Reports Q4 ’24 Results Above Expectations and Guides FY ’25 as Previewed

DHI Group (DHX) reported Q4 ’24 results ahead of our estimates and consensus. Relative to our model, the upside in revenue was attributable to ClearanceJobs, while Dice’s performance was consistent with our expectations. Bookings for both platforms were in line with our assumptions, and we were pleased to see steady to improving trends across all key operating metrics on a sequential basis. In terms of new business, management indicated that contribution from staffing and recruiting customers was solid at Dice, while ClearanceJobs experienced some deal delays due to uncertainty over a potential government shutdown and the change in administration. Due to higher revenue, gross margin was slightly ahead of our model, which combined with lower than projected sales and marketing expenses, resulted in adjusted EBITDA handily beating our estimate and consensus.

As we surmised in our earnings preview, management’s initial FY ’25 guidance reflected revenue below our estimate and consensus but adjusted EBITDA in line. Although ClearanceJobs bookings are expected to grow this year, total bookings will remain depressed until technology hiring normalizes. Given the slow and steady recovery in technology job postings thus far, we have pushed out our expectations for renewed bookings growth at Dice to the end of this year. For ClearanceJobs, we were encouraged to hear that sales cycles appear largely unaffected thus far by the flurry of headlines surrounding the current administration’s efforts to reign in government spending. Worth noting, ClearanceJobs primarily caters to government agencies and contractors focused on national defense and intelligence initiatives. Thus, the CIA’s recent buyout offer to its workforce bears watching but on the whole, we think ClearanceJobs is aligned with budgets likely to see sustained growth for the foreseeable future.

We lower our revenue estimates for this year and next, but our adjusted EBITDA estimates tick up slightly due to a more significant reduction in projected product development expenses. Importantly, capitalized R&D costs are also expected to decline meaningfully this year even as the company rolls out new offerings targeted at ClearanceJobs candidates and launches a new web store for Dice later this year. With no seismic shifts in our projections, we maintain our price target of $5.00 based on an unchanged FY ’25 EV/Sales multiple of 2.0x.

Exhibit I: Reported Results and Guidance Versus Expectations

Sources: DHI Group; K. Liu & Company LLC; FactSet Estimates

Q4 revenue of $34.8 million (-6.7% Y/Y) was ahead of our $34.3 million estimate and the Street’s $34.1 million. Revenue from Dice of $21.0 million (-14.0% Y/Y) was in line with our projection, while revenue from ClearanceJobs of $13.8 million (+7.1% Y/Y) was above our estimate of $13.3 million.

Dice bookings of $18.7 million (-14.3% Y/Y) were approximately in line with our $18.8 million projection. We were encouraged to see Dice’s revenue renewal rate improve sequentially and come in slightly ahead of our assumption. New business bookings from staffing and recruiting firms were also solid. Trends across other key metrics were largely consistent with those seen throughout FY ’24 with the customer count declining, but average revenue per customer increasing.

ClearanceJobs bookings of $14.2 million (-0.4% Y/Y) were also approximately in line with our $14.3 million forecast. Per management, new business bookings were affected by uncertainty over a potential government shutdown as well as the change in administration. Relative to our assumptions, however, this impact was largely offset by slightly higher revenue renewal rates than we projected. ClearanceJob’s client count declined at a rate similar to recent quarters, while average revenue per customer again moved higher.

Exhibit II: Key Metrics

Sources: DHI Group; K. Liu & Company LLC

Gross margin of 85.4% was ahead of our 85.1% assumption, and total operating expenses were in line with our estimate despite the inclusion of $1.1 million in non-recurring severance, professional fees and other expenses not assumed in our model. As a result, adjusted EBITDA, which excludes the non-recurring items, was $9.2 million (26.3% margin) and easily topped our $7.9 million estimate and the Street’s $7.8 million. EPS of $0.02 beat our estimate by a penny and exceeded consensus by $0.02.

In Q4, DHI Group generated $4.4 million in cash flow from operations and used $2.8 million for capital expenditures. Cash at quarter-end totaled $3.7 million, while outstanding debt remained unchanged at $32.0 million. No shares were repurchased during the quarter but we expect the company to buy back stock going forward under its new $5.0 million stock repurchase program.

Management’s FY ‘25 guidance calls for revenue of $131.0-$135.0 million and an adjusted EBITDA margin of 24.0%, implying adjusted EBITDA of $31.4-$32.4 million. Prior to revisions, we were projecting FY ‘25 revenue and adjusted EBITDA of $137.3 million and $31.9 million, respectively, while consensus stood at $136.4 million and $31.6 million. As for bookings, management continues to anticipate growth at ClearanceJobs this year but does not expect growth in total bookings due to lingering softness in tech hiring and the corresponding impact on Dice. For Q1, management guided to revenue of $32.0-$33.0 million, which was short of our $34.0 million estimate and the Street’s $33.8 million.

Exhibit III: Estimate Revisions

Source: K. Liu & Company LLC

We lower our revenue estimates for this year and next due to a pushout in our expectations for renewed bookings growth at Dice. Reflecting savings from the company’s recent reorganization, however, our operating expense projections also decline, resulting in a modest uptick in our FY ’25 and FY ’26 adjusted EBITDA estimates. 

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.