DHI(DHX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents DHI Group's unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Unaudited Financial Statements This section provides DHI Group's unaudited condensed consolidated financial statements and comprehensive notes for the reporting period Condensed Consolidated Balance Sheets This table presents the company's condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024 | ASSETS | June 30, 2025 ($) | December 31, 2024 ($) | | :------------------------------------------------------------------ | :------------ | :---------------- | | Current assets | | | | Cash | $2,782 | $3,702 | | Accounts receivable, net | $17,733 | $22,120 | | Income taxes receivable | $1,963 | $238 | | Prepaid and other current assets | $3,277 | $3,593 | | Total current assets | $25,755 | $29,653 | | Fixed assets, net | $16,739 | $20,390 | | Capitalized contract costs | $7,490 | $7,465 | | Operating lease right-of-use assets | $6,029 | $6,518 | | Investments | $1,838 | $1,827 | | Acquired intangible assets | $23,800 | $23,800 | | Goodwill | $120,300 | $128,100 | | Other assets | $2,993 | $3,618 | | Total assets | $204,944 | $221,371 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Current liabilities | | | | Accounts payable and accrued expenses | $13,649 | $16,154 | | Deferred revenue | $46,482 | $44,934 | | Operating lease liabilities | $1,703 | $1,625 | | Total current liabilities | $61,834 | $62,713 | | Deferred revenue (long-term) | $376 | $522 | | Operating lease liabilities (long-term) | $8,199 | $8,995 | | Long-term debt | $30,000 | $32,000 | | Deferred income taxes | $971 | $1,369 | | Accrual for unrecognized tax benefits | $728 | $1,060 | | Other long-term liabilities | $340 | $387 | | Total liabilities | $102,448 | $107,046 | | Stockholders' equity | | | | Common stock, $.01 par value | $830 | $811 | | Additional paid-in capital | $272,811 | $270,122 | | Accumulated other comprehensive income (loss) | $(14) | $1 | | Accumulated earnings | $21,889 | $32,481 | | Treasury stock | $(193,020) | $(189,090) | | Total stockholders' equity | $102,496 | $114,325 | | Total liabilities and stockholders' equity | $204,944 | $221,371 | Condensed Consolidated Statements of Operations This table presents the company's condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $32,027 | $35,833 | $64,328 | $71,858 | | Operating expenses: | | | | | | Cost of revenue | $5,114 | $5,200 | $10,480 | $10,077 | | Product development | $3,138 | $4,729 | $6,980 | $9,527 | | Sales and marketing | $10,546 | $12,019 | $21,669 | $24,717 | | General and administrative | $6,517 | $7,296 | $13,714 | $14,523 | | Depreciation | $3,761 | $4,586 | $7,745 | $9,042 | | Restructuring | $4,216 | $0 | $6,486 | $0 | | Impairment of goodwill | $0 | $0 | $7,800 | $0 | | Total operating expenses | $33,292 | $33,830 | $74,874 | $67,886 | | Operating income (loss) | $(1,265) | $2,003 | $(10,546) | $3,972 | | Income (loss) from equity method investment | $(37) | $168 | $27 | $302 | | Impairment of investment | $0 | $0 | $0 | $(400) | | Interest expense and other | $(619) | $(845) | $(1,279) | $(1,791) | | Income (loss) before income taxes | $(1,921) | $1,326 | $(11,798) | $2,083 | | Income tax expense (benefit) | $(1,080) | $383 | $(1,206) | $2,652 | | Net income (loss) | $(841) | $943 | $(10,592) | $(569) | | Basic earnings (loss) per share | $(0.02) | $0.02 | $(0.23) | $(0.01) | | Diluted earnings (loss) per share | $(0.02) | $0.02 | $(0.23) | $(0.01) | | Weighted-average basic shares outstanding | 45,354 | 44,569 | 45,429 | 44,386 | | Weighted-average diluted shares outstanding | 45,354 | 45,037 | 45,429 | 44,386 | Condensed Consolidated Statements of Comprehensive Income (Loss) This table presents the company's condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2025 and 2024 | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(841) | $943 | $(10,592) | $(569) | | Other comprehensive income (loss): | | | | | | Foreign currency translation adjustment | $18 | $31 | $(15) | $53 | | Comprehensive income (loss) | $(823) | $974 | $(10,607) | $(516) | Condensed Consolidated Statements of Stockholders' Equity This table presents the company's condensed consolidated statements of stockholders' equity for the three and six months ended June 30, 2025 and 2024 | Item | Balance at Dec 31, 2024 ($) | Net Loss ($) | Other Comprehensive Loss - Translation Adjustments ($) | Stock-Based Compensation ($) | Restricted Stock Issued ($) | Performance-Based Restricted Stock Units Eligible to Vest ($) | Restricted Stock Forfeited or Withheld to Satisfy Tax Obligations ($) | Performance-Based Restricted Stock Units Forfeited or Withheld to Satisfy Tax Obligations ($) | Purchase of Treasury Stock Under Stock Repurchase Plan ($) | Issuance of Common Stock Upon ESPP Purchase ($) | Balance at June 30, 2025 ($) | | :-------------------------------------- | :---------------------- | :------- | :------------------------------------------------- | :----------------------- | :---------------------- | :-------------------------------------------------------- | :---------------------------------------------------------------- | :--------------------------------------------------------------------------------------- | :----------------------------------------------------- | :------------------------------------------ | :----------------------- | | Common Stock, Amount | $811 | | | | $9 | $0 | $(4) | $(1) | | $1 | $830 | | Additional Paid-in Capital | $270,122 | | | $2,627 | $(9) | $(6) | $4 | $1 | | $80 | $272,811 | | Accumulated Other Comprehensive Income (Loss) | $1 | | $(15) | | | | | | | | $(14) | | Accumulated Earnings | $32,481 | $(10,592) | | | | | | | | | $21,889 | | Treasury Stock, Amount | $(189,090) | | | | | | $(868) | $(627) | $(2,435) | | $(193,020) | | Total Stockholders' Equity | $114,325 | $(10,592) | $(15) | $2,627 | $0 | $0 | $(868) | $(627) | $(2,435) | $81 | $102,496 | | Item | Balance at Dec 31, 2023 ($) | Net Loss ($) | Other Comprehensive Income - Translation Adjustments ($) | Stock-Based Compensation ($) | Restricted Stock Issued ($) | Performance-Based Restricted Stock Units Eligible to Vest ($) | Restricted Stock Forfeited or Withheld to Satisfy Tax Obligations ($) | Performance-Based Restricted Stock Units Forfeited or Withheld to Satisfy Tax Obligations ($) | Issuance of Common Stock Upon ESPP Purchase ($) | Balance at June 30, 2024 ($) | | :-------------------------------------- | :---------------------- | :------- | :--------------------------------------------------- | :----------------------- | :---------------------- | :-------------------------------------------------------- | :---------------------------------------------------------------- | :--------------------------------------------------------------------------------------- | :------------------------------------------ | :----------------------- | | Common Stock, Amount | $789 | | | | $16 | $5 | $(1) | $0 | $1 | $810 | | Additional Paid-in Capital | $261,824 | | | $4,304 | $(16) | $(5) | $1 | $0 | $145 | $266,253 | | Accumulated Other Comprehensive Income (Loss) | $(83) | | $53 | | | | | | | $(30) | | Accumulated Earnings | $32,228 | $(569) | | | | | | | | $31,659 | | Treasury Stock, Amount | $(187,216) | | | | | | $(784) | $(869) | | $(188,869) | | Total Stockholders' Equity | $107,542 | $(569) | $53 | $4,304 | $0 | $0 | $(784) | $(869) | $146 | $109,823 | Condensed Consolidated Statements of Cash Flows This table presents the company's condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------------------------------------- | :----------------------------- | :----------------------------- | | Cash flows from (used in) operating activities: | | | | Net loss | $(10,592) | $(569) | | Adjustments to reconcile net loss to net cash flows from (used in) operating activities: | | | | Depreciation | $7,745 | $9,042 | | Deferred income taxes | $(398) | $50 | | Amortization of deferred financing costs | $72 | $72 | | Stock-based compensation | $2,627 | $4,304 | | Income from equity method investment | $(27) | $(302) | | Impairment of investment | $0 | $400 | | Impairment of goodwill | $7,800 | $0 | | Change in accrual for unrecognized tax benefits | $(332) | $113 | | Changes in operating assets and liabilities: | | | | Accounts receivable | $4,387 | $(45) | | Prepaid expenses and other assets | $868 | $581 | | Capitalized contract costs | $(25) | $(714) | | Accounts payable and accrued expenses | $(2,413) | $(4,248) | | Income taxes receivable/payable | $(1,726) | $(139) | | Deferred revenue | $1,402 | $2,297 | | Other, net | $(274) | $308 | | Net cash flows from operating activities | $9,114 | $11,150 | | Cash flows used in investing activities: | | | | Purchases of fixed assets | $(4,185) | $(7,913) | | Net cash flows used in investing activities | $(4,185) | $(7,913) | | Cash flows from (used in) financing activities: | | | | Payments on long-term debt | $(8,000) | $(16,000) | | Proceeds from long-term debt | $6,000 | $13,000 | | Payments under stock repurchase plan | $(2,435) | $0 | | Purchase of treasury stock related to vested restricted and performance stock units | $(1,495) | $(1,633) | | Proceeds from issuance of common stock through ESPP | $81 | $145 | | Net cash flows used in financing activities | $(5,849) | $(4,488) | | Net change in cash for the period | $(920) | $(1,251) | | Cash, beginning of period | $3,702 | $4,206 | | Cash, end of period | $2,782 | $2,955 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanatory notes to the condensed consolidated financial statements, covering various accounting policies and disclosures 1. Basis of Presentation The unaudited condensed consolidated financial statements are prepared in accordance with SEC rules and U.S. GAAP, omitting certain annual disclosures. Management's estimates are used, and no significant changes in critical accounting estimates occurred for the periods presented - Unaudited condensed consolidated financial statements prepared by the Company pursuant to SEC rules and U.S. GAAP, omitting certain annual disclosures[23] - Management makes estimates and assumptions, with actual results potentially differing materially. No significant changes in critical accounting estimates for the periods ended June 30, 2025[24] 2. New Accounting Standards The company is evaluating the impact of two new FASB ASUs: ASU 2023-09 (Improvements to Income Tax Disclosures, effective after Dec 15, 22024) and ASU 2024-03 (Expense Disaggregation Disclosures, effective after Dec 15, 2026), on its financial statement disclosures - Evaluating ASU 2023-09 (Improvements to Income Tax Disclosures), effective for annual periods after December 15, 2024[25] - Evaluating ASU 2024-03 (Expense Disaggregation Disclosures), effective for fiscal years beginning after December 15, 2026, requiring disaggregation of certain expenses like inventory purchases, employee compensation, depreciation, and amortization[26] 3. Fair Value Measurements The company uses a three-tier fair value hierarchy (Level 1, 2, 3) for measuring assets and liabilities. Long-term debt fair value is based on Level 2 inputs, while certain assets like equity investments, ROU assets, goodwill, and intangible assets are measured at fair value on a non-recurring basis for impairment assessment - Fair value hierarchy: Level 1 (quoted prices in active markets), Level 2 (quoted prices for similar instruments or model-derived valuations with observable inputs), Level 3 (unobservable inputs)[27][28] - Carrying amounts for cash, accounts receivable, other assets, accounts payable, accrued expenses, and long-term debt approximate fair values; long-term debt uses Level 2 inputs[28] - Equity investments, operating lease right-of-use assets, goodwill, and intangible assets are measured at fair value on a non-recurring basis for impairment assessment[29] 4. Revenue Recognition Revenue is recognized when control of goods/services is transferred, net of discounts, ratably over the service period. The company generates revenue from recruitment packages, advertising, classifieds, and career event rentals, primarily serving technology and security-cleared professions through its ClearanceJobs and Dice brands - Revenue is recognized when control of goods or services is transferred to customers, net of discounts, ratably over the service period[30] - Revenue sources include recruitment packages, advertising, classifieds, and virtual/live career fair and recruitment event booth rentals[30] Revenue by Brand | Brand | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | ClearanceJobs | $13,626 | $13,528 | $27,003 | $26,533 | | Dice | $18,401 | $22,305 | $37,325 | $45,325 | | Total | $32,027 | $35,833 | $64,328 | $71,858 | Receivables and Contract Liabilities | Item | As of June 30, 2025 ($) | As of December 31, 2024 ($) | | :-------------------------------------- | :------------------ | :---------------------- | | Receivables | $17,733 | $22,120 | | Short-term