DHI Group Inc. Q1 2025 Earnings Call
Good day and welcome to the DHI Group first quarter of 2025 Financial Results Conference
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Speaker Change: I would now like to turn the call of Judith Todd Kehrli of Pondell-Lokinson. Please go ahead.
Todd Kehrli: Thank you operator, good afternoon and welcome to DHI Group's first quarter earnings conference call for 2025.
Speaker Change: Joining me today are DHI's CEO , Art Zeile and CFO , Greg Schippers.
Speaker Change: Before I hand the call over to Art, I'd like to address a few quick items. This afternoon, DHI issued a press release announcing its financial results for the first quarter of 2025.
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 Security's laws.
Speaker Change: These four-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 four-looking statements.
Factories that could cause these four looking statements to differ
Speaker Change: From actual results include the risks and uncertainties described in the company's periodic reports on form 10K and 10Q and other filings with the Securities and Exchange Commission. DHI undertakes no obligation to update or revive any forward-looking statements.
Speaker Change: Lastly, on today's call management, we'll reference specific financial measures including adjusted EBITDA, adjusted EBITDA margin, free cash flow, and non-GAAP earnings per share.
which are not prepared in accordance with U.S. Gap.
Speaker Change: Information regarding these non-GAAP measures and the reconciliations to the most directly comparable GAAP measures is available in our earnings release which can be found on our website at DHIgrouping.com and the Investrelations section.
Speaker Change: And now turn the call over to Art Zeile, CEO of DHI Group
Art Zeile: Thank you, Todd. Good afternoon, everyone, and welcome to our first quarter earnings conference call for 2025. We appreciate you joining us today and as we review our financial performance and discuss our outlook for the remainder of the year.
Art Zeile: Let me start by saying that Q1 marks an important milestone for DHI as it is the first quarter we are reporting financial results under our new business segmentation. This segmentation aligns with how we operate and manage the business today and provides greater visibility into the performance of our individual brands.
Art Zeile: As part of this initiative, we aligned our operations around our two distinct brands, clearance jobs and dice, each with dedicated leadership and tailored go-to-market strategies that reflect their unique market dynamics and customer needs.
Art Zeile: This brand-led structure brings sales, marketing, product, and development teams under a single leader for each business, driving greater focus and accountability.
Art Zeile: At the same time, we've maintained centralized support functions, including human resources, finance, and technology operations to efficiently manage our employees, business systems, and public company responsibilities.
Art Zeile: We believe this realignment enhances our profitability and unlocks new strategic growth opportunities for each brand.
Art Zeile: More specifically, we believe that it allows clearance jobs to expand its mission in the GovTech space.
Art Zeile: Now, I would like to provide an overview of our performance, this quarter, and the measures we've implemented to enhance our position moving forward.
Art Zeile: First, looking at the company as a whole, despite a 10% decline in total revenue in the first quarter, we delivered a company-wide adjusted EBITDA of $7 million, representing an adjusted EBITDA margin of 22%.
Art Zeile: We have removed over $20 million of operating costs through three restructuring since May of 2023, while improving our product offerings and strengthening our sales and marketing teams.
Art Zeile: These initiatives position us well for a return to highly profitable growth once we are back in a normal tech hiring environment.
Art Zeile: From a segment perspective, Clears Jobs continues to demonstrate its value as a highly profitable and strategically differentiated platform.
Art Zeile: CJ delivered another quarter of a very strong profitability with adjusted EBIDA of $5.7 million and an adjusted EBIDA margin of 43%.
Art Zeile: While bookings declined 1% year over year, this was primarily due to the uncertainty around the Doge initiative and its potential impact on the federal defense budget, which I will speak to more about shortly.
Art Zeile: Importantly, our larger CJ customers remain confident in their prospects for the coming year and we believe the business is well positioned for long-term growth, given its leadership position in the market.
Art Zeile: As expected, dice faced a more challenging environment, with bookings down 20% year-over-year.
Art Zeile: This decline was primarily driven by customers that had booked multi-year contracts back in the booming first quarter of 2022 and adjusted their consumption to a lower demand environment during their renewal.
