Q2 '22 Earnings Preview
DHI Group, Inc. (DHX) reports Q2 ’22 results on Wednesday, August 3. Our estimates are largely in line with consensus, and we believe the company is poised to outperform Street expectations once more. Underpinning our confidence is the visibility provided by DHI Group’s robust bookings growth in recent quarters and continued tightness in the market for technology talent. Bookings growth for both Dice and ClearanceJobs has exceeded 30% in each of the past two quarters, providing ample support for anticipated revenue growth of over 20% in Q2 and FY ‘22. From a macro standpoint, data from the U.S. Bureau of Labor Statistics reflects a 21% Y/Y increase in job openings on average in the first two months of Q2 along with a 9% Y/Y increase in quits during that same period. Within the tech sector specifically, CompTIA reported a 62% Y/Y increase in new job postings in June, and an unemployment rate of just 1.8%. All this to say that despite an uptick in economic uncertainty of late, key leading indicators for DHI Group’s business remain positive. Indeed, we would not be surprised to see an upward revision to guidance.
Exhibit I: Our Estimates Versus Consensus
Sources: K. Liu & Company LLC; IBES Estimates
For Q2, we project revenues of $35.6 million (+24% Y/Y), comprised of $25.4 million (+23% Y/Y) from Dice and $10.2 million (+26% Y/Y) from ClearanceJobs. We expect high-teens bookings growth across both platforms to be driven by new recruitment package customers, and we model Dice and ClearanceJobs bookings of $24.0 million and $9.0 million, respectively. Our adjusted EBITDA estimate of $7.1 million (20.0% margin) is relatively flat from the prior and year-ago periods, reflecting higher sales and marketing expenses as management reinvests for growth.
Looking forward, we anticipate Q3 revenue guidance at least in line with our estimate and consensus. For FY ‘22, we see potential for a slight upward revision on the top line and assume management will reaffirm its guidance for an adjusted EBITDA margin of approximately 20%. In our view, shares of DHX have been unduly punished by negative headlines pertaining to workforce actions at several large technology companies, creating a compelling buying opportunity. We remind investors that DHI Group’s growth is still largely levered to staffing firms, which are benefiting from the tight labor market, and enterprises outside of the technology sector seeking technical talent. Our price target remains $8.50, 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.
Disclosures: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.