DHI Group Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 7, 2025

There are 6 speakers on the call.

Operator

Good day, and welcome to the DHI Group First Quarter of twenty twenty five Financial Results Conference Call. All participants will be in a listen only mode for the duration of the call. After today's presentation, there will be an opportunity to ask questions. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Todd Curley of Pondell Wilkinson.

Operator

Please go ahead.

Speaker 1

Thank you, operator. Good afternoon, and welcome to DHI Group's first quarter earnings conference call for 2025. Joining me today are DHI's CEO, Art Saleh and CFO, Greg Skippers. 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 twenty twenty five.

Speaker 1

The release is available on the company's website at dhigroupinc.com. This call is also being broadcast live over the Internet for all interested parties, and the webcast will be archived on the Investor Relations page of the company's website. I want to remind everyone that during today's call, management will make forward looking statements that involve risks and uncertainties. Please note that except for the historical information, statements on today's call may constitute forward looking statements within the meaning of the federal securities laws. These forward looking statements reflect DHI management's current views concerning future events and financial performance and are subject to risks and uncertainties, and actual results may differ materially from the outcomes contained in any forward looking statements.

Speaker 1

Factors that could cause these forward looking statements to differ from actual results include the risks and uncertainties described in the company's periodic reports on Form 10 ks and 10 Q and other filings with the Securities and Exchange Commission. DHI undertakes no obligation to update or revise any forward looking statements. Lastly, on today's call, management will 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. GAAP.

Speaker 1

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 dhigroupinc.com in the Investor Relations section. I'll now turn the call over to Art Zayle, CEO of DHI Group.

Speaker 2

Thank you, Todd. Good afternoon, everyone, and welcome to our first quarter earnings conference call for 2025. We appreciate you joining us today as we review our financial performance and discuss our outlook for the remainder of the year. 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.

Speaker 2

As part of this initiative, we aligned our operations around our two distinct brands, ClearanceJobs and Dice, each with dedicated leadership and tailored go to market strategies that reflect their unique market dynamics and customer needs. This brand led structure brings sales, marketing, product and development teams under a single leader for each business, driving greater focus and accountability. 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. We believe this realignment enhances our profitability and unlocks new strategic growth opportunities for each brand. More specifically, we believe that it allows ClearanceJobs to expand its mission in the GovTech space.

Speaker 2

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. First, looking at the company as a whole, despite a 10% decline in total revenue in the first quarter, we delivered companywide adjusted EBITDA of $7,000,000 representing an adjusted EBITDA margin of 22%. We removed over $20,000,000 of operating costs through three restructurings since May of twenty twenty three, while improving our product offerings and strengthening our sales and marketing teams. These initiatives position us well for a return to highly profitable growth once we are back in a normal tech hiring environment. From a segment perspective, ClearanceJobs continues to demonstrate its value as a highly profitable and strategically differentiated platform.

Speaker 2

CJ delivered another quarter of a very strong profitability with adjusted EBITDA of $5,700,000 and an adjusted EBITDA margin of 43%. 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. 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. As expected, Dice faced a more challenging environment with bookings down 20 year over year. This decline was primarily driven by customers that had booked multi year contracts back in the booming first quarter of twenty twenty two and adjusted their consumption to a lower demand environment during their renewal.

Speaker 2

That said, we continue to prioritize aligning Dice cost structure with current market conditions delivering adjusted EBITDA of $3,400,000 and an adjusted EBITDA margin of 18%. We remain confident in Dice's ability to return to growth as tech hiring demand normalizes. Now, let's dig into the current state of the tech labor market, which serves as a key growth indicator for our business. We believe that tech hiring demand is gradually returning to normal levels. Since August of twenty twenty four, we've seen consistent year over year increases in monthly new tech job postings.

