DHI Group Reports Second Quarter 2020 Financial Results
CENTENNIAL, Colo., Aug. 6, 2020 /PRNewswire/ -- DHI Group, Inc. (NYSE: DHX) ("DHI" or the "Company") today announced the following financial results for the second quarter ended June 30, 2020.
Second Quarter 2020 Financial Results
-- Total revenues were $33.8 million, down 10% year over year (9% excluding
impact of foreign exchange).
-- Dice revenues were $20.5 million, down 12% year over year.
-- ClearanceJobs revenues were $7.1 million, up 18% year over year.
-- eFinancialCareers revenues were $6.2 million, down 24% year over year
(21% excluding impact of foreign exchange).
-- Net income was $1.9 million, or earnings per diluted share of $0.04,
compared to net income of $3.1 million, or $0.06 per diluted share, in
the year ago quarter.
-- Cash flow from operations was $7.1 million, compared to $11.1 million in
the year-ago quarter.
-- Adjusted EBITDA(1) was $7.8 million, or an Adjusted EBITDA margin(1) of
23% compared to $9.1 million and 24% in the year-ago quarter.
-- Cash was $27.5 million and net debt(1) was $9.5 million.
Commenting on the quarter, Art Zeile, President and CEO of DHI Group, Inc., said:
"We continued to strengthen our product offering with dozens of new releases introduced during the second quarter, and while the overall job market was impacted by COVID-19, job postings for technologists have steadily been improving from their low point during the quarter as employers, including ourselves, have started to hire again. As we strive to lead the industry with the development of our career marketplaces for matching tech professionals with employers, our continued investment in product development and sales and marketing positions us well as we look to capitalize on the improving market dynamics through the remainder of the year."
Product Highlights
Below are the key product highlights delivered during the second quarter:
Dice
-- Dice Recruiter Profile is the first major release in Dice's
transformation from a job board to a full-scale career marketplace. With
Dice Marketplace, DHI Group is creating a trusted place where recruiters
and candidates can confidently search, match and communicate in real
time. Dice Recruiter Profile launches that evolution by allowing clients
to enrich their profiles with photos, personal information, details
about corporate brand and culture, news and latest hires, upcoming
events and future hiring needs--all of which create more transparency
and personalize the recruiter behind the role.
-- Dice Remote Jobs is an excellent opportunity for employers to tap into
pools of remote workers across the U.S. to increase talent pipelines and
diversify work forces as part of the nationwide shift toward remote
work. Given technologists' desire for flexible and remote work options
and the proven success of at-home work over the past several months,
technologists are increasingly seeking out employers that offer this
type of work/life balance moving forward. Dice clients now have a way to
designate a job posting as remote, without an on-site location, and tech
professionals on Dice can now easily filter their job searches for
remote-only jobs as well as have these job postings directly delivered
to their inbox with a saved search. Since the company launched Remote
Jobs, the views for these job postings have been 50% higher than the
non-remote job postings.
ClearanceJobs
-- CJ Automated Recruiter Workflow is a product feature that allows
recruiters to pre-program processes throughout the talent acquisition
lifecycle, saving them time on typically tedious recruiting tasks.
Workflow allows recruiting teams to automate recruitment processes like
connecting with potential candidates, sending introduction messages, or
tagging candidates to a specific job opening. ClearanceJobs estimates
that this powerful set of tools can eliminate approximately 3.5 hours of
administrative task time per recruiter per day. ClearanceJobs is the
only career site in the world that incorporates this capability.
ClearanceJobs continues to be DHI's testbed for key market leading
features like this one of a kind patented technology.
eFinancialCareers
-- eFC Enhanced Candidate Profile enables candidates to expose a richer
profile, equivalent to that offered in ClearanceJobs, to recruiters
specializing in their respective field. In mid-July eFC also launched
eFC Follow, Voice and Video. These features complete the foundation of
eFC's marketplace, delivering a rich set of communication tools for
recruiters and professionals to engage in career discussions. Now
finance and tech professionals and recruiters can connect virtually with
video and voice calling, as well as instant messaging all through the
eFC platform.
Business Outlook
"We continue to invest in our long term growth plan, while at the same time balancing our costs with our revenue opportunity in these challenging times," commented Kevin Bostick, CFO of DHI Group, Inc. "While we are not providing specific guidance, we continue to operate the business to Adjusted EBITDA margins(1) in the 20% range."
Conference Call Information
Art Zeile, President and Chief Executive Officer, and Kevin Bostick, Chief Financial Officer, will host a conference call today, August 6, 2020, at 5:00 p.m. Eastern Time to discuss the Company's financial results, recent developments and progress on its tech-focused strategy.
