Q2 2024 DHI Group Inc Earnings Call

August 7, 2024

Good day and welcome to the DHI Group Inc. 2nd Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: Second Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode.

Operator: Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode.

Operator: Should you need assistance, please signal a 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 this event is being recorded. I would now like to turn the conference over to Todd Kehrli, MKR Investor Relations. Please go ahead.

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 this event is being recorded.

I would now like to turn the conference over to Todd Kehrli, MKR Investor Relations. Please go ahead.

Todd Kehrli: Thank you, Operator. Good afternoon, and welcome to DHI Group's 2024 Second Quarter Earnings Conference Call. With me on today's call are DHI's CEO, Art Zeile, and CFO, Raime. Before I turn the call over to Art, I'd like to cover a few quick items. This afternoon, DHI issued a press release announcing its 2024 second quarter financial results. The release is available on the company's website at dhigroupinc.com.

Todd Kehrli: Thank you, Operator. Good afternoon and welcome to DHI Group's 2024 Second Quarter Earnings Conference Call. With me on today's call are DHI's CEO , Art Zeile, and CFO , Raimi Levy.

Todd Kehrli: This afternoon, DHI issued a press release announcing its 2024 second 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 laws.

Todd Kehrli: Before I turn the call over to Art, I'd like to cover a few quick items.

Speaker Change: this afternoon di issued press lease announcing its two thousand and twentyfour second quarter financial results

Speaker Change: 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.

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 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 laws. 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.

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 could cause these forward-looking statements to differ from actual results include the 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 statement.

Speaker Change: 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 the historical information, statements on today's call may constitute forward-looking statements within the meaning of the federal securities laws.

Todd Kehrli: Factors that could cause these forward-looking statements to differ from actual results include the 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 statement. 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.

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 statements.

Speaker Change: Factors that could cause these forward-looking statements to differ from actual results include the 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.

Speaker Change: DHI undertakes no obligation to update or revise any forward-looking statements.

Todd Kehrli: Information about and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release, a copy of which you can find on our website at dhigroupinc.com in the Investor Relations section. I'll now turn the call over to Art Zeile, CEO of DHI Group.

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 reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release, a copy of which you can find on our website at dhigroupinc I'll now turn the call over to Art Zeile, CEO of DHI Group.

Speaker Change: 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.

Speaker Change: Information about and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release, a copy of which you can find on our website at dhigroupinc.com in the Investor Relations section.

Speaker Change: I'll now turn the call over to Art Zeile, CEO of DHI Group.

Art Zeile: Thank you, Todd. Good afternoon, everyone, and welcome to our 2024 Second 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 current state of the tech labor market, which is one of the main growth drivers for our business. Although our bookings are not where we hoped they would be throughout the quarter, we continue to see a slow rise in new tech job postings, with May's total of 209,000 reported by CompTIA, marking the highest number since June of 2023.

Art Zeile: Thank you, Todd. Good afternoon, everyone, and welcome to our 2024 second 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 current state of the tech labor market, which is one of the main growth drivers for our business. Although our bookings are not where we hoped they would be throughout the quarter, we continue to see a slow rise in new tech job postings, with May's total of 209,000 reported by CompTIA, marking the highest number since June of 2023.

Art Zeile: While we haven't yet returned to the pre-pandemic average of 300,000 new job postings per month, there are signs of improvement as more employers are coming off the sidelines. AI initiatives are increasingly driving the demand for tech professionals, particularly with consulting firms being the initial focus for corporations. Notably, IBM recently announced that it had already booked $1 billion in AI-related business so far in 2024, and McKinsey & Company said it anticipates at least 40% of its projects this year will involve AI.

Art Zeile: First, let's discuss the current state of the tech labor market, which is one of the main growth drivers for our business.

Art Zeile: Although our bookings are not where we hoped they would be throughout the quarter, we continue to see a slow rise in new tech job postings, with May's total of 209,000 reported by CompTIA marking the highest number since June of 2023.

Art Zeile: While we haven't yet returned to the pre-pandemic average of 300,000 new job postings per month, there are signs of improvement as more employers are coming off the sidelines. AI initiatives are increasingly driving the demand for tech professionals, particularly with consulting firms being the initial focus for corporations. Notably, IBM recently announced that it had already booked $1 billion in AI-related business so far in 2024. And McKinsey & Company said it anticipates at least 40% of its projects this year will involve AI.

Art Zeile: While we haven't yet returned to the pre-pandemic average of 300,000 new job postings per month, there are signs of improvement as more employers are coming off the sidelines.

Art Zeile: AI initiatives are increasingly driving the demand for tech professionals, particularly with consulting firms being the initial focus for corporations.

Speaker Change: Notably, IBM recently announced that it had already booked $1 billion in AI-related business so far in 2024, and McKinsey & Company said it anticipates at least 40% of its projects this year will involve AI.

Art Zeile: We view this as an early indication of growing AI demand as companies test initiatives with consulting firms before launching broader projects. Additionally, LightCast reports that the percentage of all U.S. tech job postings requiring AI skills jumped from 15% in January to 27% in June of this year. 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 as the US becomes a more digital economy over time.

Art Zeile: We view this as an early indication of growing AI demand as companies test initiatives with consulting firms before launching broader projects.

Speaker Change: Additionally, LightCast reports that the percentage of all U.S. tech job postings requiring AI skills jumped from 15% in January to 27% in June of this year.

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 as the U.S. becomes a more digital economy over time.

Art Zeile: As businesses ramp up their investment in technology, clearance jobs and DICE will be essential tools for employers looking to find the ideal candidates for their open tech job postings from the 8.5 million technologist profiles we manage. Our clients continue to see increased success in attracting and hiring top tech talent using our platform. One recent example is American National Insurance, who stated, DICE has paid for itself already as we made one hire that we could not find anywhere else.

Speaker Change: As businesses ramp up their investment in technology, clearance jobs in DICE will be essential tools for employers looking to find the ideal candidates for their open tech job postings from the 8.5 million technologist profiles we manage.

Speaker Change: Our clients continue to see increased success in attracting and hiring top tech talent using our platforms.

Speaker Change: One recent example is American National Insurance, who stated, DICE has paid for itself already as we made one hire that we could not find anywhere else. Our team also has found great value in leveraging the database to source for talent and has found quality candidates.

Art Zeile: Our team also has found great value in leveraging the database to source for talent and has found quality candidates. Our client Coca-Cola mentioned seeing an increase in referral traffic from Dice, which has had a positive impact on their ability to source candidates, further validating the value of the platform for companies hiring their own tech talent. As evidenced by this feedback, our secret sauce is the ability to efficiently deliver the highest quality candidates to employers using our proprietary skills mapping technology to match the specific tech skills an employer is looking for with the exact candidates that have them.

Speaker Change: our client cocacoa mentioned seeing an increase in referral traffic from price which has had a positive impact on their ability to source candidates further validating the value of the platform for companies hiring for their own tech talent

Speaker Change: As evidenced by this feedback, our secret sauce is the ability to efficiently deliver to employers the highest quality candidates using our proprietary skills mapping technology to match the specific tech skills an employer is looking for to the exact candidates that have them.

Art Zeile: This is one of the reasons Forbes magazine announced Dice as the number one website for tech and IT jobs just days ago. Now, let me dig into the performance during the second quarter and what we see ahead for the remainder of 2024. In the second quarter, our total revenue declined 7% year-over-year. TJ revenue increased 8%, while DICE revenue decreased 14%. Excluding transactional revenue, our total recurring revenue declined 6% year-over

Speaker Change: This is one of the reasons Forbes Magazine announced DICE as the number one website for tech and IT jobs just days ago.

Speaker Change: Now let's dig into the performance during the second quarter and what we see ahead for the remainder of 2024.

Speaker Change: In the second quarter, our total revenue declined 7% year over year. CJ revenue increased 8% while Dice revenue decreased 14%. Excluding transactional revenue, our total recurring revenue declined 6% year over year.

Art Zeile: Clearance jobs' continued revenue growth was encouraging as government agencies and contractors are driving increased hiring of cleared tech professionals, while the decrease in DICE revenue was due to lower new business bookings and renewals over the past several quarters, as well as less transactional revenue. Looking at our bookings performance, our total bookings were down 7% year over year in the second quarter, a 200 basis point improvement from the 9% decline in the first quarter.

Art Zeile: Clearance jobs' continued revenue growth was encouraging as government agencies and contractors are driving increased hiring of cleared tech professionals, while the decrease in DICE revenue was due to lower new business bookings and renewals over the past several quarters, as well as less transactional revenue. Looking at our bookings performance, our total bookings were down 7% year-over-year in the second quarter, a 200 basis point improvement from the 9% decline in the first quarter.

Speaker Change: Clearance jobs continued revenue growth was encouraging as government agencies and contractors are driving increased hiring of cleared tech professionals while the decrease in dice revenue was due to lower new business bookings and renewals over the past several quarters as well as less transactional revenue.

Speaker Change: Looking at our bookings performance, our total bookings were down 7% year-over-year in the second quarter, a 200 basis point improvement from the 9% decline in the first quarter.

Art Zeile: Clearance jobs bookings for the second quarter increased 9% year over year, which is still below its trend line, but it is improving. During the second quarter, CJ secured several new customers, including Texas Research Institute, Iridium Satellite, and Nighthawk Flight Systems. We continue to be optimistic about the short and long-term growth prospects for CJ, although we know that even military contractors remain cautious this year. With over 10,000 employers of cleared tech professionals and over 100 government agencies that also need cleared tech professionals, Clearance Jobs has a significant growth opportunity ahead of it. Dice bookings for the second quarter declined 15% year over year, as many employers continue to be very budget conscious in this uncertain economic environment.

Art Zeile: Clearance jobs bookings for the second quarter increased 9% year over year, which is still below its trend line, but it is improving. During the second quarter, CJ secured several new customers, including Texas Research Institute, Iridium Satellite, and Nighthawk Flight Systems. We continue to be optimistic about the short and long-term growth prospects for CJ, although we know that even military contractors remain cautious this year. With over 10,000 employers of cleared tech professionals and over 100 government agencies that also need cleared tech professionals, clearance jobs has a significant growth opportunity ahead of it. Dice bookings for the second quarter declined 15% year over year, as many employers continue to be very budget conscious in this uncertain economic environment.

Speaker Change: Clearance jobs bookings for the second quarter increased 9% year-over-year, which is still below its trend line but improving.

Speaker Change: During the second quarter, CJ secured several new customers, including Texas Research Institute, Iridium Satellite, and Nighthawk Flight Systems.

Speaker Change: We continue to be optimistic about the short and long-term growth prospects for CJ, although we know that even military contractors remain cautious this year.

Speaker Change: With over 10,000 employers of cleared tech professionals and over 100 government agencies that also need cleared tech professionals, Clearance Jobs has a significant growth opportunity ahead of it.

Speaker Change: VICE bookings for the second quarter declined 15% year-over-year as many employers continue to be very budget conscious in this uncertain economic environment.

Art Zeile: Despite these headwinds, Dice secured several notable customers this quarter, including Prudential Financial, AYA Healthcare, and Blue Origin, as it continued to focus on those industries and companies hiring tech professionals, even in this weakened economic state. The data continues to indicate that these industries include aerospace, business consulting, healthcare, financial services, and education. Moving on to account management, our C.J. and D.I.C.E.

Speaker Change: Despite these headwinds, Dice secured several notable customers this quarter including Prudential Financial, Aya Healthcare, and Blue Origin as it continued to focus on those industries and companies hiring tech professionals even in this weakened economic state.

