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Monster Worldwide (NYSE:MWW)

Q2 2012 Earnings Call

August 02, 2012 8:30 am ET

Executives

Lori C. Chaitman - Former Vice President of Investor Relations

Salvatore Iannuzzi - Chairman, Chief Executive Officer and President

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

Analysts

William G. Bird - Lazard Capital Markets LLC, Research Division

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

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

Craig A. Huber - Access 3:42, LLC

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

John Janedis - UBS Investment Bank, Research Division

Jeffrey M. Silber - BMO Capital Markets U.S.

Mark S. Mahaney - Citigroup Inc, Research Division

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

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

Operator

Good morning. My name is Angel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Monster Worldwide Second Quarter 2012 Quarterly Earnings Call. [Operator Instructions] I would now like to turn the call over to our host, Ms. Lori Chaitman, Vice President, Investor's Relations. Ma'am, you may begin your conference.

Lori C. Chaitman

Thank you. Good morning, and thank you for joining us on Monster Worldwide Second Quarter 2012 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, members of our executive management team are available to answer your questions during the Q&A part of the call. They are Tim Yates, 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 or dispositions, competition and the other risks discussed in our Form 10-K and our filings made with the Securities and Exchange Commission.

With that, I'd like to turn the call over to Sal for his comments. Sal?

Salvatore Iannuzzi

Thank you, Lori. Good morning, everyone, and thank you for joining us today for our Monster's Second Quarter Conference Call. I will provide a high-level review of the quarter, the current macroeconomic conditions and discuss our outlook for the third quarter. James will give additional financial detail in his comments.

As we all now appreciate, the global business environment continues to be weak and uncertain, particularly in Europe. During the quarter, we continued to execute our strategy and are gratified that increasing acceptance of our new product portfolio resulted in strong bookings in North America and helped to buffer weakness in Europe and in Asia.

Consolidated bookings during the quarter was $242 million, flat on a current -- on a constant currency basis. In North America, bookings increased 14%. We believe that this strong performance in North America demonstrates the continuing success of our new product portfolio and focus on key verticals such as Government and Staffing. In addition, the action we took in the first quarter to increase both the quantity and quality of our traffic in the United States are continuing to pay off.

Europe's booking was down 15% on a current -- on a constant currency basis. Asia Pac bookings was down 7%. We believe that these results are consistent with global macroeconomic conditions.

Consolidated revenue was $237 million, a decrease of 5% on a current -- on a constant currency basis. EBITDA was $37 million and EBITDA margin was 15%. Continued strong EBITDA even during current difficult economic environment allow us to apply a 3 million shares during the quarter and maintain a strong liquidity position. EPS was $0.06 versus $0.04 in Q1 and $0.09 last year. As a result of tight expense control during the quarter, EPS was in the middle of our guidance range while revenue was at the lower end of the range.

Summarizing the quarter. Total bookings were flat on a constant currency basis. North American bookings increased 14%, demonstrating continued adoption of our new product portfolio in the Government, Enterprise and Staffing channels. As an example, during the quarter, Kforce, a major professional staffing and solutions firm, decided to fully integrate Power Resume Search, powered by our 6Sense technology, across their entire organization. As we have discussed, while the adoption of PRS has been very strong, adoption in the staffing sector has lagged for a variety of reasons. We are actively working with other major staffing companies on both PRS and SeeMore. Strong expense management resulted in 6% EPS.

As we consider the third quarter, we believe that it is likely that the current weak and uncertain economic environment will continue. In this environment, we continue to position ourselves offensively and defensively. On the offense, we continue to aggressively bring our new products to our clients on a global basis. And we will make investments in marketing to take advantage of specific opportunities. On the defense, we are carefully controlling operating expenses and protecting profitability. We are able to accomplish both at the same time because of the strength of our product portfolio.

For the third quarter, we anticipate that bookings will be flat to down 10% on a year-over-year basis. Please recall that last year our Government business had a very strong third quarter as a result of government spending resuming in light of the resolution of the federal budget impact. We anticipate that revenue would be in the range of down 12% to down 6%. We will continue to carefully manage operating expense as a result of -- and as a result, pardon me, EPS will be in the range of $0.02 to $0.07.

I would now like to turn over the call to James for further review of our financials.

