What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-03 compared with 2022-05-04 · 208 added, 91 removed, 231 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 potential impact of COVID-19 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.

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 potential impact of COVID-19 on our operations and financial results, uncertainty in respect to 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.

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The Dice and ClearanceJobs businesses and corporate related costs are aggregated into the Tech-focused reportable segment primarily because the Company does not have discrete financial information for those brands or costs.

As a result of the eFC separation, the eFC business was deconsolidated from the Company's consolidated financial statements as of June 30, 2021 and is reflected as a discontinued operation for all periods presented on or before June 30, 2021.

As a result of the eFC separation, the eFC business was deconsolidated from the Company's condensed consolidated balance sheets and statements of operations as of June 30, 2021 and is reflected as a discontinued operation for all periods presented on or before June 30, 2021.

Recent Developments

5 unchanged sentences

The tables below detail this customer data.

As of March 31, Increase (Decrease) Percent

As of June 30, Increase (Decrease) Percent

Recruitment Package Customers:

2 unchanged sentences

Average Annual Revenue per Recruitment Package Customer (1)

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2022 2021 Increase (Decrease) Percent

Change 2022 2021 Increase (Decrease) Percent

Dice $ 14,304 $ 13,488 $ 816 6 % $14,208 $13,512 $696 5%

2 unchanged sentences

The simple average of each month is used to derive the amount for each period and then annualized to reflect 12 months.

Dice had 6,249 recruitment package customers as of March 31, 2022, which was an increase of 1,049, or 20%, year over year and annualized revenue per recruitment package customer for Dice increased $576, or 4%, year over year.

Dice had 6,386 recruitment package customers as of June 30, 2022, which was an increase of 945, or 17%, year over year and average annual revenue per recruitment package customer for Dice increased $816, or 6%, year over year.

The increases were driven by strong renewal rates and new business activity.

ClearanceJobs had 1,928 recruitment package customers as of March 31, 2022 compared to 1,753 as of March 31, 2021, an increase of 10%, and annualized revenue per recruitment package customer increased $1,932, or 12%, year over year.

ClearanceJobs had 1,976 recruitment package customers as of June 30, 2022 compared to 1,784 as of June 30, 2021, an increase of 11%, and average annual revenue per recruitment package customer increased $1,980, or 12%, year over year.

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.

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(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 March 31, 2022 increased $13.4 million and $35.3 million from December 31, 2021 and March 31, 2021, respectively.

The increase in backlog compared to December 31, 2021 and March 31, 2021 is due to the strong technology recruitment market driving bookings growth at both Dice and ClearanceJobs, a focus on signing multi-year contracts, and the Company's ongoing investments in sales and marketing.

Backlog at June 30, 2022 increased $11.5 million and $29.0 million from December 31, 2021 and June 30, 2021, respectively.

The increase in backlog compared to December 31, 2021 and June 30, 2021 is due to the strong technology recruitment market driving bookings growth at both Dice and ClearanceJobs, a focus on signing multi-year contracts, and the Company's ongoing investments in sales and marketing.

The first quarter of each year is generally the largest bookings quarter of the year, also contributing to the growth from December 31, 2021.

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Product Releases

Dice TalentSearch Time Zone Search Dice Marketplace, Dice TalentSearch Social Data Refresh, Brand.io, TalentSearch Personalization, Unbiased Sourcing Mode

ClearanceJobs Live Video ClearanceJobs Meetings, ClearanceJobs Video, Team Recruiting, Shared Talent Pipelines, Quality of Use Improvements

New Job Apply Flow, Dice TalentSearch Time Zone Search Dice Marketplace, Dice TalentSearch Social Data Refresh, Brand.io, TalentSearch Personalization, Unbiased Sourcing Mode

Multi-Factor Authentication, ClearanceJobs Live Video ClearanceJobs Meetings, ClearanceJobs Video, Team Recruiting, Shared Talent Pipelines, Quality of Use Improvements

Other material factors that may affect our results of operations include our ability to attract qualified professionals that become engaged with our websites and our ability to attract customers with relevant job opportunities.