Speaker 2

In fact, according to CompTIA, new tech job postings in Q1 of this year increased by 16% compared to last year, averaging 215,000 new tech job postings each month during the quarter. 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. In the tech staffing sector specifically, staffing industry analysts recently revised its 2025 growth forecast to a 2% year over year increase. While this is down from the original forecast of 5% growth, it is still a significant improvement from the 6% decline in 2024 and a 10% decline in 2023. This is a positive signal reflecting confidence in the industry's improved performance this year.

Speaker 2

Another encouraging demand signal comes from Lightcast, which tracks new tech recruiter job postings. In the first quarter, tech recruiter job postings increased 36% year over year. This uptick is also a promising sign as 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. Major consulting firms are leading early stage AI projects with IBM securing $5,000,000,000 in AI related business and McKinsey forecasting that 45% of its projects will focus on AI this year.

Speaker 2

We see this as a key indicator of broader corporate AI adoption, which will ultimately require more technologists for effective implementation. As businesses increase these initiatives, platforms like ClearanceJobs and Dice along with our database of 9,100,000 tech professionals will be essential tools for employers looking to attract top tech talent. In the federal sector, Doge related uncertainty impacted new business bookings and renewals to a certain extent at ClearanceJobs. 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. Also, the heads of the Senate and House Armed Services Committee recently agreed on a 150,000,000,000 boost for current defense funding.

Speaker 2

Senate Armed Services Committee Chairman, Roger Wicker and House Armed Services Committee Chairman, Mike Rogers view this as a generational investment in the military. And both President Trump and Secretary Hegzeff have indicated their desire for the first trillion dollar defense budget for fiscal year 2026. 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. The move by Europe to start spending more on their own defense could also positively impact CJ's opportunity because as EU defense spending goes up, there are very few EU contractors they can engage. Over 60% of EU defense spending flows to U.

Speaker 2

S. Military Contractors today and the EU can't create weapons manufacturing facilities in months. It actually takes years. So in the interim, we expect this new spending will flow to U. S.

Speaker 2

Defense Contractors as they are the largest viable source of weaponry that exists. We also believe that there are additional services that CJ can deliver in the GovTech space over the course of time and we are actively working to explore them. During the quarter, CJ secured several new customers including Boston Government Services, Saab and Complete Parachute Solutions. With over 10,000 employers of cleared tech professionals and over 100 government agencies also needing cleared tech professionals, not to mention the EU opportunity I just outlined, CJ has a significant growth opportunity ahead. Dice also secured several notable customers this quarter, including American Airlines, Jason Pharmaceuticals and Flexjet.

Speaker 2

On the new business front, we are focused on recession resistant sectors like consulting, healthcare, financial services and education, as well as those staffing and recruiting firms that are seeing increased business. We continue to hear success stories from our clients like professional services firm Mindseeker, who recently said that Dice is the best platform for finding technical talent, particularly for its bigger clients. Now, let me quickly touch on what we're doing to drive increased adoption of our two brands. ClearanceJobs continues to innovate with recent product updates including expanded multi factor authentication options and enhancements to our live events platform. 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 2

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. 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. Our all jobs initiative continues to drive job posting growth, increasing candidate engagement and applications. In the first quarter, Dice averaged 1,600,000 monthly job applications, up 15% year over year further solidifying Dice as the leading tech career marketplace.

Speaker 2

We believe in the virtuous cycle of increased candidate activity attracting more recruiters and employers Turning to guidance, although there remains significant uncertainty surrounding tech hiring and investments in general in today's economy, we are reiterating our full year revenue guidance of 131 to $135,000,000 In the second quarter, we expect revenue to be between 32,000,000 and $33,000,000 In the meantime, we continue to focus on delivering substantial profits for our shareholders and are reiterating our target of a 24% adjusted EBITDA margin for the full year 2025 with strong free cash flow conversion. As I mentioned, we remain focused on controlling what we can, namely our cost structure and capital allocation. We announced a $5,000,000 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. Having achieved our targeted leverage ratio of 1x, we used our free cash flow this quarter to repurchase shares.

