After its profit warning last month (see InterQuest still being knocked from pillar to post), the half-time results from IT recruitment group, InterQuest, were pretty much as expected, with revenues for the 6 months to 30th June falling by 5% yoy to £55.8m, mainly due to the downturn in banking and finance sector recruitment.
But there were a couple of bright spots too. Contract gross margins were a point higher yoy at 11.5%, and permanent recruitment fees (essentially ‘pure’ gross margin) shot up by 20%, lifting group gross margins by 30 bps to 14.9%. But ‘increased investment in the business’ – including the opening of their first overseas office (Singapore) – left operating margins a point lower at 1.2%. However, at least InterQuest returned to net profit this half (£371k), after having taken a hit from a dodgy acquisition a year ago (see InterQuest falls into red on CCL acquisition write-off).
InterQuest is trying to emulate the success of the very much larger SThree, the long-established recruitment firm that has transformed itself from a UK-only IT staff agency to a multidiscipline, international recruitment firm. Indeed InterQuest recruited SThree veteran, Gary Goldsmith, earlier this year as its COO. Even SThree’s journey has not been without its stumbles, but at least it has the ‘bulk’ to help stabilise the business in troubled times (see SThree losing grip in UK IT recruitment). With InterQuest executive chairman, Gary Ashworth, signalling a further deterioration in trading conditions, and a return on its business investments moving to the right, InterQuest has a long, long way to catch up.