Speaker Change: The data continues to indicate that these industries include aerospace, business consulting, health care, financial services, and education.

Art Zeile: revenue renewal rates were 96% and 78%, respectively, in the second quarter. Retention rates for CJ and Dice were 113% and 99%, respectively. During the second quarter, we delivered a 25% adjusted EBITDA margin, which was up from 23% a year ago. Our operating cash flow was $9.1 million for the quarter versus $8.1 million in the year-ago quarter.

Speaker Change: Moving on to account management, our CJ and Dice revenue renewal rates were 96% and 78% respectively in the second quarter. Retention rates for CJ and Dice were 113% and 99% respectively.

Art Zeile: Retention rates for CJ and Dice were 113% and 99%, respectively. During the second quarter, we delivered a 25% adjusted EBITDA margin, which was up from 23% a year ago. Our operating cash flow was $9.1 million for the quarter, versus $8.1 million in the year-ago quarter.

Speaker Change: During the second quarter, we delivered a 25% adjusted EBITDA margin, which was up from 23% a year ago.

Speaker Change: our operating cash flow was nine point one million dollars for the quarter versus eight point one million dollars in the year ago quarter we continue to focus on operating our business efficiently as evidenced by our twelve percent year-over-year reduction in total operating expenses this past quarter

Art Zeile: We continue to focus on operating our business efficiently, as evidenced by our 12% year-over-year reduction in total operating expenses this past quarter. Now, let me quickly touch on what we are doing to drive increased adoption of our two brands. At the end of last year, we released comprehensive subscription packages that combined unlimited job postings, a company page, and selected job boosts for harder-to-fill positions. During the first half of 2024, almost all of our new business bookings across both brands were sold in this format, highlighting the value our prospects see in this combination of services. Importantly, for the second quarter, the new subscription package pricing has improved our average contract value by approximately 4% versus last year's average ACV, which included legacy pricing.

Art Zeile: For our existing customers, we have also started to see increased adoption, with 12% of our renewals choosing the new comprehensive subscription package in the second quarter. We also continue to deliver product innovation for both clearance jobs and DICE. For CJ, a big development during the quarter was our selection as the official partner of the U.S. Department of Labor's Employment Navigator and Partnership Program. The ENPP provides one-on-one assistance connecting transitioning service members with career resources as they explore and plan for post-military life. After separating from the military, veterans' security clearances generally stay current for three years.

Speaker Change: Now let me quickly touch on what we are doing to drive increased adoption of our two brands.

Speaker Change: at the end of last year we released comprehensive subscription packages that combined unlimited job postings a company page and selected job boosts for harder to fill positions

Speaker Change: During the first half of 2024, almost all of our new business bookings across both brands were sold in this format, highlighting the value our prospects see in this combination of services.

Speaker Change: Importantly, for the second quarter, the new subscription package pricing has improved our average contract value by approximately 4% versus last year's average ACV, which included legacy pricing.

Speaker Change: For our existing customers, we also have started to see increased adoption with 12% of our renewals choosing the new comprehensive subscription package in the second quarter.

Speaker Change: We also continue to deliver product innovation for both clearance jobs and DICE. For CJ, the big development during the quarter was our selection as the official partner of the U.S. Department of Labor's Employment Navigator and Partnership Program.

Speaker Change: The ENPP provides one-on-one assistance connecting transitioning service members with career resources as they explore and plan for post-military life.

Operator: 2nd quarter, 2024 Financial Results Conference Call All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: after separating from the military veterans security clearances generally stay current for three years as an enp partner clear jobs will help veterans utilize their security clearance following their service with theu s military

Art Zeile: As an ENPP partner, clearance jobs will help veterans utilize their security clearance following their service with the U.S. military. With clear job openings and demand for clear talent at record highs, a security clearance can be a valuable asset for service members in their job search. Adding clearance jobs as a resource for transitioning service members will have a big impact on the lives of veterans and will help fill the roles vital to our nation's security and defense. For D.I.C.E., the D.I.C.E.

Operator: After today's presentation there will be an opportunity to ask questions. To ask a question you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded.

Speaker Change: With clear job openings and demand for clear talent at record highs, a security clearance can be a valuable asset for service members in their job search.

Speaker Change: Adding clearance jobs as a resource for transitioning service members will have a big impact on the lives of veterans and will help fill the roles vital to our nation's security and defense.

Todd Kehrli: I would now like to turn the conference over to Todd Kehrli, MKR Investor Relations. Please go ahead.

Art Zeile: The All Jobs Initiative continues to deliver an increased number of job postings, which in turn is driving increased job applications from Canada. During the second quarter, the number of jobs posted on DICE increased 30% year over year. And DICE averaged 1.6 million monthly job applications, an increase of over 85% year over year. Increased applications can serve as a barometer for sentiment in the tech community. In a recent survey, one tech professional said, the primary reason I rated Dice a 10 out of 10 is because of its extensive database of job listings, user-friendly interface, and robust search filters that make it easy for job seekers to find relevant opportunities in their field.

Art Zeile: The All Jobs Initiative continues to deliver an increased number of job postings, which in turn is driving increased job applications from Canada. During the second quarter, the number of jobs posted on DICE increased 30% year-over-year. And DICE averaged 1.6 million monthly job applications, an increase of over 85% year-over-year. Increased applications can serve as a barometer for sentiment in the tech community. In a recent survey, one tech professional said, the primary reason I rated Dice a 10 out of 10 is because of its extensive database of job listings, user-friendly interface, and robust search filters that make it easy for job seekers to find relevant opportunities in their field.

Speaker Change: For D.I.C.E., the D.I.C.E. All Jobs Initiative continues to deliver an increased number of job postings, which in turn is driving increased job applications from candidates.

Todd Kehrli: Thank you operator, good afternoon, and welcome to DHI Group's 2024 Second Erning, 2nd quarter earnings conference call. With me on today's call are DHI's CEO, Art Zeile and CFO Rainy Leedy. Before I turn the call over to Art, I'd like to cover a few quick items. This afternoon, DHI issued a press release announcing its 2024 2nd quarter financial results. The release is available on the company's website at DHI Group Inc.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.

Speaker Change: During the second quarter, the number of jobs posted on DICE increased 30% year over year. And DICE averaged 1.6 million monthly job applications, an increase of over 85% year over year.

Speaker Change: Increased applications can serve as a barometer for sentiment in the tech community.

Speaker Change: In a recent survey, one tech professional said, the primary reason I rated Dice a 10 out of 10 is because of its extensive database of job listings, user-friendly interface, and robust search filters that make it easy for job seekers to find relevant opportunities in their field.

Todd Kehrli: I want to remind everyone that during today's call management will make forward-looking statements that involve recent 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. 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 statements.

Todd Kehrli: Factors that could cause these forward-looking statements to differ from actual results include the risks and uncertainties discussed in the company's periodic reports on form 10K and 10Q, and other filings with the Securities and Exchange Commission. DHI undertakes an 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-GAP earnings per share that are not prepared in accordance with U.S. GAP.

Speaker Change: Additionally, DICE offers valuable resources and tools for career development, networking, and skill enhancement, making it a comprehensive platform for professionals in the tech industry.

Speaker Change: Providing clients with an active and engaged candidate community and candidates with the ideal jobs they're seeking is essential to further establishing Dice as a trusted career marketplace.

Art Zeile: Before I turn the call over to Raime, let me touch on 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 postings during the second quarter. However, as I have said before, this recovery does not appear to be V-shaped, but rather a slow and steady one.

Art Zeile: Additionally, Dice offers valuable resources and tools for career development, networking, and skill enhancement, making it a comprehensive platform for professionals in the tech industry. Furthermore, providing clients with an active and engaged candidate community and candidates with the ideal jobs they're seeking is essential to further establishing Dice as a trusted career marketplace. Before I turn the call over to Raime, let me touch on 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 postings during the second quarter. However, as I have said before, this recovery does not appear to be V-shaped but rather a slow and steady one.

Speaker Change: Before I turn the call over to Raime, let me touch on 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 postings during the second quarter.

Art Zeile: As such, while we expect our bookings performance in the second half of the year to continue to improve, we do not expect total bookings to return to growth until next year, as many employers continue to be very budget conscious during this uncertain economic environment. We expect our third quarter bookings to be down between 4% to 6% year-over-year. And we expect our revenue for the third quarter to be down 4% to 6% year-over-year, with total revenue for the full year declining in the mid-single-digit percentage range.

Speaker Change: However, as I have said before, this recovery does not appear to be V-shaped, but rather a slow and steady one.

Speaker Change: As such, while we expect our bookings performance in the second half of the year to continue to improve, we do not expect total bookings to return to growth until next year, as many employers continue to be very budget conscious during this uncertain economic environment.

Todd Kehrli: Information about and reconciliations of these non-GAP measures to the most directly comparable GAP measures are available in our earnings release, a copy of which you can find on our website at DHIgroupink.com in the Investor Relations section.

Speaker Change: We expect our third quarter bookings to be down between 4% to 6% year over year. And we expect our revenue for the third quarter to be down 4% to 6% year over year, with total revenue for the full year declining in the mid single digit percentage range.

Art Zeile: Now I'll turn the call over to ArtZali, CEO of DHI Group. Thank you, Todd.

Art Zeile: 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 while at the same time delivering strong profits for our shareholders. From a profitability perspective, we continue to target an adjusted EBITDA margin of 24% for the full year. In conclusion, as businesses ramp up their investment in technology, including the surge in new AI initiatives, we believe our subscription-based offerings, which include 8.5 million technologist profiles and our unique tech skills mapping and search algorithms, will be essential tools for employers looking to find the ideal candidates for their open tech job postings. 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 Raime?

Art Zeile: Good afternoon, everyone, and welcome to our 2024 Second Quarter Earnings Conference call. We appreciate your time today as we discuss our financial performance and provide an update on our outlook. First, let's discuss the current state of the tech labor market, which is one of the main growth drivers for our business. Although our bookings are not where we hoped they would be throughout the quarter, we continued to see a slow rise in new tech job postings, with May's total of 209,000 reported by CompTIA marking the highest number since June of 2023.

Speaker Change: 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 while at the same time delivering strong profits for our shareholders.

Speaker Change: From a profitability perspective, we continue to target an adjusted EBITDA margin of 24% for the full year.

Speaker Change: In conclusion,

Speaker Change: As businesses ramp up their investment in technology, including the surge in new AI initiatives, we believe our subscription-based offerings, which include 8.5 million technologist profiles,

Speaker Change: And our unique tech skills mapping and search algorithms will be essential tools for employers looking to find the ideal candidates for their open tech job postings.

Art Zeile: While we haven't yet returned to the pre-pandemic average of 300,000 new job postings per month, there are signs of improvement as more employers are coming off the sidelines. AI initiatives are increasingly driving the demand for tech professionals, particularly with consulting firms being the initial focus for corporations. Notably, IBM recently announced that it had already booked $1 billion in AI-related business so far in 2024. And McKinsey and Company said it anticipates that at least 40% of its projects this year will involve AI.

Speaker Change: 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 Muhle: Thank you, Art, and good afternoon everyone. Jumping right in, let me take you through our financial results for the quarter. We reported total revenue of $35.8 million, which was down 7% on a year-over-year basis and down 1% from the prior quarter. Total bookings for the quarter were $30 million, down 7% year-over-year. As Art mentioned, our total recurring revenue was down 6% in the second quarter. However, clearance jobs revenue was $13.3 million, up 8% year over year, and up 3% sequentially. Bookings for CJ were $11.4 million, up 9% year over year.

