What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-10 compared with 2022-11-02 · 144 added, 272 removed, 187 unchanged (69% of the section changed)

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See also our consolidated financial statements and the notes thereto and the section entitled “Note Concerning Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended December 31, 2022.

Information contained herein contains forward-looking statements.

Information contained herein contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control.

Forward-looking statements include, without limitation,

information concerning our possible or assumed future results of operations.

Forward-looking statements include, without limitation, information concerning our possible or assumed future financial condition, liquidity and results of operations, including expectations (financial or otherwise), our strategy, plans, objectives, expectations (financial or otherwise) and intentions, and growth potential.

These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions.

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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, 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.

These factors and others are discussed in more detail below and in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, under the headings “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Information contained herein contains certain non-GAAP financial measures.

These measures are not in accordance with, or an alternative for, measures in accordance with U.S.

Such measures presented herein include adjusted earnings before interest, taxes, depreciation, amortization, non-cash stock-based compensation expense, impairment, gain or loss on sale of businesses, and certain other income or expense items, as defined, (“Adjusted EBITDA") and Adjusted EBITDA Margin.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" for definitions of these measures as well as reconciliations to the comparable GAAP measure.

These factors include, but are not limited to:

our ability to execute our tech-focused strategy;

write-offs of goodwill, tradename and intangible assets;

competition from existing and future competitors;

changes in the recruiting and career services business and technologies, and the development of new products and services;

failure to develop and maintain our reputation and brand recognition;

failure to increase or maintain the number of customers who purchase recruitment packages;

failure to attract qualified professionals or grow the number of qualified professionals who use our websites;

inability to successfully integrate future acquisitions or identify and consummate future acquisitions;

misappropriation or misuse of our intellectual property, claims against us for intellectual property infringement or the failure to enforce our ownership or use of intellectual property;

failure of our businesses to attract, retain and engage users;

unfavorable decisions in proceedings related to future tax assessments;

taxation risks in various jurisdictions for past or future sales;

significant downturn not immediately reflected in our operating results;

our indebtedness and the potential inability to borrow funds under our Credit Agreement (as defined below);

our ability to incur additional debt;

covenants in our Credit Agreement;

the development and use of artificial intelligence;

failure to timely and efficiently scale and adapt our existing technology and network infrastructure;

capacity constraints, systems failures or breaches of network security;

the usefulness of our candidate profiles;

decrease in user engagement;

Internet search engine methodologies and their impact on our search result rankings;

failure to halt the operations of websites that aggregate our data, as well as data from other companies;

our reliance on third-party data hosting facilities;

compliance with laws and regulations concerning collection, storage and use of professionals’ professional and personal information;

regulation of the internet;

a review of strategic alternatives may occur from time to time and the possibility that such review will not result in a transaction;

loss of key executives and technical personnel and our ability to attract and retain key executives, including our CEO;

increases in the unemployment rate, cyclicality or downturns in the United States or worldwide economies or the industries we serve, labor shortages, or job shortages;

litigation related to infringement or other claims regarding our services or content;

our ability to defend ownership of our intellectual property;

global climate change;

compliance with changing corporate governance requirements and costs incurred in connection with being a public company;

compliance with the continued listing standards of the New York Stock Exchange (the “NYSE”);

volatility in our stock price;

failure to maintain internal controls over financial reporting;

results of operations fluctuating on a quarterly and annual basis;

and disruption resulting from unsolicited offers to purchase the company.

These factors and others are discussed in more detail below and in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, under the headings “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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.

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We have no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy and information statements and other material information concerning us are available free of charge on the Investors page of our website at www.dhigroupinc.com .

Our reports filed with the SEC are also available by visiting http://www.sec.gov .

In addition, information contained herein contains certain non-GAAP financial measures.

These measures are not in accordance with, or an alternative for, measures in accordance with generally accepted accounting principles in the United States ("U.S.

Such measures presented herein include adjusted earnings before interest, taxes, depreciation and amortization, and

items such as non-cash stock-based compensation, gain or loss on investments, and certain other income or expense items, as defined, (“Adjusted EBITDA") and Adjusted EBITDA Margin.

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

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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.

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

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.

