DHI GROUP, INC. 10-Q

ITEM 1. Financial Statements DHI GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands, except per share data) March 31, 2021 December 31, 2020 ASSETS Current assets Cash and cash equivalents $ 7,319 $ 7,640 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 Total current assets 37,840 33,485 Fixed assets, net 24,114 24,544 Acquired intangible assets 23,800 23,800 Capitalized contract costs 8,519 7,734 Goodwill 133,684 133,353 Deferred income taxes — 19 Operating lease right-of-use assets 15,600 16,405 Other assets 1,750 1,647 Total assets $ 245,307 $ 240,987 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued expenses $ 13,007 $ 19,426 Operating lease liabilities 3,411 3,410 Deferred revenue 51,762 42,426 Income taxes payable 799 123 Total current liabilities 68,979 65,385 Long-term debt, net 19,619 19,583 Deferred income taxes 9,613 9,936 Deferred revenue 1,038 1,068 Accrual for unrecognized tax benefits 1,414 1,347 Operating lease liabilities 12,889 13,704 Other long-term liabilities 2,325 2,394 Total liabilities 115,877 113,417 Commitments and Contingencies (Note 10) Stockholders’ equity Convertible preferred stock, $ .01 par value, authorized 20,000 shares; no shares issued and outstanding — — Common stock, $ .01 par value, authorized 240,000 ; issued 73,271 and 71,233 shares, respectively; outstanding: 52,160 and 51,220 shares, respectively 735 714 Additional paid-in capital 235,312 233,554 Accumulated other comprehensive loss ( 28,222 ) ( 28,519 ) Accumulated earnings 56,642 53,971 Treasury stock, 21,111 and 20,013 shares, respectively ( 135,037 ) ( 132,150 ) Total stockholders’ equity 129,430 127,570 Total liabilities and stockholders’ equity $ 245,307 $ 240,987 See accompanying notes to the condensed consolidated financial statements. 2 Table of Contents DHI GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share amounts) Three Months Ended March 31, 2021 2020 Revenues $ 32,633 $ 36,633 Operating expenses: Cost of revenues 4,310 4,176 Product development 4,184 4,165 Sales and marketing 12,045 14,538 General and administrative 7,500 8,551 Depreciation 4,096 3,253 Impairment of intangible assets — 7,200 Total operating expenses 32,135 41,883 Operating income (loss) 498 ( 5,250 ) Interest expense and other ( 193 ) ( 183 ) Impairment of equity investment — ( 2,002 ) Unrealized gain on equity security 2,513 — Income (loss) before income taxes 2,818 ( 7,435 ) Income tax expense (benefit) 147 ( 885 ) Net income (loss) $ 2,671 $ ( 6,550 ) Basic earnings (loss) per share $ 0.06 $ ( 0.13 ) Diluted earnings (loss) per share $ 0.05 $ ( 0.13 ) Weighted-average basic shares outstanding 46,993 49,134 Weighted-average diluted shares outstanding 48,606 49,134 See accompanying notes to the condensed consolidated financial statements. 3 Table of Contents DHI GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) (in thousands) Three Months Ended March 31, 2021 2020 Net income (loss) $ 2,671 $ ( 6,550 ) Foreign currency translation adjustment 297 ( 3,865 ) Total other comprehensive income (loss) 297 ( 3,865 ) Comprehensive income (loss) $ 2,968 $ ( 10,415 ) See accompanying notes to the condensed consolidated financial statements. 4 Table of Contents DHI GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (unaudited) (in thousands) Convertible Preferred Stock Common Stock Additional Paid-in Capital Treasury Stock Accumulated Earnings Accumulated Other Comprehensive Loss Total Shares Issued Amount Shares Issued Amount Shares Amount Balance at December 31, 2020 — $ — 71,233 $ 714 $ 233,554 20,013 $ ( 132,150 ) $ 53,971 $ ( 28,519 ) $ 127,570 Net income 2,671 2,671 Other comprehensive income 297 297 Stock based compensation 1,758 1,758 Restricted stock issued 1,468 15 15 Restricted stock forfeited or withheld to satisfy tax obligations ( 204 ) ( 2 ) 369 ( 984 ) ( 986 ) 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 March 31, 2021 — $ — 73,271 $ 735 $ 235,312 21,111 $ ( 135,037 ) $ 56,642 $ ( 28,222 ) $ 129,430 Convertible Preferred Stock Common Stock Additional Paid-in Capital Treasury Stock Accumulated Earnings Accumulated Other Comprehensive Loss Total Shares Issued Amount Shares Issued Amount Shares Amount Balance at December 31, 2019 — $ — 69,509 $ 696 $ 227,227 15,591 $ ( 121,466 ) $ 83,986 $ ( 29,248 ) $ 161,195 Net income ( 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 See accompanying notes to the condensed consolidated financial statements. 5 DHI GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) Three Months Ended March 31, 2021 2020 Cash flows from (used in) operating activities: Net income (loss) $ 2,671 $ ( 6,550 ) Adjustments to reconcile net income to net cash flows from (used in) operating activities: Depreciation 4,096 3,253 Deferred income taxes ( 304 ) ( 1,262 ) Amortization of deferred financing costs 37 37 Stock based compensation 1,758 1,796 Impairment of intangible assets — 7,200 Impairment of equity investment — 2,002 Unrealized gain on equity security ( 2,513 ) — Change in accrual for unrecognized tax benefits 59 ( 81 ) Changes in operating assets and liabilities: Accounts receivable ( 3,345 ) ( 2,111 ) Prepaid expenses and other assets 629 42 Capitalized contract costs ( 794 ) 859 Accounts payable and accrued expenses ( 6,270 ) ( 6,768 ) Income taxes receivable/payable 1,127 154 Deferred revenue 9,351 4,382 Other, net ( 78 ) ( 20 ) Net cash flows from operating activities 6,424 2,933 Cash flows used in investing activities: Purchases of fixed assets ( 3,703 ) ( 4,288 ) Net cash flows used in investing activities ( 3,703 ) ( 4,288 ) Cash flows from (used in) financing activities: Payments on long-term debt ( 5,000 ) ( 2,000 ) Proceeds from long-term debt 5,000 29,000 Payments under stock repurchase plan ( 1,669 ) ( 1,643 ) 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 Effect of exchange rate changes ( 30 ) ( 212 ) Net change in cash and cash equivalents for the period ( 321 ) 22,442 Cash and cash equivalents, beginning of period 7,640 5,381 Cash and cash equivalents, end of period $ 7,319 $ 27,823 See accompanying notes to the condensed consolidated financial statements. 