DHX - Earnings call transcript Q3 2017

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Operator

Hello, and welcome to the DHI Group, Inc.

Third Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. turn Investor over Relations. to Vice Brendan like of President now the to conference Metrano, I’d Please ahead go sir.

Brendan Metrano

website Officer on Inc.; Good XXXX. quarter morning, Officer. describing Durney, release Executive the Mike that call This A today DHI the everyone. With a be at for can me copy President on morning, we company's dhigroupinc.com. and of press Chief results Luc of Gregoire, and the company's issued is of reviewed Financial Group release Chief third the

may EBITDA EBITDA financial also Results Financial federal in non-GAAP it current our of by sections to the is Annual and and is not The measures, certain risks where Before regulatory call principal including that from forward-looking could the changes beliefs entitled to from statements subject non-tech of note the here adjusted of These due company our I Form any XX-K and and includes in detailed materially are and such divestitures Mike, laws. no or I'd in business, Analysis results Statements, that company's economics, on factors, the Report businesses, Risk today's the the except and/or call or margin. update Forward-looking Conditions on are in to businesses. turn occur. over XX-Q Today's securities statements Discussion, does and are Actual financial statements differ circumstances. like based call competitive, report the Management's materially statements, future vary cause our Form of implied obligation its SEC to filings, Operations. uncertainty includes The our regarding on Factors, results and under technological forward-looking certain expectations and to adjusted in statements management's possibility results operating and including quarterly expressed that those expectations divestiture to particularly company planned changes and current required

measures, to For to measures, earnings furnished call to refer are that turn and With please SEC, which I'll Mike. release use why and both of been comparable including these X-K on the we on them website. our that, over our has reconciliations the to Form details GAAP the most available our

Mike Durney

are view Great. hi morning. going today the quarter. against and them for third discuss check-post-focused joining our thanks initiatives I’ll Thanks questions, the Then we this announced who the I’ll our Brendan, an that also And that to what as our and it I’m will talk strategy move the well and to key provide we update succession over about briefly in move some plan the financials. our for everyone, that dial will this commence CEO XXXX. impacting open recapping up before in Luc, as time forward spend our businesses I’ll dynamics in market progress on morning. turn will to to

on and of before on and It’s expect focusing realized the product are us need update we’re and During feedback XXXX transitioning objectives certainly many our got from we these place making of to we results. of outlined value last most execution we the resources with evaluating successful. we state intuitive financial believe adjustments for implementation and our half We the take proposition, on and impact people initiatives, the to now. are an time paramount progress second is in to and the accordingly. initiatives process now refined state our We’ve strategic being that some

a fully We growth term. this focused our to as out, the on for quarter In service. and services, objective on in sales Dice as we must evaluating offerings. goal having of To our the quarter our first resources the evaluating performance done our what will EVP expect drive do and the and near to like the organize indirect this to focus sales area number we the America late a sales. hired business product We’ve getTalent dedicated from organization core well accelerate Dice in tech-focused returning we’re an we’ve and efforts we the refocused best, via North The in improving to carry is that direct things from of products in have agenda last so see growth. improved results of we sales around believe execution

For no however of to standalone on elements product longer talent some benefiting of the including the Dice. a is example, service, offered work of getTalent it, as shifting

our force office, serving are from us bucket shops These done We our offering just more factors to China success Dice at with in wins there’s like in here. We efficient sales to two early adjustments yielding continuing go-to-market more pay a also monthly and strategy had performance needs we’re the the some certainly which at market Other making in mobilizing sales, and cost options resources. our but to we’re and approach, Mainland of payment through pay-for-performance customers. view enterprise our meet how addressing at more for of monthly going how billing examples our be best and billing markets serve incremental flexible forward. better clearing Kong is began created for our growth return deploy we Hong to look our structure is

