Q1 '22 Earnings Preview
DHI Group, Inc. (DHX) reports Q1 ’22 results on Wednesday, May 4. Our estimates are generally consistent with consensus, and we expect results to meet or beat Street expectations. Recall that DHI Group posted bookings growth of 35% Y/Y in Q4, providing a strong foundation for achieving significant double-digit Y/Y growth in 2022. Between the accelerating bookings growth realized in recent quarters and the ongoing war for talent, we see little risk to management’s guidance for a second consecutive quarter of revenue growth in excess of 20%. Data from the U.S. Bureau of Labor Statistics suggests labor market conditions remained tight in Q1 with the average number of job openings through February up 49% from last year, and the average number of quits up 28% Y/Y. Against this backdrop, several IT staffing firms have already reported robust growth in Q1, and we expect this to translate into similarly strong results and guidance from DHI Group.
Exhibit I: Our Estimates Versus Consensus
Sources: K. Liu & Company LLC; IBES Estimates
For Q1, we project revenues of $32.5 million (+22% Y/Y), comprised of $23.2 million (+22% Y/Y) from Dice and $9.3 million (+22% Y/Y) from ClearanceJobs. We expect another quarter of double-digit bookings growth across both platforms and have modeled Dice and ClearanceJobs bookings of $31.1 million (+11% Y/Y) and $11.9 million (+13% Y/Y), respectively. Our adjusted EBITDA estimate of $6.2 million (19.2% margin) reflects some margin compression on both a sequential and Y/Y basis to reflect ongoing investments in sales and marketing, and our EPS estimate is $(0.01).
Turning to the outlook, we anticipate Q2 revenue guidance at least in line with our estimate and consensus given our expectations for another strong bookings quarter in Q1. For the full year, we assume management will reaffirm its calls for strong double-digit growth and an adjusted EBITDA margin near 20% throughout FY ‘22. Given our bullish stance on the upcoming print and our view that that shares of DHX remain attractively valued, we believe shares ought to be bought. Our price target remains $8.00, representing a FY ’22 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.