The call can be accessed by dialing 1-844-890-1790 (in the U.S.) or 1-412-380-7407 (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 software products, online tools and services to deliver career marketplaces to candidates and employers globally. DHI's three brands--Dice, ClearanceJobs and eFinancialCareers-- enable recruiters and hiring managers to efficiently search, match and connect with highly skilled technologists in specialized fields, particularly technology, those with active government security clearances and in financial services. Professionals find ideal employment opportunities, relevant job advice and personalized data to best manage their whole technologist life. For nearly 30 years, we have leveraged the latest technology to foster career connections in multiple markets including North America, Europe, the Middle East and the Asia Pacific region. Find out more at www.dhigroupinc.com.
Investor Contact
Todd Kehrli or Jim Byers
MKR Investor Relations, Inc.
212-448-4181
ir@dhigroupinc.com
Media Contact
Rachel Ceccarelli
Senior Director Communications
212-448-8288
media@dhigroupinc.com
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 an alternative for, 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 Net Debt 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. The non-GAAP measures apply to consolidated results and results by segment or other measure as shown within this document. The Company has provided required reconciliations to the most comparable GAAP measures elsewhere in the document.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP metrics used by management to measure operating performance. Management uses Adjusted EBITDA as a performance measure 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 this measure 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, 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 writeoffs 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, transaction costs in connection with the credit agreement, deferred revenues written off in connection with acquisition purchase accounting adjustments, writeoff of non-cash stock based compensation expense, severance and retention costs related to dispositions and reorganizations of the Company, 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, 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.
We also consider Adjusted EBITDA, as defined above, to be an important indicator to investors because it provides information related to our ability to provide cash flows to meet future debt service, capital expenditures and working capital requirements and to fund future growth. We present Adjusted EBITDA as a supplemental performance measure because we believe that this measure provides our board of directors, management and investors with additional information to measure our performance, provide comparisons from period to period and company to company 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.
Adjusted EBITDA Margin is computed as Adjusted EBITDA divided by Revenues.
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, net income, operating income, cash provided by operating activities, or any other performance measures derived in accordance with GAAP as a measure of our profitability.
Net Debt
Net Debt is defined as total principal outstanding debt less cash and cash equivalents. We consider Net Debt to be an important measure of liquidity and indicator of our ability to meet ongoing obligations. We also use Net Debt, among other measures, in evaluating our choices for capital deployment. Net Debt presented herein is a non-GAAP measure and may not be comparable to similarly titled measures used by other companies.
Forward-Looking Statements
This press release and oral statements made from time to time by our representatives contain forward-looking statements. 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 results of operations. 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, the impact of the coronavirus COVID-19 outbreak on our operations and financial results, the uncertainty in respect of the regulation of data protection and data privacy, failure to attract qualified professionals to our websites or grow the number of qualified professionals who use our websites, failure to successfully identify or integrate acquisitions, U.S. and foreign government regulation of the Internet and taxation, our ability to borrow funds under our revolving credit facility or refinance our indebtedness and restrictions on our current and future operations under such indebtedness. These factors and others are discussed in more detail in the Company's filings with the Securities and Exchange Commission, all of which are available on the Investors page of our website at www.dhigroupinc.com, including the Company's most recently filed periodic reports on 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 federal securities laws.
(1 )See "Notes Regarding the Use of Non-GAAP Financial Measures" later in this press release.
