DHX - Earnings call transcript Q2 2019

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Operator

Good afternoon. My name is Kelly and I will be your conference operator today. At this time, I would like to welcome everyone to the DHI Group Second Quarter 2019 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the prepared remarks, there will be a question-and-answer session. Instructions] [Operator

like Advisor. call Please now Kehrli, to turn Relations Investor go to would over the Todd I ahead, sir.

Todd Kehrli

Good XXXX call. Luc Grégoire. operator. second Art Zeile call you, afternoon Financial to CEO welcome Thank Officer Chief DHI are fiscal DHI's quarter me financial With conference and results on today's and Group's

Before the to over cover call I to quick few items. Art, a turn I would like

announcing on its This afternoon, Company's second and fiscal all archived This press Investor page be DHI This results. available a interested on will XXXX broadcast the Relations dhigroupinc.com. release at of release is being live the issued website financial parties is company's Internet the webcast the quarter call the over for website.

on statements Exchange the make that within Please other forward-looking the and words management I'd the statements anticipates, and historical uncertainties. constitute of remind today's that of XXXX. forward-looking similar that risks today's Section like expects, forward-looking identify Securities future, except for When intend, on statements expressions believes, used, Act meaning note of statements. information, everyone will involve may call, call to XXE

These forward-looking respect performance future and forward-looking any with are current statements management's financial materially risks results and uncertainties outcomes DHI subject to actually may contained in views and and events differ to the reflect from statements.

forward-looking uncertainties and no include Factors or with XX-K that and filings could the reports to in DHI in Exchange development, delays from results XX-Q or any cause Commission. undertakes to marketing, and the and actual statements other on these risks revise discussed update forward-looking Company's the and statements. sales other Securities obligation differ Form periodic

section. Information EBITDA, are referring management will to with revenues, including Investor reconciliations at in the posted in financial U.S. about our in the earnings GAAP accordance non-GAAP margin, not available website on which and during measures most GAAP. dhigroupinc.com EBITDA which adjusted our adjusted certain are Lastly, these call, and release, measures, prepared to Relations comparable measures directly be press is today's adjusted of

to of Art now the I Zeile, over Group. DHI call CEO turn

Art Zeile

everyone Thank appreciate DHI. your Good second our quarter conference afternoon, in you, to Todd. and fiscal call. earnings XXXX We interest welcome

We pleased solid continue on to and revenue, marketing we growth second in our to consecutive are report the quarter progress product, year-over-year make reflecting of sales, our efforts.

quarter, the Dice adopting our and product strengthened we industry-leading features further During from our brands. several into offering eFinancialCareers product ClearanceJobs by

We all build for to team we our our grew continue out sales candidate commercial and sites. significantly registrations

matching become have work efforts expect leader industry we for lots with employers. continue the of we ahead, tech these DHI position will While professionals to still to

on quarter. some let we accomplished Now, me elaborate during of second the things the

offering. Let's made in start our product with progress we strengthening the

our you perspective. As a Dice, experience a feature we eFinancialCareers, product set many offering ClearanceJobs both ClearanceJobs. strongest know, three and and of brands, have user is from

into the leveraging which clients Dice more brands are we growth. revenue candidates and from from features can accelerate such, foundation engaging As effective eFinancialCareers for make to ClearanceJobs our and and product create industry-leading to the them to begin we for more

during upgrades up platform, made product which two-thirds makes revenue, of total several quarter. the For we our our significant Dice

skills experiences, recently to relevance The improved to by first search beta. were job our launched candidates upgrade and was applying an deliver search job and alerts search proprietary job alerts in model. new job The tech which data

to skillset. their those quarter, most Candidate candidates relevant allowing them This last on based jobs feature which launched are of be supplements the that power we to to Match, matched

that the secret technology tech postings sauce and maps Our sets XXX,XXX employer skills their from over model and our to competition. apart us is relationships data job skills

registrations a higher beta from rates job seeing of upgrade, conversion As rates. and already apply result this better we site are users for

career paths and made was job updates, recommendations, provides dice.com personalized predictions a new on skillset. that homepage launch we upgrade the suggests based the and quarter candidate's our profile candidate-focused Another curates during personalized of salary

We improved efficiently automate This postings new to were are recruiter beginning. includes key also upgrade of product candidate of dashboard workflow. a aspects delivered and quarter Dice and automation These our used job for past experience more managing tools upgrades tracking. this provides just of significant that a the key metrics

