DHI GROUP, INC. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Annual Report. Certain statements we make under this Item 7 constitute “Forward-Looking Statements” under the Private Securities Litigation Reform Act of 1995, the Securities Act and the Exchange Act. See also “Note Concerning Forward-Looking Statements.” You should keep in mind that any forward-looking statement made by us herein, or elsewhere, speaks only as of the date on which it is made. New risks and uncertainties come up from time to time, and it is impossible to predict these events or how they may affect us. We have no obligation to update any forward-looking statements after the date hereof, except as required by applicable federal securities law. Overview 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 technologists' lives. In online recruitment, we specialize in employment categories in which there has been a long-term scarcity of highly skilled, highly qualified professionals relative to market demand, specifically technologists who work in a variety of industries or have active government security clearances. Our websites serve as online two-sided marketplaces where employers and recruiters source and connect with prospective employees, and where technologists find relevant job opportunities, data and information to further their careers. Our websites offer job postings, news and content, career development and recruiting services tailored to the specific needs of the professional community that each website serves. 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. 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. 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. We have been in the recruiting and career development business for over 30 years. Based on our operating structure, we have identified one reportable segment, Tech-focused, which includes the Dice and ClearanceJobs businesses and corporate related costs. 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. Recent Developments None. Our Revenues and Expenses We derive the majority of our revenues from customers who pay fees, either annually, quarterly or monthly, to post jobs on our websites and to access our searchable databases of resumes. Our fees vary by customer based on the number of individual users of our databases of resumes, the number and type of job postings and profile views purchased and the terms of the packages purchased. Our Company sells recruitment packages that can include access to our databases of resumes and job posting capabilities. We believe the key metrics that are material to an analysis of our businesses are our total number of Dice and ClearanceJobs recruitment package customers and the revenue, on average, that these customers generate. The tables below detail this customer data. 32 Table of Contents Recruitment Package Customers Increase (Decrease) Percent Change Recruitment Package Customers: December 31, 2022 December 31, 2021 Dice 6,311 6,004 307 5% ClearanceJobs 2,064 1,878 186 10% Average Annual Revenue per Recruitment Package Customer (1) FY 2022 FY 2021 Increase (Decrease) Percent Change Dice $14,664 $13,644 $1,020 7% ClearanceJobs $19,080 $17,028 $2,052 12% (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 each period and then annualized to reflect 12 months. Dice had 6,311 recruitment package customers as of December 31, 2022, which was an increase of 307, or 5%, year over year and average revenue per recruitment package customer for Dice increased 7% for the year ended December 31, 2022. The increases were driven by strong renewal rates and new business customers. ClearanceJobs had 2,064 recruitment package customers as of December 31, 2022 compared to 1,878 as of December 31, 2022, an increase of 10%, and average revenue per recruitment package customer increased 12%. 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 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. 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 as follows: Summary of Deferred Revenue and Backlog: December 31, 2022 December 31, 2021 Increase Percent Change (in thousands, except percentages) Deferred Revenue $ 50,864 $ 46,146 $ 4,718 10 % Contractual commitments not invoiced 66,391 46,497 19,894 43 % Backlog 1 $ 117,255 $ 92,643 $ 24,612 27 % (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 December 31, 2022 increased $24.6 million from December 31, 2021 due to the strong technology recruitment market driving bookings growth for both Dice and ClearanceJobs, investments in product, sales and marketing 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. The Company continues to evolve and develop new software products and features to attract and engage qualified professionals and match them with employers. Our ability to grow our revenues will largely depend on our ability to grow our customer bases in the markets in which we operate by acquiring new customers while retaining a high proportion of the customers we currently serve, and to expand the breadth of services our customers purchase from us. We continue to make investments in our business and infrastructure to help us achieve our long-term growth objectives, such as the innovative products in the table below. 33 Table of Contents Product Releases 2022 2021 Dice Employer Multi-Factor Authentication, Revamped technologist onboarding, New Job Page, Dice New Job Apply Flow, Dice TalentSearch Time Zone Search, Dice TalentSearch Auto Talent Alerts, Dice iOS App Messaging Dice Marketplace, Dice TalentSearch Social Data Refresh, Brand.io, TalentSearch Personalization, Unbiased Sourcing Mode ClearanceJobs Company Page, ClearanceJobs Multi-Factor Authentication, ClearanceJobs Live Video, ClearanceJobs Scheduled Broadcast Messages ClearanceJobs Meetings, ClearanceJobs Video, Team Recruiting, Shared Talent Pipelines, Quality of Use Improvements Other material factors that may affect our results of operations include, but are not limited to, 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, positively impacting our results of operations. If we are unable to continue to attract qualified professionals to engage with our websites, 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 applying to jobs. The largest components of our expenses are personnel costs and marketing and sales expenditures. Personnel costs consist of salaries, benefits, and incentive compensation for our employees, including commissions for salespeople. Personnel costs are categorized in our statement of operations based on each employee’s principal function. Marketing expenditures primarily consist of online advertising, brand promotion and lead generation to employers and job seekers. Critical Accounting Estimates This discussion of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates, including our critical accounting estimates, on an ongoing basis. We based our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe are reasonable. In many cases, we could reasonably have used different accounting policies and estimates. In some cases, changes in the accounting estimates are