DHX - Earnings call transcript Q3 2020

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Operator

Good afternoon everyone and welcome to the DHI Group Incorporated third quarter 2020 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]. event recorded. today's note, also is being Please At conference with call I would MKR turn the like to over Relations. this time Investor to Todd Kehrli Sir, please go ahead.

Todd Kehrli

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

quick of filings its a call would financial release like call XXXX a at page over constitute call adverse and parties the during in COVID-XX to for few the surrounding on forward-looking and Securities for Exchange involve events that words of that future live When statements Before press these obligation forward-looking in delays quarter I statements. to company's uncertainties of Act and Section DHI pandemic statements. issued Relations the XX-K periodic and results and Investor These dhigroupinc.com. expressions the company's the broadcast XXE actual Commission. and DHI and announcing Art, everyone identify I risks actual financial note I in from all development, any interested items. over information, forward-looking to the turn the any uncertainties forward-looking marketing results. afternoon, the today's future to other and within and is forward-looking will believe, no XXXX. forward-looking uncertainties on call, risks fiscal anticipate, the XX-Q outcomes used include and concerning materially the third the available statements and archived This or or Form the release and undertakes the This from company's today's update internet may Exchange statements performance the subject want being could statements. the current to Securities cover that results management's statements This with reports intend, except expect, other Factors risks of is on discussed meaning forward-looking revise historical website will other to views and contained differ webcast statements remind similar management may make reflect that differ are Please website. cause impact uncertainties. sales, DHI be on

at our to on over Lastly, during comparable CEO press measures directly and accordance adjusted measures in including earnings be EBITDA financial that to Investor turn and debt call, today's now these and of Information GAAP. net DHI most management Zeile, are will Art reconciliations adjusted our to GAAP I release U.S. the measures specific in Relations call EBITDA, available the the website margin dhigroupinc.com section. are will about Group. not non-GAAP of referring in prepared with

Art Zeile

Thank and to third you Todd. XXXX welcome everyone our earnings quarter fiscal afternoon Good conference call.

we in interest your DHI. As always, appreciate

Let start with it our relates the operation first pandemic. status me COVID-XX on to quick update as

safety Our foremost the community. is DHI of and our to health concern at ensure DHI

though optional members, the our for to best highly and work of remote be effective. and currently continued office and the using offices And possible to tools. home the our majority such, continued We to development during the including several As marketing communication quarter, product employees. have team employees all have collaboration support, from made return open, sales we our

the employees, of they to rest to maintain it's our make But employees back in having assured, from the in when significant of safety forward office looking are sure the office whether we precautions are taking safe. more home. are we or We our working

quarter. the jump into let's Now of a review

many economic year work, way of their plans to they the the their their the the is before. job were lower total hiring pandemic on reformulated summer, we While as this they we that hiring all view saw and in time challenge although during recovery than during paused live actually postings based come. companies The the continues sentiment to stabilize

X%, there feed, like However, posted uptick in tech companies more as Microsoft over open Glass in on than posting September, Morgan increase X,XXX well over industry change an in on J.P. bounce Alliance, XXXX in and is forecasting and are a The focus we right tech levels. Both XX% tech staffing job to staffing rebound. an IT of complete postings saw Industry X,XXX notable research IT now. that active job almost Based XX by staffing have Companies as have XXXX in firms a get almost the centric the our market to year-over-year are bookings. jobs as growth forecasting Analysts Amazon, representing the Chase would Staffing revenue market and better, for SIA which our pre-pandemic recruiting today. sentiment the of TechServe market back Burning evidenced firms, back that levels, the

jobs forecast technologists. to released digital our be jobs worldwide grow XX Microsoft and businesses XXXX. online will development. efforts predicts be in July in be efforts digitize. more report These accelerate to will are XXX digital software of the course, to future by million mentioned million new that to in collective created, XX will, I their million require that quarter, It's million As in a will XXX XXXX Of from last the clear

our the plan As we trends. career on continue create to model, these ready to on marketplaces using best to skills data focused stand technology tech capitalize our execute we

detail the some provide quarter. development product our me efforts regarding during let Now