6 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION 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 (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. GAAP”) have been omitted and condensed pursuant to such rules and regulations. In the opinion of the Company’s management, all adjustments (consisting of only normal and recurring accruals) have been made to present fairly the financial position, results of operations and cash flows of the Company for the periods presented. 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 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. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the period. Management believes the most complex and sensitive judgments, because of their significance to the condensed consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. 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 three month period ended March 31, 2021. 2. NEW ACCOUNTING STANDARDS In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . ASU 2016-13 changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current "incurred loss" model with an "expected loss" model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of a financial asset. ASU 2016-13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2022 for Smaller Reporting Companies. The Company is evaluating the expected impact of this standard on its consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating taxes during interim quarters and the recognition of deferred tax liabilities for outside basis differences. This guidance also simplifies aspects of accounting for franchise taxes, specifies the timing for recognizing certain income tax effects of changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. 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 adopted this standard on January 1, 2021, and the adoption did not have a material effect on the Company's consolidated financial statements. 3. REVENUE RECOGNITION The Company recognizes revenue when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration to which we expect to receive in exchange for those goods or services. Revenue is recognized net of customer discounts ratably over the service period. Customer billings delivered in advance of services being rendered are recorded as deferred revenue and recognized over the service period. The Company generates revenue from recruitment packages, advertising, classifieds, and virtual and live career fair and recruitment event booth rentals. Disaggregation of revenue Our brands serve various economic professions, such as technology, security cleared, and financial. The following table provides information about disaggregated revenue by brand and includes a reconciliation of the disaggregated revenue (in thousands): 7 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three Months Ended March 31 2021 2020 Dice $ 19,051 $ 22,485 ClearanceJobs 7,625 6,900 eFinancialCareers 5,957 7,248 Total $ 32,633 $ 36,633 Contract Balances 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 March 31, 2021 As of December 31, 2020 Receivables $ 23,645 $ 20,298 Short-term contract liabilities (deferred revenue) 51,762 42,426 Long-term contract liabilities (deferred revenue) 1,038 1,068 We receive payments from customers based upon contractual billing schedules; accounts receivable is recorded when customers are invoiced per the contractual billings schedules. As the Company's standard payment terms are less than one year, the Company elected the practical expedient, where applicable. As a result, the Company does not consider the effects of a significant financing component. Contract liabilities include customer billings delivered in advance of performance under the contract, and associated revenue is realized when services are rendered under the contract. Receivables increase due to customer billings and decrease by cash collected from customers. Contract liabilities increase due to customer billings and are decreased as performance obligations are satisfied under the contracts. 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 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 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): Remainder of 2021 2022 2023 2024 Total Tech-focused $ 48,697 $ 4,035 $ 68 $ — $ 52,800 4. FAIR VALUE MEASUREMENTS The FASB ASC topic on Fair Value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value and requires certain disclosures for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. As a basis for considering assumptions, a three-tier fair value hierarchy is used, which prioritizes the inputs used in measuring fair value as follows: • Level 1 – Quoted prices for identical instruments in active markets. • 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. 8 Table of Contents 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. The estimated fair value of long-term debt is based on Level 2 inputs. Certain assets and liabilities are measured at fair value on a non-recurring basis. These assets include investments (included in other assets), goodwill and intangible assets which resulted from prior acquisitions. Items valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable. 