Raime: Thank you, Art, and good afternoon, everyone. Jumping right in, let me take you through our financial results for the quarter.

Raime: We reported total revenue of $35.8 million, which was down 7% on a year-over-year basis, and down 1% from the prior quarter. Total bookings for the quarter were $30 million, down 7% year-over-year.

Art Zeile: We do this as an early indication of growing AI demand as companies test initiatives with consulting firms before launching broader projects. Additionally, Lightcast reports that the percentage of all US tech job postings requiring AI skills jump from 15% in January to 27% in June of this year. Tech is the second largest long-term occupational growth trend in the United States, behind healthcare, and is projected to grow twice as fast as the overall US workforce as the US becomes a more digital economy over time.

Speaker Change: As Art mentioned, our total recurring revenue was down 6% in the second quarter.

Speaker Change: clearance job's revenue was thirteen point three million dollars up eight percent year-over-year and up three percent sequentially bookings for cj were eleven point four million dollars up nine percent year-over-year

Raime Muhle: We ended the second quarter with 2009 CJ recruitment package customers, which was down 3% on a year over year basis and 1% sequentially. This slight reduction is attributable to churn with smaller customers. Our average annual revenue per CJ Recruitment Package customer was up 16% year-over-year and at 5% sequentially to $24,275. During the quarter, over 90% of CJ's revenue is recurring and comes from annual or multi-year contracts. For the quarter, CJ's revenue renewal rate was 96%, and CJ's retention rate was strong at 113%. The outstanding retention rate demonstrates the continued value CJ delivers in the recruitment of cleared professionals.

Raime Muhle: We ended the second quarter with 2009 CJ recruitment package customers, which was down 3% on a year over year basis and 1% sequentially. This slight reduction is attributable to churn with smaller customers. Our average annual revenue per CJ Recruitment Package customer was up 16% year-over-year and up 5% sequentially to $24,275. During the quarter, over 90% of CJ's revenue is recurring and comes from annual or multi-year contracts. For the quarter, CJ's revenue renewal rate was 96%, and CJ's retention rate was strong at 113%. The outstanding retention rate demonstrates the continued value CJ delivers in the recruitment of cleared professionals.

Speaker Change: We ended the second quarter with 2009 CJ recruitment package customers, which was down 3% on a year-over-year basis and 1% sequentially. This slight reduction is attributable to churn with smaller customers.

Art Zeile: As businesses ramp up their investment in technology, clearance jobs and dice will be essential tools for employers looking to find the ideal candidates for their open tech job postings from the 8.5 million technologist profiles we manage. Our clients continue to see increased success in attracting and hiring top tech talent using our platforms. One recent example is American national insurance, who stated dice has paid for itself already as we made one hire that we could not find anywhere else.

Speaker Change: Our average annual revenue per CJ Recruitment Package customer was up 16% year-over-year and up 5% sequentially to $24,275.

Speaker Change: During the quarter over 90% of CJ revenue is recurring and comes from annual or multi-year contracts.

Speaker Change: For the quarter, CJ's revenue renewal rate was 96% and CJ's retention rate was strong at 113%.

Art Zeile: Our team also has found great value in leveraging the database to source for talent and has found quality candidates. Our client Coca-Cola mentioned seeing an increase in referral traffic from dice, which has had a positive impact on their ability to source candidates further validating the value of the platform for companies hiring for their own tech talent. As evidenced by this feedback, our secret sauce is the ability to efficiently deliver to employers the highest quality candidates using our proprietary skills mapping technology to match the specific tech skills an employer is looking for to the exact candidates that have them.

Speaker Change: The outstanding retention rate demonstrates the continued value CJ delivers in the recruitment of cleared professionals.

Raime Muhle: DICE revenue was $22.6 million, which was down 14% year-over-year and 3% sequentially, sites booking for $18.6 million, down 15% year over year. We ended the quarter with 5,031 DICE recruitment package customers, which is down 4% from last quarter and down 16% year-over-year. This reduction is attributable to churn with smaller customers spending less than $10,000 per year.

Raime Muhle: DICE revenue was $22.6 million, which was down 14% year-over-year and 3% sequentially, sites booking for $18.6 million, down 15% year-over-year. We ended the quarter with 5,031 DICE recruitment package customers, which is down 4% from last quarter and down 16% year-over-year. This reduction is attributable to churn with smaller customers spending less than $10,000 per year.

Speaker Change: DICE revenue was $22.6 million, which was down 14% year-over-year and 3% sequentially.

Speaker Change: sites booking for $18.6 million, down 15% year-over-year.

Speaker Change: We ended the quarter with 5,031 DICE recruitment package customers, which is down 4% from last quarter and down 16% year-over-year.

Speaker Change: This reduction is attributable to churn with smaller customers spending less than $10,000 per year.

Raime Muhle: Our average annual revenue per Dice Recruitment Package customer was up 2% sequentially and up 5% year over year to $16,294. During the quarter, over 90% of DICE revenue was recurring and came from annual or multi-year contracts. For the quarter, our DICE revenue renewal rate was 78%, down from 82% in the first quarter, and our DICE retention rate was 99%, down slightly from 100% in the first quarter.

Raime Muhle: Our average annual revenue per DICE recruitment package customer was up 2% sequentially and up 5% year over year to $16,294. During the quarter, over 90% of DICE revenue was recurring and came from annual or multi-year contracts. For the quarter, our DICE revenue renewal rate was 78%, down from 82% in the first quarter, and our DICE retention rate was 99%, down slightly from 100% in the first quarter. Turning to operating expenses, second quarter operating expenses were down 12% to $33.8 million when compared to $38.6 million in the year-ago quarter, reflecting cost savings associated with the restructuring initiatives in 2023.

Art Zeile: This is one of the reason Forbes Magazine announced dice as the number one website for tech and IT jobs just days ago.

Speaker Change: Our average annual revenue per DICE recruitment package customer was up 2% sequentially and up 5% year-over-year to $16,294.

Art Zeile: Now we dig into the performance during the second quarter and what we see ahead for the remainder of 2024. In the second quarter, our total revenue declined 7% year over year. CJ revenue increased 8% while dice revenue decreased 14%. Excluding transactional revenue are total recurring revenue declined 6% year over year. Clearance jobs continued revenue growth was encouraging. As government agencies and contractors are driving increased hiring of cleared tech professionals, while the decrease in dice revenue was due to lower new business bookings and renewals over the past several quarters, as well as less transactional revenue.

Speaker Change: During the quarter, over 90% of DICE revenue was recurring and came from annual or multi-year contracts.

Speaker Change: For the quarter our DICE revenue renewal rate was 78% down from 82% in the first quarter and our DICE retention rate was 99% down slightly from 100% in the first quarter.

Raime Muhle: Turning to operating expenses, second quarter operating expenses were down 12% to $33.8 million when compared to $38.6 million in the year-ago quarter, reflecting cost savings associated with the restructuring initiative in 2023. We implemented a restructuring in the third quarter of 2024, which is expected to yield four to six million dollars of annual savings that we expect to be partially offset by annual merit increases and investments in the business. We continue to focus on operational excellence. For the quarter, we had an income tax expense of $383,000 on income before taxes of $1.3 million. Our tax rate for the quarter approximates the statutory rate.

Speaker Change: Turning to operating expenses, second quarter operating expenses were down 12% to $33.8 million when compared to $38.6 million in the year ago quarter, reflecting cost savings associated with the restructuring initiative in 2023.

Art Zeile: Looking at our bookings performance, our total bookings were down 7% year over year in the second quarter, a 200 basis point improvement from the 9% decline in the first quarter. Clear job bookings for the second quarter increased 9% year-over-year, which is still below its trend line, but improving. During the second quarter, CJ secured several new customers, including Texas Research Institute, Aridium Satellite, and Nighthawk flight systems. We continue to be optimistic about the short and long-term growth prospects for CJ, although we know that even military contractors remain cautious this year.

Raime Muhle: We implemented a restructuring in the third quarter of 2024, which is expected to yield four to six million dollars of annual savings that we expect to be partially offset by annual merit increases and investments in the business. We continue to focus on operational excellence. For the quarter, we had an income tax expense of $383,000 on income before taxes of $1.3 million. Our tax rate for the quarter approximates the statutory rate.

Speaker Change: We implemented a restructuring in the third quarter of 2024, which is expected to yield four to six million dollars of annual savings that we expect to be partially offset by annual merit increases and investments in the business.

Speaker Change: We continue to focus on operational excellence.

Speaker Change: For the quarter, we had income tax expense of $383,000 on income before taxes of $1.3 million.

Speaker Change: Our tax rate for the quarter approximates the statutory rate.

Raime Muhle: We recorded net income of $943,000 or $0.02 per diluted share for the second quarter. For the prior year quarter, we reported a net loss of $127,000 or 0 cents per diluted share. Our non-GAAP earnings per share was nine, excuse me, six cents per diluted share for the current and prior year quarters. Diluted shares outstanding for the quarter were $45 million compared to $43.5 million in the prior year quarter. Adjusted EBITDA for the second quarter increased 3% to $9 million, a margin of 25% compared to $8.7 million, or a margin of 23%, an increase of over 200 basis points from the second quarter a year ago. Operating cash flow for the second quarter was $9.1 million compared to $8.1 million in the prior year period.

Raime Muhle: We recorded net income of $943,000 or $0.02 per diluted share for the second quarter. For the prior year quarter, we reported a net loss of $127,000 or 0 cents per diluted share, which is non-GAAP earnings per share with nine, excuse me, six cents per diluted share for the current and prior year quarters. Diluted shares outstanding for the quarter were $45 million, compared to $43.5 million in the prior year quarter. Adjusted EBITDA for the second quarter increased 3% to $9 million, a margin of 25% compared to $8.7 million, or a margin of 23%, an increase of over 200 basis points from the second quarter a year ago. Operating cash flow for the second quarter was $9.1 million, compared to $8.1 million in the prior year period.

Speaker Change: We recorded net income of $943,000 or $0.02 per diluted share for the second quarter. For the prior year quarter, we reported a net loss of $127,000 or $0.00 per diluted share.

Art Zeile: With over 10,000 employers of cleared tech professionals, and over 100 government agencies that also need cleared tech professionals, cleared jobs has a significant growth opportunity ahead of it. Dice bookings for the second quarter declined 15% year-over-year, as many employers continue to be very budget-conscious in this uncertain economic environment. Despite these headwinds, Dice secured several notable customers this quarter, including prudential financial, IA healthcare, and Blue Origin, as it continued to focus on those industries and companies hiring tech professionals, even in this weakened economic state. The data continues to indicate that these industries include aerospace, business consulting, healthcare, financial services, and education.

Speaker Change: Our non-GAAP earnings per share was $0.06 per diluted share for the current and prior year quarters.

Speaker Change: Diluted shares outstanding for the quarter were $45 million compared to $43.5 million in the prior year quarter.

Speaker Change: adjusted ebitda for the second quarter increased three percent to nine million dollars a margin twenty-five percent compared to eight point seven million dollars or a margin of twenty three percent an increase of over two hundred basis points from the second quarter a year ago

Art Zeile: Moving on to account management. Our CJ and Dice revenue renewal rates were 96% and 78% respectively in the second quarter. Retention rates for CJ and Dice were 113% and 99% respectively. During the second quarter, we delivered a 25% adjusted EBITL margin, which was up from 23% a year ago. Our operating cash flow was $9.1 million for the quarter, versus $8.1 million in the year ago quarter. We continue to focus on operating our business efficiently as evidence by our 12% year-over-year reduction in total operating expenses this past quarter.

