Q1 2024 DHI Group Inc Earnings Call
Operator: Good day, and welcome to the DHI Group First Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal any conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note, today's event is being recorded. I would now like to turn the conference over to Todd Kehrli of MKR Investor Relations. Please go ahead.
Good day and welcome to the anti group first quarter 2024 financial results Conference call.
Operator: All participants will be in listen only mode.
Should you need assistance. Please signal a conference specialist by pressing the star followed by zero.
Operator: After todays presentation, there will be an opportunity to ask questions.
To ask a question you May press Star then one on your telephone keypad.
Operator: To withdraw your question. Please press Star then two.
Operator: Please note today's event is being recorded.
Todd Kehrli: I would now like to turn the conference over to Todd currently of them to our Investor Relations. Please go ahead.
Todd Kehrli: Thank you, Operator. Good afternoon, and welcome to DHI Group's 2024 First Quarter Earnings Conference Call. With me on today's call are DHI's CEO, Art Zeile, and CFO, Raime Muhle. Before I turn the call over to Art, I'd like to cover a few quick items.
Todd: Thank you operator, good afternoon, and welcome to D. H I group's 2024 first quarter earnings conference call.
Todd: On today's call are D. H is CEO art daily and CFO Randy Lee.
Todd: Before I turn the call over to art I'd like to cover a few quick items. This afternoon D. H I issued a press release announcing its 2024 first quarter financial results.
Todd Kehrli: This afternoon, DHI issued a press release announcing its 2024 first quarter financial results. The release is available on the company's website at dhigroupinc.com. This call is being broadcast live over the Internet for all interested parties, and the webcast will be archived on the Investor Relations page of the company's website. I want to remind everyone that during today's call, management will make forward-looking statements that involve risks and uncertainties. Please note that, except for historical information, statements on today's call may constitute forward-looking statements within the meaning of the federal securities law.
Todd: It is available on the company's website at D. H I G dotcom bust.
Todd Kehrli: This call is being broadcast live over the Internet for all interested parties and the webcast will be archived on the Investor Relations page of the company's websites.
Todd Kehrli: I wanted to remind everyone that during today's call management will make forward looking statements that involve risks and uncertainties. Please note that except for the historical information statements on today's call may constitute forward looking statements within the meaning of the federal Securities laws.
Todd Kehrli: These forward-looking statements reflect DHI Management's current views concerning future events and financial performance and are subject to risks and uncertainties, and actual results may differ materially from the outcomes contained in any forward-looking statement. Factors that can cause these forward-looking statements to differ from actual results include risks and uncertainties discussed in the company's periodic reports on Form 10-K and 10-Q and other filings with the Securities and Exchange Commission. DHI undertakes no obligation to update or revise any forward-looking statements. Lastly, during today's call, management will be referring to specific financial measures, including adjusted EBITDA, adjusted EBITDA margin, and non-GAAP earnings per share that are not prepared in accordance with U.S. GAAP.
Todd Kehrli: These forward looking statements reflect management's current views concerning future events and financial performance and are subject to risks and uncertainties and actual results may differ materially from the outcomes contained in any forward looking statements.
Todd Kehrli: Factors that could cause these forward looking statements to differ from actual results include risks and uncertainties discussed in the company's periodic reports on Form 10-K, and 10-Q and other filings with the Skus and Exchange Commission.
Todd Kehrli: <unk> undertakes no obligation to update or revise any forward looking statements.
Todd Kehrli: Lastly, during today's call management will be referring to specific financial measures, including adjusted EBITDA adjusted EBITDA margin and non-GAAP earnings per share that are not prepared in accordance with U S. GAAP information about and reconciliation of these non-GAAP measures to the most directly comparable GAAP measures.
Todd Kehrli: Information about and reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is available in our earnings release, a copy of which you can find on our website at dhigroupinc.com in the Investor Relations section. With that, I'll now turn the call over to Art Zeile, CEO of DHI.
Todd Kehrli: Are available in our earnings release, a copy of which you can find on our website at T. H I G M Dot com in the Investor Relations section.
Art Zeile: With that I'll now turn the call over to art Zaley's CEO of D. H I G.
Art Zeile: Thank you, Todd. Good afternoon, everyone, and welcome to our 2024 First Quarter Earnings Conference Call. We appreciate your time today as we discuss our financial performance and provide an update on our outlook. First, we'll discuss the state of the tech labor market, which is one of the main growth drivers for our business. While we suffered from a slump in hiring demand last year, the first three months of 2024 have been more promising, with tech job postings increasing from a low point of 142,000 in December to 191,000 in March, as reported by CompTIA. The pre-pandemic average was 300,000 job postings per month in 2019, so we aren't back to normal yet, but we see small signs of improvement.
Art Zeile: Thank you Todd good afternoon, everyone and welcome to our 2024 first quarter earnings Conference call. We appreciate your time today as we discuss our financial performance and provide an update on our outlook.
Art Zeile: We are also seeing an increase in the demand for AI-skilled professionals as corporate America starts to implement generative AI in their business models. Sixteen percent of all of our job postings in March contained AI-related skills, which is a significant uptick year over year. We are also seeing that consulting companies like Deloitte, Accenture, IBM, and others are hiring tech professionals at elevated rates, indicating that large firms are actively prototyping and piloting AI solutions.
Art Zeile: First let's discuss the state of the Tech labor market, which is one of the main growth drivers for our business. While we suffered from a slump in hiring demand last year. The first three months of 2024 had been more promising with tech job postings, increasing from a low point of 142000 in December to 191000.
Art Zeile: In March as reported by comp to you.
Art Zeile: The pre pandemic average was 300000 job postings per month in 2019, so we arent back to normal yet, but we see small signs of improvement.
Art Zeile: We are also seeing an increase in the demand for AI skilled professionals as corporate America starts to implement generative AI in their business models.
Art Zeile: 16% of all of our job postings in March contained AI related skills, which is a significant uptick year over year. We are also seeing that consulting companies like Deloitte Accenture and IBM and others are hiring tech professionals at elevated rates, indicating that large firms are actively prototype.