The more qualified professionals that use our websites, the more attractive our websites become to employers and advertisers, which in turn makes them more likely to become our customers, resulting positively on our results of operations.

If we are unable to continue to attract qualified

professionals to engage with our two-sided marketplaces, our customers may no longer find our services attractive, which could have a negative impact on our results of operations.

If we are unable to continue to attract qualified professionals to engage with our two-sided marketplaces, our customers may no longer find our services attractive, which could have a negative impact on our results of operations.

Additionally, we need to ensure that our websites remain relevant in order to attract qualified professionals to our websites and to engage them in high-value tasks, such as posting resumes and/or applying for jobs.

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There have been no material changes to our critical accounting estimates as compared to the critical accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021

Three Months Ended March 31, Increase (Decrease) Percent

Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021

Three Months Ended June 30, Increase (Decrease) Percent

(in thousands, except percentages)

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(1) Includes Dice and Career Events

For the three months ended March 31, 2022 we experienced an increase in revenue of $7.7 million, or 29%.

For the three months ended June 30, 2022 we experienced an increase in revenue of $8.3 million, or 29%.

Revenue at Dice increased $6.2 million, or 30%, compared to the same period in 2021 due to improvements in renewal rates and new business activity along with consistently increasing customer counts, which drives additional revenue in future periods.

1 unchanged sentence

Cost of Revenues

Three Months Ended March 31, Increase Percent

Three Months Ended June 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenues 11.3 % 12.5 %

Cost of revenues increased $0.4 million, or 11%, driven by an increase of $0.2 million from higher compensation related costs from higher headcount and a decrease in capitalized labor of $0.2 million, which increases operating expenses.

Together, these increased expense $0.4 million.

Cost of revenues increased $0.6 million, or 16%, driven by an increase of $0.5 million from higher compensation related costs, primarily from higher headcount.

Operational costs, including the amortization of cloud computing costs, increased by $0.1 million.

Product Development Expenses

Three Months Ended March 31, Increase Percent

Three Months Ended June 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenues 11.8 % 12.2 %

Product development increased $0.3 million, or 9%, driven by an increase of $1.0 million from higher compensation related costs partially offset by an increase in capitalized labor of $0.6 million, which decreases operating expenses.

Product development expenses increased $0.9 million, or 24%, driven by an increase of $1.9 million from higher compensation related costs partially offset by an increase in capitalized labor of $1.1 million, which decreases operating expenses.

Sales and Marketing Expenses

Three Months Ended March 31, Increase Percent

Three Months Ended June 30, Increase Percent

(in thousands, except percentages)

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Sales and marketing expenses increased $4.1 million, or 41% from the same period in 2021.

This increase was driven by a $2.4 million increase in compensation related costs from higher headcount and quota attainment versus sales plan, $1.4 million increase in discretionary marketing expenses with strong customer recruitment activity, and a $0.4 million increase in operational costs, including travel and entertainment and company events as COVID-19 restrictions ease.

This increase was driven by a $2.5 million increase in compensation related costs from higher headcount and quota attainment versus sales plan, $1.3 million increase in discretionary marketing expenses with strong customer recruitment activity, and a $0.3 million increase in operational costs, including travel and entertainment and company events as COVID-19 restrictions have eased.

General and Administrative Expenses

Three Months Ended March 31, Increase Percent

Three Months Ended June 30, Increase Percent

(in thousands, except percentages)

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General and administrative expenses increased $2.2 million, or 31% from the prior year.

The increase was driven by stock-based compensation expense, which increased $0.6 million, primarily due to higher achievement against targets for the Company's PSUs.

Compensation related costs increased $0.5 million and operational costs, including recruiting and training, increased $0.4 million.

Together these increased expense $1.5 million.

Three Months Ended March 31, Increase Percent

The increase was driven by a $1.5 million increase in compensation expense, which includes a $0.6 million increase in stock-based compensation.

The increase in compensation expense is primarily due to higher achievement against targets for the Company's bonus and PSU plans.

Operational costs, including professional fees, bad debt, travel, and training increased $0.7 million.