James M. Langrock

Thank you, Sal, and good morning. Slide 3 is the second quarter pro forma income statement. Please recall that all comparisons will exclude the impact of the paid lead gen activity.

Consolidated bookings of $242 million decreased 4% on a year-over-year basis. On a constant currency basis, bookings were flat year-over-year. Revenue of $237 million declined 8% year-over-year and 4% sequentially. On a constant currency basis, revenue declined 5% year-over-year.

We are closing an increasing amount of large and multi-year transactions in our Government and Staffing business. While in the medium term, the development of multi-year business is positive, in the short run this increase is causing a slower rate of revenue recognition and increased variability from quarter-to-quarter in our bookings and revenue trends. Total operating expense of $225 million declined 7% compared to last year and 5% compared to last quarter. Currency had a 3% favorable impact on expenses. The impact of currency translation in operating income was a negative $1.3 million. Interest and other was negative $1.6 million. Equity loss was $300,000. EPS was $0.06 compared to $0.09 last year and $0.04 last quarter.

Slide 4 takes us through the pro forma adjustments, which, during the quarter, resulted in a net pre-tax loss of $3 million. The charges were: $1.8 million of costs associated with the ongoing review of strategic alternatives; and a $1.2 million restructuring charge.

Slide 5 shows the trends in operating expense. Salary and related expense in the quarter of $106 million was 13% lower than last quarter and 19% lower than last year. On a sequential basis, the reduction resulted from lower average headcount, lower incentive compensation and commissions and a reduction of FICA costs as a result of abnormally high level of those costs in the first quarter. On a year-over-year basis, the reduction in salary expense is primarily a function of lower headcount and lower incentive compensation. Marketing expense of $58 million was roughly flat on a sequential and an 18% increase on a year-over-year basis. Office and general expense was $61 million, essentially flat on a year-over-year and up 6% on a sequential basis. The result of our cost restructuring program announced in Q1 is easy to see during this quarter. Total operating expense was 7% lower on a year-over-year basis while we increased marketing expense by 18%.

Slide 6 and 7 review the quarter's segment performance. Strong bookings increased in North America, 14% on a year-over-year basis, resulted from strong performance of our Government channel and our Staffing vertical. Bookings in our field and telesales channels were approximately flat. Bookings in Canada and e-Comm [ph] and health care channels declined year-over-year in the high single digits.

Global Careers international bookings were down 21% year-over-year and 13% on a constant currency basis. Please note that in the regional and country commentary, I'll provide constant currency basis figures only. Total Europe bookings were down 16%. Italy, France and the Netherlands were all down in excess of 20%. Germany and the Scandinavian countries were down approximately 10%. Total APAC bookings were down 7%. India was up 7% while Korea was down 7% and bookings in China were down $2.5 million on a year-over-year basis. Bookings in IAF were down around $1 million.

From a segment profitability point of view, EBITDA margin of our Global Careers business was essentially flat at 16% on a sequential basis. North America was 22%, while International was 11%. Excluding China and developing markets, International EBITDA margin would have been 15%.

Slide 8 is key balance sheet and cash flow items. Pro forma EBITDA was $37 million or 16% compared to $35 million last quarter and $48 million last year. GAAP EBITDA was $34 million. Net cash provided by operations was $7 million. Capital expenditures were $21 million, somewhat higher than recent quarters as we completed our new technology platform in China and ramped up for the U.K. government business. We expect capital expenditures to return to more typical recent levels in the range of $12 million to $15 million in the third and fourth quarters.

Deferred revenue was $372 million consistent with our normal seasonal patterns and was negatively impacted by $17 million of currency translation. I noted above the impact of the increase in multi-year deals on bookings and revenue. In addition, there was an impact on deferred revenue as the added years of multi-year contracts are not typically included in deferred revenue. During the quarter, we acquired a little over 3 million shares at an average cost of $8.48 to $26 million. At the end of the quarter, net debt was $12 million and total liquidity was $318 million.

In summary for the second quarter, the investments we have made over the past several years paid off during the quarter. The 14% increase in bookings in the U.S. largely resulted from products that had a component of 6Sense technology as part of their solution. And in a difficult market conditions, we're able to control total operating expense while increasing marketing spend and earn $0.06 per share.