Art Zeile: And piloting AI solutions.
Art Zeile: Technology is the second largest long-term occupational growth trend in the United States, behind health care, and is projected to grow twice as fast as the overall US workforce, with the US becoming a more digital economy over time.
Art Zeile: Tech is the second largest long term occupational growth trend in the United States behind health care and is projected to grow twice as fast as the overall U S workforce with the U S, becoming a more digital economy over time.
Art Zeile: As businesses accelerate their investment in technology initiatives, including the implementation of Gen AI, they will need our subscription-based offerings and proprietary search algorithms to find the perfect match for their job posting from our over 8 million technologists' profiles. Our clients have seen increased success in attracting and hiring top tech talent using our platform. One example is MC Dean, a leading provider of mission-critical facilities, who became a DICE client at the end of 2023.
Art Zeile: As businesses accelerate their investment in technology initiatives, including the implementation of Gen. AI, they will need our subscription based offerings and proprietary search algorithm rhythms to find the perfect match for their job posting from our over 8 million technologist profiles.
Art Zeile: Our clients have seen increased success in attracting and hiring top tech talent using our platform.
Art Zeile: One example is M C D a leading provider for mission critical facilities. So it became a dice client at the end of 2023.
Art Zeile: Within their first week of coming on board, they made a hire through the Dice platform. And during their 60-day check-in, they told us that Dice had already paid for itself. Another example is Beacon Hill Staffing, one of the largest staffing and recruiting firms in the United States. In a recent call with our team, Beacon Hill told us that they keep track of the cost per candidate on an annual basis, and DICE consistently delivers above the average return on investment. I'm also grateful to report that they told us that our support team is absolutely, unequivocally, the best.
Art Zeile: Within their first week of coming on board they need a higher through the dice platform. During their 60 day check in they told US the dice has already paid for itself.
Art Zeile: Another example is Beacon Hill staffing one of the largest staffing and recruiting firms in the United States and.
Art Zeile: In a recent call with our team Beacon Hill told us that they keep track of the cost per candidate on an annual basis and dice consistently delivers above the average return on investment.
Art Zeile: I'm also grateful to report that they told us that our support team is absolutely unequivocally the best.
Art Zeile: A final example is Montefiore, one of New York's premier academic health systems, who is using our employer branding solutions to attract tech talent in a very competitive environment. Now, let me dig into our performance during the first quarter and what we see ahead for the remainder of 2024. In the first quarter, our total revenue declined 7% year over year.
Art Zeile: A final example is montefiore one of New York's Premier academic health systems, who is using our employer branding solutions to attract tech talent in a very competitive environment.
Art Zeile: Dice revenue decreased 14% while CJA revenue increased 10%. The decrease in DICE revenue was due to lower previous quarter new business bookings and renewals and lower one-time transactional revenue as a result of the difficult market environment. Excluding transactional revenue, our total recurring revenue declined 2% year over year.
Art Zeile: Now, let me dig into our performance during the first quarter and what we see ahead for the remainder of 2024.
Art Zeile: In the first quarter, our total revenue declined 7% year over year dice.
Art Zeile: Dice revenue decreased 14%, while C J revenue increased 10%.
Art Zeile: The decrease in dice revenue was due to lower previous quarter, new business bookings and renewals and lower onetime transaction revenue as a result of the difficult market environment excluding.
Art Zeile: Transactional revenue our total recurring revenue declined 2% year over year.
Art Zeile: Looking at our bookings performance, while our total bookings were down 9% year-over-year in the first quarter, approximately 50% of the first quarter renewal book took place in the month of January, with a lot of the actual contracts signed in November and December of 2023 before we started to see an improvement in the tech job market. Notably, we did see strong sequential improvements in transactional bookings in the first quarter for both Dice and CJ, which, as we have said in the past, we view as a leading indicator of demand for our platform.
Art Zeile: Looking at our bookings performance, while our total bookings were down 9% year over year in the first quarter approximately 50% of the first quarter renewal book. It takes place in the month of January with a lot of the actual contract signed in November and December of 2023, before we started to see an improvement in the tech job market.
Art Zeile: Notably we did see strong sequential improvements in transactional bookings in the first quarter for both dice and C J, which as we have said in the past we view as a leading indicator of demand for our platforms.
Art Zeile: DICE secured several notable customers this quarter, including Coca-Cola, First National Bank, and the City of Kansas City, as we continue to focus on those industries and companies, hiring tech professionals even in this weakened economic environment. The data continues to indicate that these industries include aerospace, business consulting, healthcare, financial services, and education. Clearance jobs bookings for the first quarter increased 5% year over year, which is below its trend line. However, we believe that booking activity was suppressed by the continuing threat of a potential government shutdown during the majority of the quarter.
Art Zeile: Dice secured several notable customers this quarter, including Coca Cola first National Bank and the city of Kansas City as we continue to focus on those industries and companies hiring tech professionals, even in this weakened economic environment the.
Art Zeile: The data continues to indicate that these industries include aerospace.
Art Zeile: Consulting health care financial services and education.
Art Zeile: Clearance jobs bookings for the first quarter increased 5% year over year, which is below its trend line. We believe that booking activity was suppressed by the continuing threat of a potential government shutdown during the majority of the quarter.
Art Zeile: In March, the president signed into law the full fiscal year 2024 appropriations package. With the certainty of government funding in place, we expect to see our CJ bookings improve. Despite these headwinds, during the first quarter, CJ secured several new customers, including Cushman and Wakefield, Rocket Lab, and Ascendian, Inc. Moving on to account management, our DICE and CJ revenue renewal rates were 82% and 98%, respectively, in the first quarter. Retention rates for Dice and CJ were 100% and 115%, respectively.
Art Zeile: In March the President signed into law, the full fiscal year 2024 appropriations package with a certainty of government funding in place, we expect to see our CJ bookings improved.
Art Zeile: Despite these headwinds during the first quarter as CJ secured several new customers, including Cushman and Wakefield walk at lab and ascending incorporated.