Three Months Ended June 30, Increase Percent

(in thousands, except percentages)

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Depreciation expense increased $0.2 million or 5% from the same period in 2021 in connection with increasing capitalized development costs throughout 2021 and projects being placed into service driving higher depreciation in 2022.

Operating Income (Loss)

Three Months Ended March 31, Increase Percent

Operating Income

Three Months Ended June 30, Increase Percent

(in thousands, except percentages)

Revenue $ 37,057 $ 28,721 $ 8,336 29 %

Operating income (loss) 628 (184) 812 (441) %

Percentage of revenues 1.8 % (0.7) %

Operating income for the three months ended March, 31, 2022 was $0.6 million, a positive margin of 1.8%, compared to operating loss of $0.2 million, a negative margin of 0.7%, for the same period in 2021, an improvement of $0.8 million.

Operating income 905 488 417 85 %

Operating margin 2.4 % 1.7 %

Operating income for the three months ended June 30, 2022 was $0.9 million, a margin of 2.4%, compared to operating income of $0.5 million, a margin of 1.7%, for the same period in 2021, an improvement of $0.4 million.

The increase in operating income and improved percentage margin was driven by higher revenues, partially offset by higher operating costs as the Company invests in its product and sales and marketing for future growth.

Income from Equity Method Investment

Three Months Ended March 31, Increase Percent

Three Months Ended June 30, Increase Percent

(in thousands, except percentages)

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Percentage of revenues 1.0 % — %

During the three months ended March 31, 2022, the Company recorded $0.2 million of income related to its proportionate share of eFC's net income.

During the three months ended June 30, 2022, the Company recorded $0.4 million of income related to its proportionate share of eFC's net income.

Gain (Loss) on Investment

Three Months Ended June 30, Increase Percent

(in thousands, except percentages)

Gain (loss) on investment $ 320 $ (674) $ 994 (147) %

Percentage of revenues 0.9 % (2.3) %

During the three months ended June 30, 2022, the Company recognized a $0.3 million gain from the sale of its 40% common share interest in Rigzone.

During the three months ended June 30, 2021, the Company recognized a $0.7 million loss on related 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 for its initial public offering.

See also Note 7 of the Notes to the condensed consolidated financial statements.

Interest Expense and Other

Three Months Ended March 31, Increase Percent

Three Months Ended June 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenues 0.8 % 0.3 %

Interest expense and other was approximately flat to the same period in 2021.

Gain on Investment

Three Months Ended March 31, Decrease Percent

Interest expense and other increased from the same period in 2021, primarily due to higher debt outstanding on the revolving credit facility during the current period.

Three Months Ended June 30,

(in thousands, except

Income (loss) before income taxes $ 1,288 $ (273)

Income tax benefit (162) (61)

Effective tax rate (12.6) % 22.3 %

Our effective tax rate for the three months ended June 30, 2022, differed from the U.S.

statutory rate due to tax benefits of $0.2 million from the vesting of share-based compensation awards, $0.1 million from research tax credits, and $0.1 million from the release of a valuation allowance on our capital loss carryforward.

The tax rate for the three months ended June 30, 2021, differed from the statutory rate due to state income taxes.

Income (loss) from discontinued operations, net of tax

Three Months Ended June 30, Increase Percent

(in thousands, except percentages)

Gain on investment $ — $ 2,513 $ (2,513) (100) %

Income (loss) from discontinued operations, net of tax $ — $ (29,999) $ 29,999 (100) %

Percentage of revenues — % (104.4) %

During the three months ended March 31, 2021, the Company recognized a $2.5 million unrealized gain on an equity security investment.

The unrealized gain was related 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 transferred majority ownership of its eFC business on June 30, 2021 to eFC management and 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.

Earnings (loss) per Share

Three Months Ended June 30,

(in thousands, except

per share amounts)

Income (loss) from continuing operations $ 1,450 $ (212)

Loss from discontinued operations, net of tax — (29,999)

Net income (loss) $ 1,450 $ (30,211)

Weighted-average shares outstanding - basic 44,682 47,227

Weighted-average shares outstanding - diluted 46,961 47,227

Diluted earnings per share - continuing operations $ 0.03 $ —

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

Diluted earnings (loss) per share $ 0.03 $ (0.64)

Diluted earnings per share from continuing operations were $0.03 and $0.00 for the three months ended June 30, 2022 and 2021, respectively.

