Monster Worldwide (MWW) Timothy T. Yates on Q1 2015 Results - Earnings Call Transcript

May 07, 2015 2:07 PM ETMonster Worldwide, Inc. (MWW)

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Monster Worldwide, Inc. (NYSE:MWW) Q1 2015 Earnings Call May 7, 2015 8:30 AM ET

Executives

Michael B. McGuinness - Senior Vice President, Chief Accounting Officer and Global Controller

Timothy T. Yates - President and Chief Executive Officer

Mark Stoever - Chief Operating Officer

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

Analysts

Kara L. Anderson - B. Riley & Co. LLC

Mark S. Marcon - Robert W. Baird & Co., Inc. (Broker)

Frank Carl Atkins - Suntrust Robinson Humphrey, Inc.

Ben Flox - Avondale Partners LLC

Operator

Good morning and welcome to Monster Worldwide First Quarter 2015 Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference over to Mike McGuinness, Head of Investor Relations for forward-looking statements. Please go ahead.

Michael B. McGuinness - Senior Vice President, Chief Accounting Officer and Global Controller

Good morning and thank you for joining us on Monster Worldwide's first quarter 2015 conference call. We will have formal remarks from Tim Yates, President and Chief Executive Officer; Mark Stoever, Chief Operating Officer; and James Langrock, Chief Financial Officer.

This morning, we issued a press release describing the company's results for the first quarter of 2015. A copy of that release can be viewed on the company's Investor Relations website at ir.monster.com.

Before we begin, I'd like to remind you that some of the statements made during this call may constitute forward-looking statements under applicable securities laws, including statements about our strategic direction, prospects, and future results. These forward-looking statements involve risk and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings for a description of the risk factors that may affect our results. Forward-looking statements reflect our views as of today and we undertake no obligation to revise or update these statements as a result of new information or future events.

Please note that some of the financial measures that we use on this call are expressed on a non-GAAP basis. Certain of those non-GAAP measures exclude charges related to stock-based compensation and other pro-forma items described in our press release. Our GAAP results and reconciliations of non-GAAP measures to GAAP measures can also be found in the release.

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

Timothy T. Yates - President and Chief Executive Officer

Thank you, Mike. Good morning, ladies and gentlemen. Thank you for joining us for Monster's first quarter 2015 conference call. Today, we will update you on the results of the first quarter and on the priorities we outlined on last quarter's call. We'll also report on the progress we are making on our "All the Jobs, All the People" strategy.

Overall, on a consolidated basis, bookings and revenue on a constant currency basis were largely consistent with our internal plans for the quarter. Adjusted earnings and cash flow metrics were better than our internal forecast, as a result of rapid execution of the reallocation to accelerate expense reduction plan and continued expense vigilance.

This quarter, you will note we have combined the IAF segment into our Careers – North America segment. Part of the old IAF is now included in our core Careers business and part – that's our military.com property is included in the Monster Government Solutions, subcomponent of Careers – North America. We believe this better aligns our reporting with how we are currently managing the business. James, will comment more.

All percentage changes are on a constant currency basis. During the quarter, bookings were up 1% year-over-year. Within that, core Careers – North America, excluding MGS, were up 6% year-over-year. This is the third consecutive quarter of bookings increase in the all-important North American market. APAC was up 7%, Careers Europe bookings were flat. We expect a roughly similar result in Q2 with acceleration later in the year.

Bookings of Monster Government Solutions were down 30%. We have always noted that MGS has a much larger than average deal size and that, as a result, bookings from quarter-to-quarter can be quite variable or lumpy. But to put this in context, this 30% reduction represents a decrease of $4.7 million year-over-year. Mark, James, and I will all talk more about MGS in our broader solutions business.

Revenue was up 1% sequentially, but down 3% year-over-year. In addition to being focused on bookings growth, we are increasingly focused on the timing of conversion of those bookings to revenue. EPS was $0.08 above the midpoint of our guidance range. EBITDA was $27 million. Cash flow from operations was also $27 million.

