What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-05 compared with 2020-11-04 · 115 added, 259 removed, 415 unchanged (47% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

2021 December 31, 2020

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Accounts receivable, net of allowance for doubtful accounts of $ 1,245 and $ 1,182

23,645 20,298

Income taxes receivable 595 1,044

Equity security 2,513 —

Prepaid and other current assets 3,768 4,503

5 unchanged sentences

Deferred income taxes — 19

Operating lease right-of-use asset 17,003 19,712

Operating lease right-of-use assets 15,600 16,405

Other assets 1,750 1,647

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Treasury stock, 21,111 and 20,013 shares, respectively

( 135,037 ) ( 132,150 )

Total stockholders’ equity 129,430 127,570

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(in thousands, except per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Revenues $ 32,633 $ 36,633

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Impairment of intangible assets — 7,200

Impairment of goodwill 23,626 — 23,626 —

Disposition related and other costs (Note 13) — — — 1,700

Total operating expenses 32,135 41,883

Loss on sale of business (Note 4) — — — ( 537 )

Operating income (loss) 498 ( 5,250 )

1 unchanged sentence

Impairment of equity investment — ( 2,002 )

Unrealized gain on equity security 2,513 —

Income (loss) before income taxes 2,818 ( 7,435 )

9 unchanged sentences

(in thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Net income (loss) $ 2,671 $ ( 6,550 )

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Balance at December 31, 2020 — $ — 71,233 $ 714 $ 233,554 20,013 $ ( 132,150 ) $ 53,971 $ ( 28,519 ) $ 127,570

Net loss ( 6,550 ) ( 6,550 )

Other comprehensive loss ( 3,865 ) ( 3,865 )

Stock based compensation 1,796 1,796

Restricted stock issued 1,468 15 15

Restricted stock forfeited or withheld to satisfy tax obligations ( 163 ) ( 1 ) 381 ( 1,048 ) ( 1,049 )

Performance-Based Restricted Stock Units forfeited or withheld to satisfy tax obligations ( 5 ) — 100 ( 300 ) ( 300 )

Purchase of treasury stock under stock repurchase plan 660 ( 1,643 ) ( 1,643 )

Balance at March 31, 2020 — $ — 70,809 $ 710 $ 229,023 16,732 $ ( 124,457 ) $ 77,436 $ ( 33,113 ) $ 149,599

Net income 2,671 2,671

Other comprehensive loss ( 205 ) ( 205 )

Stock based compensation 1,615 1,615

Restricted stock issued 393 4 4

Restricted stock forfeited or withheld to satisfy tax obligations ( 118 ) ( 2 ) 65 ( 162 ) ( 164 )

Performance-Based Restricted Stock Units forfeited or withheld to satisfy tax obligations ( 5 ) — 5 ( 13 ) ( 13 )

Purchase of treasury stock under stock repurchase plan 1,342 ( 3,433 ) ( 3,433 )

Balance at June 30, 2020 — $ — 71,079 $ 712 $ 230,638 18,144 $ ( 128,065 ) $ 79,298 $ ( 33,318 ) $ 149,265

Net loss ( 27,322 ) ( 27,322 )

Other comprehensive income 297 297

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Performance-Based Restricted Stock Units forfeited or withheld to satisfy tax obligations ( 39 ) — 139 ( 357 ) ( 357 )

Performance-Based Restricted Stock Units eligible to vest 813 8 8

Purchase of treasury stock under stock repurchase plan 590 ( 1,546 ) ( 1,546 )

Balance at September 30, 2020 — $ — 71,282 $ 714 $ 232,163 18,588 $ ( 129,137 ) $ 51,976 $ ( 30,599 ) $ 125,117

DHI GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

Balance at March 31, 2021 — $ — 73,271 $ 735 $ 235,312 21,111 $ ( 135,037 ) $ 56,642 $ ( 28,222 ) $ 129,430

Preferred Stock Common Stock Additional

5 unchanged sentences

Net income ( 6,550 ) ( 6,550 )

Other comprehensive income 1,416 1,416

Stock based compensation 1,458 1,458

Restricted stock issued 1,456 15 15

Restricted stock forfeited or withheld to satisfy tax obligations ( 113 ) ( 1 ) 214 ( 532 ) ( 533 )

Performance-Based Restricted Stock Units eligible to vest 680 7 7

Performance-Based Restricted Stock Units forfeited ( 10 ) — —

Retirement of treasury stock (see Note 12) ( 20,000 ) ( 200 ) ( 161,600 ) ( 20,000 ) 161,800 —

Purchase of treasury stock under stock repurchase plan 250 ( 491 ) ( 491 )

Balance at March 31, 2019 — $ — 69,535 $ 697 $ 222,981 14,590 $ ( 118,066 ) $ 73,023 $ ( 29,820 ) $ 148,815

Net income 3,061 3,061

Other comprehensive loss ( 3,865 ) ( 3,865 )

2 unchanged sentences

Restricted stock forfeited or withheld to satisfy tax obligations ( 163 ) ( 1 ) 381 ( 1,048 ) ( 1,049 )