DHI GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
For the three months ended June 30, For the six months ended June 30,
2020 2019 2020 2019
Revenues $
33,784 $
37,359 $
70,417 $
74,479
Operating expenses:
Cost of revenues 4,159 3,916 8,335 7,741
Product development 3,774 4,391 7,939 8,587
Sales and marketing 12,297 13,774 26,835 28,053
General and administrative 8,082 7,790 16,633 15,718
Depreciation 3,019 2,361 6,272 4,786
Impairment of intangible assets - 7,200
Disposition related and other costs - 825 1,700
Total operating expenses 31,331 33,057 73,214 66,585
Loss on sale of business - (537) (537)
Operating income (loss) 2,453 3,765 (2,797) 7,357
Interest expense and other (161) (219) (344) (324)
Impairment of equity investment - (2,002)
Income (loss) before income taxes 2,292 3,546 (5,143) 7,033
Income tax expense (benefit) 430 485 (455) 2,384
Net income (loss) $
1,862 $
3,061 $
(4,688) $
4,649
Basic earnings (loss) per share $
0.04 $
0.06 $
(0.10) $
0.10
Diluted earnings (loss) per share $
0.04 $
0.06 $
(0.10) $
0.09
Weighted average basic shares outstanding 48,427 48,918 48,781 48,513
Weighted average diluted shares 49,691 51,875 48,781 51,139
outstanding
DHI GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
For the three months For the six months
ended June 30, ended June 30,
2020 2019 2020 2019
Cash flows from (used in) operating activities:
Net income (loss) $
1,862 $
3,061 $
(4,688) $
4,649
Adjustments to reconcile net income to net cash flows from (used in) operating
activities:
Depreciation 3,019 2,361 6,272 4,786
Deferred income taxes 458 150 (804) 95
Amortization of deferred financing costs 37 37 74 74
Stock based compensation 1,615 1,620 3,411 3,078
Impairment of intangible assets - 7,200
Impairment of equity investment - 2,002
Change in accrual for unrecognized tax benefits 63 89 (18) 210
Gain on sale of equity investment (200) (200)
Loss on sale of business - 537 537
Changes in operating assets and liabilities:
Accounts receivable 4,876 6,015 2,765 3,806
Prepaid expenses and other assets 313 (189) 355 187
Capitalized contract costs 121 253 980 961
Accounts payable and accrued expenses 2,526 73 (4,242) (7,546)
Income taxes receivable/payable 101 (67) 255 1,429
Deferred revenue (8,423) (2,879) (4,041) 1,906
Other, net 719 76 699 203
Net cash flows from operating activities 7,087 11,137 10,020 14,375
Cash flows from (used in) investing activities:
Net cash received from sale of businesses - 2,683 2,683
Net cash received from sale of equity investment 200 200
Purchases of fixed assets (4,117) (3,234) (8,405) (6,286)
Net cash flows used in investing activities (3,917) (551) (8,205) (3,603)
Cash flows from (used in) financing activities:
Payments on long-term debt (7,444) (7,000) (9,444) (22,000)
Proceeds from long-term debt 7,444 36,444 14,000
Payments under stock repurchase plan (3,433) (5,076) (491)
Purchase of treasury stock related to vested restricted stock and performance (175) (518) (1,523) (1,050)
stock units
Net cash flows from (used in) financing activities (3,608) (7,518) 20,401 (9,541)
Effect of exchange rate changes 90 (149) (122) (90)
Net change in cash and cash equivalents for the period (348) 2,919 22,094 1,141
Cash and cash equivalents, beginning of period 27,823 4,694 5,381 6,472
Cash and cash equivalents, end of period $
27,475 $
7,613 $
27,475 $
7,613
DHI GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
ASSETS June 30, 2020 December 31, 2019
Current assets
Cash and cash equivalents $
27,475 $
5,381
Accounts receivable, net 18,119 21,158
Income taxes receivable 2,132 2,353
Prepaid and other current assets 3,227 4,180
Total current assets 50,953 33,072
Fixed assets, net 22,256 20,352
Acquired intangible assets 31,800 39,000
Capitalized contract costs 6,467 7,515
Goodwill 152,082 156,059
Deferred income taxes 8 7
Operating lease right-of-use asset 17,592 19,712
Other assets 1,115 2,604
Total assets $
282,273 $
278,321
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $
14,426 $
18,908
Operating lease liabilities 3,244 3,643
Deferred revenue 46,644 50,568
Income taxes payable 1,028 984
Total current liabilities 65,342 74,103
Long-term debt, net 36,509 9,435
Deferred income taxes 11,987 12,823
Deferred revenue 525 1,058
Accrual for unrecognized tax benefits 1,769 1,787
Operating lease liabilities 14,959 16,664
Other long-term liabilities 1,917 1,256
Total liabilities 133,008 117,126
Total stockholders' equity 149,265 161,195
Total liabilities and stockholders' equity $
282,273 $
278,321
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 and six month periods ended June 30, 2020 and 2019 and balance sheets as of June 30, 2020 and December 31, 2019 are provided elsewhere in this press release.
DHI GROUP, INC.