contract liabilities (deferred revenue) | $46,482 | $44,934 | | Long-term contract liabilities (deferred revenue) | $376 | $522 | Deferred Revenue by Period | Period | Remainder of 2025 ($) | 2026 ($) | 2027 ($) | 2028 ($) | Total ($) | | :---------------- | :---------------- | :----- | :----- | :----- | :------ | | Deferred revenue | $38,159 | $8,585 | $104 | $10 | $46,858 | 5. Restructuring DHI Group undertook three organizational restructurings: July 2024 (7% workforce reduction, $1.1M charge), January 2025 (8% workforce reduction to separate ClearanceJobs and Dice divisions, $2.3M charge), and June 2025 (25% Dice workforce reduction, $4.2M charge). These actions aimed to streamline operations, drive business objectives, and reduce operating costs - July 2024 restructuring: 7% workforce reduction, $1.1 million charge recognized in 2024[37] - January 2025 restructuring: 8% workforce reduction to separate ClearanceJobs and Dice divisions, $2.3 million charge recognized in Q1 2025[38] - June 2025 restructuring: 25% workforce reduction primarily within Dice brand, $4.2 million charge recognized in Q2 2025[39] 6. Leases The company holds operating leases for office space and equipment, with terms ranging from one to ten years. Lease costs for Q2 2025 were $418K (vs $412K in Q2 2024) and for H1 2025 were $843K (vs $806K in H1 2024). Operating lease liabilities totaled $9.9 million as of June 30, 2025, with a weighted-average remaining lease term of 7.1 years and a discount rate of 5.6% - Operating leases for corporate office space and equipment have terms from one to ten years, with renewal options included if reasonably certain[40] Lease Costs | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $418 | $442 | $843 | $836 | | Sublease income | $0 | $(30) | $0 | $(30) | | Total lease cost | $418 | $412 | $843 | $806 | Lease Assets and Liabilities | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------------------- | :------------ | :---------------- | | Operating lease right-of-use-assets | $6,029 | $6,518 | | Operating lease liabilities - current | $1,703 | $1,625 | | Operating lease liabilities - non-current | $8,199 | $8,995 | | Total operating lease liabilities | $9,902 | $10,620 | | Weighted Average Remaining Lease Term | 7.1 years | 7.4 years | | Weighted Average Discount Rate | 5.6 % | 5.5 % | Operating Lease Payments | Period | Operating Leases ($) | | :----------------------------------- | :--------------- | | July 1, 2025 through December 31, 2025 | $1,105 | | 2026 | $2,239 | | 2027 | $1,359 | | 2028 | $1,304 | | 2029 | $1,333 | | 2030 and thereafter | $4,858 | | Total lease payments | $12,198 | | Less: imputed interest | $(2,296) | | Total | $9,902 | 7. Investments The company holds an equity method investment in eFinancialCareers (eFC) at $1.8 million, recognizing negligible income from it in H1 2025 compared to $0.3 million in H1 2024. Another investment in a values-based career destination company was fully impaired by Q1 2024, resulting in a $0.4 million loss, and a tech skills assessment company investment is recorded at zero - Investment in eFinancialCareers (eFC) is recorded at $1.8 million as of June 30, 2025 and December 31, 2024, accounted for under the equity method[46][47] - Income from eFC was approximately zero for Q2 and H1 2025, compared to $0.2 million (Q2 2024) and $0.3 million (H1 2024)[47] - An investment in a values-based career destination company was fully impaired by Q1 2024, resulting in a $0.4 million impairment loss in H1 2024[53] - A 6.6% interest in a tech skills assessment company is recorded at zero as of June 30, 2025 and December 31, 2024, with no gain or loss recognized in the current periods[54] 8. Acquired Intangible Assets, Net The company holds an indefinite-lived acquired intangible asset of $23.8 million related to the Dice trademarks and brand name. An annual impairment test is performed on October 1, and no impairment was recorded for the three and six months ended June 30, 2025 and 2024, with no indicators of impairment in Q2 2025 - Indefinite-lived acquired intangible asset of $23.8 million related to Dice trademarks and brand name as of June 30, 2025 and December 31, 2024[55] - Annual impairment test for Dice trademarks and brand name is performed on October 1; no impairment was recorded for the three and six months ended June 30, 2025 and 2024[55][58] - Fair values are determined using a profit allocation methodology, and future cash flows attributable to the Dice brand are critical to avoiding impairment[56][57] 9. Goodwill Goodwill decreased from $128.1 million at December 31, 2024, to $120.3 million at June 30, 2025, primarily due to a $7.8 million impairment charge in the Dice reporting unit during Q1 2025 following an organizational restructuring. The goodwill was reallocated to ClearanceJobs ($97.4 million) and Dice ($30.7 million) based on relative fair values Goodwill Allocation and Impairment | Item | Tech-focused ($) | ClearanceJobs ($) | Dice ($) | Total ($) | | :---------------------------- | :----------- | :------------ | :------ | :-------- | | Goodwill at December 31, 2024 | $128,100 | $0 | $0 | $128,100 | | Segment Change | $(128,100) | $97,431 | $30,669 | $0 | | Goodwill at January 13, 2025 | $0 | $97,431 | $30,669 | $128,100 | | Impairment | $0 | $0 | $(7,800) | $(7,800) | | Goodwill at June 30, 2025 | $0 | $97,431 | $22,869 | $120,300 | - Organizational restructuring in Q1 2025 led to an interim impairment test and reallocation of goodwill from Tech-focused to two new reporting units: ClearanceJobs and Dice[59][61] - A $7.8 million impairment charge was recorded for the Dice reporting unit during Q1 2025, with an identified $0.4 million understatement in the initial Q1 2025 charge[62][66] - No impairment indicators for ClearanceJobs and Dice reporting units for Q2 2025; annual impairment test is performed on October 1[65] 10. Indebtedness The company has a $100 million revolving loan facility (expandable to $150 million) under a Credit Agreement maturing in June 2027. As of June 30, 2025, $30.0 million was borrowed, with $41.0 million available. Interest rates are variable (SOFR/base rate plus margin) and the company was in compliance with all financial covenants - Credit Agreement provides a $100 million revolving loan facility (expandable to $150 million), maturing in June 2027[69] Revolving Credit Facility Details | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------------------- | :------------ | :---------------- | | Long-term