Art Zeile: Moving onto account management, our dice and C. J revenue renewal rates were 82% and 98% respectively in the first quarter rich.
Art Zeile: Retention rates for Dyson C J, we're 100% and 115% respectively.
Art Zeile: These are significant sequential improvements for both Dice and Clearance. During the first quarter, we delivered a 24% adjusted EBITDA margin, which is up from 21% a year ago. Our operating cash flow was $2.1 million for the quarter versus $0 in the year-ago quarter.
Art Zeile: These are significant sequential improvements for both dice and clearance jobs.
Art Zeile: During the first quarter, we delivered a 24% adjusted EBITDA margin, which is up from 21% a year ago.
Art Zeile: Our operating cash flow was $2 1 million for the quarter versus $0 in the year ago quarter.
Art Zeile: We continue to focus on operating our business efficiently, as evidenced by our 10% reduction in total operating expenses year over year. Now, let me quickly touch on what we're doing to drive increased adoption of our two brands. DICE announced a partnership with TopResume at the beginning of the quarter. Candidates can now send resumes from within their DICE profile to TopResume for a free or a more advanced paid evaluation. Several tens of thousands of candidates have tried the evaluation since the launch of this service.
Art Zeile: We continue to focus on operating our business efficiently as evidenced by our 10% reduction in total operating expenses year over year.
Art Zeile: Now, let me quickly touch on what we're doing to drive increased adoption of our two brands.
Art Zeile: They just announced a partnership with top resume at the beginning of the quarter candidates can now send resumes from within their dice profile at the top resume for free for a more advanced paid evaluation.
Art Zeile: Several tens of thousands of candidates have tried the evaluation since the launch of this service dates.
Art Zeile: Dice also announced the release of Discover Companies, a new experience on Dice that enables technologists to easily discover companies that align with their preferences. A technologist can now browse and view company profiles based on location, industry, size of the company, remote work policies, and whether they are actively hiring.
Art Zeile: <unk> also announced the release of discover companies a new experience on dice that enables technologists to easily discover companies that align with their preferences.
Art Zeile: Technologists can now browse and view company profiles based on location industry size of the company remote work policies and whether they are actively hiring.
Art Zeile: DICE also launched a new job alert service that displays job opportunities better tailored to our candidates' experience and career aspirations. As a result of our many new candidate engagement features, total applications on the DICE platform were up 67% year over year in the first quarter. And we are successfully delivering our target of over 10 applications per job posting for subscription customers. We also continue to deliver product innovation in clearance jobs, with CJ Live going into production at the end of the quarter.
Art Zeile: <unk> also launched a new job alert service the displays job opportunities better tailored to our candidate experience and career aspirations.
Art Zeile: As a result of our many new candidate engagement features total applications on the dice platform were up 67% year over year in the first quarter and we are successfully delivering our target of over 10 applications per job posting for subscription customers.
Art Zeile: We also continued to deliver product innovation and clearance jobs with C. J lives going into production at the end of the quarter.
Art Zeile: CJ Live allows employers to produce and catalog streamed video content to better engage with their target candidates. We have already signed up over 100 CJ recruiters for this new service. At the end of last year, we also released comprehensive subscription packages to combine unlimited job postings, a company page, and selected job boosts for harder-to-fill positions. During the first quarter, almost all our new business bookings across all our teams were sold in this format, highlighting the value our prospects see in this combination of services. Importantly, the new subscription package pricing has improved the average contract value sold quarter over quarter.
Art Zeile: P. J life allows employers to produce and catalog streamed video content to better engage with their target candidates we.
Art Zeile: We've already signed up over 100 C. J recruiters for this new service.
Art Zeile: At the end of the last year. We also released comprehensive subscription packages that combine unlimited job postings accompany page and selected job boosts for harder to fill positions.
Art Zeile: During the first quarter, almost all of our new business bookings across all of our teams were sold in this format highlighting the value our prospects C and this combination of services.
Art Zeile: Importantly, the new subscription package pricing has improved average contract value sold quarter over quarter.
Art Zeile: Before I turn the call over to Raime, I want to talk about our expectations for the rest of 2024. As I stated earlier, we believe there are emerging signs that the demand for tech professionals is improving, as evidenced by the increasing number of tech job posts. As the past has shown us, as the demand for tech talent climbs, competition for skilled professionals intensifies. And as this competition heats up, companies will increasingly need our platforms to find, attract, and hire the best tech professionals for their digital initiatives.
Art Zeile: Before I turn the call over to Amy I want to talk about our expectations for the rest of 2024.
Art Zeile: As I stated earlier, we believe there are emerging signs that the demand for tech professionals is improving as evidenced by the increasing number of tech job postings.
Art Zeile: As in the past has shown us as the demand for tech talent clines competition for skilled professionals intensifies and as this competition heats up companies will increasingly need our platforms to find attract and hire the best tech professionals for their digital initiatives.
Art Zeile: We continue to forecast a return to year-over-year bookings growth in the second half of 2024 and maintain our commitment to a full-year 24% adjusted EBITDA margin. As we move forward, we continue to focus on improving our products and our go-to-market execution so that we are ready to capitalize on the anticipated increased demand for our tools. On that note, let me turn the call over to Raime, who will take you through our financials, and then we'll take any questions you may have. Raime?
Raime: We continue to forecast a return to year over year bookings growth in the second half of 'twenty 'twenty, four and maintain our commitment to a full year, 24% adjusted EBITDA margin.
Raime: As we move forward, we continue to focus on improving our products and our go to market execution. So that we are ready to capitalize on the anticipated increased demand for our tools.
Raime: On that note, let me turn the call over to Wayne, who will take you through our financials and then we'll take any questions you may have rainy.
Raime Leeby Muhle: Thank you, Art. And good afternoon, everyone.
Raime: Thank you Larry and good afternoon, everyone.
Raime: Right and let me take you through our financial results for the quarter.