usual product innovation. its Our high to product deliver team pace of development continued

and in candidates to used releases the product fastest profiles the With Dice virtuous new last pending This up-to-date. are the skills years. patent location specific Based profile the tech seen model recruiter experienced how based circle platform found which we two register has use rate and past ever our of that Dice delivered cases the high-impact our of be illustrates can alerts data quarter, in in any creates feature adoption company several job the release from profile. encourages within Job its a IntelliSearch Alerts, This automatically candidate's keep their skillset generated on

the career recruiters our a other recruiter During transparency creating Dice to learn marketplace, behind and environment from are clients upcoming the With was the hires, completed latest news recruiters personalize of with third future much transformation Dice in role. Profile their personal Profile culture, career first brand major more candidates Dice release and to about Recruiter one-third marketplace. profiles trusted discussions. can events more effective of Recruiter to we job a all where and facilitate details Dice's board which each the create Recruiter a enrich full-scale hiring new corporate more quarter, Dice information, and allows Profile. all about their and needs, photos, Dice

site, quarter, features. have also activities hiring which a During we view allows recruitment activity continues Team ClearanceJobs of the Dashboard, ClearanceJobs patterns. Client on to successful key launched DHI's the clients team full be market-leading test for to linking to bed their

completion launched The voice Voice These the called for second with the a to transformation which and content through finance highly follow huge Video. CJ board the relevant Voice eFinancialCareers and Video get and marketplace. feed of feature messaging from and fully of recruiters also iteration eFC features capabilities as eFC as on calling, tech candidates weekly their Follow, to are as of allows the functional We the the virtually from platform, full-scale in video we and company. follows the connect environment. Follow of professionals milestone to recruiters announced basis. brand eFC were home first work marketplace, allow career complete delivered as job all the instant on a to well new a news and

own We information messaging XXXX. have marketplace is platform clients stickiness. able capability the many the the launch Dice early same released new quarter. an as in it completing product Messenger. incredibly at This with authorization in releases second for to system expected within engagement an in our pattern system is secure Dice message a Facebook Therefore, authentication quarter, creates us. other feature and year-end. will stepping authentication to Recruiters design planned for for its candidate's to the critical industry-standard each full and multifactor move login candidates ingredient a Protecting This stone fourth already important the fourth the and the is protocol. has and which is in-platform new and be

on integration and candidates which general the seamlessly and and platform allow to schedule communicate connect recruiters application. built native meetings ClearanceJobs, also will for for We in working users' will to schedule are and email calendar into from delivering a system

quarter, Lastly, fourth eFC has in already I release IntelliSearch Dice. based similar to job described for just alerts the what

before to brand me briefly on it over Kevin. performance our I each sales let turn Now for touch

As I versus a recovery experiencing were recovery. have we believe a checkmark said V-shaped shaped I before,

a result account well exceed as CJ's teams As improved new environment Dice's bookings to to as business quarter around be sales in and the for team. we account current continues saw bookings including teams rebound, uncertainty production the in staffing plans. as the and uptick notable Renewal due all the recruiting in I management teams, accounts mentioned month. commercial We by management new several had September. for business hiring the Dice or affected during a their pre-pandemic earlier, reach both of sentiment rates

past plan we As has times have the enterprise team's cycles to of our that four large activity in continued that months. good has an despite changed their dramatically grow sales The example, is with news pipeline sales four hiring lengthening. worked one deal very

home engagement increased current environment. We from from see the continue to in candidates work

to And mentioned Department post-pandemic is before, the staffing from marketing recruiting buying who in in grow those highlights staffing and economy. and Dice as on leads In correlated reps The leading side, CJ the business commercial business pandemic, for sales a of client strongly new Dice's fills relatively in recruiting teams qualified growth. to form pipeline Dice and new accounts we focused the has remains budget, for which by that contract saw I have we in these two performance of relatively sell increase shifted indicator tech. is Defense through are which Due the seeing as Dice's necessity staffing predictable. an mantra firms generally expected our team U.S. addition, now. been is its on recruiting the Dice's to to unaffected site the ClearanceJobs need me with several on new and is that a the are teams, we of the rebound technologists success

expect as work ClearanceJobs government government We add and U.S. direct continue close to year. more expanding hard of remainder customers this to CJ's through out we agencies to the market addressable sales on

hard being by for the that in to-date performance eFC's the the so and industry and will reassessment. question uncertain the as to remains in credit market, Kong, There weighed for banking our under continuous is challenged down most future. It recession the eFinancialCareers affected the largest U.K. longer global Finally, the Hong and uncertainty banking brand. still expected its around Brexit and protests the is continue has remains do quality uncertainty no foreseeable industry