Dice is finally offerings. development core goal investment in the to the product our tech-focused On talent. second to connect franchise, as the around reposition we’ve resource best increased Our go-to

component our improve package signals and a continue among Dice rates we’ll skilled who right The using time from scarce. a will and traditional its rose attempt this our open in see bullying Talent more description, package Talent pretty access the specific customers next in a talent very the X.X, hard-to-find the security recruitment And as on and specific to which release APIs trouble the customer process clients integrated they complicated Web. of full who tech the makes to X% affective to search find added XX%. while strategic have rose in it out access players which the machine to recruitment attribution journalist search number and refer with this and strings deliver feature painful are essentially is adapt the time, seconds. are professionals for be the clients best The Open web The of A job of the for will us the customers priority and to demonstrating joint industry an for key saving our and Our Dice where to search initiative Talent skills searches. Web small Search or uses profiles. cleared through advanced drive in search Open among Search We’ve we move recruiters power learning further the populates penetration recruiting employment and solving many that and proving customers not especially some our quarter, for face our These from skillsets call discussion partners experience words minutes the product focusing low This ahead. matched to solutions feature Dice approach at with and through mechanism a candidates. job month usage a sourcing. Search Dice market for ClearanceJobs long us. and to ahead. valuable in process takes search few this of search customers database specific and to validation a rolled boost the web still the to description contextual we are are the Improving more as Developing in to product key months, solution and to of in will of for by remains issue, deep are Gone branding clients. tech highly clients days improvement and candidate. and we candidates In with so continues This very above important today. in efficient integrated the the is our manageable, efficiency job

using integrated APIs improving about of them. several seeing customers today We’re the our are and with actively half

continue Voice gain easier quarter Voice; is the recruiters reached over or and a to related market we with that reached professionals. enterprise it deeper have of Voice-over-IP to new interface download tech filters, which point the unique unemployment voice user between recruiters important the tools between has online they our of more offer with and for security of they help renewal familiar of tech processing and the backlog ultimately users search and tools overall considered more hiring today talk rate and our experience relevant and and to sourcing. career be new to ClearanceJobs top live job Improvements tests the install solves in so opportunities. various talent incredibly certain other’s live access a roadblock. of tool to efficient integration renewal effective for demand can through while the supply $XXX,XXX security the perks is to search these web days. with releasing a alerts tool in with voice-over-IP business we our a professionals. of the the integrations, a apps boost been lets make major and candidates ClearanceJobs browsers. API site is clearance security challenge. customer tech a features talk Voice a customers at mentioned ClearanceJobs has defense customers. for no remains outpaces sourced time to recruit so chat A communication nearly to over KPIs and ClearanceJobs each right functionality, now The have out and our are become rate. talent talent advanced recruiting There and to logged are The that be rollout for enhanced XXX today One professional recruited right Voice, Last on-demand reinforces and contractors better with cleared which XXXX. ClearanceJobs today full, rolled as to The works low to better location to cleared be them is connecting plug-ins job managed about in employment employers waiting directly talent continues employers offer including offering employers voice opportunity outstrips customers we’ll search trust. and candidates. has rate real-time greatly to connect, people technology first leverages lot This talent The secret time clearance, the pain

ways focus the our we apart is of from One competitors stand on skills.

of outlook are of marketing in progress see character value our not centered the of database profiles around to millennial and Part upstart co-branded holistic and titles, this a partnerships job are marketing began campaigns. honoring professional us those with sponsoring skills, incremental our study skills and on technology skillsets news with reporting to included facing women initiatives aligning culminated combination tremendous search in which and women. awards which We Bustle, for and the annual resume Our entrepreneurial employers. gap their a online approach with customer spend base site, and career pay

tech positioning of in the volumes. channel the incredibly this If Bustle checkout month important has to Dice you exclusive November,

targeting secondary also We’re awareness spend professionals, in tech amongst the employers increasing markets. on

advertising parts, has driven Dice markets. uptick is in page but ads and banner Our events and by far those days, and in seen local so Charlotte City Salt its visits various Atlanta, in Lake campaign radio which early includes an in today

highly tech goal talent their and decisions. insights have opportunities, resources Because driver in deliver. engagement of the candidates seat choosing services products, yet is third skilled job professional is career for recruit ideal a lack heated, market through the deepening we so inform the to Our to are