Raime Leeby Muhle: Jumping right in, let me take you through our financial results for the quarter. We reported total revenue of $36 million, which was down 7% on a year-over-year basis and 3% versus the prior quarter. Total bookings for the quarter were $48.8 million, down 9% year over year. As Art mentioned, our total recurring revenue was down 2% for the first quarter. DICE revenue was $23.2 million, which was down 14% year-over-year and down 6% sequentially. Diced bookings were $32 million, down 15% year over year.
Raime: We reported total revenue of $36 million, which was down 7% year over year.
Raime Leeby Muhle: On a year over year basis, 3% versus the prior quarter.
Raime Leeby Muhle: Total bookings for the quarter were $48 $8 million down 9% year over year.
Raime Leeby Muhle: As Bart mentioned, our total recurring revenue was down 2% for the first quarter.
Raime Leeby Muhle: Dice revenue was $23 $2 million, which was down 14% year over year and down 6% sequentially.
Raime Leeby Muhle: Bookings were $32 million down 15% year over year.
Raime Leeby Muhle: We ended the quarter with 5,250 DICE recruitment package customers, which is down 4% from last quarter and down 15% year-over-year. Our average annual revenue per DICE recruitment package customer was up 1% sequentially and up 2% year-over-year to $15,997. During the quarter, over 90 percent of DICE revenue was recurring and came from annual or multi-year contracts. For the quarter, our DICE revenue renewal rate was 82%, up from 78% in the fourth quarter, and our DICE retention rate was 100%, up from 97% in the fourth quarter.
Raime Leeby Muhle: We ended the quarter with 5250 dice recruitment package customers, which is down 4% from last quarter and down 15% year over year.
Raime Leeby Muhle: Our average annual revenue per dice recruitment package customer was up 1% sequentially and up 2% year over year.
Raime Leeby Muhle: $15997.
Raime Leeby Muhle: During the quarter over 90% of dice revenue, what's recurring and came from annual and multiyear contracts.
Raime Leeby Muhle: For the quarter, our dice revenue renewal rate was 82% up.
Raime Leeby Muhle: From 78% in the fourth quarter, and our dice retention rate was 100% up from 97% in the fourth quarter.
Raime Leeby Muhle: Clearance jobs revenue was $12.8 million, up 10% year over year and up 2% sequentially. Bookings for CJ were $16.8 million, up 5% year over year. We ended the first quarter with 2,032 CJ recruitment package customers, which was down 2% on a year over year basis and 1% sequentially. This slight reduction is attributable to churn with smaller customers.
Raime Leeby Muhle: He was jobs revenue with $12 $8 million up 10%, you ever year and 2% sequentially.
Raime Leeby Muhle: Looking for C J were $16 $8 million.
Raime Leeby Muhle: 5% year over year.
Raime Leeby Muhle: We ended the first quarter with 2032 C. J recruitment package customers, which was down 2% on a year over year basis and 1% sequentially.
Raime Leeby Muhle: This slight reduction is attributable to chang with smaller customers.
Raime Leeby Muhle: Our average annual revenue per CJ Recruitment Package customer was up 12% year-over-year and up 5% sequentially to $23,050. During the quarter, over 90% of CJA revenue is recurring and comes from annual or multi-year contracts. For the quarter, CJ's revenue renewal rate was 98%, and CJ's retention rate was strong at 115%. The outstanding retention rate demonstrates the continued value CJ delivers in the recruitment of cleared
Raime Leeby Muhle: Our average annual revenue Christie J recruitment package customer was up 12% year over year and up 5% sequentially to $23050.
Raime Leeby Muhle: During the quarter over 90% FPGA revenue is recurring and comes from annual and multiyear contracts.
Raime Leeby Muhle: For the quarter see Jason revenue renewal rate was 98% retention rate was strong at 115%.
Raime Leeby Muhle: Yup standing retention rate demonstrates the continued value C J deliveries and the recruitment of cleared professionals.
Raime Leeby Muhle: Turning to operating expenses, first quarter operating expenses were down 10% to $34.1 million when compared to $38 million in the year-ago quarter, reflecting cost savings associated with restructuring initiatives in 2023. We also drove efficiencies in our marketing program spend through more targeted and integrated campaigns. Both of these initiatives drove our lower operating expenses in the first quarter. For the quarter, we had an income tax expense of $2.3 million on income before taxes of $757,000.
Raime Leeby Muhle: Turning to operating expenses first quarter operating expenses were down 10% to $34 $1 million when compared to $38 million in the year ago quarter, reflecting cost savings associated with restructuring initiatives in 2023.
Raime Leeby Muhle: We also drove efficiencies in our marketing program spend through more targeted and integrated campaign.
Raime Leeby Muhle: Both of these initiatives drove our lower operating expenses in the first quarter.
Raime Leeby Muhle: For the quarter, we had income tax expense of $2 $3 million on income before taxes of $757000 our tax rate for the quarter different from the statutory rate due to tax expense of one $8 million from the tax impact of share based compensation awards.
Raime Leeby Muhle: Our tax rate for the quarter differs from the statutory rates due to tax expense of $1.8 million from the tax impacts of share-based compensation awards and $200,000 from state taxes related to research and development expenditures. We recorded a net loss of $1.5 million, or a loss of $0.03 per diluted share, which was driven by tax expense, as I previously discussed. For the prior year quarter, we reported net income of $460,000, or earnings of one cent per diluted share.
Raime Leeby Muhle: And $200000 from state taxes related to research and development expenditures.
Raime Leeby Muhle: We recorded a net loss of $1.5 million or a loss of three cents per diluted share, which was driven by tax expense as I previously discussed.
Raime Leeby Muhle: For the prior year quarter, we recorded net income of $460000 or earnings of one cents per diluted share.
Raime Leeby Muhle: In the past, we have provided a non-GAAP measure titled Adjusted Diluted Earnings Per Share. Moving forward, we are titling this measure Non-GAAP Earnings Per Share and are revising this performance measure to add back our non-cash stock-based compensation expense, which we believe provides a more transparent and comparable view of our results to our peer groups.
Raime Leeby Muhle: In the past we have provided a non-GAAP measure adjusted diluted earnings per share.