debt under revolving credit facility | $30,000 | $32,000 | | Available to be borrowed | $41,000 | $56,000 | | Interest margin | 2.10 % | 2.10 % | | Actual interest rates | 6.43 % | 6.46 % | | Commitment fee | 0.35 % | 0.35 % | - Borrowings bear interest at SOFR or a base rate plus a margin (2.00%-2.75% for SOFR/SONIA, 1.00%-1.75% for base rate, plus 0.10% spread)[70] - The company was in compliance with all financial covenants (including consolidated leverage ratio and interest coverage ratio) as of June 30, 2025[71] 11. Commitments and Contingencies The company is subject to various claims and lawsuits in the ordinary course of business, for which provisions are recorded when probable and estimable. Management believes the final resolution of these matters will not materially affect financial condition, operations, or liquidity. Tax contingencies are also reserved for - The Company is subject to various claims from taxing authorities, lawsuits, and other complaints arising in the ordinary course of business[77] - Provisions for losses are recorded when claims are probable and estimable; management believes final resolution will not materially affect financial condition, operations, or liquidity[77] - Reserves are maintained for potential examination adjustments to income taxes and accrual of indirect taxes[78] 12. Equity Transactions The Board approved a $5 million stock repurchase program in February 2025, with $2.5 million remaining as of June 30, 2025. The company repurchased 1.18 million shares for $2.46 million in H1 2025 under this plan. Additionally, shares are repurchased to cover tax obligations from employee restricted stock/PSU vesting. A Section 382 Rights Plan was adopted in January 2025 to protect net capital loss carryforwards by deterring ownership accumulation of 4.99% or more - Board approved a new $5 million stock repurchase program in February 2025, valid through February 2026[79] - As of June 30, 2025, $2.5 million of shares may yet be purchased under the current plan[81] Stock Repurchase Program Activity | Period | Total Number of Shares Purchased | Average Price Paid per Share ($) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ($) | | :------------------------------------ | :----------------- | :------------------------------- | :------------------------------------------------------------------------------- | :--------------------------------------------------------------------------------------- | | Three Months Ended June 30, 2025 | 865,585 | $2.06 | 865,585 | $2,541,108 | | Six Months Ended June 30, 2025 | 1,177,351 | $2.09 | 1,177,351 | $2,541,108 | | Three Months Ended June 30, 2024 | — | — | — | — | | Six Months Ended June 30, 2024 | — | — | — | — | - Adopted a Section 382 Rights Plan on January 28, 2025, to protect net capital loss carryforwards by deterring beneficial ownership of 4.99% or more without Board approval[87][88] 13. Stock-Based Compensation The company recorded $1.5 million in stock-based compensation expense for Q2 2025 and $2.6 million for H1 2025, with $7.7 million unrecognized expense remaining. Restricted stock vests over one to three years, and PSUs vest over three years after a one-year performance period based on bookings targets. The Employee Stock Purchase Plan (ESPP) allows eligible employees to purchase shares at a discount - Total stock-based compensation expense was $1.5 million for Q2 2025 and $2.6 million for H1 2025[94] - $7.7 million of unrecognized compensation expense related to unvested awards, expected to be recognized over a weighted-average period of approximately 1.0 years[94] - Restricted stock vests over one year for Board members and three years for employees, while PSUs vest over three years after a one-year performance period based on bookings targets[96][98] - ESPP allows eligible employees to purchase common stock at 85% of the lower of the opening or closing stock price during six-month offering periods[103] 14. Income Taxes The effective tax rate was 56% for Q2 2025 and 10% for H1 2025, differing significantly from statutory rates due to share-based compensation tax impacts, a federal tax examination benefit related to research credits, and non-deductible impairment charges. The company is evaluating the impact of the recently signed One Big Beautiful Bill Act (OBBBA) Effective Tax Rate | Period | Effective Tax Rate | | :----------------------------------- | :----------------- | | Three Months Ended June 30, 2025 | 56% | | Six Months Ended June 30, 2025 | 10% | | Three Months Ended June 30, 2024 | 29% | | Six Months Ended June 30, 2024 | 127% | - Effective tax rate for H1 2025 impacted by $0.6 million tax expense from share-based compensation, $1.9 million tax expense from nondeductible impairment charges, and a $0.4 million tax benefit from federal tax examination related to research credits[107][172] - The company is evaluating the impacts of the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, on its financial statements[104] 15. Earnings Per Share Basic and diluted EPS for Q2 2025 was $(0.02) and for H1 2025 was $(0.23), a decrease from Q2 2024 ($0.02) and H1 2024 ($(0.01)), primarily due to lower operating income, restructuring charges, and goodwill impairment, partially offset by an income tax benefit Earnings Per Share Summary | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(841) | $943 | $(10,592) | $(569) | | Basic earnings (loss) per share | $(0.02) | $0.02 | $(0.23) | $(0.01) | | Diluted earnings (loss) per share | $(0.02) | $0.02 | $(0.23) | $(0.01) | | Weighted-average basic shares outstanding | 45,354 | 44,569 | 45,429 | 44,386 | | Weighted-average diluted shares outstanding | 45,354 | 45,037 | 45,429 | 44,386 | - Decrease in EPS for Q2 and H1 2025 was driven by lower operating income, restructuring charges, and goodwill impairment, partially offset by an income tax benefit[156][173] 16. Segment Information Following a Q1 2025 restructuring, DHI Group now reports two segments: ClearanceJobs (CJ) and Dice, previously a single Tech-focused segment. ClearanceJobs focuses on security-cleared professionals, while Dice serves technology and engineering talent. Adjusted EBITDA is the key performance measure used by the CEO (CODM) for resource allocation - Company changed reportable segments from one (Tech-focused) to two: ClearanceJobs (CJ) and Dice, effective Q1 2025, with prior periods recast[109][110] - ClearanceJobs connects security-cleared professionals with employers, while Dice