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

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The tables below detail this customer data.

As of September 30, Increase Percent

As of March 31, Increase Percent

Recruitment Package Customers:

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Average Annual Revenue per Recruitment Package Customer (1)

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

Three months ended March 31,

2023 2022 Increase Percent

Change 2022 2021 Increase Percent

Dice $ 15,672 $ 14,112 $ 1,560 11 %

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

Dice had 6,409 recruitment package customers as of September 30, 2022, which was an increase of 639, or 11%, and average annual revenue per recruitment package customer for Dice increased $1,212, or 9%, from the prior year quarter.

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

ClearanceJobs had 2,030 recruitment package customers as of September 30, 2022 compared to 1,816 as of September 30, 2021, an increase of 12%, and average annual revenue per recruitment package customer increased $2,256, or 13%, from the prior year quarter.

Dice had 6,171 recruitment package customers as of March 31, 2023, which was a decrease of 78, or 1%, and average annual revenue per recruitment package customer for Dice increased $1,560, or 11%, from the prior year quarter.

The decrease in

recruitment package customers was due to macroeconomic conditions causing customer counts to decline while the average annual revenue per recruitment package customer increased driven by strong renewal and retention rates as our larger recurring customers continue to renew with Dice.

ClearanceJobs had 2,078 recruitment package customers as of March 31, 2023 compared to 1,928 as of March 31, 2022, an increase of 8%, and average annual revenue per recruitment package customer increased $2,112, or 11%, from the prior year quarter.

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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Comparison to Prior Year End Comparison Year Over Year

9/30/2022 12/31/2021 Increase Percent Change 9/30/2021 Increase Percent Change

3/31/2023 12/31/2022 Increase (Decrease) Percent Change 3/31/2022 Increase (Decrease) Percent Change

Deferred Revenue $ 58,844 $ 50,864 $ 7,980 16 % $ 56,786 $ 2,058 4 %

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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 September 30, 2022 increased $10.2 million and $22.9 million from December 31, 2021 and September 30, 2021, respectively.

The increase in backlog compared to December 31, 2021 and September 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.

Backlog at March 31, 2023 increased $7.0 million and $18.2 million from December 31, 2022 and March 31, 2022, respectively.

The increase in backlog compared to December 31, 2022 and March 31, 2022 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, 2022.

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.

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Product Releases

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

Dice Invite To Apply, Dice Matchscore on Jobs Dice New Job Apply Flow, Dice TalentSearch Time Zone Search, Dice TalentSearch Auto Talent Alerts, Dice iOS App Messaging

ClearanceJobs Expressed Interest, ClearanceJobs Enhanced Employer Profile ClearanceJobs Multi-Factor Authentication, ClearanceJobs Live Video, ClearanceJobs Scheduled Broadcast Messages

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.

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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.

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.

The largest components of our expenses are personnel costs and marketing and sales expenditures.

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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, 2022.

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

Three Months Ended September 30, Increase Percent

Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

Three Months Ended March 31, Increase Percent

(in thousands, except percentages)

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(1) Includes Dice and Career Events

For the three months ended September 30, 2022 we experienced an increase in revenue of $7.8 million, or 25%.

Revenue at Dice increased $5.1 million, or 23%, 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.

For the three months ended March 31, 2023 we experienced an increase in revenue of $4.3 million, or 12%.

Revenue at Dice increased $2.3 million, or 9%, compared to the same period in 2022 due to strong renewal and retention rates.

Revenues for ClearanceJobs increased $2.0 million, or 21%, as compared to the same period in 2022, primarily driven by continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site.

Cost of Revenues

Three Months Ended September 30, Increase Percent

Three Months Ended March 31, Increase Percent

(in thousands, except percentages)

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Percentage of revenues 12.7 % 11.9 %

Cost of revenues increased $0.8 million, or 20%, driven by an increase of $0.6 million from higher compensation related costs, primarily from higher headcount.

Cost of revenues increased $0.8 million, or 20%, driven by an increase of $0.7 million from higher compensation related costs, primarily from higher headcount, partially offset by an increase in capitalized labor of $0.1 million, which decreases operating expenses.