Sal noted that we continue to position the company offensively and defensively. Keep in mind that when our clients entered -- enter into a contract, they are anticipating the amount of recruiting they will do over the life of the contract. While corporate profitability has been reasonable during the second quarter, we all know that companies are trimming back their expectations for the remainder of the year. We are experiencing the same phenomena from our clients, particularly in our international markets.

For Q3, on a year-over-year basis, our guidance is as follows: We expect bookings to be flat to down 10%. We expect revenue to be in the range of down 12% to down 6%. We expect EPS to be in the range of $0.02 to $0.07.

I would now like to turn the call back to Sal for his concluding comments.

Salvatore Iannuzzi

Thanks, James. In an economic environment, which is now widely recognized to be difficult, our strategy is working. While certain macroeconomic headwinds are strong as many companies have reported, we do see opportunities to deflect some of these headwinds. Our new products are gaining momentum. Our improvements in traffic and traffic conversion are being recognized by our customers. The combination of our new products and improved traffic is putting our competitors on the defensive and resulting in more wins. We've been able to increase our marketing firepower in order to accelerate the adoption of our new products. These new products, combined with the increased marketing, will not only help our profitability today, but will help to build on an accelerated basis in the future.

I know all of you are interested in our progress in reviewing strategic alternatives. Please appreciate there was little that we can say on that score except to say that we are aggressively pursuing a robust process as we speak.

I'd now like to open it up for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from the line of William Bird.

William G. Bird - Lazard Capital Markets LLC, Research Division

Could you talk a little bit about just what you're seeing right now. In Europe, does it feel like trends are still worsening? And appreciating that you can't comment on the process, was wondering just how kind of the macro context factors into your review of strategic alternatives. Does it influence timing in any ways?

Salvatore Iannuzzi

Well, first of all, with regards to Europe. I think that the situation is sort of flattish at this moment. I think over the quarter, meaning Q2, the situation did deteriorate further in that more countries slowed down. As James indicated, Germany is down over 10% now. And so the issue and the slowdown, or the caution, is spread through the entire continent. A little personal commentary is that I think that the urgency of the need for resolution and alleviation of some of the concerns that persist is become evident and is -- which means there's greater chance that action will be taken. We believe that, that will be positive action, okay, but it's hard to predict when exactly it'll start to take place. But we are seeing precisely the sluggishness as you might expect companies like Spain are extremely slow. Germany is probably still in the best shape, but as I said, even Germany has slowed considerably at this point. And the profitability of European firms has dropped. The revenue line, there's some expense management that's helped support the bottom line. Generally speaking, that manifests itself in recruitment, which obviously affects us. So I think that's what you're seeing. It's what we thought would happen. We saw it first in small business. As usual, that's where it shows itself first and it's continued. By the way, that same issue with regards to small business and the way small business is behaving is true in the United States, as North America. Small business is slow. It's in the negative numbers, has it's been for the past several quarters. I think once there is more confidence in the direction the economy is going to take and which direction we're going generally, you'll start to see it manifest itself in small business and that will pick up business in general. With regard to strategic alternatives and the impact of the economy on that, we are continuing, as we've said, to the process and we'll see where it takes us. Really, it'd be totally inappropriate for me to say anything more than what we said in our press release.

Operator

And our next question comes from the line of Doug Arthur.

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

Sal, 2 questions. In terms of the impact of the new product offerings, any ballpark -- I didn't see any numbers in the release or slides about kind of what percent of, I don't know, say North American revenues these new products represent. So any update on that would be helpful. And then what can you do further to address the cost issue, particularly in Europe?

