Pracuj.pl goes public - what do you need to know before a debut? [Guide]

Pracuj.pl will debut on the Polish stock exchange on December 9, 2021. The public offering will cover 22.380.626 existing shares, representing 32,86 percent. share capital, and the maximum price has been set at PLN 82 per share. What do we need to know before we decide to buy shares in this company?

Virtually every person who is looking for an office job in Poland via the Internet has used the website pracuj.pl. Grupa Pracuj is one of the largest job and employee search platforms in Central and Eastern Europe. The company also offers software sold in the form of SaaS, which is to support the recruitment process in companies (eRecruiter). The main markets for the company are Poland and Ukraine. Grupa Pracuj has a slightly developed corporate structure. The structure of the company is presented in a simplified manner below:

Source: the company's prospectus.

In the further part of the article, we will present:

• Company history,
• The company's management staff,
• IPO offer,
• What does Pracuj.pl do,
• Financial results,
• competition.

Company history

The beginnings of Grupa Pracuj date back to 2000, when the company Commuication Partners was established. It was then that the first version of the Pracuj.pl website was created. In March 2001, the eKatalyst fund invested in the company. The beginnings of the company were very difficult, the clients were several dozen of the largest companies in Poland that were open to looking for employees via the Internet. The company took advantage of the difficult macro-economic environment (the bursting dotcom banks) for acquisitions. In April 2002 she took over Jobaid.pl. Since 2003, more and more companies have been convinced to take advantage of online job posting. Along with the increase in market adaptation, there was a sharp increase in the scale of operations. In November 2003, the company was recognized as one of the fastest growing IT companies in Central and Eastern Europe, according to Deloitte's FAST50 ranking. 

The dynamic development of the company has also been noticed by large funds. In 2006, Tiger Global appeared among the shareholders, specializing in looking for prospective companies around the world. During this year, the company started its foreign expansion. Robota International, the owner of the Ukrainian recruitment website, Robota.ua, was acquired. In 2008, the company already had 700 unique users and 000 job offers. The flywheel effect began to work. The more job offers there were, the more job seekers appeared. As the number of users grew, it became easier for companies to find a new employee. In 2014, the website pracuj.pl was used by 3 million unique users and 22 job offers were active. 

Two years later (2016), the company's revenues exceeded PLN 200 million. In the same year, Grupa Pracuj purchased shares from Tiger Global. A year later, the TCV investment fund invested in Pracuj. It is worth mentioning that  the fund invested in companies such as Facebook, Netflix or Spotify. The TCV fund invested in a Polish company for the first time. In 2019, Grupa Pracuj made an attempt to diversify its activities. As a result, the Pracuj Ventures fund was established, which focuses on investing in start-ups that deal with technologies that contribute to increasing the effectiveness of HR and the education process. Currently, the company has developed two of these concepts - theprotocol.it and Dtyg.pl.

The company's management

As at the date of preparation of the prospectus, the Management Board is composed of 3 persons who are appointed for five-year terms. It is not surprising then that the current members of the Management Board have been working for over 5 years. Each of these members has already started a second term. 

Source: Prospectus

Przemyslaw Gacek - currently he is the President of the Management Board. Przemysław Gacek started his professional career in 1997 as an apprentice at Procter & Gamble. In the years 1999-2000 he was a participant in the Management Internship Program at PwC. In 2000, he was one of the co-founders of Pracuj. Przemysław Gacek in the years 1993 - 1999 studied at the Faculty of Economic Sciences of the University of Warsaw. He obtained a master's degree in International Public Affairs. 

Raphael Nachyra - since 2005 he has been working in Grupa Pracuj. Initially, he worked as a Key Account Manager. Then in the years 2006 - 2008 he was the Sales Manager. In the years 2008 - 2013 he was the Sales Director. Since 2013, he has been the Operational Director at Grupa Pracuj. It is worth mentioning that in 1996-2001 he studied at the Warsaw University of Technology, from which he graduated with a master's degree.

Gracjan Fiedorowicz - he has been employed in Grupa Pracuj since 2007. He is the Finance Director of the company. Responsible, inter alia, for financial strategy, reporting and tax issues. Before working for the company, Gracjan Fiedorowicz in 2002-2007 worked at PricewaterhouseCoopers (PwC) where he was responsible for auditing companies' financial statements. In the years 1995-2000 he studied at the Warsaw School of Economics (Warsaw School of Economics), where he obtained a master's degree.