reasonably likely to occur from period to period. Our actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting estimates affect our more significant judgments used in the preparation of our consolidated financial statements. Goodwill We record goodwill when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. We determine whether the carrying value of recorded goodwill is impaired on an annual basis or more frequently if indicators of potential impairment exist. In testing goodwill for impairment, a qualitative assessment can be performed and if it is determined that the fair value of the reporting unit is more likely than not less than the carrying amount, the impairment review process compares the fair value of the reporting unit in which the goodwill resides to the carrying value of that reporting unit. If the fair value of the reporting unit is less than its carrying amount, an impairment charge is recorded for the amount the carrying value exceeds the fair value. Our annual impairment test for goodwill is performed on October 1 of each year. The annual impairment test for the Tech-focused reporting unit performed as of October 1, 2022 resulted in the fair value of the reporting unit being substantially in excess of the carrying value with fair value exceeding the carrying value by 154%. Results for the Tech-focused reporting unit for the fourth quarter of 2022 and estimated future results as of December 31, 2022 approximate the projections used in the October 1, 2022 analysis. As a result, the Company believes it is not more likely than not that the fair value of the reporting unit is less than the carrying value as of December 31, 2022. Therefore, no quantitative impairment test was performed as of December 31, 2022. 34 Table of Contents During the third quarter of 2020, the impacts of the COVID-19 pandemic continued and the Company's projected earnings and cash flows for the Tech-focused reporting unit declined as compared to the projections used in the March 31, 2020 analysis. As a result, the Company performed an interim impairment analysis as of September 30, 2020, which resulted in the Company recording an impairment charge of $23.6 million during the three month period ended September 30, 2020. No impairment was recorded during the years ended December 31, 2022 and 2021. The amount of goodwill as of December 31, 2022 allocated to the Tech-focused reporting unit was $128.1 million. The discount rate applied for the Tech-focused reporting unit in the October 1, 2022 analysis was 11.0%. An increase to the discount rate applied or reductions to future projected operating results could result in future impairment of the Tech-focused reporting unit’s goodwill. It is reasonably possible that changes in judgments, assumptions and estimates the Company made in assessing the fair value of goodwill could cause the Company to consider some portion or all of the goodwill of the Tech-focused reporting unit to become impaired. In addition, a future decline in the overall market conditions, uncertainty related to COVID-19, political instability, and/or changes in the Company’s market share could negatively impact the estimated future cash flows and discount rates used to determine the fair value of the reporting unit and could result in an impairment charge in the foreseeable future. The determination of whether or not goodwill has become impaired is judgmental in nature and requires the use of estimates and key assumptions, particularly assumed discount rates and projections of future operating results, such as forecasted revenues and earnings before interest, taxes, depreciation and amortization margins and capital expenditure requirements. Fair values are determined by using a combination of a discounted cash flow methodology and a market comparable method. The discounted cash flow methodology is based on projections of the amounts and timing of future revenues and cash flows, assumed discount rates and other assumptions as deemed appropriate. We consider factors such as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements. Additionally, the discounted cash flows analysis takes into consideration cash expenditures for product development, other technological updates and advancements to our websites and investments to improve our candidate databases. The market comparable method indicates the fair value of a business by comparing it to publicly traded companies in similar lines of business or to comparable transactions or assets. Considerations for factors such as size, growth, profitability, risk and return on investment are analyzed and compared to the comparable businesses and adjustments are made. A market value of invested capital of the publicly traded companies is calculated and then applied to the entity’s operating results to arrive at an estimate of value. Changes in our strategy and/or market conditions could significantly impact these judgments and require adjustments to recorded amounts of goodwill. Indefinite-Lived Acquired Intangible Assets The indefinite-lived acquired intangible assets include the Dice trademarks and brand name. The Dice trademark, trade name and domain name is one of the most recognized names of online technology recruiting and career development. Since Dice’s inception in 1991, the brand has been recognized as a leader in recruiting and career development services for technology and engineering professionals. Currently, the brand is synonymous with the most specialized online marketplace for industry-specific technologists. The brand has a significant presence in online recruiting and career development services. Considering the recognition and the awareness of the Dice brand in the talent acquisition and staffing services market, Dice’s long operating history and the intended use of the Dice brand, the remaining useful life of the Dice trademark, trade name and domain name was determined to be indefinite. We determine whether the carrying value of our recorded indefinite-lived acquired intangible asset is impaired on an annual basis or more frequently if indicators of potential impairment exist. The impairment review process is performed on October 1 of each year and compares the fair value of the indefinite-lived acquired intangible asset to its carrying value. If the carrying value exceeds the fair value, an impairment loss is recorded. The impairment test performed as of October 1, 2022 resulted in the fair value of the Dice trademarks and brand name exceeding the carrying value by 137%. The Company's operating results attributable to the Dice trademarks and brand name for the fourth quarter of 2022 and estimated future results as of December 31, 2022 approximate the projections used in the October 1, 2022 analysis. As a result, the Company believes it is not more likely than not that the fair value of the Dice trademarks and brand name is less than the carrying value as of December 31, 2022. Therefore, no quantitative impairment test was performed as of December 31, 2022. No impairment was recorded during the years ended December 31, 2022 and 2021. During