serves technology and engineering talent[111][112] - Adjusted EBITDA is the measure of segment profit or loss used by the Chief Executive Officer (CODM) for resource allocation and performance evaluation[114] Segment Revenue | Segment | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | ClearanceJobs | $6,072 | $5,957 | $11,777 | $11,416 | | Dice | $4,169 | $4,829 | $7,597 | $9,823 | | Total | $10,241 | $10,786 | $19,374 | $21,239 | Segment Adjusted EBITDA | Segment | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | ClearanceJobs | $306 | $659 | $647 | $1,394 | | Dice | $1,594 | $2,565 | $3,221 | $5,250 | | Total | $1,900 | $3,224 | $3,868 | $6,644 | 17. Subsequent Event On July 31, 2025, DHI Group acquired substantially all assets and liabilities of Agile Onboarding, LLC for an estimated $2.0 million, including an upfront payment of $1.5 million and a potential $0.5 million earn-out - On July 31, 2025, the Company acquired Agile Onboarding, LLC[124] - Purchase price estimated at $2.0 million, including $1.5 million upfront and $0.5 million earn-out based on performance criteria within two years[124] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's discussion and analysis of DHI Group's financial condition and results of operations for the current reporting periods Overview DHI Group provides software products and online tools for career marketplaces, specializing in technology and security-cleared professions through its ClearanceJobs and Dice brands. The company transitioned from a single "Tech-focused" segment to two distinct segments (ClearanceJobs and Dice) in Q1 2025 to reflect its current operating structure - DHI provides software products, online tools, and services for career marketplaces, specializing in technology and active government security clearance professionals[128] - Operates two brands, ClearanceJobs and Dice, which serve as online two-sided marketplaces for employers/recruiters and technologists[128][129] - Changed reportable segments from one (Tech-focused) to two (ClearanceJobs and Dice) in Q1 2025 due to organizational restructuring[130] Our Revenue and Expenses The majority of DHI's revenue comes from recruitment packages, which comprise over 90% of total revenue. ClearanceJobs saw a 7% decrease in customers but a 7% increase in average annual revenue per customer in Q2 2025 YoY, while Dice experienced a 13% decrease in customers and a 5% decrease in average annual revenue per customer due to macroeconomic conditions. Backlog decreased by 3% from December 31, 2024, and 2% YoY, reflecting lower demand - Over 90% of total revenue is derived from recruitment packages, which include access to resume databases and job posting capabilities[131] Customer Count | Brand | As of June 30, 2025 | As of June 30, 2024 | Increase (Decrease) | Percent Change | | :------------ | :------------------ | :------------------ | :------------------ | :------------- | | ClearanceJobs | 1,868 | 2,009 | (141) | (7)% | | Dice | 4,365 | 5,031 | (666) | (13)% | Average Annual Revenue Per Customer | Brand | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------ | :------------------------------- | :------------------------------- | :------------------ | :------------- | | ClearanceJobs | $26,026 | $24,275 | $1,751 | 7% | | Dice | $15,434 | $16,294 | $(860) | (5)% | - ClearanceJobs' increased revenue per customer was due to high demand for security-cleared professionals and product enhancements, despite lower renewals for smaller customers[133] - Dice's decrease in customers and revenue per customer was due to macroeconomic conditions impacting renewal rates and new business activity[134] Backlog | Item | June 30, 2025 ($) | December 31, 2024 ($) | Increase (Decrease) vs. Dec 31, 2024 ($) | Percent Change vs. Dec 31, 2024 | June 30, 2024 ($) | Increase (Decrease) vs. June 30, 2024 ($) | Percent Change vs. June 30, 2024 | | :------------------------ | :------------ | :---------------- | :----------------------------------- | :------------------------------ | :------------ | :------------------------------------ | :------------------------------- | | Deferred Revenue | $46,858 | $45,456 | $1,402 | 3% | $52,268 | $(5,410) | (10)% | | Contractual commitments not invoiced | $54,316 | $59,294 | $(4,978) | (8)% | $51,431 | $2,885 | 6% | | Backlog | $101,174 | $104,750 | $(3,576) | (3)% | $103,699 | $(2,525) | (2)% | Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024 For the three months ended June 30, 2025, DHI Group experienced an 11% decrease in total revenue, primarily driven by an 18% decline in Dice revenue due to macroeconomic conditions. Operating income shifted to a loss of $1.3 million, impacted by lower revenues and a $4.2 million restructuring charge. EPS decreased to $(0.02) from $0.02 in the prior year Revenue Revenue by Brand | Brand | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------ | :------------------------------- | :------------------------------- | :------------------ | :------------- | | ClearanceJobs | $13,626 | $13,528 | $98 | 1% | | Dice | $18,401 | $22,305 | $(3,904) | (18)% | | Total revenue | $32,027 | $35,833 | $(3,806) | (11)% | - ClearanceJobs revenue increased 1% due to continued demand for government clearance professionals and product enhancements[144] - Dice revenue decreased 18% due to macroeconomic conditions leading to lower renewal rates, new business activity, and non-annual product activity[144] Cost of Revenue Cost of Revenue by Segment | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :------------------------------- | :------------------------------- | :------------------ | :------------- | | ClearanceJobs | $1,661 | $1,549 | $112 | 7% | | Dice | $3,453 | $3,585 | $(132) | (4)% | | Other corporate expenses | $0 | $66 | $(66) | (100)% | | Total cost of revenue | $5,114 | $5,200 | $(86) | (2)% | | Percentage of revenue | 16.0% | 14.5% | | | - Dice segment's cost of revenue decreased $0.1 million, primarily due to a $0.4 million decrease in compensation costs (lower headcount), partially offset by $0.2 million increase in operational costs and $0.1 million lower capitalized labor[145] Product Development Expenses Product Development Expenses by Segment | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :------------------------------- | :------------------------------- | :------------------ | :------------- | | ClearanceJobs | $1,216 | $1,174 | $42 | 4% | | Dice | $1,921 | $3,555 | $(1,634) | (46)% | | Other corporate expenses | $1 | $0 | $1 | n.m. | | Total product development | $3,138 | $4,729 | $(1,591) | (34)% | | Percentage of revenue | 9.8% | 13.2% | | | - Dice segment's product development expenses decreased $1.6 million, primarily due to $2.5 million lower compensation costs (lower headcount), partially offset by $0.9 million lower capitalized labor[146] Sales and Marketing Expenses Sales and Marketing Expenses by Segment | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :------------------------------- | :------------------------------- | :------------------ | :------------- | | ClearanceJobs | $3,664 | $3,746 | $(82) | (2)% | | Dice | $6,882 | $8,093 | $(1,211) | (15)% | | Other corporate expenses | $0 | $180 | $(180) | n.m. | | Total sales and marketing | $10,546 | $12,019 | $(1,473) | (12)% | | Percentage of revenue | 32.9% | 33.5% | | | - Dice segment's sales and marketing expenses decreased $1.2 million, with $1.0 million from lower compensation costs (headcount) and $0.3 million from lower discretionary marketing[147] General and Administrative Expenses General and Administrative Expenses by Segment | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :------------------------------- | :------------------------------- | :------------------ | :------------- | | ClearanceJobs | $1,226 | $1,494 | $(268) | (18)% | | Dice | $2,373 | $2,967 | $(594) | (20)% | | Other corporate expenses | $2,918 | $2,835 | $83 | 3% | | Total G&A | $6,517 | $7,296 | $(779) | (11)% | | Percentage of revenue | 20.3% | 20.4% | | | - ClearanceJobs G&A decreased $0.3 million due to lower compensation (stock-based). Dice G&A decreased $0.6 million from lower operational costs ($0.3 million) and compensation ($0.2 million)[148] Depreciation Depreciation by Segment | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :------------------------------- | :------------------------------- | :------------------ | :------------- | | ClearanceJobs | $881 | $672 | $209 | 31% | | Dice | $2,880 | $3,914 | $(1,034) | (26)% | | Other corporate expenses | $0 | $0 | $0 | n.m. | | Total Depreciation | $3,761 | $4,586 | $(825) | (18)% | | Percentage of revenue | 11.7% | 12.8% | | | - ClearanceJobs depreciation increased $0.2 million due to capitalized development costs. Dice depreciation decreased $1.0 million as fixed asset purchases (primarily capitalized development costs) declined[149] Restructuring Restructuring Charges by Segment | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :------------------------------- | :------------------------------- | :------------------ | :------------- | | ClearanceJobs | $372 | $0 | $372 | n.m. | | Dice | $3,844 | $0 | $3,844 | n.m. | | Other corporate expenses | $0 | $0 | $0 | n.m. | | Total Restructuring | $4,216 | $0 | $4,216 | n/a | | Percentage of revenue | 13.2% | 0% | | | - The $4.2 million restructuring charge in Q2 2025 was intended to streamline operations, drive business objectives, reduce operating expenses, and improve operating margins[150] Operating Income (Loss) Operating Income (Loss) Summary | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :---------------- | :------------------------------- | :------------------------------- | :------------------ | :------------- | | Revenue | $32,027 | $35,833 | $(3,806) | (11)% | | Operating income (loss) | $(1,265) | $2,003 | $(3,268) | (163)% | | Operating margin | (3.9)% | 5.6% | | | - The shift to an operating loss was driven by lower revenues and the restructuring charge, partially offset by lower product development and sales and marketing expenses[151] Income from Equity Method Investment Income from Equity Method Investment | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :---------------------------------- | :------------------------------- | :------------------------------- | :------------------ | :------------- | | Income from equity method investment | $(37) | $168 | $(205) | (122)% | | Percentage of revenue | (0.1)% | 0.5% | | | - The company recorded approximately zero income from eFinancialCareer's net income in Q2 2025, compared to $0.2 million in Q2 2024[152] Interest Expense and Other Interest Expense and Other | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :------------------------------- | :------------------------------- | :------------------ | :------------- | | Interest expense and other | $619 | $845 | $(226) | (27)% | | Percentage of revenue | 1.9% | 2.4% | | | - Decrease driven by lower debt outstanding and lower interest rates on the revolving credit facility[154] Income Taxes Income Taxes Summary | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | | :---------------------------- | :------------------------------- | :------------------------------- | | Income (loss) before income taxes | $(1,921) | $1,326 | | Income tax expense (benefit) | $(1,080) | $383 | | Effective tax rate | 56.2% | 28.9% | - Q2 2025 effective tax rate impacted by $0.1 million tax expense from share-based compensation and a $0.4 million tax benefit from a federal tax examination related to research credits[155] Earnings (Loss) per Share Earnings (Loss) per Share | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | | :---------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) | $(841) | $943 | | Basic earnings (loss) per share | $(0.02) | $0.02 | | Diluted earnings (loss) per share | $(0.02) | $0.02 | - Decrease in EPS driven by lower operating income, partially offset by an income tax benefit[156] Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024 For the six months ended June 30, 2025, DHI Group's total revenue decreased by 10%, with Dice revenue declining 18% due to macroeconomic conditions. Operating income shifted to a $10.5 million loss, a significant decrease from a $4.0 million profit in the prior year, primarily due to lower revenues, $6.5 million in restructuring charges, and a $7.8 million goodwill impairment. Diluted EPS was $(0.23) compared to $(0.01) in H1 2024 Revenue Revenue by Brand | Brand | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------ | :----------------------------- | :----------------------------- | :------------------ | :------------- | | ClearanceJobs | $27,003 | $26,533 | $470 | 2% | | Dice | $37,325 | $45,325 | $(8,000) | (18)% | | Total revenue | $64,328 | $71,858 | $(7,530) | (10)% | - ClearanceJobs revenue increased 2% due to continued demand for government clearance professionals and product enhancements[158] - Dice revenue decreased 18% due to macroeconomic conditions leading to lower renewal