Performance-Based Restricted Stock Units eligible to vest 60 — —

Performance-Based Restricted Stock Units forfeited ( 10 ) — —

Balance at June 30, 2019 — $ — 69,882 $ 700 $ 224,601 14,755 $ ( 118,584 ) $ 76,084 $ ( 31,497 ) $ 151,304

Net income 4,381 4,381

Other comprehensive loss ( 1,863 ) ( 1,863 )

Stock based compensation 1,057 1,057

Restricted stock issued 234 2 2

Restricted stock forfeited or withheld to satisfy tax obligations ( 214 ) ( 2 ) 85 ( 316 ) ( 318 )

Performance-Based Restricted Stock Units eligible to vest ( 548 ) ( 6 ) ( 6 )

Performance-Based Restricted Stock Units forfeited ( 100 ) ( 1 ) ( 1 )

Performance-Based Restricted Stock Units forfeited or withheld to satisfy tax obligations ( 5 ) — 100 ( 300 ) ( 300 )

Purchase of treasury stock under stock repurchase plan 660 ( 1,643 ) ( 1,643 )

Balance at September 30, 2019 — $ — 69,254 $ 693 $ 225,658 15,207 $ ( 120,171 ) $ 80,465 $ ( 33,360 ) 153,285

Balance at March 31, 2020 — $ — 70,809 $ 710 $ 229,023 16,732 $ ( 124,457 ) $ 77,436 $ ( 33,113 ) $ 149,599

See accompanying notes to the condensed consolidated financial statements.

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(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from (used in) operating activities:

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Impairment of intangible assets — 7,200

Impairment of goodwill 23,626 —

Impairment of equity investment — 2,002

Unrealized gain on equity security ( 2,513 ) —

Change in accrual for unrecognized tax benefits 59 ( 81 )

Gain on sale of equity investment ( 200 ) —

Loss on sale of business — 537

Changes in operating assets and liabilities:

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Net cash flows from operating activities 6,424 2,933

Cash flows from (used) in investing activities:

Net cash received from sale of businesses — 2,683

Net cash received from sale of equity investment 200 —

Cash flows used in investing activities:

Purchases of fixed assets ( 3,703 ) ( 4,288 )

4 unchanged sentences

Payments under stock repurchase plan ( 1,669 ) ( 1,643 )

Purchase of treasury stock related to vested restricted stock and performance stock units ( 1,742 ) ( 1,366 )

Purchase of treasury stock related to vested restricted and performance stock units ( 1,343 ) ( 1,348 )

Net cash flows from (used in) financing activities ( 3,012 ) 24,009

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The accompanying unaudited condensed consolidated financial statements of DHI Group, Inc.

(“DHI” or the “Company”) have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission.

(“DHI” or the “Company”) have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC").

Certain information and disclosures normally included in annual audited consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.

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Although the Company believes that the disclosures are adequate to make the information presented not misleading, these financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “Annual Report on Form 10-K”).

Operating results for the nine month period ended September 30, 2020 are not necessarily indicative of the results to be achieved for the full year.

Operating results for the three month period ended March 31, 2021 are not necessarily indicative of the results to be achieved for the full year.

Preparation of the condensed consolidated financial statements in conformity with U.S.

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Actual results could differ materially from management’s estimates reported in the condensed consolidated financial statements and footnotes thereto.

There have been no significant changes in the Company’s assumptions regarding critical accounting estimates during the nine month period ended September 30, 2020, except as disclosed in Notes 6, 8 and 9 relating to impairments to equity method investments, intangible assets, and goodwill, respectively.

There have been no significant changes in the Company’s assumptions regarding critical accounting estimates during the three month period ended March 31, 2021.

NEW ACCOUNTING STANDARDS

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The Company is evaluating the expected impact of this standard on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurements (Topic 820), Disclosures Framework - Changes to the Disclosure Requirements for Fair Value Measurement.

This standard removes, modifies, and adds certain disclosure requirements for fair value measurements.

This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019.

The Company adopted the new standard on January 1, 2020.

The adoption of ASU 2018-13 did not have a material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-15, Intangibles-Goodwill and Other-Internal-Use Software:

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract .

The new standard requires entities that are customers in cloud computing arrangements to defer implementation costs if they would be capitalized by the entity in software licensing arrangements under the internal-use software guidance.

2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods within those years.

The amendments allow either a retrospective or prospective approach to all implementation costs incurred after adoption.

The Company adopted this standard, effective January 1, 2020, under the prospective approach, and capitalized implementation costs are included in other assets on the Company's balance sheet.

In December 2019, the FASB issued ASU No.

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The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

The Company is evaluating the expected impact of this standard on its consolidated financial statements.

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company adopted this standard on January 1, 2021, and the adoption did not have a material effect on the Company's consolidated financial statements.