I will now update you on the priorities we communicated on last quarter's call. The first priority was and is to demonstrate that new strategic products combined with our traditional core products provide a superior competitive solution for our clients and allow us to gain share. Our core products offer substantial and continuing value and they are enhanced by our strategic new products. In evaluating this premise, we look at a number of key metrics. Among those are, the number of clients we do business with in the period and their average spend. Renewal rates for existing clients, as you know, much of our business is done on an annual contract basis. While there was always churn, for example, the client, who no longer has a hiring need in the current quarter, we evaluate the trends on these metrics in both numbers and dollars of clients retained. We also measure the number of new clients and the number of win-back clients.

During the first quarter, most of these top-level metrics showed improvement in our core North American and European Careers business. I would characterize the pace of the improvement as modest but noticeable. One area which continues to show weakness is the retention rate for existing clients in Europe. While Europe overall is, as reported, flattish, a reduction in dollars retained from existing clients on a year-over-year basis was offset by increases in new and win-back clients in Europe. In part, we believe the weakness in this metric reflects the economy and a very competitive landscape in Europe. But we do believe we can and will do better on it.

The second priority is to prove that our model has substantial operating leverage. EBITDA margin during the quarter was 14.7% versus 13.9% last quarter. In growing our EBITDA margins, as we discussed last quarter, we are committed to maintaining our strategic product and sales force investment.

We have done so during the quarter. Mark will comment on the recent digital campaign we've launched, aimed at the Millennial audience. This campaign is specifically timed to accompany the rollout of substantially increased job content on our sites. We have also preserved quarter-bearing sales head count. We are able to preserve and, in fact, increase marketing and sales investment, while reducing overall cost as a result of the rapid implementation of the expense reduction program. We are on target to reduce our operating costs globally by approximately $10 million on a year-over-year basis in Q4. James will provide more detail.

The third priority relates to capital allocation. During the quarter, we were entirely consistent with our articulated capital allocations policy. We clearly focused on cash flow and, as a result, our net cash improved by $17 million and our leverage ratios also improved. During the quarter, we monetized our breakeven business in Australia, which was accounted for on the equity method and we continue to pursue other opportunities to prune our portfolio.

Overall, we executed our plan effectively during the quarter and we are making steady progress. We are very excited about how our products are being received in the market. Periodically, Monster meets with our Customer Advisory Board, which is comprised mainly of enterprise clients, to discuss our strategic product initiatives, our product roadmaps, and our go-to-market plans.

We also seek and embrace client feedback and recommendations. The two recommendations, for example, that came out of the recent meeting were that we should continue focusing our sales reps on selling an overall product solution versus an individual product and, in addition, that we should more aggressively publish and supply market intelligence and data to our clients. We're focusing on both of these suggestions.

At this meeting, last CAB meeting, which happened last month, hosted by Mark and Joanie Courtney, in Orlando. Joanie, by the way, is a frequent contributor on Fox and CNBC, and you can see her job market commentary on both those networks and on Twitter, @JoanieCourtney. The feedback we have received at these meetings is increasingly positive and the trend has been accelerating in terms of the receptivity to our strategy.

I'd like to quote from one of our clients at the last meeting. This client wrote that – actually wrote an e-mail to all of the management – that Monster is at a tipping point: believed that we had successfully rebranded; that we were, despite the exhortation to continue, much less product and more solutions oriented; and that Monster was in a position to be able to become the recruiting solution instead of being a part of the recruiting solution. We are very encouraged by this type of feedback from important thought leaders in our industry as it is very consistent with what we are trying to accomplish.

However, we want to and need to accelerate that progress if we are going to fulfill our potential. We are not yet consistent enough in our penetration and coverage of the market. We are too exposed in any given quarter to being disappointed by the loss of a big deal or a client loss or weakness in a part of our diverse business. I'd like to share with you a couple of initiatives we've implemented to improve on that.

First, in order to improve our sales execution, we have made some changes in sales management. You'll recall that earlier in the year, we asked Andrea Bertone to focus exclusively on our European business, and Mark Stoever has been leading the North American sales force. In April, Paul Forte joined us as Executive Vice President of North American Sales. Paul is a 30-year veteran sales executive with substantial experience in building solutions-oriented sales teams. We believe that these changes provide us substantially more sales management focus and firepower and discipline.

In addition, we have made significant changes to our commission plans in North America. These changes have a number of objectives. Our commission plans, historically, were based on top line bookings. We have introduced change to the plans to motivate not only top line bookings, but also revenue. In addition, we have added objectives for our sales managers designed to better incent account coverage and greater sales force productivity. We expect real incremental progress as a result of these changes right away, but it should become noticeable in starting in Q3. Secondly, we are doing a review of our existing Monster Government Solutions business and are developing plans to build larger, more consistent and more profitable software solutions business. For a moment, I just want to clarify the language.

