Q4 '24 Earnings Preview
DHI Group, Inc. (DHX) reports Q4 ’24 results on Wednesday, February 5, after market close. We expect Q4 results in line with our estimates and consensus. As for guidance for this year, recall that the company announced a strategic reorganization a couple of weeks ago. At the time, we opined that there could be some downside risk to consensus revenue expectations for FY ’25 but expressed comfort with both our and the Street’s adjusted EBITDA estimates. We maintain that same view heading into the print. We note that while the rate of decline in job openings has moderated in recent months, the number of quits remains below pre-pandemic levels, suggesting a more robust recovery in labor market conditions is not yet imminent. That said, we are still optimistic that an inflection point in bookings growth remains in the cards for FY ’25 given a low unemployment rate among technologists and an uptick in new job postings during the latter half of last year.
Exhibit I: Our Estimates Versus Consensus
Sources: K. Liu & Company LLC; FactSet Estimates
For Q4, we project revenue of $34.3 million, adjusted EBITDA of $7.9 million and EPS of $0.01, all of which are generally consistent with consensus of $34.1 million, $7.8 million and $0.00, respectively. By segment, our estimates call for Dice revenue of $21.0 million and ClearanceJobs revenue of $13.3 million. We assume an 8% Y/Y decline in bookings, primarily reflecting a mid-teens decrease for Dice, partially offset by modest growth at ClearanceJobs. Given the challenging bookings environment over the past year, we expect management’s initial FY ’25 guidance to reflect a low to mid-single digit decline in revenue in the best case scenario. However, we believe an adjusted EBITDA margin consistent with last year’s targeted 24% remains plausible considering the anticipated cost savings from the recent reorganization.
Subsequent to the strategic reorganization, DHI Group announced a new $5 million share repurchase authorization. Additionally, the company instituted a shareholder rights plan to encourage any stockholder looking to acquire 4.99% or more of shares outstanding to obtain prior approval from the Board of Directors. We believe the former action creates value for shareholders, while the latter protects value by ensuring the company can fully utilize its net capital loss carryforwards to offset future tax expenses. Our price target remains $5.00, representing an unchanged FY ’25 EV/Sales multiple of 2x.
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.