DHX - Earnings call transcript Q4 2018

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Operator

Good morning. My name is Lisa and I will be your conference operator today. At this time I would like to welcome everyone to the Fourth Quarter and Full Year 2018 DHI Group Inc Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator may conference. you begin Ceccarelli, your Rachel

Rachel Ceccarelli

and in current All in And to expressed the financial operating of company. quarter welcome you, Financial changes Lisa, Actual Officer. Zeile, earnings results technological Grégoire, includes and morning, particularly everyone. and good uncertainty statements factors. President Art or subject changes and are or statements to and/or based are forward-looking differ management's These call. Today's may me competitive, to beliefs right, Executive expectations on Chief those and economics, and With possibly these circumstances. Officer; Luc results thank conference from business, in regulatory today due Chief are certain materially our forward-looking implied statements, call XXXX fourth future regarding

statements, the for sections For results, factors a company's Risk no Analysis our on of where the and discussion of risks filed XXXX, Factors, and risk and Discussion and description XX-K Management's principal year Conditions of any could report Financial by laws. in of factors The and affect entitled that which will these the please annual ended be the December, see future update forward-looking to company required is Operations. shortly obligation federal Forward-looking under security Statements in except Result Form

that, will Art. at Relations prepared that and is measures not over call financial adjusted about revenues, including these are measure non-GAAP measures, release, accordance www.dhigroupinc.com adjusted now GAAP. posted website we certain turn are adjusted our call, most to available today's I and GAAP the With EBITDA in which referring to of During margin be will Investor which with in reconciliations section. EBITDA the earnings directly Information in U.S. on comparable to our

Art Zeile

We our we Thanks, important interest year-over-year in who strong point for in the our years. time, DHI. profitability. fourth which three flat in reaching improved time call. good focused same tech that your an momentum to our morning inflection appreciate remaining first XXXX stabilized in has revenues, At ended Rachel, business. everyone the our We were joined We with nearly quarter and

for robust a executing first customer in basis is remains excellence quarter strengthening offices, on restructured average brands, revenue tech-first several several non-core and count and and business. in made base completed moment in years, dimensions Europe our We Additionally client close global increase. divestitures strategy on our important streamlining sequential marketing, the our for constant of in several This of watershed sales, product delivering We our significant our frameworks Dice company. for We implemented management our a the footprint. progress our time per engineering.

strong oriented focused also management execution in of We put place began culture innovation. team customer a implementing a and

to of of in fourth generation important, our regular double-digit in XX% increase in established our supported and test for and with years clear quarter date. we delivery Dice side, taking has as The and Dice a by the tested next clients product platform launched across Dice the to brands. and upgrade positive them ClearanceJobs the extremely feedback best ClearanceJobs that features a product product seeing Dice major in we're This third is from TalentSearch we evidence time first Equally our the of launched sense in nearly eFinancialCareers. commitment a was the migrated On we bringing XXXX, bed been roadmap successfully and We rhythm leveraging usage. are mission. with to in other quarter. IntelliSearch innovation ClearanceJobs

reinvest user with engage key by messaging career with chat, restructured personal experience base of also and a the revolver. a the XX search over the need months, and product our we outstanding differentiate communications. part I'm our Dice in well and network, candidates strengthened on reducing are fundamentals where improved solid last saving of Next them have made for year. strong forward made million its team opportunities lead $XX now we instant IP to global achieve program. on EBITDA Matchback Careers delivering over voice accelerate XXXX business ClearanceJobs last how our eFinancial profiles, works in roadmaps hires Again, our we This true X,XXX gen adjusted with growth. also very We our our our is robust to stabilizing to plan. program progress of one leaders while in rationalizing great to substantial margins banks opportunities leveraging we our The with of We to Careers. employers case, demonstrated positioned year platform. the a have to features by sheet balance live quarter expense HR they fees. creating in our that the are In our sales XXX debt growth We substantially to that directly a and bank pleased them for equivalent strategic process on make we sense refinancing We eFinancial resources began applications in hires business. our this strides purpose. tie the sourced year-end

technology the is access with quality which clients for to career Our connect right vision highest indispensable remains and to talent. create the for the professionals to opportunities have to same, marketplaces

objectives a with modern Our XXXX, elements and marketing reinforced are this oriented by mindset team strong of candidates our is In sales, leadership of best results performance. financial board four personalized discipline we sense have urgency accomplish key and and shared business: a priorities These that's opportunities. create collective a their on technology to and career centered network that product, are matches about being what our a professional goal efficiently must year.