the first quarter of 2020, because of the initial impacts of the COVID-19 pandemic and its potential impact on future earnings and cash flows that are attributable to the Dice trademarks and brand name, the Company performed an interim impairment analysis. As a result of the analysis, the Company recorded an impairment charge of $7.2 million during the first 35 Table of Contents quarter of 2020. During the third quarter of 2020, the impacts of the COVID-19 pandemic continued and the Company's projected earnings and cash flows that are attributable to the Dice trademarks and brand name declined as compared to the projections used in the March 31, 2020 analysis. As a result, the Company performed an interim impairment analysis as of September 30, 2020, which resulted in the Company recording an additional impairment charge of $8.0 million during the three month period ended September 30, 2020. The projections utilized in the October 1, 2022 analysis included increasing revenues at rates approximating industry growth projections. The Company’s ability to achieve these revenue projections may be impacted by, among other things, uncertainty related to COVID-19, competition in the technology recruiting market, challenges in developing and introducing new products and product enhancements to the market and the Company’s ability to attribute value delivered to customers. The October 1, 2022 analysis included operating margins during the year ending December 31, 2022 that approximate operating margins for the year ended December 31, 2021 and then increasing modestly. If future cash flows that are attributable to the Dice trademarks and brand name are not achieved, the Company could realize an impairment in a future period. In the October 1, 2022 analysis, the Company utilized a relief from royalty rate method to value the Dice trademarks and brand name using a royalty rate of 4.0%, which is based on comparable industry licensing agreements and the profitability attributable to the Dice trademarks and brand name, and a discount rate of 12.0%. The determination of whether or not indefinite-lived acquired intangible assets have become impaired involves a significant level of judgment in the assumptions underlying the approach used to determine the value of the indefinite-lived acquired intangible assets. Fair values are determined using a profit allocation methodology which estimates the value of the trademark and brand name by capitalizing the profits saved because the company owns the asset. We consider factors such as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements. Changes in our strategy, uncertainty related to COVID-19, and/or changes in market conditions could significantly impact these judgments and require adjustments to recorded amounts of intangible assets. If projections are not achieved, the Company could realize an impairment in the foreseeable future. Income Taxes We utilize the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized for differences between the financial statement and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The calculation of our tax liabilities involves dealing with uncertainties in applying tax laws and regulations in numerous jurisdictions. Tax benefits from uncertain tax positions are recognized when it is more likely than not that the positions will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Because of the complexity of some of these uncertainties, the ultimate resolution could result in a payment that is materially different from our current estimate of the accrual for unrecognized tax benefits. 36 Table of Contents Results of Operations Our historical financial information discussed in this Annual Report has been derived from the Company’s financial statements and accounting records for the years ended December 31, 2022, 2021 and 2020. Consolidated operating results in dollars and as a percent of revenue follows: For the year ended December 31, (in thousands) 2022 2021 2020 2022 vs 2021 2021 vs 2020 Revenues $ 149,680 $ 119,903 $ 111,167 $ 29,777 $ 8,736 Operating expenses: Cost of revenues 17,607 15,088 14,286 2,519 802 Product development 17,674 16,020 14,887 1,654 1,133 Sales and marketing 59,364 43,701 39,693 15,663 4,008 General and administrative 34,049 28,583 26,625 5,466 1,958 Depreciation 17,487 16,344 10,259 1,143 6,085 Impairment of intangible assets — — 15,200 — (15,200) Impairment of goodwill — — 22,607 — (22,607) Impairment of right-of-use asset — 1,919 — (1,919) 1,919 Total operating expenses 146,181 121,655 143,557 24,526 (21,902) Other operating income: Proceeds from settlement 2,061 — — 2,061 — Operating income (loss) $ 5,560 $ (1,752) $ (32,390) $ 7,312 $ 30,638 For the year ended December 31, 2022 2021 2020 Revenues 100.0% 100.0% 100.0% Operating expenses: Cost of revenues 11.8 % 12.6 % 12.9 % Product development 11.8 % 13.4 % 13.4 % Sales and marketing 39.7 % 36.4 % 35.7 % General and administrative 22.7 % 23.8 % 24.0 % Depreciation 11.7 % 13.6 % 9.2 % Impairment of intangible assets — % — % 13.7 % Impairment of goodwill — % — % 20.3 % Impairment of right-of-use asset — % 1.6 % — % Total operating expenses 97.7 % 101.5 % 129.1 % Other operating income: Proceeds from settlement 1.4 % — % — % Operating income (loss) 3.7 % (1.5) % (29.1) % 37 Table of Contents Comparison of Years Ended December 31, 2022 and 2021 Revenues Year Ended December 31, Increase (Decrease) Percent Change 2022 2021 (in thousands, except percentages) Dice (1) $ 106,957 $ 86,257 $ 20,700 24.0 % ClearanceJobs 42,723 33,646 9,077 27.0 % Total revenues $ 149,680 $ 119,903 $ 29,777 24.8 % (1) Includes Dice and Career Events. We experienced an increase in revenue of $29.8 million, or 24.8%. Revenue at Dice increased by $20.7 million, or 24.0%, compared to the same period of 2021 due to improvements in renewal rates and new business activity along with increasing customer counts, which drives additional revenue. Revenues for ClearanceJobs increased by $9.1 million, or 27.0%, as compared to the same period of 2021, driven by continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site. Cost of Revenues Year Ended December 31, Increase Percent Change 2022 2021 (in thousands, except percentages) Cost of revenues $ 17,607 $ 15,088 $ 2,519 16.7 % Percentage of revenues 11.8 % 12.6 % Cost of revenues increased by $2.5 million, or 16.7%, driven by an increase of $1.8 million from higher compensation related costs, primarily from higher headcount. Operational costs, including the amortization of cloud computing and consulting costs, increased by $0.7 million. Product Development Expenses Year Ended December 31, Increase Percent Change 2022 2021 (in thousands, except percentages) Product development $ 17,674 $ 16,020 $ 1,654 10.3 % Percentage of revenues 11.8 % 13.4 % Product development expenses increased $1.7 million, or 10.3%, driven by an increase of $5.0 million from higher compensation related costs, primarily due to higher headcount, partially offset by an increase in capitalized labor of $3.8 million, which decreases operating expenses. Additionally, operational costs, including consulting, education and training costs, increased by $0.5 million. Sales and Marketing Expenses Year Ended December 31, Increase Percent Change 2022 2021 (in thousands, except percentages) Sales and marketing $ 59,364 $ 43,701 $ 15,663 35.8 % Percentage of revenues 39.7 % 36.4 % Sales and marketing expenses increased $15.7 million, or 35.8%, from the same period in 2021. The increase was primarily driven by $9.4 million increase in compensation related costs due to increased headcount and higher quota attainment versus sales plan, and a $5.1 million increase in discretionary marketing expenses supporting the growth in the sales team, and a $1.1 million increase in operational costs, including company events, credit card fees, and hotel and travel. 