Speaker 2

Our Board believes as we do that our shares are trading below their intrinsic value due to the soft tech hiring environment. Also, we believe the sum of parts valuation of our company justifies this view. In closing, I'm proud of the progress we've made in reshaping DHI Group into a more focused, efficient and profitable organization. ClearanceJobs 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 2

And across both brands, we are making smart investments in product innovation to drive customer engagement and future growth. With that, I'll turn the call over to Greg to walk you through our financial results in more detail. Greg?

Speaker 3

Thank you, Art, and good afternoon, everyone. As Art mentioned, we have completed the segmentation of our business into two distinct brands, ClearanceJobs and Dice. Going forward, we will report our results in alignment with this structure. This segmentation reflects how we manage and operate the business today and offers greater visibility into the performance of each brand. 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.

Speaker 3

Now let me take you through our results for the first quarter. We reported total revenue of $32,300,000 which was down 10% on a year over year basis and down 7% versus the fourth quarter. Total bookings for the quarter were $42,100,000 down 14% year over year. 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. ClearanceJobs revenue was $13,400,000 up 3% year over year, but down 3% sequentially.

Speaker 3

Bookings for CJ were $16,800,000 down 1% year over year. We ended the first quarter with eighteen ninety one CJ recruitment package customers, which was down 7% on a year over year basis and down 3% on a sequential basis. This reduction is attributable to churn with smaller customers, whereas the number of CJ accounts spending greater than $15,000 in annual recurring revenue has increased and is up approximately 14% versus prior year. 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 Approximately 90% of CJ revenue is recurring and comes from annual or multiyear contracts.

Speaker 3

For the quarter, CJ's revenue renewal rate was 92%, and CJ's retention rate was strong at 106%. The outstanding retention rate demonstrates the continued value CJ delivers in the recruitment of cleared professionals. Dice revenue was $18,900,000 which was down 18% year over year and down 10% sequentially. Dice bookings were $25,300,000 down 20% year over year. We ended the quarter with 4,490 Dice recruitment package customers, which is down 5% from last quarter and down 14% year over year.

Speaker 3

Dice revenue renewal rate was 70% for the quarter and its retention rate was 92%. 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. 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 As with CJ, approximately 90% of Dice revenue is recurring and comes from annual or multiyear contracts. Turning to operating expenses. First quarter operating expenses increased $7,100,000 to $41,200,000 when compared to $34,100,000 in the year ago quarter and includes a $7,400,000 Dice goodwill impairment charge and a $2,300,000 charge from the January restructuring.

Speaker 3

Excluding those charges, our first quarter operating expenses declined 2,500,000 or 7%. Because of the difficult market conditions over the past two point five years, we have reduced costs through restructuring in the second quarter of twenty twenty three, in the third quarter of twenty twenty four, and again in January of this year. Together, these restructurings have reduced our annual operating expenses and capitalized development costs by approximately $20,000,000 We continue to focus on our operational efficiency. For the quarter, we had an income tax benefit of $126,000 on a loss before taxes of $9,500,000 Our tax rate differed for the quarter from our approximate statutory rate of 25% due to tax expense from the vesting of stock based compensation and the nondeductible impairment of goodwill. Moving on to the bottom line, we recorded a net loss of $9,400,000 or $0.21 per diluted share in the first quarter.

Speaker 3

For the prior year quarter, we reported a net loss of $1,500,000 or $03 per diluted share. Net loss for the quarter was impacted by a $7,400,000 impairment to Dice goodwill and a $2,300,000 restructuring charge associated with our January restructuring, which included a reduction of approximately 8% of the company's workforce. Non GAAP earnings per share for the quarter was $04 compared to earnings of $05 per share for the prior year quarter. Diluted shares outstanding for the quarter were $45,500,000 compared to $44,200,000 in the prior year quarter. Adjusted EBITDA for the first quarter decreased 19% to $7,000,000 a margin of 22% compared to $8,600,000 or a margin of 24% in the first quarter a year ago.

