DHI Group, Inc. (NYSE: DHX) (“DHI” or the “Company”) today
announced financial results for the first quarter ended March 31,
2023.
First Quarter 2023 Financial Highlights(1)
- Total revenue was $38.6 million, up 12% year over year.
- Total bookings were $53.6 million, up 6% year over year.
- Net income was $0.5 million, or $0.01 per diluted share, a net
income margin of 1%, compared to net income of $1.3 million, or
$0.03 per diluted share, a net income margin of 4%, in the year-ago
quarter. Adjusted Diluted Earnings Per Share for the quarter was
$0.00, versus $0.01 in the year-ago quarter.
- Adjusted EBITDA was $8.1 million, up 16% year over year, and
Adjusted EBITDA Margin was 21%, up from 20% in the year-ago
quarter.
- Cash flow from operations was $0.0 million.
- Cash was $5.4 million and total debt was $46.0 million at
quarter end.
(1) See definition of bookings and see
"Notes Regarding the Use of Non-GAAP Financial Measures" related to
Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Diluted
Earnings Per Share later in this press release.
Commenting on the first quarter, Art Zeile, President and CEO
of DHI Group, said:
"For the first quarter, employers in the U.S. posted job
openings for approximately 813,000 tech jobs, and the tech
unemployment rate for April remained near all-time lows at 2.3%,
with approximately two job openings for every one tech worker
looking for employment. Even in this difficult macro environment,
there continues to be significant demand for technologists across
all industries as companies continue to invest in technology
initiatives.
"Our first quarter results highlight the fact that our existing
customers continue to find value in our subscription offerings as
they rely on our offerings to find, attract and hire the best
technologists for their job openings. Our revenue renewal rates for
Dice and ClearanceJobs remained strong in the mid-90s, and our
retention rates remained over 100% as we continued to expand within
existing customers. In fact, our average annual revenue per
recruitment package customer for both Dice and ClearanceJobs
increased in the first quarter, both sequentially and year over
year in the first quarter.
"While our new business teams are still seeing longer sales
cycles as a result of the current uncertainty in the U.S. economy,
we did sign on several large new customers during the first
quarter, including Edward Jones, Bechtel, and the Department of
Transportation, highlighting the value proposition for our offering
among non-tech companies that are looking to hire tech
professionals.
"During the quarter, we continued to invest in our
industry-leading products, as the total addressable market for our
subscription-based offerings remains at over $1 billion in annual
spend, and we believe we are just scratching the surface."
Commenting on the first quarter and 2023 guidance, Kevin
Bostick, CFO of DHI Group, said:
"As Art mentioned, the current economic uncertainty continues to
lengthen our sales cycles and impact our Dice new business. As
such, for 2023, we now expect total revenue for the year to grow 5%
- 6%, with second quarter revenue expected to grow 4% - 5% year
over year. With the current economic environment, we are focusing
on the expense side of our business and expect our Adjusted EBITDA
margin to increase in the second half of the year and reach 25% as
we exit the year. We also expect to reduce our debt outstanding
throughout the year."
Conference Call Information
Art Zeile, President and Chief Executive Officer, and Kevin
Bostick, Chief Financial Officer, will host a conference call
today, May 10, 2023, at 5:00 p.m. Eastern Time to discuss the
Company’s financial results and recent developments.
The call can be accessed by dialing 844-890-1790 (in the U.S.)
or 412-380-7407 (outside the U.S.). Please ask to be placed into
the DHI Group, Inc. call. A live webcast of the call will
simultaneously be available through the Investor Relations section
of the Company’s website, https://www.dhigroupinc.com, and
available for replay after the call ends.
About DHI Group, Inc.
DHI Group, Inc (NYSE: DHX) is a provider of AI-powered career
marketplaces that focus on technology roles. DHI’s two brands, Dice
and ClearanceJobs, enable recruiters and hiring managers to
efficiently search for and connect with highly skilled technology
professionals based on the skills requested. The Company’s patented
algorithm manages over 100,000 unique technology skills.
Additionally, our marketplaces allow tech professionals to find
their ideal next career opportunity, with relevant advice and
personalized insights. Learn more at www.dhigroupinc.com.