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

Product Development Expenses

Three Months Ended September 30, Increase Percent

Three Months Ended March 31, Increase Percent

(in thousands, except percentages)

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Product development expenses increased $0.8 million, or 19%, driven by an increase of $1.1 million from higher compensation related costs, primarily from higher headcount, partially offset by an increase in capitalized labor of $0.3 million, which decreases operating expenses.

Operational costs, including consulting and education/training costs, increased by $0.2 million.

Operational costs, including consulting, decreased by $0.1 million.

Sales and Marketing Expenses

Three Months Ended September 30, Increase Percent

Three Months Ended March 31, Increase Percent

(in thousands, except percentages)

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Sales and marketing expenses increased $2.1 million, or 15% from the same period in 2022.

This increase was driven by a $2.2 million increase in compensation related costs from higher headcount and quota attainment versus sales plan, $1.3 million increase in discretionary marketing expenses supporting the growth in the sales team, and a $0.2 million increase in operational costs, including travel and entertainment and company events.

This increase was driven by a $1.9 million increase in compensation related costs from higher headcount and quota attainment versus sales plan and a $0.3 million increase in operational costs, including Company events, consulting and travel and entertainment.

The increase was partially offset by $0.1 million decrease in discretionary marketing expenses.

General and Administrative Expenses

Three Months Ended September 30, Increase Percent

Three Months Ended March 31, Increase Percent

(in thousands, except percentages)

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General and administrative expenses increased $0.4 million, or 6% from the prior year.

The increase was driven by a $0.7 million increase in compensation expense, which includes a $0.3 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 increased $0.4 million primarily due to a higher provision for bad debt in the third quarter of 2022 to align with the Company's growth, combined with a provision reduction in the third quarter of 2021 as collection risks related to the COVID-19 pandemic declined.

Three Months Ended September 30, Increase Percent

The increase was driven by a $0.7 million increase in stock-based compensation.

The increase in compensation expense is primarily due to higher achievement against targets related to the Company's PSUs.

See also Note 12 of the notes to condensed consolidated financial statements.

The increase was partially offset by a $0.2 million decrease in compensation related costs from lower headcount.

Three Months Ended March 31, Increase Percent

(in thousands, except percentages)

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Percentage of revenues 10.8 % 11.5 %

Depreciation expense was flat from the same period in 2021.

While the Company continues to increase its capitalized development costs, increases to depreciation expense may lag due to the timing of placing the related assets into service.

Impairment of Right-of-Use Asset

Three Months Ended September 30, Decrease Percent

(in thousands, except percentages)

Impairment of Right-of-Use Asset $ — $ 1,919 $ (1,919) (100) %

Percentage of revenues — % 6.2 %

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

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

Depreciation expense increased $0.2 million, or 5%, compared to the same period in 2022.

The increase was driven by higher capitalized internal development costs throughout 2022 and in the first quarter of 2023, which increased depreciation in the first quarter of 2023.

Operating Income

Three Months Ended September 30, Increase Percent

Three Months Ended March 31, Decrease Percent

(in thousands, except percentages)

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Operating margin 1.5 % 1.8 %

Operating income for the three months ended September 30, 2022 was $1.2 million, a positive margin of 3.2%, compared to operating loss of $2.2 million, a negative margin of 7.2%, for the same period in 2021, an improvement of $3.4 million.

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

Operating income for the three months ended March 31, 2023 was $0.6 million, a positive margin of 1.5%, compared to operating income of $0.6 million, a positive margin of 1.8%, for the same period in 2022, a decrease of $0.1 million.

The decrease in operating income and percentage margin was driven by higher operating costs as the Company invests in its product and sales and marketing, primarily through higher headcount in those areas, for future growth.

The decrease was partially offset by higher revenues.

Income from Equity Method Investment

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

Income from equity method investment $ 591 $ — $ 591 n/a

Percentage of revenues 1.5 % — %

During the three months ended September 30, 2022, the Company recorded $0.6 million 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.

Accordingly, there was no income from the Company's proportionate share of eFC's net income for the three months ended September 30, 2021 as the investment was acquired June 30, 2021.