38 Table of Contents General and Administrative Expenses Year Ended December 31, Increase Percent Change 2022 2021 (in thousands, except percentages) General and administrative $ 34,049 $ 28,583 $ 5,466 19.1 % Percentage of revenues 22.7 % 23.8 % General and administrative costs increased $5.5 million or 19.1%, primarily due to an increase in compensation related costs of $3.7 million, which includes a $1.8 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 stock-based compensation plans. Operational costs, including bad debt expense and consulting increased by $1.8 million. Depreciation Year Ended December 31, Increase Percent Change 2022 2021 (in thousands, except percentages) Depreciation $ 17,487 $ 16,344 $ 1,143 7.0 % Percentage of revenues 11.7 % 13.6 % Depreciation expense increased $1.1 million or 7.0% from the same period in 2021, in connection with increasing internal development costs driving higher depreciation. Impairment of right-of-use asset Year Ended December 31, Decrease Percent Change 2022 2021 (in thousands, except percentages) Impairment of right-of-use asset $ — $ 1,919 $ (1,919) (100.0) % Percentage of revenues — % 1.6 % 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 right-of-use ("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 third quarter of 2021, which did not reoccur in 2022. Proceeds from settlement Year Ended December 31, Increase Percent Change 2022 2021 (in thousands, except percentages) Proceeds from settlement $ 2,061 $ — $ 2,061 — % Percentage of revenues 1.4 % — % During the fourth quarter of 2022 the Company received proceeds from a legal settlement of $2.1 million. Operating Income (Loss) Year Ended December 31, Increase Percent Change 2022 2021 (in thousands, except percentages) Revenue $ 149,680 $ 119,903 $ 29,777 24.8 % Operating income (loss) 5,560 (1,752) $ 7,312 (417.4) % Percentages of revenues 3.7 % (1.5) % 39 Table of Contents Operating income for the year ended December 31, 2022 was $5.6 million, a margin of 3.7%, compared to operating loss of $1.8 million, a negative margin of 1.5%, for the same period in 2021. The increase in operating income and improved percentage margin was driven by higher revenues and proceeds from settlement, 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 Year Ended December 31, Increase Percent Change 2022 2021 (in thousands, except percentages) Income from equity method investment $ 1,597 $ 190 $ 1,407 740.5 % Percentage of revenues 1.1 % 0.2 % During the years ended December 31, 2022 and 2021, the Company recorded $1.6 million and $0.2 million, respectively, of income related to its proportionate share of eFC's net income. The Company records its proportionate share of eFC's net income three months in arrears. The increase of $1.4 million is primarily due to the 2022 period reflecting a full year of activity. Impairment of investment Year Ended December 31, Decrease Percent Change 2022 2021 (in thousands, except percentages) Impairment of investment $ (2,300) $ — $ (2,300) — % Percentage of revenues (1.5) % — % During the third quarter of 2022, the Company recognized a $2.3 million loss related to an impairment of a subordinated convertible promissory note as further described in Note 7 of the notes to consolidated financial statements. Gain on investment Year Ended December 31, Decrease Percent Change 2022 2021 (in thousands, except percentages) Gain on investment $ 320 $ 1,198 $ (878) (73.3) % Percentage of revenues 0.2 % 1.0 % During the second quarter of 2022, the Company recognized a $0.3 million gain from the sale of its 40% common share interest in Rigzone. The gain on investment of $1.2 million for the year ended December 31, 2021 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 its initial public offering. The Company sold 100% of this investment during the third quarter of 2021. See also Note 7 of the notes to consolidated financial statements. Interest Expense and Other Year Ended December 31, Increase Percent Change 2022 2021 (in thousands, except percentages) Interest expense and other $ 1,580 $ 667 $ 913 136.9 % Percentage of revenues 1.1 % 0.6 % Interest expense and other increased by $0.9 million, or 136.9%, from the same period in 2021 due to higher debt outstanding under the Credit Agreement during the current period and higher interest rates. 40 Table of Contents Income Taxes Year Ended December 31, 2022 2021 (in thousands, except percentages) Income (loss) before income taxes $ 3,597 $ (1,031) Income tax benefit (579) (629) Effective tax rate (16.1) % 61.0 % A reconciliation between the income tax expense (benefit) at the federal statutory rate and the reported income tax benefit is summarized as follows: Year Ended December 31, 2022 2021 Federal statutory rate $ 755 $ (216) Gain on sale of businesses or investments — (251) Stock-based compensation (1,130) (84) State tax expense, net of federal effect 139 110 Change in accrual for unrecognized tax benefits (16) (155) Executive compensation 266 541 Research and development tax credits (763) (478) Income from equity method investment (335) — Change in valuation allowance 555 — Other (50) (96) Income tax benefit $ (579) $ (629) Our effective income tax rate was (16.1)% and 61.0% for the years ended December 31, 2022 and 2021, respectively. The 2022 tax rate differed from the federal statutory rate primarily because of a tax benefit related to the vesting of stock-based compensation; tax credits for research and development; and an increase in the valuation allowance associated with an investment. The 2021 tax rate differed from the federal statutory rate primarily because of the utilization of a capital loss carryforward to offset a gain on an investment; deduction limitations on executive compensation; and tax credits for research and development. Income (loss) from discontinued operations, net of tax For the year ended December 31, Increase Percent Change 2022 2021 (in thousands, except percentages) Loss from discontinued operations, net of tax $ — $ (29,340) $ 29,340 (100) % Percentage of revenues — % (24.5) % During the second quarter of 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. 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 method investment of $3.6 million and eFC's earnings during the period. 