Art Zeile: That said, we continue to prioritize aligning dice cost structure with current market conditions, delivering adjusted EBITDA of $3.4 million and an adjusted EBITDA margin of 18%.
Art Zeile: We remain confident in DICE's ability to return to growth as tech hiring demand normalizes.
Art Zeile: Now, let's dig into the current state of the tech labor market, which serves as a key growth indicator for our business.
Art Zeile: We believe that tech hiring demand is gradually returning to normal levels Since August of 2024 we've seen consistent year-over-year increases in monthly new tech job postings
Art Zeile: In fact, according to Kantia, new tech job postings in Q1 of this year increased by 16% compared to last year.
Art Zeile: Averaging 215,000 new tech job postings each month during the quarter.
Art Zeile: While the number of new tech job postings is improving, it is still only around 70% of normal levels if we consider 2019 the last normal year of tech hiring demand.
Art Zeile: In the tech staffing sector specifically, staffing industry analysts recently revised its 2025 growth forecast to a 2% year-over-year increase.
Art Zeile: While this is down from the original forecast of 5% growth, it is still a significant improvement from the not 6% decline in 2024 and a 10% decline in 2023.
Art Zeile: This is a positive signal, reflecting confidence in the industry's improved performance this year.
Art Zeile: Another encouraging demand signal comes from light tasks which tracks new tech recruiter job postings
Art Zeile: In the first quarter, Kehr Cruder job postings increased 36% year-over-year [inaudible]
Art Zeile: This uptick is also a promising sign, is increased hiring of tech recruiters typically signals a forthcoming rise in the demand for hiring tech professionals.
Moreover, AI continues to generate increasing demand for tech professionals.
Art Zeile: Major consulting firms are leading early stage AI projects with IBM securing $5 billion in AI related business and McKinsey forecasting that 45% of its projects will focus on AI this year.
Art Zeile: We see this as a key indicator of broader corporate AI adoption, which will ultimately require more technologists for effective implementation.
Speaker Change: As businesses increase these initiatives, platforms like Clarence Jobs and Dice, along with our database of 9.1 million tech professionals, will be essential tools for employers looking to attract top tech talent.
Speaker Change: In the federal sector, Doge-related uncertainty impacted new business bookings and renewals to a certain extent at various jobs.
Speaker Change: However, we believe this is temporary as the canceled Department of Defense contracts reported by DOGE represent approximately one half of 1% of the full defense budget.
Speaker Change: Also, the heads of the Senate and House Armed Services Committee
Speaker Change: Recently, agreed on a $150 billion boost for current defense funding. Senate Armed Services Committee Chairman Roger Wicker and House Armed Services Committee Chairman Mike Rogers view this as a generational investment in the military.
Speaker Change: and both President Trump and Secretary Hegseth have indicated their desire for the first $1 trillion defense budget for fiscal year 2026.
Speaker Change: Moreover, Booz Allen's CEO recently noted that if the government wants to operate with fewer people, it will need more technology. And that means more technologists will be needed to implement it.
Speaker Change: The move by Europe to start spending more on their own defense could also possibly impact CJ's opportunity because as EU defense spending goes up, there are very few EU contractors
Speaker Change: Over 60% of EU defense spending flows to US military contractors today and the EU can't create weapons, manufacturing, facilities, and months, it actually takes years.
Speaker Change: So in the interim, we expect this new spending will flow to U.S. defense contractors as they are the largest viable source of weaponry that exists.
Speaker Change: We also believe that there are additional services that CJ can deliver in the GovTech space of the course of time and we are actively working to explore them.
Speaker Change: During the quarter, CJ secured several new customers, including Boston Government Services, SAWB, and Complete Parachute Solutions.
Speaker Change: With over 10,000 employers of cleared tech professionals, and over a hundred government agencies also needing cleared tech professionals, non-to mention the EU opportunity I just outlined, CJA has a significant growth opportunity ahead.
Speaker Change: Dice also secured several notable customers this quarter, including American Airlines, Jason Pharmaceuticals, and FlexJet.
Speaker Change: On the new business run, we are focused on recession-resistant sectors like consulting, health care, financial services, and education.