The increase is driven by an increase in operating income and the gain on sale of investment in the current period.

Diluted earnings (loss) per share were $0.03 and $(0.64) for the three months ended June 30, 2022 and 2021, respectively.

The prior year loss per share was driven by the loss from discontinued operations, which did not occur in the second quarter of 2022.

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021

Six Months Ended June 30, Increase (Decrease) Percent

(in thousands, except percentages)

$ 51,457 $ 39,634 $ 11,823 30 %

ClearanceJobs 19,934 15,763 4,171 26 %

Total revenues $ 71,391 $ 55,397 $ 15,994 29 %

(1) Includes Dice U.S.

and Career Events

We experienced an increase in revenue of $16.0 million, or 29%.

Revenue at Dice increased by $11.8 million, or 30%, compared to the same period in 2021 due to improvements in renewal rates and new business activity, and increasing customer counts, which drives additional revenue in future periods.

Revenue at ClearanceJobs increased by $4.2 million, or 26%, as compared to the same period in 2021, 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

Six Months Ended June 30, Increase Percent

(in thousands, except percentages)

Cost of revenues $ 8,280 $ 7,295 $ 984 13 %

Percentage of revenues 11.6 % 13.2 %

Cost of revenues increased $1.0 million, or 13%, driven by an increase of $0.8 million from higher compensation related costs, primarily from higher headcount.

Operational costs, including the amortization of cloud computing costs, increased by $0.2 million.

Product Development Expenses

Six Months Ended June 30, Increase Percent

(in thousands, except percentages)

Product development $ 8,302 $ 7,112 $ 1,190 17 %

Percentage of revenues 11.6 % 12.8 %

Product Development increased $1.2 million, or 17%, driven by an increase of $2.8 million from higher compensation related costs, partially offset by an increase in capitalized labor of $1.7 million, which decreases operating expenses.

Sales and Marketing Expenses

Six Months Ended June 30, Increase Percent

(in thousands, except percentages)

Sales and marketing $ 28,215 $ 19,922 $ 8,293 42 %

Percentage of revenues 39.5 % 36.0 %

Sales and marketing expenses increased $8.3 million, or 42% from the same period in 2021.

The increase was driven by a $4.8 million increase in compensation related costs from higher headcount and quota attainment versus sales plan, $2.8 million increase in discretionary marketing expenses with strong customer recruitment activity, and a $0.7 million increase in operational costs, including travel and entertainment and company events as COVID-19 restrictions have eased.

General and Administrative Expenses

Six Months Ended June 30, Increase Percent

(in thousands, except percentages)

General and administrative $ 16,875 $ 13,093 $ 3,782 29 %

Percentage of revenues 23.6 % 23.6 %

General and administrative costs increased $3.8 million, or 29%, from the same period in 2021.

The increase was driven by a $2.6 million increase in compensation expense, which includes a $1.3 million increase in stock-based compensation.

The increase in compensation expense is primarily due to higher achievement against targets for the Company's bonus and PSU plans.

Operational costs, including legal, collection expenses, travel, and training increased $1.2 million.

Six Months Ended June 30, Increase Percent

(in thousands, except percentages)

Depreciation $ 8,186 $ 7,671 $ 515 7 %

Percentage of revenues 11.5 % 13.8 %

Depreciation expense increased $0.5 million, or 7%, from the same period in 2021 in connection with increasing capitalized development costs throughout 2021 and projects being placed into service driving higher depreciation in 2022.

Operating Income

Six Months Ended June 30, Increase Percent

(in thousands, except percentages)

Revenue $ 71,391 $ 55,397 $ 15,994 29 %

Operating income 1,533 304 1,229 404 %

Operating margin 2.1 % 0.5 %

Operating income for the six months ended June 30, 2022 was $1.5 million, a margin of 2.1%, compared to operating income of $0.3 million, a margin of 0.5%, for the same period in 2021, an improvement of $1.2 million.