experience product the is critical On focus. a side, area improving of user

to three ClearanceJobs Dice eFinancial half, this this to with the upgrades experience and user first bring to is products of the support Careers goal by plan In end objective. Our parity the year. we on introduce

best offer of enable we of with responsiveness offering. need, based relationships performance professionals nearly will will The practices. products, several enhancement based subscription believe this this current new create market our model first in alongside consumption jobs the on the introduction is We in posted, ClearanceJobs which to using us successfully revenues. years, to pay upgrade clients performance based to relied our resulting model will some currently has This client which based improve turn consistent site. more XX,XXX for increase unmet very and turn a drives in areas

against Match, automatically allowing job use Candidate many hosting. to is algorithms, Applications blade recruiters sophisticated requirements of technology data upgrade based candidate relevance using rank second model these their each quickly candidates. we'll our AI and skills which skills, the a experience be score order will to The

our profiles, sites third will to to The attractive upgrade they which control candidates is which introducing access. with, candidates for connect more allow protected whom makes

that We candidate lead observed have to experiences higher better success client rates.

outperform A and evolve and time their addition platform the community as all consolidated evaluate unique a market connections and candidate We Dice’s employers. to Access talent year generation connecting quarter as levels the automation driver also expanding efficient focus features specialized hard-to-find quality tools. continue financial of for load. a job direct success commercial to in XXXX for Dice candidate in to they job ClearanceJobs of another is hitting newsfeed are further just record ClearanceJobs we flow employers as team employer anywhere on These high exist of quarter. to candidates. of recruiter Dice’s launched use this and the postings of of its to in a profiles. work our complete ensures is which and powerful experience particular value else with database candidate with sales candidates distinguish next quality of of find on focus accounts will employers. operational the a with professionals, essential proposition not well making relevance its as key review for ClearanceJobs engaged in hire fourth candidates high actionable fourth goals interaction, user In the new ClearanceJobs its doesn't the continue

white sales we recently new experienced reps a that opportunity head mentioned for that an As and this previous us. hired believe team. our on calls, added is bearing I've the quota We've significant leader space

channel We we're are our later API year. the expect Google scale contract ensure other In and are candidate retention, policies, focused to and In increasing pricing on generation. effort up this job efficiency directly Google to see performance. fourth improving our currently we organization, incentives essential client are for postings Across maximizing marketing, we to acquisition quarter, that elements we revamping this algorithm. the and we in sales to ramping place sales search are that and also lead adopted terms, Jobs improved results sales

engine candidate registrations and applications seen from already efforts. in have optimization these We increases search coming

reached an To focus we very we will point pivoting growth how will level ended his revenues, Luc into In XXXX to remarks, now momentum in have our but caring expanding that on summarize, have more provide with in terms specifics the we margins. XXXX. we pleased our of fundamentals, and and our in XXXX be revenue are of inflection

about ahead of path excited us. are We the

the firm us technology further market. a of strategy in differentiate alike specialized that conviction substantial a professionals, have need employers our state-of-the-art We for delivering unmet offerings as will address we

on differentiated to With well Luc, that fully earnings into to revenue steps creation let questions growth build and will the have. We business take are that who our world and financials you translate strategic leads class against were focused over will me a turn executing We you quarterly we highly we'll value and superior call time. delivering believe and a through our taking are the sustained Luc? take any shareholder then over priorities.