social the job content based the and focus our strengths. all and The based voice continues We of lead use top and mobile of analysis skill companies recommendations career Dice ever unique more and our the us Dice been available monthly on on to downloads We area say tech Employer ago. focus on has commented work. about attract Ideal XX% as clients. tools instead about valuable average Street expertise the One in a The study eFinancialCareers tech move to part depth Careers titles of tech experience data attributes choose mapping had and tailored for they has of this about platform community, the has on discussion the we on be some the provides and The path their survey, we this pros grow of and Content pros a but tool insights. employer feel as and originally app We’ll (inaudible). and unique been is for Wall desktop to we to central lively year data a a and is today jobs. salary, on Ideal which how of date the compete in information. tech be sets app, and launched The career places eFinancialCareers with that account looking about The professionals of visitors from first to series positive a has provide also a stories is employers. Employer of number content relevant search We reaction our pros on the where in on reveals to and skills There salary received how the of traffic of launched apart. creates about data. funnel generation we based delivers are the career calculators think product XXX,XXX through date. the market, visitor unique variety and with in like have Dice for them combination serves most future. may an skills that app continues to also to

million surpassed skilled and demand in content further professionals tech for financial X the In this specific highlighting users unique services fact, the quarter information. among we

the new a a We on end usage users also and more launched user site. personalized based to of eFinancialCareers homepage behavior provide experience

with at so step So to to right careers. professionals by time, visits far a and jobs the improves that right financial The this showing every we’ve with approach. lift redesign we’re their way seen rise content applications of of professionals content relevancy the in the in

already an As we the creating of success, the ground work needs structure short we’ve position for in laid important. the changing customers is to ourselves organizational to is It term. efficient future goal term us and serve here in our long fourth propel the and

and our (inaudible) of platform also many to and migrated event a for brands. we’ve cloud example, downtime simplified our infrastructure which creates based For services reduces our

ago, behind customer structure with testing the are ways later including cost as Google, happening and are pushing tools growth market competitive some these pivotal the This along I scenes These ever benefit every serves necessarily as at our as employers from seeing a the of job and impressed Technology recruitment I by we the solutions and not few direction. for its the in environment the generalist inundated was players HR are challenge was savings discuss and new the cost many While slice the When is is and facing, forward on. find a we recruitment and in way. of is through industry broader are Conference industry. fierce a is DHI, will weeks DHI widget who large reinforced that specialized a

and the of the employer on through with tech value think to talent unmatched. and relevant and experience. knowledge serve best the improve cleared tank Our of today really security companies delivering talent insights to onus our targeted offer professional is to continue the The our skillsets quality products, proposition is communities of us

with complete to our all EVP new such addition performance. is of we’ve got executing of and the to sales evolution strategy largely a players functional the on drive and Our organization our

And brands valuable we Our including makes on and people are behind solutions an in in the turn The resources areas stage and to for further the grow. asset our new good core our success. with it all a can most I’ll provide, one the difference company next our we exciting is Luc. over focusing investing team discovering that

Luc Gregoire

Today quarter of tech performance; our you morning outlook our third financial fourth quarter focus review Thank the XXXX discuss points financial good and I’ll the key strategy. our I’ll Mike aspects everyone. and address of

the the focus third around quarter, tech our Before explain I strategy. leadership new let organized its its segmentation. Effective begin, company in me

and the Tech-focused reporting our The result, eFinancialCareers. is of segments, segment a eCareer now Dice, consists tech As two company focus healthy and our segments. ClearanceJobs

segmented that is business been have periods. supplement provided other presentation the corporate other. prior today’s in appendix and recasts Our BioSpace We’ve material and included our to Rigzone a hospitality; in in results

easier mid-XX%. Now Drilling continues on or a would Exchange X% revenue British US with X% by factor key pound per the down our longer. around XX our contracts XXXX, for to in XXXX review, non-Tech Dice year-on-year. the are and Revenue down with of XX%, segment helped was of cost months the consistent in at Tech-focused business, not of recruitment down quarter that followed hold decline quarter rates with Average revenue Tech-focused our this the with declined down Customer start revenue were mid-XXXX businesses on stabilized expectations the the quarter. Brexit. components customer rate year-on-year. and results X% to abating, X% exchanged becoming fallout the declined in and third XX% the package the have renewal monthly customers