41 Table of Contents Earnings per Share Year Ended December 31, 2022 2021 (in thousands, except per share amounts) Income (loss) from continuing operations $ 4,176 $ (402) Loss from discontinued operations, net of tax — (29,340) Net income (loss) $ 4,176 $ (29,742) Weighted-average shares outstanding - basic 44,274 46,333 Weighted-average shares outstanding - diluted 46,533 46,333 Diluted earnings (loss) per share - continuing operations $ 0.09 $ (0.01) Diluted earnings (loss) per share - discontinued operations $ — $ (0.63) Diluted earnings (loss) per share $ 0.09 $ (0.64) Diluted earnings (loss) per share from continuing operations was $0.09 and $(0.01) for the years ended December 31, 2022 and 2021, respectively. The improvement in the 2022 period was primarily driven by higher revenues, partially offset by higher operating costs as the Company invests in its product and sales and marketing for future growth. The prior year loss was driven by an ROU asset impairment and higher depreciation expense partially offset by gain on investment. Diluted earnings (loss) per share was $0.09 and $(0.64) for the years ended December 31, 2022 and 2021, respectively. The prior year loss per share was driven by the loss from discontinued operations. Comparison of Years Ended December 31, 2021 and 2020 Revenues Year Ended December 31, Increase (Decrease) Percent Change 2021 2020 (in thousands, except percentages) Dice (1) $ 86,257 $ 82,190 $ 4,067 4.9 % ClearanceJobs 33,646 28,977 4,669 16.1 % Total revenues $ 119,903 $ 111,167 $ 8,736 7.9 % (1) Includes Dice and Career Events We experienced an increase in revenue of $8.7 million, or 7.9%. Revenue at Dice increased by $4.1 million, or 4.9%, compared to the same period in 2020 due to improvements in renewal rates and new business activity along with consistently increasing customer counts during 2021, which drives additional revenue in future periods. Revenues for ClearanceJobs increased by $4.7 million, or 16.1%, as compared to the same period of 2020, driven by continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site. Cost of Revenues Year Ended December 31, Increase Percent Change 2021 2020 (in thousands, except percentages) Cost of revenues $ 15,088 $ 14,286 $ 802 5.6 % Percentage of revenues 12.6 % 12.9 % Cost of revenues increased by $0.8 million, or 5.6%, driven by an increase of $0.4 million associated with web hosting and cloud computing, consistent with the Company's investment in its products and tools to enhance sales processes. The Company also experienced a $0.4 million increase in headcount related costs. 42 Table of Contents Product Development Expenses Year Ended December 31, Increase Percent Change 2021 2020 (in thousands, except percentages) Product development $ 16,020 $ 14,887 $ 1,133 7.6 % Percentage of revenues 13.4 % 13.4 % Product development expenses increased $1.1 million or 7.6%. Within product development, the Company experienced a decrease in capitalized labor of $0.7 million, which increased expense, along with an increase in consulting costs of $0.3 million. Sales and Marketing Expenses Year Ended December 31, Increase Percent Change 2021 2020 (in thousands, except percentages) Sales and marketing $ 43,701 $ 39,693 $ 4,008 10.1 % Percentage of revenues 36.4 % 35.7 % Sales and marketing expenses increased $4.0 million, or 10.1%, from the same period in 2020. The increase was primarily driven by $2.4 million increase in compensation related costs due to increased headcount and higher quota attainment versus sales plan, and a $1.5 million increase in discretionary marketing expenses as customer recruitment activity rebounded. General and Administrative Expenses Year Ended December 31, Increase Percent Change 2021 2020 (in thousands, except percentages) General and administrative $ 28,583 $ 26,625 $ 1,958 7.4 % Percentage of revenues 23.8 % 24.0 % General and administrative costs increased $2.0 million or 7.4%, primarily due to an increase in compensation related costs of $2.9 million with business performance driving achievement for the bonus and stock-based compensation plans. This was partially offset by lower bad debt expense of $0.7 million. Depreciation Year Ended December 31, Increase Percent Change 2021 2020 (in thousands, except percentages) Depreciation $ 16,344 $ 10,259 $ 6,085 59.3 % Percentage of revenues 13.6 % 9.2 % Depreciation expense increased $6.1 million or 59.3%, from the same period in 2020, in connection with increasing internal development costs during 2019 and 2020 that were then placed in service, primarily in late 2020, and depreciated. Internal development costs are reflected as purchases of fixed assets in the consolidated statements of cash flows. Impairment of intangible assets Year Ended December 31, Decrease Percent Change 2021 2020 (in thousands, except percentages) Impairment of intangible assets $ — $ 15,200 $ (15,200) (100.0) % Percentage of revenues — % 13.7 % The Company has an indefinite-lived acquired intangible asset related to the Dice trademarks and brand name. During the first and third quarters of 2020, because of the impacts of the COVID-19 pandemic, the Company performed an interim impairment 43 Table of Contents 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 9 of the notes to consolidated financial statements. Impairment of goodwill Year Ended December 31, Decrease Percent Change 2021 2020 (in thousands, except percentages) Impairment of goodwill $ — $ 22,607 $ (22,607) (100.0) % Percentage of revenues — % 20.3 % 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 10 of the notes to consolidated financial statements. Impairment of right-of-use asset Year Ended December 31, Increase Percent Change 2021 2020 (in thousands, except percentages) Impairment of right-of-use asset $ 1,919 $ — $ 1,919 — % Percentage of revenues 1.6 % — % 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 third quarter of 2021. Operating Income (Loss) Year Ended December 31, Increase (Decrease) Percent Change 2021 2020 (in thousands, except percentages) Revenue $ 119,903 $ 111,167 $ 8,736 7.9 % Operating income (loss) $ (1,752) $ (32,390) $ 30,638 (94.6) % Percentage of revenues (1.5) % (29.1) % Operating loss for the year ended December 31, 2021 was $1.8 million, a negative margin of 1.5%, compared to operating loss of $32.4 million, a negative margin of 29.1%, for the same period in 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. Income from equity method investment Year Ended December 31, Decrease Percent Change 2021 2020 (in thousands, except percentages) Income from equity method investment $ 190 $ — $ 190 — % Percentage of revenues 0.2 % — % During the fourth quarter of 2021, the Company recorded $0.2 million of income related to its proportionate share of eFC's net income. 