REVENUE RECOGNITION

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The following table provides information about disaggregated revenue by brand and includes a reconciliation of the disaggregated revenue (in thousands):

Three Months Ended September 30 Nine Months Ended September 30

2020 2019 2020 2019

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31

Dice $ 19,051 $ 22,485

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The following table provides information about opening and closing balances of receivables and contract liabilities from contracts with customers as required under Topic 606 (in thousands):

As of September 30, 2020 As of December 31, 2019

As of March 31, 2021 As of December 31, 2020

Receivables $ 23,645 $ 20,298

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T he Company recognized the following revenues as a result of changes in the contract liability balances in the respective periods (in thousands):

Three Months Ended Nine Months Ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Three Months Ended

March 31, 2021 March 31, 2020

Revenue recognized in the period from:

Amounts included in the contract liability at the beginning of the period $ 20,805 $ 24,175

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table includes estimated deferred revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period (in thousands):

1 unchanged sentence

Tech-focused $ 48,697 $ 4,035 $ 68 $ — $ 52,800

SALE OF BUSINESSES

The Company sold the Hcareers business on May 22, 2018 for $ 16.5 million and incurred approximately $ 1.5 million in selling costs, with $ 1.7 million of the purchase price placed in escrow (recorded in prepaid and other current assets), to be released twelve months after the closing date, subject to the terms and conditions of the transaction agreement , including certain contingencies.

Additionally, the Company recorded a receivable of $ 0.2 million related to working capital, subject to the terms and conditions of the transaction agreement.

Net cash proceeds of $ 14.0 million were received on the date of sale of Hcareers.

As a result of the sale, a $ 0.8 million loss was recognized in the second quarter of 2018.

During the second quarter of 2019, the escrow of $ 1.7 million and working capital terms and related contingencies were finalized resulting in the Company recording an additional loss on sale of $ 0.5 million and receiving cash of $ 0.7 million from the escrow and $ 0.2 million from working capital.

The Company sold the RigLogix portion of the Rigzone business on February 20, 2018 for $ 4.2 million and incurred approximately $ 0.6 million in selling costs.

$ 0.4 million of the purchase price was placed in escrow, which was released to the Company in the first quarter of 2019.

As a result of the sale, a $ 4.6 million gain was recognized in the first quarter of 2018.

The gain on sale exceeded net proceeds as liabilities transferred in the transaction exceeded assets, primarily due to deferred revenues of $ 1.2 million.

The Company sold the Health eCareers business on December 4, 2017 for $ 15.0 million and incurred approximately $ 0.6 million of selling costs.

$ 1.5 million of the purchase price was placed in escrow, which was released to the Company in the second quarter of 2019.

FAIR VALUE MEASUREMENTS

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• Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are observable in active markets.

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

• Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The carrying amounts reported in the Condensed Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, other assets, accounts payable and accrued expenses and long-term debt approximate their fair values.

The equity security is carried at fair value using values available on a public exchange and is based on a Level 1 input.

The fair value of the long-term debt was estimated using present value techniques and market based interest rates and credit spreads.

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Such instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment.

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At January 1, 2018, the Company held preferred stock representing a 10.0 % interest in the fully diluted shares of a leading tech skills assessment company.

Equity Security at Fair Value

Through its predecessor companies, the Company owns a minority interest representing less than 1% of the common stock of a technology company that completed an initial public offering ("IPO") and became publicly traded during the first quarter of 2021.

Prior to the IPO, the Company had elected the measurement alternative in accordance with FASB ASC 321, Investments – Equity Securities.

As of December 31, 2020, it was not practicable to estimate the fair value of its interest because there were no observable transactions for the investment.

Accordingly, the investment was carried at its original cost, less impairments, which resulted in a carrying value of zero as of December 31, 2020.

As a result of the IPO, the shares now have a readily determinable fair market value, which was $ 2.5 million as of March 31, 2021, and an unrealized gain has been recognized in the current quarter.

The investment is accounted for as an equity security, with unrealized gains and losses included in earnings.

Unrealized gain for the three months ended March 31, 2021 was $ 2.5 million.

Other Investments

At January 1, 2018, the Company held preferred stock representing a 10.0 % interest in the fully diluted shares of a tech skills assessment company.

During 2018, the skills assessment company completed an additional equity offering, lowering DHI's total interest to 7.6 %.

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The Company has evaluated the 40 % common share interest in the Rigzone business and has determined the investment meets the definition and criteria of a variable interest entity ("VIE").

The Company evaluated the VIE and determined that the Company does not have a controlling financial interest in the VIE, as the Company does not have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance.

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

significantly impact the VIE's economic performance.

The common share interest is being accounted for under the equity method of accounting as the Company has the ability to exercise significant influence over Rigzone.

As accumulated earnings of the VIE have been approximately zero since the date of transfer, the investment is recorded at zero at September 30, 2020.

On January 1, 2019, the Company adopted ASU No.

2016-02, Leases (Topic 842) , applying the modified retrospective transition.

As accumulated earnings of the VIE have been approximately zero since the date of transfer, the investment is recorded at zero at March 31, 2021.

The Company has operating leases for corporate office space and certain equipment.

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All operating lease expense is recognized on a straight-line basis over the lease term.

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The components of lease cost were as follows (in thousands):

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2020 2019 2020 2019

For the Three Months Ended March 31,

Operating lease cost *

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Supplemental cash flow information related to leases was as follows (in thousands):

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash paid for amounts included in measurement of lease liabilities:

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Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount):

September 30, 2020 December 31, 2019

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 December 31, 2020

Operating lease right-of-use-assets $ 15,600 $ 16,405

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Operating leases 4.03 % 4.00 %

As of September 30, 2020, future operating lease payments were as follows (in thousands):

As of March 31, 2021, future operating lease payments were as follows (in thousands):

Operating Leases

October 1, 2020 through December 31, 2020 $ 989

April 1, 2021 through December 31, 2021 $ 3,028

2026 and Thereafter 1,521

2 unchanged sentences

Total $ 16,300

As of September 30, 2020 the Company has no additional operating or finance leases that have not yet commenced.