Speaker Change: as well as those staffing and recruiting firms that are seeing increased business.
Speaker Change: We continue to hear success stories from our clients, like professional services from Mindseeker, who recently said that DICE is the best platform for finding technical talent, particularly for its bigger clients.
Speaker Change: Now, let me quickly touch on what we're doing to drive increased adoption of our two brands.
Speaker Change: Clair's jobs continue to innovate with recent product updates, including expanded multifactor authentication options and enhancements to our live events platform.
Speaker Change: CJ was honored to receive recognition from the White House as a vital private sector partner in strengthening the National Cybersecurity Workforce, reinforcing CJ's leadership position in this critical market.
Speaker Change: For DICE, during the quarter we launched a redesigned hiring page to introduce prospective clients to our menu of services. We also introduced a new modern dashboard and home feed for technologists.
Speaker Change: In the current quarter, we expect to release a new modernized job search experience, as well as a lighter version of our talent search product for our new web store, which is part of our broader product-led growth strategy.
Speaker Change: Our All Jobs Initiative continues to drive job posting growth, increasing candidate engagement
Speaker Change: In the first quarter, DICE averaged 1.6 million monthly job applications, up 15% year-over-year further solidifying DICE as the leading tech career marketplace.
Speaker Change: We believe in the virtuous cycle of increased candidate activity attracting more cruders and employers as subscribers.
Speaker Change: Turning to guidance, although there remains significant uncertainties surrounding tech hiring and investments in general in today's economy, we are reiterating our full year revenue guidance of $131 to $135 million.
Speaker Change: In the second quarter, we expect revenue to be between $32 and $33 million.
Speaker Change: In meantime, we continue to focus on delivering substantial profits for our shareholders and our reiterating our target of a 24% adjusted EBITDA margin for the full year 2025, with strong, free cash
Speaker Change: As I mentioned, we remain focused on controlling what we can, namely our cost structure and capital allocation.
Speaker Change: We announced a five million dollar share repurchase program in January , reflecting our confidence in the strength of our brands, the resilience of our business model, and our commitment to driving shareholder value.
Speaker Change: Having achieved our targeted leverage ratio of 1X, we used our free cash flow this quarter to repurchase shares. Our board believes, as we do, that our shares are trading below their intrinsic value due to the soft, tech, hiring environment.
Speaker Change: Also, we believe the sum of parts valuation of our company justifies this view.
Speaker Change: In closing, I'm proud of the progress we've made in reshaping DHI Group into a more focused, efficient, and profitable organization.
Speaker Change: Clearns Jobs remains a market leader with strong profitability and long-term growth potential, and DICE is well positioned to benefit as tech hiring demand returns.
Speaker Change: And across both brands, we are making smart investments in product innovation to drive customer engagement and future growth.
Speaker Change: With that, I'll turn the call over to Greg to walk you through our financial results in more detail. Greg?
Greg Schippers: Thank you, Art, and good afternoon, everyone. As Art mentioned, we have completed the segmentation of our business into two distinct brands, Clarence Jobs and Dice.
Greg Schippers: Going forward, we will report our results in alignment with this structure.
Greg Schippers: This segmentation reflects how we manage and operate the business today and offers greater visibility into the performance of each brand.
Greg Schippers: To support this transition, we have also provided historical segmented results by quarter for 2024 in this quarter's presentation on our investor relations website. Now, let me take you through our results for the first quarter.
Greg Schippers: We reported total revenue of $32.3 million, which was down 10% on a year-over-year basis and down 7% versus the fourth quarter.
Greg Schippers: Total bookings for the quarter were $42.1 million, down 14% year over year.
Greg Schippers: Our total recurring revenue was down 9% compared to the prior year quarter, and the bookings that drive our recurring revenue were down 13% for the quarter.
Greg Schippers: Cleaner Shops Revenue was $13.4 million, up 3% year-over-year, but down 3% sequentially.
Greg Schippers: Bookings for CJ were $16.8 million down 1% year over year.
Greg Schippers: We ended the first quarter with 1,891 CJ recruitment package customers, which was down 7% on a year-over-year basis and down 3% on a sequential basis.