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. 5. INVESTMENTS 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 %. The Company did not adjust the recorded value of the investment because the shares issued under the new share offering were not similar to the Company's share rights. As of December 31, 2019 it was not practicable to estimate the fair value of the preferred stock as the shares are not traded. The investment was carried at its original cost of $ 2.0 million and was included in the other assets section of the Condensed Consolidated Balance Sheets. During the three months ended March 31, 2020, based on the investment's historical cash burn rate, uncertainty of its ability to meet revenue and cash flow projections, current liquidity position, lack of access to additional capital, and impacts from the COVID-19 pandemic, the Company determined the value to be zero. Accordingly, the Company recorded an impairment charge of $ 2.0 million during the first quarter of 2020. On January 31, 2018, the Company transferred a majority ownership of the BioSpace business to BioSpace management with zero proceeds received from the transfer, while retaining a 20 % preferred share interest in the BioSpace business. During the second quarter of 2020, the Company sold its 20 % interest in BioSpace to BioSpace management for $ 0.2 million. At the time of sale, the recorded value of the investment was zero. Accordingly, the Company recognized a $ 0.2 million gain on sale, which was included in interest expense and other on the Condensed Consolidated Statements of Operations. Rigzone is a website dedicated to delivering online content, data, and career services in the oil and gas industry in North America, Europe, the Middle East, and Asia Pacific. Oil and gas companies, as well as companies that serve the energy industry, use Rigzone to find talent for roles such as petroleum engineers, sales professionals with energy industry expertise and skilled tradesmen. On August 31, 2018, the Company transferred a majority ownership of the Rigzone business to Rigzone management, while retaining a 40 % common share interest, with zero proceeds received from the transfer. 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 9 Table of Contents 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 March 31, 2021. 6. LEASES The Company has operating leases for corporate office space and certain equipment. The leases have original terms from one year to eight years , some of which include options to renew the lease, and are included in the lease term when it is reasonably certain that the Company will exercise the option. No leases include options to purchase the leased property. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We do not have any lease agreements with related parties. Operating lease right-of-use "ROU" assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Operating ROU assets and liabilities commencing after January 1, 2019 are recognized at commencement date based on the present value of lease payments over the lease term. When readily available, the Company uses the implicit rate in determining the present value of the lease payments. When leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available at the commencement of the lease, including the lease term. Because the implicit rate in each lease is not available, the Company used its incremental borrowing rate to determine the present value of lease payments. Leases with an initial term of 12 months or less are not recorded on the balance sheet. All operating lease expense is recognized on a straight-line basis over the lease term. The components of lease cost were as follows (in thousands): For the Three Months Ended March 31, 2021 2020 Operating lease cost * $ 960 $ 1,104 Sublease income ( 180 ) ( 336 ) Total lease cost $ 780 $ 768 * Includes short-term lease costs and variable lease costs, which are immaterial. Supplemental cash flow information related to leases was as follows (in thousands): For the Three Months Ended March 31, 2021 2020 Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 1,003 $ 1,178 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ — $ — Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount): 10 Table of Contents 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 Operating lease liabilities - current 3,411 3,410 Operating lease liabilities - non-current 12,889 13,704 Total operating lease liabilities $ 16,300 $ 17,114 Weighted Average Remaining Lease Term (in years) Operating leases 4.8 4.9 Weighted Average Discount Rate Operating leases 4.03 % 4.00 % As of March 31, 2021, future operating lease payments were as follows (in thousands): Operating Leases April 1, 2021 through December 31, 2021 $ 3,028 2022 3,780 2023 3,554 2024 3,073 2025 3,016 2026 and Thereafter 1,521 Total lease payments $ 17,972 Less imputed interest 1,672 Total $ 16,300 As of March 31, 2021 the Company has no additional operating or finance leases that have not yet commenced. 7. ACQUIRED INTANGIBLE ASSETS, NET Considering the recognition of the Dice brand, its long history, awareness in the talent acquisition and staffing services market, and the intended use, the remaining useful life of the Dice.com trademarks and brand name was determined to be indefinite. We determine whether the carrying value of recorded indefinite-lived acquired intangible assets is impaired on an annual basis or more frequently if indicators of potential impairment exist. The impairment review process compares the fair value of the indefinite-lived acquired intangible assets to its carrying value. If the carrying value exceeds the fair value, an impairment loss is recorded. 