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2021 the Company has no additional operating or finance leases that have not yet commenced.

ACQUIRED INTANGIBLE ASSETS, NET

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If the carrying value exceeds the fair value, an impairment loss is recorded.

As of September 30, 2020 and December 31, 2019, the Company had an indefinite-lived acquired intangible asset of $ 23.8 million and $ 39.0 million, respectively, related to the Dice trademarks and brand name.

During the first quarter of 2020, because of the initial impacts of the COVID-19 pandemic and its potential impact on future earnings and cash flows that are attributable to the Dice trademarks and brand name, the Company performed an interim impairment analysis.

As a result of the analysis, the Company recorded an impairment charge of $ 7.2 million during the first quarter of 2020.

During the third quarter of 2020, the impacts of the COVID-19 pandemic continued and the Company's projected earnings and cash flows that are attributable to the Dice trademarks and brand name declined as compared to the projections used in the March 31, 2020 analysis.

As a result, the Company performed an interim impairment analysis as of September 30, 2020, which resulted in the Company recording an additional impairment charge of $ 8.0 million during the three month period ended September 30, 2020.

No impairment was recorded during the three and nine month periods ended September 30, 2019.

The projections utilized in the March 31 and September 30, 2020 analyses included a decline in revenues caused by the COVID-19 pandemic that are attributable to the Dice trademarks and brand name for the year ending December 31, 2020 compared to the year ended December 31, 2019.

The September 30, 2020 analysis included a further decline in revenues caused by the COVID-19 pandemic that are attributable to the Dice trademarks and brand name for the year ending December 31, 2021 compared to the year ended December 31, 2020 and then increasing to rates approximating industry growth projections, although peaking at rates slightly lower than in the March 31, 2020 analysis.

As of March 31, 2021 and December 31, 2020, the Company had an indefinite-lived acquired intangible asset of $ 23.8 million related to the Dice trademarks and brand name.

During the first and third quarters of 2020, because of the impacts of the COVID-19 pandemic and its potential impact on future earnings and cash flows that are attributable to the Dice trademarks and brand name, the Company recorded impairment charges of $ 7.2 million and $ 8.0 million, respectively.

No impairment was recorded during the three month period ended March 31, 2021.

The projections utilized in the September 30, 2020 analysis included a decline in revenues for the year ending December 31, 2021 compared to the year ended December 31, 2020, and then increasing revenues to rates approximating industry growth projections.

The Company’s ability to achieve these revenue projections may be impacted by, among other things, uncertainty related to COVID-19, competition in the technology recruiting market, challenges in developing and introducing new products and product enhancements to the market and the Company’s ability to attribute value delivered to customers.

Cash flows that are attributable to the Dice trademarks and brand name are projected to decline for the year ending December 31, 2020 compared to the year ended December 31, 2019 as a result of the lower revenue, but partially offset by reductions to operating expenses.

Operating expenses, excluding impairments, utilized in the March 31 and September 30, 2020 analyses are projected to decline for the year ending December 31, 2020 as compared to the year ended December 31, 2019, including a reduction in operating margin.

The March 31, 2020 analysis included modest operating margin improvements during the year ending December 31, 2021 and beyond while the September 30, 2020 analysis included a small reduction in operating margin during the year ending December 31, 2021 and then increasing modestly.

The September 30, 2020 analysis included a small reduction in operating margin during the year ending December 31, 2021 and then increasing modestly.

If future cash flows that are attributable to the Dice trademarks and brand name are not achieved, the Company could realize an impairment in a future period.

In the March 31, 2020 and September 30, 2020 analyses, the Company utilized a relief from royalty rate method to value the Dice trademarks and brand name using a royalty rate of 5.0 % and 4.0 %, respectively, based on comparable industry studies and a discount rate of 17.5 % and 15.5 %, respectively.

The decline in the royalty rate is due to revenue declines and impacts of the COVID-19 pandemic and the decline in the discount rate is primarily due to the lower projections, as compared to the March 31, 2020 analysis.

The Company's operating results attributable to the Dice trademarks and brand name through March 31, 2021 and projections of future results have met or exceeded those included in the

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

projections utilized in the September 30, 2020 analysis.

In the September 30, 2020 analysis, the Company utilized a relief from royalty rate method to value the Dice trademarks and brand name using a royalty rate of 4.0 % based on comparable industry studies and a discount rate of 15.5 %.

The determination of whether or not indefinite-lived acquired intangible assets have become impaired involves a significant level of judgment in the assumptions underlying the approach used to determine the value of the indefinite-lived acquired intangible assets.

Fair values are determined using a profit allocation methodology which estimates the value of the trademark and brand name by capitalizing the profits saved because the company owns the asset.

Fair values are determined using a profit allocation methodology which estimates the value of the trademarks and brand name by capitalizing the profits saved because the company owns the asset.

We consider factors such as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements.

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If projections are not achieved, the Company could realize an impairment in the foreseeable future.