Art Zeile: As Art mentioned, CJ's new business teams were impacted in the quarter by doge-related uncertainty Our average annual revenue per CJ recruitment package customer was up 12% year over year and up 3% sequentially to $25,800
Art Zeile: Approximately 90% of CJ revenue is recurring and comes from annual or multi-year contracts.
Art Zeile: For the quarter, CJ's revenue renewal rate was 92% and CJ's retention rate was strong at 106%.
Art Zeile: The outstanding retention rate demonstrates the continued value CJ delivers in the recruitment of cleared professionals.
Art Zeile: Dice Revenue was $18.9 million, which was down 18% year-over-year and down 10% sequentially. Dice bookings were $25.3 million, down 20% year-over-year.
Art Zeile: We ended the quarter with 4,490 dice recruitment package customers, which is down 5% from last quarter and down 14% year over year.
Art Zeile: Dice Revenue Renewal Rate was 70% for the quarter and its retention rate was 92%.
Art Zeile: The reduction in customer count and DICE's renewal rate is also attributable to churn with smaller customers spending less than $15,000 per year, representing 75% of the total churn on count and are more likely to be impacted by the difficult macro environment and uncertainty.
Art Zeile: Our average annual revenue per dice recruitment package customer was in line with the fourth quarter and up 2% year over year to $16,400.
Art Zeile: As with CJ, approximately 90% of vice revenue is recurring and comes from annual or multi-year contracts
Turning to Operating Expenses
Art Zeile: First quarter, operating expenses increased $7.1 million to $41.2 million when compared to $34.1 million in the year ago quarter. It includes a $7.4 million dice goodwill and paramacharge and a $2.3 million charge from the January restructuring.
Art Zeile: Because of the difficult market conditions over the past two and a half years, we have reduced costs through restructuring in the second quarter of 2023 in the third quarter of 2024 and again in January of this year.
Art Zeile: Together, these restructuring have reduced our annual operating expenses and capitalized development costs by approximately $20 million. We continue to focus on our operational efficiency.
Art Zeile: For the quarter, we had an income tax benefit of $126,000 on a loss before taxes of $9.5 million.
Art Zeile: Our tax rate differed for the quarter from our approximate statutory rate of 25 percent due to tax expense from the best unit stock-based compensation and the non-deductible impairment of goodwill.
Art Zeile: Moving on to the bottom line, we recorded a net loss of $9.4 million or 21 cents per diluted share in the first quarter. For the prior year quarter, we reported a net loss of $1.5 million or 3 cents per diluted share.
Art Zeile: Net loss for the quarter was impacted by a $7.4 million impairment to DICE Goodwill and a $2.3 million restructuring charge associated with our January restructuring, which included a reduction of approximately 8% of the company's workforce.
Art Zeile: non-GAAP earnings per share for the quarter was $0.04 compared to earnings of $0.05 per share for the prior year quarter.
Art Zeile: The alluded-chairs outstanding for the quarter were 45.5 million compared to 44.2 million in the prior year quarter
Art Zeile: Adjusted EBITDA for the first quarter decreased 19% to $7.0 million, a margin of 22%, compared to $8.6 million, or a margin of 24% in the first quarter a year ago.
Art Zeile: On a segmented basis, CJ Adjusted Ebita was very strong at $5.7 million in the first quarter.
Speaker Change: Representing a 43% adjusted EBITDA margin as compared to adjusted EBITDA at $5.5 million or a margin of 42% in the prior year period.
Speaker Change: Operating cashflow for the first quarter was $2.2 million, compared to $2.1 million in the prior year period.
Speaker Change: Brie Cashflow, which is operating in cashflow's less capital expenditures with $88,000 for the first quarter, up significantly from a negative $2.4 million in the first quarter of last year.
Speaker Change: Our capital expenditures primarily consist of capitalized development costs, which were $2.0 million in the first quarter compared to $3.4 million in the first quarter last year, a savings of $1.5 million or 42%.
Speaker Change: Capitalized Development Costs in the first quarter of 2025 were $0.4 million for CJ and $1.6 million for DICE as compared to $0.7 million for CJ and $2.7 million for DICE in the 2024 period.