Loss on Investment

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

Loss on investment $ — $ (641) $ 641 (100) %

Percentage of revenues — % (2.1) %

During the three months ended September 30, 2021, the Company recognized a $0.6 million loss 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.

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

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

Impairment of Investment

Three Months Ended September 30, Decrease Percent

(in thousands, except percentages)

Impairment of investment $ (2,300) $ — $ (2,300) n/a

Percentage of revenues (6.0) % — %

During the three months ended September 30, 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 the condensed consolidated financial statements.

Interest Expense and Other

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

Interest expense and other $ 447 $ 150 $ 297 198 %

Percentage of revenues 1.2 % 0.5 %

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 and higher interest rates.

Three Months Ended September 30,

(in thousands, except

Loss before income taxes $ (938) $ (3,006)

Income tax benefit (12) (572)

Effective tax rate 1.3 % 19.0 %

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

statutory rate due to tax benefits of $0.1 million each from the vesting of share-based compensation awards and research tax credits and due to tax expense of $0.5 million from a valuation allowance related to the impairment of an investment.

The tax rate for the three months ended September 30, 2021, differed from the statutory rate due to tax expense of $0.1 million from a valuation allowance on our capital loss carryforward.

Earnings (Loss) per Share

Three Months Ended September 30,

(in thousands, except

per share amounts)

Net loss $ (926) $ (2,434)

Weighted-average shares outstanding - basic 44,190 45,807

Weighted-average shares outstanding - diluted 44,190 45,807

Diluted loss per share $ (0.02) $ (0.05)

Diluted loss per share was $0.02 and $0.05 for the three months ended September 30, 2022 and 2021, respectively.

The loss for the three months ended September 30, 2022 was driven by the impairment of investment while the loss for the three months ended September 30, 2021 was driven by an ROU asset impairment.

Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

$ 78,799 $ 61,906 $ 16,893 27 %

ClearanceJobs 31,119 24,249 6,870 28 %

Total revenues $ 109,918 $ 86,155 $ 23,763 28 %

(1) Includes Dice U.S.

and Career Events

We experienced an increase in revenue of $23.8 million, or 28%.

Revenue at Dice increased by $16.9 million, or 27%, 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 $6.9 million, or 28%, 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

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

Cost of revenues $ 12,841 $ 11,086 $ 1,755 16 %

Percentage of revenues 11.7 % 12.9 %

Cost of revenues increased $1.8 million, or 16%, driven by an increase of $1.5 million from higher compensation related costs, primarily from higher headcount.

Operational costs, including consulting costs, increased by $0.2 million.

Product Development Expenses

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

Product development $ 12,982 $ 11,168 $ 1,814 16 %

Percentage of revenues 11.8 % 13.0 %

Product development increased $1.8 million, or 16%, driven by an increase of $4.5 million from higher compensation related costs, primarily due to higher headcount, partially offset by an increase in capitalized labor of $3.0 million, which decreases operating expenses.

Additionally, operational costs, including consulting and education/training costs, increased by $0.3 million.

Sales and Marketing Expenses

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

Sales and marketing $ 43,207 $ 31,214 $ 11,993 38 %

Percentage of revenues 39.3 % 36.2 %

Sales and marketing expenses increased $12.0 million, or 38% from the same period in 2021.

The increase was driven by a $7.0 million increase in compensation related costs from higher headcount and quota attainment versus sales plan, $4.0 million increase in discretionary marketing expenses supporting the growth in the sales team, and a $0.9 million increase in operational costs, including travel and entertainment, credit card fees and company events.

General and Administrative Expenses

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

General and administrative $ 25,543 $ 20,649 $ 4,894 24 %

Percentage of revenues 23.2 % 24.0 %

General and administrative costs increased $4.9 million, or 24%, from the same period in 2021.

The increase was driven by a $3.3 million increase in compensation expense, which includes a $1.6 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 bad debt expenses, sales tax, collection expenses, travel, and training increased $1.6 million.

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

Depreciation $ 12,594 $ 12,030 $ 564 5 %

Percentage of revenues 11.5 % 14.0 %

Depreciation expense increased $0.6 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.

