DHI(DHX) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Unaudited Financial Statements Presents DHI Group's unaudited condensed consolidated financial statements for Q3 and YTD 2022, showing revenue growth and a shift to net income driven by continuing operations Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | $222,786 | $221,578 | | Total Current Assets | $26,588 | $24,456 | | Goodwill | $128,100 | $128,100 | | Total Liabilities | $117,452 | $105,216 | | Deferred Revenue (Current) | $51,455 | $45,217 | | Long-term Debt, net | $30,000 | $22,730 | | Total Stockholders' Equity | $105,334 | $116,362 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $38,527 | $30,758 | $109,918 | $86,155 | | Operating Income (Loss) | $1,218 | $(2,215) | $2,751 | $(1,911) | | Income (Loss) from Continuing Operations | $(926) | $(2,434) | $1,825 | $(634) | | Net Income (Loss) | $(926) | $(2,434) | $1,825 | $(29,974) | | Diluted EPS | $(0.02) | $(0.05) | $0.04 | $(0.64) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash flows from operating activities | $28,686 | $25,623 | | Net cash flows used in investing activities | $(13,073) | $(15,460) | | Net cash flows used in financing activities | $(13,305) | $(14,327) | | Net change in cash and cash equivalents | $2,308 | $(4,154) | - The company operates as a single reportable segment, "Tech-focused," including the Dice and ClearanceJobs brands, with all operations in the United States following the deconsolidation of the eFinancialCareers ("eFC") business[27] Notes to Condensed Consolidated Financial Statements These notes detail accounting policies, revenue recognition, eFC deconsolidation, investment impairment, credit agreement, and equity transactions - On June 30, 2021, the Company transferred majority ownership of its eFinancialCareers (eFC) business, retaining a 40% interest, now treated as a discontinued operation and accounted for under the equity method[26][35][56] Disaggregated Revenue by Brand (in thousands) | Brand | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Dice | $27,342 | $22,272 | $78,799 | $61,906 | | ClearanceJobs | $11,185 | $8,486 | $31,119 | $24,249 | | Total | $38,527 | $30,758 | $109,918 | $86,155 | - In Q3 2022, a subordinated convertible promissory note was converted into preferred shares, resulting in a recognized impairment loss of $2.3 million[54] - In June 2022, the company entered into a new Third Amended and Restated Credit Agreement, increasing its revolving loan facility to $100 million, with $30 million outstanding as of September 30, 2022[70][78] - The company repurchased 2.65 million shares for $15.0 million during the nine months ended September 30, 2022, with an additional $5.7 million remaining available for repurchase under the current plan[83][84] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q3 and YTD 2022 financial results, highlighting strong revenue growth, increased operating expenses, and liquidity Revenues and Key Metrics Revenue from recruitment packages showed positive trends with double-digit growth in customers and average revenue per customer, increasing backlog Recruitment Package Customers (as of Sep 30) | Brand | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Dice | 6,409 | 5,770 | 11% | | ClearanceJobs | 2,030 | 1,816 | 12% | Average Annual Revenue per Recruitment Package Customer (Three Months Ended Sep 30) | Brand | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Dice | $14,868 | $13,656 | 9% | | ClearanceJobs | $19,308 | $17,052 | 13% | - Total backlog, including deferred revenue and un-invoiced contractual commitments, increased to $102.9 million at September 30, 2022, a 29% increase from $79.9 million at September 30, 2021, driven by strong bookings and multi-year contracts[116][117] Results of Operations Results show strong top-line growth for Q3 and YTD 2022, with total revenues up 25% and 28%, and operating income improving significantly Revenue Growth (Three Months Ended Sep 30) | Brand | 2022 (in thousands) | 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Dice | $27,342 | $22,272 | 23% | | ClearanceJobs | $11,185 | $8,486 | 32% | | Total | $38,527 | $30,758 | 25% | Revenue Growth (Nine Months Ended Sep 30) | Brand | 2022 (in thousands) | 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Dice | $78,799 | $61,906 | 27% | | ClearanceJobs | $31,119 | $24,249 | 28% | | Total | $109,918 | $86,155 | 28% | - Operating expenses increased across all categories for the three and nine-month periods, primarily due to higher compensation-related costs from increased headcount and sales quota attainment, and increased discretionary marketing spend to support sales growth[126][127][129][130] - Operating income for the nine months ended September 30, 2022, was $2.8 million, a significant improvement from an operating loss of $1.9 million in the same period of 2021, driven by higher revenues partially offset by investments in product, sales, and marketing[151] Liquidity and Capital Resources The company maintains solid liquidity, financed by operations and a credit facility, with increased operating cash flow and capital deployed for growth Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Line Item | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net income (loss) | $1,825 | $(29,974) | | Interest expense | $990 | $517 | | Income tax benefit | $(937) | $(511) | | Depreciation | $12,594 | $12,030 | | Non-cash stock-based compensation | $7,188 | $5,592 | | Loss from discontinued operations, net of tax | — | $29,340 | | Other Adjustments | $892 | $1,221 | | Adjusted EBITDA | $22,852 | $19,085 | - Adjusted EBITDA for the nine months ended September 30, 2022, was $22.9 million (21% margin), compared to $19.1 million (22% margin) for the same period in 2021[169][171] - The company anticipates capital expenditures for the full year 2022 to be approximately $19 million, an increase over prior periods due to investments in new product development[185] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate exposure from its variable-rate credit facility, with minimal foreign exchange risk - As of September 30, 2022, the company had $30.0 million in outstanding borrowings under its variable-rate Credit Agreement, where a hypothetical 1.0% increase in interest rates would increase annual interest expense by approximately $0.3 million[194] - Subsequent to the deconsolidation of the eFC business on June 30, 2021, the company's operations are conducted entirely within the United States, significantly reducing its exposure to foreign exchange risk[193] Controls and Procedures Management concluded disclosure controls were effective as of September 30, 2022, with no material changes to internal controls during the quarter - The CEO and CFO concluded that as of September 30, 2022, the company's disclosure controls and procedures were effective at a reasonable assurance level[195] - There were no changes in internal controls over financial reporting during the quarter ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, these controls[196] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material pending legal proceedings, beyond ordinary course claims - The company is not currently a party to any material pending legal proceedings[198] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - As of November 2, 2022, there have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K[199] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchase activity during Q3 2022, executing its board-authorized program monthly Share Repurchases (Quarter Ended Sep 30, 2022) | Period | Total Shares Purchased (shares) | Average Price Paid per Share ($) | Shares Purchased as Part of Announced Programs (shares) | Approx. Dollar Value Remaining for Purchase ($) | | :--- | :--- | :--- | :--- | :--- | | July 2022 | 311,353 | $5.03 | 235,173 | $8,240,843 | | August 2022 | 264,598 | $5.17 | 264,598 | $6,871,835 | | September 2022 | 220,006 | $5.55 | 220,006 | $5,651,565 | | Total | 795,957 | - | 719,777 | - | Other Information No other information is reported for this item - None[202] Exhibits This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and XBRL data files