big in the third quarter. So I'm wondering did bookings just fall off a cliff in September or were they flat to down across all geographies in September, which is kind of leading to the flat bookings in the fourth quarter?

James M. Langrock

So John, this is James. From a booking standpoint, as Sal mentioned in his comments is in July and August, the bookings, in spite of what was going on in the economy, the bookings held up. Actually, they might even be slightly better than we anticipated. Then in September, on a global basis, we saw a significant slowdown. Even in Korea, I mean it was still 25% growth, but they were anticipating higher. So we did see a slowdown even -- not as much in Asia, but we did see a slowdown in Asia. So the slowdown in September was really global in nature. So that's what leading us, John. And we're seeing similar trends right now in October as well, so that's what's leading us to the flat bookings guidance.

Sal Iannuzzi

Just to provide a little bit more color to what James just said. We were pleasantly surprised both in July and August because given the huge amount of negativity that was out there, whether it's the economic issues in Europe or the issues here in the United States that we all know too well, so I won't go through again, but we were pleasantly surprised that, that negativity was not translating to commitments by our customers and what they were willing to do. We were actually -- July and particularly August, was slightly better than we expected, which was on track to accomplish the numbers that we had forecasted previously. What we were all holding our breath on was when people came back from the summer vacations in Europe, even the U.S., and how would September came out. And the first week of September was sort of okay, but then I guess as people came more to grips with what the broader issues were and the impact that they may have as our clients, people in HR functions, et cetera brought the commitments they wish to make forward to their CFOs. And what we saw is CFOs say, "Wait, we want to just take a breath here." And rather than commit to a bigger deal or to a longer-term deal, they asked that to buy what was needed for the more immediate future and not commit in size or in time. And that momentum continued right through the end of September. And right now, we're in the same mode. The e-Comm business, which is not, in a dollar sense, is not a huge portion of our business. But it has been historically, and I believe it is still today, it's an indicative of the mood of customers is really slowed down quite significantly. All right. The small company, the very small companies are just waiting before they commit and they're just not buying. What t was interesting during the quarter, particularly in that segment, we know that there was almost a perfect correlation between the U.S. stock market, the Dow Jones behavior in a particular day and the amount of business in e-Comm. The days when -- and we saw obviously some pretty wild gyrations during the quarter. On days that the stock market will decline significantly, our e-Comm business will just cease. On days when things look better, okay, our e-Comm business wasn't robust, but it did better. All right. Very much based on the news of the day, much more emotional, if you will. And as I've said, that continues. Hopefully today, the news has been a little bit better this morning, so hopefully today it will do a little bit better. But it's just that it moves from day-to-day. I think we need to see a trend of good news and then we'll start to see some pickup.

James M. Langrock

And John, as it relates OpEx. As we noted, we're going to take actions to reduce our run rate that we'll see in 2012. We're not providing specific guidance for 2012 yet. And as we get better visibility, we'll be able to make a call on that. But right now, is to take cost out of the run rate in 2012 where we see opportunities to invest in marketing and sales. So that's where we currently are on OpEx. And we'll be very prudent as we always are and disciplined with our spend, but the intent right now is to reduce the run rate and then see how things progress into 2012.

Sal Iannuzzi

Right now, we're in the mood of preparing for the worst and hoping for the best. I think that's the -- given the overall climate, that's the most prudent course of action.

Operator

Your next question is from the line of Mark Marcon of R.W. Baird.

Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division

It's Mark Marcon. I've got couple of questions. First, can you talk a little bit about 2 related elements which is the bookings that you're seeing in North America in October, we're almost towards the end of the month, so did that pattern that you saw in September continue into October? And then related to that, as it relates North America, do you think your gaining share in North America? And if so, from whom? And then on a more positive note, can you talk a little bit more about SeeMore and the rollout plan there. I've demoed it. It looks really good. I just don't know what the plan is to monetize it?

Sal Iannuzzi

Mark, let me take it and James sure can add some more specifics to the question. First of all, unfortunately, in October, we are seeing a continuance of September. Okay. Once again, it is not terrible. It's not the business that ceased. But we are seeing a continuance of the same type of thing we saw in the month of September. With regard to share, very difficult to tell who it's coming from. But for the most part it sort of follows, who's our biggest competitor, who has most significant market share and then trails down from there. I think we're not zeroing in on any one competitor. We're going after the business very aggressively in all areas. And so we're probably -- just like an answer to your question, we're probably taking a bit from all the normal suspects. And that is what we've been doing in the past and that is really what we continue to do. With regards to SeeMore, we have had some -- we are experiencing very positive reaction to the product. Okay. Your observations of the product appear to be consistent with what our customers are saying and articulating to us. We have closed a number of transactions during Q3. It is following up on one of the questions we got a little while ago, it is a longer sell, because it's a different kind of commitment from the customer. But the fact that we've had the kind of deal closure the we've had is encouraging. And in addition to that, the pipeline in that area is growing for where we are in the evolution of the selling of that product. Okay. I would term it as robust and continues to gain momentum. The amount of conversations that I wouldn't even include in the pipeline yet of customers, really thinking about starting to look at, trying to understand how we could be immersed in their environments. Those conversations are significant. So as someone said, it's not done until it's done. But the signs, which I still believe is early, the signs are very encouraging. James, do you have any comment?

James M. Langrock

Just on the share question in North America. If you look at our bookings growth year to date, we're at 25%. So on any measure, we would believe, even in North America, that bookings growth, which we believe is really the indicator of the health of the business. It would also gives us confidence that we are gaining share in North America.

Operator

The next question is from the line of Mark Mahaney from Citigroup.

Mark S. Mahaney - Citigroup Inc, Research Division

Just a quick question on one of the products, Power Resume Search. Could you talk about the traction you're seeing with that product with clients?

Sal Iannuzzi

So Mark, in North America, we're still, it's probably a little over 50%. And on a year-over-year basis, it's growing nicely in the U.K. and France. The traction is starting to get close to where we are here in North America, so we’re seeing a nice growth. And PRS over in the U.K. and France, we're also very pleased with the adoption of PRS.

Operator

And your next question is from the line of Tobey Sommer of SunTrust.

Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division

Sal, you've talked about a 50% incremental operating margin this year and we've got pretty good revenue growth, solid double-digit to work-off of to achieve that. What kind of incremental operating margin do you think you could achieve in a slower growth environment, mid-single digit? Can you still get a pretty good incremental margin off of that?

Sal Iannuzzi

Yes. Not only do we think we're committed to doing it, I think that obviously, when we talked about reductions and certain types of certain costs, and we are very aggressively looking at that possibility, but I think that, certainly, our intent is to increase margin. We have not at all -- the question does come out a number of times -- at one point before the big recession, if you will, recession of the late, we enjoyed margins that was somewhat close to 25%. I think we got as close as maybe about 23% plus or minus. Our goal, and we firmly still believe, we can get to those margins. Obviously, we need to execute -- 2 things need to happen, 3 things really. We need a little bit of positive headwinds on this from the economy. We need to execute on the selling side and we need to maintain and keep up our discipline on expense. But our goal is still to push towards that number.

Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division

So you're saying you can get a 50% incremental margin with a mid-single digit top line growth?

Sal Iannuzzi

We believe so, yes.

Operator

Ladies and gentlemen, this concludes today's conference. You may now disconnect.

Sal Iannuzzi

Thank you very much.

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