Speaker 3

On a segmented basis, CJ adjusted EBITDA was very strong at $5,700,000 in the first quarter, representing a 43 percent adjusted EBITDA margin as compared to adjusted EBITDA of $5,500,000 or a margin of 42% in the prior year period. Dice's adjusted EBITDA was $3,400,000 representing an 18% adjusted EBITDA margin, which compares to $5,000,000 and a 22% margin last year. Operating cash flow for the first quarter was $2,200,000 compared to $2,100,000 in the prior year period. Free cash flow, which is operating cash flows less capital expenditures, was $88,000 for the first quarter, up significantly from a negative $2,400,000 in the first quarter of last year. Our capital expenditures primarily consist of capitalized development costs, which were $2,000,000 in the first quarter compared to $3,400,000 in the first quarter last year, a savings of $1,500,000 or 42%.

Speaker 3

Capitalized development costs in the first quarter of twenty twenty five were $400,000 for CJ and $1,600,000 for Dice as compared to $700,000 for CJ and $2,700,000 for Dice in the 2024 period. Over time, we are targeting free cash flow at 10% of annual revenue. Following the restructurings, we expect further reductions to our capitalized development costs in 2025 as compared to 2024. We are targeting total capital expenditures in 2025 to range between 9,000,000 and $10,000,000 as compared to $13,900,000 last year. 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 3

From a liquidity perspective, at the end of the quarter, we had $2,700,000 in cash and our total debt was $33,000,000 under our $100,000,000 revolver, resulting in leverage at 0.98 times our adjusted EBITDA. We continue to target one times leverage for the business. Deferred revenue at the end of the quarter was $50,700,000 down 9% from the first quarter of last year. Our total committed contract backlog at the end of the quarter was $107,800,000 which was down 9% from the end of the first quarter last year. Short term backlog was $82,900,000 at the end of the first quarter, a decrease of 6,400,000 or 7% year over year.

Speaker 3

Long term backlog, that is revenue to be recognized in thirteen or more months, was $24,800,000 at the end of the quarter, an increase of $3,400,000 or 16% from the prior year quarter. During the quarter, we repurchased 886,000 shares for $2,100,000 In January, our Board approved a new $5,000,000 stock repurchase program, which began in February and will run through February 2026. At the end of the quarter, we had $4,300,000 remaining on our $5,000,000 repurchase program. Adding to the guidance that Art provided, we are reiterating our annual revenue guidance for the first full year of 131,000,000 to $135,000,000 and we continue to target an adjusted EBITDA margin of 24% for the full year. 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 3

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

Speaker 2

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.

Speaker 4

And our first question will come from Gary Prestopino with Barrington Research. Please go ahead.

Speaker 5

Good afternoon, all. Art, I guess the obvious question here and we appreciate the fact that you've broken all this out in adjusted EBITDA for both segments. What is it that gives ClearanceJobs, adjusted EBITDA margin that is more than twice of what Dice produces?

Speaker 2

I would have to say it's the revenue per employee. In the case of Dice I'm sorry, in the case of ClearanceJobs, it's running at about $700,000 per employee. For ClearanceJobs, it's about half that. I'm sorry, for Dice, it's about half that. So we have had to work a lot harder on fixing legacy code and bringing Dice to the same level of feature set and capability as ClearanceJobs over the course of several years.

Speaker 2

So, that's the answer. It's a bigger team. And quite frankly, more so in the tech spend and what we've been doing over the course of time than for clearance jobs.

Speaker 4

Okay.

Speaker 5

And then as I look through these numbers, Greg, maybe you can answer this. Is your corporate before anything below that line running at about 6,050,000 per quarter? Is that about right?

Speaker 3

Our corporate expenses are going to run excluding anything that is kind of unusual in nature, is going to run about $7,000,000 a year annually. It's a pretty small group. There's a handful of employees in there and our public company costs.