Impairment of Right-of-Use Asset

Nine Months Ended September 30, Decrease Percent

(in thousands, except percentages)

Impairment of Right-of-Use Asset $ — $ 1,919 $ (1,919) (100) %

Percentage of revenues — % 2.2 %

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

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

Operating Income

Nine Months Ended September 30, Increase Percent

Three Months Ended March 31, Increase Percent

(in thousands, except percentages)

Revenue $ 109,918 $ 86,155 $ 23,763 28 %

Operating income (loss) 2,751 (1,911) 4,662 (244) %

Operating margin 2.5 % (2.2) %

Operating income for the nine months ended September 30, 2022 was $2.8 million, a positive margin of 2.5%, compared to operating loss of $1.9 million, a negative margin of 2.2%, for the same period in 2021, an improvement of $4.7 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 $ 171 $ 155 $ 16 10 %

Nine Months Ended September 30, Increase Percent Change

(in thousands, except percentages)

Income from equity method investment $ 1,107 $ — $ 1,107 n/a

Percentage of revenues 0.4 % 0.5 %

During the nine months ended September 30, 2022, the Company recorded $1.1 million of income related to its proportionate share of eFC's net income.

During the three months ended March 31, 2023 and 2022, the Company recorded $0.2 million 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.

Accordingly, there was no income from the Company's proportionate share of eFC's net income for the nine months ended September 30, 2021 as the investment was acquired June 30, 2021.

Gain on investment

Nine Months Ended September 30, Decrease Percent

(in thousands, except percentages)

Gain on investments $ 320 $ 1,198 $ (878) (73) %

Percentage of revenues 0.3 % 1.4 %

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

During the nine months ended September 30, 2021, the Company recognized a $1.2 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.

Impairment of Investment

Three Months Ended September 30, Decrease Percent

(in thousands, except percentages)

Impairment of investment $ (2,300) $ — $ (2,300) n/a

Percentage of revenues (2.1) % — %

During the nine months ended September 30, 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 the condensed consolidated financial statements.

Interest Expense and Other

Nine Months Ended September 30, Increase Percent

Three Months Ended March 31, Increase Percent

(in thousands, except percentages)

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Percentage of revenues 2.1 % 0.7 %

Interest expense and other increased $0.6 million, or 129%, compared to the same period in 2021, due to higher debt outstanding on the revolving credit facility during the current period and higher interest rates.

Nine Months Ended September 30,

Interest expense and other increased from the same period in 2022, primarily due to higher debt outstanding on our revolving credit facility during the current period and higher interest rates.

Three Months Ended March 31,

(in thousands, except

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Effective tax rate 951.9 % (141.8) %

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

statutory rate due to a tax benefit of $1.1 million from the vesting of share-based compensation awards.

The tax rate for the nine months ended September 30, 2021, differed from the statutory rate due to a tax benefit of $0.3 million related to a valuation allowance on our capital loss carryforward.

Income (loss) from discontinued operations, net of tax

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

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

Percentage of revenues — % (34.1) %

During the nine months ended September 30, 2021, the Company transferred majority ownership of its eFC business 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 nine months ended September 30, 2021.

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

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

Earnings (Loss) per Share

Nine Months Ended September 30,

Our effective tax rate for the three months ended March 31, 2023 and 2022 differed from the U.S.

statutory rate due to tax benefits of $0.5 million and $0.8 million, respectively, from the vesting of share-based compensation awards.

Earnings per Share

Three Months Ended March 31,

(in thousands, except

per share amounts)

Income (loss) from continuing operations $ 1,825 $ (634)

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

Net income (loss) $ 1,825 $ (29,974)

Net Income $ 460 $ 1,301

Weighted-average shares outstanding - basic 43,886 44,702

Weighted-average shares outstanding - diluted 45,240 47,170

Diluted earnings (loss) per share - continuing operations $ 0.04 $ (0.01)

Diluted loss per share - discontinued operations $ — $ (0.63)

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

Diluted earnings (loss) per share from continuing operations was $0.04 and $(0.01) for the nine months ended September 30, 2022 and 2021, respectively.

The improvement was primarily driven by higher revenues in the 2022 period.

The prior year loss was driven by an ROU asset impairment and higher depreciation expense partially offset by gain in investment.

