What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-10 compared with 2021-08-06 · 205 added, 168 removed, 288 unchanged (56% of the section changed)

8 unchanged sentences

Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements.

These factors include, but are not limited to, our ability to execute our tech-focused strategy, competition from existing and future competitors in the highly competitive markets in which we operate, failure to adapt our business model to keep pace with rapid changes in the recruiting and career services business, failure to maintain and develop our reputation and brand recognition, failure to increase or maintain the number of customers who purchase recruitment packages, cyclicality or downturns in the economy or industries we serve, the impact of the coronavirus COVID-19 outbreak on our operations and financial results, geopolitical events such as the uncertainty surrounding the UK's departure from the European Union (EU) and civil unrest in Hong Kong, uncertainty in respect of the regulation of data protection and data privacy, failure to attract qualified professionals to our websites or grow the number of qualified professionals who use our websites, failure to successfully identify or integrate acquisitions, U.S.

These factors include, but are not limited to, our ability to execute our tech-focused strategy, competition from existing and future competitors in the highly competitive markets in which we operate, failure to adapt our business model to keep pace with rapid changes in the recruiting and career services business, failure to maintain and develop our reputation and brand recognition, failure to increase or maintain the number of customers who purchase recruitment packages, cyclicality or downturns in the economy or industries we serve, the impact of the coronavirus COVID-19 outbreak on our operations and financial results, geopolitical events, uncertainty in respect of the regulation of data protection and data privacy, failure to attract qualified professionals to our websites or grow the number of qualified professionals who use our websites, failure to successfully identify or integrate acquisitions, U.S.

and foreign government regulation of the Internet and taxation, our ability to borrow funds under our revolving credit facility or refinance our indebtedness and restrictions on our current and future operations under such indebtedness.

9 unchanged sentences

We are a provider of software products, online tools and services that deliver career marketplaces to candidates and employers in the United States.

DHI’s brands, Dice and ClearanceJobs, enable recruiters and hiring managers to efficiently search, match and connect with highly skilled technologists in specialized fields, particularly technology and active government security clearance.

Professionals find ideal employment opportunities, relevant job advice and personalized data that help manage their technologist lives.

3 unchanged sentences

Majority ownership and control of DHI's eFinancialCareers ("eFC") business, which provides career websites to the financial services industry and has operations in the United Kingdom, Continental Europe, Asia, the Middle East and North America, was transferred to eFC management on June 30, 2021.

Recent Developments

On June 30, 2021, the Company transferred majority ownership and control of its eFC business to eFC's management.

The Company retained a 40% common share interest.

As a result, all ongoing DHI operations, which include the Dice and ClearanceJobs brands, are in the United States subsequent to June 30, 2021.

Recent Developments

Our Revenues and Expenses

4 unchanged sentences

The tables below detail this customer data.

As of June 30,

As of September 30, Increase (Decrease) Percent

Recruitment Package Customers:

1 unchanged sentence

ClearanceJobs 1,816 1,682 134 8%

For the three months ended June 30, For the six months ended June 30,

Average Monthly Revenue per Recruitment Package Customer (1)

2021 2020 2021 2020

Three months ended September 30, Nine months ended September 30,

2021 2020 Increase (Decrease) Percent

Change 2021 2020 Increase (Decrease) Percent

Dice $1,138 $1,122 $16 1% $1,130 $1,135 $(5) —%

1 unchanged sentence

(1) Calculated by dividing recruitment package customer revenue by the daily average count of recruitment package customers during each month, adjusted to reflect a thirty day month.

The simple average of each month is used to derive the amount for the three and six month periods..

Dice had 5,441 recruitment package customers as of June 30, 2021, which was approximately flat year over year while average revenue per recruitment package customer declined for the three and six month periods.

The decline was due to the COVID-19 pandemic, which drove lower renewal rates throughout 2020 and negatively impacted revenue into 2021.

ClearanceJobs had 1,784 recruitment package customers as of June 30, 2021 compared to 1,652 as of June 30, 2020 and average revenue per recruitment package customer increased for the three and six month periods.

The increases for ClearanceJobs were due to

continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site.

The simple average of each month is used to derive the amount for each period.

Dice had 5,770 recruitment package customers as of September 30, 2021, which was an increase of 470, or 9%, year over year and average revenue per recruitment package customer for Dice increased for the three month period while it decreased for the nine month period.

The increases were driven by strong renewal rates and new business activity while the decrease in revenue per recruitment package customer for the nine month period was due to the low levels of customer activity in 2020 that impacted revenues into 2021.

ClearanceJobs had 1,816 recruitment package customers as of September 30, 2021 compared to 1,682 as of September 30, 2020, an increase of 8%, and average revenue per recruitment package customer increased for both the three and nine month periods.

The increases for ClearanceJobs were due to continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site.

Deferred revenue, as shown on the Condensed Consolidated Balance sheets, reflects customer billings made in advance of services being rendered.

Backlog consists of deferred revenue plus customer contractual commitments not invoiced representing the value of future services to be rendered under committed contracts.

Backlog consists of deferred revenue plus customer contractual commitments not invoiced

representing the value of future services to be rendered under committed contracts.

We believe backlog to be an important measure of our business as it represents our ability to generate future revenue.

A summary of our deferred revenue and backlog is presented in the table below.

