DHI Group, Inc.

Good day, and welcome to the DHI Group First Quarter of 2025 Financial Results Conference Call. All participants will be in a listen-only mode for the duration of the call. And should you need any assistance today, 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. And to withdraw your question, please press star, then two. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Todd Curley of Pondell Wilkinson. Please go ahead.

Thank you, operator. Good afternoon and welcome to DHI Group's first quarter earnings conference call for 2025. Joining me today are DHI's CEO, Art Saley, and CFO, Greg Skippers. Before I hand the call over to Art, I'd like to address a few quick items. This afternoon, DHI issued a press release announcing its financial results for the first quarter of 2025. The release is available on the company's website at dhigroupinc.com. This call is also 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 described 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, on today's call management, we'll reference specific financial measures, including adjusted EBITDA, adjusted EBITDA margin, free cash flow, and non-GAAP earnings per share, which are not prepared in accordance with U.S. GAAP. Information regarding these non-GAAP measures and the reconciliations to the most directly comparable GAAP measures is available in our earnings release, which can be found on our website at dhigroupinc.com in the Investor Relations section. I'll now turn the call over to Art Zailey, CEO of DHI Group.

Thank you, Todd. Good afternoon, everyone, and welcome to our first quarter earnings conference call for 2025. We appreciate you joining us today as we review our financial performance and discuss our outlook for the remainder of the year. Let me start by saying that Q1 marks an important milestone for DHI. As it is the first quarter, we are reporting financial results under our new business segmentation. This segmentation aligns with how we operate and manage the business today and provides greater visibility into the performance of our individual brands. As part of this initiative, we aligned our operations around our two distinct brands, Clearance Jobs and Dice, each with dedicated leadership and tailored go-to-market strategies that reflect their unique market dynamics and customer needs. This brand-led structure brings sales, marketing, product, and development teams under a single leader for each business, driving greater focus and accountability. At the same time, we've maintained centralized support functions, including human resources, finance, and technology operations to efficiently manage our employees, business systems, and public company responsibilities. We believe this realignment enhances our profitability and unlocks new strategic growth opportunities for each brand, More specifically, we believe that it allows clearance jobs to expand its mission in the gov tech space. Now, I would like to provide an overview of our performance this quarter and the measures we've implemented to enhance our position moving forward. First, looking at the company as a whole, despite a 10% decline in total revenue in the first quarter, we delivered company-wide adjusted EBITDA of $7 million, representing an adjusted EBITDA margin of 22%. We have removed over $20 million of operating costs through three restructurings since May of 2023, while improving our product offerings and strengthening our sales and marketing teams. These initiatives position us well for a return to highly profitable growth once we are back in a normal tech hiring environment. From a segment perspective, Clearance Jobs continues to demonstrate its value as a highly profitable and strategically differentiated platform. CJ delivered another quarter of a very strong profitability with adjusted EBITDA of $5.7 million and an adjusted EBITDA margin of 43%. While bookings declined 1% year over year, this was primarily due to the uncertainty around the DOGE initiative and its potential impact on the federal defense budget, which I will speak to more about shortly. Importantly, our larger CJ customers remain confident in their prospects for the coming year and we believe the business is well positioned for long-term growth given its leadership position in the market. As expected, Dice faced a more challenging environment with bookings down 20% year over year. This decline was primarily driven by customers that had booked multi-year contracts back in the booming first quarter of 2022 and adjusted their consumption to a lower demand environment during their renewal. That said, we continue to prioritize aligning Dice cost structure with current market conditions, delivering adjusted EBITDA of $3.4 million and an adjusted EBITDA margin of 18%. We remain confident in Dice's ability to return to growth as tech hiring demand normalizes. Now, let's dig into the current state of the tech labor market which serves as a key growth indicator for our business. We believe that tech hiring demand is gradually returning to normal levels. Since August of 2024, we've seen consistent year-over-year increases in monthly new tech job postings. In fact, according to CompTIA, new tech job postings in Q1 of this year increased by 16% compared to last year, averaging 215,000 new tech job postings each month during the quarter. While the number of new tech job postings is improving, it is still only around 70% of normal levels if we consider 2019 the last normal year of tech hiring demand. In the tech staffing sector specifically, staffing industry analysts recently revised its 2025 growth forecast to a 2% year-over-year increase. While this is down from the original forecast of 5% growth, It is still a significant improvement from the 6% decline in 2024 and a 10% decline in 2023. This is a positive signal, reflecting confidence in the industry's improved performance this year. Another encouraging demand signal comes from LightCast, which tracks new tech recruiter job postings. In the first quarter, tech recruiter job postings increased 36% year over year. This uptick is also a promising sign, as increased hiring of tech recruiters typically