Executive Summary

Q3 FY2024 revenue was $29.456M, up 5% sequentially, but down 23% year over year; gross margin improved sequentially to 32.6% but remained below the prior year’s 35.8% .
Diluted EPS was $(0.18), driven largely by non-cash impairment charges totaling $20.5M (goodwill $15.285M; intangible assets $5.209M); adjusted EBITDA improved sequentially to $(0.413)M from $(0.630)M in Q2 .
Management initiated ~$3.0M annual SG&A reductions (first $1.6M implemented; ~$1.4M pending) and is accelerating M&A and technology consolidation (ATS/ERP) over 12–18 months to position for recovery .
No formal financial guidance provided; estimates from S&P Global were unavailable this quarter (request limit exceeded), limiting beat/miss analysis versus consensus. Management reiterated strong liquidity: $19.6M cash, $8.7M undrawn ABL, no debt, and current ratio 4.1 .

What Went Well and What Went Wrong

What Went Well

Sequential improvement: revenue +$1.406M (+5%), gross profit +$0.828M, gross margin +130 bps versus Q2; direct hire revenue +34% q/q, and adjusted EBITDA improved q/q to $(0.413)M .
Liquidity and balance sheet resilience: $19.6M cash, $8.7M ABL availability (undrawn), net working capital $26.9M, current ratio 4.1, and no long-term debt .
Cost actions and modernization: initial $1.6M SG&A savings implemented, further ~$1.4M to follow; consolidation of ATS/ERP and embedded AI to improve recruiter productivity and enable faster M&A integration (weeks vs. months) .
Management tone: “We are taking aggressive actions to improve our financial results…streamline our operations while taking out an estimated $3 million in annual SG&A costs” (CEO) .

What Went Wrong

Significant net loss due to impairments and demand weakness: $(19.286)M net loss and $(0.18) diluted EPS, with $20.5M in non-cash impairment charges; adjusted net loss $(3.790)M .
Broad-based demand headwinds in staffing: contract services revenue down 21% YoY; direct hire down 37% YoY; industrial contract services down 24% YoY, with spread compression from wage and employment cost inflation .
SG&A ratio elevated on lower revenue: SG&A 34.6% of revenue vs. 30.8% prior year, reflecting fixed costs over reduced volumes .
Pricing/margin pressure: professional contract gross margin declined 150 bps YoY (25.0% vs. 26.5%); industrial margin declined 250 bps YoY (15.2% vs. 17.7%) .

Financial Results

Sequential Trend – last three quarters

Metric	Q1 2024	Q2 2024	Q3 2024
Revenue ($USD Millions)	$30.606	$28.050	$29.456
Gross Profit ($USD Millions)	$9.700	$8.767	$9.595
Gross Margin (%)	31.8%	31.3%	32.6%
SG&A ($USD Millions)	$10.6	$10.006	$10.203
Net Income (Loss) ($USD Millions)	$(1.6)	$(1.008)	$(19.286)
Diluted EPS ($)	$(0.01)	$(0.01)	$(0.18)
Adjusted EBITDA ($USD Millions, Non-GAAP)	$(0.200)	$(0.630)	$(0.413)

Year-over-Year comparison – Q3

Metric	Q3 2023	Q3 2024
Revenue ($USD Millions)	$38.171	$29.456
Gross Profit ($USD Millions)	$13.653	$9.595
Gross Margin (%)	35.8%	32.6%
Net Income (Loss) ($USD Millions)	$7.876	$(19.286)
Diluted EPS ($)	$0.07	$(0.18)
Contract Staffing Revenue ($USD Millions)	$32.980	$26.169
Direct Hire Revenue ($USD Millions)	$5.191	$3.287

Segment/KPI details – Q3 FY2024

Item	Q3 2024	YoY Change	Seq Change
Contract Services Revenue ($USD Millions)	$26.2	-21%	+3%
Direct Hire Revenue ($USD Millions)	$3.3	-37%	+34%
Industrial Contract Services Revenue ($USD Millions)	$2.4	-24%	-2%
Professional Contract Gross Margin (%)	25.0%	-150 bps YoY	—
Industrial Contract Gross Margin (%)	15.2%	-250 bps YoY	—
Cash ($USD Millions)	$19.6	—	—
ABL Availability ($USD Millions)	$8.7	—	—
Net Working Capital ($USD Millions)	$26.9	—	—
Current Ratio (x)	4.1	—	—
Shareholders’ Equity ($USD Millions)	$86.3	—	—
Net Book Value / Share ($)	$0.79	—	—
Net Tangible Book Value / Share ($)	$0.36	—	—

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
SG&A annual run-rate	FY2025 run-rate	None disclosed	Reduce ~$3.0M annually (initial $1.6M implemented; additional ~$1.4M shortly)	Lowered
Technology consolidation (ATS/ERP)	Next 12–18 months	None disclosed	Migrate/integrate legacy systems to cloud platforms; improve efficiency & M&A integration	Operational plan
Capital allocation (Buybacks vs. M&A)	Ongoing	Buybacks paused Dec 31, 2023	Prioritize accretive M&A; buybacks remain optional when prudent	Strategy updated