As you know, we are building our business on three pillars, reach, connections, and solutions, which we will henceforth refer to as software solutions. Our traditional core Monster products of postings and resumes reside in reaching connections. The first way we use the word solutions is to communicate that we provide to our clients the best set of products from across our three pillars.

A client solution may be comprised of job postings plus Twitter Cards, Power Resume Search license, and an applicant tracking system. In that scenario, a client would be utilizing products from each of our three pillars. The second way we use the term solutions is to describe our third pillar, software solutions. In this case, we're providing software, largely cloud-based, which becomes a part of our clients' human resources environment.

As laid out last year, we plan to build on the success we have had in providing human resource software solutions to U.S. Government agencies, both federal and state. The products included in this set of solutions are the Monster Cloud Solutions product, which used to be referred to as SeeMore, our Monster Hiring Management Suite, private-label job exchanges or job boards, and Monster Data and Analytics.

We believe there is real potential to grow this business further in the government space, and to more aggressively pursue the commercial space with software solutions. We believe this business has attractive financial and client dynamics. The business will be built on the core capabilities of Monster and the Government Solutions business, and will be led by Steve Cooker, who currently leads our MGS business.

As we plan for this expansion, we want to make sure that we build on a solid foundation. The current profitability of MGS, both in North America and in the U.K., is significantly below the fully allocated EBITDA margins of our core Careers business. As we build the business, we want to make sure that new business is adequately profitable and that we have plans to improve the profitability of any business, which is currently below standard.

In addition, in recent quarters we've had a couple of client disappointments. As noted last quarter, we believe these disappointments have occurred for specific client reasons and are not endemic or represent an execution problem in our business. But we are factoring in the learnings from these disappointments in our plans for expansion.

I'd now like to turn the call over to Mark for his remarks.

Mark Stoever - Chief Operating Officer

Thank you, Tim. Turning now to an update on the company's continued strategic execution. Q1 2015 was another solid operating quarter for Monster as last year's momentum continued. Over three million new users joined the Monster network in Q1, an 8% increase year-over-year, bringing our total global membership up to 223 million. In North America, we provided solutions to over 45,000 individual customers. This is a 3% increase year-over-year, and approximately 3,600 of these customers purchased at least one of our new strategic products. We saw a 4% year-over-year increase in demand for our job advertising products. We are encouraged that this increase includes growth in both our classic job duration job postings as well as continued contribution from several of our new strategic products, including Twitter Cards and our more recent Social Job Ad product.

The growth in overall job advertising was split almost equally between our classic and new strategic products. Demand for our direct sourcing products or our resumes and profiles was also up, growing 12% on a year-over-year basis.

While our classic and Power Resume products continue to improve and were also slightly up, the majority of growth in this category came from our new strategic products; TalentBin and Talent CRM. We also saw growth in our software and services category, which was offset by a decline in our recruitment media products. In Europe, we provided service to over 13,000 customers, flat to last year, with approximately 1,200 of them purchasing at least one of the newer products. As Tim says, Europe continues to be sluggish. Overall, our job advertising business in Europe was down 3% year-over-year, mostly driven by declines in France and Germany, which will partially offset by slight growth in the U.K. and the Netherlands, and also a small contribution by the sales of the new products that are now internationally, Twitter Cards, which was extended into 15 additional markets in Q1.

Our direct sourcing products, however, grew 11% year-over-year. While the split vary by country, the majority of the growth in our direct sourcing business came from the new strategic products, TalentBin and Talent CRM. Our traffic and seeker engagement metrics were strong, specifically as it relates to our ongoing efforts to increase overall organic user traffic. This is a result of our deep focus on search engine optimization, the expansion of our jobs content and our mobile-first approach. Altogether, these actions have driven a 50% year-over-year increase in organic search traffic domestically. We continue to take a mobile-first approach to optimizing across our user experience, which aligns well to how our users are engaging with us. We launched the first of several new mobile-first experiences in Q1, including our new responsive design-based homepage in the United States.

Mobile engagement continues to be strong with over 43% of all seeker interactions now coming from a mobile device. This is up from 27% a year ago.