Speaker Change: Operating cash flow for the second quarter was $9.1 million compared to $8.1 million in the prior year period.

Raime Muhle: Our capitalized development costs in the second quarter were $3.2 million compared to $4.3 million in the second quarter of last year, a decline of $1.1 million. Capitalized development costs for the company are primarily related to costs incurred from building new products and features on our platform, which will continue to decrease in the second half of the year. We expect our Cap Act revenue for the year to be between $14 and $16 million versus $20.3 million in the prior year.

Raime Muhle: Our capitalized development costs in the second quarter were $3.2 million, compared to $4.3 million in the second quarter of last year, a decline of $1.1 million. Capitalized development costs for the company are primarily related to costs incurred from building new products and features on our platform, which will continue to decrease in the second half of the year. We expect our cap act for the year to be between $14 and $16 million versus $20.3 million in the prior year.

Speaker Change: Our capitalized development costs in the second quarter were $3.2 million compared to $4.3 million second quarter of last year, a decline of $1.1 million.

Speaker Change: Capitalized development costs for the company are primarily related to costs incurred from building new products and features on our platform, which will continue to decrease in the second half of the year.

Speaker Change: We expect our cap acts for the year to be between $14 and $16 million versus $20.3 million in the prior year.

Raime Muhle: From a liquidity perspective, at the end of the quarter, we have $3 million in cash and total debt of $35 million under our $100 million revolver. Total Debt, a 25 basis points decrease on our revolver interest rate. Deferred revenue at the end of the quarter was $52.3 million, down 2% from the second quarter of last year. Our total committed contract backlog at the end of the quarter was $110.3 million, which was down 6% from the end of the second quarter of last year.

Speaker Change: From a liquidity perspective, at the end of the quarter, we had $3 million in cash and total debt of $35 million under our $100 million revolver.

Art Zeile: Now let me quickly touch on what we're doing to drive increased adoption of our two brands. At the end of last year, we released comprehensive subscription packages that combined unlimited job postings, a company page, and selected job boosts for harder to fill positions. During the first half of 2024, almost all of our new business bookings across both brands were sold in this format, highlighting the value our prospect see in this combination of services.

Art Zeile: Importantly, for the second quarter, the new subscription package pricing has improved our average contract value by approximately 4% versus last year's average ACV, which included legacy pricing. For our existing customers, we also have started to see increased adoption, with 12% of our renewals choosing the new comprehensive subscription package in the second quarter. We also continue to deliver product innovation for both clearance jobs and Dice. For CJ, the big development during the quarter was our selection as the official partner of the U.S. Department of Labor's Employment Navigator and Partnership Program.

Speaker Change: Total Debt

Speaker Change: in a 25 basis points decrease on our revolver interest rate.

Speaker Change: the thirred revenue at the end of the quarter was fifty-two point three million dollars down two percent from the second quarter of last year

Speaker Change: Our total committed contract backlog at the end of the quarter was $110.3 million, which was down 6% from the end of the second quarter last year.

Raime Muhle: Roughly 80% of the backlog is considered short-term and will be recognized as revenue in the next 12 months. During the quarter, we did not purchase shares under our Share BIDAC program, and shares purchased related to the vesting of share-based awards were minimal.

Raime Muhle: Roughly 80% of the backlog is considered short term and will be recognized as revenue in the next 12 months. During the quarter, we did not purchase shares under our Share BIDAC program, and shares purchased related to the vesting of share-based awards were minimal.

Speaker Change: Roughly 80% of the backlog is considered short-term and will be recognized as revenue in the next 12 months.

Speaker Change: during the quarter we did not purchase shares under our share buyback program and shares purchase related to the vesting of share-based awards minimal

Raime Muhle: Moving on to guidance, while we expect booking performance in the second half of the year to continue to improve, many employers continue to be very budget conscious during this uncertain economic environment. As a result, we do not expect our total bookings to return to growth until next year. We expect our third quarter bookings to be down 4 to 6% year over year, and we expect our revenue for the third quarter to be down 4 to 6% year over year, with total revenue for the full year declining in the mid-single-digit percentage range.

Raime Muhle: Moving on to guidance, while we expect booking performance in the second half of the year to continue to improve, many employers continue to be very budget conscious during this uncertain economic environment. As a result, we do not expect our total bookings to return to growth until next year. We expect our third-quarter bookings to be down 4 to 6% year-over-year, and we expect our revenue for the third quarter to be down 4 to 6% year-over-year, with total revenue for the full year declining in the mid-single-digit percentage range.

Speaker Change: Moving on to guidance. While we expect booking performance in the second half of the year to continue to improve, many employers continue to be very budget conscious during this uncertain economic environment.

Art Zeile: The ENPP provides one-on-one assistance connecting transitioning service members with career resources as they explore and plan for post-military life. After separating from the military, veterans' security clearance is generally state current for three years As an ENPP partner, clearance jobs will help veterans utilize their security clearance following their service with the US military With clear job openings in demand for clear talent at record highs, a security clearance can be a valuable asset for service members in their job search.

Speaker Change: As a result, we do not expect our total bookings to return to growth until next year.

Speaker Change: We expect our third quarter bookings to be down 4-6% year-over-year, and we expect our revenue for the third quarter to be down 4-6% year-over-year, with total revenue for the full year declining in the mid-single-digit percentage range.

Raime Muhle: From a profitability perspective, we continue to target an adjusted EBITDA margin of 24% for the full year. 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. 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 will follow.

Speaker Change: From a profitability perspective, we continue to target an adjusted EBITDA margin of 24% for the full year.

Art Zeile: Adding clearance jobs as a resource for transitioning service members will have a big impact on lives of veterans and will help fill the roles vital to our nation's security and defense. For DICE, the DICE All Jobs Initiative continues to deliver an increased number of job postings, which in turn is driving increased job applications from candidates. During the second quarter, the number of jobs posted on DICE increased 30% year over year, and DICE averaged 1.6 million monthly job applications, an increase of over 85% year over year.

Speaker Change: 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.

Speaker Change: To wrap up, while the current economic environment is still impacting our growth,

Speaker Change: 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 will follow.

Raime Muhle: 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 Muhle: 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.

Art Zeile: Increased applications can serve as a barometer for sentiment in the tech community. In a recent survey, one tech professional said, the primary reason I rated DICE a 10 out of 10 is because of its extensive database of job listings, user friendly interface, and robust search filters that make it easy for job seekers to find relevant opportunities in their field. Additionally, DICE offers valuable resources and tools for career development, networking, and skill enhancement, making it a comprehensive platform for professionals in the tech industry. Providing clients with an active and engaged candidate community and candidates with the ideal jobs they're seeking is essential to further establishing DICE as a trusted career marketplace.

Speaker Change: 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.

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're happy to answer your questions.

Speaker Change: And with that, let me turn the call back to Art.

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, we're happy to answer your questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Zach Cummins with B. Reilly Securities. Please go ahead.

Speaker Change: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key.

Art Zeile: To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Art Zeile: Before I turn the call over to Raimi, let me touch on our expectations for the rest of 2024. As I stated earlier, we believe there are emerging signs that demand for tech professionals is improving, as evidenced by the increasing number of tech job postings during the second quarter. However, as I have said before, this recovery does not appear to be B-shaped, but rather a slow and steady one. As such, while we expect our bookings performance in the second half of the year to continue to improve, we do not expect total bookings to return to growth until next year, as many employers continue to be very budget conscious during this uncertain economic environment.

Art Zeile: The first question comes from Zach Cummins with B. Riley Securities. Please go ahead.

Zach Cummins: Hi, good afternoon, Art and Raime. Thanks for taking my question. Art, just curious about what you're hearing from your customers, especially on the DICE side of the business, just given the current macro environment. It seems like job postings have been making some incremental progress in recent months, but I think the latest jobs report has really almost sounded the alarms in a sense. So just curious about the dialogue you're hearing with your customers and kind of how that's impacting your updated outlook for the second half of this year.

Zach Cummins: Hi, good afternoon, Art and Raime. Thanks for taking my question. Art, just curious about what you're hearing from your customers, especially on the DICE side of the business, just given the current macro environment. It seems like job postings were making some incremental progress in recent months, but I think the latest jobs report has really sounded the alarms in a sense. So just curious about the dialogue you're hearing with your customers and kind of how that's impacting your updated outlook for the second half of this year.

Zach Cummins: Hi, good afternoon, Art and Raime. Thanks for taking my questions.

Zach Cummins: Art, just curious on what you're hearing from your customers, especially on the D.I.C.E. side of the business, just given the current macro environment.

Speaker Change: It seems like job postings were making some incremental progress in recent months, but I think the latest jobs report has really

Art Zeile: We expect our third quarter bookings to be down between four to six percent year over year, and we expect our revenue for the third quarter to be down four to six percent year over year, with total revenue for the full year declining in the mid single digit percentage range. 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 while at the same time delivering strong profits for our shareholders.

Speaker Change: Well, sound of the alarms, as I said, so just curious of dialogue you're hearing with your customers and kind of how that's impacting your updated outlook in the second half of this year.

Art Zeile: Well, that's a great question. That's the question we ask just about every week here at DHI Group.

Speaker Change: Well, that's a great question. That's the question we ask just about every week here at DHI Group, and I would say it is still a very sluggish economy. There is still a belief that

Art Zeile: And I would say it is still a very sluggish economy. There is still a belief that the demand for tech hiring isn't nearly what it was in years past or what you consider to be a normal year. The way that we look at the tech jobs report that comes out from CompTIA every single month is that we're still down about 30% from what would constitute a normal environment in terms of the total number of tech job postings.

Art Zeile: And I would say it is still a very sluggish economy. There is still a belief that the demand for tech hiring isn't nearly what it has been in years past or what you consider to be a normal year. The way that we look at the tech jobs report that comes out from CompTIA every single month is that we're still down about 30% from what would constitute a normal environment in terms of the total number of tech job postings.

Speaker Change: the demand for tech hiring isn't nearly what it has been in years past or what you consider bea a normal year the way that we look at the tech jobs report that comes up from compti

Art Zeile: From a profitability perspective, we continue to target an adjusted EBITDA margin of 24% for the full year. In conclusion, as businesses ramp up their investment in technology, including the Surge and new AI initiatives, we believe our subscription-based offerings, which include 8.5 million technologists profiles in our unique tech skills mapping and search algorithms, will be essential tools for employers looking to find the ideal candidates for their open tech job postings, on that note.

Speaker Change: We are still down about 30% from what would constitute a normal environment in terms of the total number of tech job postings and in fact we did an analysis of Q2 tech job postings this year versus Q2 of 2019.

Art Zeile: And in fact, we did an analysis of Q2's tech job postings this year versus Q2 of 2019, and the exact answer was that we were down 31% from that quarter in terms of tech job postings. So again, it's a difficult environment.

Zach Cummins: 2019 and the exact answer was that we were down 31% from that quarter in terms of tech job postings. So again, it's a difficult environment. I'd say the real you know substantial you know kind of

Raime Muhle: Let me turn the call over to Raimey, who will take you through our financials and then we'll take any questions you may have. Raimey? It was $30 million down 7% year-over-year. As Art mentioned, our total recurring revenue was down 6% in the second quarter, clearance jobs revenue was $13.3 million, up 8% year-over-year, and up 3% sequentially. Bookings for CJ were $11.4 million, up 9% year-over-year. We ended the second quarter with 2009 CJ recruitment package customers, which was down 3% on a year-over-year basis and 1% sequentially.