Forward-Looking Statements
This press release and oral statements made from time to time by
our representatives contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. You should
not place undue reliance on those statements because they are
subject to numerous uncertainties and factors relating to our
operations and business environment, all of which are difficult to
predict and many of which are beyond our control. Forward-looking
statements include, without limitation, information concerning our
possible or assumed future financial condition, liquidity and
results of operations, including expectations (financial or
otherwise), our strategy, plans, objectives, expectations
(financial or otherwise) and intentions, growth potential, and
statements regarding our 2023 financial outlook. These statements
often include words such as “may,” “will,” “should,” “believe,”
“expect,” “anticipate,” “intend,” “plan,” “estimate” or similar
expressions. These statements are based on assumptions that we have
made in light of our experience in the industry as well as our
perceptions of historical trends, current conditions, expected
future developments and other factors we believe are appropriate
under the circumstances. Although we believe that these
forward-looking statements are based on reasonable assumptions, you
should be aware that many factors could affect our actual financial
results or results of operations and could cause actual results to
differ materially from those in the forward-looking statements.
These factors include, but are not limited to, our ability to
execute our tech-focused strategy, competition from existing and
future competitors in the highly competitive markets in which we
operate, failure to adapt our business model to keep pace with
rapid changes in the recruiting and career services business,
failure to maintain and develop our reputation and brand
recognition, failure to increase or maintain the number of
customers who purchase recruitment packages, cyclicality or
downturns in the economy or industries we serve, uncertainty in
respect to the regulation of data protection and data privacy,
failure to attract qualified professionals to our websites or grow
the number of qualified professionals Form 10-K and Form 10-Q and
subsequent filings under the headings “Risk Factors,”
“Forward-Looking Statements” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations.” You
should keep in mind that any forward-looking statement made by the
Company or its representatives herein, or elsewhere, speaks only as
of the date on which it is made. New risks and uncertainties come
up from time to time, and it is impossible to predict these events
or how they may affect us. We have no obligation to update any
forward-looking statements after the date hereof, except as
required by applicable federal securities laws.
Notes Regarding the Use of Non-GAAP Financial
Measures
The Company has provided certain non-GAAP financial information
as additional information for its operating results. These measures
are not in accordance with, or alternatives to, measures in
accordance with generally accepted accounting principles in the
United States (“GAAP”) and may be different from similarly titled
non-GAAP measures reported by other companies. The Company believes
that its presentation of non-GAAP measures, such as Adjusted
EBITDA, Adjusted EBITDA Margin, and Adjusted Diluted Earnings Per
Share provides useful information to management and investors
regarding certain financial and business trends relating to its
financial condition and results of operations. In addition, the
Company’s management uses these measures for reviewing the
financial results of the Company and for budgeting and planning
purposes. Non-GAAP results exclude the impact of items that
management believes affect the comparability or underlying business
trends in our condensed consolidated financial statements in the
periods presented. The non-GAAP measures apply to consolidated
results or other measures as shown within this document. The
Company has provided required reconciliations to the most
comparable GAAP measures elsewhere in the document.
Adjusted Diluted Earnings Per Share
Adjusted Diluted Earnings Per Share is a non-GAAP performance
measure that management believes is useful to investors and
management in understanding our ongoing operations and in the
analysis of operating trends. Adjusted Diluted Earnings Per Share
is computed as diluted earnings per share plus or minus the impacts
of certain non-cash and other items, including impairments, costs
related to reorganizing the Company, including severance and
related costs, gains or losses on investments, proceeds from
settlement, and discrete tax items.
Adjusted Diluted Earnings Per Share is not a measurement of our
financial performance under GAAP and should not be considered as an
alternative to diluted earnings per share, net income, or any other
performance measures derived in accordance with GAAP as a measure
of our profitability.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures
used by management to measure operating performance. Management
uses Adjusted EBITDA and Adjusted EBITDA Margin as performance
measures for internal monitoring and planning, including
preparation of annual budgets, analyzing investment decisions and
evaluating profitability and performance comparisons between us and
our competitors. The Company also uses these measures to calculate
amounts of performance based compensation under the senior
management incentive bonus program. Adjusted EBITDA represents net
income plus (to the extent deducted in calculating such net income)
interest expense, income tax expense, depreciation and
amortization, and items such as non-cash stock-based compensation,
losses resulting from certain dispositions outside the ordinary
course of business including prior negative operating results of
those divested businesses, certain write-offs in connection with
indebtedness, impairment charges with respect to long-lived assets,
expenses incurred in connection with an equity offering or any
other offering of securities by the Company, extraordinary or
non-recurring non-cash expenses or losses, losses from equity
method investments, transaction costs in connection with the credit
agreement, deferred revenues written off in connection with
acquisition purchase accounting adjustments, write-off of non-cash
stock-based compensation expense, severance and retention costs
related to dispositions and reorganizations of the Company, and
losses related to legal claims and fees that are unusual in nature
or infrequent, minus (to the extent included in calculating such
net income) non-cash income or gains, including income from equity
method investments, interest income, business interruption
insurance proceeds, and any income or gain resulting from certain
dispositions outside the ordinary course of business, including
prior positive operating results of those divested businesses, and
gains related to legal claims that are unusual in nature or
infrequent.