I'd next like to make a few comments on our progress against our strategy to bring together all of the jobs and all of the people combined with the most advanced online recruiting platform. I discussed our progress across the three strategic pillars that Tim mentioned. Monster Reach, Monster Connections and Monster Software Solutions. First, Monster Reach encompasses all of the products which enable our customers to be the most sophisticated job marketers possible. Our focus is on providing our customers with access to the broader set of candidates with the largest set of job content across desktop and mobile, as well as the traditional and now social web.

In the quarter, we published three million jobs across all our distribution channels, including to the monster.com site in the United States. We continue to collect jobs at scale, and our steady-state average continues to be well over four million jobs per month. I will remind you that prior to this initiative, our jobs content would average around 250,000 job advertisements in any given month.

The value of all the jobs is being brought to the market through all of our site experiences, but also through a robust engagement messaging campaign. In late Q1, we launched a consumer brand campaign, our first in sometime that builds upon our Find Better messaging and was aimed specifically at Millennials, a large and growing part of the workforce. This campaign has been largely conducted in digital channels blending the best of brand, direct, and social marketing. As an example, the core of the campaign is based on a set of engaging user videos, which in a short few weeks have been viewed over 35 million times by our target audience. This is a powerful demonstration of how we are executing our strategy to expand the reach of the Monster brand.

Providing social recruiting capabilities continues to be critical for our customers. And in the quarter, we launched Monster Social Job Ads providing recruiters a turnkey and automated ability to expand their reach by automatically targeting jobs to appropriate Twitter users at scale.

Looking at some of the latest performance data, we're up 40% or up to 40% of the engagements are converting to apply starts, continuously improving from launch and a key indicator of excellent customer performance. We sold to approximately 500 customers in the quarter, who have run more than 800 campaigns to-date, with success across a diverse set of occupations including engineering, marketing, customer service, sales management, and transportation.

Equally important to these customers is the continued halo effect they see from using Social Job Ads as their jobs advertised are now being retweeted and their follower counts are growing. And further, we're seeing almost 90% of the candidates' Social Job Ad transactions take place on a mobile device, providing scale to our customers across both social and mobile.

Monster Connections, pillar number two, is where we enable employers to discover and connect with potential candidates on Monster and across the social web. Power Resume Search, which is our flagship search product, continues to demonstrate its value and strength as a core offering.

In Q1, we saw a 34% increase year-over-year in the number of recruiters engaging on the platform. And not only more recruiters using the platform, they're doing more when they're on. We've seen a continued increase in their productivity on the platform approximately 60% year-over-year.

Talent CRM enables recruiters to discover and communicate directly with active and passive candidates across the Monster database through new discovery in recruiting campaign tools. In Q1, we commercially launched this product in 15 additional international markets and are encouraged by how the engagement rates are increasing. Messaging volumes have more than doubled since last quarter. Beyond the ability to connect with the Monster user base, TalentBin by Monster, allows recruiters to discover and communicate with passive candidates using talent profiles that have been collected from the social web. We brought TalentBin into 11 new international markets and continue to see the strong results from customers using this product. We are encouraged by the results our customers have recruiting passive talent, and by using the new features such as our Automated Follow-Up Marketing Campaigns, which have raised passive candidate response rate up five times.

Lastly, let me now turn to the Monster Software Solutions, our third strategic pillar focused on bringing the power of Monster's technology to a wide range of commercial staffing and government customers, particularly to cloud-based applications. This software platform enables our customers to use their own data, making Monster the only company in the industry to offer clients end-to-end sourcing and talent management. This allows clients to utilize our award-winning and industry-leading search capabilities to source clients across multiple databases, ours and theirs, using a single interface that provides comprehensive talent reporting and analytics. We continue to grow the customer base for our cloud-based solutions and are increasing the number of customer installations that have added additional components to their Monster suite.

We are broadening our solutions to customers leveraging our existing capabilities in the areas of building career site hosting, search, employee referrals, applicant tracking, and messaging and analytics. If I look forward to the remainder of 2015, we believe that the overall demand for talent, especially in the U.S., has started to shift back in favor of the candidate, not uniformly but likely broader than the specific segments we're seen, like technology, where such a shift has already occurred. For instance, the demand for healthcare professionals is very high and growing. According to the BLS Employment Predictions (sic) [Projections], between 2012 and 2021, the U.S. is expected to see growth of 1.7 million healthcare jobs, that's a 21.5% growth, and 1.16 million healthcare support jobs, a 28% growth, hence our push to extend TalentBin use for sourcing healthcare professionals.