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table shows the carrying amount of goodwill as of December 31, 2019 and September 30, 2020 and the changes in goodwill for the nine month period ended September 30, 2020 (in thousands):

The following table shows the carrying amount of goodwill as of December 31, 2020 and March 31, 2021 and the changes in goodwill for the three month period ended March 31, 2021 (in thousands):

Goodwill at December 31, 2020 $ 133,353

Foreign currency translation adjustment 331

Impairment ( 23,626 )

Goodwill at September 30, 2020 $ 131,132

The amount of goodwill as of September 30, 2020 allocated to the Tech-focused reporting unit was $ 131.1 million.

Goodwill at March 31, 2021 $ 133,684

The amount of goodwill as of March 31, 2021 allocated to the Tech-focused reporting unit was $ 133.7 million.

The annual impairment test for the Tech-focused reporting unit is performed on October 1 of each year.

During the first quarter of 2020, because of the initial impacts of the COVID-19 pandemic and its potential impact on future earnings and cash flows for the reporting unit, the Company performed an interim impairment analysis of goodwill.

The results of the analysis indicated that the fair value of the Tech-focused reporting unit was not substantially in excess of the carrying value as of March 31, 2020.

The percentage by which the estimated fair value exceeded carrying value for the Tech-focused reporting unit at March 31, 2020 was less than 1%.

During the third quarter of 2020, the impacts of the COVID-19 pandemic continued and the Company's projected earnings and cash flows for the Tech-focused reporting unit declined as compared to the projections used in the March 31, 2020 analysis.

As a result, the Company performed an interim impairment analysis as of September 30, 2020, which resulted in the Company recording an impairment charge of $ 23.6 millions during the three month period ended September 30, 2020.

No impairment was recorded during the three and nine month periods ended September 30, 2019.

Revenue projections for the Tech-focused reporting unit declined compared to the projections used in the March 31, 2020 analysis due to the continued impacts of the COVID-19 pandemic.

The September 30, 2020 analysis included a further decline in revenues attributable to the Tech-focused reporting unit for the year ending December 31, 2021 compared to the year ended December 31, 2020 and then increasing to rates approximating industry growth projections, although peaking at rates slightly lower than in the March 31, 2020 analysis.

During the three months ended September 30, 2020, because of the impacts of the COVID-19 pandemic and its potential impact on future earnings and cash flows for the reporting unit, the Company recorded an impairment charge of $ 23.6 million.

No impairment was recorded during the three month periods ended March 31, 2021 and 2020.

Revenue projections attributable to the Tech-focused reporting unit used in the September 30, 2020 analysis included a decline in revenues for the year ending December 31, 2021 compared to the year ended December 31, 2020 and then increasing to rates approximating industry growth projections.

The Company’s ability to achieve these revenue projections may be impacted by, among other things, the length and impacts of the COVID-19 pandemic, competition in the technology recruiting market, challenges in developing and introducing new products and product enhancements to the market and the Company’s ability to attribute value delivered to customers.

Future cash flows attributable to the Tech-focused reporting unit are projected to decline for the year ending December 31, 2020 compared to the year ended December 31, 2019 as a result of the lower revenue, but partially offset by reductions to operating expenses.

The September 30, 2020 analysis included a small reduction in operating margin during the year ending December 31, 2021 and then increasing modestly.

The Company's operating results attributable to the Tech-focused reporting unit through March 31, 2021 and projections of future results have met or exceeded those included in the September 30, 2020 analysis.

Determining the fair value of a reporting unit is judgmental in nature and requires the use of estimates and key assumptions, particularly assumed discount rates and projections of future operating results.

The discount rate applied for the Tech-focused reporting unit in the September 30, 2020 analysis was 14.5 %, compared to 16.5 % at March 31, 2020.

The decline in the discount rate is primarily due to the lower projections, as compared to the March 31, 2020 analysis.

An increase to the discount rate applied or reductions to future projected operating results could result in future impairment of the Tech-focused reporting unit’s goodwill.

The discount rate applied for the Tech-focused reporting unit in the September 30, 2020 analysis was 14.5 %.

An increase to the discount rate applied or reductions to future projected operating results could result in a future impairment of the Tech-focused reporting unit’s goodwill.

It is reasonably possible that changes in judgments, assumptions and estimates the Company made in assessing the fair value of goodwill could cause the Company to consider some portion or all of the goodwill of the Tech-focused reporting unit to become impaired.

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(a wholly-owned subsidiary of the Company) and its wholly-owned subsidiary, Dice Career Solutions, Inc.

(collectively, the “Borrowers”), entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), which matures in November 2023, and replaced the previously

(collectively, the “Borrowers”), entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), which matures in November 2023, and replaced the previously existing credit agreement dated November 2015.

The Credit Agreement provides for a revolving loan facility of $ 90 million, with an expansion option up to $ 140 million, as permitted under the terms of the Credit Agreement.

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

existing credit agreement dated November 2015.

The Credit Agreement provides for a revolving loan facility of $ 90 million, with an expansion option up to $ 140 million, as permitted under the terms of the Credit Agreement.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at a LIBOR rate or a base rate plus a margin.

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The Credit Agreement also provides that the payment of obligations may be accelerated upon the occurrence of customary events of default, including, but not limited to, non-payment, change of control, or insolvency.