Deferred Revenue and Backlog:

6/30/2021 12/31/2020 6/30/2020

A summary of our deferred revenue and backlog is as follows:

Comparison to Prior Year End Comparison Year Over Year

9/30/2021 12/31/2020 Increase (Decrease) Percent Change 9/30/2020 Increase (Decrease) Percent Change

Deferred Revenue $ 43,403 $ 36,582 $ 6,821 19 % $ 35,592 $ 7,811 22 %

2 unchanged sentences

(1) Backlog consists of deferred revenue plus customer contractual commitments not invoiced representing the value of future services to be rendered under committed contracts.

Backlog at June 30, 2021 increased $10.6 million and $15.7 million from December 31, 2020 and June 30, 2020, respectively.

Compared to December 31, 2020, the increase is due to the normal seasonal increase in number of customers that renew in the first quarter and a focus on signing multi-year contracts.

Compared to June 30, 2020, the increase is driven by bookings growth at both Dice and ClearanceJobs and the focus on multi-year contracts.

Backlog at September 30, 2021 increased $15.5 million and $26.1 million from December 31, 2020 and September 30, 2020, respectively.

The increase in backlog compared to December 31, 2020 and September 30, 2020 is due to the strong technology recruitment market driving bookings growth at both Dice and ClearanceJobs and a focus on signing multi-year contracts.

To a lesser extent, we also generate revenue from advertising on our various websites or from lead generation and marketing solutions provided to our customers.

Advertisements include various forms of rich media and banner advertising, text links, sponsorships, and custom content marketing solutions.

Lead generation information utilizes advertising and other methods to deliver leads to a customer.

Lead generation information utilizes advertising and other methods to deliver leads to customers.

The Company continues to evolve and present new software products and features to attract and engage qualified professionals and match them with employers.

Product Releases

Dice Marketplace, Dice TalentSearch Social Data Refresh

Dice Marketplace, Dice TalentSearch Social Data Refresh, Brand.io, TalentSearch Personalization

Dice IntelliSearch-Based Job Alerts, Dice Private Email, Dice Remote Jobs, Dice Recruiter Profile, Dice Instant Messaging

ClearanceJobs Meetings, ClearanceJobs Video, Team Recruiting

ClearanceJobs Meetings, ClearanceJobs Video, Team Recruiting, Shared Talent Pipelines

ClearanceJobs Client Team Dashboard, ClearanceJobs Workflow, ClearanceJobs Favorites, ClearanceJobs Self-Serve BrandAmp, ClearanceJobs Candidate Search and ClearanceJobs Broadcast Message upgrades

7 unchanged sentences

Personnel costs consist of salaries, benefits, and incentive compensation for our employees, including commissions for salespeople.

Personnel costs are categorized either in our statement of operations based on each employee’s principal function or those personnel costs incurred during the application development stage of internal use software and website development are recorded as fixed assets and amortized to depreciation expense in the statement of operations over the estimated useful life of the asset.

Personnel costs are categorized in our statement of operations based on each employee’s principal function.

Personnel costs incurred during the application development stage of internal use software and website development are recorded as fixed assets and amortized to

depreciation expense in the statement of operations over the estimated useful life of the asset.

Marketing expenditures primarily consist of online advertising, brand promotion and lead generation to employers and job seekers.

1 unchanged sentence

There have been no material changes to our critical accounting policies as compared to the critical accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020

Three Months Ended June 30, Increase (Decrease) Percent

Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020

Three Months Ended September 30, Increase (Decrease) Percent

(in thousands, except percentages)

2 unchanged sentences

Total revenues $ 30,758 $ 27,149 $ 3,609 13 %

(1) Includes Dice U.S.

and Career Events

For the three months ended June 30, 2021, we experienced an increase in revenue of $1.1 million, or 4%.

(1) Includes Dice and Career Events

For the three months ended September 30, 2021, we experienced an increase in revenue of $3.6 million, or 13%.

Revenue at Dice increased $2.4 million, or 12%, compared to the same period in 2020.

Dice renewal rates and new business activity improved from the prior year quarter along with consistently increasing customer counts since the third quarter of 2020, which drives additional revenue in future periods.

Dice renewal rates and new business activity improved from the prior year quarter along with consistently increasing customer counts during 2021, which drives additional revenue in future periods.

Revenues for ClearanceJobs increased $1.2 million, or 16%, as compared to the same period in 2020, primarily driven by continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site.

Cost of Revenues

Three Months Ended June 30, Increase Percent

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenues 12.3 % 13.1 %

Cost of revenues increased $0.1 million, or 3%, driven by an increase of $0.2 million from higher web hosting costs and a decrease in capitalized labor of $0.1 million, which increases operating expenses.

Cost of revenues increased $0.2 million, or 7%, driven by an increase of $0.2 million from higher cloud computing amortization and a decrease in capitalized labor of $0.1 million, which increases operating expenses.

Together, these increased expense $0.2 million.

These increases were partially offset by lower headcount and utility costs.

Product Development Expenses

Three Months Ended June 30, Increase Percent

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenues 13.2 % 13.6 %

Product development increased $0.1 million, or 3%, driven by an increase in consulting costs of $0.3 million and a decrease in capitalized labor of $0.6 million, which increases operating expenses.

Together, these increased expense $0.9 million.

These increases were partially offset by lower headcount of $0.8 million.

Product development increased $0.4 million, or 10%, driven by a decrease in capitalized labor of $0.4 million, which increases operating expenses.

Sales and Marketing Expenses

Three Months Ended June 30, Increase Percent

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

2 unchanged sentences

Sales and marketing expenses increased $2.2 million, or 25% from the same period in 2020.