Raime Leeby Muhle: Moving forward, we're titling this measure non-GAAP earnings per share and are revising this performance measure to add back our noncash stock based compensation expense, which we believe provides a more transparent and comparable view of our results to our peer group.
Raime Leeby Muhle: With that said, non-GAAP earnings per share was $0.05 per diluted share for both the current and prior year quarter. Diluted shares outstanding for the quarter were 44.2 million compared to 45.2 million in the prior year quarter. Adjusted EBIT off for the first quarter increased 6% to $8.6 million, a margin of 24% compared to $8.1 million, or a margin of 21%, an increase of approximately 300 basis points from the first quarter a year ago.
Raime Leeby Muhle: With that said non-GAAP earnings per share was five cents per diluted share for both the current and prior year quarter.
Raime Leeby Muhle: Diluted shares outstanding for the quarter were $44 2 million compared to $45 2 million in the prior year quarter.
Raime Leeby Muhle: Adjusted EBITDA for the first quarter increased 6% to $8 $6 million, a margin of 24% compared to $8 $1 million or a margin of 21% an increase of approximately 300 basis points from.
Raime Leeby Muhle: From the first quarter a year ago.
Raime Leeby Muhle: Operating cash flow for the first quarter was $2.1 million compared to zero in the prior year period, while purchases of fixed assets were $4.4 million in the current quarter compared to $4.8 million in the first quarter of last year. Included in fixed asset purchases this quarter was $3.4 million of capitalized development costs compared to $4.6 million in the first quarter of last year. Capitalized development costs for the company are primarily related to costs incurred in building new products and features on our platform.
Raime Leeby Muhle: Operating cash flow for the first quarter with $2 $1 million compared to zero in the prior year period, while purchases of fixed assets for $4.4 million in the current quarter compared to $4 $8 million in the first quarter of last year.
Raime Leeby Muhle: Included in fixed asset purchases this quarter with $3.4 million of capitalized development costs.
Raime Leeby Muhle: Three to $4 $6 million.
Raime Leeby Muhle: First quarter of last year.
Raime Leeby Muhle: Capitalized development costs for the company are primarily related to costs incurred from building new products and features on our platform.
Raime Leeby Muhle: From a liquidity perspective, at the end of the quarter, we had $3.2 million in cash and total debt of $41 million under our $100 million revolver. Total debt increased by $3 million from $38 million at the end of the fourth quarter, primarily due to seasonal payroll-related Q1 expenses. However, total debt was down from $46 million in the prior year quarter.
Raime Leeby Muhle: From a liquidity perspective at the end of the quarter, we had $3 $2 million in cash and total debt of $41 million under our $100 million revolver.
Raime Leeby Muhle: Total debt increased by $3 million from $38 million at the end of the fourth quarter, primarily due to seasonal payroll related Q1 expenses.
Raime Leeby Muhle: Total debt was down from $46 million in the prior year quarter.
Raime Leeby Muhle: We finished the quarter at 1.1 times leverage. We continue to target approximately one times leverage for the business. Deferred revenue at the end of the quarter was $55.7 million, down 5% from the first quarter of last year. Our total committed contract backlog at the end of the quarter was $114.5 million, which was down 8% from the end of the first quarter of last year. Roughly 80% of the backlog is considered short-term and will be recognized as revenue in the next 12 months.
Raime Leeby Muhle: We finished the quarter at one one times leverage we continue to target approximately one times leverage for the business.
Raime Leeby Muhle: Deferred revenue at the end of the quarter was $55 $7 million down 5% from the first quarter of last year.
Raime Leeby Muhle: Our total committed contract backlog at the end of the quarter with $114 $5 million, which was down 8% from the end of the first quarter last year.
Raime Leeby Muhle: Roughly 80% of the backlog is considered short term and will be recognized as revenue in the next 12 months.
Raime Leeby Muhle: During the quarter, we did not purchase shares under our share buyback program. However, we did purchase shares related to the vesting of share-based awards. For the quarter, we repurchased 646,000 shares for $1.6 million to cover income tax withholding associated with the vesting of employee share awards. This compares to repurchases of 899,000 shares for $5.3 million in the first quarter of last year.
Raime Leeby Muhle: During the quarter, we did not purchase shares under our share buyback program. However, we did purchase shares related to the vesting of share based awards for the quarter, we repurchased 646000 shares for $1 $6 million to cover income tax withholding associated with the vesting of <unk>.
Raime Leeby Muhle: Please share award.
Raime Leeby Muhle: This compares to repurchases of 899000 shares for $5 $3 million in the first quarter of last year.
Raime Leeby Muhle: Moving on to guidance, we expect our bookings performance to improve in the second quarter, with growth in total bookings returning in the second half of the year. For the second quarter, we expect our revenue to be similar to first-quarter revenue, with total revenue for the full year declining in the low single-digit percentage range. From a profitability perspective, we are targeting a full-year adjusted EBITDA margin of 24%. We remain focused on driving long-term sustainable revenue growth and are well positioned from a customer acquisition perspective as tech hiring returns to more normal levels.
Raime Leeby Muhle: Moving onto guidance, we expect our bookings performance to improve in the second quarter with growth in total bookings returning in the second half of the year.
Raime Leeby Muhle: For the second quarter, we expect our revenue to be similar to first quarter revenue with total revenue for the full year declining in the low single digit percentage range.
Raime Leeby Muhle: From a profitability perspective, we are targeting a full year adjusted EBITDA margin of 24%.
Raime Leeby Muhle: We remain focused on driving long term sustainable revenue growth and are well positioned from a customer acquisition perspective, it's tech hiring returning to more normal levels.
Raime Leeby Muhle: To wrap up, while the current economic environment is still impacting our growth, we expect companies across all industries will increase their investment in technology initiatives as companies look to implement generative AI into their business models, which we believe will drive increased demand for our products and services as demand for technologists increases. In the meantime, we are focused on improving our industry-leading offerings and our go-to-market execution, so we are ready to capitalize on the acceleration of tech hiring. And with that, let me turn the call back to Art.