not we is flexible uplift occur we gain needs marketing term and enhanced as execute meet more However yet which of fully on of more we to extend traction in what seeing types our and net with customers the should customers, we’re our and different expect win-back strategies. new sales the features a product

to on related Moving was declined concerns. impacted and eFinancialCareers; revenue persistent X% by Brexit mostly

While sentiment on to improving, long-term be plans. hesitant hiring customers regarding seems remain Brexit

ClearanceJobs, for grew cleared XX%, to professionals. For XX% revenues for due grew although continued lower a of the tight security rate line supply at billings

in particularly our mainly to the was revenue the to half and down Rigzone? for comprised this Hospitality, first non-tech Total quarter, energy. eCareers, which of X% easier declines For year, Health BioSpace in compared of businesses, comps XX% due

higher product lower operating compensation partly and and revenue increased Third and related with sales by amortization depreciation year-over-year, expenses expenses costs X% flat. based administrative expenses, offset other general stock Tech-focused of and cost with development cost party disposition before and of being and marketing

contribution areas business. in particularly Tech-focused that had to expenses, manage less carefully our to meaningful continue We a

servicing achieve for to to us EBITDA such and of far so resources enable from Hong year Kong down resources lower discontinuing getTalent and Adjusted X.X% savings quarter was costs. the the rationalization of as headcount for help XXX,XXX $XX disposition product marketing redirect related and efforts. this impact revenue to mitigate including the China Our and is million

XXX,XXX to this and Our decline based XXXX. due Stock that to compensation us commitment date EBITDA the XX% year, and of was of to energy XX%. related down in taken XXX,XXX values. increase was Depreciation our last mainly expense lower in amortization due save a which was impairment due annual grant margin line, expense $XXX,XXX forfeitures write-down adjusted interest deferred excluding costs will impact from charges financing related credit of to were reduction fees. The

average interest this charge, Excluding decreased from lower borrowings.

Our tax effective XX% Net rate from quarter was of $X.X discrete a $X.XX tax a benefited for quarter. income realized credit share. this million the or

net These income was of getTalent by include pursuing write-off. caused forward. quarter move many million which fixed $X.X of of which asset items, the impacted results a a the company initiatives are we’re number This to discontinuing

enables year. divestitures this and cost the already save $X us of capital related However, in incurred write-down and the this our organization Tech-focused XXX,XXX mostly on Cost to described. of in or the for cost, that deferred realignment retention million to and $X of termination getTalent expense redeploy financing find and million

in and We prior significant for also this quarters incurred cost legal (inaudible) and matters.

prior $XX decrease the However unusual impacted The XX, accounted generated will down an cash the revenue million lower is in mainly operating billings cash the outstanding in revolver for on partly quarter, Cumulatively, year. in by compared million million, were contract a year-over-year. quarter, [rate]. we was flow benefit third earnings below in due as average for expenses these million million on $X.X as collections. XX share balance, year prior $X.X the earnings slightly per received to offset was well quarter. fourth lower in be period million third cash improved and in receivables restitution XX.X billings, last to the which Deferred by year quarter. of We $X.XX increase XX October from the the again as our Net

third of longer growth see that In the at better in environmental the revenue its non-tech-focused spending slightly expect materially. factors business businesses the Dice Fourth will Looking the by marketing acquire trends cost for recruiters. Typical back rest higher for a helped be are current and rates and decline rest of a our we and change finance year. modest business. win than continue customers trends improvement expected exchange our the increased change environment. to to quarter quarter due taking would of competitive efforts don’t in year, in our context, the in The the should not to continued Tech-focused with as also growth we candidates ClearenceJobs significant

that Our an investment after marketing in the ongoing continue to for rationalization maintain and invest cost product XX% of adjusted and EBITDA full efforts should key year enable disposition us margin related make initiatives. still approximately and to