44 Table of Contents Impairment of Investment Year Ended December 31, Increase Percent Change 2021 2020 (in thousands, except percentages) Impairment of investment $ — $ (2,002) $ 2,002 (100.0) % Percentage of revenues — % (1.8) % During the first quarter of 2020, due to the impacts from the COVID-19 pandemic, the Company determined the value of its 7.6% interest in a leading tech skills assessment company to be zero. Accordingly, the Company recorded an impairment charge of $2.0 million during the first quarter of 2020. Gain on investment Year Ended December 31, Increase Percent Change 2021 2020 (in thousands, except percentages) Gain on investment $ 1,198 $ — $ 1,198 — % Percentage of revenues 1.0 % — % The gain on investment of $1.2 million 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 consolidated financial statements. Interest Expense and Other Year Ended December 31, Decrease Percent Change 2021 2020 (in thousands, except percentages) Interest expense $ 667 $ 831 $ (164) (19.7) % Percentage of revenues 0.6 % 0.7 % Interest expense and other decreased by $0.2 million, or 19.7%, from the same period in 2020. The decrease in interest expense was primarily due to lower weighted average debt outstanding during the year. The 2020 period included a $0.2 million gain recognized in the second quarter of 2020 on the sale of the Company's 20% interest in BioSpace. Income Taxes Year Ended December 31, 2021 2020 (in thousands, except percentages) Loss before income taxes $ (1,031) $ (35,223) Income tax benefit (629) (2,826) Effective tax rate 61.0 % 8.0 % 45 Table of Contents A reconciliation between tax benefit at the federal statutory rate and the reported income tax benefit is summarized as follows: Year Ended December 31, 2021 2020 Federal statutory rate $ (216) $ (7,397) Gain on sale of businesses or investments (251) (42) Stock-based compensation (84) 432 Nondeductible impairment — 5,029 State tax expense (benefit), net of federal effect 110 (514) Change in accrual for unrecognized tax benefits (155) (216) Executive compensation 541 323 Research and development tax credits (478) (530) Other (96) 89 Income tax benefit $ (629) $ (2,826) Our effective income tax rate was 61.0% and 8.0% for the years ended December 31, 2021 and 2020, respectively. The 2021 tax rate differed from the federal statutory rate primarily because of the utilization of a capital loss carryforward to offset a gain on an investment; deduction limitations on executive compensation; and tax credits for research and development. The 2020 tax rate differed from the federal statutory rate primarily because of tax deficiencies in stock-based compensation; nondeductible impairment charges; state tax benefits; and tax credits for research and development. Income (loss) from discontinued operations, net of tax Year Ended December 31, Decrease Percent Change 2021 2020 (in thousands, except percentages) Income (loss) from discontinued operations, net of tax $ (29,340) $ 2,382 $ (31,722) (1,331.7) % Percentage of revenues (24.5) % 2.1 % During the second quarter of 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. 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 method investment of $3.6 million and eFC's earnings during the period. Income from discontinued operations for the year ended December 31, 2020 represents eFC's earnings during the period. Loss per share Year Ended December 31, 2021 2020 (in thousands, except per share amounts) Loss from continuing operations $ (402) $ (32,397) Income (loss) from discontinued operations, net of tax (29,340) 2,382 Net loss (29,742) (30,015) Weighted-average shares outstanding-diluted 46,333 48,278 Diluted loss per share - continuing operations (0.01) (0.67) Diluted earnings (loss) per share - discontinued operations (0.63) 0.05 Diluted loss per share (0.64) (0.62) Diluted loss per share from continuing operations was $0.01 and $0.67 for the years ended December 31, 2021 and 2020, respectively. The decrease in diluted loss per share was primarily driven by the non-cash impairment charges during 2020 and 46 Table of Contents the gain on 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 $0.62 for the years ended December 31, 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. Non-GAAP Financial Measures We have provided certain non-GAAP financial information as additional measures for our operating results. These measures are not in accordance with, or an alternative for, measures in accordance with U.S. GAAP and may be different from similarly titled non-GAAP measures reported by other companies. We believe the presentation of non-GAAP measures, such as Adjusted EBITDA and Adjusted EBITDA margin, provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP metrics 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. The Company also uses this measure to calculate amounts of performance based compensation under the senior management incentive bonus program. Adjusted EBITDA represents net income plus (to the extent deducted in calculating such net income) interest expense, income tax expense, depreciation and amortization, and items such as non-cash stock based compensation, losses resulting from certain dispositions outside the ordinary course of business including prior negative operating results of those divested businesses, certain write-offs in connection with indebtedness, impairment charges with respect to long-lived assets, expenses incurred in connection with an equity offering or any other offering of securities by the Company, extraordinary or non-recurring non-cash expenses or losses, losses from equity method investments, transaction costs in connection with the credit agreement, deferred revenues written off in connection with acquisition purchase accounting adjustments, write-off of non-cash stock-based compensation expense, severance and retention costs related to dispositions and reorganizations of the Company, and losses related to legal claims and fees that are unusual in nature or infrequent, minus (to the extent included in calculating such net income) non-cash income or gains, including income from equity method investments, interest income, business interruption insurance proceeds, and any income or gain resulting from certain dispositions outside the ordinary course of business, including prior operating results of those divested businesses, and gains related to legal claims that are unusual in nature or infrequent. Adjusted EBITDA Margin is computed as Adjusted EBITDA divided by Revenues. We also consider Adjusted EBITDA and Adjusted EBITDA Margin, as defined above, 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. 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. We understand that although Adjusted EBITDA and Adjusted EBITDA Margin is frequently used by securities analysts, lenders and others in their evaluation of companies, Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tool, and you should not consider them in isolation, or as a substitute for analysis of our liquidity or results as reported under GAAP. Some limitations are: • Adjusted EBITDA and Adjusted EBITDA Margin do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; • Adjusted EBITDA and Adjusted EBITDA Margin do not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA and Adjusted EBITDA Margin do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt; • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect any cash requirements for such replacements; and 47 Table of Contents • Other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDA Margin differently than we do, limiting their usefulness as a comparative measure. To compensate for these limitations, management evaluates our liquidity by considering the economic effect of excluded expense items independently, as well as in connection with its analysis of cash flows from operations and through the use of other financial measures, such as capital expenditure budget variances, investment spending levels and return on capital analysis. 