IPO offer

According to the information contained in the prospectus, the existing shareholders intend to sell 20% of the company's shares. If there are more potential buyers, it will be possible to increase the number of shares offered to 32,86% of the company. The value of the offer will range from PLN 1,1 billion to PLN 1,8 billion. The TCV fund, which so far owned 26,66% of Grupa Pracuj shares, will be selling the most shares. Part of the offer includes blocks of shares belonging to the co-founders of the company. However, after the offer, Przemysław Gacek (the president of the Group) will still hold no less than 53% of shares in Grupa Pracuj. 

Source: company presentation

Operating activity of Grupa Pracuj.pl

Pracuj.pl is a leading technology platform operating on the recruitment market. The recruiting platform helps in two ways. 

First, the company's solutions are to make it easier for HR departments of companies to find new employees who meet the requirements of employers. Thanks to the use of the Pracuj offer, enterprises can quickly publish and update job offers, providing users (potential employees) with relevant information regarding the position, scope of duties or earnings. 

Secondly, the websites pracuj.pl and robota.ua are aimed at offering users an easy way to change jobs. Users can easily find interesting job offers. Both these  companies related to the industry (e.g. IT, finance), way of working (remotely, stationary) or workplace (e.g. Warsaw, Gdańsk, Kraków, etc.). Additionally, Pracuj.pl users can receive personalized notifications on their e-mail regarding potential interesting job offers.

The main source of revenues (86,6%) of Grupa Pracuj are fees for placing a job offer by employers or recruitment agencies. This revenue group also includes additional services related to job offers (the so-called value-added services). The operating activities in Poland and Ukraine will be described below.

Activities in Poland

Grupa Pracuj generates most of its revenues on the Polish market. According to the data reported by the company, Grupa Pracuj generated approximately PLN 2020 million in 265, i.e. 88,5% of the group's revenues. The company's offer on the Polish market includes:

• A recruitment website under the brand of pracuj.pl along with specialized industry sectors, e.g. it.pracuj.pl.
• Additional services such as: "Work zone", virtual job fair, "Recruitment 360".
• ATS platform sold on the basis of SaaS called eRecruiter.
• Additional recruitment websites: Dryg.pl, theprotocol.it.

Pracuj.pl website

The Pracuj.pl website is the largest recruitment portal in Poland. The website focuses mainly on office job offers (the so-called white collar segment). According to the Gemius research, the website is used by 3,1 million users per month. 35 clients were served through Pracuj.pl and over 000 recruitment projects were implemented.

Services for employees

Pracuj.pl focuses on facilitating the "candidate path" from the moment of looking for a job to being invited to an interview. Through the website, users can apply for job positions without sending a CV (through their profile) or checking the status of their application. Thanks to this, the so-called user experiencewhich makes it very easy for users to use the portal. Thanks to this, many employees start looking for a job on the website pracuj.pl. Along with the changes in the behavior of users on the Internet, a mobile application and a mobile version of the website were introduced. At the same time, users can use additional functions, such as payroll reports, salary calculators, tips or a CV creator.

Services for employers

It is the main source of the company's income. Employers pay for placing job advertisements on the Pracuj.pl website. Companies can post a job advertisement for a period of 30 days. While the job advertisement is up-to-date, companies can purchase additional services to increase the attractiveness of the advertisement. These include:

• • Refreshment,
  • Distinction with a logo,
  • Great offer,
  • Positioning.

Refreshing - this is a feature that allows you to update the date of a job posting. As a result, the ad is placed higher in the search results. 

Distinction with a logo - allows you to distinguish a job advertisement with the company's logo.

Super offer - allows you to distinguish a job offer with a special designation "Super Offer".

Positioning - this functionality was introduced in the first quarter of 2021. This allows you to show job advertisements more often in the search results. 

Another offer of Grupa Pracuj for employers is job fairs JOBICON. It is a one-stop-shop event where the employer can present his brand and job offers to his candidates. At the same time, video chats, workshops, webinars and meetings with celebrities are organized at JOBICON. Job fairs are held twice a year (in spring and autumn).

Employers can also post theirs (for a fee) business profiles on the Pracuj.pl website. The employer's profile includes a description of the activity, current job offers, a description of the recruitment process and contact details.