I As EBITDA we so, to conclude to while tech matching remarks, employers. believe exceeding of on our the doing executing five we companies adjusted matching professionals tech a online my marketplaces have years. for targets. are than that can our reiterate successfully we career want on And professionals plan I created next we and build capitalize expected technologist We platform our the believe with over quality highest competitors the better for with are millions jobs new

will While progress COVID-XX With won't and our Kevin, to we turn and Kevin? through may presents certainly growth. of and continued any are overnight have. over we the that, returning we financials will goal call who take the our this towards you making confident then business you plan achieving questions to uncertainty, our me are growth take happen let in

Kevin Bostick

Thank I will then comments everyone. start and by few going good results, the about the through afternoon a financial business. Art you add

with recruitment X% we down from year-over-year. of total quarter sequentially XX% and quarter, sequentially revenues ended is revenue package which $XX.X third customers, was down and in Dice the reported was down Dice year-over-year. third $XX.X third the quarter million, quarter, the million We XX% For second the XX% year-over-year. X% X% which and X,XXX

comes annual from package or our average per is XX% monthly revenue year revenue basis. ago $X,XXX of on $XX,XXX recruitment Our recruitment to an recurring package was down the customers. customer Dice Over Dice quarter and X% versus

customer Dice up the last XX% from quarter, quarter, rate Our down XX% third percentage points but renewal three was year-over-year. for

XX renewal was period down percentage compared revenue but the to up same Dice five Our XX%, year. from points percentage rate last when points last quarter,

will prior rates, at expectation maintaining customers ongoing to an While we there is renewing is they customers the renewal re-sign in-period or in recovery these lower non-renewal with with we economy. dialog termination, see did are when contract that the that further

have touch we a and for positive believe ongoing As last revenue implemented we new points mentioned organization, quarter, onboarding around who both success our a new customer processes leader we hired rates. impact that should and has client renewal on

base strategy best for recruitment relationships. Currently, balance year-over-year. XX% revenue increase revenue concentration is larger revenue solid us of and a of customer customers without to differentiation XX% be serves. This our believe As strong XX% stable on this X% risk. stability ClearanceJobs' the of approximately we makes will customer of continued million, continues up ClearanceJobs as no it quarter generate an significant the insulated sequentially in customer revenue, market products double-digit is and think our put growth. a $X.X this X% was We look having of though Dice, revenue. strong at one competitive a and our package third We good somewhat growth reflective innovative well position as year-over-year of

down year-over-year which down was rates. excluding $X.X eFinancialCareers when X% exchange and XX% foreign of sequentially for quarter Third million, revenue impact the was

COVID the U.K., the we primarily quarter. were the as to pandemic. U.K. eFC's during furloughs experience October is continued as which largest were COVID geography, expected, second for impacted difficulties shutdown by Coronavirus the for negatively to due performance our revenue In our we the the impacted region, APAC this impact of largest well which geography As eFC In eFC, of year. extended the through by

Turning to operating expenses.

operating of address $XX.X expenses non-cash Dice which which million, goodwill of trade quarter million the I both name charges a impairment million, of Third includes both $X in of and were moment. $XX.X will

expenses XX% is third of $X.X $X.X was a charges, of year-over-year. million tax loss more the third-party statutory the nondeductible the in X%, $XX.X in management impairment rate exercise non-cash March decrease quarter our primarily late expected an comprehensive for and operating the marketing operating as rate decrease were currently lower cost charges. as This impairment impact result resulting the between This impairment in million, Excluding which and began the X% than continues to effective spend. the jurisdictions. was due of or of which benefit expenses million, of Income representing efficient tax of charges rate allocation includes well