This increase was driven by a $0.4 million increase in discretionary marketing expenses as customer activity rebounded and a $0.2 million increase in operational costs, including travel and entertainment.

This increase was driven by a $1.3 million increase in compensation related costs from higher headcount and quota attainment versus sales plan, $0.7 million increase in discretionary marketing expenses as customer recruitment activity rebounded, and a $0.2 million increase in operational costs, including company events.

General and Administrative Expenses

Three Months Ended June 30, Increase Percent

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenues 24.6 % 23.3 %

General and administrative expenses were flat with the prior year.

Stock based compensation expense increased approximately $0.4 million compared to the prior year due to higher achievement against targets for the Company's performance-based restricted stock units, while bad debt expense, professional fees and other operational costs decreased from the prior year.

Together, these changes left general and administrative expenses flat with the prior year.

Three Months Ended June 30, Increase Percent

General and administrative expenses increased $1.2 million, or 20% from the prior year.

The increase was driven by stock based compensation expense, which increased approximately $0.8 million, primarily due to higher achievement against targets for the Company's PSUs.

Compensation related costs increased $0.5 million, which was driven by higher bonus costs as the Company has exceeded bonus targets and a change in the Company's vacation policy that was implemented during the current quarter.

These increases were partially offset by a decrease in professional fees and other operational costs from the prior year.

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

3 unchanged sentences

Internal development costs are reflected as purchases of fixed assets in the Condensed Consolidated Statements of Cash Flows.

Operating Income (Loss)

Three Months Ended June 30, Decrease Percent

Impairment of Intangible Assets

Three Months Ended September 30, Decrease Percent

(in thousands, except percentages)

Impairment of intangible assets $ — $ 8,000 $ (8,000) (100) %

Percentage of revenues — % 29.5 %

The Company has an indefinite-lived acquired intangible asset related to the Dice trademarks and brand name.

During the third quarter of 2020, because of the impacts of the COVID-19 pandemic, the Company performed an interim impairment analysis of the Dice trademarks and brand name.

As a result of the analysis, the Company recorded an impairment charge of $8.0 million in the third quarter of 2020.

See also Note 8 of the Notes to the Condensed Consolidated Financial Statements.

Impairment of Goodwill

Three Months Ended September 30, Decrease Percent

(in thousands, except percentages)

Impairment of goodwill $ — $ 22,607 $ (22,607) (100) %

Percentage of revenues — % 83.3 %

During the third quarter of 2020, because of the impacts of COVID-19 pandemic, the Company performed an interim impairment analysis of goodwill.

As a result of the analysis, the Company recorded an impairment charge of $22.6 million in the third quarter of 2020.

See also Note 9 of the Notes of the Condensed Consolidated Financial Statements.

Impairment of Right-of-Use Asset

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

Impairment of right-of-use asset $ 1,919 $ — $ 1,919 — %

Percentage of revenues 6.2 % — %

During the three months ended September 30, 2021, due to the continuing impacts of COVID-19 on the real estate markets and its impact on the future cash flows attributable to its ROU assets, the Company performed an impairment analysis of a sublease within its ROU assets.

As a result, the Company recorded an impairment charge of $1.9 million during the quarter.

Operating Loss

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

Revenue $ 30,758 $ 27,149 $ 3,609 13 %

Operating income (loss) 488 1,655 (1,167) (71) %

Operating loss (2,215) (28,478) 26,263 (92) %

Percentage of revenues (7.2) % (104.9) %

Operating income for the three months ended June 30, 2021 was $0.5 million, a margin of 1.7%, compared to operating income of $1.7 million, a margin of 6.0%, for the same period in 2020, a decrease of $1.2 million.

The decrease in operating income and percentage margin was primarily driven by the increase in depreciation expense, partially offset by higher revenues.

Operating loss for the three months ended September 30, 2021 was $2.2 million, a negative margin of 7.2%, compared to operating loss of $28.5 million, a negative margin of 104.9%, for the same period in 2020, an improvement of $26.3 million.

The decrease in operating loss and improved percentage margin was primarily driven by the non-cash impairments of goodwill and intangible assets of $30.6 million in the third quarter of 2020, partially offset by increased investments in sales and marketing, higher depreciation, and the ROU asset impairment of $1.9 million in the third quarter of 2021.

Interest Expense and Other

Three Months Ended June 30, Decrease Percent

Three Months Ended September 30, Decrease Percent

(in thousands, except percentages)

2 unchanged sentences

Interest expense and other decreased $0.1 million, from the same period in 2020 due to lower debt outstanding.

Unrealized loss on equity security

Three Months Ended June 30, Decrease Percent

Loss on Investments

Three Months Ended September 30, Decrease Percent

(in thousands, except percentages)

Unrealized loss on equity security $ (674) $ — $ (674) — %

Loss on investments $ (641) $ — $ (641) — %

Percentage of revenues (2.1) % — %

The unrealized loss on equity security relates to a minority interest representing less than 1% of the common stock of a technology company that became publicly traded during the first quarter of 2021 after filing an initial public offering.

The loss on investments relates to a minority interest representing less than 1% of the common stock of a technology company that became publicly traded during the first quarter of 2021 after filing an initial public offering.

The Company sold 100% of this investment during the third quarter of 2021.

See also Note 7 of the Notes to the Condensed Consolidated Financial Statements.