Income from equity method investment

Six Months Ended June 30, Increase Percent Change

(in thousands, except percentages)

Income from equity method investment $ 516 $ — $ 516 — %

Percentage of revenues 0.7 % 0.0 %

During the six months ended June 30, 2022, the Company recorded $0.5 million of income related to its proportionate share of eFC's net income.

Interest Expense and Other

Six Months Ended June 30, Increase Percent

(in thousands, except percentages)

Interest expense and other $ 543 $ 282 $ 261 93 %

Percentage of revenues 0.8 % 0.5 %

Interest expense and other increased $0.3 million, or 93%, compared to the same period in 2021, primarily due to higher debt outstanding on the revolving credit facility during the current period.

Gain (loss) on investment

Six Months Ended June 30, Decrease Percent

(in thousands, except percentages)

Gain on investments $ 320 $ 1,839 $ (1,519) (83) %

Percentage of revenues 0.4 % 3.3 %

During the six months ended June 30, 2022, the Company recognized a $0.3 million gain from the sale of its 40% common share interest in Rigzone.

During the six months ended June 30, 2021, the Company recognized a $1.8 million gain related 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.

See also Note 7 of the Notes to the condensed consolidated financial statements.

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands, except

2 unchanged sentences

Effective tax rate (50.7) % 3.3 %

Our effective tax rate for the three months ended March 31, 2022, differed from the U.S.

statutory rate due to a $0.8 million tax benefit from the vesting or settlement of share-based compensation awards.

The tax rate for the three months ended March 31, 2021, differed from the statutory rate because of a $0.5 million tax benefit from the release of a valuation allowance on our capital loss carryforward.

Income from discontinued operations, net of tax

Three Months Ended March 31, Decrease Percent

Our effective tax rate for the six months ended June 30, 2022, differed from the U.S.

statutory rate due to tax benefits of $1.0 million from the vesting of share-based compensation awards, $0.1 million from research tax credits, and $0.1 million from the release of a valuation allowance on our capital loss carryforward.

The tax rate for the six months ended June 30, 2021, differed from the statutory rate due to a $0.4 million tax benefit from the release of a valuation allowance on our capital loss carryforward.

Income (loss) from discontinued operations, net of tax

Six Months Ended June 30, Increase Percent

(in thousands, except percentages)

Income from discontinued operations, net of tax $ — $ 659 $ (659) (100) %

Income (loss) from discontinued operations, net of tax $ — $ (29,340) $ 29,340 (100) %

Percentage of revenues — % (53.0) %

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

Income from discontinued operations for the three months ended March 31, 2021 represents eFC's earnings during the period.

Earnings per Share

Three Months Ended March 31,

The Company transferred majority ownership of its eFC business on June 30, 2021 to eFC management and 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.

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.

Earnings (loss) per Share

Six Months Ended June 30,

(in thousands, except

1 unchanged sentence

Income from continuing operations $ 2,751 $ 1,800

Income from discontinued operations, net of tax — 659

Net income $ 1,301 $ 2,671

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

Net income (loss) $ 2,751 $ (27,540)

Weighted-average shares outstanding - basic 44,692 47,111

Weighted-average shares outstanding - diluted 46,977 48,854

Diluted earnings per share - continuing operations $ 0.06 $ 0.04

Diluted earnings per share - discontinued operations $ — $ 0.01

Diluted earnings per share $ 0.03 $ 0.05

Diluted earnings per share from continuing operations were $0.03 and $0.04 and diluted earnings per share were $0.03 and $0.05 for the three months ended March 31, 2022 and 2021, respectively.

The decreases were driven by the unrealized gain on equity securities in 2021.

Diluted earnings (loss) per share - discontinued operations $ — $ (0.60)

Diluted earnings (loss) per share $ 0.06 $ (0.56)

Diluted earnings per share from continuing operations were $0.06 and $0.04 for the six months ended June 30, 2022 and 2021, respectively.

The increase is driven by an increase in operating income and an income tax benefit in the current period.

Diluted earnings (loss) per share were $0.06 and $(0.56) for the six months ended June 30, 2022 and 2021, respectively.

The prior year loss per share was driven by the loss from discontinued operations.

