DHX - Earnings call transcript Q3 2019

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Operator

Welcome everyone to the DHI Group Third Quarter 2019 Financial Results Conference Call. All participants will be in a 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.

I would now like to turn the conference over to Rachel Ceccarelli Director of Corporate Communications. ahead. go Please

Rachel Ceccarelli

Art and third Andrea With and to Executive welcome on Luc Financial Thank Grégoire. fiscal good XXXX Group's Officer; Chief DHI's quarter call call. and financial DHI Chief today's Officer you, are afternoon Zeile results me conference

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

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

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

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

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

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

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

Art Zeile

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

make company revenue we During to growth. the continue towards overall quarter, to returning positive progress the

While corner We market third further perspective, product go-to-market are headway by believe the strengthening significant efforts turned revenue our offering which growth. for not matching to the technologists we with become leader for from made strategy, growing have the these quarter and we are our in in of have future both critical the drivers employers. positioning DHI yet revenue industry our a

some quarter. of we this let me things the elaborate accomplished on Now

with start know as and platforms we our in ClearanceJobs. eFinancialCareers progress three offer, made Let's the product many we you Dice, of have

we delivered been Dice During more have in and product this delivered eFinancialCareers past several innovation year than years. in had

do we to We more of date have we we it the to are proud but faster. made want do to and want progress

During to product accelerate third roadmaps. hiring we our the quarter, help began additional engineering talent

quarter a This enhanced candidate skill our search candidates. features to better technology significantly both and our job experience search model data proprietary job alerts, facing job on Dice, we create utilize for launched two

differentiator improved easier key fit search job that our and for job With recently filtering find protection. patent their recruiting features search and against a model This requirements. alerts users, enhanced an jobs technologist more skills generalist and is data make to tailored capabilities it relevant that tools preferences algorithm, submitted for and

metrics Dice past pay-per-view IntelliSearch, search are Match, and and improvements Dice over this Candidate pricing, we now clients including improved made both product engagement year job delivering candidates. job job management and significant for have alerts The to

allows allows to The profile recruiters recruiters their information to postings candidates job a recruiter During wish the relationships. candidates. profiles to interests, profile also to and rich releasing eFC quarter create our ways contact messaging new eFinancialCareers It recruiter we create multitude stronger engage they features. to our highlighting and by and of continue platform improve in share new with

and we stepping recruiters have to our service year dynamic real-time the to introduced seeing eFinancialCareers jobber engagement ClearanceJobs trends and features the the on candidates at allows we chat same messaging now were from are These unique over eFinancialCareers. past platform. in positive and on employers. becoming other technologists matching are Our proven transition for These the successful features a for marketplace a stones and

on ClearanceJobs delivering and In clients and automated by quarter, to ClearanceJobs IntelliSearch engagement new metrics candidates. which dashboard released the continues third innovation. uses real-time intelligence new for drive to powered its employer both user recommend connections focuses

groups, curated marketplace XX tailored on important dialog, forums community new and engaged creating the more platform. foster to to discussion groups Additionally, stronger are ClearanceJobs which designed are career segmented added These topics. a

As for is a I experience perspective. solid most both ClearanceJobs product offering user past, in quarters. revenue growth many the the future our robust has from it stated double-digit And and generated

the As growth. By leading which such, platforms. clients implementing we Dice in to building foundation we and for the features candidates more value taking are eFinancialCareers from the can begin revenue and accelerate are from creating and them product we ClearanceJobs industry

product ahead, our us in Looking clear of a roadmap front platforms. have we of for each

add are Dice and messaging to We to eFinancialCareers. to recruiter and Candidate Match profile now IntelliSearch working and

year. those to half expect in be the next We features live first of

Network further to ClearanceJobs Cleared of automating XXXX has features recruiter number a workflow. a advance the with on planned focus for

offering. are we growth our our seeing in updates, managed services In product addition to successful

small, it still for While customers. this relatively is commercial delivers superb our work full a solution team's because service important

team teams. the improving who own have driver talk A internal is quarters to new strategy. their recruiting future to a our let's which second of about the growth, ago, test customers commercial we concept to established Now revenue few our selling go-to-market key Dice accounts

that confident working. is to this approach go-to-market plan highly new are our We

this a Our this team's and opportunity company. for performance demonstrated have the is research market big