Art Zeile: I'd say the real substantial news for this quarter is that we saw not only the continuing pattern of attrition of smaller companies, which we have seen in many quarters in the past, I would say over the last six quarters, but we did have two notable customers that were in the six-figure range for us that did not renew at all. And they were for different reasons. In one particular case, it was a large automobile manufacturing company that had UAW strike-related budget constraints.

Art Zeile: I'd say the real, you know, substantial, you know, kind of news for this quarter is that we saw not only the continuing pattern of attrition of smaller companies, which we have seen in many quarters in the past, I would say over the last six quarters, but we did have two notable customers that were in the six-figure range for us that did not renew at all. And they were for different reasons. In one particular case, it was a large automobile manufacturing company that had UAW strike-related budget constraints.

Zach Cummins: News for this quarter is that we saw not only the continuing pattern of

Zach Cummins: Attrition of smaller companies, which we have seen in many quarters in the past, I would say over the last six quarters, but we did have two notable customers that were in the six-figure range for us.

Speaker Change: that did not renew at all, and they were for different reasons. In one particular case, it was a large automobile manufacturing company that had UA...

Art Zeile: And then the second one was a staffing recruiting firm that divested their IT practice, so they no longer had IT recruiters. And that's what really caused a dip in the DICE revenue renewal rate from what we saw in the first quarter. But that's how I would describe the environment today. It's still about the same as it was in the first quarter, and that is to say that people are very budget conscious. They're worried about the state of the economy, probably even more so since the job report that came out on Friday of last week. So that's what we're hearing.

Speaker Change: were UAW strike related budget constraints and then the second one was a staffing recruiting firm that divested their IT practice.

Art Zeile: And then the second one was a staffing recruiting firm that divested their IT practice, so they no longer had IT recruiters. And that's what really caused a dip in the DICE revenue renewal rate from what we saw in the first quarter. But that's how I would describe the environment today. It's still about the same as it was in the first quarter, and that is to say that people are very budget-conscious. They're worried about the state of the economy, probably even more so since the job report that came out on Friday of last week. So that's what we're hearing.

Speaker Change: So they no longer had IT recruiters.

Speaker Change: And that's what really caused a dip in the DICE revenue renewal rate from what we saw in the first quarter.

Speaker Change: How I would describe the environment today, it's still about the same as it was in the first quarter, and that is to say that people are very budget conscious, they're worried about the state of the economy, probably even more so since the job report that came out on Friday of last week.

Raime Muhle: This slight reduction is attributable to churn with smaller customers. Our average annual revenue per CJ recruitment package customer was up 16% year-over-year and at 5% sequentially. To $24,275. During the quarter, over 90% of CJ revenue is recurring and comes from annual or multi-year contracts. For the quarter, CJ's revenue renewal rate was 96% and CJ's retention rate was strong at 113%. The outstanding retention rate demonstrates the continued value CJ delivers in the recruitment of cleared professionals.

Speaker Change: So that's that's what we're hearing.

Zach Cummins: Got it. In terms of one question for Raime, it'd be nice to see you dip below one times leverage this quarter, but how are you thinking about capital allocation, just given the current backdrop? How are you going to continue to balance continuing to chip away at the debt versus maybe potentially resuming share repurchase?

Raime Muhle: Got it. In terms of one question for Raime, it'd be nice to see you dip below one times leverage this quarter, but how are you thinking about capital allocation? Just given the current backdrop, how are you going to continue to balance continuing to chip away at the debt versus maybe potentially resuming share repurchase?

Raime: Got it. In terms of one question for Raime, it'd be nice to see you dip below one times leverage.

Raime: How are you thinking about capital allocation, just given the current backdrop? How are you going to continue to balance continuing to chip away at the debt versus maybe potentially resuming share repurchases?

Raime Muhle: Hi Zach. Yep, a great question. We were really pleased with our leverage ratio, tracking below that one times in a row because we do pick up the benefit of an interest rate reduction of about 25 basis points. And so we're pleased with that. I think that's an ongoing conversation with our board regarding what our best, highest use of capital is. I imagine that in this coming quarter, we will have discussions around whether we continue to pay down debt and or we reintroduce the buyback program, just given that we hit that lower than one times leverage. So I think it remains to be seen how that conversation evolves, and as you would imagine, some of that depends on the Fed and rates as well in a broader macro environment.

Raime Muhle: Hi Zach. Yep, a great question. We were really pleased with our leverage ratio, below that one times, because we do pick up the benefit of an interest rate reduction of about 25 basis points. And so we're pleased with that. I think that's an ongoing conversation with our board regarding what our best, highest use of capital is. I imagine that in this coming quarter, we will have discussions around whether we continue to pay down debt and or we reintroduce the buyback program, just given that we hit that lower than one times leverage. So I think it remains to be seen how that conversation evolves, and as you would imagine, some of that depends on the Fed and rates as well in a broader macro environment.

Raime Muhle: Dice revenue was $22.6 million, which was down 14% year-over-year and 3% sequentially. Dice booking for $18.6 million down 15% year-over-year. We ended the quarter with 5,031 dice recruitment package customers, which is down 4% from last quarter and down 16% year-over-year. This reduction is attributable to churn with smaller customers spending less than $10,000 per year. Our average annual revenue per dice recruitment package customer was up 2% sequentially and at 5% year-over-year to $16,294.

Speaker Change: Hi Zach, great question. We were really pleased with our leverage ratio.

Speaker Change: tracking below that one times because we do pick up the benefit of

Speaker Change: interest rate reduction of about 25 basis points and so we're pleased with that. I think that's an ongoing conversation with our board.

Speaker Change: regarding what our best, highest use of capital is. I envision that in this coming quarter, we will have discussions around

Speaker Change: whether we continue to pay back down debt and or we reintroduce the buyback program just given that we hit that lower than one times leverage so I think

Raime Muhle: During the quarter, over 90% of dice revenue was recurring and came from annual or multi-year contracts. For the quarter, our dice revenue renewal rate was 78% down from 82% in the first quarter and our dice retention rate was 99% down slightly from 100% in the first quarter.

Speaker Change: It remains to be seen how that conversation evolves, and as you would imagine, some of that depends on the Fed and rates as well in the broader macro environment.

Zach Cummins: Okay. Well, thanks for taking my questions and best of luck with the rest of the quarter.

Speaker Change: Understood. Well, thanks for taking my questions and best of luck with the rest of the quarter.

Operator: The next question is from Gary Prestopino with Barrington Research. Please go ahead.

Gary Prestapino: The next question is from Gary Prestapino with Barrington Research. Please go ahead.

Zach Cummins: Thanks, Zach.

Raime Muhle: Turning to operating expenses, second quarter operating expenses were down 12% to $33.8 million when compared to $38.6 million in the year-ago quarter, reflecting cost savings associated with the restructuring initiative in 2023. We implemented a restructuring in the third quarter of 2024, which is expected to yield 4 to $6 million of annual savings that we expect to be partially offset by annual merit increases and investments in the business. Business. We continue to focus on operational excellence.

Speaker Change: The next question is from Gary Prestapino with Barrington Research. Please go ahead.

Gary Prestapino: Hey, good afternoon, Art and Raime. Um, let me, let me, well, first of all, have you gotten any data from CompTIA on what the tech job postings were like in July? Because, just according to my record, they were at $142,000 in December. In March, they increased to $191,000. And now we're at $209,000. So you are starting to see a pickup. But because of what's going on in the economy, did they slow down in July versus June? Or do you not have that data? Yes.

Gary Prestopino: Hey, good afternoon, Art and Raime. Um, let me, let me, well, first of all, have you gotten any data from CompTIA on what the tech job postings were like in July? Because, just according to my records, they were at $142,000 in December. In March, they increased to $191,000. And now we're at $209,000. So you are starting to see a pickup. But because of what's going on in the economy, did they slow down in July versus June? Or do you not have that data? Yes.

Gary: Hey good afternoon Art and Raime. Hey Gary. Let me, let me, well first of all have you gotten any data from CompTAI on what the postings were like, tech job postings were like in July ? Because just according to my records

Speaker Change: They were at 142,000 in December , in March they increased to 191,000 and now we're at 209,000. So you are starting to see a pickup, but because of what's going on in the economy, did they track down in July versus June or you don't have that data?

Raime Muhle: For the quarter, we had income tax expense of $383,000 on income to four taxes of $1.3 million. Our tax rate for the quarter approximates the statutory rate. We recorded net income of $943,000 or $2 cents per diluted share for the second quarter. For the prior year quarter, we recorded a net loss of $127,000 or $0 cents per diluted share. Our non-gap earnings per share was 9, excuse me, 6 cents per diluted share for the current and prior year quarters, diluted shares outstanding for the quarter were $45 million compared to $43.5 million in the prior year quarter.

Art Zeile: Yes, they did post that data just Friday of last week, and the answer is that July's new tech job postings were 176,324. So it's below what we saw as a peak in May. Now I have to say that, because of seasonality, we always see a dip in June and July. And so when I think about that figure, I actually compare it to the last seasonal dip, which was December of last year.

Speaker Change: Yes, they did post that data just Friday of last week.

Speaker Change: And the answer is that July's new tech job postings were 176,000.

Speaker Change: 3324

Speaker Change: So it's below what we saw as a peak in May. Now I have to say that...

Speaker Change: because of seasonality, we always see a dip in June and July. And so when I think about that figure, I actually compare it to the last seasonal dip, which was December of last year, and that was 142,000 new TechDoc postings.

Art Zeile: And that was 142,000 new tech job postings. The other kind of notable outcome from the CompTIA report is that the unemployment rate for the tech sector did edge down, which is obviously positive. And then the number of total tech jobs in the economy decreased by 14,000. But this is the lowest decrease we have seen in over a year, quite frankly. So it feels like there's a little bit of stabilization. But, as we know, it's been a difficult year or a year and a half as we've been waiting for a recession. And so I think that, more than anything else, weighs on the decision-making process for a lot of CFOs out there.

Raime Muhle: Adjusted EBIDA for the second quarter increased 3% to $9 million, a margin of 25%, compared to $8.7 million or a margin of 23%, an increase of over 200 basis points from the second quarter a year ago. Operating cash flow for the second quarter was $9.1 million compared to $8.1 million in the prior year period. Our capitalized development cost in the second quarter was $3.2 million compared to $4.3 million second quarter of last year, a decline of $1.1 million.

Speaker Change: The other kind of notable outcomes from the CompTIA report is that the unemployment rate for the tech sector did edge down, which is obviously a positive.

Speaker Change: And then the number of total tech jobs in the economy decreased by 14,000, but this is the lowest decrease we have seen in over a year, quite frankly. So it feels like there's a little bit of stabilization, but

Speaker Change: As we know, it's been a difficult year, or a year and a half, as we've been waiting for a recession. And so, I think that, more than anything else, weighs on the decision-making process for a lot of CFOs out there.

Gary Prestapino: Okay, and then in terms of your target for adjusted EBITDA margin, you said it was 24%, I believe, but you actually came up with 25%. So, is that... sequential dip in the AE margin a function of that you've had to lower your sales growth guidance a little bit, or is there some kind of incremental investments that you're making for the company over the last six months of this year.