We also are seeing renewed interest from customers in understanding the overall labor market data, as Tim said in his opening remarks, trends amongst the growing Millennial workforce in helping them provide a better candidate experience from the start of their first interaction with a potential employer all the way through to a hire. Social, mobile, candidate experience and recruiter effectiveness remain the key pain points in the market and our suite of solutions across our three strategic pillars aim to solve these challenges for our customers' needs today and in the future.

We have several additional product expansions planned for the year, aligned to our strategic plan. Social Job Ads now in beta internationally will rollout in several new global markets in Q2 with most major markets launched in 2015. We are currently beta testing the pay-per-click platform in the United States and we expect to phase this model into the broad U.S. customer base later this year. Pay-per-click purchasing model is an important alternative advertising model and a key to penetrating new customer segments as well as new and win-back customers.

As discussed last quarter, pay-per-click will not replace our traditional duration-based job ads, career ad network or our other specialty postings. Pay-per-click job ads will be priced initially at market-based price points based on historic and current supply and demand data and categorized as easy, medium, or hard to fill, with a target in floor pricing for each category.

Ultimately, we expect pricing for this product to be very dynamic, and we're able to align customer demand for hires in a given category and location with a corresponding supply of talent. And finally, all of our job content will continue to be optimized with a focus on quality creation. Broad consumer brand messaging involve mobile-first experiences to further attract, engage, and retain the audience at scale.

I'm very encouraged by the progress our Monster team has made in the first quarter of 2015. The solutions we are delivering will continue to enable us to satisfy our mission of connecting people to jobs wherever they are.

I'd now like to turn the call over to James.

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

Thank you, Mark. Today, I'm going to review our first quarter results, comment on Q1 revenue and bookings trends, provide an update on our Reallocate to Accelerate program and provide financial guidance. Slide one summarizes the first quarter pro forma income statement. EPS was $0.08, at the upper end of our guidance range. EBITDA was $27 million and EBITDA margin was 14.7%, representing a sequential improvement of 80 basis points. Revenue was $183.7 million, a year-over-year decrease of 7% and 1% sequentially. On a constant currency basis, revenue was down 3% year-over-year, but grew 1% sequentially. Operating expenses of $168.5 million were 2% lower on a sequential basis and were helped by currency and the benefits of the Reallocate to Accelerate program.

Slide two summarizes the pro forma adjustments during the quarter. The $4.5 million on the salary and related line represents stock-based compensation. We incurred $20.2 million of costs relating to the Reallocate to Accelerate restructuring program, consisting of severance, lease obligations and asset impairments. We realize an $8.8 million gain on the sale of our joint venture in Australia. As Tim mentioned, we continue to review our non-core assets for opportunities to monetize at favorable terms. The $1.3 million adjustment within interest and other primarily represents the non-cash amortization of debt discount associated with the issuance of the convertible notes.

Beginning in the first quarter, we have begun to utilize a fixed long-term projected non-GAAP tax rate in our non-GAAP financials. This change provides consistency across interim periods by eliminating the effects of non-recurring and period-specific items. In Q1 we recorded an $11 million non-recurring benefit; however, the non-GAAP tax rate is 35%.

Slide three shows the non-GAAP expense trend. Currency had a four percentage point benefit on all expense captions. Salary and related expenses at $89 million decreased 5% and 2% on a year-over-year and sequential basis, respectively. We ended the quarter with head count of almost 3,900, down 4% year-over-year and 5% sequentially, driven primarily by head count reductions resulting from the Reallocate to Accelerate program.

Marketing expense was $33 million, relatively flat on a sequential basis and a decrease of 20% on a year-over-year basis. As Tim and Mark mentioned, we were able to significantly reduce marketing spend year-over-year, while driving quality traffic as well as deliver a highly impactful Millennial campaign in the first quarter. Office and general expense was $46 million, a decrease of 6% both sequentially and on a year-over-year basis.

Slide four is non-GAAP segment performance. As part of the strategic plan to better align internal resources and drive growth, the company has combined the IAF and Careers – North American segments. Military.com will now be managed by our Government Solutions team due to the synergies between those two businesses. Fastweb and our monster.com consumer ad business will now be part of the core Careers – North American business.