signals a forthcoming rise in the demand for hiring tech professionals. Moreover, AI continues to generate increasing demand for tech professionals. Major consulting firms are leading early-stage AI projects, with IBM securing $5 billion in AI-related business and McKinsey forecasting that 45% of its projects will focus on AI this year. We see this as a key indicator of broader corporate AI adoption, which will ultimately require more technologists for effective implementation. As businesses increase these initiatives, platforms like Clearance Jobs and Dice, along with our database of 9.1 million tech professionals, will be essential tools for employers looking to attract top tech talent. In the federal sector, Doge-related uncertainty impacted new business bookings and renewals to a certain extent at clearance jobs. However, we believe this is temporary as the canceled Department of Defense contracts reported by Doge represent approximately one half of 1% of the full defense budget. Also, the heads of the Senate and House Armed Services Committee recently agreed on a $150 billion boost for current defense funding. Senate Armed Services Committee Chairman Roger Wicker and House Armed Services Committee Chairman Mike Rogers view this as a generational investment in the military. And both President Trump and Secretary Hegseth have indicated their desire for the first trillion-dollar defense budget for fiscal year 2026. Moreover, Booz Allen's CEO recently noted that if the government wants to operate with fewer people, it will need more technology. And that means more technologists will be needed to implement it. The move by Europe to start spending more on their own defense could also positively impact CJ's opportunity, because as EU defense spending goes up, there are very few EU contractors they can engage. Over 60% of EU defense spending flows to US military contractors today, and the EU can't create weapons manufacturing facilities in months. It actually takes years. So in the interim, We expect this new spending will flow to U.S. defense contractors as they are the largest viable source of weaponry that exists. We also believe that there are additional services that CJ can deliver in the GovTech space over the course of time, and we are actively working to explore them. During the quarter, CJ secured several new customers, including Boston Government Services, Saab, and Complete Parachute Solutions. With over 10,000 employers of cleared tech professionals and over 100 government agencies also needing cleared tech professionals, not to mention the EU opportunity I just outlined, CGA has a significant growth opportunity ahead. Dice also secured several notable customers this quarter, including American Airlines, Jason Pharmaceuticals, and FlexJet. On the new business front, we are focused on recession-resistant sectors like consulting, health care, financial services, and education, as well as those staffing and recruiting firms that are seeing increased business. We continue to hear success stories from our clients, like professional services firm MindSeeker, who recently said that Dice is the best platform for finding technical talent, particularly for its bigger clients. Now, let me quickly touch on what we're doing to drive increased adoption of our two brands. Clearance Jobs continues to innovate with recent product updates including expanded multi-factor authentication options and enhancements to our live events platform. CJ was honored to receive recognition from the White House as a vital private sector partner in strengthening the national cybersecurity workforce, reinforcing CJ's leadership position in this critical market. For Dice, during the quarter we launched a redesigned hiring page to introduce prospective clients to our menu of services. We also introduced a new modern dashboard and home feed for technologists. In the current quarter, we expect to release a new modernized job search experience, as well as a lighter version of our talent search product for our new web store, which is part of our broader product-led growth strategy. Our all jobs initiative continues to drive job posting growth, increasing candidate engagement, and applications. In the first quarter, DICE averaged 1.6 million monthly job applications, up 15% year over year, further solidifying DICE as the leading tech career marketplace. We believe in the virtuous cycle of increased candidate activity, attracting more recruiters and employers as subscribers. Turning to guidance, although there remains significant uncertainty surrounding tech hiring, and investments in general in today's economy, we are reiterating our full year revenue guidance of $131 to $135 million. In the second quarter, we expect revenue to be between $32 and $33 million. In the meantime, we continue to focus on delivering substantial profits for our shareholders and are reiterating our target of a 24% adjusted EBITDA margin for the full year 2025. with strong free cash flow conversion. As I mentioned, we remain focused on controlling what we can, namely our cost structure and capital allocation. We announced a $5 million share repurchase program in January, reflecting our confidence in the strength of our brands, the resilience of our business model, and our commitment to driving shareholder value. Having achieved our targeted leverage ratio of 1x, We used our free cash flow this quarter to repurchase shares. Our board believes, as we do, that our shares are trading below their intrinsic value due to the soft tech hiring environment. Also, we believe the sum of parts valuation of our company justifies this view. In closing, I'm proud of the progress we've made in reshaping DHI Group into a more focused, efficient, and profitable organization. Clearance Jobs remains a market leader with strong profitability and long-term growth potential. And Dice is well positioned to benefit as tech hiring demand returns. And across both brands, we are making smart investments in product innovation to drive customer engagement and future growth. With that, I'll turn the call over to Greg to walk you through our financial results in more detail. Greg?