Salvatore Iannuzzi

Let me answer maybe the second one first and then I'll turn it over to James to talk a little bit about how the new products are behaving and the numbers there. I think that the -- we're watching carefully the expense profile in Europe. We announced what we did and we announced our restructuring, or I should say we announced and did the restructuring in Q1. That's largely, if not virtually entirely behind us now. It is doing -- it is giving us the latitude, the flexibility to do exactly what we hoped it would do. It's allowing us both to react with the -- to the slowdown in revenue to bolster the bottom line and it's given us more freedom in our marketing spend. Included in the numbers this quarter, there was $17 million of reduction of expense. That’s not just in Europe, that's in general. And at the same time, we increased marketing spend by a little over $10 million, okay? Now most of that spend has been here in -- a good portion of it has been in North America. I think that what we will do is, depending on how negative the environment becomes, we can contract that marketing expense in different places around the world in reaction to it. Or if we see opportunity in certain countries, we can get ahead of it somewhat and spend some marketing dollars because we think that in the future, it will bring us significant return. The combination of the new products and the marketing -- I mean, the U.S. is proving that, that combination is strong. It is difficult to beat. And as I said, North America is evidence of that. So we'll see how things evolve. We’ve created the flexibility. I think we know how to manage the expense line well and we'll adjust it to whatever develops, okay? James, you want to take the ...

James M. Langrock

With the new products, I would say, Doug, it's approximately about 25% of North America is new products and that would -- expense excluding Government. So if you include Government, the number gets higher. It's probably in excess of, from a booking standpoint, 40% in North America. If you recall last year, the numbers we gave: Government was $100 million in bookings; PRS was $100 million; and the Career Ad Network was about $55 million, $60 million. So that kind of level sets you on where the numbers are. But that's where we are from a new products and that number, obviously, this year is starting to increase.

Salvatore Iannuzzi

Yes, let me give you a little bit more color on this one. Here, in the United -- in North America, our commercial clients, the adoption of PRS, using that one as the example, is now approximately 75%. Staffing companies have been experimenting with PRS for the last year and we've had many pilots, many small adoptions to test it, to use it, to understand how they can embed it in their environments, et cetera. Many have concluded those betas and had felt that the technology is worth the cost, the premium pricing, et cetera. And now, the discussions have turned less to beta and much more to, okay, how do we implement and how do we implement on a much broader basis, and there were many of those discussions going on. What makes predicting bookings quarter-to-quarter a little bit more interesting than it's even has been in the past is that these transactions tend to be large and it's hard to predict if one -- if it's going to happen this quarter, in September versus October, just because of the very nature of it. But those conversations are strong. There are many of them with many firms. And so we think that, that area is promising, and even in a soft environment, it's allowing us to -- as is evident in the numbers this quarter, it's allowing us to bolster our performance. In the government area, I think the concern is always raised that the government is going to contract because of the budget issue, et cetera. First of all, our business is both U.S. federal government as well as state and local and hopefully we'll expand internationally. But the genesis or the core of our product and what we sell to government is designed to make government more efficient in their recruitment and even in their management of talent. So given the concerns of our budget, we're fortunate that we're in position to help government agencies at the right time when they need it, with the right products. And that was giving rise to the significant increase in growth in that business.

Operator

And our next question comes from the line of Tim McHugh.

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

I just had 2 questions: one is can you update us on the pricing environment, and have you seen competitors get more aggressive given that the environment’s gotten tougher, I guess, both the U.S. and international? And then in China, you gave us a number instead of percentage in terms of the bookings, so I was just curious what our percentage change was for that?

Salvatore Iannuzzi

Jim, do you want to give them the percentage change?

James M. Langrock

At a constant currency, it was down 23%.

Salvatore Iannuzzi

With regards to pricing, 2 things are happening -- and things are behaving a little bit differently in different parts of the world, okay? So the answer may be a little bit lengthy. In the United States or North America, what is occurring is that we are being more and more successful with new products. Those new products are creating a challenge for competition. There is no question about that now. There is -- the products, since the products are unique to Monster, there was less -- there's always price pressure. Customers always want to get things for less. It's their responsibility to do that. But it's -- I would say from that standpoint, it's normal. It is not driven by competition because literally, in those products, we don't have competition. With regards to our older products, job postings, traditional search, right, I think what's happening, particularly now with the increase in traffic and most important applies [ph] for Monster end customers are noticing it. The only thing competition can compete with us on is price. So in those products, you are seeing increasing competition on price. Our position on that is to meet the competition, period, okay? We have the better service. We have the better product. We have a complete array of new product. And we think that this is the right time, okay, to really compete and compete hard. In Europe, the situation is a little bit different. Yes, all these things that I said regarding product are certainly there. But the competition in price is not as strong as it is in North America. I think that the environment is such where everyone is realizing, they're trying to -- that the economic conditions are weak. They're trying to maintain position. They're doing the best that they can in accomplishing that. I think that as time continues to go on, we still have the edge because of the product portfolio and the acceptance of the product portfolio. But the pricing itself -- there's competition, but it's simply not as -- I would not characterize it at all as strong. Now, it could get to that, okay? If things continue to deteriorate, that could develop. As I said, the same thing we believe would happen there is happening in North America with the capability that we have to compete on the marketing end, the flexibility we have to apply dollars there, we're prepared to deal with that if it should develop, right? Similarly to the United States, okay? In Asia, things are relatively constant. There is price competition. The 3 major markets, as you know, that we deal in are South Korea, China and India. Price competition in Korea, there is some but not anything unusual. India, I would say the same. It's probably a little bit more in China, but not appreciable so. The issue in China is more that the overall economy has slowed down and it's impacting just the level of demand and the level of business.