Speaker Change: Over time, we are targeting free cash low at 10% of annual revenue.
Speaker Change: Following the restructurings, we expect further reductions to our capitalized development in 2025 as compared to 2024.
Speaker Change: We are targeting total capital expenditures in 2025 to range between $9 and $10 million as compared to $13.9 million last year.
Speaker Change: By consolidating our tech organization into a small number of teams with subject matter expertise in adjacent areas, we are expecting to accelerate our product release schedule and enhance our overall efficiency.
Speaker Change: From a liquidity perspective at the end of the quarter, we had $2.7 million in cash and our total debt was $33 million under our $100 million revolver, resulting in leverage at 0.98 times our adjusted EBITDA.
We continue to target one time's leverage for the business.
Speaker Change: Before a revenue at the end of the quarter was $50.7 million, down 9% from the first quarter of last year. Our total committed contract backlog at the end of the quarter was $107.8 million, which was down 9% from the end of the first quarter last year.
Speaker Change: Long term backlog that is revenue to be recognized in 13 or more months was $24.8 million at the end of the quarter, an increase of $3.4 million for 16% from the prior year quarter.
During the quarter, we repurchased $886,000 shares for $2.1 million.
Speaker Change: In January , our board approved a new $5 million stock repurchase program, which began in February and will run through February 2026. At the end of the quarter, we had $4.3 million remaining on our $5 million repurchase program.
Speaker Change: Adding to the guidance that Art provided, we are reiterating our annual revenue guidance for the first full year of $131 to $135 million and we continue to target an adjusted eapotom margin of 24% for the full year.
Speaker Change: To wrap up, while the hiring environment over the past two-plus years has impacted our revenue growth, we anticipate that companies across all industries will steadily increase their investment in technology initiatives in 2025 and beyond.
Speaker Change: We believe this will drive greater demand for our products and services. In the meantime, we remain focused on enhancing our industry leading offerings, optimizing our go-to-market execution and doing so efficiently, ensuring we are well positioned to capitalize on this opportunity.
Art Zeile: And with that, let me turn the call back to Art.
Art Zeile: Thanks, Greg. I want to thank all our employees once again for their hard work this quarter. It is a pleasure to be part of such a great team. That said, we are happy to answer your questions.
Thank you very much for your time, Gary Prestopino.
We will now begin the question and answer session.
Art Zeile: To ask a question, you may press star, but one on your telephone keypad.
Art Zeile: If you're using a speaker phone, please pick up your hands up before pressing the keys. And to withdraw a question, please press star, then two.
Art Zeile: At this time, we will pause this momentarily to assemble our roster.
Speaker Change: And our first question will come from Gary Prestopino with Varrington Research. Please go ahead.
Gary Prestapino: Good afternoon, Walt. I guess the obvious question here, and we appreciate the fact that you've broken all of us out just to be a bit dark.
to both segments. What is this that gives?
Adjust to the EBITAM margin that is more than twice of what?
Dave produces.
Gary Prestapino: I would have to say it's the revenue per employee, I'm sorry, in the case of Clear Shops, it's running at about $700,000 per employee for Clear Shops, it's about half that. I'm sorry, for DICE, it's about half that.
Gary Prestapino: Daddy's to the same level of feature set and capability as clearance jobs over the course of several years so that's the answer. It's a bigger team and quite frankly more so in the tech spend in what we've been doing over the course of time then for clearance shots.
Okay.
Before anything below that line, running it about six points.
0 5 million per quarter, is that about right?
Gary Prestapino: Our corporate expenses are going to run excluding anything that is kind of unusual in nature. It's going to run about $7 million a year annually. It's a pretty small group. There's a handful of employees in there in our public company costs.
Speaker Change: So it's only $7 million a year, that $6.058 is $6.058.
Gary Prestapino: Okay, and you'll see that Gary in more detail when the investor presentation is posted, just following this call, you'll get detail by quarter, running from Q1 to 2024 forward, so you can see all the different pieces that roll up.
Speaker Change: And then just two other questions and I'll let somebody else go. With dice, you said bookings are down 20% lowered demand on renewals, what exactly when you're talking about lowered demand?
