Caldwell Posts 45 Percent Q4 Revenue Decline; Full-Year Results Down Nearly 20 Percent

As the pandemic continues to impact executive search firms around the world, Caldwell delivers the results for its fourth quarter and full-year. It reveals declining revenues as the economic impact of COVID-19 hits clients and pricing pressures rise among recruiting rivals. Let’s go inside the latest numbers.

November 13, 2020 – Toronto-based Caldwell posted Q4 revenues of $11.3 million (Canadian), a 45.7 percent decrease from a year ago. Full year revenues declined by 18.7 percent, from $69.7 last year to $56.7 million. Like many companies, the search firm’s performance was heavily impacted by the global COVID-19 pandemic.

“Fiscal 2020 was a year unlike any other,” said John Wallace, chief executive officer. “After an incredible start to the year, the world went in a completely unexpected direction due to the pandemic and the ensuing economic uncertainty. The effect on our business has been significant, as employment levels and hiring at our clients were dramatically reduced.” One silver lining, according to Mr. Wallace: the pandemic has accelerated “an impressive level of innovation and adaptation” inside the firm.

“Our team has done a superlative job of delivering outstanding and transformative leadership talent for our clients, and we have seen monthly sequential increases in new search volumes and business development activity,” he said. “We remain extremely confident in the team’s ability to garner market share throughout a recovering market.” Like its rivals, the firm’s consultants have seen improving conditions in September and October, with results for November still too early to report. But with the U.S. election results in turmoil and fast rising COVID-19 caseloads expected to lockdown much of the country by Christmas, caution remains the buzzword for December and the first month or two of the New Year.

“As a result of quick and decisive steps to actively manage costs, preserve capital and enhance liquidity, we have come out of a challenging year in a position of financial strength,” Mr. Wallace said. “We have a balance sheet and a cash position with liquidity to operate during the current pandemic environment and do intend to make strategic investments to expand our industry, geographic and service coverage as the opportunities arise.” Part of that balance sheet includes proceeds of stimulus grants received from the governments of Canada and the U.S. to help offset the negative impact of the pandemic. The firm received more than $2.8 million in stimulus grants, $2.1 million of which came from the U.S. grant program.

COVID-19’s Impact

According to Caldwell, its revenue decrease is attributable to reductions in the number of assignments to 110 (2019: 127) and average fee per assignment to $101,000 (2019: $161,000). The decrease in both factors is primarily the result of the pandemic’s economic impact on its clients and related pricing pressures among executive search firms. The number of assignments decreased on a lower number of assignments per partner at 2.9 (2019: 3.2) and a lower average number of partners at 37.3 (2019: 40).

“We experienced record growth results leading up to the pandemic’s occurrence,” the firm said. “Fiscal 2019 revenue of $72.1 million was the highest in our firm’s history, and the first half of fiscal 2020 (September 1, 2019 to February 28, 2020) was 12 percent higher than the same period in fiscal 2019.” Since the onset of the pandemic, Caldwell has seen significant pressure on its business. The firm continues to encourage its employees to work remotely, and it does not anticipate a full return to its offices until sometime later in 2021.

Caldwell Records 42 Percent Q3 Revenue Decline
Toronto-based Caldwell posted Q3 revenues of $11.5 million (Canadian), a 42 percent decrease from a year ago. Like many companies, the firm’s performance was impacted by the global COVID-19 pandemic.

“This is a challenging business environment for the executive search industry,” said John Wallace, chief executive officer. “Our third quarter revenue is down 42 percent over last year, which we believe is in line with our industry overall. That said, we remain extremely confident about our ability to manage our business through this pandemic and economic downturn.”

Other Activity

During the quarter, Caldwell appointed Ben Jaksich as managing director and leader of Caldwell Advance, the firm’s recruitment offering focused on emerging leaders and advancing professionals. He is based in New York. “Having Ben at the helm of our Caldwell Advance team further strengthens our ability to connect our clients with transformational talent,” said Mr. Wallace. “As organizations adapt and adjust their talent needs to current market conditions, this expansion of our Caldwell Advance team will further bolster our ability to provide long term value to our clients.”

Korn Ferry Posts Flat Year-End Revenues; Q4 Down 10.2 Percent 
Largest search firm posts fiscal year-end revenues of $1.92 billion as it navigates pandemic and economic crisis. $300 million cost savings efforts include pay cuts and furloughs, with “more change” in the works, according to CEO Gary D. Burnison. The fiscal fourth quarter was impacted by COVID-19 with revenues falling 19 percent in Asia Pacific, 17. 2 percent in Latin America, 12.5 percent in Europe, the Middle East and Africa, and 10.1 percent in North America.

In this newly created position, Mr. Jaksich was hired to drive the overall growth and management of Caldwell Advance. He will also focus on the recruitment of emerging leaders and advancing professionals, with a concentration in private equity and venture capital relationships and a particular emphasis on technology companies.

Caldwell also recently added to its recruiting capabilities in the insurance sector with the return of Peter Reed as managing partner of the firm’s insurance practice, and a member of the firm’s Stamford, Conn. and New York offices. Mr. Reed conducts executive search engagements across the C-suite and boardroom for domestic and global companies, including property and casualty, and life insurance carriers, as well as brokers and other industry-related service providers.

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor  – Hunt Scanlon Media

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