The is charge during non-cash of The loss trade decline a Dice of in the into impairment impact towards million the $XX.X driven by of mentioned, and whereas Dice the charges quarter of the $X the million diluted that expectation million. loss I per compared or $X.XX the a year result royalty goodwill million recovery the of the driven these rate primarily recorded Including and was to a impairment As by $XX.X assumption charges, name, of XXXX. for broader trade $XX.X to net impairment of pandemic a $X.XX we used third million, a end related recovery will XXXX, extend previously of name expected for share an net we ago. diluted $X.X non-cash of a we the goodwill the third income valuing share, name the the impact COVID-XX. recorded impairment the per to quarter, trade

for the from assets. last impacted quarter year versus loss non-cash Adjusted goodwill net discrete the was from with third $X.X quarter was XX%, diluted items. was year. income and and $XX.X net Last per by of margin the a of last negatively consistent earnings year. was third impacted this second substantially impairments million quarter of of EBITDA charges was by $X.XX $X.XX the for million, of which intangible $XXX,XXX quarter the share Adjusted positively quarter's year's This tax

we business As margins. is approximately manage adjusted to last our call, goal on stated to XX% our EBITDA the

of flow the $XX quarter, current as structure facility. $XX.X total cash do year of $XX.X resulting overall capacity of or With under coming From the new focus available we more $X.X also debt of quarter, we $X.X to last to to at to million year our third-party structure When deferred our in did ago the the to normal in $XX.X cost quarter. quarterly the quarter cash million, was add and COVID-XX, $XX.X supporting borrowing in and had operating while think headcount, third million flow, was become as as us the payment reducing of we generated million about the the the into the how quarter quarter. outstanding the and marketing of cash liquidity to quarter contracts XX% sales, with first have committed million incremental in compared debt our for the Even business. seasonality Deferred end well cost the was prior monthly on debt and year. in compared our the of to we the in We customer we bookings. this, at expect the marketing credit has $XX.X This our still is our of equally portion quarter, million. We begin borrowing at in having being around million customers notably We a due We investing quarters net the continue the second impacts our the end of significant better in mindful revenue product payments. quarter contract spend. the from of unbilled revenue, down terms backlog end our of normal have contracts other million. of end third visibility perspective,

or $X.X of program million buyback XXXX. $X $X.XX we During used the of per May XXX,XXX for have repurchased quarter, total, runs million current approximately the we share. which shares $XXX,XXX In through approximately

long Consistent recognition we opportunities previous to of the our the continue evaluate term strength to We business. with the shares. against is our will in investment programs, a buying believe and continue that of buyback back business prospects

the program employee buyback the equity our incentive as an impacts use also to we of know, offset you plan. As opportunity

as bookings ahead, the for company improving As a whole. are we look

a as use September in saw Dice job uptick increased As bookings notable environment. and in in this companies Art postings mentioned, technology of for we their

as effectively U.S. With to our budget, ourselves correlated their in. to strength the are to and regards job. which, We speaking, firms find to continue because need environment seeing recruiting to their Defense in do the is expect staffing we success immune our they these them we business has of technology to realize Department grow ClearanceJobs, relatively been

impact as issues a well in expect impacted regions, the to geopolitical ongoing largest we the eFinancialCareers, our headwinds APAC U.K. to be continue continue significant potential as and hiring Kong the by Hong COVID, sector. banking For in to two as

Looking to and to in right time ongoing customers forward, to same our revenue business support have at invest place operate the drive to we cost term our long the continuing we structure business believe while the in growth.