A very important solution offered by Grupa Pracuj in Poland is the eRecruiter platform. The aforementioned platform is offered in the SaaS model. eRecruiter generated PLN 25,3 million in Poland, which represented 8% of the company's revenues. According to the data prepared by the company, about 75% of all recruitment is supported by eRecruiter. Thanks to the platform's functionality, candidates can safely apply via application forms. On the other hand, eRecruiter provides employers with the possibility of preliminary, automatic selection of candidates (e.g. they reject candidates who expect too much salary). Employers can also easily organize, filter and edit the candidate database. What's more, eRecruiter allows employers to verify where the candidates' CVs are coming from. As a result, employers know which channels are most effective in "Attracting potential candidates".

Activities in Ukraine

The main activity of the company in Ukraine is carried out under the brand name robota.ua. Grupa Pracuj acquired the rights to the Ukrainian recruitment website in 2006. It can be said that robota.ua is the equivalent of the Polish pracuj.pl. According to the data presented by the company, approximately 75,1% of revenues come from fees for placing job offers on the website received from enterprises and recruitment agencies. The remaining revenues were generated from providing enterprises with databases containing candidates' CVs and from additional services (image building, internet advertising).

The website has about 150 employees who try to offer services to enterprises (direct and telesales). The most important clients are large enterprises, which owned 55% of job offers published on the Ukrainian platform in 2020. At the same time, large enterprises generated about 70% of robota.ua revenues. According to Grupa Pracuj data, rabota.ua had 2021 active customers (enterprises and recruitment agencies) by the end of Q63 XNUMX. 

As in the case of pracuj.pl, the Ukrainian website has a flywheel effect. The more job offers, the more active users. The influx of new users increases the chances of companies finding a competent employee. As a result, it encourages new companies (Small and Medium) to look for employees online. According to the company's data, in 2020 the robota.ua website had an average of 3,7 million unique users per month. It is worth mentioning that 9 years earlier, the number of unique CVs was only 0,47 million. 

The activity of Pracuj Ventures

Maciej Noga, source: grupapracuj.pl

Grupa Pracuj is a limited partner of the alternative investment company (ASI) - Pracuj Ventures. The managers of this fund who manage the important positions are Pawel Leks (one of the co-founders of Grupa Pracuj), Maciej Noga (co-founder of Pracuj) and Mykola Mykhailov. This is important because the management board of Grupa Pracuj cannot directly influence the investment policy of ASI. 

Grupa Pracuj does not have its direct representative in the key management personnel of Pracuj Ventures. The investment decisions are made by the members of the investment committee. It is worth mentioning that important operational activities in Pracuj Ventures are performed by Przemysław Gacek, who acts as an ASI investor, and not because he is the President of the Management Board of Grupa Pracuj.

Pracuj Ventures invests in start-ups from the technology industry, which operate in the HR (Human Resources), education and development sectors. These start-ups often act as HR Tech companies. They can be, among others. human capital management (HCM) systems, automation of HR processes (e.g. chatbots). Other examples are, for example, suppliers of tools for managing employee education, benefit platforms or software for analyzing and planning talent development.

As a rule, the fund supports promising companies with amounts ranging from PLN 0,5 million to PLN 2 million. Most often, the activities of start-ups are complementary to the Group's solutions. Pracuj sometimes takes over a promising company. In the years 2019-2021, the fund analyzed a total of 410 potential investments and invested in 7 companies. Ultimately, Pracuj Ventures plans to involve funds in 9-11 start-ups.

Currently, the portfolio of Pracuj Ventures includes:

• Wandlee - automation of sales, marketing, recruitment, customer service using a virtual assistant such as chatbot,
• Worksmile - a wellbeing platform that combines benefits for employees with elements of wellbeing,
• Inhire.io - a recruitment platform that focuses on the IT market,
• Gymsteer - a platform for managing fitness clubs,
• Gamfi - tools offering motivation for employees (e.g. gamification),
• Sherlock Waste - a platform thanks to which employees can report problems in the workplace,
• Kadromierz - a tool for creating online work schedules.

customers 

Throughout the period of Grupa Pracuj's operation, the main goal was to acquire large and medium-sized domestic (Polish, Ukrainian) and international companies. Another important source of clients are recruitment agencies, which still see an opportunity to publish job offers on the pracuj.pl and robota.ua websites. The company is currently trying to penetrate the SME market (small and medium-sized enterprises). Currently, Grupa Pracuj is also trying to increase the activity among micro-enterprises (employing less than 10 employees). It is worth mentioning that the company's revenues are very diversified. According to the prospectus, no client generated more than 1% of revenues.