in be significantly We XXXX. will expanding this team

after quarters, commercial in of studies go XXs and specific in to them. sales With believe of we together territory the plans two our over tech there non-tech conducted last that XXXXs the targets are companies putting

have effort to ready accelerate hired we are sales We now that leadership. this new

demonstrated on teams has sales Arie recruitment company selling joined experience XX. software October the performance high within as scaling Kanofsky products and background in a industry. Arie the

now on our line and plan a company in believe we the back as Arie very whole. growth top are with and we board are excited both drive to Dice track to We on have

hiring better Our projected and at are X% industry a to online grow our market recruiting to at than market we believe product competitors research that XX% from and revenue is go-to-market for that can technologists professional We that a And companies forecast with grow confident is are our over shows annually. rates. offering improved approximately tool we have tech strategy our subset XXXX annually grow the the faster XXXX. rate of that to

While building to foundation won't are happen we upon overnight, this which growth. the achieve this

of to improved our programs. we and marketing value registration continue channels our The a third is growth as in candidate digital again Lastly, activity. see proposition improve in the of delivering metrics our And candidates drove new quarter, profile marketing significant candidate high-quality to clients. surgical heart our result

In closing, we opportunity us. about continue market front to excited the in be of

Journal related. As the decade three careers reported recently most article technology on most promising top careers in the of are of XX promising their Wall Street the the next

application With one developers. software the being top

the decade, to expected application the Over by number is XX%. grow next software developers of

right are believe highlights at the in We in us top time. the The tech of the we have growth. opportunity two that in the expecting careers XX right and front are this place other we double-digit also list shows

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

Luc Grégoire

you, Thank afternoon, everyone. Art, and good

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

was year third right year-over-year quarter $XX.X we the X% both declined and Dice of for Jumping $XX.X X% year-over-year The the revenue revenues excluding down on in Dice a revenue sequentially, improved which from third last exchange. sequentially. were stabilizing an the performance quarter basis. impact in third when and the foreign of year-over-year flat X% reported represents quarter, million million,

are marketing Dice and territory We expect growth into in year. performance move and delivering investments as positive increasing next we significant improved our product a drive sales innovation well to on as

has The many Dice stable first customers with line customers. in with years quarter recruitment third the trend package following the XXXX remained ended of in decline. two We

renewal the Our rate slides revenue renewal on last customer of and rate XX% our both of were year. same period count XX% at

at $XXXX contract customers package and slightly been are as Our these our up average annual to come of customers. have steady packages, months. approximately an average per was is The significant recruitment basis, $XX,XXX year-over-year recurring package Dice revenues which length of over on or XX% over recruitment revenue XX from slightly monthly

eFinancialCareers from or revenue where slowing impact foreign also slowdown of by and contributors quarter our recruiting negatively this down X% excluding $X.X we industry The Brexit, U.K. were Third rates. current the saw because impacted was year million, to eFinancialCareers X% The quarter prior performance the volume was there. European for Kong the a of the financial in contracting across protests Hong in uncertainty. exchange

solid increase third innovation year-over-year. competitive is this ClearanceJobs This And see going reflected several now continue seen product million growth forward. of rate, for growth for to were on XX% double-digit and an for $X.X we've CJs continued platform which differentiation. strong revenues we quarter years, strong prospects revenue

made over to past total has stabilize revenue build a help we've Overall, our upon. foundation year the changes and can we substantial to laid

immediate building we we're beginning once these the rates year. generate described, in will an put ongoing to in blocks us revenue to executed sales, position jump investments long-term confident that adding growth and innovation revenue sustained the to our our result Art plan while growth next As fully are now increased

and we that quarter, ramp in third sales on growth continued the level on offsetting more to continue Looking commercial expect at with ClearanceJobs organization of the we and around total the the quarter product stability strong eFinancialCareers. begin Dice impacts geopolitical to our innovation our with revenue to up continued fourth remain invest

the project. reduction million, generated last ramp Third Dice our well remaining quarter the closure year-over-year, fund business as the decline non-recurrence of spending and from were last which core as of current that a our million in sales efficiencies up expense and few year. related are to operating the reduction expenses on XX% Europe $X.X we The and of our $XX.X calls fees consulting of from helping of $X.X capability. engineering million divested to discussed business efficiencies the or These project, expenses operating the representing related came

operating our performance the activities, this greater helping development quarter product Also, which rates. expense and discrete product capitalization to was increased of our resources applied engineering in proportion

drive and substantially add to the intend commercial increased board, over mentioned, sales seeing with Art sales we our new good traction will the to we're quarters, As coverage from expense. commercial initial next CRO two our which on accounting account

also As coming be to which engineering we'll discussed, in of increased drive the talent expense our and new features, capital product deployment will accelerate the adding additional some expenditures quarters.