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands, except

Income (loss) before income taxes $ (273) $ 1,494

Income tax expense (benefit) (61) 332

Loss before income taxes $ (3,006) $ (28,751)

Income tax benefit (572) (1,758)

Effective tax rate 19.0 % 6.1 %

Our effective tax rate for both periods differed from the U.S.

statutory rate due to state income taxes and the allocation of income (loss) between jurisdictions.

Income (loss) from discontinued operations, net of tax

Three Months Ended June 30, Decrease Percent

Our effective tax rate for the three months ended September 30, 2021, differed from the U.S.

statutory rate due to tax expense of $0.1 million related to a valuation allowance on our capital loss carryforward.

The tax rate for the three months ended September 30, 2020, differed from the statutory rate due to tax expense of $5.5 million from nondeductible impairment charges.

Loss from discontinued operations, net of tax

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

Income (loss) from discontinued operations, net of tax $ (29,999) $ 700 $ (30,699) (4,386) %

Loss from discontinued operations, net of tax $ — $ (329) $ 329 (100) %

Percentage of revenues — % (1.2) %

During the three months ended June 30, 2021, the Company transferred majority ownership of its eFC business and has recorded it as a discontinued operation.

As a result, the Company recognized a $30.0 million loss during the three months ended June 30, 2021.

The loss was comprised of $28.1 million related to the reclassification of currency translation adjustments and $5.2 million from the removal of eFC's net assets.

The loss was partially offset by the recording of an equity investment of $3.6 million and eFC's earnings during the three months ended June 30, 2021.

Income from discontinued operations for the three months ended June 30, 2020 represents eFC's earnings during the period.

The Company transferred majority ownership of its eFC business on June 30, 2021 to eFC management and has recorded it as a discontinued operation.

Loss from discontinued operations for the three months ended September 30, 2020 represents eFC's earnings during the period.

Earnings (loss) per Share

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands, except

per share amounts)

Income (loss) from continuing operations $ (212) $ 1,162

Weighted-average shares outstanding—diluted 47,227 49,691

Diluted earnings (loss) per share - continuing operations $ — $ 0.02

Income (loss) from discontinued operations $ (29,999) $ 700

Weighted-average shares outstanding—diluted 47,227 49,691

Diluted earnings (loss) per share - discontinued operations $ (0.64) $ 0.01

Net income (loss) $ (30,211) $ 1,862

Loss from continuing operations $ (2,434) $ (26,993)

Loss from discontinued operations, net of tax — (329)

Net Loss $ (2,434) $ (27,322)

Weighted-average shares outstanding - diluted $ 45,807 $ 47,955

Diluted earnings (loss) per share $ (0.64) $ 0.04

Diluted earnings (loss) per share from continuing operations was zero and $0.02 for the three months ended June 30, 2021 and 2020, respectively.

The decrease was driven by the increase in depreciation expense and the unrealized loss on equity security, partially offset by higher revenues.

Diluted earnings (loss) per share was $(0.64) and $0.04 for the three month periods ended June 30, 2021 and 2020, respectively.

The decrease was driven by lower diluted earnings per share from continuing operations and the loss from discontinued operations.

Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020

Six Months Ended June 30, Increase (Decrease) Percent

Diluted loss per share - continuing operations $ (0.05) $ (0.56)

Diluted loss per share - discontinued operations $ — $ (0.01)

Diluted loss per share $ (0.05) $ (0.57)

Diluted loss per share from continuing operations and diluted loss per share were $0.05 and $0.56 for the three months ended September 30, 2021 and 2020, respectively.

The decrease was driven by the impairment of the ROU asset.

The increase in loss per share was primarily driven by the the impairments of goodwill and intangible assets of $30.6 million in the third quarter of 2020, partially offset by increased investments in sales and marketing, depreciation, and the ROU asset impairment of $1.9 million in the third quarter of 2021.

Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020

Nine Months Ended September 30, Increase (Decrease) Percent

(in thousands, except percentages)

4 unchanged sentences

and Career Events

We experienced a decrease in revenue of $1.6 million, or 3%.

We experienced an increase in revenue of $2.0 million, or 2%.

Revenue at Dice decreased by $0.9 million, or 1%, compared to the same period in 2020 as the COVID-19 pandemic drove lower renewal rates throughout 2020, which negatively impacted revenue into 2021.

1 unchanged sentence

Cost of Revenues

Six Months Ended June 30, Increase Percent

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenues 12.9 % 12.5 %

Cost of revenues increased $0.3 million, or 4%, primarily driven by an increase of $0.5 million from higher costs associated with web hosting and cloud computing.

These costs were partially offset by a decrease in compensation related and other costs of $0.2 million.

Cost of revenues increased $0.6 million, or 5%, primarily driven by an increase of $0.5 million from higher costs associated with web hosting and cloud computing amortization.

Product Development Expenses

Six Months Ended June 30, Decrease Percent

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenues 13.0 % 12.9 %

Product Development expenses were flat with the same period in 2020.

Product Development increased $0.3 million, or 3% from the same period in 2020.

Within product development, the Company experienced a $0.9 million decrease in headcount related costs, which were offset by a decrease in capitalized labor, which increased expense $0.9 million, and an increase in consulting costs of $0.3 million.

Sales and Marketing Expenses

Six Months Ended June 30, Decrease Percent

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenues 36.2 % 35.9 %

Sales and marketing expenses decreased $1.2 million, or 6% from the same period in 2020.