Operator

And your next question comes from the line of Craig Huber.

Craig A. Huber - Access 3:42, LLC

Couple of questions, first, on your cost. Can you help us think about your marketing and promotion line is roughly $58 million each these last 2 quarters. What are you guys expecting, given your current budget and guidance, what the marketing and promotion line should be in the third and fourth quarter?

James M. Langrock

So I would -- so if you assume the midpoint of our guidance, at top and the bottom line, OpEx would be flat to slightly down. So from a modeling standpoint, I would assume at this point that the marketing spend would be what we've seen it for the first half will be similar in the second half.

Salvatore Iannuzzi

The -- to qualify that response [ph] is this, the -- it's very easy in this environment -- I mentioned before that we spent $10 million more in the second quarter, approximately $10 million in the second quarter of this year versus second quarter of last year, okay? Very easy not to spend that money and we have the capability to turn off the spend literally within a week, okay? However -- and that would have delivered an additional $0.03 to $0.05 a share. We think that we've been shortsighted. Wrong decision would have led us to not be able to maintain the momentum we are building, both with our customers on the commercial side as well as Staffing and elsewhere. So yes, it would have returned a better bottom line in Q2, but it would have shortchanged us going forward. We will watch, obviously, at some point if things would deteriorate very significantly. We would take action, but I think that the better thing for us to do right now is to pick our targets, pick our response where we think there was opportunity and seize that opportunity. As we go on, if the situation develops in a country in Europe where we see that same opportunity to move our business forward, we will spend in those areas. We'll reduce it where we don't see opportunity, but we will increase it where we think there is opportunity.

Craig A. Huber - Access 3:42, LLC

And then also on your employee count of flat in the quarter versus 3 months ago, I guess it was down 4% to 5% sequentially in the first quarter. Are you comfortable with your employee level right now? I know it's a very sensitive subject, but are you comfortable with your level employees are at now given the market volatility out there on the economic front?

Salvatore Iannuzzi

I think that our population, if you look at it over the past 6 months, is down. You have to remember that our numbers, just when we give you one benchmark, our numbers as opposed to even a few years ago excluding China, okay, and China was a completely different situation and we really added it on, if you will, but it's also different in the cost per employee, et cetera, very different. Our employee base today is somewhere in the low 4,000, about 4,200, 4,300 excluding China. Compared to several years ago, that's a reduction of almost somewhere in the vicinity of 1,000 to 1,200, 1,300 people. So going into this slowdown, okay, I think that we have a good comfort zone with regard to the population we have now. We have made reductions. We’ve said before that the company needed to rebuild itself. A workforce that was necessary for the rebuilding where we were able to have been extracted, if you will, from the workforce. So we've taken those types of reductions. I think that our -- the productivity is very high in our sales force, et cetera, but we're comfortable. If the situation develops that we need to do more, we will make strategic decisions, but not across-the-board. We will do them strategically and take action in different parts of the world to decrease the population, okay, but all the time protecting our core market. We think that clearly that is our future, and we will do whatever needs to be done.

Operator

Your next question comes from the line of Tobey Sommer.

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

I was wondering if you could -- I don't think you gave this already, can you tell us what the losses were like in some of the emerging markets that in prior investor context you have given those losses. Just wondering what the financial impact was in 2Q?