We clear based features Dice us, roadmap ClearanceJobs on eFinancialCareers. into adopting have time-tested a of both in front and again,

In the of substantially ClearanceJobs profile on year, the second messaging, half the focused recruiter-candidate of we'll both on platform. and increased have recruiter engagement be which

These steps recruiter between recruiters and creating launched messaging a profile to trusted this candidates. are already eFinancialCareers month. and have key beta for in We past network two

can Messaging Recruiters that recruiters information, and chat create eFC an candidates contact candidates. be and can service now a profile with time. in-platform to allows with in is personalized job photos, shared real postings on that

generally in will the available upcoming to features this making bring be the these working and Dice quarter same in eFinancialCareers features two quarters. to We

a large also introduced part eFinancialCareers gives solution recruiters, to The effective which have format creates their videos, potential a first a product and ClearanceJobs major bring compelling had this are featured of employers quarter. that ways ClearanceJobs With becoming release job postings We links, BrandAmp candidates. now Dice. the to features experience client photos, social company new user BrandAmp, and key to life. differentiated new impression

will quarters. You product further see upcoming releases innovation meaningful through in

growing commercial Now, team. about progress let's making the and accounts in that we're talk our developing sales

customer research those internal by regarding market focused strategy, recruiting on that have market compiled and sales own which recently new teams, their sizing. we is segments target Our guided customers is

hire very sales in in are progress While we new are early team, still of seeing direct this new up early stages we attracting standing customers. the

we adding resources to this As continue a result, organization second the this to in year. of intend half

goal of new coming customer business new acquisition. are that hunters from revenue increase is to add percentage the we on our development, As focused

shows forecast XXXX that over a XXXX grow and subset XX% annually industry the the of recruiting is expected to X% research from online rate professional to to market at is faster Our tech that grow annually. approximately actually

our very that customer new achievable from we goal. is revenue percentage feel So of acquisition increasing a

won't least our increase it substantially happen are laying at but revenue this we We strengthened the foundation overnight, today growth. can growth we are believe It and product our rate grow with to achieve market. confident the that platform, with

marketing addition sales, in into In refining candidate investment been programs new our have our acquisition. to commercial we

to us initiative pleased report registration the candidate as efficiencies second marketing digital candidate initiatives channels. driving to our improved the seeing first In and which many better social growth. sales through our maximize are marketing our dollars. years, we candidate These time time, to are quarter, channels engage in digital improving. mobile commercial acquisition channels and lead we the are in optimization tech digital professionals registration marketing At allow our both improved budget are increased drove and driving same We and our double-digit metrics we key growth engine for marketing that search improved

career platform closing, where our the In same, technology we are have access the with plan, market believe reporting the our opportunities year. can connect We best strategic forward to quality where vision in to professionals of the successfully progress we and continue as we the creating create on and clients execute indispensable remainder the remains to our to right continued on look highest talent. platforms growth throughout the

you take our who the financials With will that, turn Luc, let then through and over will quarterly questions have. Luc? may take you me any call to

Luc Grégoire

And afternoon, everyone. Art. good you, Thank

quarter, tech-focused this year-over-year in As see revenue mentioned, progress ongoing repeat Art growth business. continued in of especially our to we the continued

closed story, for third non-core we and to of quarter through the related Dice such, since tech business. on these the Europe a and reminder four refer laser-focused of businesses. our We're call as three brands that comparisons brands today remaining my divested our results will now and remarks the and to revenue As end the may XXXX, of on only those XXXX be our and new

we second year-over-year revenues $XX.X the excluding exchange. for up million, Jumping right of reported in, quarter, tech-focused foreign X%

revenues X% of and year-over-year much-improved up Dice $XX.X declined in on performance revenue represents The the quarter revenue stabilizing year, million sequentially. Looking second which at our quarter, brands, basis. X% Dice down a from second slightly were Dice last year-over-year the a

trends customers in we're on recruitment and years of the the following We to up are and over quarter customer by the customers points investments in decline. first percentage also sequentially four edged rate drive package has We expect to renewal with accounts changes in our XX%, with improved prior to second line up the trend X,XXX with The ended the year. encouraged Dice many we're Dice making performance. continue stabilized seeing revenue

package to $XX,XXX our include come key over improvements XX% – are rates, metrics package an increasing recruitment of renewal or X year over recurring revenue from an with year-over-year customer to annualized year average Dice an customers, points These which for on our contract revenue XX% over basis. $X,XXX months. recruitment percentage revenues XX per to increased as slightly Dice, are Other our average of monthly metrics X% length our and approximately