The decrease was primarily driven by a reduction in discretionary marketing spend of $0.6 million, a $0.4 million decrease in operational costs, including travel, entertainment, and consulting, and a $0.1 million decrease in compensation related costs.

Sales and marketing expenses increased $1.0 million, or 3% from the same period in 2020.

The increase was primarily driven by a $1.2 million increase in compensation related costs due to increased headcount and higher quota attainment versus sales plan, which was offset by a $0.3 million decrease in operational costs, including travel, entertainment, and consulting.

General and Administrative Expenses

Six Months Ended June 30, Decrease Percent

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenues 24.0 % 24.3 %

General and administrative costs decreased $1.0 million, or 7%, from the same period in 2020.

The decrease was primarily driven by a decrease in compensation related costs of $0.6 million, a decrease in bad debt expense of $0.3 million, and a decrease in professional fees of $0.2 million.

Six Months Ended June 30, Increase Percent

General and administrative costs increased $0.2 million, or 1%, from the same period in 2020.

The increase was primarily driven by stock based compensation, which increased approximately $1.1 million compared to the prior year due to higher achievement against targets for the Company's PSUs.

Compensation related costs increased $0.3 million, which was driven by higher bonus costs as the Company has exceeded bonus targets and a change in the Company's vacation policy that was implemented during the current quarter.

These increases were partially offset by a decrease in operational costs, including bad debt expense, legal fees, and professional fees totaling $1.2 million.

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

4 unchanged sentences

Impairment of Intangible Assets

Six Months Ended June 30, Decrease Percent

Nine Months Ended September 30, Decrease Percent

(in thousands, except percentages)

2 unchanged sentences

The Company has an indefinite-lived acquired intangible asset related to the Dice trademarks and brand name.

During the first quarter of 2020, because of the impacts of the COVID-19 pandemic, the Company performed an interim impairment analysis of the Dice trademarks and brand name.

As a result of the analysis, the Company recorded an impairment charge of $7.2 million during the six months ended June 30, 2020.

During the first and third quarters of 2020, because of the impacts of the COVID-19 pandemic, the Company performed an interim impairment analysis of the Dice trademarks and brand name.

As a result of the analysis, the Company recorded an impairment charge of $15.2 million during the nine months ended September 30, 2020.

See also Note 8 of the Notes to the Condensed Consolidated Financial Statements.

Operating Income (Loss)

Six Months Ended June 30, Increase Percent

Impairment of Goodwill

Nine Months Ended September 30, Decrease Percent

(in thousands, except percentages)

Impairment of goodwill $ — $ 22,607 $ (22,607) (100) %

Percentage of revenues — % 26.9 %

During the third quarter of 2020, because of the impacts of COVID-19 pandemic, the Company performed an interim impairment analysis of goodwill.

As a result of the analysis, the Company recorded an impairment charge of $22.6 million in the third quarter of 2020.

See also Note 9 of the Notes of the Condensed Consolidated Financial Statements.

Impairment of Right-of-Use Asset

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

Impairment of right-of-use asset $ 1,919 $ — $ 1,919 — %

Percentage of revenues 2.2 % — %

During the third quarter of 2021, due to the continuing impacts of COVID-19 on the real estate markets and its impact on the future cash flows attributable to its ROU assets, the Company performed an impairment analysis of a sublease within its ROU assets.

As a result, the Company recorded an impairment charge of $1.9 million during the quarter.

Operating Loss

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

Revenue $ 86,155 $ 84,130 $ 2,025 2 %

Operating income (loss) 304 (4,915) 5,219 (106) %

Operating loss (1,911) (33,393) 31,482 (94) %

Percentage of revenues (2.2) % (39.7) %

Operating income for the six months ended June 30, 2021 was $0.3 million, a margin of 0.5%, compared to an operating loss of $4.9 million, a negative margin of 8.6% for the same period during 2020.

The increase was primarily due to the $7.2 million impairment of the Dice trademark and brand name that occurred during the 2020 period while the 2021 period was impacted by higher depreciation expense.

Operating loss for the nine months ended September 30, 2021 was $1.9 million, a negative margin of 2.2%, compared to an operating loss of $33.4 million, a negative margin of 39.7% for the same period during 2020.

The decrease in operating loss and improved percentage margin was primarily driven by non-cash impairments of goodwill and intangible assets of $37.8 million during the 2020 period, partially offset by increased investments in sales and marketing, higher depreciation, and the ROU asset impairment of $1.9 million in the third quarter of 2021.

Interest Expense and Other

Six Months Ended June 30, Decrease Percent

Nine Months Ended September 30, Decrease Percent

(in thousands, except percentages)

3 unchanged sentences

Impairment of Equity Investment

Six Months Ended June 30, Increase Percent Change

Nine Months Ended September 30, Increase Percent Change

(in thousands, except percentages)

3 unchanged sentences

Accordingly, the Company recorded an impairment charge of $2.0 million during the first quarter of 2020.

Six Months Ended June 30, Increase Percent

Gain on Investments

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

Unrealized gain on equity security $ 1,839 $ — $ 1,839 — %

Gain on investments $ 1,198 $ — $ 1,198 — %

Percentage of revenues 1.4 % — %

The unrealized gain on equity security relates to a minority interest representing less than 1% of the common stock of a technology company that became publicly traded during the first quarter of 2021 after filing an initial public offering.

The gain on equity investments relates to a minority interest representing less than 1% of the common stock of a technology company that became publicly traded during the first quarter of 2021 after filing an initial public offering.