Adjusted EBITDA Margin is computed as Adjusted EBITDA divided by
Revenues.
We also consider Adjusted EBITDA and Adjusted EBITDA Margin, as
defined above, to be important indicators to investors because they
provide information related to our ability to provide cash flows to
meet future debt service, capital expenditures, working capital
requirements, and to fund future growth. We present Adjusted EBITDA
and Adjusted EBITDA Margin as supplemental performance measures
because we believe that these measures provide our board of
directors, management and investors with additional information to
measure our performance, provide comparisons from period to period
by excluding potential differences caused by variations in capital
structures (affecting interest expense) and tax positions (such as
the impact on periods or companies of changes in effective tax
rates or net operating losses), and to estimate our value.
We understand that although Adjusted EBITDA and Adjusted EBITDA
Margin are frequently used by securities analysts, lenders and
others in their evaluation of companies, Adjusted EBITDA and
Adjusted EBITDA Margin have limitations as analytical tools, and
you should not consider them in isolation, or as a substitute for
analysis of our liquidity or results as reported under GAAP. Some
limitations are:
- Adjusted EBITDA and Adjusted EBITDA Margin do not reflect our
cash expenditures, or future requirements for capital expenditures
or contractual commitments;
- Adjusted EBITDA and Adjusted EBITDA Margin do not reflect
changes in, or cash requirements for, our working capital
needs;
- Adjusted EBITDA and Adjusted EBITDA Margin do not reflect
interest expense, or the cash requirements necessary to service
interest or principal payments on our debt;
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized often will have to be
replaced in the future, and Adjusted EBITDA and Adjusted EBITDA
Margin do not reflect any cash requirements for such replacements;
and
- Other companies in our industry may calculate Adjusted EBITDA
and Adjusted EBITDA Margin differently than we do, limiting their
usefulness as comparative measures.
To compensate for these limitations, management evaluates our
liquidity by considering the economic effect of excluded expense
items independently, as well as in connection with its analysis of
cash flows from operations and through the use of other financial
measures, such as capital expenditure budget variances, investment
spending levels and return on capital analysis.
Adjusted EBITDA and Adjusted EBITDA Margin are not measurements
of our financial performance under GAAP and should not be
considered as an alternative to revenue, operating income, net
income, net income margin, cash provided by operating activities,
or any other performance measures derived in accordance with GAAP
as a measure of our profitability or liquidity.
DHI GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per
share amounts)
For the three months ended
March 31,
2023
2022
Revenues
$
38,620
$
34,334
Operating expenses:
Cost of revenues
4,912
4,099
Product development
4,694
3,942
Sales and marketing
16,060
13,941
General and administrative
8,208
7,766
Depreciation
4,173
3,958
Total operating expenses
38,047
33,706
Operating income
573
628
Income from equity method investment
171
155
Interest expense and other
(798
)
(245
)
Income (loss) before income taxes
(54
)
538
Income tax benefit
(514
)
(763
)
Net income
$
460
$
1,301
Basic earnings per share
$
0.01
$
0.03
Diluted earnings per share
$
0.01
$
0.03
Weighted-average basic shares
outstanding
43,886
44,702
Weighted-average diluted shares
outstanding
45,240
47,170
DHI GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2023
2022
Cash flows from (used in) operating
activities:
Net income
$
460
$
1,301
Adjustments to reconcile net income to net
cash flows from (used in) operating activities:
Depreciation
4,173
3,958
Deferred income taxes
(848
)
(1,823
)
Amortization of deferred financing
costs
36
37
Stock-based compensation
2,887
2,235
Income from equity method investment
(171
)
(155
)
Change in accrual for unrecognized tax
benefits
60
93
Changes in operating assets and
liabilities:
Accounts receivable
(4,153
)
(3,820
)
Prepaid expenses and other assets
279
386
Capitalized contract costs
683
(483
)
Accounts payable and accrued expenses
(11,382
)
(3,941
)
Income taxes receivable/payable