Speaker Change: Could you maybe just explain that a little bit in terms of how your revenues book out in that regard or just want to make sure I understand.
Speaker Change: while the lower demand could, you know, help to reduce working by 20 percent.
So, Gary, the-
Speaker Change: I'll take the first part of this art and then maybe you can jump in. Part of the issue in the first quarter, as Art mentioned, was the multi-year contracts that were entered into in Q1 of 2022 and 2023, which were still high-demand periods.
Speaker Change: We had in the neighborhood of $6 million of renewals in the quarter coming up on those and those were challenged, you know, from a conversion given the demand environment today. So that's a portion of it now, let's turn it over to Art.
Speaker Change: G positions and hiring in general and sold a locked in.
Art Zeile: Contracts that had a higher level of profile views once they realized that they were not consuming that same level in 2024 and in this first quarter they decided to reduce their contract spend they are still moving forward on multi year contracts, but at a lower level.
Speaker Change: Okay that helps a lot and then just lastly.
Art Zeile: Real quickly here.
Art Zeile: Has any of the contractors that you're dealing with starting to see a flow of any kind of.
Art Zeile: Funds from the EU.
Art Zeile: <unk> spending or is it too early at this point.
Art Zeile: So I would say, it's kind of interesting talking to contractors in February and March they were very fearful of Doge and any kind of a I would say contract termination and Theres a tracker online that you can go to that shows all of the contracts that have actually been terminated by <unk> by Department and.
Art Zeile: By dollar value and so there was a fear that they would run through department of defense.
Art Zeile: Have not substantially and so I think that that fear has receded, especially with regard to the pronouncements of President Trump and secretary hedges as I've indicated as well as the house and Senate Armed Services Committee Chairman's.
Art Zeile: Their willingness to boost the exact the defense budget now that hasnt been signed into law.
Art Zeile: Those are.
Art Zeile: Kind of forecast for the future. So we haven't seen a dramatic change in the funding of additional defense projects, but I think.
Art Zeile: Just based on the new cycle and the constant discussion of the need for stronger defense. We believe that that's very very likely further room for later this year.
Speaker Change: Okay. Thank you.
Art Zeile: Of course, great.
Speaker Change: Great. Thank you Gary.
Speaker Change: And our next question will come from Kevin Liu with cable and company. Please go ahead.
Kevin Liu: Hey, good afternoon, guys, maybe if we could continue on the conversation on those could you kind of parse out the actual impact on your quarter and just curious to what extent are impacted churn. If it didn't have any impact there versus just kind of delaying your bookings.
Kevin Liu: And then maybe if you could talk about kind of what you've seen early in Q2.
Kevin Liu: The fact that an independent like it has been proposed and that looks like or is that getting any sort of added content and letting customers looks like now.
Kevin Liu: Yes, I can speak to that Kevin and Great question, I would say that first and foremost.
Kevin Liu: When doge kind of rampaged other agencies other government institutions. There was a fear that they would withhold any kind of activity from department of defense.
Kevin Liu: And I would say that what that really meant is that a lot of people were fearful that they might be losing contracts or that there might be a suspension of new contract activity that did not really play out.
Kevin Liu: I'd scare most of the smaller contractors as indicated by Greg the fee.
Kevin Liu: Folks that did not renew for the most part were smaller military contractors. It also scared the.
Kevin Liu: Folks that we're talking to us about buying a clearance jobs license for the very first time. So there were a couple of weeks where for the very first time in the history that I've been on board there were no new business bookings for clearance jobs.
Kevin Liu: And that was just really like I said very unusual given our pattern is to have new business bookings in for the clearance jobs New business team every single day of the week for the most part so again the fear was there I'd say that the larger contractors did not have that same level.
Kevin Liu: <unk> of.
Kevin Liu: Uncertainty fear they had existing contracts. So they felt comfortable renewing in largely the same pattern that they have for the past. So this is something that I.
Kevin Liu: Again, we would affect renewals are smaller customers for clearance shops, as well as new business relationships that we're trying to establish.
Kevin Liu: Got it and just.
Speaker Change: I'll spell for claims.