As of September 30, 2020, the Company was in compliance with all of the financial covenants under the Credit Agreement.

As of March 31, 2021, the Company was in compliance with all of the financial covenants under the Credit Agreement.

The obligations under the Credit Agreement are guaranteed by two of the Company’s U.S.

based wholly-owned subsidiaries and secured by substantially all of the assets of the Borrowers and the guarantors and stock pledges from certain of the Company’s foreign subsidiaries.

The amounts borrowed as of September 30, 2020 and December 31, 2019 are as follows (dollars in thousands):

September 30,

The amounts borrowed as of March 31, 2021 and December 31, 2020 are as follows (dollars in thousands):

2021 December 31,

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deferred financing costs, net of accumulated amortization of $ 356 and $ 319

Total borrowed $ 36,546 $ 9,435

( 381 ) ( 417 )

Long-term debt, net $ 19,619 $ 19,583

Available to be borrowed under revolving facility, subject to certain limitations $ 70,000 $ 70,000

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Although the outcome of these legal matters, except as described below and recorded in the condensed consolidated financial statements, cannot be determined, it is the opinion of management that the final resolution of these matters will not have a material effect on the Company’s financial condition, operations or liquidity.

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the first quarter of 2018, the Company recorded a $ 1.0 million liability related to a class action lawsuit regarding the applicability of provisions of the Fair Credit Reporting Act (the "FCRA") to one of our products.

The lawsuit was brought by Ian Douglas, individually, as a representative of the class and on behalf of the general public, against DHI Group, Inc.

and Dice Inc.

asserting six claims under the FCRA that the Company’s Open Web profiles are “consumer reports” and Dice is a “consumer reporting agency” under the FCRA, including claims pursuant to the private right of action in 15 U.S.C.

Section 1681n for alleged willful violations of the FCRA.

The action was originally filed in a federal district court on July 26, 2017, but as a part of the settlement process, the action was re-filed in the Superior Court of Santa Clara County, California (Case No.

The recorded liability reflected a settlement, which was subject to a final judgment, and was paid in the third quarter of 2019.

The settlement resolved all remaining claims subject to the lawsuit, and final judgment approving the settlement was entered on July 24, 2020.

Tax Contingencies

The Company operates in a number of tax jurisdictions and is routinely subject to examinations by various tax authorities with respect to income taxes and indirect taxes.

The determination of the Company’s worldwide provision for taxes requires judgment and estimation.

The determination of the Company’s worldwide provision for taxes requires

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

judgment and estimation.

The Company has reserved for potential examination adjustments to our provision for income taxes and accrual of indirect taxes in amounts which the Company believes are reasonable.

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The following table summarizes the Stock Repurchase Plans approved by the Board:

May 2018 to May 2019 May 2019 to May 2020 May 2020 to May 2021

Approval Date May 2018 April 2019 May 2020

May 2019 to May 2020 May 2020 to May 2021 (1)

Feb 2021 to Feb 2022

Approval Date April 2019 May 2020 February 2021

Authorized Repurchase Amount of Common Stock $ 7 million $ 5 million $ 8 million

As of September 30, 2020 the value of shares that may yet be purchased under the current plan was $ 3.6 million.

(1) During the first quarter of 2021, the Company completed its purchases under the plan, which consisted of 2.2 million shares for $5.0 million, effectively ending the plan prior to its original expiration date.

As of March 31, 2021 the value of shares that may yet be purchased under the current plan was $ 7.6 million.

Purchases of the Company's common stock pursuant to the Stock Repurchase Plans were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Shares repurchased [1]

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[2] Average price paid per share includes costs associated with the repurchases.

There were 7,811 unsettled share repurchases as of September 30, 2020 and no unsettled share repurchases as of September 30, 2019.

The Company's Board approved the retirement of 20 million shares of treasury stock during the three months ended March 31, 2019 and, as a result, the Company reduced additional paid in capital by $ 161.6 million and Common Stock by $ 0.2 million during the three months ended March 31, 2019.

The value of treasury stock retired was computed based on the average repurchase price of all treasury shares as of March 31, 2019, which was $ 8.09 per share.

DISPOSITION RELATED AND OTHER COSTS

In May 2017, the Company announced plans to divest a number of its online professional communities to achieve greater focus and resource allocation toward its core tech-focused business.

The planned divestitures included:

BioSpace (transferred majority ownership to BioSpace management on January 31, 2018 and sold the remaining interest during the second quarter of

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2020), Hcareers (sold May 22, 2018), Health eCareers (sold December 4, 2017), and Rigzone (sold the RigLogix portion of the Rigzone business on February 22, 2018 and transferred majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018).

Additionally, the Company ceased the Dice Europe operations on August 31, 2018 and vacated certain offices during 2018.

In connection with the planned divestitures and reorganization to the tech-focused strategy, the Company incurred certain costs, including severance and retention, lease exit, business closure, professional fees related to activist shareholders, search, financial advisory, and legal services, and other costs to further these strategic objectives.

The activities associated with disposition related and other costs were substantially completed during the year ended December 31, 2019.