The Company sold 100% of this investment during the third quarter of 2021.

See also Note 7 of the Notes to the Condensed Consolidated Financial Statements.

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands, except

Income (loss) before income taxes $ 1,861 $ (7,266)

Income tax expense (benefit) 61 (893)

Loss before income taxes $ (1,145) $ (36,017)

Income tax benefit (511) (2,651)

Effective tax rate 44.6 % 7.4 %

Our effective tax rate for the six months ended June 30, 2021, was lower than the U.S.

statutory rate due to a $0.4 million tax benefit from the release of a valuation allowance related to our capital loss carryforward.

The tax rate for the six months ended June 30, 2020, differed from the statutory rate due to a tax deficiency of $0.4 million related to the vesting or settlement of share-based compensation awards;

and tax expense of $0.4 million from the nondeductible impairment of an equity investment.

Our effective tax rate for the nine months ended September 30, 2021, differed from the U.S.

statutory rate due to a tax benefit of $0.3 million related to a valuation allowance on our capital loss carryforward.

The tax rate for the nine months ended September 30, 2020, differed from the statutory rate due to tax expense of $5.5 million from nondeductible impairment charges.

Income (loss) from discontinued operations, net of tax

Six Months Ended June 30, Decrease Percent

Nine Months Ended September 30, Decrease Percent

(in thousands, except percentages)

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Percentage of revenues (34.1) % 1.6 %

During the six months ended June 30, 2021, the Company transferred majority ownership of its eFC business and has recorded it as a discontinued operation.

As a result, the Company experienced a loss from discontinued operations, net of tax, of $29.3 million during the six months ended June 30, 2021.

During the nine months ended September 30, 2021, the Company transferred majority ownership of its eFC business to eFC management and has recorded it as a discontinued operation.

As a result, the Company experienced a loss from discontinued operations, net of tax, of $29.3 million during the nine months ended September 30, 2021.

The loss was comprised of $28.1 million related to the reclassification of currency translation adjustments and $5.2 million from the removal of eFC's net assets.

The loss was partially offset by the recording of an equity investment of $3.6 million and eFC's earnings during the six months ended June 30, 2021.

Income from discontinued operations for the six months ended June 30, 2020 represents eFC's earnings during the period.

The loss was partially offset by the recording of an equity investment of $3.6 million and eFC's earnings during the nine months ended September 30, 2021.

Income from discontinued operations for the nine months ended September 30, 2020 represents eFC's earnings during the period.

Earnings (loss) per Share

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands, except

per share amounts)

Income (loss) from continuing operations $ 1,800 $ (6,373)

Weighted-average shares outstanding—diluted 48,854 48,781

Diluted earnings (loss) per share - continuing operations $ 0.04 $ (0.13)

Income (loss) from discontinued operations $ (29,340) $ 1,685

Loss from continuing operations $ (634) $ (33,366)

Income (loss) from discontinued operations, net of tax $ (29,340) $ 1,356

Net loss $ (29,974) $ (32,010)

Weighted-average shares outstanding - diluted 46,740 48,503

Diluted loss per share - continuing operations $ (0.01) $ (0.69)

Diluted earnings (loss) per share - discontinued operations $ (0.63) $ 0.03

Net income (loss) $ (27,540) $ (4,688)

Weighted-average shares outstanding—diluted 48,854 48,781

Diluted earnings (loss) per share $ (0.56) $ (0.10)

Diluted earnings (loss) per share from continuing operations was $0.04 and ($0.13) for the six months ended June 30, 2021 and 2020, respectively.

The increase was driven by the unrealized gain on equity security in the 2021 period and the impairment charge in the 2020 period, partially offset by lower revenues and higher depreciation expense.

Diluted earnings (loss) per share was $(0.56) and $(0.10) for the six months ended June 30, 2021 and 2020, respectively.

The decrease was driven by the loss from discontinued operations, partially offset by higher diluted earnings per share from continuing operations.

Diluted loss per share $ (0.64) $ (0.66)

Diluted loss per share from continuing operations was $(0.01) and $(0.69) for the nine months ended September 30, 2021 and 2020, respectively.

The decreased loss per share was driven by the impairment charges in the 2020 period and the gain in investment in the 2021 period, partially offset by the ROU asset impairment and higher depreciation expense in the 2021 period.

Diluted loss per share was $(0.64) and $(0.66) for the nine months ended September 30, 2021 and 2020, respectively.

Current year to date loss per share is primarily driven by the loss on discontinued operations.

The prior year loss per share is primarily driven by the impairment charges.

Liquidity and Capital Resources

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Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP metrics used by management to measure operating performance.

Management uses Adjusted EBITDA as a performance measure for internal monitoring and planning, including preparation of annual budgets, analyzing investment decisions and evaluating profitability and performance comparisons between us and our competitors.

Management uses Adjusted EBITDA as a performance measure for internal monitoring and planning, including

preparation of annual budgets, analyzing investment decisions and evaluating profitability and performance comparisons between us and our competitors.

The Company also uses this measure to calculate amounts of performance based compensation under the senior management incentive bonus program.

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Adjusted EBITDA and Adjusted EBITDA Margin are not measurements of our financial performance under GAAP and should not be considered as an alternative to revenue, net income, operating income, cash provided by operating activities, or any other performance measures derived in accordance with GAAP as a measure of our profitability or liquidity.