rates. exchange with line quarter, for of $X.X year eFinancialCareers foreign impact was in Second excluding quarter revenue the the prior million,

banks continued models in in in potential Pacific, demand offset Tier competitive headwinds growth We North in in and clients. to penetration by of challenges. a was growth by pool represent Tier offerings markets and banks, see and address introducing which pricing in America. We're macro these X driven growing these This substantial new Asia challenges to Europe strong untapped X

for of going differentiation prospects strong reflective and solid revenues of is revenue brand product ClearanceJobs quarter second ClearanceJobs growth innovation strong year-over-year. an were for and $X see continue competitive to increase we million XX% forward. continued This this

of the growth changes past quarter result to we're are in believe an the the year rates, growth. beginning immediate the won't sustained long-term we've revenue industry While made over turning jump at and substantial we

We to to our with the fourth continue positive will expected expect achieve in modest revenue second the growth turn in half, to Dice business growth that revenue year-over-year quarter.

generated which capability. million business year-over-year, ramp-up Europe business our of expenses closure discussed few expenses of expenses, of $X.X reduction million our helped second the total year. were on came The in spending last expense our also reduction a decline to operating efficiencies to remaining XX% quarter sales our the Dice last operating which or and calls, in from we project $XX.X Turning of $X.X fund million, divested related core from the

traction expense drive Art from in the to As initial incremental good we some will sales coming the which increased heads, we're intend sales quarters. mentioned, commercial team add seeing and

started Many trends of and even our metrics. as realized candidate marketing, efficiencies came we positive from seeing

We these our resources marketing will to second further bolster add business. in half yielding the year higher the to look of to

of EBITDA and As quarter, the percentage our improved margin four a year. quarter to up same the result hiring, XX% for of timing from points efficiencies of we adjusted last the

still in we approximately be marketing adjusted the high-yielding expect accelerated more second as and product XXXX, Looking growth. well of as EBITDA sales half our capacity, XX% as to margin we resources engineering to our increase and to invest

was awards. to Dice was tax an expected relating XXXX benefits discreet which expense tax effective for rate by quarter of XX%, our driven below share-based of the XX%, second rate of $XXX,XXX, reflecting

the or a loss a diluted year for against was diluted share, $XXX,XXX income per or share of $X.XX per quarter Net ago. $X.X million $X.XX

which of costs, costs, $XXX,XXX $X.XX related current negatively loss earnings disposition negatively impacted The of partially expense earnings favorable after-tax quarter were offset $X Prior resulting in year million businesses, a by share. on disposition-related or items, sale diluted share. by net unfavorable were a diluted items and discreet totaling tax $X.XX by impacted discreet were or after per

diluted share So, per quarter per our was of as the on XXXX. compared earnings on to second second for of a $X.XX quarter XXXX normalized the basis, share $X.XX

We generated introduced $XX.X representing year-over-year, flexible increase quarter, of practices now more last second of billing million a the having operating $X.X million in normalized the cash substantial year. flow

of capital modest we current continue product balance in rate increase to of throughout our engineering invest innovation to Turning headcount. the sheet, increase we XXXX, remainder of to and as run a expect with first, the an expenditures

a As our our of CapEx development made of capitalized is reminder, staff. mostly up salaries

quarter, At at compared end bringing practices flexible as of now the to to Deferred million, introduced year. of the first debt million. our normalized $XX was more quarter million the quarter, cash the billing at revenue debt our was million the last $X end the of less the $XX $XX end about having

the us a to at made the shareholders the of DHI return quarter, the execute Russel second over rejoined the end the are the strategic progress Russel pace year front, visibility successfully investment increased on exposure welcome XXXX We will our the pleased bring we significant that inclusion growth, our to and equity plan. continue On we to as reflecting report XXXX includes we've index, of profitability, in community increased past revenue growth that strong innovation. and

to much In deliver ability grow employers about market candidates closing, and in equally sales excited user continue our confident alike. a a to as front differentiated leverage We're our very our execution. ability and and and in in stronger forward us opportunity the we marketing continue we're platform and going to experience to confident enhance improved product of revenues to

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

Art Zeile

off last Thanks, a all their hard thanking this Luc. for XXXX by commitment, we're plan solid half great and quarter. of With to globe be close I'd focus I employees like once in take your With our to work forward It your the our on to questions. again to of happy start around look pleasure year. second the to a in team. executing of such is that, part the a to we're

Operator

[Operator Marc from comes Wiesenberger Instructions] B. FBR. the Your question line first of from Riley

is line open. Your

Marc Wiesenberger

you and Good if with any Thank and it's afternoon. with pricing talk you. about rolled the Can that's trends been your reception performance-based out received customers.

