DHI(DHX) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 2024 was $35.8 million, down 7% year-over-year and down 1% from the prior quarter [18] - Total bookings for the quarter were$ 30 million, also down 7% year-over-year [18] - Adjusted EBITDA for the second quarter increased 3% to $9 million, with a margin of 25% compared to 23% a year ago [21] - Operating cash flow for the quarter was$ 9.1 million, up from $8.1 million in the prior year [21] Business Line Data and Key Metrics Changes - ClearanceJobs revenue was$ 13.3 million, up 8% year-over-year and up 3% sequentially, with bookings of $11.4 million, up 9% year-over-year [18][19] - Dice revenue was$ 22.6 million, down 14% year-over-year and down 3% sequentially, with bookings of $18.6 million, down 15% year-over-year [19][20] - Revenue renewal rates were 96% for ClearanceJobs and 78% for Dice, with retention rates of 113% and 99% respectively [12][20] Market Data and Key Metrics Changes - The tech labor market showed signs of improvement with 209,000 new tech job postings in May, the highest since June 2023, although still below pre-pandemic levels [6][7] - The percentage of US tech job postings requiring AI skills increased from 15% in January to 27% in June [8] - The number of jobs posted on Dice increased 30% year-over-year, with average monthly job applications rising over 85% year-over-year [15][44] Company Strategy and Development Direction - The company is focusing on improving its products and go-to-market execution to capitalize on anticipated increased demand for tech professionals [17][24] - The introduction of comprehensive subscription packages has improved average contract value by approximately 4% [13] - ClearanceJobs is positioned to benefit from increased hiring of cleared tech professionals, with significant growth opportunities ahead [10][19] Management's Comments on Operating Environment and Future Outlook - Management noted that the recovery in tech hiring is slow and steady, with expectations for bookings to improve in the second half of the year but not return to growth until next year [16][24] - The company anticipates third-quarter bookings and revenue to decline by 4% to 6% year-over-year [17][24] - Management highlighted the cautious approach of employers due to economic uncertainty, impacting hiring decisions [29] Other Important Information - The company implemented a restructuring initiative expected to yield$ 4 million to $6 million in annual savings [20] - Total debt decreased by$ 6 million during the quarter, with a leverage ratio below one times, resulting in a 25 basis point decrease in interest rate [22][30] - Deferred revenue at the end of the quarter was $52.3 million, down 2% year-over-year [23] Q&A Session Summary Question: What are customers saying about the Dice side of the business? - Management indicated that the economy remains sluggish, with tech job postings down about 30% from normal levels, and noted attrition of smaller companies impacting revenue [26][29] Question: What is the current capital allocation strategy? - Management is considering whether to continue paying down debt or resume share repurchases, depending on the macroeconomic environment [30] Question: What were the tech job postings in July? - July's tech job postings were reported at 176,324, which is below May's peak but shows seasonal trends [32] Question: How is the adjusted EBITDA margin target being managed? - The target for adjusted EBITDA margin is 24%, with expectations of offsetting restructuring savings against merit increases and investments [34] Question: Is there an increase in interest from potential new accounts? - Management noted a slight improvement in the SRC pipeline, indicating stabilization in the market [36] Question: What is the outlook for ClearanceJobs? - Management expects to maintain the 9% improvement in ClearanceJobs bookings, despite political and economic uncertainties [40] Question: How will marketing spend be managed in the second half of the year? - Marketing spend is expected to remain similar to Q2 levels, with flexibility to adjust based on market conditions [42]