Gary Prestopino: Okay, and then in terms of your target for adjusted EBITDA margin, you said it was 24%, I believe, but you actually came up with 25%. So, is that... sequential dip in the AE margin a function of you having to lower your sales growth guidance a little bit or is there some kind of incremental investments that you're making for the company over the last six months of this year.

Raime Muhle: Capitalized development cost for the company are primarily related to cost incurred from building new products and features on our platform which will continue to decrease in the second half of the year. We expect our catbacks for the year to be between $14 and $16 million versus $20.3 million in the prior year. From a liquidity perspective at the end of the quarter, we have $3 million in cash in total debt of $35 million under our $100 million revolver.

Speaker Change: Okay, and then in terms of your target for adjusted EBITDA margin, you said it's 24% I believe?

Speaker Change: Yes, that's correct. You actually came up with 25%.

Speaker Change: So is that...

Speaker Change: sequential dip in the AE margin a function of that you've had to lower your sales growth guidance a little bit or is there some kind of incremental investments that you're making?

Speaker Change: for the company over the last six months of this year.

Raime Muhle: Total debt in the 25 basis points decrease on our revolver interest rate. The fird revenue at the end of the year was $52.3 million down 2% from the second quarter of last year. Our total committed contract backlog at the end of the quarter was $110.3 million, which was down 6% from the end of the second quarter last year. Roughly 80% of the backlog is considered short term and will be recognized as revenue in the next 12 months. During the quarter, we did not purchase shares under our share bidect program and shares purchased related to the vesting of share based awards were minimal.

Raime Muhle: Yeah, hi, Gary. This is Raime. And I think that as we look towards the second half of the year, as we noted, we did have a restructuring event at the beginning of the quarter that will yield us annualized savings. And we're expecting that to be offset by merit increases for our employees, which actually go into effect in the half, at the midpoint of the year. So that will impact our Q3 and Q4 on a comparable basis. And we do have investments as well, baked into the second half, related to several initiatives that we expect to yield longer-term growth for us.

Raime Muhle: Yeah. Hi Gary. This is Raime.

ramme: yeah h gary this is ramme i think that as we look towards the second half of the year is noted we did have a restructuring event at the beginning of the quarter that will yield that annualized savings and we're expecting that to be offset by

Speaker Change: merit increases for our employees which actually go into effect in the half at the midpoint of the year.

Raime Muhle: I think that as we look towards the second half of the year, as we noted, we did have a restructuring event at the beginning of the quarter that will yield annualized savings, and we're expecting that to be offset by merit increases for our employees, which actually go into effect at the midpoint of the year. So that will impact our Q3 and Q4 on a comparable basis. And we do have investments as well baked into the second half related to several initiatives that we expect to yield longer-term growth for us.

Speaker Change: So that will impact our Q3 and Q4 on a comparable basis. And we do have investments as well, baked into the second half, related to several initiatives that we expect to yield longer-term growth for us.

Gary Prestopino: So, so you're. Right now, your Salesforce is still, especially with Dice, because CJ is growing. Dice is still a very, very challenging environment for the salespeople out there. But are they starting to, at least, see a pickup in, I guess, for lack of a better word, for interest or activity, listening, whatever, from, you know, the potential new account base out there?

Art Zeile: So, so you're. Right now, your sales force is still, especially with Dice, because CJ is growing; Dice is still a very, very challenging environment for the salespeople out there. But are they starting to, at least, see a pickup in, I guess, for lack of a better word, for interest or activity, listening, whatever from, you know, the potential new account base out there?

Speaker Change: Okay, so you're, right now your sales force is still, especially with Dice, because CJ is growing. Dice is still a very, very challenging environment for the sales people out there. But are they starting to?

Raime Muhle: Moving on to guidance. While we expect booking performance in the second half of the year to continue to improve, many employers continue to be very budget conscious during this uncertain economic environment. As a result, we not expect our total bookings to continue to improve in the next four to six percent year-over-year, and we expect our revenue for the third quarter to be down four to six percent year-over-year, with total revenue for the full year declining in the mid single digit percentage range.

Speaker Change: at least

Speaker Change: You know, see a pickup in, I guess, for lack of a better word, for interest or activity, listening, whatever, from, you know, the potential new account base out there.

Art Zeile: Yeah, I was going to say that we have two new business teams for Dice. One is focused on commercial accounts. One is focused on staffing, recruiting, and consulting companies, what we call the SRC category. And I would say that the SRC pipeline and activity improved sequentially from Q1 to Q2. I wouldn't say it was, you know, significant or something that obviously drove an enormous amount of bookings, but it feels like it's stabilizing. And there is kind of a belief that maybe that is an indicator of sorts, that the market is also more stable when staffing and recruiting agencies are more active, and are actively involved with staffing technology professionals. So that felt better.

Art Zeile: Yeah, I was going to say that we have two new business teams for Dice. One is focused on commercial accounts. One is focused on staffing, recruiting, and consulting companies, what we call the SRC category. And I would say that the SRC pipeline and activity improved sequentially from Q1 to Q2. I wouldn't say it was, you know, significant or something that obviously drove an enormous amount of bookings, but it feels like it's stabilizing. And there is kind of a belief that maybe that is an indicator of sorts, that the market is also more stable when staffing and recruiting agencies are more active and are actively involved with staffing technology professionals. So that felt better.

Speaker Change: Yeah, I was going to say that we have two new business teams for DICE. One is focused on commercial accounts, one is focused on staffing, recruiting, consulting companies, what we call SRC category. And I would say that the SRC pipeline and activity improved sequentially from Q1 to Q2.

Speaker Change: I wouldn't say it was, you know, significant or something that obviously drove an enormous amount of bookings, but it feels like it's stabilizing.

Raime Muhle: 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.

Speaker Change: and there is kind of a belief that maybe that is a an indicator of sorts that the market is also more stable when staffing recruiting agencies are more active.

Art Zeile: I'd still say commercial accounts is a very challenging environment. We are focused on those five industries that are hiring. But I look at that and say, well, back in 2002, or maybe even a better representative year would be 2019, we had all 16 verticals that we track, aggressively hiring technology talent. Now we have a lot more difficult. There are still customers that are very interested in hiring tech professionals, but it's an environment where the demand is a lot weaker.

Art Zeile: I'd still say commercial accounts is a very challenging environment. We are focused on those five industries that are hiring. But I look at that and say, well, back in 2002, sorry, 2022, or maybe even a better representative year would be 2019. We had all 16 verticals that we tracked, aggressively hiring technology talent. Now we have a lot more difficult. There are still customers that are very interested in hiring tech professionals, but it's an environment where the demand is a lot weaker.

Speaker Change: actively involved with staffing technology professionals.

Speaker Change: So that felt better. I'd still say commercial accounts is a very challenged environment.

Speaker Change: we are focused on those five industries that are hiring

Speaker Change: But I look at that and say, well, back in 2002, I'm sorry, 2022, or maybe even a better representative year would be 2019. We had all 16 verticals that we track aggressively hiring technology talent.

Art Zeile: And with that, let me turn the call back to Art. Thank you, Raime. I'd like to thank all of our employees, again, for their hard work this past quarter.

Speaker Change: A lot more difficult. There's still customers that are very interested in hiring tech professionals but it's it's an environment where the demand is a lot weaker.

Art Zeile: It is a pleasure to be part of such a great team. With that, we're happy to answer your questions.

Operator: We will now begin the question and answer session.

Speaker Change: Okay, thank you.

Operator: To ask a question, you may press star then one on your telephone and keypad.

Speaker Change: Again, if you have a question, please press star then 1.

Operator: Again, if you have a question, please press star then 1. The next question is from Kevin Liu with K-Liu and Company, LLC. Please go ahead.

Operator: If you are using a speaker phone, please pick up your handset before pressing the key. To withdraw your question, please press star then two.

Speaker Change: The next question is from Kevin Liu with K-Liu & Co. LLC. Please go ahead.

Kevin Liu: Hey, good afternoon, guys. Art, you mentioned that you guys have seen kind of an 85% increase in average monthly applications from candidates. I'm wondering if you could put that into context for us, you know, do you think that's indicative of potentially quit rates starting to rise again, and maybe employers need to get back to hiring to fill roles? Or is it more a function of some kind of higher unemployment amongst technology professionals? Would you please help me with the question of how much of a leading indicator this could be for things improving from here on out?

Operator: At this time, we will pause momentarily to assemble our roster.

Kevin Liu: Hey, good afternoon, guys.

Kevin Liu: Art, you mentioned that you guys have seen kind of an 85% increase in average monthly applications from candidates. I'm wondering if you could put that into context for us, you know, do you think that's indicative of potentially quit rates starting to rise again and maybe employers need to get back to hiring the fill roles? Is it more a function of kind of higher unemployment amongst technology professionals?

Zachary Cummins: The first question comes from Zach Cummins with Be Riley Securities. Please go ahead. Hi, good afternoon, Art and Raime. Thanks for taking my questions. Just curious on what you're hearing from your customers, especially on the diet side of the business, just given the current macro environments. It seems like job postings were making some incremental progress in recent months, but I think the latest jobs report has really sounded the alarms in a sense. So just curious of dialogue you're hearing with your customers and kind of how that's impacting your updated outlook in the second half of this year.

Speaker Change: Any help there in terms of how much of a leading indicator this could be for things improving from here on out?

Art Zeile: I think it is both, quite frankly. I think that we've built a better experience for the candidates and made it easier for them to apply. We have an easy-apply kind of functionality on the DICE platform. And, nevertheless, I do think that the environment is such that most people are a little bit worried about their present employment situation, so they are more interested in going to a DICE and looking at their Plan B or Plan C. I do think that there's also kind of a pent-up kind of demand to think about career steps in general.

Art Zeile: I think it is both, quite frankly. I think that we've built a better experience for the candidates, made it easier for them to apply. We have an easy-apply kind of functionality on the Dice platform.

Speaker Change: And, nevertheless, I do think that the environment is such that most people are a little bit worried about their present employment situation, so they are more interested in going to a DICE and looking at their Plan B or Plan C. I do think that there's also kind of almost a, now, a pent-up interest.

Art Zeile: Well, that's a great question. It's the question we ask just about every week here at DHI Group. And I would say it is still a very sluggish economy. There is still a belief that the demand for tech hiring isn't nearly what it has been in years past or what you consider to be a normal year. The way that we look at the tech jobs report that comes out from Comptia every single month is that we're still down about 30% from what would constitute a normal environment in terms of the total number of tech job postings.

Speaker Change: kind of demand to think about career steps in general. If you think about it, there were a lot of people that were eager to move

Art Zeile: If you think about it, there were a lot of people that were eager to move to a new career position in 2021, 2022. Then there was kind of last year, and we're still in, the great stay. Well, in general, most tech professionals want to be involved with a new technology, a new skill set, a new project once every two or three years. So I think that there is this pent-up demand to look at alternatives.

Art Zeile: If you think about it, there were a lot of people that were eager to move to a new career position in 2021-2022. Then there was kind of last year, and we're still in, the great stay. Well, in general, most tech professionals want to be involved with a new technology, a new skill set, a new project once every two or three years. So I think that there is this pent-up demand to look at alternatives.

Speaker Change: to a new career position in 2021-2022 than there was kind of last year, and we're still in, the Great Stay. Well, in general, most tech professionals want to be involved with a new...

Speaker Change: technology, a new skill set, a new project I would say once every every two or three years. So I think that there is this pent-up demand to you know look at alternatives.