247
954
Deferred revenue
7,981
10,640
Other, net
(241
)
(164
)
Net cash flows from operating
activities
11
9,218
Cash flows from used in investing
activities:
Purchases of fixed assets
(4,833
)
(4,091
)
Net cash flows used in investing
activities
(4,833
)
(4,091
)
Cash flows from (used in) financing
activities:
Payments on long-term debt
(3,000
)
(4,000
)
Proceeds from long-term debt
19,000
14,000
Payments under stock repurchase plan
(3,521
)
(7,499
)
Purchase of treasury stock related to
vested restricted and performance stock units
(5,295
)
(4,202
)
Net cash flows from (used in) financing
activities
7,184
(1,701
)
Net change in cash and cash equivalents
for the period
2,362
3,426
Cash and cash equivalents, beginning of
period
3,006
1,540
Cash and cash equivalents, end of
period
$
5,368
$
4,966
DHI GROUP, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in thousands)
ASSETS
March 31, 2023
December 31, 2022
Current assets
Cash and cash equivalents
$
5,368
$
3,006
Accounts receivable, net
24,980
20,494
Prepaid and other current assets
3,815
4,294
Total current assets
34,163
27,794
Fixed assets, net
21,879
21,252
Capitalized contract costs
8,994
9,677
Operating lease right-of-use assets
6,088
6,581
Investments
5,968
5,646
Acquired intangible assets
23,800
23,800
Goodwill
128,100
128,100
Other assets
4,017
3,854
Total assets
$
233,009
$
226,704
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable and accrued expenses
$
12,403
$
23,818
Deferred revenue
58,079
50,121
Income taxes payable
280
34
Operating lease liabilities
—
105
Total current liabilities
70,762
74,078
Deferred revenue
765
743
Operating lease liabilities
8,007
8,428
Long-term debt, net
46,000
30,000
Deferred income taxes
4,667
5,515
Accrual for unrecognized tax benefits
829
769
Other long-term liabilities
727
932
Total liabilities
131,757
120,465
Total stockholders’ equity
101,252
106,239
Total liabilities and stockholders’
equity
$
233,009
$
226,704
Supplemental Information and Non-GAAP
Reconciliations
On the pages that follow, the Company has provided certain
supplemental information that we believe will assist the reader in
assessing our business operations and performance, including
certain non-GAAP financial information and required reconciliations
to the most comparable GAAP measure. A statement of operations and
statement of cash flows for the three-month periods ended March 31,
2023 and 2022 and balance sheets as of March 31, 2023 and December
31, 2022 are provided elsewhere in this press release.
DHI GROUP, INC.
NON-GAAP & SUPPLEMENTAL
DATA
(Unaudited)
(in thousands, except per
share and customer data)
Revenue
Q1 2023
Q1 2022
$ Change
% Change
Dice1
$
26,910
$
24,634
$
2,276
9
%
ClearanceJobs
11,710
9,700
2,010
21
%
Total Revenues
$
38,620
$
34,334
$
4,286
12
%
Net income2
$
460
$
1,301
Net income margin3
1
%
4
%
Diluted earnings per share2
$
0.01
$
0.03
Adjusted diluted earnings per share4
$
—
$
0.01
Adjusted EBITDA4
$
8,054
$
6,930
Adjusted EBITDA margin3 4
21
%
20
%
(1) Includes Dice and Career Events
(2) Net income and diluted earnings per
share for the three months ended March 31, 2023 includes the net
positive impact of income from investments and severance and
related costs, all net of tax, and discrete tax items of $0.3
million, or $0.01 per diluted share. For the three months ended
March 31, 2022, the Company recorded income from investments,
severance and related costs, all net of tax, and discrete tax items
that positively impacted net income by $0.8 million, or $0.02 per
diluted share.
(3) Net income margin and Adjusted EBITDA
Margin are calculated by dividing the respective measure by that
period's revenues.
(4) See "Notes Regarding the Use of
Non-GAAP Financial Measures" elsewhere in this press release.
Bookings1
Q1 2023
Q1 2022
$ Change
% Change
Dice
$
37,618
$
36,819
$
799
2
%
ClearanceJobs
15,948
13,865
2,083
15
%
Total Bookings
$
53,566
$
50,684
$
2,882
6
%
(1) Bookings represent the value of all
contractually committed services in which the contract start date
is during the period and will be recognized as revenue within 12
months of the contract start date. For contracts that extend beyond
12 months, the value of those contracts beyond 12 months is
recognized as bookings on each annual anniversary of each contract
start date valued as the amount of revenue that will be recognized
within 12 months of the respective anniversary date.