In 2020, the number of job offers posted on the pracuj.pl website exceeded 310 thousand. Offers dominate among recruitment agencies, companies from the financial, IT and retail sectors. Job offers for the so-called white collars. Below is a list of industries whose share in job offers exceeded 1%:

Source: Grupa Pracuj prospectus

Sales and marketing

The company spends its sales and marketing resources on increasing brand recognition among both employees and employers. Although a lot of traffic to Grupa Pracuj websites is organic, the company still tries to spend marketing measures to increase traffic to the group's platforms. One of the tools is, for example, real time bidding (automatic buying of advertising space on the Internet, e.g. on websites). In addition to buying advertising banners on the internet, portals pracuj.pl and robot.ua they run advertising campaigns in traditional media or prepare guides, educational content or podcasts. 

In the case of employers, marketing activities are used to build a brand with clients "Expert on the recruitment market". Grupa Pracuj develops educational projects such as "HR Challenges" or "Academy of Inspirations". The company is also developing a content marketing offer to raise awareness in the HR departments of companies. 

Company dividend policy

The company's activity is very profitable. This is due to the fact that the company has gained such a scale of activity that it does not have to compete for orders from clients (entrepreneurs) with the price. Grupa Pracuj pays a significant part of its profits to investors in the form of dividends. In 2018, the company generated PLN 117,7 million of net profit and allocated PLN 2019 million to dividends in 47,9. A year later, Grupa Pracuj paid out PLN 61,8 million as dividends. 

On June 28, 2021, the General Meeting of Shareholders decided to allocate the entire net profit for 2020 (PLN 72,2 million) as a dividend. In addition, it was decided that another PLN 38 million would be paid from the reserve capital (profits from previous years). In 2021, Grupa Pracuj will pay out PLN 103,7 million in the form of dividends. As at the prospectus date, PLN 79,8 million has already been paid out.

In the prospectus, the company announced that in the medium term it intends to pay out no less than 50% of the net profit for the financial year. The company, however, stipulates that if the current investment needs are greater, the dividend may be temporarily reduced. 

Risk factors

It is worth remembering that the Polish recruitment market is very competitive. Market entry barriers are very low. There are many recruitment portals that try to "chew on" the position of pracuj.pl. Among the competitors can be given OLX, Infopraca, Praca.pl, Just Join IT. In addition, social networking sites such as LinkedIn and Facebook are also a threat. One of the moats owned by Grupa Pracuj is very high recognition, which means that a large part of the traffic to the websites is obtained organic. In order not to lose its position, Pracuj devotes large marketing resources to maintaining brand recognition.

Another risk factor is the deterioration of the macroeconomic situation in Poland and Ukraine. If GDP falls, the situation in the labor market becomes more difficult as companies limit new recruitments. The more difficult the situation on the labor market, the fewer new job offers there are. This results in a decrease in revenues generated from the publication of new job offers and additional services.

The financial data 

Grupa Pracuj has a very profitable business. Additionally, the company does not have to incur large capital expenditures (CAPEX). High profitability and prudent financial policy meant that the company is not indebted. It is worth noting that as the scale of operations increases, the operating margin increases. As a result, you can see the operating leverage in this business model. Below is a summary of the financial results of Pracuj:

Source: own study based on data from the prospectus

The reason for the increase in revenues was the rebuilding of labor demand after the slowdown resulting from COVID-19. 

Grupa Pracuj is a cash machine. High operating cash flow and low CAPEX resulted in high free cash flow (FCF). In the years 2018-2021, the company repaid almost PLN 180 million. As a result, the company currently has no interest debt.

* operating cash flow, ** capital expenditure, *** free cash flow

Source: own study based on data from the prospectus

Competition and comparison companies

The company does not operate in a vacuum. It has a lot of competition both on the Polish and Ukrainian market. Some competitors have little potential to put pressure on Grupa Pracuj. However, there is potential competition, which includes OLX (belongs to Prosus listed in Amsterdam), Facebook (potential competitor), LinkedIn (Microsoft). Indirect potential competition are also GigEconomy-related platforms, such as Upwork and Fiverr. 