Speaker 5

So it's only $7,000,000 a year, that 6,058,000.000 is Okay.

Speaker 4

That's where I wanted

Speaker 3

to get at. All right. 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 of twenty twenty four forward. So you can see all the different pieces that roll up.

Speaker 5

And then just two other questions, and I'll let somebody else go. With Dice, you said bookings are down 20%, lower demand on renewals. What exactly when you're talking about lower demand, could you maybe just explain that a little bit in terms of how your revenues book out in that regard? I just want to make sure I understand how the lower demand could help to reduce bookings by 20%.

Speaker 3

So, yes, Gary, 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 multiyear contracts that were entered into in Q1 of twenty twenty two and 2023, which are still high demand periods, we had in the neighborhood of $6,000,000 of renewals in the quarter coming up on those, and those were challenged from a conversion given the demand environment today. So that's a portion of it. And then I'll turn it over to Art.

Speaker 2

No, I think you covered it well, Greg. The bottom line is that the larger staffing recruiting firms like to have a multiyear contract relationship with us. It's easier for them. It also cements a better relationship quite frankly between the two parties. And in that 2022 and twenty twenty three first quarter period, they were feeling pretty good about the growth of the overall economy, especially in 2022 coming out of COVID, there was kind of a surge of demand for all technology positions and hiring in general.

Speaker 2

And so they locked in 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're still moving forward on multiyear contracts, but at a lower level.

Speaker 5

Okay. That helps a lot. And then just lastly, real quickly here. Has any of the contractors that you're dealing with starting to see a flow of any kind of funds from EU defense spending or is it too early at this point?

Speaker 2

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 there's a tracker online that you can go to that shows all the contracts that have actually been terminated by Doge, by department and by dollar value. And so, was a fear that they would run through Department of Defense. They have not substantially.

Speaker 2

And so, I think that that fear has receded, especially with regard to the pronouncements of President Trump and Secretary Hagzeff, as I've indicated, as well as the House and Senate on Services Committee Chairman's, their willingness to boost the defense budget. Now that hasn't been signed into law. Those are kind of forecasts for the future. So we haven't seen a dramatic change in the funding of additional defense projects, but I think just based on the news cycle and the constant discussion of the need for stronger defense, we believe that that's very, very likely for later this year.

Speaker 5

Okay. Thank you.

Speaker 2

Of course. Thank Thank

Speaker 4

our next question will come from Kevin Liu with K. Liu and Company. Please go ahead. Hi, good afternoon guys. Maybe if we could continue on the conversation on those.

Speaker 4

Could you kind of parse out the actual impact on your quarter? I'm just curious to what extent it impacted churn, if it did have any impact there versus just kind of delaying new bookings? And then maybe if you could talk about kind of what you've seen early in Q2, has the fact that a new defense budget has been proposed and it's not much larger, is that giving any sort of added confidence in letting customers move forward now?

Speaker 2

Yes. I can speak to that Kevin and great question. I would say that first and foremost, when Doge kind of rampaged other agencies, other government institutions, there was a fear that they wouldn't withhold any kind of activity from Department of Defense. 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.

Speaker 2

It did scare most of the smaller contractors as indicated by Greg, the folks that did not renew for the most part were smaller military contractors. It also scared the folks that were talking to us about buying a ClearanceJobs 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 ClearanceJobs. And that was just really, like I said, very unusual given our pattern is to have new business bookings in for the ClearanceJobs new business team every single day of the week for the most part. So again, the fear was there.

Speaker 2

I'd say that the larger contractors did not have that same level of 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, again, it affects renewals of smaller customers for ClearanceJobs as well as new business relationships that we're trying to establish.

Speaker 4

Got it. And just also for ClearanceJobs, as we make our way through this year and presumably sentiment gets better with higher defense budget, How should we think about kind of your willingness to spend on the marketing front? Would you is there kind of a floor level that you want the CJ business to have in terms of an EBITDA margin, somewhere north of 40%? Or are you willing to go lower than that if the opportunities are there to really reaccelerate the growth profile?

