Q2 '24 Earnings Preview
DHI Group, Inc. (DHX) reports Q2 ’24 results on Wednesday, August 7. Recall that the company announced an organizational restructuring last month, leading us to opine that ongoing macroeconomic softness has likely continued to impact bookings and revenue at Dice. With the latest data from the U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) still showing mid-teens Y/Y declines in the number of job openings throughout Q2, the demand environment appears little changed from the start of the year, in our view. This has largely been corroborated by the IT staffing and services providers that have reported results thus far, all of whom have noted that employers continue to scrutinize or delay new spending decisions. Moreover, guidance from these services providers is for more of the same in the near-term with the usual seasonal softness associated with the summer months leading to a slight sequential step down in revenue. While hope remains that demand for labor could rise exiting the year given the potential for interest rate cuts and an elevated number of job openings by historical standards, few are willing to go out on a limb at this juncture and guide accordingly. With this in mind, we expect DHI Group’s Q2 results to largely track both consensus and our expectations given the significant contribution from prior period bookings. However, with bookings growth likely sluggish in 1H, we suspect revenue guidance for the year could come down some with the impact to adjusted EBITDA largely offset by cost savings from the restructuring. We maintain our price target of $7.00, which represents a FY ’24 EV/Sales multiple of 2.5x.
Exhibit I: Our Estimates Versus Consensus
Sources: K. Liu & Company LLC; FactSet Estimates
We project Q2 revenue of $36.2 million, comprised of $22.9 million from Dice and $13.3 million from ClearanceJobs. We model flattish bookings Y/Y, reflecting a high single digit decline in Dice bookings offset by mid-teens bookings growth for ClearanceJobs. As noted above, we suspect Dice bookings could fall further than we originally assumed given the ongoing softness in demand for labor. Our adjusted EBITDA estimate of $8.5 million is in line with consensus and consistent with the company’s performance in Q1. Looking forward, we believe management could guide FY ’24 revenue lower while maintaining its prior adjusted EBITDA expectations as the previously announced restructuring is expected to generate $4.0-$6.0 million in annualized savings.
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 model with report 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.