Revenue in our North American Careers segment was $122.4 million, flat sequentially and down 4% year-over-year. Within the Careers – North American segment, our core North American business was up 3% sequentially. This was driven by revenue increases in our staffing, healthcare, small business, and newspaper verticals. This sequential increase in core North America was offset by reductions in our Government business and the legacy IAF segment.

Now on to bookings within North America: we're very pleased with the bookings trends in our North American core business, with growth of 6% on a year-over-year basis. Many of our verticals had double-digit growth year-over-year led by our staffing vertical. Staffing companies have seen tremendous demand recently and we are gaining increasing share of their business.

As you know, staffing companies are often early adopters of new products and they have recognized and appreciate the value proposition that these new products provide and provides us additional confidence in the new strategy. Staffing contracts tend to be longer term in nature, which results in slower revenue conversion, which I'll discuss in detail when I provide Q2 and full-year 2015 guidance.

Bookings in our Government business were down $4.7 million or 30% year-over-year. As Tim discussed, the Government business is extremely lumpy. Over the long-term, we believe there is great opportunity to expand the solutions business both within the government space and into the commercial space. Adjusted EBITDA Careers – North America was $33.4 million and the EBITDA margin was a healthy 27%.

On a constant currency basis, revenue in the International Careers segment was up 3% sequentially and down 1% year-over-year. Revenue from Europe was up 4% sequentially and down 3% year-over-year. Our U.K. business continues to perform well and the Netherlands showed signs of improvement as well. APAC revenue was flat sequentially and up 4% on a year-over-year basis, driven by improving results in both Korea and India. Careers – International EBITDA margin was 1.2%. As Tim discussed, the profitability in our European government business is below the corporate average, which continues to have a negative impact on International EBITDA margins. Further, working with our partner in South Korea, we have invested additional resources in our Korean business to drive growth in this valuable asset, which has temporarily impacted margins in the International segment. As discussed, the full benefits of Reallocate to Accelerate program will occur in Q4 2015.

Slide five takes us through cash flow and key balance sheet metrics. Adjusted EBITDA was $27 million. Net cash provided by operating activities was $27 million, an increase of $8 million on a year-over-year basis. Capital expenditures were $8 million. We expect capital expenditures to be between $7 million and $9 million per quarter in 2015. Deferred revenue was $304 million, up 1% sequentially and down 11% year-over-year. This year-over-year decrease was driven by two factors. First, currency negatively impacted deferred revenue by approximately $18 million. And second, Q1 2014's opening deferred revenue balance was higher than Q1 2015's opening balance. Total debt was $210 million, total liquidity increased to $170 million, and our leverage ratio improved from 2.47 in December of 2014 to 2.20 in March of 2015.

I would now like to provide you an update on the Reallocate to Accelerate program. We are pleased that we're able to complete most of the program earlier than we expected, although we still have some actions to complete in certain countries in Europe. The plan, when finalized globally, is expected to save about $10 million per quarter, beginning in the fourth quarter of 2015.

Slide six summarizes our guidance. We expect to generate between $10 million and $20 million of cash flow from operations in the second quarter of 2015, including the impact of the Reallocate to Accelerate program.

EPS of $0.07 to $0.11, which excludes approximately $4 million to $5 million of stock-based compensation, $1.2 million of non-cash debt discount amortization related to the convertible debt and restructuring charges related to our Reallocate to Accelerate program. We expect Q2 revenue to be down 2% to 3% sequentially at actual rates. This decline is primarily due to our International segment continuing to face FX headwinds in Europe.

Within North America, we expect revenue to be slightly down as well due to impact of the Q1 bookings mix I mentioned earlier, where verticals like staffing are performing extremely well and have a longer revenue conversion cycle. However, we expect revenue to return to sequential growth beginning in Q3 and continue to build from there. We are committed to achieving substantially improved EBITDA and EBITDA margins and we reiterate our 18% to 22% Q4 2015 margin target. With that, we are assuming economic conditions similar to today, high-single-digits bookings growth for the year at constant currency with the usual lag between bookings and revenue.

Looking forward to 2016, we are still on track for the 30% to 35% EBITDA margin target by Q2 2016. We expect revenue growth to resume in the beginning of the third quarter. Our expense reduction plan is ahead of schedule and we are confident that with a lower cost base and a resumption of revenue growth, we will meet this target.

I'd now like to hand the call back to Tim for his concluding remarks.

Timothy T. Yates - President and Chief Executive Officer

Thank you, James. The company executed satisfactorily during the first quarter. However, we can accelerate the rate of improvement and we are making changes to reach our goals. We are aggressively moving ahead on all the priorities we've communicated and remain fully committed to our EBITDA targets. From a capital allocation point of view, we made significant progress in the quarter and expect these trends to continue in the quarters ahead. Last quarter, I said that there was no better use of cash than our own stock; that is true.

During the second quarter, it remains our plan to utilize free cash flow to increase liquidity and reduce our leverage ratios and fixed charge covenant ratios. As noted last quarter, we have no plans for acquisitions. We have no plans which would dilute the stock. Other than for new hires, we have not made any broad-based equity grants and we'll not do so – and we'll do so only as we achieve our current EBITDA and revenue objectives. And as we both mentioned, we will continue to review our non-core assets.

In concluding, I want to go back for a moment to our clients. We've all noted that we are very excited about the progress we are making with our clients. I want to illustrate this by another quote from another client at the Customer Advisory Board. This client, who is a senior human resources executive at a major technology company, tweeted out after the last meeting, @Monster – congratulations on getting your sexy back, impressed by your new products and services. We are fully committed to our "All the Jobs, All the People" strategy. Its power is beginning to be recognized in the market. We have a lot of work to do to achieve our potential and we thank our global associates for their dedication and commitment to Monster.

With that, we'll open the call to questions.

Question-and-Answer Session

Operator

We will now begin the question-and-answer session. The first question comes from Kara Anderson of B. Riley & Co. Please go ahead.

Kara L. Anderson - B. Riley & Co. LLC

Hi. Good morning. I guess I'm a little unclear on the timing of certain products and services that you laid out last year and I know we got a little bit of an update today. But I'm wondering if you could go through sort of what's left to be deployed and when we might expect to see that hit.

Mark Stoever - Chief Operating Officer

Hi, Kara, it's Mark. I'll handle this based on the majority of the rollout occurring in North America first and then followed in the major markets of Europe. So at the moment, TalentBin has been rolled out all throughout North America and Europe top-tier markets, Twitter Cards as well, as well as Talent CRM. The Social Job Ad product that I referenced launched here in North America in Q1 and is in the process of being rolled out in Europe, as we speak, which leaves really the last big component, although all of these continue to sort of rev because they're in their 1.0 version. But the last big component is the pay-per-click advertising, which is in beta here in North America. We're rolling this out by customer segment, starting with our self-service moving into the small business and then the mid-market and then finally the enterprise and staffing segments. We expect to have a full commercial launch of pay-per-click in the U.S. by Q3 and then the rollout in Europe beyond that.

Kara L. Anderson - B. Riley & Co. LLC

And then just if I could follow up on that, what are you doing in terms of training to educate your sales force on the new products available?

Mark Stoever - Chief Operating Officer

There has been for some time now prior to launch, and I would say going back to spring of last year this time, we were getting ready for the July 1 rollout in North America which covered a majority of the products I spoke of. At that time, we kicked off a pretty extensive robust program for all salespeople and management across the country, taking them through not just the product functionality and features, but more about the solution sell understanding from clients, how they're challenged with extending their reach, hiring diversity, hard to reach candidates, understanding the social web and how they might employ social recruiting and create Twitter accounts and followers on Twitter.

So that we not only are selling product, but we can be consultants to our clients, because in many ways, a lot of this is new for them in terms of how they can really expand their reach to find the broadest set of candidates both passive and active, through the tools that we offer them. That continues on a regular basis that training, obviously with updates. We continue to do webinars and have an entire organization focused on not just the sales training, but also client adoption. As this is your first time on the call, I think, Kara, but as I said in previous calls, client success and client adoption remains a key priority for us, not just to get the products in the hands of the clients, but make sure the recruiters are using them, as often as they possibly can and seeing the results that the products give them.

Kara L. Anderson - B. Riley & Co. LLC

Great. Thank you. I'll jump back in the queue.

Operator

The next question comes from Mark Marcon from R. W. Baird. Please go ahead.