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, operating income, net income, net income margin, 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 years ended December 31, 2022, 2021 and 2020 follows (in thousands): Year Ended December 31, 2022 2021 2020 Reconciliation of Net Income (loss) to Adjusted EBITDA: Net income (loss) $ 4,176 $ (29,742) $ (30,015) Interest expense 1,580 748 1,031 Income tax benefit (579) (629) (2,826) Depreciation 17,487 16,344 10,259 Non-cash stock based compensation 9,519 7,681 5,764 Income from equity method investment (1,597) (190) — Impairment of intangible assets — — 15,200 Impairment of goodwill — — 22,607 Impairment of investment 2,300 — 2,002 Impairment of right-of-use asset — 1,919 — Proceeds from settlement (2,061) — — Gain on investments (320) (1,198) (200) Severance and related costs 445 1,969 1,194 Loss (income) on discontinued operations, net of tax — 29,340 (2,382) Other — (80) — Adjusted EBITDA $ 30,950 $ 26,162 $ 22,634 Reconciliation of Operating Cash Flows to Adjusted EBITDA: Net cash provided by operating activities $ 36,035 $ 28,581 $ 18,683 Interest expense 1,580 748 1,031 Amortization of deferred financing costs (146) (147) (147) Income tax benefit (579) (629) (2,826) Deferred income taxes 3,800 569 2,918 Change in accrual for unrecognized tax benefits 16 156 446 Change in accounts receivable 2,109 1,102 (859) Change in deferred revenue (4,718) (10,075) 8,193 Discontinued operations results — (3,593) (7,290) Severance and related costs 445 1,969 1,194 Changes in working capital and other (7,592) 7,481 1,291 Adjusted EBITDA $ 30,950 $ 26,162 $ 22,634 48 Table of Contents A reconciliation of Adjusted EBITDA Margin for the years ended December 31, 2022, 2021 and 2020 follows (in thousands, except percentages): Year Ended December 31, 2022 2021 2020 Revenues $ 149,680 $ 119,903 $ 111,167 Net income (loss) $ 4,176 $ (29,742) $ (30,015) Net income (loss) margin (1) 3 % (25) % (27) % Adjusted EBITDA $ 30,950 $ 26,162 $ 22,634 Adjusted EBITDA Margin (1) 21 % 22 % 20 % (1) Net income (loss) margin and Adjusted EBITDA Margin are calculated by dividing the respective measure by that period's revenues Liquidity and Capital Resources Cash Flows We have summarized our cash flows for the years ended December 31, 2022, 2021 and 2020 as follows (in thousands): Year Ended December 31, 2022 2021 2020 Cash from operating activities $ 36,035 $ 28,581 $ 18,683 Cash used in investing activities (17,656) (19,304) (15,904) Cash used in financing activities (16,913) (15,387) (542) We have financed our operations primarily through cash provided by operating activities and borrowings under our revolving credit facility. At December 31, 2022, we had cash and borrowings of $3.0 million and $30.0 million, respectively, compared to $1.5 million and $23.0 million, respectively, at December 31, 2021. Liquidity Our principal internal sources of liquidity are cash on hand, as well as the cash flow that we generate from our operations. In addition, we had $70.0 million in borrowing capacity under our $100.0 million Credit Agreement at December 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. 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. However, it is possible that one or more lenders under the Credit Agreement may refuse or be unable to satisfy their commitment to lend to us, we may violate one or more of our covenants or financial ratios contained in our Credit Agreement or we may need to refinance our debt and be unable to do so. In addition, our liquidity could be negatively affected by a decrease in demand for our products and services and the ability of our customers to pay for current or future services. We may also make acquisitions and may need to raise additional capital through future debt financings or equity offerings to the extent necessary to fund such acquisitions, which we may not be able to do on a timely basis or on terms satisfactory to us or at all. Comparison of Years Ended December 31, 2022 and 2021 Operating Activities Cash flows from operating activities is driven by earnings and is dependent on the amount and timing of billings and cash collections from our customers. Cash flows from operating activities primarily consists of net income adjusted for certain non-cash items, including depreciation, changes in deferred tax assets and liabilities, stock based compensation, impairments, and the effect of changes in working capital. Net cash flows from operating activities were $36.0 million and $28.6 million for the years ended December 31, 2022 and 2021, respectively, an increase of $7.4 million. 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 49 Table of Contents from our customers. Cash provided by operating activities during the year ended December 31, 2022 increased primarily due to strong billings to and collections from customers and the timing of certain vendor and tax payments. Investing Activities During the year ended December 31, 2022, cash used in investing activities was $17.7 million compared to $19.3 million of cash used in investing activities during the year ended December 31, 2021. Cash used in investing activities during the year ended December 31, 2022 is primarily comprised of $18.0 million of purchases of fixed assets, which is primarily comprised of capitalized development costs as the Company continues to invest in its products. Cash used in investing activities during the year ended December 31, 2021 is comprised of $3.2 million of cash transferred to eFC related to the transfer of ownership in the prior year period, $3.0 million of cash paid for an investment as described in Note 7 of the notes to consolidated financial statements, and $14.3 million of fixed assets purchases, which is primarily comprised of capitalized development costs, partially offset by cash proceeds of $1.2 million from the sale of an investment. Financing Activities Cash used in financing activities during the year ended December 31, 2022 was $16.9 million primarily due to cash uses of $23.4 million, net, related to share repurchases and $0.5 million from financing costs paid, partially offset by $7.0 million of net proceeds on long-term debt. Cash used during the year ended December 31, 2021 was $15.4 million and was driven by $18.4 million of share repurchases, partially offset by $3.0 million of net borrowings on long-term debt. Comparison of Years Ended December 31, 2021 and 2020 Operating Activities Net cash flows from operating activities primarily consist