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. 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. 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 11 Table of Contents 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 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. Changes in our strategy, uncertainty related to COVID-19, and/or changes in market conditions could significantly impact these judgments and require adjustments to recorded amounts of intangible assets. If projections are not achieved, the Company could realize an impairment in the foreseeable future. 8 . GOODWILL 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 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 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. 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 %. 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. In addition, a future decline in the overall market conditions, uncertainty related to COVID-19, political instability, and/or changes in the Company’s market share could negatively impact the estimated future cash flows and discount rates used to determine the fair value of the reporting unit and could result in an impairment charge in the foreseeable future. 9. INDEBTEDNESS Credit Agreement —In November 2018, the Company, together with Dice, Inc. (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 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. 12 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Borrowings under the Credit Agreement bear interest, at the Company’s option, at a LIBOR rate or a base rate plus a margin. The margin ranges from 1.75 % to 2.50 % on LIBOR loans and 0.75 % to 1.50 % on base rate loans, determined by the Company’s most recent consolidated leverage ratio. The Company incurs a commitment fee ranging from 0.30 % to 0.45 % on any unused capacity under the revolving loan facility, determined by the Company’s most recent consolidated leverage ratio. The facility may be prepaid at any time without penalty. The Credit Agreement contains various customary affirmative and negative covenants and also contains certain financial covenants, including a consolidated leverage ratio and a consolidated interest coverage ratio. Borrowings are allowed under the Credit Agreement to the extent the consolidated leverage ratio, calculated on a pro forma basis, is equal to or less than 2.50 to 1.00 . Negative covenants include restrictions on incurring certain liens; making certain payments, such as stock repurchases and dividend payments; making certain investments; making certain acquisitions; making certain dispositions; and incurring additional indebtedness. Restricted payments are allowed under the Credit Agreement to the extent the consolidated leverage ratio, calculated on a pro forma basis, is equal to or less than 2.00 to 1.00 , plus an additional $ 5.0 million of restricted payments. 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 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 March 31, 2021 and December 31, 2020 are as follows (dollars in thousands): March 31, 2021 December 31, 2020 Amounts borrowed: Revolving credit facility $ 20,000 $ 20,000 Less: deferred financing costs, net of accumulated amortization of $ 356 and $ 319 ( 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 Interest rates: LIBOR rate loans: Interest margin 1.75 % 2.00 % Actual interest rates 1.88 % 2.19 % Commitment fee 0.30 % 0.35 % There are no scheduled principal payments until maturity of the Credit Agreement in November 2023. 10 . COMMITMENTS AND CONTINGENCIES Litigation The Company is subject to various claims from taxing authorities, lawsuits and other complaints arising in the ordinary course of business. The Company records provisions for losses when claims become probable and the amounts are reasonably estimable. 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. 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 13 Table of Contents 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. 11. EQUITY TRANSACTIONS Stock Repurchase Plans —The Company's Board of Directors ("Board") approved a stock repurchase program that permits the Company to repurchase its common stock. Management has discretion in determining the conditions under which shares may be purchased from time to time. The following table summarizes the Stock Repurchase Plans approved by the Board: 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 (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 March 31, 2021 2020 Shares repurchased [1] 589,899 659,913 Average purchase price per share [2] $ 2.62 $ 2.49 Dollar value of shares repurchased (in thousands) $ 1,546 $ 1,643 [1] No shares of our common stock were purchased other than through a publicly announced plan or program. [2] Average price paid per share includes costs associated with the repurchases. There were 11,394 unsettled share repurchases as of March 31, 2021 and 51,500 unsettled share repurchases as of March 31, 2020. 12. 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 $ 1.8 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. These shares are part of the compensation plan for services provided by the employees or Board members. The closing price of the Company’s stock on the date of grant is used to determine the fair value of the grants. The expense related to the restricted stock grants is recorded over the vesting period as described below. There was no cash flow impact resulting from the grants. The restricted stock vests in various increments either quarterly or on the anniversaries of each grant, subject to the recipient’s continued employment or service through each applicable vesting date. 