Q4 '23 Earnings Preview
DHI Group, Inc. (DHX) reports Q4 ’23 results on Wednesday, February 7. Data from the latest U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) suggests demand for labor remained soft exiting 2023 as the number of job openings declined 20% Y/Y in December and fell approximately 17% on average for Q4. The number of quits also mirrored the trends in job openings, falling 17% in December and 14% on average for Q4. Although the JOLTS data points to further weakening of labor market conditions relative to Q3, initial year-end 2023 reports from a couple of IT staffing firms indicate demand for technology workers has begun to stabilize, albeit at lower levels than a year ago. All things considered, we believe our modeling assumptions for Q4 adequately reflect the challenging macro backdrop, and we expect DHI Group to meet both our estimates and consensus. As for guidance, we anticipate a conservative outlook for FY ’24 calling for a Y/Y decrease in revenue and an adjusted EBITDA margin generally consistent with where the company exits FY ‘23. Our price target remains $6.75 based on a FY ’24 EV/Sales multiple of 2.5x.
Exhibit I: Our Estimates Versus Consensus
Sources: K. Liu & Company LLC; FactSet Estimates
Management’s FY ‘23 guidance implies Q4 revenue and adjusted EBITDA of $35.1-$36.6 million and $8.8-$9.1 million, respectively. Both our Q4 estimates and consensus are within management’s guidance. Our revenue projection of $35.9 million is comprised of $23.6 million from Dice and $12.4 million from ClearanceJobs. We expect bookings to decline nearly 15% Y/Y due to elevated churn and a difficult selling environment for Dice, partially offset by modest growth in bookings for ClearanceJobs. Our adjusted EBITDA estimate of $8.9 million coincides with management’s targeted adjusted EBITDA margin of 25% exiting the year. Looking forward, we note that our FY ’24 projections assume that bookings will continue to decline throughout the first half of the year before returning to growth at year-end. From a profitability standpoint, we expect no change in the adjusted EBITDA margin as we surmise management will attempt to hold the line there. We remain comfortable with our assumptions and thus expect our estimates to fall within any guidance provided for FY ’24.
Exhibit II: U.S. Job Openings in Thousands
Source: U.S. Bureau of Labor Statistics Job Openings and Labor Turnover Survey
Exhibit III: U.S. Quits in Thousands
Source: U.S. Bureau of Labor Statistics Job Openings and Labor Turnover Survey
Our report with model and disclosures is available here.
Disclosure(s):
K. Liu & Company LLC (“the firm”) receives or intends to seek compensation from the companies covered in its research reports. The firm has received compensation from DHI Group, Inc. (DHX) in the past 12 months for “Sponsored Research.”
Sponsored Research produced by the firm is paid for by the subject company in the form of an initial retainer and a recurring monthly fee. The analysis and recommendations in our Sponsored Research reports are derived from the same process and methodologies utilized in all of our research reports whether sponsored or not. The subject company does not review any aspect of our Sponsored Research reports prior to publication.