NON-GAAP SUPPLEMENTAL DATA
(Unaudited)
(dollars in thousands, except per customer data)
For the three months For the six months
ended June 30, ended June 30,
2020 2019 2020 2019
Reconciliation of Net Income (loss) to Adjusted EBITDA:
Net income (loss) $
1,862 $
3,061 $
(4,688) $
4,649
Interest expense 362 217 541 326
Income tax expense (benefit) 430 485 (455) 2,384
Depreciation 3,019 2,361 6,272 4,786
Non-cash stock based compensation 1,615 1,620 3,411 3,078
Loss on sale of business 537 537
Disposition related and other costs 825 1,700
Legal contingencies and related fees 19 163
Impairment of intangible assets 7,200
Impairment of equity investment 2,002
Gain on sale of equity investment (200) (200)
Severance and related costs 699 1,217
Other (1) 2 3 (2)
Adjusted EBITDA $
7,786 $
9,127 $
15,303 $
17,621
Reconciliation of Operating Cash Flows to Adjusted EBITDA:
Net cash provided by operating activities $
7,087 $
11,137 $
10,020 $
14,375
Interest expense 362 217 541 326
Amortization of deferred financing costs (37) (37) (74) (74)
Income tax expense (benefit) 430 485 (455) 2,384
Deferred income taxes (458) (150) 804 (95)
Change in accrual for unrecognized tax benefits (63) (89) 18 (210)
Change in accounts receivable (4,876) (6,015) (2,765) (3,806)
Change in deferred revenue 8,423 2,879 4,041 (1,906)
Disposition related and other costs 825 1,700
Legal contingencies and related fees 19 163
Severance and related costs 699 1,217
Changes in working capital and other (3,781) (144) 1,956 4,764
Adjusted EBITDA $
7,786 $
9,127 $
15,303 $
17,621
Dice Recruitment Package Customers
Beginning of period 5,850 6,100 6,000 6,200
End of period 5,450 6,100 5,450 6,100
Average for the period (1) 5,600 6,100 5,750 6,100
Dice Average Monthly Revenue per Recruitment Package Customer (2) $
1,131 $
1,130 $
1,142 $
1,132
(1) Reflects the daily average of recruitment package customers during the period.
(2) Reflects the simple average of each period presented.
Summary of Deferred Revenue and Backlog: June 30, 2020 December 31, 2019
Deferred Revenue $
47,169 $
51,626
Contractual commitments not invoiced 23,910 37,093
Backlog(3) $
71,079 $
88,719
(3) Backlog consists of deferred revenue plus customer contractual commitments not invoiced representing the value of future services to be rendered under committed contracts.
DHI GROUP, INC.
NON-GAAP SUPPLEMENTAL DATA (CONTINUED)
(Unaudited)
(in thousands)
Reconciliation of Debt to Net June 30, 2020 December 31,
Debt: 2019
Long term debt, net $
36,509 $
9,435
Add: Deferred
financing costs, net 491 565
Principal debt
outstanding 37,000 10,000
Less: Cash and cash
equivalents 27,475 5,381
Net Debt $
9,525 $
4,619
Revenue
Q2 2020 Q2 2019 Change
$ Fx Impact(1)
Dice $
20,489 $
23,215 (12)%
$
ClearanceJobs 7,107 6,014 18%
eFinancialCareers 6,188 8,130 (24)% (207)
Total Revenues $
33,784 $
37,359 (10)% $
(207)
Net Income (loss)(2) $
1,862 $
3,061
Diluted earnings (loss) per share(2) $
0.04 $
0.06
Adjusted EBITDA $
7,786 $
9,127
Adjusted EBITDA Margin 23% 24%
Revenue
FY 2020 FY 2019 Change
$ Fx Impact(1)
Dice $
42,974 $
46,361 (7)%
$
ClearanceJobs 14,007 11,796 19%
eFinancialCareers 13,436 16,322 (18)% (337)
Total Revenues $
70,417 $
74,479 (5)% $
(337)
Net Income (loss)(3) $
(4,688) $
4,649
Diluted earnings (loss) per share(3) $
(0.10) $
0.09
Adjusted EBITDA $
15,303 $
17,621
Adjusted EBITDA Margin 22% 24%
(1) Foreign exchange impact is calculated by determining the increase (decrease) in current period revenues where current period revenues are translated using prior period exchange rates.
(2) For the three months ended June 30, 2020, the Company recorded a gain from sale of equity investment, which was offset by severance and related costs, net of tax, and discrete tax items that negatively impacted net income $0.4 million, or $0.01 per diluted share. For
the three months ended June 30, 2019, the Company recorded disposition related and other costs and loss on sale of businesses, net of tax, and discrete tax items that negatively impacted net income $0.8 million, or $0.02 per diluted share.
(3) For the six months ended June 30, 2020, the Company recorded a gain from sale of equity investment, impairment, and severance and related costs, net of tax, and discrete tax items that negatively impacted net income by $8.6 million, or $0.17 per diluted share. For the
six months ended June 30, 2019, the Company recorded disposition related and other costs and loss on sale of businesses, net of tax, and discrete tax items that negatively impacted net income $2.6 million, or $0.05 per diluted share.
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SOURCE DHI Group, Inc.