we’ve delayed our topline As discussed can effect. the various initiatives before, a benefit have the to from

normal rate. So time. persist we of expect current run to margin view But level as the don’t for some we this our

amortization, For will million. in be be the total. normal our should loan our should XX%, the on quarter increase their quarter, points, The and should rates other items approximately fourth count tax XX consistent in LIBOR rate run with compensation, stock be the those depreciation, diluted share spread XX basis

the But fourth quarter Given performed we to We’ve any current for the assurance our process. our and businesses. for uncertainty divestiture [AMD] non-tech-focused that amount activity quarter transaction. will of and above interest no our we number businesses are non-tech all process, across considerable businesses. valuable a they We engaged that potential since the during can we such the note be there in and be are acquirers the began of this inherent of support with assuming now experienced proceeds the continue a of processes, believe fourth a result expectations

revolving past our against shareholders. we which divestitures the gain can of making and the Regarding preserving current we in bold as remained will to more our Once we namely allocation definitive free to liquidity Therefore, focused policy, allocation generation applied we’ve a capital before, business reevaluate be can then growth cash capital outcome, indicated line. in flow returning our ensure our view included investing our opportunistic policy acquisitions. on near-term Tech-focused adequately initiatives, fund we capital

to based feel results are our expected taking meet while progress should to our but fronts recruitment well us the growing skills tech-focused capabilities multiple positon and This rationalize we strategy, continuing topline making unique longer on the we’re recap, resources than needs in the of to our market. improve, tech-professional carefully. to So leverage

interest you now As call thank your for the I’ll always, and to I back Mike. turn

Mike Durney

Thanks Luc.

before we the So that want address single-tech-focused made The the CEO announcement on time to just now company’s Board a initiated I over make continue we in today Board we Directors our Q&A, implement organization. to the The progress plan. I we the turn now of continues have transition team company and to And it full place. plan. management transition, now to this right believe it’s for the evolution the

So that we’ve lead consultants search. commenced hired and that Board has to a the search

until So transition or CEO little I March I’ll longer it to found. find if process the continue I’ll and a in successor provide stay a that help that we If is will takes while earlier XX longer than person. then until be little a until

our roadmap organization forward execute focused moving strategy our this work right it on that strategy Board our here of who execute have on team we everybody all on it. we have product great are the focused need is on and that business. absolutely are people all the confident in executing and think this to opportunity together, it. and management rolling with the The and on to for I and the plan, strategic We

future. So the continue has company and been foreseeable focus that the is for to the will be

over Operator? it to turn I’ll with questions. so And

Operator

& the question B. Kara [Operator Anderson comes with Riley And from Company. first Instructions]

Kara Anderson

you packaged accounts, how Dice over of out rates you receiving what year. customer conversation turning past improvement and that stabilized renewal those has the that changed feedback Recognizing from for kind are

Mike Durney

think rates of we I’ll don’t time, I renewal for in the to is I that renewal. that mid who month when all remind we renew know measured everybody, about when just look up say we but at XX%, and bear talk higher the customers

overtime roughly it’s or we months month or later. back number of to following months or is months two some third the half overtime, three So get a a which six those whether

that’s retention way background rates. as reminder how by measure just a we and of So

the is that popular we get with most need. So response no

somebody Occasionally find they don’t serve positions, and marketing as a can’t term specialist Customers those find them need two variety needs the markets or forms exist. back somebody have no have been that come and number feedback to for, tough the of and and are there come crossbows fair crew] shorter could Competitive in and a them. customers because finished because occasionally amount LinkedIn Those in comes they that they or tech fill go the in Now done building we’ll when whether to admin I don’t generalist they people of points and because or they their looking [tech are biggest we tough skillsets generalist in are very may will hard the had a and that as get operations. are sales a we specific spend are are of they to geographic accounting don’t that get. off to thinking we organization, bulk need find person be environment, and they to us back, Indeed they they felt of a where It and customers. of a out spend a come allocate go. who its the

those the reason. years. over up really has that’s That So pattern another when about talk But people changed they renew haven’t materially reasons of for don’t been generally why we responses renewal. the are when