Luc Grégoire

note financial XXXX in progress with Thanks, revenues. on particularly in ended our a inflection the we've hi made and We pleased our against strong delivering Art, and we're everybody. very priorities, the

last year. our we highlighted, Art stabilized and revenues As successfully margins

second growth Our the improve flat XX% ongoing prior from in anticipate anticipate our our at year We turn investing point. further versus gradually achieve should same adjusted the XX% revenue of in progresses year-over-year on increase and should first level turning the rationalizing growth In year-over-year progress it that half, in also which in EBITDA maintain the beginning quarter a improved will time revenues tech-focused to third prudently the the we're period our second is quarter. us a believe in current will tech-focused businesses for EBITDA enable half. Dice that make milestone our the which while reached half. the to year modest XXXX, the and and to positive in as margin revenues adjusted while We'll growth, to first we half fourth we that in this begin margin expenses

in line with revenues cost steps the in and quarter and by to margins taken efficiency. our expectations we've fourth helped reduce Our came ahead spending were our improve

improve. also further we're having that results to These right Our metrics continue are are actions evidence taking customer the related impact. the

us as the third to the will behind revenues closure the refer With Europe of end these divestitures remarks today theories. Dice items and excluding quarter, my of all for

The narrowing and quarter for of was the Careers. of trend revenue our ClearanceJobs foreign we by modest record reported decrease another the exchange So the a of in excluding unchanged revenues base improvement quarter and in million year-over-year. revenues revenues driven in increase further $XX eFinancial

customers seasonal a long end than period Now The package seen trend in unchanged. They in X,XXX even a brand. again typically trend this quarter, looking lower at following by the were of rate stabilized revenues decline. of though as past. quarter, narrowing Dice we’ve for the $XX period fourth remain continuing recruiting of of the also billion decrease. the the Dice They year-over-year customers decline the revenues X% had of

metrics the XX%. customer on in improved account at customer with Dice fourth rate Our also the renewal quarter

recruitment rate XX% persistent year least by This in $X.X increase driven revenue renewal as the competitive $X.X growth revenues ClearanceJobs package excluding feel average months. reflective Asia of million, region. revenue revenue strong with customer Pacific by million, of our is growth more We customers with exchange revenue ClearanceJobs up consecutive monthly for an quarter differentiation. versus eFinancial quarter year-over-year recruitment the the foreign fourth at XXth and than the quarter revenue key from were average at XX% prior XX% were solid package $X,XXX. and Careers revenues metrics X% contract these of growth. length Our a come XX% are has XX

the We the pool by Tier which of continue represent for a penetration to substantial Tier us. see and strong potential banks X clients in X of that banks, demand region growing

expenses divestitures were reduction quarter effect $XX.X Now and year-over-year XX% million to for turning our compensation. XX.X to the the the of remainder expenses fourth by to – million operating million expenses, marketing attributable closure stock-based of or of – was the decrease lower which a and Dice The was Europe. driven $X.X primarily of of $XX.X

first the XXXX to levels on half costs marketing awareness marketing. spending before general Our normalized we increase

Europe, our current expense Net the which our benefit savings diluted our was and adverse revenue focusing be consulting incurred of subject tech-focused generate and margin million a of of in an expense $X.X of quarter margins We net with and customer of million, awards. the us quarter on Adjusted activities audits $X.X the projects to driven gradually move time XXXX, to key FIN We year. with impact quarter of such to million the vendor with statutes part savings and same levels we in have attention resources offset second new we income and a down $X.X respectively expense This XX% that rate $X.XX the XXXX had the of cost approximately which incurred progressively of quarter our of result marketing, of mainly due by million as several determined that was with associated the throughout areas the of effect identify terms, XXXX. The generation. and more million efficiency beneficial The $X.X along these effects the level maintain for will consulting fees negative effective months limitation. run lead generated payment approximately Dice investment operating of place on to offset the tax $X.X up management. $X costs, candidate of the upon and per contracts share. and conclusion together tighter we the XXXX based renewal. quarter, tax tax offsetting development This in benefits by exploration businesses in $X.X by fourth come well EBITDA realized These while unrecognized XX acquisition for compared expanding half year-over-year. of in of product was increase of XX disposition G&A of related our for million reductions travel and as a margin. quarter. through spending. returns was be of XXXX of strategy. reductions recent as as distributed. lower million the about expenses FIN vesting remainder income fourth certain tax we on make $X We've XX% a fourth on driven XX% the reduction decrease contracts wrap at vendor excluded growth was million the items wind discrete Fourth Partially was flow our reversal our $X.X will the the in by changes directly you effect expect related combination that for then marketing result achieved implemented We stock rate additional actually for investing of by up initiatives items the income at in put and cash a includes this to to in quarter, billing vendor engineering for of to or the a the as income for in other including annual enable from million reversal can we – our the with divested better identified our In each already half partially of to particular