Diluted earnings (loss) per share were $0.04 and $(0.64) for the nine months ended September 30, 2022 and 2021, respectively.

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

Liquidity and Capital Resources

Diluted earnings per share $ 0.01 $ 0.03

Diluted earnings per share was $0.01 and $0.03 for the three months ended March 31, 2023 and 2022, respectively.

The decrease was driven by lower operating income and an increase in interest expense in the current year.

Non-GAAP Financial Measures

We have provided certain non-GAAP financial measures as additional information for our operating results.

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.

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The Company also uses these measures 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, 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 positive operating results of those divested businesses, and gains related to legal claims that are unusual in nature or infrequent.

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 expense, 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 positive 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, 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 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 of Directors (the "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 are frequently used by securities analysts, lenders and others in their evaluation of companies, Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our liquidity or results as reported under GAAP.

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• Other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDA Margin differently than we do, limiting their usefulness as comparative measures.

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, 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 nine months ended September 30, 2022 and 2021 follows (in thousands):

Nine Months Ended September 30,

Reconciliation of Net Income (loss) to Adjusted EBITDA:

Net income (loss) $ 1,825 $ (29,974)

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 three months ended March 31, 2023 and 2022 follows (in thousands):

Three Months Ended March 31,

Reconciliation of Net Income to Adjusted EBITDA:

Net income $ 460 $ 1,301

Interest expense 798 245

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Income from equity method investment (171) (155)

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

Gain on investment (320) (1,198)

Impairment of investments 2,300 —

Severance and related costs 421 109

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

Adjusted EBITDA $ 8,054 $ 6,930

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Change in deferred revenue (7,981) (10,640)

Discontinued operations results — (3,593)

Severance and related costs 421 109

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Adjusted EBITDA $ 8,054 $ 6,930

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

Nine Months Ended September 30,

A reconciliation of Adjusted EBITDA Margin for the three months ended March 31, 2023 and 2022 follows (in thousands):

Three Months Ended March 31,

Revenues $ 38,620 $ 34,334

Net income (loss) $ 1,825 $ (29,974)

Net income (loss) margin (1)

Net income $ 460 $ 1,301

Net income margin (1)

Adjusted EBITDA $ 8,054 $ 6,930

Adjusted EBITDA Margin (1)

(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 nine months ended September 30, 2022 and 2021 (in thousands).

Nine Months Ended September 30,

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

Liquidity and Capital Resources

A summary of our cash flows for the three months ended March 31, 2023 and 2022 follows (in thousands):

Three Months Ended March 31,

Cash from operating activities $ 11 $ 9,218

Cash used in investing activities $ (4,833) $ (4,091)

Cash used in financing activities $ (13,305) $ (14,327)

Cash from (used in) financing activities $ 7,184 $ (1,701)

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

At September 30, 2022, we had cash of $3.8 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 $70.0 million in borrowing capacity under our $100.0 million Credit Agreement at September 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.

At March 31, 2023, we had cash of $5.4 million compared to $3.0 million at December 31, 2022.

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

In addition, we had $54.0 million in borrowing capacity under our $100.0 million Credit Agreement, as defined below, at March 31, 2023, 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, 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.

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Operating Activities

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

Net cash flows from operating activities were $28.7 million and $25.6 million for the nine-month periods ended September 30, 2022 and 2021, respectively.

Net cash flows from operating activities were $0.0 million and $9.2 million for the three-month periods ended March 31, 2023 and 2022, 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 $3.1 million compared to the same period of 2021.

Cash provided by operating activities during the 2023 period decreased $9.2 million compared to the same period of 2022 due to higher overall headcount, the timing of bonus payments, and the timing of payments to vendors and billings to and cash collections from our customers.

Investing Activities

Cash used in investing activities during the nine-month period ended September 30, 2022 was $13.1 million compared to $15.5 million used in the same period of 2021.

Cash used in investing activities in the nine-month period ended September 30, 2022 is primarily comprised of $13.4 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 nine-month period ended September 30, 2021 is comprised of $3.0 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 to the condensed consolidated financial statements, and $10.7 million of fixed asset purchases, which is primarily comprised of capitalized development costs, partially offset by cash proceeds of $1.2 million from the sale of an investment.