rates, new business activity, and non-annual product activity[158] Cost of Revenue Cost of Revenue by Segment | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :----------------------------- | :----------------------------- | :------------------ | :------------- | | ClearanceJobs | $3,444 | $3,036 | $408 | 13% | | Dice | $6,970 | $6,975 | $(5) | 0% | | Other corporate expenses | $66 | $66 | $0 | 0% | | Total cost of revenue | $10,480 | $10,077 | $403 | 4% | | Percentage of revenue | 16.3% | 14.0% | | | - ClearanceJobs cost of revenue increased $0.4 million due to $0.2 million in compensation and $0.1 million in marketing event costs[159] - Dice cost of revenue was flat, with $0.4 million decrease in compensation (lower headcount) offset by increases in other operational costs[159] Product Development Expenses Product Development Expenses by Segment | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :----------------------------- | :----------------------------- | :------------------ | :------------- | | ClearanceJobs | $2,568 | $2,263 | $305 | 13% | | Dice | $4,197 | $7,264 | $(3,067) | (42)% | | Other corporate expenses | $215 | $0 | $215 | n.m. | | Total product development | $6,980 | $9,527 | $(2,547) | (27)% | | Percentage of revenue | 10.9% | 13.3% | | | - Dice segment's product development expenses decreased $3.1 million, primarily due to lower compensation costs from reduced headcount[160] - ClearanceJobs segment increased $0.3 million due to lower capitalized labor ($0.3 million) and higher operational costs ($0.2 million), partially offset by lower compensation ($0.2 million)[160] Sales and Marketing Expenses Sales and Marketing Expenses by Segment | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :----------------------------- | :----------------------------- | :------------------ | :------------- | | ClearanceJobs | $7,311 | $7,656 | $(345) | (5)% | | Dice | $14,276 | $16,881 | $(2,605) | (15)% | | Other corporate expenses | $82 | $180 | $(98) | (54)% | | Total sales and marketing | $21,669 | $24,717 | $(3,048) | (12)% | | Percentage of revenue | 33.7% | 34.4% | | | - Dice segment's sales and marketing expenses decreased $2.6 million, driven by $1.8 million lower compensation (headcount), $0.6 million lower discretionary marketing, and $0.2 million lower operational costs[162] - ClearanceJobs segment decreased $0.3 million due to lower compensation (headcount), partially offset by higher commissions[162] General and Administrative Expenses General and Administrative Expenses by Segment | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :----------------------------- | :----------------------------- | :------------------ | :------------- | | ClearanceJobs | $2,607 | $2,952 | $(345) | (12)% | | Dice | $5,361 | $5,844 | $(483) | (8)% | | Other corporate expenses | $5,746 | $5,727 | $19 | 0% | | Total G&A | $13,714 | $14,523 | $(809) | (6)% | | Percentage of revenue | 21.3% | 20.2% | | | - ClearanceJobs G&A decreased $0.3 million due to lower compensation (stock-based and headcount). Dice G&A decreased $0.5 million from lower compensation ($0.3 million) and operational costs ($0.2 million)[163] Depreciation Depreciation by Segment | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :----------------------------- | :----------------------------- | :------------------ | :------------- | | ClearanceJobs | $1,576 | $1,324 | $252 | 19% | | Dice | $6,169 | $7,718 | $(1,549) | (20)% | | Other corporate expenses | $0 | $0 | $0 | n.m. | | Total depreciation | $7,745 | $9,042 | $(1,297) | (14)% | | Percentage of revenue | 12.0% | 12.6% | | | - ClearanceJobs depreciation increased $0.3 million due to capitalized development costs. Dice depreciation decreased $1.5 million as fixed asset purchases (primarily capitalized development costs) declined[164] Restructuring Restructuring Charges by Segment | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :----------------------------- | :----------------------------- | :------------------ | :------------- | | ClearanceJobs | $372 | $0 | $372 | n.m. | | Dice | $3,844 | $0 | $3,844 | n.m. | | Other corporate expenses | $2,270 | $0 | $2,270 | n.m. | | Total restructuring | $6,486 | $0 | $6,486 | n.m. | | Percentage of revenue | 10.1% | 0% | | | - The $6.5 million restructuring charges in H1 2025 were intended to streamline operations, drive business objectives, reduce operating expenses, and improve operating margins[165] Impairment of Goodwill Goodwill Impairment by Segment | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :------------------------ | :----------------------------- | :----------------------------- | :------------------ | :------------- | | ClearanceJobs | $0 | $0 | $0 | n.m. | | Dice | $7,800 | $0 | $7,800 | n.m. | | Other corporate expenses | $0 | $0 | $0 | n.m. | | Total impairment of goodwill | $7,800 | $0 | $7,800 | n.m. | | Percentage of revenue | 12.1% | 0% | | | - The $7.8 million goodwill impairment loss in H1 2025 was entirely related to the Dice segment following the organizational restructuring[166][123] Operating Income Operating Income Summary | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Increase (Decrease) ($) | Percent Change | | :---------------- | :----------------------------- | :----------------------------- | :------------------ | :------------- | | Revenue | $64,328 | $71,858 | $(7,530) | (10)% | | Operating income | $(10,546) | $3,972 | $(14,518) | (366)% | | Operating margin | (16.4)% | 5.5% | | | - The decrease in operating income and margin was primarily driven by lower revenues, restructuring charges, and goodwill impairment, partially offset by lower product development and sales and marketing expense[167] Income from Equity Method Investment Income from Equity Method Investment | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Decrease ($) | Percent Change | | :---------------------------------- | :----------------------------- | :----------------------------- | :------- | :------------- | | Income from equity method investment | $27 | $302 | $(275) | (91)% | | Percentage of revenue | 0.0% | 0.4% | | | - The company recorded approximately zero income from eFinancialCareer's net income in H1 2025, compared to $0.3 million in H1 2024[169] Impairment of Investment Impairment of Investment | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Decrease ($) | Percent Change | | :------------------------ | :----------------------------- | :----------------------------- | :------- | :------------- | | Impairment