DHI Group, Inc.

Good afternoon, and welcome to the DHI Group Incorporated Second Quarter 2023 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Todd Curley of MKR Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, and welcome to DHI Group's 2023 Second Quarter Earnings Conference Call. With me on today's call are DHI's CEO, Art Zaley, and CFO, Kevin Bostick. Before I turn the call over to Art, I'd like to cover a few quick items. This afternoon, DHI issued a press release announcing its 2023 second quarter financial results. The release is available on the company's website at dhigroupinc.com. This call is being broadcast live over the internet for all interested parties and the webcast will be archived on the investor relations page of the company's website. I want to remind everyone that during today's call, management will make forward-looking statements that involve risks and uncertainties. Please note that except for the historical information, Statements on today's call may constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect DHI management's current views concerning future events and financial performance and are subject to risks and uncertainties, and actual results may differ materially from the outcomes contained in any forward-looking statements. Factors that could cause these forward-looking statements to differ from actual results include the risks and uncertainties discussed in the company's periodic reports on Form 10-K and 10-Q, and other filings with the Securities and Exchange Commission. DHI undertakes no obligation to update or revise any forward-looking statements. Lastly, during today's call, management will be referring to specific financial measures, including adjusted EBITDA, adjusted EBITDA margin, and adjusted diluted earnings per share that are not prepared in accordance with U.S. GAAP. Information about and recommendations of these non-GAAP measures to the most directly comparable gap measures are available in our earnings release, a copy of which you can find on our website at dhigroupinc.com and in the Industrial Relations section. I'll now turn the call over to Art Zaley, CEO of DHI Group.

Thank you, Todd. Good afternoon, everyone, and welcome to our 2023 Second Quarter Earnings Conference Call. We appreciate your time today as we discuss our financial performance and future outlook. First, Let's discuss the state of the market. According to CompTIA, the tech sector's unemployment rate was 2.3% in June, demonstrating continued demand for technology professionals. This coincided with a decline in actual tech job postings, with second quarter numbers significantly lower than in the previous year. The ongoing uncertainty in the economy continues to suppress most hiring plans. Despite the challenging current environment, The longer term view suggests companies will continue to invest in technology initiatives. Our two subscription offerings, Dice and Clearance Jobs, provide staffing and recruiting firms, large enterprises, and government agencies with the tools necessary to find, attract, and hire the best technologists for their job openings from our 7.4 million candidate profiles. Now let me dig into our performance during the second quarter. In the second quarter, our total revenue grew by 4%, a slower pace compared to the 12% growth we achieved in the first quarter. Dice revenue for the quarter decreased 2% year over year, while CJ revenue increased 20%. The decrease in Dice revenue was the result of lower new business bookings over the past three quarters and significantly lower transactional revenue, which we believe is a reflection of the uncertain economic environment we have faced during that time. Excluding transactional revenue, recurring Dice revenue increased in the second quarter. Dice new business teams continue to see smaller pipeline volume and more intense deal scrutiny in the sales cycle. We remain laser focused on those firms that have significant tech hiring needs right now because their technology roadmaps are less likely to be impacted by the economy. The four industries that have elevated technology job postings today are aerospace, business consulting, financial services, and healthcare. In the second quarter, we brought on new DICE clients like Federal Emergency Management Agency, or FEMA, Rutgers University, and Global Accounting Network. Additionally, DICE landed one of the oldest and largest automotive manufacturers in the United States. and the automotive giant is now part of our new account special handling program. Our average DICE annual contract value increased 9% year over year and was down 1% sequentially. This is a challenging economic environment today, but we expect companies across all industries to increase their investment in technology initiatives over the long run. Clearance jobs bookings for the quarter were negatively affected by the debt ceiling negotiations and its implied threat of the government delaying payment to military contractors. Nevertheless, during the quarter, CJ added several new clients, including Korn Ferry, TRIA Federal, and Rocket Communications. We continue to expect the larger fiscal 2023 defense budget to have a positive impact on the volume of government projects and the corresponding demand for cleared tech professionals to fulfill them. Moving on to account management, our revenue renewal rates in the second quarter slipped from the high 90s we reported last year. For the quarter, our DICE and CJ revenue renewal rates were 84% and 90% respectively. Retention rates for the quarter for DICE and CJ were 101% and 110% respectively. Last year, many of our clients ran out of profile views in their subscriptions and had to top up during the second quarter, which created a tough comparable for these metrics. We are seeing our customers return to a profile consumption pattern consistent with the lower number of tech job postings. The attrition we have seen continues to be concentrated on clients with less than $10,000 in annual spend. These are generally smaller firms. Moving on to EBITDA. During the second quarter, we delivered a 23% adjusted EBITDA margin and announced an organizational restructuring intended to streamline our team structure and improve our operating margins. The net result was a reduction of our workforce by approximately 10%. This restructuring primarily targeted mid-level management, including sales and engineering positions, which tend to have higher compensation. The restructuring is expected to generate annual cost savings of approximately $8 to $10 million, and those savings will be evident in our third quarter results. We continue to focus on strengthening our industry-leading product offerings to better penetrate our large market opportunities. For Dice, during the quarter, we introduced a new feature called Apply Distribution. This feature allows us to algorithmically change the order in which job postings are displayed to candidates to promote those postings that have a lower number of applications. We believe this new feature will benefit both the clients and candidates alike. For clearance jobs, we introduced the ability to add comments throughout the platform, allowing for more engagement between recruiters and candidates. This is our first true CJ Community feature. We are also excited to announce that our CJ native mobile app will be available in the third quarter after a year and a half of development. The timing is ideal to launch this app as professionals in the security space are now more receptive to managing their careers on mobile devices than at any time in the past. During the second quarter, we also continue to focus on expanding our tech professional community through our brand advertising campaigns. These campaigns help drive roughly 45,000 new Dice candidate registrations each month during the quarter. As a result, we have 6.1 million Dice members, and they made 1.7 million visits each month to our platform. Adding tech professionals to our marketplaces attracts more employers, which in turn makes our platforms more valuable to tech professionals, creating a virtuous circle. During the second quarter, We also announced the arrival of our new Chief Marketing Officer, Amy Heidersbach. Amy brings a wealth of experience as a hands-on, forward-thinking marketer in B2B software companies and two-sided marketplaces. She previously served as the CMO at Persado, Alteryx, and CareerBuilder earlier in her career. We look forward to Amy's leadership in taking our product positioning, go-to-market strategy, and brand development to the next level of sophistication. In summary, we acknowledge the challenges posed by the uncertain economic landscape, but remain confident in our ability to adapt and grow. With our strong market position, ongoing product enhancements, and effective expense management, we are well positioned to navigate the current economy and continue our path to higher growth as the macroeconomic environment improves. On that note, Let me turn the call over to Kevin, who will take you through our financials and our guidance, and then we'll take any questions you may have. Kevin?