James M. Langrock

So the forecasted loss, we've been saying for China and developing markets in Eastern Europe particularly Turkey, is approximately $30 million. If you look at the -- for 2012, if you look at the EBITDA margin was around 11% internationally, if you exclude those, EBITDA margin would be 15%, 16%. So they're still incurring losses in Q2. The losses were narrowed a little bit from Q1. But for the full year, from a modeling standpoint, Tobey, it's about $30 million.

Salvatore Iannuzzi

And included in that, for example, is this past quarter, actually in the first week of -- not this past quarter, this quarter, the first week of July, we implemented the new platform in China. And the numbers that James gave are included, for the China portion of that is including the cost of doing that. China is now on the same platform as we are here in North America. That's a big step forward to in the future, being able to challenge that market. But really, that $30 million that James is referring to and the principal amount of it is China and Latin America, we believe and view as investments for the future. Is it a drag on the bottom line today? Absolutely, okay? We estimate the drag to be somewhere around $0.15 plus or minus. And it is extremely difficult, once again, obviously, in this economic -- these circumstances and we'll make decisions as things continue to develop as to what we should or should not do in those situations. But right now, we view them as strong investments.

Operator

And your next question comes from the line of John Janedis.

John Janedis - UBS Investment Bank, Research Division

Now, from your customers with annual contracts, can you talk about utilization of postings and products? And what kind of commitments are you seeing on renewals from the larger corporate customers?

Salvatore Iannuzzi

Yes. In general, I think what we -- and there's always exceptions, so -- but from a general -- broadly, what we're seeing is companies in Europe and here are buying somewhat less there. As I said, in North America, they're competing on more commoditized products or more -- older products, so there's heavy competition. But the demand, overall, is just less. The companies are just not hiring as much, which is proven by the continuing high level of rate of unemployment, and that varies actually from region-to-region in the country. The Northeast probably got the highest -- one of the highest unemployment rates, particularly in financial services and now creeping into technology. But I think that -- so the job postings, the number of postings being sold, I think, are less, demonstrating that, that concern or that contraction that's there. I think where we're seeing, fortunately what's offsetting that, in our case, is the new products in that they are buying those. They are renewing those. And those are increasing in terms of -- compared to last year or prior periods. The momentum is increasing, which is offsetting some of that decrease that, in this type of environment should be no surprise, is occurring in the older or more traditional products.

John Janedis - UBS Investment Bank, Research Division

Now separately, kind of related, I guess. You talked about the multi-year commitments from customers. Is there any way you can -- when you talk about the 14% increase in the North American bookings, can you give us a sense of maybe how much of that increase is related to multi-year? That would be helpful.

James M. Langrock

So the business -- the increase, John, was we don't give the exact number. The increase was driven by Staffing as well as the Government business was a significant driver of the growth. So we don't give an exact number, but the Government who had a strong quarter as well as Staffing. And the 14%, if I was to give a number, may be 5% to 7% of it was due to the multi-year deals.

Salvatore Iannuzzi

And what we're hopeful for is that as I think it's been happening over the past year or so, but we're hopeful that, that continues to increase. What that'll do is obviously secure more of future revenue as well as rather than have a sales force who is bogged down with annual renewals, have a sales force that is -- what I'm incurring additional sales costs is freed up to pursue new business. So we're hopeful that the securing of new -- of multi-year contracts, et cetera, increases in volume. I think it will for 2 reasons: one is the nature of the new products, PRS, SeeMore, et cetera, will -- their very nature, most companies want to secure a fixed cost for a longer period than a year. But I think what you'll also see when things start to turn around – and unfortunately we can't predict when that's going to be, but when things start to turn around, I think you will have more of a rush to secure pricing for the longer term at a time when markets still may be a little bit soft and get in while the getting is good, to be blunt.

Operator

And your next question comes from the line of Jeff Silber.

Jeffrey M. Silber - BMO Capital Markets U.S.

Wanted to talk a little bit about what you're doing in the staffing industry and maybe we can use Kforce as a proxy. I'm not expecting you to give specific numbers, but if you can tell us, was Kforce looking at other options? Were they deciding whether to even implement any of this type of technology? Maybe a little bit more color on how you won that deal?