The following table displays a roll forward of the disposition related and other costs and related liability balances (in thousands):

Three Months Ended September 30, 2020 Accrual at June 30, 2020 Expense Cash Payments Accrual at September 30, 2020

Severance and retention $ 129 $ — $ — $ 129

Lease exit and related asset impairment costs 273 — ( 13 ) 260

Total disposition related and other costs $ 402 $ — $ ( 13 ) $ 389

Three Months Ended September 30, 2019 Accrual at June 30, 2019 Expense Cash Payments Accrual at September 30, 2019

Severance and retention $ 817 $ — $ ( 292 ) $ 525

Professional fees and other costs 59 — ( 37 ) 22

Lease exit and related asset impairment costs 590 — ( 175 ) 415

Total disposition related and other costs $ 1,466 $ — $ ( 504 ) $ 962

Nine Months Ended September 30, 2020 Accrual at December 31, 2019 Expense Cash Payments Accrual at September 30, 2020

Severance and retention $ 145 $ — $ ( 16 ) $ 129

Lease exit and related asset impairment costs 365 — ( 105 ) 260

Total disposition related and other costs $ 510 $ — $ ( 121 ) $ 389

Nine Months Ended September 30, 2019 Accrual at December 31, 2018 Expense Cash Payments Accrual at September 30, 2019

Severance and retention $ 1,089 $ 1,258 $ ( 1,822 ) $ 525

Professional fees and other costs 1,271 442 ( 1,691 ) 22

Lease exit and related asset impairment costs 947 — ( 532 ) 415

Total disposition related and other costs $ 3,307 $ 1,700 $ ( 4,045 ) $ 962

There were 11,394 unsettled share repurchases as of March 31, 2021 and 51,500 unsettled share repurchases as of March 31, 2020.

STOCK BASED COMPENSATION

Under the 2012 Omnibus Equity Award Plan, the Company has granted stock options, restricted stock and Performance-Based Restricted Stock Units (“PSUs”) to certain employees and directors.

The Company recorded total stock based compensation expense of $ 1.5 million and $ 4.9 million during the three and nine month periods ended September 30, 2020, respectively, and $ 1.1 million and $ 4.1 million during the three and nine month periods ended September 30, 2019, respectively.

At September 30, 2020, there was $ 10.8 million of unrecognized compensation expense related to unvested awards, which is expected to be recognized over a weighted-average period of approximately 1.4 years.

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company recorded total stock based compensation expense of $ 1.8 million during each of the three month periods ended March 31, 2021 and 2020, respectively.

At March 31, 2021, there was $ 12.8 million of unrecognized compensation expense related to unvested awards, which is expected to be recognized over a weighted-average period of approximately 1.5 years.

Restricted Stock— Restricted stock is granted to employees of the Company and its subsidiaries, and to non-employee members of the Company’s Board.

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Vesting occurs over one year for Board members and over two to four years for employees.

A summary of the status of restricted stock awards as of September 30, 2020 and 2019 and the changes during the periods then ended is presented below:

Three Months Ended September 30, 2020 Three Months Ended September 30, 2019

Shares Weighted- Average Fair Value at Grant Date Shares Weighted- Average Fair Value at Grant Date

Non-vested at beginning of the period 4,153,171 $ 2.48 4,549,079 $ 2.31

Granted 282,500 $ 2.34 233,000 $ 3.50

Forfeited ( 74,586 ) $ 2.63 ( 213,875 ) $ 2.40

Vested ( 204,816 ) $ 2.42 ( 215,026 ) $ 1.80

Non-vested at end of period 4,156,269 $ 2.47 4,353,178 $ 2.39

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

A summary of the status of restricted stock awards as of March 31, 2021 and 2020 and the changes during the periods then ended is presented below:

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31, 2021 Three Months Ended March 31, 2020

Shares Weighted- Average Fair Value at Grant Date Shares Weighted- Average Fair Value at Grant Date

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These shares are granted under two compensation agreements that are for services provided by the employees.

The first agreement expired and was terminated during the first quarter of 2020.

The first agreement expired and was terminated during the first quarter of 2020 and had no unvested shares as of March 31, 2020.

Under the second agreement, the fair value of the PSUs are measured at the grant date fair value of the award, which was determined based on an analysis of the probable performance outcomes.

The performance period is over one year and is based on the achievement of bookings targets during the years ended December 31, 2020 and 2019, as defined in the agreement.

The performance period is over one year and is based on the achievement of bookings targets during the year of grant, as defined in the agreement.

The earned shares will then vest over a three year period, one-third on each of the first, second, and third anniversaries of the grant date, or if later, the date the Compensation Committee certifies the performance results with respect to the performance period.

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Accordingly, the Company remeasured the awards.

As of September 30, 2020, there were 1,572,756 unvested shares related to the second agreement.

There was no cash flow impact resulting from the grants.

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of the status of PSUs as of September 30, 2020 and 2019 and the changes during the periods then ended is presented below:

Three Months Ended September 30, 2020 Three Months Ended September 30, 2019

Shares Weighted- Average Fair Value at

Grant Date Shares Weighted- Average Fair Value at

Non-vested at beginning of the period 1,587,607 $ 2.50 1,722,500 $ 2.48

Forfeited ( 14,851 ) $ 2.55 ( 100,000 ) $ 2.35

Non-vested at end of period 1,572,756 $ 2.41 1,622,500 $ 2.49

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

A summary of the status of PSUs as of March 31, 2021 and 2020 and the changes during the periods then ended is presented below:

Three Months Ended March 31, 2021 Three Months Ended March 31, 2020

Shares Weighted- Average Fair Value at

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There was no cash flow impact resulting from the grants.