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 March 31, 2021 and 2020 and the changes during the periods then ended is presented below: 14 Table of Contents 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 Non-vested at beginning of the period 3,877,853 $ 2.49 3,994,787 $ 2.46 Granted 1,468,223 $ 2.62 1,467,500 $ 2.82 Forfeited ( 204,175 ) $ 2.76 ( 162,796 ) $ 3.04 Vested ( 1,034,684 ) $ 2.58 ( 1,009,884 ) $ 2.65 Non-vested at end of period 4,107,217 $ 2.50 4,289,607 $ 2.52 PSUs —PSUs are granted to employees of the Company and its subsidiaries. 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 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 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. For the performance period ending December 31, 2020, as a result of the COVID-19 pandemic and its impact on the overall economy, the bookings targets were modified during the third quarter of 2020. Accordingly, the Company remeasured the awards. There was no cash flow impact resulting from the grants. 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 Grant Date Shares Weighted- Average Fair Value at Grant Date Non-vested at beginning of the period 1,352,438 $ 2.50 1,664,650 $ 2.53 Granted 990,000 $ 2.62 911,460 $ 2.82 Forfeited ( 105,656 ) $ 2.14 ( 641,075 ) $ 3.30 Vested ( 339,111 ) $ 2.58 ( 308,024 ) $ 1.90 Non-vested at end of period 1,897,671 $ 2.54 1,627,011 $ 2.51 Stock Options— The fair value of each option grant is estimated using the Black-Scholes option-pricing model. This valuation model requires the Company to make assumptions and judgments about the variables used in the calculation, including the fair value of the Company’s common stock, the expected life (the period of time that the options granted are expected to be outstanding), the volatility of the Company’s common stock, a risk-free interest rate and expected dividends. The expected life of options granted is derived from historical exercise behavior. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury rates in effect at the time of grant. The stock options vest 25% after one year, beginning on the first anniversary date of the grant, and 6.25% each quarter following the first anniversary. There was no cash flow impact resulting from the grants. 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: 15 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three Months Ended March 31, 2021 Options Weighted-Average Exercise Price Aggregate Intrinsic Value Options outstanding at beginning of the period 110,000 $ 7.40 $ — Forfeited ( 85,000 ) $ 7.38 $ — Options outstanding at end of period 25,000 $ 7.50 $ — Exercisable at end of period 25,000 $ 7.50 $ — Three Months Ended March 31, 2020 Options Weighted-Average Exercise Price Aggregate Intrinsic Value Options outstanding at beginning of the period 190,000 $ 8.28 $ — Forfeited ( 80,000 ) $ 9.48 $ — Options outstanding at end of period 110,000 $ 7.40 $ — Exercisable at end of period 110,000 $ 7.40 $ — 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- Average Remaining Contractual Life (in years) $ 7.00 - $ 7.99 15,000 0.0 $ 8.00 - $ 8.99 10,000 0.5 25,000 13. SEGMENT INFORMATION The Company has a single reportable segment, Tech-focused, which includes the Dice, ClearanceJobs, and eFinancialCareers services, as well as corporate related costs. The Company allocates resources and assesses financial performance on a consolidated basis, as all services pertain to the Company's Tech-focused strategy. The Company’s foreign operations are comprised of a portion of the eFinancialCareers services, which operate in the United Kingdom, Europe and the Asia Pacific regions. Revenue and long-lived assets by geography, as presented in the tables below, are based on the location of each of the Company's subsidiaries. 16 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three Months Ended March 31, 2021 2020 Revenues: United States $ 27,057 $ 29,996 United Kingdom 3,090 3,674 EMEA and APAC (1) 2,486 2,963 Non-United States 5,576 6,637 Total revenues $ 32,633 $ 36,633 As of March 31, December 31, 2021 2020 Long-lived assets 2: United States $ 33,223 $ 33,838 United Kingdom 5,829 6,277 EMEA and APAC (1) 662 834 Non-United States 6,491 7,111 Total long-lived assets $ 39,714 $ 40,949 (1) Europe (excluding United Kingdom), the Middle East and Africa (“EMEA”) and Asia-Pacific (“APAC”). (2) Long-lived assets include fixed assets and lease right of use assets. 14. EARNINGS PER SHARE Basic earnings (loss) per share (“EPS”) is computed based on the weighted-average number of shares of common stock outstanding. 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 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 March 31, 2021 2020 Net income (loss) $ 2,671 $ ( 6,550 ) Weighted-average shares outstanding—basic 46,993 49,134 Add shares issuable from stock-based awards 1,613 — Weighted-average shares outstanding—diluted 48,606 49,134 Basic earnings (loss) per share $ 0.06 $ ( 0.13 ) Diluted earnings (loss) per share $ 0.05 $ ( 0.13 ) 15. INCOME TAXES 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: • 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. 17 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS • 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.