Salvatore Iannuzzi

Sure. We've been talking to Kforce for some time. And Kforce, I think they have a reputation and justifiably so in looking for new technology to increase their bottom line. And they've been looking at PRS. They beta-tested PRS with categorized as a relatively small percentage of their agents, and they've been made it -- and then became convinced it was the right technology for them. I do believe that they looked at some other things that purported to provide the same service. Given the decision they made, it's obvious they decided that ours was the best solution for them. And what's happened now is that they feel that in any technology adoption, there's always some degree of risk of implementation, et cetera, execution risks. But they feel that the ROI and the potential positive impact outweighs any negative and now have decided to employ it across their entire force of agents. And as I said, there are others following a similar pattern in a sense of how they're coming to the decision. And the number where [ph] -- the discussion isn't really about whether to do it or not, but really the discussion is: what's the safest and easiest way to implement because it involved, again, a change of technology plus a training of their revenue generators, the workflow of their revenue generators So it's a decision that has to have a lot of thought behind them, and then they're going through that phase.

Operator

And your next question comes from the line of Mark Mahaney.

Mark S. Mahaney - Citigroup Inc, Research Division

You had mentioned that new products account for perhaps 25% of North America bookings now. Could you disclose what that number is for International and plan the strategy or the plan for increasing that penetration of international bookings as well?

Salvatore Iannuzzi

Do you want to give them percentage for it ?

James M. Langrock

Yes, so obviously, Mark, the product, PRS in Europe, was just in -- it's been -- it's in the U.K., France and Germany. And it’s just started its tracking well, tracking similar to what we've seen here in the U.S., so it's a smaller component and then obviously we'll start rolling SeeMore out. In CAN, it's been there, small, but we're seeing very significant growth in the CAN products, so it's less than the 25%. I don't have the exact number in front of me, but it's growing very nicely over in Europe.

Salvatore Iannuzzi

To give you a little additional color. In the U.K. and in France, where PRS has been introduced for, say, approximately 12 months now, maybe a little bit less, adoption on the commercial side stands at 50%, maybe a little bit north of that. So it's following the same pattern. But I won't speak to Germany because it's just too soon and that's a different market. But in -- it's following somewhat the same pattern as here in the United States. In terms of adoption of -- discussions going on with regard to the adoption of SeeMore as well as PRS for the major staffing companies, it's following virtually exactly the same pattern as it has in the United States. The testing is in early stages just because it's been introduced later, and -- but it seems to be following the same pattern. And most important, the reaction of the customer is one of interest and being positive that they like the technology. They like what they see. And so we think it'll -- best as we could tell right now, barring a total economic calamity where people just keep spending money, it'll follow the same pattern that we've seen here.

Operator

And your next question comes from the line Glenn Greene.

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

Just couple of questions and quick clarification. You may have given this, but I was a little unclear what the PRS North America bookings trends were. And related to that and it's obviously early, but SeeMore traction on the corporate side as opposed to the government side. And then the clarification, Sal suggested $17 million of expense savings in the quarter. I was unclear if that was sort of an annualized figure or do we sort of multiply that by 4 to get sort of an annual run rate?

James M. Langrock

So first question on PRS. Traction in North America right now, it's about -- the quarter was over -- close to 56% almost 60% of our resume sales were in PRS. The savings of the $17 million, what I would -- from a modeling standpoint, as I mentioned before, you would assume right now that Q3, we're not giving full year guidance, but Q3 will be flat to sequentially down. So that's more from a run rate. Glenn, that’s the way I would look at, it. SeeMore is doing well. We have a significant pipeline in SeeMore, it's building nicely. So we're very pleased with that, where we stand with that. We've done – for the year-to-date, we've done several million dollars’ worth of SeeMore bookings. But the pipeline is quite significant and growing nicely. And that's on the commercial side; it's not on the Government. So that was commercial numbers that I gave you, Glenn.

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

Okay. And then just the 50% of resume sales for PRS, what was that in terms of growth?

James M. Langrock

The growth would have been -- in North America would have been at -- would have been over – it would have been the high teens; the low 20s on PRS growth. Glenn, the $17 million was the annual -- was the quarterly savings.

Operator

And your final question comes from the line of Mark Marcon.