rate diluted the the $XXX,XXX, of income of income $X.XX quarter third share an $XXX,XXX expense for for reflecting quarter ago. for Tax effective share per net XX%. was was year-to-date Net a or $X.X or year million tax the against period per diluted $X.XX

per while earnings tax last Brazil. quarter's by share on rate year benefit the related had disposition $X.XX items, discrete share of This loss one spin-off other a impacted small from penny costs from and book per adversely in diluted the was

points quarter on $X.XX, the third percentage quarter Adjusted at in items, margin quarter EPS came were $X.XX for for excluding up same last a EBITDA from XX%, those year. the normalized two last So year. the basis again

continue For engineering XX%, $X.X increased adjusted even our increase million practices higher in full with of in to with of flow we in approximately $X.X expect substantial We cycle invoicing million normalized the that investment come at year, our and cash quarter, were margin last having income year-over-year year. capabilities. the EBITDA flexible generated billing sales through the fiscal introduced operating representing third more and a to

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

development our As capital up a of capitalized made our is mostly of stuff. reminder, expenditure salaries

a our cash total million debt reflecting at last was year million. year. $X.X to more At $XX.X ago of practices end of with compared the the was million revenue quarter the end debt the the million, bringing our flexible introduced $XX.X quarter, $X billing Deferred

of services represents delivered. As of advance contracts that a been remainder, portion revenue invoiced the deferred in to be have our

end revenue the of contract last When of year. at portion upfront. the indicative note our It's in had of that contract our the invoiced important the to a not unbilled a backlog freight rather reduction but third end to current we of reduction slightly the above our the quarter the that, of merely is portion overall committed actually of slowing of our are quarter revenue the business, being was contracts

approximately XXX,XXX average and in remaining impact of approximately compensation. our May runs million during which buyback appropriate believe you the $X repurchased We of stock-based quarter We given through an at also help leaving shares price offset current $X $X.XX of can program, buyback is the the million the current dilutive valuation program XXXX.

we growth. our stock now which in our laid building made we stabilized significant more blocks delivered the down recap, this business, year our last than improved foundation with million of sustained to place return We've our So paid debt, and year, upon a and cash are significant buybacks. $XX are supporting in to we'll progress a operating revenue flow solid and portion profitability, putting

forward execution of quarters. game reporting our on plan look evolution While progress, in continued we we our we made and the on focused coming to remain much

you your today. thank interest for always, As

let And that, to turn back Art. me call with the

Art Zeile

close once to With questions. globe that, their Thanks Luc. around again part hard great happy of a thanking for your a be our is I'd take such we're like quarter. to by It pleasure employees to this all team. last the work

Operator

Sidoti session. We Instructions] Our of question [Operator go begin & the from Josh will comes first question-and-answer Co. ahead. now Please Vogel

Josh Vogel

How positive It's all developments about Luc? Art nice hear and Thank you. to in the business. the you doing

Art Zeile

it, appreciate really I Josh.

Luc Grégoire

Josh. you, Thank

Josh Vogel

Great.

us is some lines, G&A were to So over investing guess, what's you, of fairly couple be product would next plan in because the I engineering quantify but that sales and at sense I obviously only of look down have there for not you your we a trend give a questions really sequentially, and how expense will maybe your operating also QX or were already that really development, they significantly helpful. around of or when marketing year-over-year, quarters you for that's as is I sales if and couple doing QX, the can guess, capabilities, in comments start

Art Zeile

Kanofsky I'll of part cover we leaving would sales In say as our investing scheme the that at And off hand his Luc. own format and of of put that we we we've resources. in then QX. a sales and the new to it your a CRO, a should the to related engineering on have appropriate I'll So Officer June, back pause to Chief first I'm the us all feel right are and believer yes, that investment that's things, result Josh question off strategy. grand and are like pick the in on end Arie because in his team now I that of Revenue track

initiative accelerate hire make we actually of to in we of XXXX. that a resources part did that have expertise in number That's all of road QX. quite necessary need the We an to our engineering maps product as domains sure

again, the there So that was sales. engineering considerable hires, on a of but pause is did we bigger pretty amount picture