No formal numerical revenue/EPS/margins guidance provided for Q4/FY; management commentary remained cautious near-term but constructive longer term .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Macro demand (“Big Stay”)	Persistent macro/labor uncertainty; direct hire down; sequential softness; cautious outlook	Demand remains weak YoY; early signs of stabilization; sequential revenue/margin improvement	Stabilizing; cautious
AI/Technology initiatives	Plan to integrate AI tools; focus on placing AI/cyber talent	Consolidating ATS (Bullhorn/JobDiva), embedding AI to boost recruiter efficiency; ERP unification to accelerate bolt-on integration	Execution progressing
Capital allocation	Reviewing strategic alternatives; buybacks paused; exploring M&A	Emphasis on accretive M&A; keep “powder dry”; buybacks not prudent amid negative cash flow	Shift to M&A
Pricing/margins	Professional margins stable to slight decline; industrial pressure	Professional margin down 150 bps YoY; industrial down 250 bps; some spread compression	Mixed; pressure persists
Direct hire trajectory	Down sharply YoY; cyclical; expected to lead recovery	Direct hire +34% q/q; management views $18–19M normalized annual perm target longer-term	Early uptick; long-term lever
Government work	—	Exploring more federal placements (top-secret clearance) to buffer cycles	Expanding channel

Management Commentary

CEO: “We are taking aggressive actions to improve our financial results…ramp up our M&A activities and at the same time, streamline our operations while taking out an estimated $3 million in annual SG&A costs” .
CEO on liquidity and valuation: “GEE Group continues to have substantial liquidity…We also continue to believe that our stock is undervalued…trading at levels very near and even slightly below tangible book value” .
CFO on margin dynamics: “The decreases in gross profit and gross margin are mainly attributable to the decline in Direct Hire revenue…increases in contractor pay…resulting in spread compression” .
CEO on recovery positioning: “We’re not going to sit idly by…we are actively bringing in new talent, going after new customers…expanding our menu of services through strategic acquisitions” .

Q&A Highlights

Buybacks vs. M&A: Management views buybacks as not prudent during negative cash flow; prioritizing accretive acquisitions at improved multiples; buybacks remain a future option .
Insider/ownership/valuation: Insiders and directors hold significant stakes; one director bought nearly 1M shares; management believes shares trade near tangible book and are undervalued .
Recovery timing: Industry signs point to potential recovery in 2025; company not waiting—pursuing market share and cost actions now .
Operational efficiencies: Offshore recruiting under consideration; ATS/ERP consolidation to reduce cost and accelerate integration .
Working capital/DSO: Liquidity strong; DSOs around mid-40 days; balance sheet supports organic and M&A initiatives .

Estimates Context

Consensus EPS and revenue estimates for Q3 FY2024 via S&P Global were unavailable due to request limits; therefore, beat/miss analysis versus Wall Street consensus cannot be provided this quarter. If needed, we can refresh once access is restored.
Management did not provide specific numerical guidance ranges; directional commentary remains cautious near-term given macro demand, with strategic actions to improve profitability and position for recovery .

Key Takeaways for Investors

Sequential momentum: Q3 showed q/q improvement in revenue, gross profit, and adjusted EBITDA, signaling stabilization despite tough YoY comps .
Impairments mask operating trajectory: $20.5M non-cash impairments drove GAAP losses; adjusted metrics better reflect underlying trends and cost actions .
Cost discipline: ~$3.0M annual SG&A reductions underway should support margin recovery as volumes normalize .
Tech enablement: ATS/ERP consolidation and embedded AI should enhance recruiter productivity, reduce cycle times, and facilitate faster M&A integration .
Liquidity optionality: $19.6M cash, $8.7M ABL availability, and no debt provide flexibility for organic hiring, pricing actions, and accretive M&A .
Perm hiring is a key lever: Direct hire rebounded +34% q/q; returning toward normalized $18–19M annual perm could materially lift margins and profitability .
Strategy tilt to M&A: With improved acquisition pricing, bolt-ons that deepen IT and other verticals can accelerate scale and operating leverage; buybacks remain an option when cash flow turns and valuation appropriate .

Appendix: Additional Data and Reconciliations

Adjusted net income (loss) Q3 FY2024: $(3.790)M vs. $8.073M YoY .
EBITDA Q3 FY2024: $(0.608)M; Adjusted EBITDA: $(0.413)M; YoY Adjusted EBITDA: $2.097M .
Free cash flow YTD FY2024: $(1.175)M vs. $2.502M prior year .

All figures sourced from GEE Group’s Q3 FY2024 8-K press release and earnings call transcript; estimates from S&P Global were unavailable this quarter due to request limits. Citations: - - - -.

GEE Group Inc. (JOB)·Q3 2024 Earnings Summary