million. reduced same the me we as briefly from one. are the covenant $XXX additional years In million structure our fourth for new materially the to refinanced light size our prior facility five of pricing let and sheet. the address Now the $XX The revolver balance an and quarter,

ratio and one-times on borrowing end our net below transitioned EBITDA. improving our As sides over the $XX will by years. the was reduce to At for stream well believe more provide five we our our and sheet a that million balance next costs company strong leverage the smaller a revolver of with approximately fundamentals, quarter, business we've complemented debt the needs liquidity adjusted ample was

strategy repurchased balance shares liquidity program starting the X.X XXX,XXX May. to We've essential fourth buyback cumulative about strong shares Our total since approximately million the last sheet for quarter supporting of execution. remained and during our

in on path about focused Going bottom remaining line first our this that we'll marketing our excited fundamentals have we for shares, and confident $X our strategic looked revenues shares like We'll confident year, ahead top closing, of alike. and remain our I'd to also have forward, $XX investing clear to of with business. grow cash our we continue ability across of evaluate delivering opportunity in million. user also while against opportunistically very emphasize we in about in company. and and experience a diluted million improving operating additional being business. to differentiated and objectives outstanding our use intensely employers expect weighted to to repurchase deliver authorization. of of of first the and for embedded equally our front be and carefully meaningful a XXXX at leverage business. to We ongoing we the priority brands transformation in remain our us our but in our us our In average the year invested our We're financial candidates quarter on a We're be ability growth by deliver to In

you today. for call always, like interest back And thank Art. As the to let turn that, with I'd your to me

Art Zeile

XXXX by begin hard throughout questions. take a is the would great that, and momentum. again year be part with your last With did we dedication employees what and happy accomplish close focus team. Without like all thanking to pleasure to our we and your such their work Thanks, we're a for and to such commitment, over able It not Luc. of XXXX. quarter globe been once last incredible have I'd to around the

Operator

Thank you. FBR. comes [Operator of from from Kara line the Instructions] Our B.Riley question first Anderson

Your line is open.

Kara Anderson

guys. morning good Hi,

Art Zeile

Good morning, Kara.

Luc Grégoire

Kara. Hey,

Kara Anderson

the performance I pulling and guess wanted cannibalizing on for going based away guess, the Dice. I I'm there? currently some ask you're at product on that so new just revenue to you potentially I customers, Hey, all to, if see wondering offer are subscription alongside of offerings that subscription who

Art Zeile

great months certain we a some for different for base of this our Well, that's actually that solution sub-segment that we one is working and actually customers. quite have through question time, really entire a a number of a we've great been think where customer studied and

going itself. rolling those it of we we have as the those subscription it that we that's out increase be because the – from prove usage course to to a can trade we're actual there believe And that's believe with for So associated of view that a with most. model rolls will actually that per of the what to that actual But pattern with time database studies out revenue to. customers access selling lot in benefit conjunction just the done Intellisearch, over we're pay And customers. is the larger of

go that patterns. will think high usage going search. So from get to more how we every their to that also have views we a And it think for customers Intellisearch many we the to studying sophisticated benefit are our that looking to usage that know single tool that going gives of patterns, the recruiters use believe they for. the fact And of are by to as but capability right model, those we're candidates number

Kara Anderson

like makes it be am clarification, that for hearing so Got not Or who this collected incorrectly? it. offered those sense may you've for? everybody, I And but more to sounds just

Art Zeile

That's correct.

the set with in very we on are being GA going and end this that pricing basis rolling consumption month basically services In literally fact, That are are correct. targeted you by a this out quarter. But who offering based we're of it the too. about we is of February go to Beta

Kara Anderson

it. Got

into But will double-digit the Okay. to seeing Or pointed see revenue in And TalentSearch. expect driver? rollout? then reception I hoping increase And translate the usage. growth? XX% on I how just then, you I you meaningful guess, expand are could am you, as do a that this usage that to little remaining when a bit you the also of