Art Zeile: And in fact, we did an analysis of Q2's tech job postings this year versus Q2 of 2019. And the exact answer was that we were down 31% from that quarter in terms of tech job postings. So again, it's a difficult environment. I'd say the real, you know, substantial you know, kind of news for this quarter is that we saw not only the continuing pattern of attrition of smaller companies, which we have seen in many quarters in the past.

Kevin Liu: It's great to hear, and maybe just switching gears to CJ, you know, it was nice to see kind of the acceleration in bookings, kind of quarter over quarter. As you look towards the back half of the year, do you expect you can continue to build on that and accelerate that further? And perhaps you could kind of talk about how the election cycle could potentially impact that, positive or negatively, as we make our way through the rest of this year.

Art Zeile: It's great to hear, and maybe just switching gears to CJ, you know, it was nice to see kind of the acceleration in booking this kind of quarter over quarter. As you look towards the back half of the year, do you expect you can continue to build on that and accelerate that further? And perhaps you could kind of talk about how the election cycle could potentially impact that, positive or negatively, as we make our way through the rest of this year.

CJ: It's great to hear, and maybe just switching gears to CJ, you know, it was nice to see kind of the acceleration in bookings, kind of quarter over quarter. As you look towards the back half of the year, do you expect you can continue to build on that and accelerate that further? And perhaps you could kind of talk about, you know, how the election cycle could potentially impact that, positive or negatively, as we make our way through the rest of this year.

Art Zeile: So we're not planning on seeing anything remarkably pick up for CJ. I'd say that we are, you know, proud of the fact that we got to 9% improvement, and if we could hold that for the remainder of the year, that's a net positive in an environment where there's still, as you mentioned, political uncertainty. There's still a lot of economic uncertainty. Obviously, we always talk about CJ being correlated to the defense budget, and that's behind us, but quite frankly, we have to get, we're going to probably go into a continuing resolution once again when we get to the end of this fiscal year, which again does provide a little bit of uncertainty going into the back half. But Raime, do you have any additional thoughts?

Speaker Change: So we're not planning on seeing anything remarkably pick up for CJ. I'd say that we are, you know, proud of the fact that we got to 9% improvement.

Art Zeile: I would say over the last six quarters, but we did have two notable customers that were in the six figure range for us that did not renew at all. And they were for different reasons. In one particular case, it was a large manufacturing, automobile manufacturing company that had UA or UAW strike-related budget constraints. And then the second one was a staffing recruiting firm that divested their IT practice. So they no longer had IT recruiters.

Speaker Change: And if we could hold that for the remainder of the year, that's a net positive in an environment where there's still, as you mentioned, political uncertainty, there's still a lot of economic uncertainty. Obviously, we always talk about CJ being correlated to the defense budget, and that's behind us.

Speaker Change: Quite frankly, we're going to probably go into a continuing resolution once again when we get to the end of this fiscal year, which again does provide a little bit of uncertainty going into the back half. But Raime, do you have any additional thoughts?

Art Zeile: And that's what really caused a dip in the dice revenue renewal rate from what we saw in the first quarter. But that's how I would describe the environment today. It's still about the same as it was in the first quarter. And that is to say that people are very budget conscious. They're worried about the state of the economy, probably even more so since the job report that came out on Friday of last week. So that's what we're doing.

Raime Muhle: I don't. Art, I think you summed it up beautifully.

Raime: I don't. Art, I think you summed it up beautifully.

Kevin Liu: Alright, great. And then, just lastly, for me, I know you guys have taken out some costs already through the restructuring last month. Maybe as you look at kind of more of your variable cost structure and marketing, in particular, how are you thinking about the spend there as we go into the back half of the year? Are you interested in continuing to kind of build the funnel in hopes of better times ahead? Or would you look to pare that back and kind of match it to when you start to see more of a pick-up on the booking?

Art Zeile: All right, great. And then, just lastly, for me, I know you guys have taken out some costs already through the restructuring last month. Maybe as you look at kind of more of your variable cost structure and marketing, in particular, how are you thinking about the spend there as we go into the back half of the year? Are you interested in continuing to kind of build the funnel in hopes of better times ahead? Or would you look to pare that back and kind of match it to when you start to see more of a pick-up on the booking?

Speaker Change: All right, great. And then just lastly for me, I know you guys have taken out some costs already through the restructuring last month. Maybe as you look at kind of more of your variable cost structure and marketing in particular, how are you thinking about the spend there as we go into the back half of the year? Are you interested in continuing to kind of build the funnel in hopes of better times ahead? Or would you look to pare that back and kind of match it to when you start to see more of a pickup on the booking front?

Raime Muhle: in terms of one question for Raimea, maybe nice to see you dip below one times leverage this quarter, but how are you thinking about capital allocation just given the current backdrop? How are you going to continue to balance continuing to chip away at the dead versus maybe potentially resuming share purchases?

Raime Muhle: Yeah, I anticipate that our marketing spend, particularly our variable marketing spend, will be very similar in the second half to what we saw in the second quarter. We've made a lot of improvements and continue to make improvements in the efficiency of our marketing spend and believe that the current level of marketing spend that we're seeing in Q2 is appropriate based on what we anticipate in the second half for bookings and revenue. Of course, that continues to be an area that we can flex as needed, up or down, you know, depending on how the market evolves.

Speaker Change: Yeah, I anticipate that our marketing spend, particularly our variable marketing spend, will be very similar in the second half to what we saw in the second quarter. We've made a lot of improvements and continue to make improvements on the efficiency of our marketing spend.

Kevin Liu: All right, thank you for taking the question.

Raime Muhle: Hi, Zach. Yep, great questions. We were really pleased with our leverage ratio, tracking below that one times because we do pick up the benefit of interest rate reduction of about 25 basis points. And so we're pleased with that. I think that's an ongoing conversation with our board. Regarding what our best highest use of capital is, I envision that in this coming quarter, we will have discussions around whether we continue to pay down debt and or we reintroduce the buyback program, just given that we hit that lower than one time leverage. So I think it remains to be seen how that conversation evolves. And as you would imagine, some of that depends on the Fed and rates as well in the broader macro environment.

Zachary Cummins: Understood.

Raime: and believe that the current level of marketing spending we're seeing in q two is appropriate based on what we envision in the second half for bookings and revenue

Raime: Of course, that continues to be an area that we can flex as needed, up or down, depending on how the market evolves.

Kevin Liu: Okay, thank you for taking the question.

Art Zeile: Thanks, Kevin. Thank you, Kevin. I appreciate it.

Speaker Change: thank you for taking a quest

Operator: Again, if you do have a question, please press star then 1. Next, we have a follow-up question from Gary Prestapino with Barrington Research. Please go ahead.

Operator: Again, if you do have a question, please press star then 1. Next, we have a follow-up question from Gary Prestopino with Barrington Research. Please go ahead.

Raime: Thanks Kevin. Thank you Kevin.

Speaker Change: again if you do have a questions please press starars than one

Gary Prestapino: Next we have a follow-up question from Gary Prestapino with Barrington Research. Please go ahead. Yeah I just I was trying to write down as either you were talking

Gary Prestapino: Yeah, I just I was trying to write down as either Art or Raime, you mentioned something about the number of job postings on DICE. Unincreased applicants were up. I just didn't get it all down when you were talking about that. Do you have that?

Gary Prestopino: Yeah, I just I was trying to write down as either Art or Raime, you mentioned something about the number of job postings on DICE and increased applicants were up. Did I, I just didn't get it all down when you were talking about that. Do you have that?

Gary Prestapino: Either Art or Raime, you mentioned something about the number of post-job postings on DICE.

Speaker Change: Unincreased applicants were up. I just didn't get it all down when you were talking about that. Do you have that?

Art Zeile: Yes, so quarter over quarter, if you think about Q2 of this year versus Q2 of last year, the total number of tech job postings on Dice is actually up 30% despite the weakened environment, and the total number of applications that have been generated on the platform is up 85%. And so we're proud of the product team's delivery of a number of different features that create more engagement on the platform.

Zachary Cummins: Well, thanks for taking my questions and best of luck with the rest of the quarter. Thanks, Zach.

Raime: yeah

Raime: So.

Speaker Change: quarter-over quarter if you think about q two of this year versus q two last year the total number of tech job postings on guys is actually up thirty percent despite the weakened environment and the total number of applications that have been generated on the platform is up eighty five percent

Gary Prestopino: The next question is from Gary Prostapino with Barrington Research. Please go ahead.

Art Zeile: Hey, good afternoon, Art and Remy. Let me, let me, well, first of all, have you gotten any data from comp TAI on what the postings were like tech job postings were like in July, because just according to my records, they were up 142,000 in December and March, they increased to 191 and now we're at 209,000. So you are starting to see a pickup, but because of what's going on in the economy, did they track down in July versus June or you don't have that data?

Speaker Change: and so we're proud of the product teams.

Speaker Change: delivery of a number of different features that create more engagement on the platform and we also related this back to what we call our all jobs initiative we're essentially focused on bring all the tech jobs in the united states economy to dice

Art Zeile: And we also related this back to what we call our All Jobs Initiative. We're essentially focused on bringing all the tech jobs in the United States economy to DICE. That is the goal. It's not something that we can achieve this year, but we think we can achieve it by the end of 2025.

Art Zeile: We're essentially focused on bringing all the tech jobs in the United States economy to Dice. That is the goal. It's not something that we can achieve this year, but we think we can achieve it by the end of 2025.

Speaker Change: That is the goal. It's not something that we did achieve this year, but we think we can achieve it by the end of 2025.

Gary Prestapino: So I guess the question I would have, and maybe just explain this to me, if the job postings were up 30%, right? Um, that must mean you're obviously getting more posts from your customer base that you're still retaining. But that's not translating into a similar, you know, some revenue growth there, or a similar level. It wouldn't be a similar level of revenue growth, but at least revenue. So could you kind of walk me through that?

Gary Prestopino: So I guess the question I would have, and maybe just explain this to me, if the job postings were up 30%, right? Um, that must mean you're obviously from your customer base that you're still retaining, and you're getting more posts. But that's not translating into a similar, you know, some revenue growth there, or a similar level. It wouldn't be a similar level of revenue growth, but at least it would bring in revenue. So could you kind of walk me through that?

Art Zeile: Yes, they did post that data just Friday of last week. And the answer is that July's new tech job postings were 176,324. So it's below what we saw as a peak in May. Now I have to say that because of seasonality, we always see a dip in June in July. And so when I think about that figure, I actually compare it to the last seasonal dip, which was December of last year, and that was 142,000 new tech job postings.

Speaker Change: So I guess the question I would have, and maybe just explain this to me, if the job postings were up 30%, right?

Speaker Change: That must mean you're obviously from your customer base that you're still retaining, you're getting more postings.

Speaker Change: but that's not translating into a similar some revenue grow there similar level would be a ilar level revenue growth but at least revenue grow

Art Zeile: Yeah, I think that I can understand the logic that is inherent in that question. You're saying that if we only had jobs on our site that were associated with subscriptions, then we should have seen a lift in the dollar value of those subscriptions. Our all-job initiative actually has two different additional layers of jobs that we put on the D.I.C.E. site in addition to those that are paid subscriptions. The first is what's called programmatic. We take feeds from different job marketing agencies, and we will place them directly on the D.I.C.E. platform

Speaker Change: So could you kind of walk me through that?