A reconciliation of Adjusted EBITDA for the six months ended June 30, 2021 and 2020 follows (in thousands):

Six Months Ended June 30,

A reconciliation of Adjusted EBITDA for the nine months ended September 30, 2021 and 2020 follows (in thousands):

Nine Months Ended September 30,

Reconciliation of Net Income (loss) to Adjusted EBITDA:

Net income (loss) $ (27,540) $ (4,688)

Net loss $ (29,974) $ (32,010)

Interest expense 517 822

Income tax expense (benefit) 61 (893)

Income tax benefit (511) (2,651)

Depreciation 12,030 7,730

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Impairment of intangible assets — 15,200

Impairment of equity investment — 2,002

Unrealized gain on equity security (1,839) —

Gain on sale of equity investment — (200)

Impairment of goodwill — 22,607

Impairment of investment — 2,002

Impairment of right-of-use asset 1,919 —

Gain on investment (1,198) (200)

Severance and related costs 1,456 954

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Amortization of deferred financing costs (110) (110)

Income tax expense (benefit) 61 (893)

Income tax benefit (511) (2,651)

Deferred income taxes 710 2,220

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Adjusted EBITDA $ 19,085 $ 17,619

A reconciliation of Adjusted EBITDA Margin for the six months ended June 30, 2021 and 2020 follows (in thousands):

Six Months Ended June 30,

A reconciliation of Adjusted EBITDA Margin for the nine months ended September 30, 2021 and 2020 follows (in thousands):

Nine Months Ended September 30,

Revenues $ 86,155 $ 84,130

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Adjusted EBITDA Margin 22 % 21 %

We have summarized our cash flows for the six months ended June 30, 2021 and 2020 (in thousands).

Six Months Ended June 30,

We have summarized our cash flows for the nine months ended September 30, 2021 and 2020 (in thousands).

Nine Months Ended September 30,

Cash from operating activities $ 25,623 $ 14,444

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We have financed our operations primarily through cash provided by operating activities and borrowings under our revolving credit facility.

At June 30, 2021, we had cash of $7.9 million compared to $4.5 million at December 31, 2020.

At September 30, 2021, we had cash of $3.5 million compared to $4.5 million at December 31, 2020.

Our principal internal sources of liquidity are cash and cash equivalents, as well as the cash flow that we generate from our operations.

In addition, we had $74.0 million in borrowing capacity under our $90.0 million Credit Agreement at June 30, 2021, subject to certain availability limits including our consolidated leverage ratio, which generally limits borrowings to 2.5 times annual adjusted EBITDA levels, as defined in the Credit Agreement.

In addition, we had $72.0 million in borrowing capacity under our $90.0 million Credit Agreement at September 30, 2021, subject to certain availability limits including our consolidated leverage ratio, which generally limits borrowings to 2.5 times annual adjusted EBITDA levels, as defined in the Credit Agreement.

We believe that our existing cash and cash equivalents, cash generated from our continuing operations and available borrowings under our Credit Agreement will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months and the foreseeable future thereafter.

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Operating Activities

Net cash flows from operating activities primarily consist of net income adjusted for certain non-cash items, including depreciation, amortization, changes in deferred tax assets and liabilities, stock based compensation, impairments, unrealized gain on equity security, loss from sale of business, loss on disposition of discontinued operations, and the effect of changes in working capital.

Net cash flows from operating activities were $19.3 million and $10.0 million for six month periods ended June 30, 2021 and 2020, respectively.

Cash inflow from operations is driven by earnings and is dependent on the amount and timing of billings and cash collection from our customers.

Net cash flows from operating activities primarily consist of net income adjusted for certain non-cash items, including depreciation, amortization, changes in deferred tax assets and liabilities, stock based compensation, impairments, gain on investments, loss from sale of business, loss on disposition of discontinued operations, and the effect of changes in working capital.

Net cash flows from operating activities were $25.6 million and $14.4 million for nine month periods ended September 30, 2021 and 2020, respectively.

Cash inflow from operations is driven by earnings and is dependent on the amount and timing of billings and cash collections from our customers.

Cash provided by operating activities during the 2021 period increased $11.2 million compared to the same period of 2020 primarily due to strong billings to and collections from customers.

Investing Activities

Cash used in investing activities during the six month period ended June 30, 2021 was $9.8 million compared to $8.2 million used in the same period of 2020.

Cash used in investing activities in the six month period ended June 30, 2021 increased from the comparable 2020 period due to cash retained in the eFC business and lower internal development costs, primarily driven by lower headcount and development activities dedicated to the transfer of the eFC business.

Cash used in investing activities during the nine month period ended September 30, 2021 was $15.5 million compared to $12.3 million used in the same period of 2020.

Cash used in investing activities in the nine month period ended September 30, 2021 increased from the comparable 2020 period due to cash retained in the eFC business and cash paid for investment, partially offset by lower internal development costs, primarily driven by lower headcount and development activities dedicated to the transfer of the eFC business, and higher proceeds from sale of investments.

Financing Activities

Cash used in financing activities during the six month period ended June 30, 2021 was $9.3 million and was driven by $4.0 million of net repayments on long-term debt and $5.3 million related to share repurchases.

Cash from financing activities during the six month period ended June 30, 2020 was $20.4 million, primarily due to $27.0 million of net proceeds on long-term debt, partially offset by $6.6 million related to share repurchases.

Cash used in financing activities during the nine month period ended September 30, 2021 was $14.3 million and was driven by $2.0 million of net repayments on long-term debt and $12.3 million related to share repurchases.