Speaker 2

I think that 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 ClearanceJobs should be a 40% EBITDA margin platform for the foreseeable future. I don't know if you have anything to add to that, Greg.

Speaker 3

Yes. No, I completely agree with the 40 plus percent. Art mentioned, it would be targeted marketing if we spent any more where it would be accretive to the margin. And in particular, getting more exposure in the Western Part of The United States, super dense for us in the D. C.

Speaker 3

Area, but we have opportunity, when you move west for clearance jobs.

Speaker 4

Got it. 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 customers in certain segments. Just wondering if you're sensing that things have kind of bottomed out here and we can start to see an improvement or if the environment is still pretty challenging out there?

Speaker 2

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 attends to commercial relationships like we announced American Airlines and Flexjet this quarter. I would still say that there's a lot of uncertainty and fear for commercial accounts and therefore we've seen those bookings suppressed. It's been a positive surprise to see that bookings for staffing and recruiting agencies have actually exceeded our internal expectations this first quarter.

Speaker 2

I think that's because for most companies they view hiring through a staffing recruiting agency as a less risky proposition in this kind of environment. It makes it a variable expense as opposed to a 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 recruiting new business team, but not the other one not the commercial accounts team.

Speaker 4

Got it. I appreciate the color there and good luck here in the second quarter.

Speaker 2

Thank you very much. Really appreciate it, Kevin.

Speaker 4

And our next question is a follow-up from Gary Prestopino with Barrington Research. Please go ahead.

Speaker 5

I just wanted to ask in terms of some of the expense categories, project development, sales and marketing, G and A, D and A or depreciation. Greg, should we look at the percentage of those expenses on sales to maybe hold steady throughout the rest of the year?

Speaker 3

Yes, good question. I would say if you're using the first quarter of twenty twenty five as the comparison, it should stay in that general area. As revenue expands, of course, there'll be some efficiency on those expenses. But otherwise, yes, you should look at it relatively flat.

Speaker 5

Okay. Thank you.

Speaker 3

Now just one follow-up on that too, Gary. If you think about capitalized development costs, that will trend down from last year's numbers and maybe be more consistent or in line with what we're seeing here in Q1 and trending towards 9,000,000 to $9,500,000 maybe 10,000,000 for the year as opposed to almost 14,000,000 last year. So direct cash savings there, but it's not reflected in EBITDA.

Speaker 5

Okay. Thank you.

Speaker 2

And

Operator

this concludes our question and answer session. I'd like to turn the conference back over to Art Zayle for any closing remarks.

Speaker 2

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 Kurley and he will help arrange a meeting. Thanks everyone for your interest in DHI Group and have a great day.

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Key Takeaways

  • DHI Group reorganized into two distinct brands—ClearanceJobs and Dice—each with dedicated leadership and tailored go-to-market teams, while retaining centralized support functions to drive accountability and unlock strategic growth.
  • Despite a 10% year-over-year revenue decline in Q1, the company delivered $7 million of adjusted EBITDA at a 22% margin after cutting over $20 million in operating costs through recent restructurings.
  • ClearanceJobs posted Q1 adjusted EBITDA of $5.7 million (43% margin) with only a 1% drop in bookings, citing temporary federal defense budget uncertainty but a strong pipeline—including new EU defense spending—to drive long-term growth.
  • Dice saw bookings fall 20% as large multiyear contracts renewed at lower consumption levels, yet still achieved $3.4 million of adjusted EBITDA (18% margin) and is aligning its cost structure for a rebound when tech hiring normalizes.
  • Tech hiring indicators are improving—Q1 new tech job postings rose 16% year-over-year, AI initiatives are fueling demand, and DHI reaffirmed full-year revenue guidance of $131–135 million with a 24% adjusted EBITDA margin, supported by a $5 million share repurchase program.
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Earnings Conference Call
DHI Group Q1 2025
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