While not range. XX% providing guidance, business specific margins manage the to the continue we in to

execution forward Let that business we continued our we and continue us in with predictability model XXXX. innovation as and confident We back we business the turn protection and to progress in plan by finish sum of while some our me focused the feel our call reporting to times, remain me let and And we sales. are find we the challenging and made in ourselves up saying to XXXX very provides have on on into Art. look that, enter investments

Art Zeile

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

Operator

Riley from today question with Securities. ahead And question. your first B. Gulani go from comes Aman [Operator Instructions]. Please our

Aman Gulani

business? that first or Hi that guys. low eFC continues of you have declining have divesting potentially given to considered with question, question. piece fairly my off guess revenues the Thanks spinning the I visibility, for taking

Art Zeile

the in is that and is challenged the our sectors to significant will the is I recession foreseeable longer future. the most than There we that of industry face compare we would going other that headwinds benefit Dice question effectively. of question. be over and the indicated no industry and is nicely which to continued to term any certainly well Aman, expansion offset grow States a And years, eFC many is say banking CJ I continuing those we across the appreciate When for eFC by eFC business globe. growth their which the of United expect fair to the performance think positive poor next from CJ performance to to really tech in Dice as job five and mask continues as it

evaluating looking we our all So eFC the and options, at definitely are closely frankly. quite business

would is, the So say I answer yes.

Aman Gulani

bit clarity, begin of of recovery back And in Got do renewals growth. a sequential think those DHI expect the Thank get how when bookings? greater it. do can maybe you. And two and you just a you to

Art Zeile

So brands the each individual team have own its dynamics. within

the think a revenue growing our in we summer part the perspective. are saw than we October renewal of so I earlier that rates more from

we So recruiting especially our themselves. If staffing, we get business for revenue about large the consulting amount and to speaking, the largest renewal brand, broadly think of counts and Dice, a revenue we have tied agencies.

feel they that future. about think their better I

those seeing improve. rates are We renewal

divided end into of We feel to about the kind the Obviously, in on be today their XX of the with the about quarter. XX-month the have And be subscriptions is many both brands. we customers client relationship, more talk that Dice come sense the And I has And of of beginning for which if of saw all is have XXXX. end subsequent a a our into business, quarter plans. this say, bigger I figures, am moving the uncertain really for hiring the about by better confident challenge we that talking revenue the to at back a of many when because But paused bookings. their and next hiring than we general, would across I these about dollar industries plans period. quarter period a seen it's their especially new firm makes future. the pretty is time And of new still that

doesn’t in over long revenue reflect run. immediately, it the but itself So

as allow we of to we it's So to us And towards the evolving have expect revenues today. bookings, end how that's this better firming up essentially the fundamentally at situation XXXX. would of look

Aman Gulani

it. Got

the in renewal Can then of you what some question trends start in relative in of Okay. you October seeing saw rates talk just about you quarter? to the just November me. and And third from last

Art Zeile

that terms themselves, Yes. is I I it's bit renewal would softer the September, say feels another say, little we like doing are are certain are that I it's that shouldn’t there that them just in it's than feel in than, my still meaning call. trajectory, towards we rates portion October like teams of well, earnings softer same fantastic. shaped of And checkmark mentioned but that a moving in recovery in bookings. month the

CJ seen this their have teams consulting they levels February new also of bookings. And the pre-pandemic at business has January business do exceed have beginning team exceeded were We we the and same. new of seen and the recruiting and management account year. staffing what team The the producing

to are trends is we sales taking transferred there can teams we teams are that about we engine those program more nimble That's for that just want that to of bookings possible Arie of reps a be we that our leadership acting the facilitate bookings Kanofsky's are the with great and to seeing sales appear place reason So real-time. certain thing take the the growth. that be idea the as why right And now. advantage wherever in

proposition that that there. Another clients Burning large of going doing strategy number trying Glass after have open that very don't are And how across of a postings today targeted we those the the that the to towards being have tech shows we value using postings sell particular are many our we and feed as States. night United each important thing are is part

Aman Gulani

it will Thank on. it. you. I Got pass

Art Zeile

Appreciate questions. Aman. the much very you Thank

Operator

next Co. question your Josh Our Please from with question. & go ahead from comes Vogel Sidoti

Josh Vogel

evening Thanks. Good Hope guys. doing well. are you

Art Zeile

Thanks Josh.