Cash used in investing activities during the three-month period ended March 31, 2023 was $4.8 million compared to $4.1 million used in the same period of 2022.

Cash used in investing activities in the three-month period ended March 31, 2023 increased from comparable 2022 period due to higher purchases of fixed assets, which is primarily comprised of capitalized development costs, as the Company continues to invest in its products.

Financing Activities

Cash used in financing activities during the nine months ended September 30, 2022 was $13.3 million and was driven by $7.0 million of net proceeds on long-term debt, and offset by $19.8 million, net, related to share repurchases and $0.5 million from financing costs paid.

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

Cash used in financing activities during the three-month ended March 31, 2023 was $7.2 million and was driven by $16.0 million of net proceeds on long-term debt and offset by $8.8 million, net, related to share repurchases.

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.

Financing and Capital Requirements

Credit Agreement

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

We have a $100 million revolving credit facility, which matures June 2027, with $ 46.0 million of borrowings on the facility at March 31, 2023, leaving $ 54.0 million available for future borrowings, subject to the terms of the Credit Agreement.

Borrowings under the Credit Agreement denominated in U.S.

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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 5.40 % (the rate in effect on September 30, 2022) on our current borrowings, interest payments are expected to be $0.4 million from October 1, 2022 to December 31, 2022, $1.6 million in each of 2023, 2024, 2025, and 2026 and $0.8 million in 2027.

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 Company's most recent consolidated leverage ratio.

Assuming an int eres t rate of 6.90 % (the rate in effect on March 31, 2023) on our current borrowings, interest payments are expected to be $2.4 million from April 1, 2023 to December 31, 2023, $3.2 million in each of 2024, 2025 and 2026 and $1.6 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 September 30, 2022, the Company was in compliance with all of the financial covenants under the Credit Agreement.

As of March 31, 2023, the Company was in compliance with all of the financial covenants under the Credit Agreement.

Refer to Note 9 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 September 30, 2022, the value of our lease right-of-use asset was $5.5 million and the value of our lease liability was $7.6 million.

As of March 31, 2023, the value of our lease right-of-use asset was $6.1 million and the value of our lease liability was $8.0 million.

See note 5 to the condensed consolidated financial statements for further information.

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Other Capital Requirements

As of September 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.

As of March 31, 2023, 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 September 30, 2022 are $1.0 million of tax benefits that would affect the effective tax rate if recognized.

Included in the balance of unrecognized tax benefits at March 31, 2023 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 12 months.

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

During the nine months ended September 30 2022, the Company repurchased $15.0 million of shares of its common stock pursuant to the stock repurchase program.

As of September 30, 2022, the value of shares available to be

purchased under the current plan was $ 5.7 million.

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

As of March 31, 2023, the value of shares available to be purchased under the current plan was $ 8.2 million.

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

See note 11 of the notes to the condensed consolidated financial statements for further information.

We anticipate capital expenditures in 2022 to be approximately $19 million.

The increase over prior periods is due to the additional investments in the development of new products and features.

We anticipate capital expenditures for the year ending December 31, 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 and leasehold improvements.

We intend to use operating cash flows to fund capital expenditures.

Impact of COVID-19 on our Business

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

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

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

Recruitment activity for our businesses improved during the second half of 2021 and has continued to improve in 2022.

Based on information currently available, we are not anticipating a significant long-term impact on our business and operations, results of operations, financial condition, cash flows, liquidity and capital and financial resources.

However, the situation is uncertain and 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.

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

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

The extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments, which cannot be predicted with confidence at this time.

Future developments include the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact, the impact on governmental programs and budgets, the further development of additional treatments or vaccines, and the resumption of widespread economic activity.

While the pandemic may impact our financial performance in the future, due to the inherent uncertainty of the situation, we may not be able to predict the likely impact of the COVID-19 pandemic on our future operations.

The labor market and certain of the industries that we serve have historically experienced short-term cyclicality.

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For instance, the COVID-19 pandemic resulted in a slowdown of recruiting activity in 2020, 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 database licenses and have a positive impact on our revenues and results of operations.

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 database 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 may be negatively impacted.

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

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