Raime Leeby Muhle: To wrap up while the current economic environment is still impacting our crowd. We expect companies across all industries will increase their investment in technology initiatives as companies look to implement generative AI into their business model, which we believe will drive increased demand for our products and services.
Art Zeile: Demand for technology that will follow.
Art Zeile: In the meantime, we are focused on improving our industry, leading offerings and our go to market execution. So we are ready to capitalize on the acceleration of tech hiring.
Raime Leeby Muhle: And with that let me turn the call back to art.
Art Zeile: Thank you Amy I'd like to thank all of our employees again for their hard work. This past quarter. It is a pleasure to be part of such a great team with that we're happy to answer your questions.
Art Zeile: Thank you, Raime. I'd like to thank all of our employees again for their hard work this past quarter. It is a pleasure to be part of such a great team. With that said, we are happy to answer your questions.
Operator: Thank you. If you would like to ask a question, please press star then 1. To remove yourself from the queue, please press star then 2.
Art Zeile: Thank you.
Art Zeile: To ask a question. Please press Star then one.
Operator: To remove yourself from the queue. Please press Star then two.
Operator: Once again, it's star more than one if you have a question. And today's first question comes from Zach Cummins with B. Riley. Please go ahead.
Speaker Change: Once again it started in the morning, if you have a question.
Operator: And today's first question comes from Zach Cummins with B Riley. Please go ahead.
Ethan Widell: Hi there, Ethan Widell calling in for Zach Cummins. Thank you for taking my questions. Just one on my end. Could you give a little incremental color maybe on your bundling strategy with Dice and CJ? Are there any gives and takes there that you can point to?
Zachary Cummins: Hi, there you can why Dell, calling in for exact comments. Thank you for taking my questions. Just one on my end.
Ethan Widell: Could you give a little incremental color maybe on your bundling strategy with Dyson C. J are there any.
Ethan Widell: Got.
Ethan Widell: It gives and takes there.
Ethan Widell: Can you can point to.
Art Zeile: Yeah, we mentioned that virtually all of our new business deals were booked in this manner, and it was almost close to 100%. And I would say that we have found that this combination of unlimited job postings, so there's no more concept of job slots, which is endemic to our industry, as well as job boosts and a company page, together really drives success for our customers. So we're really pleased with the, you know, penetration rate, if you will, associated with those new business bookings.
Ethan Widell: Yeah, we we mentioned that virtually all of our new business deals were booked in this manner and it was almost close to 100% and I would say that we have found that this combination of unlimited job postings. So theres no more concept of jobs slots, which is.
Art Zeile: Endemic to our industry.
Art Zeile: As well as job boosts and accompany page in combination really drive success for our customers. So we're really pleased with the penetration rate. If you will associated with those new business bookings, we did see a large number of our existing accounts also move too.
Art Zeile: The subscription bundle and nevertheless, not at the same level is almost 100% I think that's because it is a little bit higher in terms of the before that after price compared to the before price. When you move to this package you get a lot more value, but it's a little bit more expensive.
Art Zeile: We did see a large number of our existing accounts also move to this subscription bundle, but nevertheless, not at the same level as almost 100%. I think that's because it is a little bit higher in terms of the before and after price compared to the before price when you move to this package. You get a lot more value, but it's a little bit more expensive.
Art Zeile: Yeah.
Art Zeile: Got it. I appreciate it. Thank you.
Speaker Change: Got it appreciate it thank you.
Operator: Thank you. I really appreciate it.
Art Zeile: Thank you really appreciate it.
Operator: Our next question comes from Max Michaelis with Lake Street Capital Markets. Please go ahead. Hey, guys. Thanks for taking my call.
Operator: And our next question comes from Mark Smith with Lake Street Capital markets. Please go ahead.
Maxwell Scott Michaelis: Hey guys, thanks for taking my questions. The first one is just on your bookings outlook for improvement and then returning to total growth for the second half of the year. If we think about that from a segment level, DICE and clearance jobs, what are you implying for, I guess, segment growth? So if DICE was down 15% this quarter, are you assuming a lower contracting DICE rate and then clearance jobs growth rate improving, or should we expect DICE bookings to return to growth in the second half of the year?
Maxwell Scott Michaelis: Hey, guys. Thanks for taking my questions first one is just on your bookings outlook for improvement and then returning to total growth for the second half of the year. If we think about that from a segment level Dyson clearance jobs. What what are you implying for I guess segment growth. So dice was down 15%. This quarter are you assuming a work detracting.
Maxwell Scott Michaelis: Right.
Maxwell Scott Michaelis: Clearance jobs growth rate, improving or should we expect <unk> bookings to return to growth in the second half.
Raime Leeby Muhle: Sure, I can take that one. And so when we think about Q1 24 is still a difficult comparison versus the prior year, as Q1 23 was still very strong related to the macro tech hiring environment, including in our transactional bookings and revenue a year prior. We do expect bookings year-on-year to show progressive improvements as booking comps ease throughout the year, and we are seeing stabilization and strengthening in our renewal and retention rates across both brands. And as Art just discussed our subscription packages, we're seeing additional interest in those packages as well that's fueling new business. From a brand-specific perspective, we are expecting sales to strengthen throughout the year in both brands.
Speaker Change: Sure I can take that one so when we think about Q1 24.
Raime Leeby Muhle: A difficult comparison.
Raime Leeby Muhle: Prior year Q1, 'twenty three was still very strong related to the macro tech hiring environment include.
Raime Leeby Muhle: Including in our transactional bookings in revenue a year prior.
Raime Leeby Muhle: We do expect the bookings year on year to show progressive improvement as booking comps ease throughout the year and we are seeing stabilization in strengthening in our renewal and retention rates across both brands and as I just discussed our subscription packages were seeing additional interest in those package.
Raime Leeby Muhle: Just as well that that's skewing new business.
Raime Leeby Muhle: From a brand specific perspective and.
Raime Leeby Muhle: We are expecting.
Raime Leeby Muhle: Yeah.
Raime Leeby Muhle: Strengthening throughout the year in both brands.
Raime Leeby Muhle: Yeah.
Speaker Change: Okay. Thank you and then I guess my next question would be.