Art Zeile

tell positioned existing customers our our rolled really terms bigger to activity. number can, it's be middle very it we what I call of we early part exposure benefit that base. of new as this business our It our affecting the rest of you for and us product that product relatively forward a Marc. how or and business converted of we sure days will the We about our QX. I customer of PPV. existing being well standard in business year I the is continuing our as in appreciate question. for making that working base activity and are new to pay-per-view a is have the to for appears to excited It's

Marc Wiesenberger

helpful, thank you. That’s

Luc Grégoire

just is Luc. retention actually I add would on there. clients, this the converting seeing Marc, XXX% over that we're

Art Zeile

accretive very good sure it's customer. are these existing attrition. not That’s positioned being as We're an We're revenue a making deals any seeing point. when

Marc Wiesenberger

That's to hear. good really

that past about opportunities talked potential the in on there? provide Can contracts. know you've I ClearanceJobs, you government update with to front on any Moving

Art Zeile

for Yes, we space of last talent. agency initiative to clear year started QX an map need the understand out in government really their and

as this agencies plan at they actually clear motion of have civilian start essentially a pilots of able military-industrial year wanted As beginning which of of we total the were have a complex. you'd in the need are that to a side suspect, And much as to now. the We six we with approach. right of

perspective. the of for making come And ClearanceJobs than our ClearanceJobs I'm a my very X% new the are we a so really market effort officer new revenue in complete from traditionally is team government platform motion from the definitely them. on of headway good effort Less agencies. of This proud us. has

Marc Wiesenberger

exciting. definitely That’s

can of it that's on a maybe Brexit think across little you drama brands. effects recent on out I the bit, you how touched playing if elaborate the and the

Art Zeile

there's platform no market. in a across the market. that it's that question creates you biggest tell it for and but headway markets, the I'll Absolutely, operates different it our And UK eFC started UK and global brand our XX

it UK how say our future. thriving performance financial are go-slow individual of the companies for a to still on an approach taking I hiring terms a effect there. have themselves the the are remains that but So market they in specifically would handle and does customers community

say the eFC see XX what it I out by means how to the in a degree see the same Europe, plays think headwind markets are that platform. to October certain to Asia-Pac still we platform. part of that I as for to continental we to the of well really in that beneficiary wait other of we have that in as have our have to

seeing individual Singapore, by social that team. Hong in In the being countries are fact, our the Asia-Pac double-digit Kong, we're growth attended to rates and

Marc Wiesenberger

me, cash some of regard targets any flows, with for deploying one last M&A horizon? The see your on interesting really of the solid Great. to you kind do

Art Zeile

across marketing, of that activities. functional all say and we're sales, of down, working execution on really would now, heads the our I right excellence product

in that's us. time. looking There's really radar acquisitions presented our this are nothing we at to opportunistically on are at that point So,

Luc Grégoire

a get have help actually of us going to next Yes – working on we the internally. what's we're to level lot

a So, lot we have there.

As debt you us collect the that getting in know, give future. and opportunities to net we're capability will close zero our to more

Marc Wiesenberger

Thank much. you very

Art Zeile

appreciate Thanks, questions. Marc, I the

Operator

question line comes next Your from Josh Vogel the from Sidoti. of

Your line open. is

Josh Vogel

Good afternoon, guys.

Art Zeile

Josh. afternoon Good

Josh Vogel

North can and the competitors taking bolstering to launches these wonder having new I challenges some you you bit some successes competitive business versus and differentiated talk they you platform mentioned Luc, find the little are your you your in can about that that were from a the market, enhancements. of cues So, in particular. in if American just with how

Luc Grégoire

I’ll it. jump give will just quick Art I think on and start a

I I side been of eFC advantage being think takes more big business, in of it's it the and global the that UK has Asia-Pacific the second presence think, lesser traditionally of presence now. In of That there's competitive. here. a the U.S., and tier the the said,

Art Zeile

I would and course And was we the markets that ironically, countries as the of be added the America literally of from last UK eFC to built earlier one just add a platform North over to platform. platform mentioned the the it was time. was added

would regions that being a So, of behind rest to, bit say it the terms that investing timing actually little area but in attend a we're of just in. of I that the it's an it's matter the of we