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

With regards to SeeMore and the success that you had with Kforce, can you give us a sense in terms of the timing of when you think some of the other contracts may come through as the pipeline builds? And also, if you could comment a little bit about the price premium that you might get relative to the traditional product for that?

Salvatore Iannuzzi

Mark, I think that what I can tell you, it’s the nature of the type of sell. You're selling really new technology, and it's very difficult to predict when a contract would actually be signed. I can tell you that there's a significant number of discussions going on with a significant number of staffing firms, even one or 2 that -- or initially indicated that, in essence, they didn't need the product. They've come on board and are in fairly serious conversations now. But exactly the timing is just -- I'd love to predict, but you just can't. It would be a shot at the dark. I think that the -- but the momentum, whether it manifests itself in Q3 or 4 is certainly positive, and I think it's recognized that it gives companies a considerable ability to increase their efficiency and ability to service their customers. So I think the good news is I don't want to take it certainly for granted, but that the battle has been fought and we seem to be on the right side of it now. Now, it's a question of execution and drawing up the contract, so to speak, and that may take a little bit longer, a little bit less time depending on who we're talking to. And the economy will probably have something to do with it, too. It's always harder to commit when things are really soft, and if they get much softer people can slow down a little bit. But it's certainly going in the right direction. Does that answer your question or did you have another part to it?

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

I was also wondering about just the timing in terms of the large contract, the one that's going to flow through in terms of revenue?

Salvatore Iannuzzi

Those are somewhat the same issue. It's a lumpy business in terms of just when we'll be ready to book the government or the state -- the federal or state level. We'll be ready to ink a contract and you could see that you have a dry period, but you can also see that all of a sudden a number of them sign at the same time. The business was robust in Q2. The pipeline is robust in Q3. And really, the issue is: when will it happen? Is it a Q3 event? Does it become a Q4 event? But the realization that the products work and the products bring real benefit to the rarest agencies and more and more to the state and local level, once again, is becoming quite obvious.

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

Great. And then with regards to Germany and Korea, you -- the global macro headlines are fairly obvious to everybody, I think. Can you comment with regards to how you're doing from a share perspective? Have you maintained your lead in those markets? What's happening from that perspective?

Salvatore Iannuzzi

Yes, in South Korea, we are clearly the dominant firm in our space. I think we are maintaining our lead. It's difficult to go with -- our position is about 65%, 70% of the market. And every now and then, we go up 1 percentage point or so. But with numbers of that nature, it's really hard to move much more. The real issue there is the economy and which way the economy goes. We fully expect that as -- when the economy picks up, which, as you know, in South Korea is largely dependent on Europe and the U.S. because of the nature of their economy, you will see a resumption of growth in demand there. The fact that it's holding as steady as it is bodes really well for that to occur. And remember, their -- the comparables there are in years where they were growing at 40% to 50% in some quarters. So we're very positive of South Korea. In Germany, I think we're maintaining market share. I think that business is -- there is competition, but things are sort of steady. We're not gaining, but we're not losing. I think there is -- it would be prudent in the spend there, to say, in marketing we're spending a little bit more than we were, but not significantly. We just simply don't think the opportunity is ripe right now. But if -- given the strength of Germany, the economic strength, et cetera, when we see and we feel the opportunity is right, that is a prime market where we will invest more heavily.

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

Great. And then with regards to the restructuring that just went through, can you -- you gave us the headcount x China. Can you give us a perspective on that relative to, say, where it was in the first quarter and how it might look like in the third quarter?

Salvatore Iannuzzi

Yes, I think what -- and I'll James respond also. But I think that what we said is our goal was to save somewhere in between $90 million and $100 million and that a portion of that would be used to feed our marketing, which we are doing. That's hoping to support that $10 million of increase, say, in Q2. What it's doing is also what we envision the rest of the savings from the restructuring to go to either the bottom line or to offset the decline in revenue. And unfortunately, it is also in the decline in revenue, driven by what’s -- we all know what's going on in the marketplace. So it's doing precisely, at this stage of the game, what we anticipate and what we designed it to do. In terms of it -- did we achieve the goal, the answer is absolutely. The numbers are working, it's very, very closely to what we had modeled and what we thought would occur.

Operator

Thank you for participating in today's Monster's Worldwide conference call. You may now disconnect.

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