It is also worth noting that there is a recruitment platform listed on the stock exchange operating on the Russian market and the former USSR countries. It is a Headhunter company. Companies operating on the American and Japanese Recruit Holdings or Chinese 51Jobs.com are also listed on global stock exchanges. 

Headhunter

It is the largest recruitment platform in Russia. The company is also a leader in such markets as Kazakhstan, Belarus and Uzbekistan. Headhunter also operates on the Azerbaijani and Kyrgyz markets. Previously, the company also operated in Ukraine, but it withdrew from this market due to the political conflict between Russia and Ukraine. According to data prepared by SimilarWeb, it is the fourth most popular website related to the labor market (indeed, jooble, glassdoor).

Source: own study

Recruit Holdings

It is a company listed in Japan. About half of the revenues come from the Japanese market, another important market is the United States, which accounts for 21% of revenues. The company operates in many markets. It owns websites such as Indeed (bought in 2012), which is a recruiting platform, and Glassdoor (bought in 2018). Glassdoor is a website where current and former employees share their insights on the organizational culture or the recruitment process. In addition, Recruit has many different websites, such as Zexy (wedding segment), Study Sapuri (educational platform), Hot Pepper Gourmet (food segment). The company employs approximately 47 people.

Source: own study

51 Jobs 

It is a Chinese company that was founded in 1998. In 2020, 58% of the company's revenues were generated from recruitment platforms, while the remaining part was generated from other services for HR departments. The company made its debut on the Nasdaq in 2004. The collected funds allowed to increase the scale of the business. In 2016, the number of registered customers exceeded 100 million. In 2020, the number of registered users exceeded 171 million. The company's flagship service is 51job.com, one of the most popular recruitment platforms in China. In addition, the company also has a website lagou.com, which specializes in recruiting employees for the IT industry.

Source: own study

OLX

It is one of the largest companies in the world operating in the classifieds model. The main source of income is the OLX platform, where there are local offers for sale of things and job offers. In addition, the OLX group also includes sites such as Avito, AutoTrader, Otodom, Otomoto, 321Sold! or Autovit.ro. In 2019, OLX's revenues amounted to € 1,3 billion. Currently, OLX is part of the Prosus group. 

Where to buy Pracuj.pl shares

Grupa Pracuj.pl is to debut on the stock exchange on December 9, 2021. Below is a list of selected offers Forex brokers offering an extensive stock offer, including for companies from the Warsaw Stock Exchange.

Broker
End	Poland	Denmark	Poland
Shares on offer	approx. 3500 - shares approx. 2000 - CFDs on stocks 16 exchanges	19 - shares 8 - CFDs on stocks 37 exchanges	approx. 1 - stocks + CFDs on stocks 5 exchanges
Min. Deposit	PLN 0 (recommended min. PLN 2000 or USD 500, EUR)	PLN 0 / EUR 0 / USD 0	PLN 0
Platform	xStation	SaxoTrader Pro Saxo Trader Go	MetaTrader 5
	REVIEW	REVIEW	REVIEW
	CREATE AN ACCOUNT	CREATE AN ACCOUNT	CREATE AN ACCOUNT

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. From 72% to 89% of retail investor accounts record monetary losses as a result of trading CFDs. Think about whether you understand how CFDs work and whether you can afford the high risk of losing your money.

Summation

The company is currently valued at approximately PLN 5,5 billion. Grupa Pracuj is a leader on the Polish market and has a leading position on the Ukrainian market. The company has a very profitable business. Grupa Pracuj in recent years has generated an operating margin of 40% -50% and generates very high free cash flow. The company has no debt and has announced that it intends to pay dividends on a regular basis.

Competition in the market is fierce and entry barriers are very low. Pracuj.pl was one of the pioneers on the market of recruitment platforms, which allowed him to have a better starting position. But it is thanks to operational efficiency that Grupa Pracuj owes its first place on the market. Thanks to this, the flywheel began to work. The more users visiting the website in search of work, the easier it was to attract paying customers (large and medium-sized enterprises). The more jobs there are, the more new users will appear who want to find a job. So far, the company is not strongly present on the CEE market. This is necessary because the chances of dynamic growth on the Polish and Ukrainian markets are limited.