Josh Vogel

a is, back a you come are but clients subscriptions, to question back some talking see My in there. second first pause quarter about or row you for starting hoping how did win

much see not of is those so starting subscriptions QX, anyone So subscriptions that where come in are paused who of those back? but some up in you came were to maybe paused that that QX,

Art Zeile

category believe to real do and are are recruiting you you unless business that understanding for job staffing, the Dice of fundamentally a we if in our and have lot a consulting you And Yes. in especially, technologists. fact, tool the that can't as Dice is key looking your the customers

QX, from practical point, rely data at the a candidates the that Dice becomes harvested So becomes over The paused on perspective. course unusable from in contacts that when the had period But of could they stale. still of previous a essentially certain the they information time. about they

was those recruitment especially decision staffing quarter view they be getting So and to of future, to how to as a agencies flow recruiting to when are that their we candidates make essentially use how XXXX for able into believe their a other they moving and ensure QX an tools they would important Dice clients. and to

Josh Vogel

the appreciate I insights.

to that growth subscription and is that X% you? business? try we data a getting kind what straight Some encouraging out the thinking different can growth data maybe taking number then of But I year put a about like thinking is from next back benchmark kind in deduce maybe Again, of your of Dice, points to point we see by SIA market sequential And we some research building and about off SIA. that to the model firms they model. industry do know where the one of it but prior comparing from recruiting questions

Art Zeile

Yes.

a I think it's good benchmark.

it SIA's market that growing faster same correlates they growing but tech that is the It part X% how been market I think frame historically over right whole way fact, even X% look be good of out. I with as as has grow that it to projected for online we five a the figure at but And a pretty to overall a seen believe the the recruitment the rebound. or years. that’s We should historically, not is next just sector in is it benchmark. where to the have CAGR some happens say, studies actually to other tools

and good down are research we SIA. by month And a with relationship that. for of month have predicting progression the close We the they with head sat not

at think bit the a today's track it is IT that that too pandemic. confident sector get healthier uncertain of they beginning was staffing that’s little the feel itself the on will we becoming I back and in aggressive world, but than

Josh Vogel

CJ prior but prospects an House statistics right. I whoever All to effect the elections. don’t in have ends have is I know the correlated on potentially defense budget, Great. But the White from does of the opinion? that your in up ClearanceJobs,

Art Zeile

bullish I or budgets comes think of proposes the associated down the does a has to the President the term government and of who for it not defense. the whether with all over need real forms long it really view

view, military today experiences even pro-defense. budget. Biden's based the Trump is which DOD and budget, is background he my that so President And is pro-defense sequentially Clearly, increased has on is and

the that and them that President in think on we you have and a I that to of need we it. itself that would aggressive that There future that it's affect about is view strong posture about one if both less But in world I be question an uncertain think can in no smaller live defense. common defense CJ. represented defense be budgets, was to say

if did are We reverse, lower the other someone words, the working in in budget.

Josh Vogel

Yes.

of Okay. on mix more or I coming margin was one is couple The to there that in just And let And pricing going gross is been something there? some just else last due and else quarters. questions. someone ask will has curious, and I

Art Zeile

do that? Kevin, want address you to

Kevin Bostick

Yes, will. I

conscious down cost very about spend comes I us think we really money. it our to where being

We careful backfills. are about very hiring

And on entire just but making around there is focused company. marketing the We mentality containment rather statement. one very the particular think that income IRR. are appropriate our spend the getting cost don't is that I across any area, sure is

down. it a across advertising of is line little don't or have competitive initiative a think being us the we I one a just to benefit are one whole come item, any which particular particular less when seeing clearly, business. And bit bit comes It's of it digital environment. rates little cost conscious So

So that’s well. as helpful

Josh Vogel

for thanks my questions guys. Well, Fair. taking

Art Zeile

it. I appreciate Thank Josh. you

Operator

we And to ladies like session. and gentlemen, call any question-and-answer today's over Zeile Art I at for closing this time, conclude remarks. to the will back would turn conference

Art Zeile

us Group for our day. call everyone great interest and and on thanks yourself your Thanks in for a DHI today have joining

Operator

conclude Ladies We gentlemen, for and today's you conference with will attending. we call. that, thank

now disconnect your may You lines.

DHI (DHX) 4 Nov 202020 Q3 Earnings call transcript