Speaker Change: We make our way through this year and presumably sentiment gets better with a higher defense budget and how should we think about kind of your willingness to spend on the marketing front would you is there a kind of a floor level that you want the C. J business to have in terms of an EBITDA margin somewhere north of 40% or are you willing to go lower than that if the opportunity there.
Speaker Change: I'd say, it's really reaccelerate the growth profile.
Speaker Change: I think we're pretty effective in terms of our marketing spend today a lot of the marketing spend is geared towards generating marketing qualified leads and we're always experimenting with new channels, new ways to essentially make those more targeted I still think that clearance jobs should be a 40% EBITDA margin.
Speaker Change: Platform for the foreseeable future I don't know if you have anything to add to that Greg.
Greg Schippers: Yes, no I completely agree with the 40 plus percent and.
Greg Schippers: Art mentioned it would be targeted marketing, if we spent any more where it would be accretive.
Greg Schippers: To the to the margin.
Greg Schippers: Particular.
Greg Schippers: To give you more exposure in the western part of the United States Super dense for us and the D C area.
Greg Schippers: But we have opportunity.
Greg Schippers: When you move West Port Clarence jobs.
Greg Schippers: Got it.
Speaker Change: And then maybe just lastly on the dice side of things can you just talk about kind of the new business environment. Today, obviously, there's been a lot of uncertainty maybe related tariffs, which might impact some of your technical certain segments, but I'm. Just wondering if you're saying that you know things have kind of bottomed out here and we can start to see an improvement or.
Greg Schippers: If the environment is still pretty challenging out there.
Speaker Change: Great question and you have to understand that for US new business is divided into two teams. One is a team that attends to staffing recruiting agencies and the other is a team that.
Speaker Change: Tends to commercial relationships like we announced American Airlines and Flexjet this quarter.
Speaker Change: I would still say that theres, a lot of uncertainty and fear for commercial accounts and therefore, we've seen those bookings suppressed.
Speaker Change: Been a positive surprise to see that bookings for staffing and recruiting agencies have actually exceeded our internal expectations. This first quarter I think that's because for most companies. They view hiring through a staffing recruiting agency is a less risky proposition in this kind of environment. It makes it a variable expense.
Speaker Change: As opposed to a.
Speaker Change: Structural expense for an employee being on your payroll. So we have seen a I'd say solidification of new business bookings for the staffing and recruiting new business team, but not the other one not the commercial accounts team.
Speaker Change: Got it I appreciate the color there and good luck here in the second quarter.
Kevin Liu: Thank you very much I really appreciate it Kevin.
Speaker Change: And our next question is a follow up from Gary <unk> with Barrington Research. Please go ahead.
Gary Prestapino: Hey, I just wanted to ask in terms of.
Gary Prestapino: Some of the expense categories product development sales and marketing G&A DNA more depreciation.
Greg Schippers: Greg should we.
Gary Prestapino: Look at the percentage of those expenses on sales to maybe hold steady throughout the rest of the year.
Gary Prestapino: Yeah. Good question I would say if you're using the first quarter of 2025 is the comparison.
Gary Prestapino: It should stay in that general area.
Gary Prestapino: As revenue expands of course there'll be some efficiency on those expenses, but otherwise, yes, you should look at it to relatively flat.
Speaker Change: Okay. Thank you now just one follow up on that to Gary.
Gary Prestapino: If you think about capitalized development costs.
Gary Prestapino: Will trend down from last year's numbers.
Gary Prestapino: And maybe be more consistently in line with what we're seeing here in Q1 and training towards nine denied a half million, maybe 10 for the year as opposed to almost 14 last year. So yes direct cash savings there, but it's not reflected in EBITDA.
Gary Prestapino: Okay. Thank you.
Gary Prestapino: Yeah.
Gary Prestapino: Okay.
Gary Prestapino: And this concludes our question and answer session.
Speaker Change: Like to turn the conference back over to art Zaley for any closing remarks.
Speaker Change: Thank you very much and thank you all for joining us today as always if you have any questions about our company or would like to speak with management. Please reach out to Todd Curly and he will help arrange a meeting thanks, everyone for your interest and DHA group and have a great day.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.