Q3 '22 Earnings Preview
DHI Group, Inc. (DHX) reports Q3 ’22 results on Wednesday, November 2. Recall that the company hosted an investor day in early September, during which management reaffirmed its Q3 revenue guidance and raised its outlook for FY ’22. We increased our estimates accordingly, and our projections are largely consistent with consensus for both Q3 and Q4 ’22. Given the relatively recent financial update, we expect the upcoming print and guide to be in line with Street expectations.
Exhibit I: Our Estimates Versus Consensus
Sources: K. Liu & Company LLC; FactSet Estimates
For Q3, we project revenues of $37.5 million (+22% Y/Y), comprised of $26.8 million (+20% Y/Y) from Dice and $10.7 million (+26% Y/Y) from ClearanceJobs. We expect total bookings growth to approach 20%, reflecting both the addition of new recruitment package customers and higher average revenue per customer. Specifically, we model Dice and ClearanceJobs bookings of $25.2 million and $11.6 million, respectively. Our adjusted EBITDA estimate of $7.3 million (19.3% margin) is down from the prior and year-ago periods, reflecting higher sales and marketing expenses as management reinvests for growth. As for guidance, we expect management to reaffirm its upwardly revised expectations for $148.0-$149.0 million in revenue and an adjusted EBITDA margin of approximately 20% in FY ‘22.
Similar to last quarter, management’s commentary on underlying labor market conditions within the technology sector is likely to be a key focal point during the call as broader economic concerns continue to raise fears that a hard recession may be forthcoming, hurting employment in the process. We remain of the view that despite some signs of softening, labor markets remain exceedingly tight as evidenced by data from the U.S. Bureau of Labor Statistics, which continues to show job openings well above pre-pandemic levels and the number of quits holding steady near the record levels seen last year. Moreover, CompTIA’s Tech Jobs Report indicated that employer job postings for technology positions totaled 302,370 in September, while the unemployment rate remained low at 2.1%. We believe that with demand for technology talent still outpacing supply, DHI Group is well positioned to sustain the strong business momentum exhibited over the past 18 months. Our price target remains $10.50, representing a FY ’23 EV/Sales multiple of 3x.
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.