Luc Grégoire

a a on sales of started we but engineers, already are even but million efforts our the able little generated a to the on being the $X rate. increase been by we and some on remember said more numbers the and sense reductions find bit year, the and way Yeah, efficiencies to sale, higher coming up you far. side, about are from the give bit, capitalization so just in last in that's of That numbers

that well. operating a expenditures amounts are capital bit but the reducing notice expense, that little as you'll the also we're but engineers, quarter up adding we're So going this to ticked

to temporary, going beyond said, could investment our some sense where be back we we're that's that you So you that to ramping, the go expenditure. decrease we margins being expect how -- out, give and expect operating given that just that's through of while I going cycle playing expect to in think and to would you forward could a but get

and That's back then basically put on trying to show business off the us to growth.

I think explanation. main be that would the So

engineering Again element office of the not Just increasing -- one is, a is guess quarter expenditures about to there increase all some capital running there and more I be they're ongoing was costs. space. that the an also point a quarter, one-time runway is of there saw you the this that item on should the but half capitalization this

things go. give as to So way. a you going dramatic margins, where It to are but will just not sense impact of

them. we'll We very quarter fourth continue more about the we be say in to about that focused talk And have on to when our budget.

Josh Vogel

mentioned put team and great. and numbers. analyst or you date Sounds team significantly some helpful. that you. you're today -- we quantify like to Can aren't XXXX. your I numbers Thank And That's a Can dollar about are in am successes on an you think the when I if the strategy many team also going how you to expand possible? go-to-market just behind that, amount the so put you and

Art Zeile

that bit is me today So it your meaning are of renewing relationship commercial the within consists for there effectively a give existing framework and a to renewing team. that year. elements are of business of are first think team business they team that And reps, new next of sales the taking expand which let contract accounts we customer continuing team to little are accounts for are that in you individuals overarching part the about then sales new that question, an commercial accounts the that

a And less team one a than speaking terms should that's their minimum in we bit in the people. next see year XX strength a that's that Roughly doubling XXXX. team as that's of a out little this

roughly doubling as if think So XX people. to it

that exceeded the incline are that depth and increase have have nice that a accounts actual can or I front but for you very the feel increase their market. targets they an comfortable of because commercial I me, of continue we of don't could exact in terms year-to-date In on bookings team numbers of this tell they the and figures the the for

If we to of We runway you of are XX,XXX left the for continue there the fact and roughly team with. relationships solid think after. have comfortable QX and that indicate about our X,XXX lot study to customer feel a that that we is results go QX from to today targets that succeed

Josh Vogel

if or That's said capital the great. open price to of and type And about thinking the If allocation. then building Can repurchases for maybe missed to Thank enhancement quarter kind you. off just you today on the and Thank I or were share product sorry brand a and Luc potential you the strategy and be average in numbers that of what guys talk play? geographic appetite please deals, would your exploring it you're acquisitions? so you. I'm

Luc Grégoire

give capital we in more the some a we as efficiency points strategy look Again, at to by comment if general are on capital that at XX-Q you year-to-date, the it’s it consider, share sure about bought XXX,XXX consider useful. for I'll and numbers, point there's strategy, on back well, want kind than we the shares. $X.XX. -- XXX,XXX Art us that it's about $X.XX you call look And allocation the some I'm of in acquisition but the the on will but buyback, we

to our is be play we're always Our know. force as capital all our to to almost the first strategy that, in here business. put the is in continues invest our paid can at be in putting debt the that's off as that place engineering going to business to the beyond you show-off capabilities investing to see If capital sale and you

history for I there we that past, all that. know And potential think opportunities to capital speak when basis, think you is business our but the returning for flexibility want covered in opportunities, going outside shareholders. see I think the typically maintain Art look of to wedge where to Beyond let we're to those to we and our we I continue

Art Zeile

get And a mean Josh. when comes to growth today. are revenue invest in manage it companies, when do first from so I nevertheless give we would opportunistic opportunities me you is presented strategies the I say to that them, fix of they product let time-to-time. So, are additional that say brands the acquisitions. I our thinking and our focus that thoughts go-to-market about growth. We various couple we creating And -- fix

committed whether or And perspective, me I we we I the definitely acquisitions that think a idea tech. to provider, a perspective from geographic ask that brand you you from not focused a on are When brand specific. it's specialist would or are tell

allows on. they right of to proposition in kind deliver priority that that again, to our to today acquisition fundamentally as better is value exist anything I take us for So to would transform tech and individual would of essentially the approach. go-to-market us a the terms But say product recruiters be brands