No stock options were granted during the nine months ended September 30, 2020 and 2019.

A summary of the status of options previously granted as of September 30, 2020 and 2019, and the changes during the periods then ended, is presented below:

Three Months Ended September 30, 2020

Options Weighted-Average Exercise Price Aggregate Intrinsic Value

Options outstanding at beginning of the period 110,000 $ 7.40 $ —

Options outstanding at end of period 110,000 $ 7.40 $ —

Exercisable at end of period 110,000 $ 7.40 $ —

Three Months Ended September 30, 2019

Options Weighted-Average Exercise Price Aggregate Intrinsic Value

Options outstanding at beginning of the period 193,000 $ 8.28 $ —

Options outstanding at end of period 193,000 $ 8.28 $ —

Exercisable at end of period 193,000 $ 8.28 $ —

No stock options were granted during the three months ended March 31, 2021 and 2020.

A summary of the status of options previously granted as of March 31, 2021 and 2020, and the changes during the periods then ended, is presented below:

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Options Weighted-Average Exercise Price Aggregate Intrinsic Value

3 unchanged sentences

Exercisable at end of period 25,000 $ 7.50 $ —

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Options Weighted-Average Exercise Price Aggregate Intrinsic Value

3 unchanged sentences

Exercisable at end of period 110,000 $ 7.40 $ —

T he weighted-average remaining contractual term of options exercisable at September 30, 2020 is 0.4 years.

T he following table summarizes information about options outstanding as of September 30, 2020:

The weighted-average remaining contractual term of options exercisable at March 31, 2021 is 0.2 years.

The following table summarizes information about options outstanding as of March 31, 2021:

Exercise Price Options Outstanding and Exercisable Weighted-

9 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

United States $ 27,057 $ 29,996

1 unchanged sentence

EMEA and APAC (1)

2,611 3,157 8,313 8,990

Non-United States 5,576 6,637

Total revenues $ 32,633 $ 36,633

March 31, December 31, September 30, December 31,

2020 2019 2020 2019

March 31, December 31,

Long-lived assets 2:

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Diluted EPS is computed based on the weighted-average number of shares of common stock outstanding plus common stock equivalents, where dilutive.

For the three and nine month period ended September 30, 2020, 1.4 million and 1.3 million dilutive shares were excluded from the computation of shares contingently issuable upon exercise as we recognized a net loss.

Outstanding stock-based awards that were anti-dilutive and excluded from the calculation of diluted EPS were approximately 2.3 million and 2.3 million shares for the three and nine month periods ended September 30, 2020, and approximately 0.4 million and 0.6 million shares for the three and nine month periods ended September 30, 2019, respectively.

For the three month period ended March 31, 2020, 1.6 million dilutive shares were excluded from the computation of shares contingently issuable upon exercise as we recognized a net loss.

Outstanding stock-based awards that were anti-dilutive and excluded from the calculation of diluted EPS were approximately 0.4 million and 1.8 million shares for the three month periods ended March 31, 2021 and 2020, respectively.

The following is a calculation of basic and diluted earnings per share and weighted-average shares outstanding (in thousands, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Net income (loss) $ 2,671 $ ( 6,550 )

4 unchanged sentences

Diluted earnings (loss) per share $ 0.05 $ ( 0.13 )

The Company’s effective tax rate was 5 % and 6 % for the three and nine months ended September 30, 2020, respectively, and 14 % and 25 % for the three and nine months ended September 30, 2019, respectively.

The Company’s effective tax rate was 5 % and 12 % for the three months ended March 31, 2021 and 2020, respectively.

The following items caused the effective tax rate to differ from the U.S.

statutory rate:

• Tax expense of $ 4.2 million and $ 4.8 million during the three and nine months ended September 30, 2020, respectively, from nondeductible impairment charges.

• Tax deficiencies of $ 0.5 million and $ 0.4 million during the nine months ended September 30, 2020 and 2019, respectively, related to the vesting or settlement of share-based compensation awards.

• A tax benefit of $ 0.5 million during the three months ended March 31, 2021, from the release of a valuation allowance related to the Company's capital loss carryforward.

• A tax deficiency of $ 0.4 million during the three months ended March 31, 2020, related to the vesting or settlement of share-based compensation awards.

• Tax expense of $ 0.6 million during the three months ended March 31, 2020, related to the nondeductible impairment of an equity investment.

DHI GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

• A tax benefit of $ 0.2 million during the nine months ended September 30, 2020, from the expiration of the statute of limitations in certain foreign jurisdictions.

• A tax benefit of $ 0.2 million during the three months ended September 30, 2019, related to the transition tax on the deemed repatriation of foreign earnings.

• A tax benefit of $ 0.2 million during the three months ended September 30, 2019, related to the divestiture of businesses.

• A tax benefit of $ 0.2 million during the three months ended March 31, 2020, from the expiration of the statute of limitations in certain foreign jurisdictions.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements