Earnings report for staffing and talent (MAN, FVRR, UPWK, etc) Q3 2023
Activity drops but prices rise
The business of hiring hasnt turned around yet
The business of talent placement ain’t easy. Unemployment is low, job openings are elevated, one might think these would be good things for the business. The ratio of job openings to unemployed workers continues to fall - a strong headwind. Staffing and placement companies all report year-on-year (YoY) negative growth. The companies bucking the trend saw gains in revenue through price hikes, both in how much they charged customers and in take rates (for marketplaces). Overall profitability for many of the placement companies has improved as cost cuts have been steeper than revenue losses.
Single-line businesses hit hard, showcasing the benefits of diversification
Single line businesses, like ZipRecruiter, saw the largest drop in revenue. Healthcare firms were also hard hit after the drop in federal funds for covid. Multi-unit staffing firms held on. Companies with pricing power raised prices offsetting declines.
Customer base declines are broad-based, but prices are rising
Fiverr, ZipRecruiter, LinkedIn, and staffing firms reported a decline in year-on-year customer. Upwork sees slowing active customer growth and fewer year-on-year new customer growth. Revenue for these companies is up, though, thanks to the ability to increase pricing. For Upwork and Fiverr, that means a higher take rate, and for LinkedIn, pushing up the price of the subscription.
US was weak in staffing, Asia has held up, driven by Japan
US staffing market is slowing down, particularly healthcare. Asia, Japan specifically, is one of the best performing regions.
Fiverr and Upwork are leading in their embrace of Gen AI
Generative AI is getting lots of attention, but Fiverr Neo and Upwork Chat Pro are some of the only gen ai features making their way to the staffing market. Those features are still limited in use. Gen AI’s development outside they key platforms is a lot more pronounced.
What happens with weakening consumer demand and Asia
Techi and healthcare hiring fell off. Business is struggling despite a strongly growing US economy. So far retail and hospitality hiring sectors have held on. As consumer demand weakens and hiring for those roles slows down, the short-term outlook for this area could be soft.