Liquidity and Capital Resources

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Adjusted EBITDA and Adjusted EBITDA Margin

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

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

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

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Adjusted EBITDA Margin is computed as Adjusted EBITDA divided by Revenues.

We also consider Adjusted EBITDA and Adjusted EBITDA Margin, as defined, to be important indicators to investors because they provide information related to our ability to provide cash flows to meet future debt service, capital expenditures, working capital requirements, and to fund future growth.

capital requirements, and to fund future growth.

We present Adjusted EBITDA and Adjusted EBITDA Margin as supplemental performance measures because we believe that these measures provide our Board, management and investors with additional information to measure our performance, provide comparisons from period to period by excluding potential differences caused by variations in capital structures (affecting interest expense) and tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), and to estimate our value.

8 unchanged sentences

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, net income margin, 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 three months ended March 31, 2022 and 2021 follows (in thousands):

Three Months Ended March 31,

Reconciliation of Net Income to Adjusted EBITDA:

Net income $ 1,301 $ 2,671

A reconciliation of Adjusted EBITDA for the six months ended June 30, 2022 and 2021 follows (in thousands):

Six Months Ended June 30,

Reconciliation of Net Income (loss) to Adjusted EBITDA:

Net income (loss) $ 2,751 $ (27,540)

Interest expense 543 373

5 unchanged sentences

Severance and related costs 323 1,311

Income from discontinued operations, net of tax — (659)

Loss from discontinued operations, net of tax — 29,340

Adjusted EBITDA $ 14,733 $ 12,725

12 unchanged sentences

Adjusted EBITDA $ 14,733 $ 12,725

Net Income Margin and Adjusted EBITDA Margin for the three months ended March 31, 2022 and 2021 follows (in thousands):

Three Months Ended March 31,

Net Income (Loss) Margin and Adjusted EBITDA Margin for the six months ended June 30, 2022 and 2021 follows (in thousands):

Six Months Ended June 30,

Revenues $ 71,391 $ 55,397

Net Income $ 1,301 $ 2,671

Net Income Margin (1)

Net income (loss) $ 2,751 $ (27,540)

Net income (loss) margin (1)

Adjusted EBITDA $ 14,733 $ 12,725

Adjusted EBITDA Margin (1)

(1) Net income margin and Adjusted EBITDA margin are calculated by dividing the respective measure by that period's revenues.

We have summarized our cash flows for the three months ended March 31, 2022 and 2021 (in thousands).

Three Months Ended March 31,

(1) Net income (loss) margin and Adjusted EBITDA Margin are calculated by dividing the respective measure by that period's revenues.

We have summarized our cash flows for the six months ended June 30, 2022 and 2021 (in thousands).

Six Months Ended June 30,

Cash from operating activities $ 19,448 $ 19,298

2 unchanged sentences

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

At March 31, 2022, we had cash of $5.0 million compared to $1.5 million at December 31, 2021.

At June 30, 2022, we had cash of $3.6 million compared to $1.5 million at December 31, 2021.

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 $57.0 million in borrowing capacity under our $90.0 million Credit Agreement at March 31, 2022, 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 $70.0 million in borrowing capacity under our $100.0 million Credit Agreement at June 30, 2022, 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.

3 unchanged sentences

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, 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 $9.2 million and $6.4 million for the three-month periods ended March 31, 2022 and 2021, respectively.

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, income from equity method investments, gain on investments, loss on disposition of discontinued operations, and the effect of changes in working capital.

Net cash flows from operating activities were $19.4 million and $19.3 million for the six-month periods ended June 30, 2022 and 2021, respectively.

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

Cash provided by operating activities during the 2022 period increased $2.8 million compared to the same period of 2021 primarily due to strong billings to and collections from customers.

Cash provided by operating activities during the 2022 period increased $0.1 million compared to the same period of 2021.

Investing Activities

Cash used in investing activities during the three-month period ended March 31, 2022 was $4.1 million compared to $3.7 million used in the same period of 2021.

Cash used in investing activities in the three-month period ended March 31, 2022 increased from the comparable 2021 period due to higher internal development costs, primarily driven by higher product development headcount.