Cash from financing activities during the nine month period ended September 30, 2020 was $19.3 million, primarily due to $27.0 million of net proceeds on long-term debt, partially offset by $7.7 million related to share repurchases.

Credit Agreement

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(collectively, the "Borrowers") entered into the Second Amended and Restated Credit Agreement as further amended in June 2021 (the "Credit Agreement"), which matures in November 2023, and replaced the previously existing credit agreement dated November 2015.

The June 2021 amendment modified the credit agreement to allow for the disposition of the eFC business.

The June 2021 amendment modified the credit agreement to allow

for the disposition of the eFC business, removed the option to borrow in Euros and Sterling, and incorporated certain form updates.

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.

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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 June 30, 2021, the Company was in compliance with all of the financial covenants under the Credit Agreement.

As of September 30, 2021, the Company was in compliance with all of the financial covenants under the Credit Agreement.

Refer to Note 10 in the Notes to the Condensed Consolidated Financial Statements.

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

The obligations under the Credit Agreement are guaranteed by one of the Company's U.S.

based wholly-owned subsidiaries and secured by substantially all of the assets of the Borrowers and the guarantors.

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Commitments and Contingencies

The following table presents certain minimum payments due and the estimated timing under contractual obligations with minimum firm commitments as of June 30, 2021:

The following table presents certain minimum payments due and the estimated timing under contractual obligations with minimum firm commitments as of September 30, 2021:

Payments Due By Period

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Our principal commitments consist of obligations under operating leases for office space and equipment and long-term debt.

As of June 30, 2021, we had $16.0 million outstanding under our Credit Agreement.

As of September 30, 2021, we had $18.0 million outstanding under our Credit Agreement.

Interest payments are due at varying, specified periods (to a maximum of three months) based on the type of loan (LIBOR or base rate loan) we choose.

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Future interest payments on our Credit Agreement are variable due to our interest rate being based on a LIBOR rate or a base rate.

Assuming an interest rate of 1.88% (the rate in effect on June 30, 2021) on our current borrowings, interest payments are expected to be approximately $0.2 million for the remainder of 2021, approximately $0.3 million for 2022, and approximately $0.3 million for 2023.

As of June 30, 2021, we had approximately $1.0 million of unrecognized tax benefits as liabilities, and it is uncertain if or when such amounts may be settled.

Assuming an interest rate of 1.88% (the rate in effect on September 30, 2021) on our current borrowings, interest payments are expected to be approximately $0.1 million for the remainder of 2021, approximately $0.3 million for 2022, and approximately $0.3 million for 2023.

As of September 30, 2021, we had approximately $1.0 million of unrecognized tax benefits as liabilities, and it is uncertain if or when such amounts may be settled.

Related to the unrecognized tax benefits considered permanent differences, we have also recorded a liability for potential penalties and interest.

Included in the balance of unrecognized tax benefits at June 30, 2021 are $1.0 million of tax benefits that, if recognized, would affect the effective tax rate.

Included in the balance of unrecognized tax benefits at September 30, 2021 are $1.0 million of tax benefits that, if recognized, would affect the effective tax rate.

The Company believes it is reasonably possible that as much as $0.3 million of its unrecognized tax benefits may be recognized in the next twelve months.

Impact of COVID-19 on our Business

The spread of the coronavirus disease (“COVID-19”) has caused an economic downturn on a global scale, as well as significant volatility in the financial markets.

The spread of the coronavirus disease (“COVID-19”) caused an economic downturn on a global scale, as well as significant volatility in the financial markets.

In March 2020, the World Health Organization declared the spread of the COVID-19 virus a pandemic.

COVID-19 has slowed recruitment activity for our businesses this year as employers have slowed hiring, which has reduced our revenues and operating cash flows.

COVID-19 slowed recruitment activity for our businesses during 2020 as employers slowed hiring, which reduced our revenues and operating cash flows during 2020 and into the beginning of 2021.

We expect the pandemic may continue to negatively impact our financial performance in the coming months, but, based on information currently available, we are not anticipating a significant long-term impact on our business and operations, results of operations, financial condition, cash flows, liquidity and capital and financial resources.

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The Company cannot at this time predict the ultimate impact that the COVID-19 pandemic will have on its financial condition and operations.

In an effort to protect the health and safety of our employees, we have taken action to adopt social distancing policies at our office locations, including working from home and the temporary closure of our locations where necessary.

We may have to take further actions that we determine are in the best interests of our employees or as required by federal, state, or local authorities.

In an effort to protect the health and safety of our employees, we have taken action to adopt certain policies at our office locations, including working from home and the temporary closure of our locations when necessary.

We may have to take further actions that we determine are in the best interests of our employees or as required by health organizations, federal, state, or local authorities.

The impact of the COVID-19 pandemic continues to unfold.

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From time to time, we see market slowdowns, which can lead to lower demand for recruiting technologists and financial and security cleared professionals.

In 2020, the COVID-19 pandemic led to a reduction in recruitment activity.

If recruitment activity continues to slow in the industries in which we operate during 2021 and beyond, our revenues and results of operations will be negatively impacted.

In 2020 and early in 2021, the COVID-19 pandemic led to a reduction in recruitment activity.

If recruitment activity slows in the industries in which we operate during the remainder of 2021 and beyond, our revenues and results of operations may be negatively impacted.

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 2. Management’s Discussion and Analysis