Heidrick net revenue up 4% in constant currency, but posts loss amid $39.2 million noncash charge

July 25 2017

Net revenue rose 4.1% in constant currency in the second quarter at executive search firm Heidrick & Struggles International Inc. (NASD: HSII), but the firm posted a net loss of $18.2 million.

(US$ thousands) Q2 2017 Q2 2016  % change constant currency (US$ 000s)
Net revenue $152,214 $148,861 2.3% 4.1%
Reimbursements $4,904 $4,955 -1.0%  
Total revenue $157,118 $153,816 2.1%  
Net loss/income ($18,248) $6,655 nm  

Second-quarter revenue from executive search rose across all regions except Asia Pacific at the Chicago-based firm. In addition, revenue rose 35.3% in the company’s leadership consulting operations thanks to both organic growth and the acquisition of Philosophy IB last September.

However, Heidrick’s “culture shaping” business saw revenue decline 35.7%, and the company announced a noncash impairment charge of $39.2 million to write off the long-lived asset and goodwill impairment cause by the business line’s performance.

Heidrick reported it plans to combine leadership consulting and culture shaping into a combined offering going forward called “Heidrick Consulting.” The firm had acquired culture-shaping provider Senn-Delaney Leadership Consulting Group in December 2012.

Revenue by segment and geography

  Q2 2017 Q2 2016  % change % growth in constant currency
Executive search        
Americas $83,090 $81,494 2.0%  
Europe $30,335 $27,538 10.2% 16.4%
Asia Pacific $21,115 $21,677 -2.6% -2.2%
Total executive search and leadership consulting $134,540 $130,709 2.9% 4.3%
Leadership consulting $11,433 $8,450 35.3% 43.9%
Culture shaping $6,241 $9,702 -35.7% -34.0%


Heidrick forecasts consolidated third-quarter net revenue of between $148 million and $158 million.

Share price and market cap

Shares in Heidrick fell 13.74% in early afternoon trading today to $19.15, and the company had a market cap of $358.8 million, according to Yahoo.

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