Maxwell Scott Michaelis: Okay, thank you. And then I guess my next question would be, if we look at this new pricing bundle and it's good to see that ACBs are up quarter over quarter, will you guys be sharing an actual ACB number as well as, I guess, retention numbers for this new price bundling? Like, to help us get an idea of what kind of growth we're actually seeing on the contract value.
Maxwell Scott Michaelis: As we look at this new pricing bundle and it's good to see that agencies are up quarter over quarter would you guys be sharing an actual ACB number as well as I guess retention numbers for this new price point like to help us get an idea what kind of growth, we're actually seeing on a contract value standpoint.
Raime Leeby Muhle: That's something that we're actively debating as to whether or not we're going to break that out separately, but I can appreciate the fact that everybody's interested in understanding the performance of the bundles themselves, so we'll definitely take that under consideration.
Speaker Change: Oh, that's something that we're actively debating as to whether or not we're going to break that out separately, but I can appreciate the fact that everybody is interested in understanding the performance of the bundles themselves. So so we'll definitely take that under consideration.
Maxwell Scott Michaelis: All right, sounds good. I guess for the last one, I'll jump back into queue.
Speaker Change: Alright, it sounds good and I guess last one.
Speaker Change: Jump back in queue.
Speaker Change: It's good to see that tech postings are up so 191 from $1 42 December I guess, how did that trend.
Maxwell Scott Michaelis: Through April and I guess now into May.
Speaker Change: But I guess April.
Maxwell Scott Michaelis: So ultimately we get that report.
Maxwell Scott Michaelis: Three to five business days into a new month. So we do have the benefit of April April was just about the same level as March a little bit below that I'd say.
Maxwell Scott Michaelis: It's good to see that tech postings are up. So 191 from 142 in December, I guess. How did that trend through April? And I guess now into May? I guess it's still early May, but I guess April.
Art Zeile: So ultimately, we get that report about three to five business days into a new month. So we do have the benefit of April. April was just about the same level as March, a little bit below that. I'd say, you know, in a comparative way, it's statistically insignificant. It's flat with March.
Art Zeile: Comparative way, it's statistically insignificant it's flat with March so we're still seeing that level of new tech job postings I do think it is interesting that a pretty considerable amount, meaning the 16% figure are associated with AI and that's climbing month over month I didn't.
Maxwell Scott Michaelis: So we're still seeing that level of new tech job postings. I do think it is interesting that a pretty considerable amount, meaning the 16% figure, are associated with AI, and that's climbing month over month. I didn't mention it because I wanted to, you know, use March as kind of our baseline for comparison purposes, but April we tipped ticked up to 17% of all of our jobs included AI skills. So we're definitely seeing this trend towards more AI-related job activity.
Maxwell Scott Michaelis: Because they wanted to use March as kind of our baseline for comparison purposes, but April we tip kicked up to 17% of all of our jobs, including AI skills. So we're definitely seeing this trend towards more AI related.
Maxwell Scott Michaelis: Job activity.
Operator: All righty, sounds good. Thanks, guys.
Speaker Change: Alright, it sounds good thanks, guys.
Speaker Change: Thank you.
Operator: And as a reminder, ladies and gentlemen, if you'd like to ask a question, please press star then 1. Our next question comes from Kevin Liu with K-Liu and Company, LLC. Please go ahead.
Speaker Change: And as a reminder, ladies and gentlemen, if you would like to ask a question. Please press Star then one.
Operator: Our next question comes from Kevin Liu with K Lowe and company LLC. Please go ahead.
Kevin D. Liu: Hey, good afternoon. Maybe just continuing the AI discussion here. Could you talk a little bit about how much AI is kind of driving interest in the Dice platform from a customer standpoint? And then anything you guys are doing on your end to really capitalize on that?
Kevin D. Liu: Hey, good afternoon, maybe just continuing the AIA discussion here.
Kevin D. Liu: Could you talk a little bit about you know how much AI is kind of driving interest until the dice platform.
Kevin D. Liu: From a corpus standpoint.
Kevin D. Liu: Anything you guys are doing on your end to really capitalize on that.
Art Zeile: I think that's a great question, Kevin, and I can tell you that we are seeing a lot of interest in terms of activity on our site associated with our AI job articles as well as the two reports that we issued last month. So we have a report that's geared towards informing clients as to how they can attend to the question of how to recruit AI candidates or AI-skilled candidates, and then we also have a report that really features what a candidate should think about in terms of their career and how to make sure that they have the right AI skills for the future. So we put out these two long format ebooks, and we've seen a tremendous amount of interest as a result.
Kevin D. Liu: I think that's a great question, Kevin and I can tell you that we are seeing a lot of interest in terms of activity on our site associated with our AI job articles as well as the two reports that we issued last month. So we have a report.
Art Zeile: A report that's geared towards informing clients as to how they can tend to the question of how to recruit.
Art Zeile: Recruit AI candidates are AI skilled candidates and then we also have a report that really features what a candidates should think about in terms of their career and how to make sure that they have the right AI skills for the future. So we put out these two long format E.
Art Zeile: Books, and we've seen a tremendous amount of interest as a result.
Art Zeile: Yeah.
Art Zeile: That's great to hear. And maybe just going back to the question on kind of the confidence for renewed bookings growth in the second half here, you know, what are you seeing in terms of pipelines, leads, et cetera, that give you confidence in that outlook? And then maybe specific to the CJ side of the equation, obviously, you know, the threat of government shutdown has had impacts in some quarters. So we've seen that growth rate bounce around. But ultimately, would you expect that to be kind of 10% plus growth for you guys? Or are there things in the environment that would still limit that side of the business?
Kevin: That's great to hear and maybe going back to the question on kind of the confidence continued bookings growth in the second half here you know what.
Art Zeile: Are you seeing in terms of the pipeline.
Art Zeile: That kind of gives you confidence.
Art Zeile: In that outlook.
Art Zeile: And then maybe specific to TJ side of the equation.
Art Zeile: Obviously the.
Art Zeile: Is that a government shutdown has had impact.