Average Annual Revenue per
Recruitment Package Customer1
Q1 2023
Q1 2022
$ Change
% Change
Dice
$
15,672
$
14,112
$
1,560
11
%
ClearanceJobs
$
20,520
$
18,408
$
2,112
11
%
(1) Calculated by dividing recruitment
package customer revenue by the daily average count of recruitment
package customers during each month, adjusted to reflect a 30-day
month. The simple average of each month is used to derive the
amount for each period and then annualized to reflect 12
months.
Renewal Rates
Renewal Rate on Revenue:
Q1 2023
Q1 2022
Dice
92
%
104
%
ClearanceJobs
95
%
104
%
Renewal Rate on Count:
Dice
82
%
86
%
ClearanceJobs
83
%
87
%
Retention Rates1
Q1 2023
Q1 2022
Dice
105
%
114
%
ClearanceJobs
109
%
115
%
(1) For customers that renewed their
annual recruitment packages during the period, the retention rate
represents the total contract value renewed, relative to the
previous total contract value.
Recruitment Package
Customers
March 31, 2023
March 31, 2022
Change
% Change
Dice
6,171
6,249
(78
)
(1
)%
ClearanceJobs
2,078
1,928
150
8
%
Deferred Revenue and
Backlog1
Comparison to Prior Year
End
Comparison Year Over
Year
March 31, 2023
December 31, 2022
$ Change
% Change
March 31, 2022
$ Change
% Change
Deferred Revenue
$
58,844
$
50,864
$
7,980
16
%
$
56,786
$
2,058
4
%
Contractual commitments not invoiced
65,389
66,391
(1,002
)
(2
) %
49,262
16,127
33
%
Backlog
$
124,233
$
117,255
$
6,978
6
%
$
106,048
$
18,185
17
%
(1) Backlog consists of deferred revenue
plus customer contractual commitments not invoiced representing the
value of future services to be rendered under committed
contracts.
Adjusted Diluted Earnings per
Share
Q1 2023
Q1 2022
Reconciliation of Diluted Earnings per
Share to Adjusted Diluted Earnings per Share:
Diluted earnings per share
$
0.01
$
0.03
Severance and related costs, net of
tax
0.01
—
Discrete tax items
(0.01
)
(0.02
)
Other1
(0.01
)
—
Adjusted diluted earnings per share
$
0.00
$
0.01
Weighted average shares- diluted and
adjusted diluted earnings per share
45,240
47,170
(1) Adjusts, as applicable, for the share
impact of common stock equivalents, where dilutive.
DHI GROUP, INC.
NON-GAAP & SUPPLEMENTAL
DATA (CONTINUED)
(Unaudited)
(in thousands, except per
share and customer data)
Adjusted EBITDA
Q1 2023
Q1 2022
Reconciliation of Net Income to Adjusted
EBITDA:
Net income
$
460
$
1,301
Interest expense
798
245
Income tax benefit
(514
)
(763
)
Depreciation
4,173
3,958
Non-cash stock-based compensation
2,887
2,235
Income from equity method investment
(171
)
(155
)
Severance and related costs
421
109
Adjusted EBITDA
$
8,054
$
6,930
Reconciliation of Operating Cash Flows to
Adjusted EBITDA:
Net cash provided by operating
activities
$
11
$
9,218
Interest expense
798
245
Amortization of deferred financing
costs
(36
)
(37
)
Income tax benefit
(514
)
(763
)
Deferred income taxes
848
1,823
Change in accrual for unrecognized tax
benefits
(60
)
(93
)
Change in accounts receivable
4,153
3,820
Change in deferred revenue
(7,981
)
(10,640
)
Severance and related costs
421
109
Changes in working capital and other
10,414
3,248
Adjusted EBITDA
$
8,054
$
6,930
Guidance
Earlier in this press release, the Company provided guidance for
Adjusted EBITDA margin, which is a non-GAAP financial measure. We
are unable to reconcile expected Adjusted EBITDA margin to its
nearest GAAP measure without unreasonable efforts because we are
unable to predict with a reasonable degree of certainty the actual
impact of items such as non-cash stock-based compensation,
impairments, income tax expense, gains or losses from equity method
investments, severance and retention costs, and legal claims and
fees. By their very nature, these items are difficult to anticipate
with precision because they are generally associated with
unexpected and unplanned events that impact our company and its
financial results. Therefore, we are unable to provide a
reconciliation of this non-GAAP financial measure.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510005413/en/
Investor Contact Todd Kehrli or Jim Byers MKR Investor
Relations, Inc. 212-448-4181 ir@dhigroupinc.com
Media Contact Rachel Ceccarelli VP of Engagement
212-448-8288 media@dhigroupinc.com
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