of investment | $0 | $400 | $(400) | (100)% | | Percentage of revenue | 0% | 0.6% | | | - A $0.4 million impairment loss was recognized in H1 2024 due to the deterioration of an investment's financial position[170] Interest Expense and Other Interest Expense and Other | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Decrease ($) | Percent Change | | :------------------------ | :----------------------------- | :----------------------------- | :------- | :------------- | | Interest expense and other | $1,279 | $1,791 | $(512) | (29)% | | Percentage of revenue | 2.5% | 2.0% | | | - Decrease driven by lower debt outstanding and lower interest rates on the revolving credit facility[171] Income Taxes Income Taxes Summary | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------------------- | :----------------------------- | :----------------------------- | | Income before income taxes | $(11,798) | $2,083 | | Income tax expense (benefit) | $(1,206) | $2,652 | | Effective tax rate | 10.2% | 127.3% | - H1 2025 effective tax rate impacted by $0.6 million tax expense from share-based compensation, $1.9 million tax expense from nondeductible impairment charges, and a $0.4 million tax benefit from a federal tax examination related to research credits[172] Earnings (Loss) per Share Earnings (Loss) per Share | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(10,592) | $(569) | | Basic earnings (loss) per share | $(0.23) | $(0.01) | | Diluted earnings (loss) per share | $(0.23) | $(0.01) | - Decrease in EPS driven by lower operating income, restructuring charges, and goodwill impairment, partially offset by an income tax benefit[173] Non-GAAP Financial Measures This section discusses the company's non-GAAP financial measures, including Adjusted EBITDA and Adjusted EBITDA Margin, used for performance evaluation Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA for H1 2025 was $15.5 million (24% margin), down from $17.5 million (24% margin) in H1 2024. This non-GAAP measure is used by management for internal monitoring, planning, and performance evaluation, excluding items like interest, taxes, depreciation, amortization, stock-based compensation, and impairment charges - Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures used by management for internal monitoring, planning, and performance evaluation[176] - Adjusted EBITDA excludes interest expense, income tax expense, depreciation and amortization, non-cash stock-based compensation, impairment charges, restructuring charges, and other non-recurring items[176] Adjusted EBITDA Reconciliation | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :-------------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(10,592) | $(569) | | Interest expense | $1,279 | $1,791 | | Income tax expense (benefit) | $(1,206) | $2,652 | | Depreciation | $7,745 | $9,042 | | Non-cash stock-based compensation | $2,599 | $4,304 | | Income from equity method investment | $(27) | $(302) | | Impairment of investment | $0 | $400 | | Impairment of goodwill | $7,800 | $0 | | Severance, professional fees and related costs | $1,391 | $223 | | Restructuring | $6,486 | $0 | | Adjusted EBITDA | $15,475 | $17,541 | Adjusted EBITDA Margin | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :-------------------- | :----------------------------- | :----------------------------- | | Revenue | $64,328 | $71,858 | | Adjusted EBITDA | $15,475 | $17,541 | | Adjusted EBITDA Margin | 24% | 24% | Liquidity and Capital Resources This section details the company's liquidity sources, capital resources, and cash flow activities, including operating, investing, and financing Cash Flows Cash decreased from $3.7 million at December 31, 2024, to $2.8 million at June 30, 2025. Operating activities provided $9.1 million, investing activities used $4.2 million, and financing activities used $5.8 million in H1 2025 Cash Flow Summary | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------------------- | :----------------------------- | :----------------------------- | | Cash from operating activities | $9,114 | $11,150 | | Cash used in investing activities | $(4,185) | $(7,913) | | Cash used in financing activities | $(5,849) | $(4,488) | - Cash balance at June 30, 2025, was $2.8 million, down from $3.7 million at December 31, 2024[182] Liquidity The company's primary liquidity sources are cash, operating cash flow, and $41.0 million available under its $100 million revolving credit facility. Management believes these sources are sufficient for anticipated cash requirements for at least the next 12 months - Principal internal sources of liquidity are cash, cash flow from operations, and $41.0 million available borrowing capacity under the $100 million Credit Agreement as of June 30, 2025[183] - Management believes existing liquidity sources are sufficient to satisfy anticipated cash requirements for at least the next 12 months and the foreseeable future[183] Operating Activities Net cash from operating activities decreased by $2.1 million to $9.1 million in H1 2025 compared to H1 2024, primarily due to lower billings and cash receipts from customers, partially offset by reduced employee payments from lower headcount - Net cash flows from operating activities were $9.1 million for H1 2025, a decrease of $2.1 million from $11.2 million in H1 2024[184] - Decrease driven by lower billings and cash receipts from customers, partially offset by lower payments to employees due to reduced headcount[184] Investing Activities Cash used in investing activities decreased to $4.2 million in H1 2025 from $7.9 million in H1 2024, primarily due to lower capitalized development costs - Cash used in investing activities was $4.2 million for H1 2025, down from $7.9 million in H1 2024[185] - Primarily comprised of $3.9 million of capitalized development costs in H1 2025, compared to $6.6 million in H1 2024[185] Financing Activities Cash used in financing activities increased to $5.8 million in H1 2025 from $4.5 million in H1 2024, driven by higher share repurchases ($3.8 million) and net debt payments ($2.0 million) - Cash used in financing activities was $5.8 million for H1 2025, up from $4.5 million in H1 2024[186] - H1 2025 activities driven by $3.8 million in share repurchases and $2.0 million in net payments on long-term debt[186] Critical Accounting Estimates There have been no material changes to the company's critical accounting estimates compared to those described in its Annual Report on