Art Zeile: I'm curious have you seen that growth rate bounce around but ultimately would you expect that to be kind of a 10% plus grower for you guys or are there things in environment that was still limit that side of the business.
Art Zeile: Yeah, I could speak to all of that. I could tell you that we do believe the pipeline is improving month over month, week over week, for that matter. So we feel like there are signals ahead that still give us confidence for the second half of the year. I could also tell you that one clear signal is that K-Force and Robert Half, specifically the technology division of Robert Half, have indicated, you know, guidance for growth again.
Speaker Change: Yeah, I can speak to all of the above I can tell you that we do believe the pipeline is improving.
Art Zeile: Month over month week over week for that matter. So we feel like there are signals ahead still give us confidence for the second half of the year I can also tell you that one clear signal is that K force and Robert half specifically the technology Division of Robert half has indicated.
Art Zeile: Guidance for growth again, so that is very good for us to believe that what we're seeing in terms of our pipeline is also what other staffing recruiting firms at least are looking at and seeing in their pipelines I could tell you that we believe C. J should be booking in double digit growth range.
Art Zeile: So that is very good for us to believe that what we're seeing in terms of our pipeline is also what other staffing recruiting firms are at least looking at and seeing in their pipelines. I could tell you that we believe CJ should be booking in the double-digit growth range. We do believe it was suppressed by the kind of uncertainty in government funding of the defense budget, but that has clearly passed in March. I would say we also feel bullish about a tailwind really existing associated with the fiscal year 2023 defense budget.
Art Zeile: We do believe it was suppressed by the kind of.
Art Zeile: Uncertainty in government funding of the defense budget that is clearly passed in March I would say, we also feel bullish about a tailwind really existing associated with the fiscal year 2023 defense budget. If you remember that budget actually went up by 10% all of the projects the awards.
Art Zeile: If you remember, that budget actually went up by 10%. All of the projects, the awards, have not been worked into the system as a result of that budget. I think there will be years of that kind of, call it a golf ball going through the snake, if you will, because of the size of that increase in the budget and what it means for projects.
Art Zeile: Have not been worked into the system as a result of that budget I think there'll be years of that kind of a call.
Art Zeile: Call It a golf ball going through the snake.
Art Zeile: If you will.
Art Zeile: Because of the size of that increase in budget and what it means for projects.
Raime Leeby Muhle: It's great to hear. And then, just lastly, for me, you know, to capitalize on kind of all these opportunities and get back to positive growth in the second half, could you just talk about the trajectory of sales and marketing spending? Is there a lot of incremental investment that's needed on either of those aspects?
Speaker Change: Okay. That's great to hear and then just lastly for me you know to capitalize on kind of all these opportunities then they get back to positive growth in the second half could you just talk about.
Raime Leeby Muhle: The trajectory of sales and marketing spending is there a lot of incremental investment that's needed on either of those assets.
Raime Leeby Muhle: Sure. Hi Kevin. This is Raime. The sales and marketing spend is down year on year based on the restructuring that we did in 2023, in addition to what I mentioned earlier related to the efficiencies in our marketing campaigns. So at this point, we believe our Q1 sales and marketing spend is roughly what we're anticipating throughout the year in terms of sales and marketing spend, and we think that's the right level to position us for growth as well as investments in the future, yet maintaining that 24% EBITDA target that we're hitting in Q1 and anticipate hitting throughout the year.
Rainy: Sure Hi, Kevin This is rainy the sales and marketing spend is.
Raime Leeby Muhle: Is down year on year based on the restructuring that we did in 2023. In addition to what I mentioned earlier related to the efficiencies in our marketing campaigns.
Raime Leeby Muhle: At this point, we believe our Q1 sales and marketing spend is roughly what we're anticipating throughout the year in terms of sales and marketing spend.
Raime Leeby Muhle: And we think that's the right level to position us for growth as well as investments in the future and yet maintaining that 24% EBITDA target, where we're hitting in Q1 and anticipate hitting throughout the year.
Art Zeile: And I would go one step further, Kevin, to say that we don't view this recovery in terms of tech job interest as a V-shaped recovery. It's going to be a long, slow, steady recovery.
Speaker Change: And I would go one step further Kevin to say that we don't view. This recovery in terms of tech job interest to be a V shape recovery, it's going to be a long slow steady recovery, we're not planning to add significantly or incrementally to the sales team in terms of.
Art Zeile: We're not planning to add significantly or incrementally to the sales team in terms of headcount. We do have the ability to moderate our B2C, meaning be the candidate kind of spend, so that we can be very cautious as we see activity levels shift on our platforms. So there's mechanisms that we have to maintain that spend pretty effectively, and most importantly, we don't anticipate a larger team.
Art Zeile: Head count.
Art Zeile: We do have the ability to moderate our b to C meeting beta candidate kind of spend spend so that we can be.
Art Zeile: Be very cautious as we see activity levels shift on our platforms. So there's there's mechanisms that we have to maintain that spend pretty effectively and most importantly, we don't anticipate a larger team.
Kevin D. Liu: All right, sounds good. Thanks so much for taking the questions.
Speaker Change: Alright sounds good thanks, so much for taking the question.
Speaker Change: Thank you.
Operator: And ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to management for closing remarks.
Speaker Change: And ladies and gentlemen, this concludes our question and answer session I'd like to turn the conference back over to management for closing remarks.
Operator: Okay.
Art Zeile: Well, thank you, operator, and thank you all for joining us today. As always, if you have any questions about our company or would like to speak with management, please reach out to Todd, and he will help arrange a meeting. Thank you for your interest in DHI Group, and have a great day.
Speaker Change: Well. Thank you operator, and thank you all for joining US today as always if you have any questions about our company, who would like to speak with management. Please reach out to Todd and he will help arrange a meeting.
Art Zeile: <unk> for your interest in D. H I group and have a great day.
Operator: Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
Speaker Change: Thank you Sir This concludes today's conference call.
Operator: Thank you all for attending today's presentation.
Operator: You may now disconnect your lines and have a wonderful day.
Operator: Yeah.
Operator: [music].