DHI(DHX) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - DHI Group reported a 7% revenue decline in 2024, with total revenue of $34.8 million for the fourth quarter, down 7% year-over-year and down 1% sequentially [7][34] - Adjusted EBITDA for the fourth quarter decreased 9% to$ 9.2 million, with a margin of 26%, compared to $10.1 million and a margin of 27% in the prior year [44] - Free cash flow for the current year was$ 7.1 million, a $6.0 million increase over the prior year [46] Business Line Data and Key Metrics Changes - ClearanceJobs revenue increased by 7% year-over-year to$ 13.8 million, while Dice revenue decreased by 14% year-over-year to $21.0 million [16][37] - Total recurring revenue declined by 5% year-over-year, with ClearanceJobs bookings flat year-over-year and Dice bookings down 14% [17][34] - Revenue renewal rates for ClearanceJobs and Dice were 93% and 77% respectively, with retention rates of 111% for ClearanceJobs and 97% for Dice [20][37] Market Data and Key Metrics Changes - New tech job postings were approximately 70% of normal, with a notable rebound in the second half of 2024, showing a 12% increase compared to the first half [11][12] - The tech unemployment rate remained low at approximately 2% in December, indicating a tight labor market for tech talent [13] - Tech recruiter job postings increased by 22% year-over-year in the second half of 2024, suggesting a potential rise in demand for tech professionals [15] Company Strategy and Development Direction - The company restructured its operations into two distinct brands, Dice and ClearanceJobs, to enable tailored strategies for their unique market dynamics [8][9] - DHI Group is focusing on recession-resistant sectors like consulting, aerospace/defense, healthcare, financial services, and education [19] - The company plans to launch new products, including CJ Verify and a paid candidate subscription service for ClearanceJobs, to enhance customer engagement [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a gradual recovery in tech hiring demand, with expectations of a 5% growth in tech staffing revenue in 2025 [13][27] - The company anticipates revenue of$ 131 million to $135 million for the full year 2025, with a target adjusted EBITDA margin of 24% [27][28] - Management noted that while the hiring environment has impacted growth, they expect increased investment in technology initiatives across industries in 2025 [51] Other Important Information - The company implemented a Section 382 rights plan to protect its capital loss carryforward, which exceeds$ 100 million [42] - DHI Group's Board approved a new $5 million stock buyback program, believing that shares are trading below intrinsic value [28][50] - Greg Schippers has been officially appointed as Chief Financial Officer, bringing over a decade of experience with the company [29] Q&A Session Summary Question: Business prospects for Dice in 2025 - Management indicated that staffing is expected to recover before commercial accounts, with positive signs in renewal and new business activity [56][58] Question: Concerns for ClearanceJobs amidst efficiency initiatives - Management has not seen direct impacts on ClearanceJobs from potential defense budget cuts and remains optimistic about continued activity levels [60] Question: Cash usage and debt repayment - Approximately$ 6 million of cash was used to pay down debt, impacting cash on hand at the end of Q4 [66] Question: Segment reporting by brand - Management intends to provide more detailed segment reporting following the restructuring [72] Question: Expectations for bookings growth in 2025 - Management expects growth for ClearanceJobs but remains conservative regarding Dice, anticipating no significant improvement [81][82] Question: Exposure to non-defense agencies - Management clarified that ClearanceJobs primarily serves defense-related agencies, with limited exposure to non-cleared agencies [88] Question: Marketing spend expectations - Marketing spend is expected to be seasonal, with reductions during summer and holiday periods [96]