Luc Grégoire

The here roadmap, tools we're we just other as about as have we'll believe. much revenues the any that CJ following talking markets,

Josh Vogel

Great. Today, tools and platform the okay. enhancement. growing a Sure, general new of tech-focused we course in see

look when to monthly key thus XXXX. looking revenue basically the So XXXX to seeing we it at per in of starting are in far last second you especially guess and over around XXXX, of recruitment back and some your from average And trend customer. I package in higher you're hovering $X,XXX.XX metrics, half quarter-to-quarter, year

have renewal I'm discussions to gaining higher the talk to today changes least each notable leverage Can general about the around terms around and pricing pricing platform? you you at conversations or across opportunities to curious the pricing. having you're

Art Zeile

the larger and value done our we to actually Dice environment on good rate more seeing we're do only rate in it a where think quarter. past. our has did itself. you that top platform question. eFC the for tell in better is I'll increase increased card a we the shining where in card customers ClearanceJobs of the That's That's a enact I than the first the pricing platform that

I think to product that's attributable our team.

are show and innovating. product that visibly that releases engineering we're Our teams providing

a put if I seeing are our on our platforms. happening. value that It's the and from want we They're designed capacity actually renew where So out Dice buying They're to focus more customers the of time highest is eFC a upmarket, both customers over services. number the message we program, us with more of large spend at That sales the more and XXX%. buying definitely part put you will. larger

Luc Grégoire

stay Yes. about quarter, I past pivoting would about more smallest remained add than shed we this we're a under That into that we've we than how are quality the flat, much on you talked customers our this to contracts you higher the think flat. customers were XXX if $XX,XXX the quality we count. year. that would flat nearly lower a mix. that staying in yet tells little That's customers, that adding I quantity $X,XXX you tell bit customer

Art Zeile

design. That's definitely the intent. That's by

Josh Vogel

downtick items half around over might Okay, in great. the for metric weren't I some how the helpful, first was Qs to EBITDA year, on here you. it a hitting That’s thank out curious of guidance was this XX% of anticipate from around three play in that the adjusted commentary assumes hitting be up four slight the QX. you the up I wondering put just as Based year. you what and just that

Luc Grégoire

fell but news the get and capitalized my I also, that development our a in good we script, emphasize The a that in proportion think have pretty employees area to hiring, those is salaries behind little particularly fixed assets. we in lot that of engineering team. bit on our of good of about yes, a product I tried efficiency, Sure,

while That's on committed the from We'll impact still that but XX% profitability. get doesn't margin. to we able of hiring We quarter. to a the We're holding about talked much. so we're it that, also holding to to on committed EBITDA bolstering why keep So, the margin. our our timing in capacity this be benefited

Art Zeile

we third what's year, confirm capacity accounts would out and trend Luc is to and I want play that really that's going And this product, engineering, saying to in fourth and is what specifically. sales the invest quarter the over is commercial

Luc Grégoire

It's a the Art, of were marketing first marketing. year, the money spending really I of last In mentioned high. in past bit half we calories. the think, the on empty was has

looking start doing That's invest really and where the get is business the generating invest second the at to activities what we reasonable So, better intend we had or half. We will here. we leads. see sequential we're now margins site that of registrations could not here. be in higher a done gas continue keep us found we'll as more to yielding progressive the our line in maintaining This level. that to start We're pedal shocks to

Josh Vogel

we expecting into Okay, and my toward thinking shocking especially your question be more not last sequentially going whatnot? to pick efforts great. just But forward, about marketing digital doing and led up That toward it anything marketing campaigns there. should

Art Zeile

assumption. Yes, I think that's fair a

we're over think engage will as of more we more efficient spending getting associated with I in be channels we But marketing. time. the digital different the course

Josh Vogel

Thank guys. you,

Art Zeile

you questions. Appreciate very your Thank Josh. much,

Operator

further no will for Todd There call questions to are I back at now turn the this remarks. Instructions] Kehrli time. closing [Operator

Todd Kehrli

everyone please Group. for a ir@dhigroupinc.com great call in and schedule (XXX)XXX-XXXX. call with day. for or To email management, interest you, Thanks joining your meeting our Thank a DHI have

Operator

call. conference today's concludes This

disconnect. You may now

DHI (DHX) 3 Aug 192019 Q2 Earnings call transcript