Announces Organizational Restructuring Expected to Generate Significant Cost Savings

Yesterday morning, DHI Group (DHX) filed an 8-K announcing an organizational restructuring that will reduce the company’s workforce by approximately 10%. The reduction in force is expected to generate $8-$10 million in annual cost savings and should be largely completed by the end of Q2 ’23. Additionally, management reaffirmed its prior FY ’23 guidance for revenue growth of 5%-6% and an adjusted EBITDA margin of 25% exiting the year.

We believe the company’s full year guidance, which was provided earlier this month, already contemplated the announced restructuring. That said, we were previously modeling a more modest downtick in operating expenses during 2H ’23 and had assumed an adjusted EBITDA margin of 24% by year-end. Given more specifics into the path to a 25% adjusted EBITDA margin exiting the year, we now raise our adjusted EBITDA estimates slightly for this year and next. Our prior revenue estimates remain unchanged as does our price target of $9.00, which continues to reflect a FY ’23 EV/Sales multiple of approximately 3x.

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.