of net income adjusted for certain non-cash items, including depreciation, changes in deferred tax assets and liabilities, stock based compensation, impairments, and the effect of changes in working capital. Net cash flows from operating activities were $28.6 million and $18.7 million for the years ended December 31, 2021 and 2020, respectively, an increase of $9.9 million. Cash inflow from operations is driven by earnings and is dependent on the amount and timing of billings and cash collection from our customers. Cash provided by operating activities during the year ended December 31, 2021 increased primarily due to strong billings to and collections from customers. Investing Activities During the year ended December 31, 2021, cash used in investing activities was $19.3 million compared to $15.9 million of cash used in investing activities during the year ended December 31, 2020. Cash used by investing activities during the year ended December 31, 2021 increased from the comparable 2020 period due to cash transferred to 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, partially offset by higher proceeds from sale of investments. Financing Activities Cash used in financing activities during the year ended December 31, 2021 was $15.4 million primarily due to $3.0 million of net borrowings on long-term debt and $18.4 million of repurchases of common stock. Cash used during the year ended December 31, 2020 was $0.5 million primarily due to $10.5 million of repurchases of common stock, partially offset by $10.0 million of net borrowings on long-term debt. Financings and Capital Requirements Credit Agreement We have a $100 million revolving credit facility, which matures June 2027, with $30.0 million of outstanding borrowings on the facility at December 31, 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 the Secured Overnight Financing Rate ("SOFR") 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. The margin ranges from 2.00% to 2.75% on SOFR and SONIA loans and 1.00% to 1.75% on base rate loans, determined by the Company’s most recent consolidated leverage ratio, plus an additional spread of 0.10%. The Company incurs a commitment fee ranging from 0.35% to 0.50% on any unused capacity under the revolving loan facility, determined by the 50 Table of Contents Company’s most recent consolidated leverage ratio. Assuming an interest rate of 6.67% (the rate in effect on December 31, 2022) on our current borrowings, interest payments are expected to be $2.0 million per year in years 2023 through 2026 and $1.0 million in 2027. The Credit Agreement contains various affirmative and negative covenants and also contains certain financial covenants, including a consolidated leverage ratio and a consolidated interest coverage ratio. As of December 31, 2022, the Company was in compliance with all of the financial covenants under the Credit Agreement. Refer to Note 11 of the notes to consolidated financial statements and Item 7A. "Quantitative and Qualitative Disclosures about Market Risk - Interest Rate Risk." Contractual Obligations The Company has operating leases for corporate office space and certain equipment. The leases have terms from one year to eight years, some of which include options to renew the lease, and are included in the lease term when it is reasonably certain that the Company will exercise the option. No leases include options to purchase the leased property. As of December 31, 2022 the value of our lease right-of-use asset was $6.6 million and the value of our lease liability was $8.5 million. Our recorded lease right-of-use asset and lease liability were each reduced $2.1 million as of December 31, 2022, which represents a tenant improvement allowance that is expected to be consumed in 2023. See also Note 6 of the notes to consolidated financial statements for further information. We make commitments to purchase advertising from online vendors, which we pay for on a monthly basis. We have no significant long-term obligations to purchase a fixed or minimum amount with these vendors. Other Capital Requirements As of December 31, 2022, we recorded approximately $0.8 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 December 31, 2022 are $0.8 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 twelve months. The Company's Board of Directors approved a stock repurchase program that permits the Company to repurchase its common stock. During the year ended December 31, 2022, the Company repurchased 3.3 million shares for $18.6 million. As of December 31, 2022, the value of shares available to be purchased under the current plan was $2.1 million. Management has discretion in determining the conditions under which shares may be purchased from time to time. Subsequent to December 31, 2022, the Company's Board of directors announced a new stock repurchase program that permits the repurchase of up to $10 million of the Company's common stock through February 2024. See also Note 13 of the notes to consolidated financial statements for further information. We anticipate capital expenditures in 2023 to be approximately $20 million to $22 million. The increase over prior periods is due to the additional investments in the development of new products and features. We intend to use operating cash flows to fund capital expenditures. 51 Table of Contents Cyclicality The labor market and certain of the industries that we serve have historically experienced short-term cyclicality. However, we believe that online career websites and marketplaces continue to provide economic and strategic value to the labor market and industries that we serve. Any slowdown in recruitment activity that occurs could negatively impact our revenues and results of operations. For instance, the COVID-19 pandemic resulted in a slowdown of recruiting activity in 2020 and early in 2021, which negatively impacted our business. Alternatively, a decrease in the unemployment rate or a labor shortage, including as a result of an increase in job turnover, generally means that employers (including our customers) are seeking to hire more individuals, which would generally lead to more job postings and databases licenses and have a positive impact on our revenues and results of operations. Based on historical trends, improvements in labor markets and the need for our services generally lag behind overall economic improvements. Additionally, there has historically been a lag from the time customers begin to increase purchases of our recruitment services and the impact to our revenues due to the recognition of revenue occurring over the length of the contract, which can be several months to over a year. 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 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, our revenues and results of operations could be negatively impacted. 52 Table of Contents Recent Accounting Pronouncements For a discussion of new accounting pronouncements affecting the Company, refer to Note 2 of the notes to consolidated financial statements included in Item 8 of this Annual Report. 53 Table of Contents