Speaker Change: yeah I that I can understand the the logic

Art Zeile: The other kind of notable outcomes from the comp tier report is that the unemployment rate for the tech sector did edge down, which is obviously a positive. And then the number of total tech job, tech jobs in the economy decreased by 14,000, but this is the lowest decrease we have seen in over a year, quite frankly. So it feels like there's a little bit of stabilization, but as we know, it's been a difficult year or a year and a half as we've been waiting for a recession.

Speaker Change: that is inherent in that question, you're saying if we only had jobs on our site that were associated with subscriptions, then we should have seen a lift in the dollar value of those subscriptions.

Speaker Change: Our all-job initiative actually has two different additional layers of jobs that we put onto the DICE site in addition to those that are paid subscriptions.

Speaker Change: The first is what's called programmatic. We take feeds from different job marketing agencies.

Art Zeile: And so I think that more than anything else weighs on the decision-making process for a lot of CFOs out there. Okay, and then in terms your target for adjusted EBITDA margin, you said is 24% I believe, but yes that's correct. You actually came up with 25%. So is that sequential dip in the AE margin, a function of that you've had to lower your sales growth guidance a little bit or is there some kind of incremental investments that you're making?

Art Zeile: We're paid by the click-through rates associated with those jobs or by the applications that are sent to the underlying customers. There are certain customers, like, for example, Capital One or Amazon, that prefer to go through a marketing agency for all their jobs, so they also include technology jobs in that. It's a little bit of a different way of getting revenue, but it's tuned to the way that they like to post jobs.

Art Zeile: We're paid by the click-through rate associated with those jobs or by the applications that are sent to the underlying customers. There are certain customers, like, for example, Capital One or Amazon, that prefer to go through a marketing agency for all their jobs, so they also include technology jobs in that. It's a little bit of a different way of getting revenue, but it's tuned to the way that they like to post jobs.

Speaker Change: And we will place them directly on the DICE platform. We're paid by the click-through rates associated with those jobs or by the applications that are sent to the underlying customers. There are certain customers, like, for example,

Speaker Change: Capital One or Amazon that prefer to go through a marketing agency for all their jobs so they also include technology jobs in that. It's a little bit of a different way of getting revenue but it's

Art Zeile: The second lever or way of getting additional jobs on our site is that we actually scrape them off of sites that do not pay us for a subscription, and we use the benefits that we drive to those particular customers as a way of enticing them to buy a full-time subscription with us. So we do have jobs now on the D.I.C.E. site that are not paid for by the underlying customers themselves.

Gary Prestapino: Okay, that explains it. Thank you.

Speaker Change: tune to the way that they like to post shos the second let lever or way of getting additional jobs on our site is that we actually

Art Zeile: We're the company over the last six months of this year. Yeah, hi, Gary. This is Raime. I think that as we look towards the second half of the year, as we noted, we did have a restructuring event at the beginning of the quarter that will yield us annualized savings and we're expecting that to be offset by merit increases for our employees, which actually go into fact in the midpoint of the year.

Speaker Change: Scrape them off of

Speaker Change: sites that do not pay us for a subscription

Speaker Change: And we use the benefits that we drive to those particular customers as a way of enticing them to buy a full-time subscription with us. So we do have jobs now on the Dice site that are not paid for by the underlying customer themselves.

Gary Prestopino: Okay, that explains it. Thank you.

Art Zeile: Absolutely a great question.

Art Zeile: So that will impact our Q3 and Q4 on a comparable basis and we do have investments as well based into the second half related to several initiatives that we expect to yield in a longer term growth for us. Okay, so so you're right now your sales force is still, especially with dice, because CJ is growing, dice is still a very, very challenging environment for the sales people out there. But are they starting to at least, you know, see a pick up and I guess lack of a better word for interest or activity listening, whatever from, you know, the potential new account base out there.

Speaker Change: Okay, that explains it. Thank you.

Speaker Change: Absolutely, great question.

Operator: At this time, there are no further questions, so this concludes our question and answer session. I would like to turn the conference back over to Art Zeile for any closing remarks.

Speaker Change: At this time, there are no further questions, so this concludes our question and answer session. I would like to turn the conference back over to Art Zeile for any closing remarks.

Art Zeile: Well, thank you very much, Operator, and thank you to everyone for joining us today. As always, if you have any questions about our company or would like to speak with the management team, myself, or Raime, please reach out to Todd Kehrli, and he will help to arrange a meeting. Thanks, everyone, for your interest in DHI Group, and have a great day.

Art Zeile: Well, thank you very much, operator. And thank you to everyone for joining us today. As always, if you have any questions

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Art Zeile: well thank you very much operator and thank you to everyone for joining us today as always if you have any questions about our company or wewould like to speak with the management team myself

Speaker Change: ramy please reach out to tod curly and he will help to arrange your meeting thanks everyone for your interest in di group and have a great day

Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Art Zeile: Yeah, I was going to say that we have two new business teams for dice, one is focused on commercial accounts, one is focused on staffing, recruiting, consulting companies, which is all SRC category. And I would say that the SRC pipeline and activity improved sequentially from Q1 to Q2. I wouldn't say it was, you know, significant or something that obviously drove an enormous amount of bookings, but it feels like it's stabilizing. And there is kind of a belief that maybe that is an indicator of sorts that the market is also more stable when staffing recruiting agencies are more active actively involved with staffing technology professionals.

Art Zeile: So that felt better. I'd still say commercial accounts is very, is a very challenged environment. We are focused on those five industries that are hiring, but I look at that and say, well, back in 2002, I'm sorry, 2022 or maybe even a better representative year would be 2019. We had all 16 verticals that we tracked aggressively hiring technology talent. Now we have a lot more difficult. There's still customers that are very interested in hiring tech professionals, but it's an environment where the demand is a lot weaker.

Operator: Okay, thank you. Again, if you have a question, please press star then one.

Kevin Liu: The next question is from Kevin Liu with Kay Liu and company LLC. Please go ahead. Hey, good afternoon guys. I think that guy could seem kind of an 85% increase in average monthly applications from Canada. I'm wondering if you could put that into context for us. Do you think that's indicative of potentially quite right starting to rise again and maybe employers even get back to hiring the civil? Is it more of a function of kind of higher unemployment among technology professionals just any help there in terms of how much of a leading indicator this could be for things improving from here on out?

Kevin Liu: I think it is both, quite frankly, I think that we've built a better experience for the candidates made it easier for them to apply. We have an easy apply kind of functionality on the dice platform. And nevertheless, I do think that the environment is such that most people are a little bit worried about their present employment situation. So they are more interested in going to a dice and looking at their plan B or plan C. I do think that there's also kind of almost a now a pent up kind of demand to think about career steps in general.

Art Zeile: If you think about it, there were a lot of people that were eager to move to a new career position in 2020, 2022, then there was kind of last year and we're still in the great stay. Well, in general, most tech professionals want to be involved with a new technology, a new skill set, a new project. I would say once every two or three years. So I think that there is this pent up demand to look at alternatives. It's great to hear.

Kevin Liu: And maybe just switching gears to CJ. No, it was nice to see kind of the acceleration and booking this kind of quarter over quarter. As you look towards the back half of the year, do you expect you can continue to build on that and accelerate that further.

Art Zeile: And perhaps you could kind of talk about how the election cycle could potentially impact that positive or negatively as we make our way through the rest of this year. So we're not planning on seeing anything remarkably pick up for CJ. I'd say that we are proud of the fact that we got to 9% improvement. And if we could hold that for the remainder of the year, that's a positive in a environment where there's still, as you mentioned, political uncertainty, there's still a lot of economic uncertainty.

Art Zeile: Obviously, we always talk about CJ being correlated to the defense budget, and that's behind us. But quite frankly, we have to get, we're going to probably going to a continuing resolution once again when we get to the end of this fiscal year, which again does provide a little bit of uncertainty going into the back half. But, Raimi, do you have any additional thoughts? I don't. All right. I think you've summed it up beautifully. All right. Great.

Kevin Liu: And then just lastly for me, I know you guys have taken out some costs already through the restructuring last month. Maybe as you look at kind of more of your variable cost structure and marketing in particular, how are you thinking about the spend there as we go into the back half of the year? Are you interested in continuing to kind of build the funnel in hopes of better times ahead? Or would you look to pair that back and kind of match it to when you start to see more of a pick up on the bookings from?

Kevin Liu: Yeah, I anticipate that our marketing spend particularly our variable marketing spend will be very similar in the second half to what we saw in the second quarter. We've made a lot of improvements and continue to make improvements on the efficiencies of our marketing spend. And believe that the current level of marketing spend we're seeing in Q2 is appropriate based on what we envision in the second half for bookings and revenue. Of course, that continues to be an area that we can flex as needed, up or down, depending on how the market evolves Okay, thank you for taking the questions. Thanks Kevin. Thank you Kevin. Appreciate it. Again, if you do have a question, please press star then one.

Gary Prestopino: Next, we have a follow up question from Gary Prestopino with Barrington Research. Please go ahead. Yeah, I just I was trying to write down as either you were talking. Either you art or Raime, you mentioned something about the number of post job postings on dice and increased applicants were up. I just didn't get it all down when when you were talking about that. Do you have that?

Art Zeile: Yeah, so quarter over quarter if you think about Q two of this year versus Q two of last year, the total number of tech job postings on dice is actually up 30% despite the weakened environment and the total number of applications that have been generated on the platform is up 85%. And so we're proud of the product teams, you know, delivery of a number of different features that create more engagement on the platform.

Art Zeile: And we also related this back to what we call our all jobs initiative. We're essentially focused on bringing all the tech jobs in the United States economy to dice. That is the goal. It's not something that we get achieved this year, but we think we can achieve it by the end of 2025.

Art Zeile: So I guess the question I would have and maybe just explain this to me if the Pope if the job postings were up 30% right. That must mean you're obviously from your customer base that you're still retaining, you're getting more postings. But that's not translating into a similar, you know, some revenue growth there or similar level. It would be a similar level of revenue growth, but at least revenue growth. So could you kind of walk me through that?

Art Zeile: Yeah, I can understand the logic that is inherent in that question. And you're saying if we only had jobs on our site that were associated with subscriptions, then we should have seen a lift in the dollar value of those subscriptions. Our all job initiative actually has two different additional layers of jobs that we put onto the dice site in addition to those that are paid subscriptions. The first is what's called programmatic.

Art Zeile: We take feeds from different job marketing agencies and we will place them directly on the dice platform was paid by the click through late associated with those jobs or by the applications that are some of the underlying customers. There are certain customers like for example, a capital one or Amazon that prefer to go through a marketing agency for all their jobs. So they also include technology jobs in that. It's a little bit of a different way of getting revenue, but it's tuned to the way that they like to post jobs.

Art Zeile: The second lever or way of getting additional jobs on our site is that we actually scrape them off of sites that do not pay us for a subscription. And we use the benefits that we drive to those particular customers as a way of enticing them to buy a full time subscription with us. So we do have jobs now on the dice site that are not paid for by the customer, the underlying customer of themselves.

Art Zeile: Okay, that explains it. Thank you. Absolutely. Great question.

Operator: At this time, there are no further questions so this concludes our question and answer session.

Art Zeile: I would like to turn the conference back over to Art Zeile for any closing remarks. Well, thank you very much operator and thank you to everyone for joining us today. As always, if you have any questions about our company or would like to speak with the management team myself, Raime, please reach out to Todd Kehrli and he will help to arrange a meeting.

Operator: Thanks everyone for your interest in DHI Group and have a great day. The conference has now concluded.

Operator: Thank you for attending today's presentation.

Operator: You may now disconnect.

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