Cash used in investing activities during the six-month period ended June 30, 2022 was $8.2 million compared to $9.8 million used in the same period of 2021.

Cash used in investing activities in the six-month period ended June 30, 2022 decreased from the comparable 2021 period due to $3.0 million of cash transferred to eFC related to the transfer of ownership in the prior year period.

This decrease was partially offset by higher internal development costs in the current period, primarily driven by higher product development headcount.

Financing Activities

Cash used in financing activities during the three-month period ended March 31, 2022 was $1.7 million and was driven by $10.0 million of net proceeds on long-term debt and $11.7 million related to share repurchases.

Cash used in financing activities during the three-month period ended March 31, 2021 was $3.0 million and was driven by share repurchases.

Cash used in financing activities during the six-month period ended June 30, 2022 was $9.2 million and was driven by $7.0 million of net proceeds on long-term debt, and offset by $15.8 million related to share repurchases.

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

Financing and Capital Requirements

Credit Agreement

We have a $90 million revolving credit facility, which matures November 2023, with $ 33.0 million of borrowings on the facility at March 31, 2022, leaving $ 57.0 million available for future borrowings.

Borrowings under the Credit Agreement bear interest, payable at least quarterly, at the Company’s option, at a London Interbank Offered Rate ("LIBOR") rate or a base rate, plus a margin.

Assuming an int eres t rate of 2.25 % (the rate in effect on March 31, 2022) on our current borrowings, interest payments are expected to be $0.6 and $0.8 million in 2022 and 2023, respectively.

We have a $100 million revolving credit facility, which matures June 2027, with $ 30.0 million of borrowings on the facility at June 30, 2022, leaving $ 70.0 million available for future borrowings, subject to the terms of the Credit Agreement.

Borrowings under the Credit Agreement denominated in U.S.

dollars bear interest, payable at least quarterly, at the Company’s option, at a Secured Overnight Financing Rate ("SOFR") rate or a base rate, plus a margin.

Borrowings under the credit agreement denominated in pounds sterling, if any, bear interest at the Sterling Overnight Index Average ("SONIA") rate plus a margin.

Assuming an int eres t rate of 3.30 % (the rate in effect on June 30, 2022) on our current borrowings, interest payments are expected to be $0.5 million from July 1, 2022 to December 31, 2022, $1.0 million in each of 2023, 2024, 2025, and 2026 and $0.5 million in 2027.

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.

As of March 31, 2022, the Company was in compliance with all of the financial covenants under the Credit Agreement.

As of June 30, 2022, 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 and Item 3.

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No leases include options to purchase the leased property.

As of March 31, 2022, the value of our obligations under operating leases was $6.4 million.

As of June 30, 2022, the value of our obligations under operating leases was $6.0 million.

See note 6 to the condensed consolidated financial statements for further information.

2 unchanged sentences

Other Capital Requirements

As of March 31, 2022, we recorded approximately $0.9 million of unrecognized tax benefits as liabilities, and we are uncertain if or when such amounts may be settled.

As of June 30, 2022, we recorded approximately $1.0 million of unrecognized tax benefits as liabilities, and we are 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 March 31, 2022 are $0.9 million of tax benefits that would affect the effective tax rate if recognized.

Included in the balance of unrecognized tax benefits at June 30, 2022 are $1.0 million of tax benefits that would affect the effective tax rate if recognized.

The Company believes it is reasonably possible that as much as $0.2 million of its unrecognized tax benefits may be recognized in the next 12 months.

The Company's Board of Directors previously approved a stock repurchase program that permits the Company to repurchase its common stock.

As of March 31, 2022, the value of shares available to be purchased under the current plan was $ 13.1 million.

During the six months ended June 30 2022, the Company repurchased $11.2 million of shares of its common stock pursuant to the stock repurchase program.

As of June 30, 2022, the value of shares available to be purchased under the current plan was $ 9.4 million.

Management has discretion in determining the conditions under which shares may be purchased from time to time.

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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 certain policies at our office locations, including working from home and the temporary closure of our locations when necessary.

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.

12 unchanged sentences

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.

If recruitment activity slows in the industries in which we operate, 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