Josh Vogel

Thank a But, too will margin of I'll be in you. there And like expect adjusted that, queue. look the ongoing us is early with we one still hop margin and could investments. on a your in compression give expansion? what back more see just all it to little of XXXX, Understanding should planned to bit your EBITDA read

Luc Grégoire

I we're of not putting in our think but what provide have come would quarter. of in for because And investments more to annualization expect we'll and the again, down to somewhat, XXXX, in in the a even XXXX. specifics way margins now, dramatic the fourth I right

Josh Vogel

good. for my guys, you, Sounds Thank questions. taking

Art Zeile

very much, Josh. Thanks

Operator

And you, Please [Operator FBR. Art. from question go Kara Anderson Thank B. next will Riley of come ahead. our Instructions]

Aman Gulani

Aman Hey for I'm in guys. This jumping is Gulani. Kara.

Art Zeile

Hi.

Aman Gulani

Hey.

pay-per-view to subscription? the wanted comment for on is user with to like just get able how pay-per-view model. your sense you're progressing versus you base I much Are of So, a how

Art Zeile

team the enabler tell just I you accounts in So I exact don't that front can was of Aman, that that I for view talking as but commercial we about. have me an statistics pay-per-view

taking posting as so, again, the their actually of in direct as percentage benefits head the to are are they have pay-per-view of jobs the we finding well to platform. terms customers able And of my we're discovery what value of top that the the accelerate contract. is off I them number a provide are off a of that And pretty good figures don't new exact

that's value pay-per-view close pay-per-view that majority. at proposition the to again, I an the new We XX:XX for least if business, make that yes it's I'd too. to taking believe not But it of them format. It's a say want so all accounts easy say, format is commercial that flowing compelling through made to it

Luc Grégoire

I then, in that And to continues progress talked level material a about that would at line add good still but fashion, we a it specifically. not a

Aman Gulani

That's Got helpful. it.

should from of the subset of like monthly subscription the perspective per think users users how for the we about So average subset the pay-per-view revenue economics of user? versus

Luc Grégoire

I user So have turns the as like would past that in say perspective. it looks average about or same than is we it from out, more what an generated it the

average contract of the You value is year. think the It size that when but know that like our annualized customers. average is range, variability and roughly about looks generally course of $XX,XXX an a are of in that's you there about per statistics lot

accounts We're up customers as their first as $XXX,XXX are commercial signing some contract. that over

are It X,XXX than a would singing on pilot say. basis kind let's of like less format. some pilot for be XX-day We

Art Zeile

to that But up will our a feel last a the be average that tick several we've contributor of and in seen slight quarters, contract acquisition new over we it. value business

from know one to also we other, renewing our as are the accretion and that We the going seeing well. customers form conversion are and on

Luc Grégoire

it's net accretive. revenue Yes,

Aman Gulani

That's helpful.

features over from across could that new or products your last mean mean and or been out of so about, you the products brands. has a I I then out are most And mean that Okay. you've you've so, rolled number of portfolio last year customer me, which engagement? effective rolled features in talk question I the

Art Zeile

it's but out really in individual I them make the terms a difference to proposition value combination of all of and really make that platform, about think in was personally the capabilities the think that I if views that we've of behind pay-per-view rolled not two So important Again, as IntelliSearch be and features. would the on se per a Candidate those seeing in large mechanism, platform. pricing we're it then And applications, is engagement Match. but particular well, feature amount a a really

I would ones are Those notable. that be three very think the

they're the and of employer. the think with terms with of all of hit to in and our the level ClearanceJobs following quarter continues every I engagement a new ClearanceJobs format, candidates part height

that to the with right there we track connections that we're candidates. and see continue the the confirms improve on to everything So customers product

Aman Gulani

in Thank you. I'll the back That's helpful. very jump queue.

Art Zeile

Aman. appreciate Great,

Operator

question-and-answer session. closing like our back for turn Ceccarelli over the Rachel to conference concludes to any This would I remarks.

Rachel Ceccarelli

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

Operator

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

may You disconnect. now

DHI (DHX) 10 Nov 192019 Q3 Earnings call transcript