Kara Anderson

gaining still, not do equipment customers. can or differently, penetration you Open Web of are Open go decent then said of and packaged that think (inaudible) what Dice traction to, some does it make appears you Web And level kind on

Mike Durney

proprietary to used some not database who generated like like profile. Yes, appropriate, to resumes think the or there But we database second answer or recruitment with to information piece. a it’s package database an publicly Open create the customers component is probably appropriate are the with I’ll aggregated profiles wouldn’t Dice some of there be customer Web available everybody. for world and whether Dice it’s post Open Web search whether its jobs that

to the as Open find both such. tech find world really use them for we’re we to to usage talked don’t like I things does passive is, we this but customers earlier refer and of Web a trying to We One (inaudible) and the professionals. push and to active and as generally about way refer

to used with or structured they One The be than provide. lower or responsive, a somebody it’s information think I like doesn’t the is that to profile Open to Web a in response that obvious profile things we similar more about are access are customers LinkedIn. to resume Open that Dice, interacting of their somebody has rates the place has professionals Web gotten but person what who we have we’ve find their with to who a tend were able and tech used resume

customers the certain database really active than to address passive. more (inaudible) So much want

had of So our would anywhere never Web that we near customer have penetration base. Open thought full

to nature the working they make While technology base. customer is a useful recruitment how and research, answer database Open But which database find of by that on number way we the just search we little improving Web we package the of greater the Web your Dice think interact, it attractive the Open and question limit there believe would will is of search. a are the that Dice on more to customers

Kara Anderson

monetized do downloads, to Careers that seekers and And then you on is Dice that offerings? from been how last one job driven me, connect

Mike Durney

Dice, are and The primary we’re aren’t tech we’ve wherever on professionals the existing and because as that tech our Dice push to find users features been professionals push distribution rolled they of increased be Over product levels them strategy time more them The reaching we’ll of out to itself. marketing is site which whenever current that users has focus go so for purely do functionality. professionals customer monetized not from engagement the come the through through the clients, needs from were in monetization not app or recruiters, on future our customers, foreseeable mobile to a a the bringing that usage activity the app. and will rely from

So it always we ultimately for a us which for we professionals to hope. tech it’s professional, way is reach with a way the tech see in opportunities monetize to engage careers and way

Operator

Kip [Operator Instructions] and Paulson then Fitzgerald. with next question Cantor from comes

Kip Paulson

bit any Wondering a marketing changes your flush sales marketing more, if out investments strategy? just to you can your and

Mike Durney

the three old to to similar leader sales we a that our our will those and strategy, where will sales further our I to real push marketing we’ve believe. think But excited the to on That but market professionals. performance standpoint, over places us. they distribute trying That distribution campaign. to to it’s are focused and ClearanceJobs brands aren’t increases again never person eFinancialCareers on social marketing what market to of it’s had standpoint, opportunity team offerings having about some engagement a the traditional bring will with ways, But increase is from professionals having Sure. each and go-to-market and those our experience before If to in sales the call with attract is in North we’re from surely is, what no I our organized more the people been, is not which continues tech tech the Dice, to are engage the around knowledge and expanding and America break site that to be quite those traditional to one great a to part and wherever market I are have excited variety change one a quite of come engage I the site. professionals strategy historical opportunities that through as position now penetrate three in we marketing, all that going sales Tech-focused to From new would a about And offering product, three from the structure. strategy of bring marketing. techniques to in

Operator

more the Metrano call for present As return any to there are we’d the comments. Brendan closing like to at time, questions no

Brendan Metrano

appreciate Steve. DHI Group. in Thanks We interest your

XXX-XXX-XXXX, follow-up at any email ir@dhigroupinc.com. Relations Investor you questions, call or can have you If

Operator

concluded. The attending you for presentation. conference today's now Thank has

disconnect. You may now

DHI (DHX) 2 Nov 172017 Q3 Earnings call transcript