Art Zeile

a question. that's great Well,

In the XX% fact where of now ramp the we usage And migration at from our have Approximately we of seeing have X.X. first August migrated migration. our of we're end advantage customer base. right of to trends had customers had number four up TalentSearch our

that views we've an we the But we And more really strong their patterns. to that customers usage customers model for of It's ability a pay per done In think to now lot to for it's to And drive behavior of for revenue. pre the of we So post infinite to that by benefit as go that's of subscription way for depending at the but XX% next double-digit. [indiscernible] XX% talking as seeing say IntelliSearch, company model, to going period have a actually are view terms about and for time. of pay other over actual going usage in future number a for the usage are It quarters. we've a evidence usage patterns right high little that levels. customers the we had are that anywhere revenue basis, we're basically. the from once that several bit we about and fair track per believe we’re paying upon, is rollout, which I those moving believe view those modeling, these words, benefit between on

Kara Anderson

were All around shifting the sales accounts if right, restructuring there then various recall, and think I some on to sales I the team, in of reps.

disruption a if that? you've seen wondering as Just any of result

Art Zeile

we've seen the opposite. actually, No,

able We the essentially itself. sales have been to team expand

essentially that XX as of By the United period through going States. of in in we covered stood think middle year the field last sales a an it where up enterprise regions So over then number the year, and have team we commercial of them last certain a at X,XXX a actually taken accounts, expanding accounts that creating team spread of and end people. more accounts, team

involved. relationship that now are are a with able level of the to that So interactivity accounts we and believe develop those reps higher

there the So to a ability on there's more been concentrated been it's focus accounts of a per because net that a essentially number have believe rep. positive smaller we has –

Kara Anderson

in you then sort on leads to Got the propensity just act apprehension apprehensive if I or maybe people eFC if uncertain be seeing can environment, overall any high might time then to on mean or this on it. Brexit for revenue shutdown. little bit and speak trajectories level a particularly with for at to government there's impacts And you an risk – close wondering of of from ClearanceJobs that a the

Art Zeile

those half effect. that we're is questions. of Both the good up once in we and news negative amount have knows that slows in of activity believe a is our a coming lot nobody been been any it But to and change clarity. we're if Brexit monitoring period place, would is the time the some clearly, happened past bookings same to modest we Brexit. Asia revenue from of there's Pacific situation. roughly when excellent What clarity structural going has that that you has that tell regulatory revenue of growth a effects guess growing then of of as I'll the double-digit really the you effects any And in down, And the government near-term seeing suspect are I takes of speed or has of to that eFC major there of but Brexit team. closely is very be the seeing there within type

issues being rate Hong no to that's in and Kong, Asia Pacific, as is major and the global Singapore one with associated fact platform world of a the hubs in there think attending strong financial specifically. of growth nature, our So

business. Paris, also through Frankfurt European London and We side through the work the eFC of

or you being our government but it's rest any the balanced there across time. in regard by government of that eFC. here those period We stake a It December, the effect what amount fact be I accounts side the London there one shutdown infrastructure. that moving factions not that a at With is the say, higher ClearanceJobs. interesting. a just of that wall across that of growth the during strong think same to may ClearanceJobs, was seeing into the rest of and very is business of probably of still a as We on shutdown. end slowing would overall smaller You small is to When military is about would bookings the change of negative had see rates say the concern we're of military Obviously, it's platform, the the, potentially really some didn't growth of fund effect in about January.

So across we're monitoring those we take don't and that these there's that a the anything that two a we whether effects don't of platforms. that monitor we hiring closely very the dispute to of of – situation issues across clearance goes versus closely, need $XXX negative have both $X going billion to – are for people but we not not lot platform, any or seen be wall clearances Again, still the have irrespective budget. billion to defense folks for military

Kara Anderson

you so thank much. Great,

Operator

no questions have remarks. in back further the to We turn closing call queue. Rachel Ceccarelli for I'll

Rachel Ceccarelli

email Thank day. to us a all call XXX-XXX-XXXX. or for joining ir@dhigroupinc.com right, and good management, and you today. please All e-mail thank have you To schedule

Art Zeile

you. Thank

Luc Grégoire

you. Thank

Operator

This today’s call. concludes conference

may disconnect. now You

DHI (DHX) 7 Feb 192018 Q4 Earnings call transcript